With any new business, having dealt with the formalities of registering with HM revenue and Customs, the question as to when tax is due will undoubtedly arise.

Let us say a sole trader starts up in business from the first of this month and decides to go with a year end to match that of the tax year, i.e. 5 April 2011.

The first tax return for the new business will be issued in April 2011 and tax on the profits from 1 September 2010 to 5 April 2011 will be due on 31 January 2012, plus the individual will have to make a payment on account towards the eventual 2011/12 tax and class 4 national insurance liability on 31 January 2012 and 31 July 2012 (each payment is equal to half of the tax and class 4 national insurance liability for the previous year) unless:

• the previous year's tax and class 4 national insurance bill was below £1,500, or;
• more than 80% of the tax due was collected at source.

Let us say the tax and class 4 national insurance liability for the period 1 September 2010 to 5 April 2011 was £10,000 then the total due on 31 January 2012 is £15,000 with a further payment due of £5,000 on 31 July 2012.

For small companies the Corporation tax liability is usually due nine months after the year end.

The above is for general guidance only.  Buick & Co Chartered Tax Advisers take no responsibility for this blog and its reliability.  If any tax planning is to be undertaken specific advice should be sought beforehand from a professional tax advisor.