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Our jargon-busting guide to setting up a limited company in the UK

Setting up a limited company in the UK can appear to be a daunting task  – but it needn’t be and we’re here to show you why. It might be a bit of a tongue twister but with proper preparation and planning, you can get your business up and running quickly and smoothly.

To help you, here’s our jargon-busting guide to setting up a limited company in the UK.

What is a limited company?

A limited company is a business owned by its shareholders who are not personally liable for any debts the company may incur. They have a limited liability, which means their personal assets are protected should the company struggle with debt.

Why set up a limited company?

There are lots of benefits to setting up a limited company:

  • Limited liability: your personal assets are protected should the company end up in debt.
  • Tax benefits: limited companies incur a lower rate of tax than individuals.
  • Easier to raise finance: limited companies are considered more credible by lenders, making it easier to raise finance.
  • Professional image: limited company status gives your business a more professional image. In essence, it helps your business look the business.
Checking accounts

How to set up a limited company

Here are the steps to setting up a limited company:

  1. Choose a name for your company.
  2. Check with Companies House that the name is available (no two companies are allowed to have the exact same name in the UK).
  3. Register your company with Companies House. Once registered, you’ll receive your unique company number.
  4. Open a business bank account (you’ll need your company number).
  5. Hire an accountant.
  6. Make sure you invest in business insurance.
  7. Build your website.
  8. Start to market your business.

Cost of setting up a limited company

How much it costs you to set up a limited company depends on the services you use. The fee for incorporation can only cost around £10 but be prepared to pay around £200 for all the bits and pieces that come with registering your company with Companies House. And of course, you’ll need to budget for insurance, getting a website built, accountant fees and so on.

Here are our bonus tips for setting up a limited company to help you:

  • Do your research: there are plenty of resources available to help you in setting up your limited company so, do your research and make sure you understand the process at the start.
  • Be patient: it takes time to set up a limited company and won’t necessarily happen overnight
  • Get professional help: if you’re not sure about any aspect of setting up a limited company, including tax liabilities, legalities, business advice and accounts management, always seek professional help. It’s much easier to get it right from the outset than try and fix something later on. 

A limited company gives you the peace of mind that your personal assets are protected while you launch and grow your business. For more information or advice, get in touch with our team today.

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Selling an Inherited
Property in the UK:
A Guide

Inheriting a property in the UK can be a great financial windfall, but it can also be a burden especially if you’re not sure what to do with it. If you’re thinking about selling your inherited property, read Norwich Accountancy’s guide to help you get started.

Step 1: Assess the Property

What condition is it in? What might it be worth? Use an online valuation tool from one of the property portals or get a valuation from a local estate agent. The valuation will take into consideration the condition of the property, including any damage, wear and tear, and any repairs that may need doing.

Step 2: Decide How to Sell the Property

Once you have assessed the property and got your estimated valuation, decide how to sell the property. There are several options, including:

  • Sell the property privately yourself – if you have the time and expertise, this option will save on agent and/or auction fees. 
  • Sell via a local estate agent or an online agent, – you’ll pay more but you’ll get the benefit of their experience and knowledge of the property market, the local area, and they should work on your behalf to get the best possible price.
  • Sell at a property auction – if you need to sell the property quickly, this could be a good option but you may potentially get less than the property’s value.
  • Sell to an investor – you can list your property on sites that will place the property in front of property investors. It can lead to a quick sale and also save on agent and/or auction fees.

Step 3: Get the Property Ready to Sell

Prepare the property for sale, including making any repairs, emptying the property of any personal possessions and cleaning the property thoroughly. You may want to consider ‘staging’ the property – hiring furniture to make the property look its best for when potential buyers come to browse.

Step 4: Market the Property

It’s not time to give your estate agent the go-ahead, list your property yourself, go to auction or find an investor. 

Selling property

Step 5: Negotiate with Buyers

Once you have interested buyers, negotiate the best possible price. Remember, this will reflect any repairs or improvements, any fixtures and fittings, or anything else that needs updating.

Step 6: Complete the Sale

Once you’ve agreed on the price, instruct solicitors to carry out the necessary legal work, conduct searches and draw up contracts of sale. Exchange contracts and complete the transfer of ownership, including handing over the title deeds. Don’t forget to set aside some money to pay any fees or taxes, like capital gains tax, that come with the sale of a property.

Here are some bonus tips for you:

  • Be patient; don’t expect to sell the property quickly and be prepared for the legal process to take a bit longer.
  • Be ready to negotiate but also be prepared to compromise.
  • Be organised; there will be a lot of paperwork to read and complete, so the more you can keep track of it all the easier the process will be.
  • If you’re not sure about anything, always seek professional advice from a professional. 
  • Lastly, remember that you may be emotional when the time comes to hand over the keys. Selling an inherited property comes with family ties, so allow yourself to grieve.

Selling an inherited property can be a complex and time-consuming process but by following these steps, it can be a bit easier. At Norwich Accountancy, we hope our guide helps you when you sell your inherited property in the UK.

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How to Start a Pension When You’re Self-Employed?

There are plenty of perks that come with being self-employed, but being your own boss does mean you’re responsible for your pension arrangements. Although a daunting prospect, it’s important you start saving for your retirement as soon as possible and we’re here to help make it super simple.  

There are a variety of pension options available for the self-employed. The most popular options are:

  • A private/personal pension is a simple, flexible option. You decide how much you want to contribute to your pension and how it is invested.
  • A Self-Invested Personal Pension (SIPP) is more flexible than a personal pension in that you have more control over how your money is invested, and you can access the pension more easily. But SIPP pensions can be complex to set up and manage.
  • National Employment Savings Trust (Nest) is a government workplace pension scheme. Whilst it’s a government-backed workplace pension scheme, it’s not the same as the state pension and the pot is made up of contributions made by workers and employers and not from taxpayers.
  • Lifetime ISA (LISA) aren’t actually pensions but they do look and act pretty similar as they’re designed to help you save for things like your retirement. With a LISA, for every £4 you pay in, the government adds £1. So if you pay in the maximum of £4,000 a year, you’ll get £1,000 from the government at the end of the tax year. It won’t help you save nearly as much as a pension, but the money is already yours so you won’t pay tax when you draw it out. 

Here are Norwich Accountancy’s five steps to starting a pension when you’re self-employed in the UK.

1. Choose a pension provider

As you can see, there are a wide variety of pension providers offering options for self-employed people. Compare what providers are offering, such as investment options, contribution levels, customer service and fees charged, before deciding where you’ll put away to fund you later in life.

2. Open a pension account

Once you’ve picked your pension provider, start the process of opening a pension account with them. Generally, it’s a simple process, which can be done online, but ask for help from a pension professional if you’re not sure about anything.

3. Make a contribution to your pension account

Start to make contributions to your pension account on a regular basis, i.e. weekly or monthly when you get paid at the end of the month. Or, you can make a lump sum payment – how much you contribute is up to you.

Talking about accounts

4. Invest your money

Once you’ve made a contribution to your pension pot, decide how you want it invested. There are lots of pension investment options available so choose the one that suits your appetite for risk and your investment goals. This is where getting some professional advice can work wonders and give you peace of mind that your pension is in the right place.

5. Review your pension regularly

Make sure you review your pension account regularly to check whether it still meets your needs. If investment market conditions or your circumstances change, you may need to adjust your contributions or investment options.

Here are some bonus pension tips for the self-employed:

  • Make regular contributions, even if it is a small amount to start with.
  • Invest wisely by choosing investments that are right for you and your personal circumstances. If you’re not sure, talk to our pension professionals who’ll help you understand your options to help you make an informed decision.

Whichever pension option you choose, the sooner you start contributing to the pension the more time your money has to grow, and the more you’ll have when the time comes to retire. Getting pension advice and starting a pension when you’re self-employed is an important step in planning for your retirement goals, and keeps you on track. 

Need help to pick the right way to build a pension pot? Get in touch with our pension experts today.

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Do limited companies have to pay CIS?

Contractors must legally register for the Construction Industry Scheme ( CIS ). The scheme means that contractors deduct money from a subcontractor’s payments and pass it to the HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.

However, there are some exemptions and reliefs that can apply to paying CIS and as always, we’re here to help you save money whenever and wherever possible.

Who has to pay CIS?

Whether you’re a sole trader, in a partnership or own a limited company, you must register as a contractor with the Construction Industry Scheme (CIS) if you pay subcontractors to carry out construction work. Even if you’re not in the construction industry, if you’ve spent more than £3 million on construction in the 12 months since you made your first payment, then you still have to register.

Who is exempt from HMRC CIS?

You don’t have to register as a contractor with the CIS is the work you’re carrying out is: 

  • paid for by a charity or trust
  • paid for by a governing body or by the head teacher of a school acting behalf of the local education authority
  • on the subcontractor’s own property if the work costs less than £1,000 excluding materials. However, you must call the CIS helpline to get an exemption. 
  • On a property not for sale or rent and for your own business use

The type of work being carried out also affects whether you’re exempt, for example:

  • architecture and surveying
  • scaffolding hire (labour not included)
  • Carpet fitting
  • Delivery of materials
  • A canteen or other site facilities on a construction site that aren’t classed as construction themselves.
Laying paving

How to pay CIS

Companies required to pay CIS must deduct a percentage of the payment from the subcontractor and pay that to HMRC (HM Revenue and Customs). This is called deduction at source.

The Construction Industry Scheme (CIS) deduction rates are:

  • 20% for registered subcontractors
  • 30% for unregistered subcontractors
  • 0% if the subcontractor has ‘gross payment’ status – for example they do not have deductions made

Construction CIS payments to HMRC can be made online, by post or over the phone. 

Construction companies that don’t pay the CIS due are liable to penalties. So, it’s important to make sure you’re paying CIS correctly to avoid the headache of hefty fines. 

If you’re not sure if you should be paying CIS or how to pay the tax, contact HMRC.

Here are some other factors to think about with CIS taxes:

  • The CIS rules are complex so, if you’re unsure about anything, seek professional advice. 
  • HMRC has the authority to conduct checks to make sure you’re paying CIS correctly.
  • And don’t forget, if they find you are non-compliant with CIS, you may be liable to penalties. 

By checking the eligibility criteria and following the CIS rules, you can make sure you’re paying the correct amount of tax to HMRC to avoid any risk of penalties. As tax and accountancy specialists, we’re here to help you understand CIS and register for the scheme. We can manage your CIS payments and make sure your construction projects are fully compliant and give you peace of mind that you’re crossing the t’s and dotting the i’s when it comes to tax. 

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