Taxes remain a key aspect of the incomes of individuals as well as businesses. Through this blog post, we will discuss the concept of turnover in business, whether the turnover of a business considers a tax deduction or not and some key essentials of corporate tax. In addition to this, we will also discuss the various aspects of tax deduction in the UK; both for businesses and individuals. In the end, we will review the types of taxes collected and submitted to HMRC. 

Is Turnover Before Or After Tax?

When calculated for businesses, turnover is the amount of income generated from sales of goods or services and considers the amount once discounts and taxes are deducted. You need to calculate your business turnover accurately before you can register it for VAT.

This also means that turnover takes includes incomes from the trading account of a business without including incomes generated through other sources or the payment of dividends. 

Since TIN Numbers are not used in the UK while conducting business with international markets UK companies provide alternates to the TIN Number. These include the Unique Taxpayer Reference (UTR) and Company registration number (CRN). Both numbers are separate and are used for different purposes by UK companies. They are extremely important for businesses and will need to be provided during regular company administration. 

The UTR is issued to registered companies by HMRC once a limited company has been registered for Corporation Tax. In addition to HMRC documents, the UTS can also be found by logging into the online Corporation Tax account of businesses.

The Company Registration Number (CRN) is a unique combination of 8 characters, which consists of either 8 numbers or depicts 2 letters that are followed by 6 numbers. It is displayed on the Certificate of Incorporation of businesses. Among the many uses of a CRN include registering with HMRC, opening a company bank account as well communicating or trading with third parties.

What Is A TIN Number used for in the UK?

A TIN Number is primarily a Tax Identification Number used to track and monitor the tax accounts of individuals. Although the term TIN Number is not specifically used in the UK in its strictest sense, the HMRC issues two TIN-like numbers to members of the public. The purpose and use of these are described below:

  • The Unique Tax Payer Reference (UTR): This is a ten-digit set of numbers issued by the HMRC to individuals and businesses who qualify for paying tax returns in the UK. You will find this number on the front page of the tax return (form SA100 or CT600). In addition to this, you will find it on a “Notice to complete Tax Return” (form SA316 or CT603) or a Statement of Account. It is also printed next to the headings of “Tax Reference”, “UTR” or “Official Use”; but the appearance and terms that are used will depend on the type of document issued. 
  • The National Insurance Number (NINO): This includes two letters which are followed by six numbers and then only one of the letters between A, B, C and D. Individuals residing in the UK will be issued a NINO once they are 16 years of age. They will be informed by the Department for Work and Pensions (DWP) or the HMRC. If you are an employee, you will find this number on your payslip as well as on a Statement of Account issued by HMRC. It links individuals to their records of national insurance contributions, tax payments, student loans as well as social security benefits.

Both of these numbers are not officially issued through a card or a document but are used during relevant correspondence from the HMRC, they remain permanent for life and their format will not be altered. They should be considered personal and private by individuals and should not be disclosed in general. 

Individuals who are under the age of 16 or do not have a right to work in the UK will not be issued a UTR or a NINO. However, individuals seeking employment or those who are eligible to claim state benefits will need these numbers for official documentation.

How Much Tax Do I Have To Pay In The UK?

According to a general estimate, an individual pays one-third of their income in the form of taxes in the UK. While the amount of tax one pays depends on the scale of their income, some people will pay a higher tax perhaps due to the property that they own or inheritance that they may receive.

There are different types of taxes under the UK taxation system. Direct taxes include PAYE (Pay As You Earn) and National Insurance. These account for 20 per cent of an individual’s income. On the other hand, indirect taxes include VAT, council tax as well as duties on alcohol and petrol. 

Therefore, basic taxes in the UK include the following:

  • Income Taxes 
  • Property Taxes 
  • Capital Gains 
  • UK Inheritance Taxes 
  • Value Added Tax 

These are all progressive taxes; which means that the scale of taxes increases with an increase in income.

What Are FedEx Duties And Taxes?

When goods are brought into a country, there are certain customs duties and taxes levied upon them by the government.  The reason why duties are levied is to make sure that goods imported from other countries do not impact the sales and prices of locally produced goods and to keep competition fair. 

There are times when consumers find themselves billed for such duties and taxes by FedEx; however, these are not applied by the company rather by their own governments. There are times when FedEx pays these in advance and bills you for reimbursement along with their service charges which are called Disbursement Fees. 

Customs charges in the UK are based on the following factors:

  • Country of manufacture
  • Country-specific regulations
  • Description and end-use of the product
  • Product value
  • Trade agreements (if applicable)
  • The product’s Harmonised System (HS) code

It must be noted that any additional charges in excess of the cost of the shipped goods are declared by the company to the shipper who aims to send goods overseas and has the choice of bearing such charges by making a pre-payment, forwarding them to the receiving party or mentioning a third party who is responsible for payment of duties and taxes. 

This choice of payment depends on (a) the terms of the agreement between both parties who are to send and receive goods and (b) whether or not the receiver has a FedEx account as non-account holders will not be able to make a payment. Ins such cases, the shipment is held at the destination and not delivered to the intended recipient until duties and taxes are paid.

Which Incomes Are Tax-Free In The UK?

Incomes derived from any of the following sources are considered to be tax-free in the UK:

  • Transport costs of an employee’s (and their immediate family) relocation for work in the UK
  • Winnings from games, pool betting, lotteries or competitions with prizes
  • Long service employee awards (certain limitations apply)
  • Individual savings account amounting to £20,000
  • Incomes such as interest or dividends arising from savings accounts 
  • Pensions paid to war widows and dependents
  • Social security and state benefits include maternity allowance, employment and support allowance, attendance allowance, child tax credit and housing benefit. 

Who Collects Tax Revenues In The UK?

The HMRC collects and administers tax collection in the UK. HMRC administers the following central taxes while local governments collect council tax:

  • Income tax
  • Corporation tax
  • Capital gains tax
  • Inheritance tax
  • Insurance premium tax
  • Stamp, land, and petroleum revenue taxes
  • Environmental taxes
  • Climate change and aggregates levy and landfill tax
  • Value-Added Tax
  • Customs duty
  • Excise duties

Who Is Tax Exempt In The UK?

Individuals may apply for tax exemption if they face  the following conditions:

  • If someone is a tax resident for at least one year out of the previous three years 
  • They have spent less than 16 days in the UK during the previous tax year
  • They are not a UK resident

The same applies in case:

  • Someone is not a tax resident for the previous three years
  • They have spent less than 46 days in the UK

Conclusion:

The above discussion points out that turnover is the trading income of a business and the amount shown in the books of accounts of businesses indicate a deduction of taxes. Since TIN Numbers are not used in the UK while conducting business with international markets UK companies provide alternates to the TIN Number. These include the Unique Taxpayer Reference (UTR) and Company registration number (CRN).

FAQs: Is Turnover Before Or After Tax?

Is turnover your gross or net?

Turnover is the net sales amount or the trading income of a business. When calculated for businesses, turnover is the amount of income generated from sales of goods or services and considers the amount once discounts and taxes are deducted. You need to calculate your business turnover accurately before you can register it for VAT.

Is turnover before or after expense?

Turnover is the revenue generated by a business through the sales of goods or services. It does not take into account the expenses incurred by the business. You need to calculate your business turnover accurately before you can register it for VAT.

Does turnover mean profit?

No turnover does not mean profit. Turnover is the amount of sales revenue generated by a business through sales of goods or services. Profit is the remaining income of a business once expenses/overheads have been deducted from the turnover.

How do I get a tax number in the UK?

As an individual taxpayer, a UTR will be issued to you automatically when you apply for your tax self-assessment in the UK. The UTR is issued to registered companies by HMRC once a limited company has been registered for Corporation Tax. In addition to HMRC documents, the UTS can also be found by logging into the online Corporation Tax account of businesses.

What is the purpose of a TIN number?

From filing income or corporation tax returns to VAT returns, the unique TIN Number (UTR in case you are in the UK), will serve as the taxpayer’s identification number in maintaining the details of their tax payment history. It may also be used by the HMRC to monitor the tax accounts of individuals.

References:

What is ‘turnover’ and how do you calculate it? – Bytestart.

What is turnover – Starfish Accounting

What Is Turnover? – Touch Financial

What is a Tax Identification Number | GoCardless

Jurisdiction’s name: United Kingdom Information on Tax Identification Numbers Section I – TIN Description The United Kingdom

Do UK companies have a TIN number?

What is a Tax Identification Number? | the West Brom

UK Tax Calculators

HM Revenue & Customs – GOV.UK

Customs duties and taxes guide | FedEx United Kingdom

What was missing from this post which could have made it better?