Today, an increasing number of people are choosing to operate their businesses online rather than in physical stores.

If you are planning to join or have already joined the ranks of online sellers, it’s important to pay extra attention to tax matters.

Our team has summarised the following points to help online sellers navigate the tax season.

Types of Taxes

Considering that different types of businesses may involve different tax laws, if you’re unsure, you can also consult our professional team.

Based on our existing client situations, you typically need to pay:

  • Income tax
  • National Insurance contributions (NI)
  • VAT (most businesses are required to pay this)
  • Corporation tax

If you’re a new online seller, you can earn up to £1,000 before having to pay taxes and should do so promptly.


Do You Need to Pay Corporation Tax?

Required: Since April 2020, all non-resident companies are required to pay a 19% corporation tax.

Not Required: If your business is based overseas and operates online, you are not required to pay corporation tax.

Filing Tax Returns

HMRC requires all online sellers to submit annual company tax returns (CT600).

It’s important to note that you must submit a CT600 even if your company has incurred losses or does not owe taxes.

When submitting the return, you should calculate your company’s profit and loss for tax purposes and complete the corporation tax form.

If you operate a limited company, you also need to submit your company accounts simultaneously.


Corporation Tax Filing Deadline

Typically, the deadline for tax returns is 12 months after the end of the accounting period they cover.

Missing the deadline will result in fines for late submission.

There is a separate deadline for paying corporation tax, usually 9 months and 1 day after the end of the accounting period.

Maintaining Financial Records

Normally, businesses need to keep detailed records of income and expenses for at least 6 years to support HMRC inquiries.

Additionally, maintaining proper records can help with financial planning during the company’s growth.

If you have outsourced financial matters to an accounting team, be sure to retrieve and keep invoices and receipts promptly.