Frequently Asked Questions

DKAT Accountants provides a comprehensive range of accounting and tax services including self-assessment tax returns, annual accounts and corporation tax, bookkeeping and VAT, payroll and CIS, tax planning, business start-up, HMRC compliance, and estate and inheritance tax planning. All services are delivered by FCCA-qualified accountants on a fixed-fee basis.

Simply book a free consultation through our website, call us on 07990 572720, or email info@dkat.co.uk. We aim to respond within 12 hours. The initial consultation is completely free and carries no obligation. We will discuss your needs, explain our fees, and agree a service plan.

All DKAT fees are fixed and transparent. We agree your fee upfront before any work begins, so you know exactly what you are paying. There are no surprise invoices, no hourly billing, and no hidden extras. Fixed fees mean you can contact us with questions throughout the year without worrying about the clock running.

Yes. DKAT is led by an FCCA-qualified accountant — Fellow of the Association of Chartered Certified Accountants (ACCA), the highest ACCA membership grade. We are regulated by ACCA under the Chartered Certified Accountants’ Order 2004, hold professional indemnity insurance, and maintain full compliance with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 and UK GDPR.

Yes. While we are based in London and meet local clients in person, we work with clients across the whole of the UK remotely. We use cloud accounting platforms including Xero, QuickBooks, FreeAgent, Sage and QuickFile, which means all your records are available securely online and we can collaborate effectively from anywhere.

Yes. One of our core principles is that every client has a dedicated accountant who knows their business or personal situation in depth. You will always speak to the same person — not a different team member each time. Your accountant is proactive: they will reach out with deadlines, planning opportunities, and relevant changes without waiting for you to ask.

We are fully MTD-compliant and work with all major cloud accounting platforms: Xero, QuickBooks, FreeAgent, Sage, and QuickFile. If you do not currently use any software, we can recommend the right platform for your situation and handle the setup and migration. All submissions are made in accordance with HMRC’s Making Tax Digital requirements under Finance Act 2016, Schedule 12.

Inheritance Tax (IHT) is charged at 40% on the value of an estate above the available nil-rate band. The standard nil-rate band (NRB) is £325,000 per person, frozen until at least April 2031. An additional Residence Nil-Rate Band (RNRB) of £175,000 applies where a main home is left to direct descendants, giving a combined allowance of up to £500,000 per person or £1 million for married couples and civil partners who transfer unused allowances. Estates valued below the available threshold pay no IHT. A reduced rate of 36% applies where at least 10% of the net estate is left to a qualifying charity.

The Residence Nil-Rate Band (RNRB) provides an additional £175,000 of IHT-free allowance (on top of the standard £325,000 NRB) where a main residence is left to direct descendants — children, step-children, grandchildren, or their spouses and civil partners. The RNRB is subject to a taper: for every £2 the estate exceeds £2 million, the RNRB is reduced by £1, and it is fully withdrawn at estates above £2.35 million. Unused RNRB is transferable between spouses and civil partners, and can be claimed even where the property has been downsized or sold before death.

There are several legitimate strategies to reduce IHT exposure: making Potentially Exempt Transfers (PETs) — gifts that become fully exempt after seven years; using the annual gift exemption (£3,000 per year per donor); gifting from surplus income; making charitable donations (which reduce the estate and can lower the IHT rate to 36%); maximising pension contributions (pension pots currently outside the estate, though changing from April 2027); using Business Property Relief (BPR) on qualifying business assets (subject to the new £2.5m cap per person from April 2026); and placing assets in trust. Each strategy has specific conditions and should be reviewed by a specialist before implementation.

Gifts made to individuals are Potentially Exempt Transfers (PETs). If the donor survives for seven years after making the gift, it falls completely outside the estate for IHT purposes. If the donor dies within seven years, the gift is brought back into the estate, but taper relief reduces the IHT charge on gifts made between three and seven years before death: 20% reduction at 3–4 years, 40% at 4–5 years, 60% at 5–6 years, and 80% at 6–7 years. Certain gifts — such as those into most types of trust — are immediately chargeable transfers and have different rules.

Business Property Relief (BPR) reduces IHT on qualifying business assets. Prior to 6 April 2026, 100% relief was available on qualifying unquoted shares, business interests, and assets used in a business without limit. From 6 April 2026, the combined BPR and Agricultural Property Relief (APR) 100% relief is capped at £2.5 million per person (transferable between spouses, giving up to £5 million per couple). Assets above the cap qualify for 50% relief — an effective IHT rate of 20%. If you have qualifying business or agricultural assets, the change is now live and specialist advice should be sought immediately.

Yes. From 6 April 2027, unspent defined contribution pension pots and unused death benefits will be brought within the scope of inheritance tax under provisions in Finance Act 2026. HMRC confirmed in May 2026 that the maximum combined effective rate (40% IHT plus income tax on the remainder for an additional-rate taxpayer beneficiary) is 67%. This is one of the most significant changes to pension and estate planning in decades. Anyone with substantial pension savings should review their estate plan and nominations urgently, as there is a planning window before April 2027.

For most company directors, a combination of a low salary (typically set at the National Insurance secondary threshold or the personal allowance, depending on employer NIC eligibility) and dividends remains more tax-efficient than salary alone. In 2025/26, the optimal salary level depends on whether you qualify for the Employment Allowance (£10,500 from April 2025 but unavailable to sole directors). From 6 April 2026, dividend rates rise to 10.75% (basic) and 35.75% (higher), narrowing the margin further. Employer pension contributions — deductible from corporation tax, exempt from NIC — are typically the most powerful extraction and tax-saving tool available. The optimal structure is personal to your circumstances and should be modelled by DKAT each year.

When adjusted net income exceeds £100,000, the personal allowance (£12,570) is reduced by £1 for every £2 of income above £100,000 — and is fully withdrawn at £125,140. This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140. The most effective mitigation is to reduce adjusted net income below £100,000 through pension contributions or Gift Aid donations. For a director earning £110,000, a pension contribution of £10,000 can save over £5,000 in income tax while also reducing corporation tax and avoiding NIC.

The annual allowance is £60,000 for 2025/26 — this is the maximum combined individual and employer pension contribution that qualifies for tax relief. Personal contributions also require sufficient UK earnings to claim relief (100% of your UK earnings, up to £60,000). The tapered annual allowance applies where adjusted income exceeds £260,000, reducing the allowance by £1 for every £2 above that threshold, down to a minimum of £10,000. Unused allowances from the previous three tax years can be carried forward — making large one-off pension contributions viable for those with available carry-forward.

Business Asset Disposal Relief (BADR) reduces Capital Gains Tax to 14% (in 2025/26, rising to 18% from 6 April 2026) on qualifying business disposals. Qualifying disposals include: the sale of a trading business or its assets; disposal of shares in a personal trading company where you hold at least 5% of shares and voting rights and have been an employee or officer for at least two years; and qualifying partnership interests. The lifetime limit on qualifying gains is £1 million. BADR must be claimed via your self-assessment return within 12 months of the 31 January following the tax year of disposal.

The UK has several government-backed investment schemes offering significant tax reliefs: SEIS (Seed Enterprise Investment Scheme) provides 50% income tax relief on investments up to £200,000 in qualifying early-stage companies, plus CGT exemption on gains and loss relief. EIS (Enterprise Investment Scheme) provides 20% income tax relief on investments up to £2 million, CGT deferral, and CGT exemption on gains after three years. VCT (Venture Capital Trusts) provided 30% income tax relief — reduced to 20% from 6 April 2026 — on subscriptions up to £200,000, with tax-free dividends and gains. Each scheme has qualifying conditions; take professional advice before investing.

CGT rates from 30 October 2024 are 18% (basic rate taxpayer) and 24% (higher/additional rate) on all assets including residential property. The annual exempt amount is £3,000. Strategies to reduce CGT include: using bed-and-ISA to shelter gains within the ISA allowance; timing disposals across two tax years to use two annual exempt amounts; transferring assets to a spouse (inter-spouse transfers are at no gain/no loss) to use their allowance and lower rate; using capital losses to offset gains; and for residential property, maximising Private Residence Relief where applicable. For property disposals, remember the 60-day reporting rule — CGT must be reported and paid within 60 days of completion on non-main-residence sales.

The decision depends on your circumstances. A sole trader structure is simpler and cheaper to run, with income taxed as personal income. A limited company offers limited liability (your personal assets are protected), the ability to extract income as dividends (potentially more tax-efficient), a corporation tax rate of 19%–25% on profits, and a more professional image. In general, a limited company becomes more tax-efficient once annual profits consistently exceed around £30,000–50,000, though this threshold varies significantly with the employment allowance changes from April 2025 and the employer NI increase. DKAT will model both options for your specific numbers before you commit.

You register a limited company through Companies House using form IN01 (online at gov.uk for £50, same-day processing in most cases). You will need: a company name (checked for availability), a Standard Industrial Classification (SIC) code, a registered UK address, the details of at least one director and one shareholder, your Memorandum and Articles of Association (Companies House provides a model version), and People with Significant Control (PSC) information. After incorporation, you must also register with HMRC for corporation tax within three months of starting to trade, and register for VAT, PAYE and self-assessment as required. DKAT handles the full setup as part of our business start-up service.

Depending on your structure and activities: Corporation tax (all limited companies, within 3 months of starting to trade); Self-assessment (sole traders, partners, directors with untaxed income — register by 5 October after the first tax year); VAT (mandatory when taxable turnover exceeds £90,000 in any 12-month period, or on a voluntary basis below this threshold); PAYE (when you take on your first employee or pay yourself a salary); and CIS (if working in the construction industry as a contractor or subcontractor). Registering for MTD-compatible bookkeeping software from day one ensures compliance from the start.

The Seed Enterprise Investment Scheme (SEIS) allows investors to claim 50% income tax relief on investments up to £200,000 in qualifying early-stage companies. For your company to qualify, it must be UK-based, have gross assets of no more than £350,000 at the time of investment, have no more than 25 full-time equivalent employees, have been trading for less than three years, and not be in an excluded sector (financial services, property development, legal services, etc.). HMRC advance assurance can be sought before raising investment to confirm SEIS eligibility. DKAT assists with the advance assurance application and SEIS1 compliance certificates.

For a limited company, a separate business bank account is legally required — company money belongs to the company, not the director personally. Mixing personal and business funds is a serious compliance issue and can expose you to personal liability. For sole traders, it is not a legal requirement but is strongly recommended for bookkeeping clarity, tax return accuracy, and to demonstrate business legitimacy if HMRC ever queries your accounts. Most cloud accounting platforms work best when linked to a dedicated business account.

HMRC requires all businesses to maintain adequate records to support their tax returns. For limited companies, statutory records include: accounts and tax computations, PAYE records, bank statements, sales invoices, purchase receipts, and minutes of board decisions. Records must be kept for six years from the end of the accounting period. For sole traders, records must be kept for at least five years after the 31 January filing deadline for the relevant tax year. Under Making Tax Digital, digital records are mandatory for VAT-registered businesses and increasingly for income tax. DKAT helps set up your record-keeping system from day one.

You must file a self-assessment return if, in the tax year, you were: self-employed as a sole trader with gross income above £1,000; a partner in a business partnership; received rental income above £2,500; earned over £100,000 from employment; you or your partner received Child Benefit and either earned above £60,000; received untaxed income from savings, investments, or dividends exceeding your allowances; made capital gains above the annual exempt amount (£3,000); are a company director; have foreign income; or received a notice to file from HMRC. Register by 5 October following the end of the tax year if you are newly required to file.

For the 2025/26 tax year (6 April 2025 to 5 April 2026): paper returns must be filed by 31 October 2026; online returns must be filed by 31 January 2027; any tax owed must also be paid by 31 January 2027. An automatic £100 penalty applies for filing even one day late, regardless of whether any tax is owed. Daily penalties of £10 begin after three months. Under Making Tax Digital for Income Tax, sole traders and landlords with income above £50,000 must also file quarterly updates from April 2026.

Payments on account are advance payments towards your next year’s tax bill. They apply when your last self-assessment tax bill exceeded £1,000 and less than 80% of your tax was collected at source. Two payments of 50% each are due: the first on 31 January (same date as your balancing payment for the previous year) and the second on 31 July. First-time self-assessment filers are often surprised that the January bill includes both a balancing payment and the first payment on account. If your income is lower in the current year, you can apply to reduce payments on account, but interest applies if you underpay.

You can claim expenses incurred wholly and exclusively for your trade, including: office costs (stationery, postage, phone bills — business proportion); business travel at HMRC approved rates (45p/mile first 10,000 miles, 25p thereafter); staff costs; marketing and professional fees; training that maintains or updates existing skills; use of home (£6 per week flat rate without receipts, or actual proportion for larger claims); and equipment via the Annual Investment Allowance. You cannot claim: personal entertaining, fines and penalties, or costs with a dual personal/business purpose unless separable. Keep contemporaneous records — HMRC can request evidence going back six years.

If you sell a UK residential property that is not your only or main home and a capital gain arises, you must report the gain and pay the estimated CGT to HMRC within 60 days of the completion date, using HMRC’s online property reporting service. This is separate from — and in addition to — your annual self-assessment return. Failure to report within 60 days results in automatic late filing penalties, even if the tax was correctly paid through self-assessment. The CGT rates on residential property are 18% (basic rate) and 24% (higher rate), applicable from 30 October 2024.

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) replaces the annual self-assessment return with a system of quarterly digital submissions for sole traders and landlords. From 6 April 2026, MTD is mandatory for those with combined gross income above £50,000; from April 2027 for those above £30,000; and from April 2028 for those above £20,000. Quarterly updates are due by 7 August, 7 November, 7 February and 7 May each year, followed by an End of Period Statement and Final Declaration by 31 January. HMRC applies a soft-landing penalty period in 2026/27. DKAT handles all MTD submissions and can migrate you to a compliant platform.

You must register for VAT when your taxable turnover exceeds the VAT registration threshold of £90,000 in any rolling 12-month period, or when you expect it to exceed this threshold in the next 30 days alone. You must notify HMRC within 30 days of the date you exceeded the threshold, and you have a further 30 days to submit the VAT1 registration form. Voluntary registration below this threshold is possible and can be beneficial if your customers are VAT-registered businesses (they can reclaim the VAT you charge). The deregistration threshold is £88,000.

The VAT Flat Rate Scheme (FRS) is available to businesses with taxable turnover of £150,000 or less (excluding VAT). Instead of accounting for the difference between VAT charged and VAT reclaimed, you simply pay HMRC a fixed percentage of your gross (VAT-inclusive) turnover. The percentage depends on your trade sector. The scheme reduces administration and can result in a small cash benefit — though a 16.5% rate applies to “limited cost businesses” (those who spend less than 2% of gross turnover on goods). DKAT will calculate whether the FRS is beneficial for your specific business before you join.

VAT returns are typically submitted quarterly, though monthly and annual accounting options are available. The return and payment are both due one month and seven days after the end of the VAT period. Under Making Tax Digital for VAT, all VAT-registered businesses must keep digital records and submit returns using HMRC-approved software. Late submission triggers a points-based penalty system — accumulating four penalty points within a rolling period results in a £200 financial penalty, with additional £200 charges for each further late return. Late payment interest also accrues from the due date.

Yes, if you are VAT-registered you can reclaim VAT (input tax) on goods and services purchased for business use, provided they are supported by a valid VAT invoice showing the supplier’s VAT registration number. You cannot reclaim VAT on: business entertainment (client meals, hospitality); cars (unless used 100% for business, which is rare); items purchased for personal use; and goods and services that relate to exempt supplies. You can reclaim VAT on a car if it is used exclusively for business, or on a commercial vehicle (van, lorry) used for business purposes.

For VAT purposes, digital records must be kept under MTD for VAT and must include: the time of supply; the value of the supply; the rate of VAT charged; and information about purchases (to support input tax claims). All VAT records must be kept for six years. For general bookkeeping, you should retain sales invoices, purchase receipts, bank statements, payroll records, and expense records. Under Making Tax Digital, records must be kept in a compatible digital format — paper records alone are no longer sufficient for VAT-registered businesses.

Under the standard (invoice-based) VAT accounting method, VAT is accounted for when an invoice is issued or received. Under the cash accounting scheme, VAT is accounted for when payment is actually received from customers or made to suppliers. This is beneficial for businesses with customers who pay slowly, as you only pay VAT to HMRC when you have been paid — improving cash flow. The scheme is available to businesses with taxable turnover up to £1.35 million. You leave the scheme when turnover exceeds £1.6 million.

From 6 April 2025, significant changes took effect: the employer National Insurance rate increased from 13.8% to 15%; the secondary threshold (the salary point above which employer NIC is payable) dropped from £9,100 to £5,000 per year; and the Employment Allowance increased from £5,000 to £10,500, now available to all eligible employers regardless of their prior-year NIC bill. Sole directors who are the only employee of their company remain unable to claim the Employment Allowance, meaning employer NIC now starts at salaries above £5,000 for these directors — materially changing the optimal salary calculation.

PAYE, National Insurance contributions, CIS deductions and student loan repayments must be paid to HMRC by the 19th of each month for paper/cheque payments, or by the 22nd for electronic payments (which must clear HMRC’s bank account by that date). Real Time Information (RTI) submissions must be made to HMRC on or before each payday. Late payment of PAYE results in interest charges from the due date, and repeated late payments trigger penalty charges. P60s must be issued to all employees by 31 May following each tax year end; P11D forms by 6 July.

Auto-enrolment requires all employers to automatically enrol eligible workers into a qualifying workplace pension scheme and make minimum employer contributions. A worker is eligible if they are aged 22 to State Pension age, earn above £10,000 per year, and work in the UK. The minimum contributions are 3% employer and 5% employee (including tax relief) based on qualifying earnings. You must re-enrol any workers who opt out every three years. New employers must assess their workforce and comply from their first payroll run. Failure to comply with auto-enrolment carries escalating fines from The Pensions Regulator.

The Construction Industry Scheme (CIS) governs how contractors pay subcontractors in the construction industry. Contractors must: register with HMRC as a CIS contractor; verify subcontractors before first payment; deduct CIS tax at either 20% (registered subcontractors), 30% (unregistered), or 0% (gross payment status); and submit monthly CIS returns to HMRC by the 19th of each month. Subcontractors should register to receive the 20% rate and can apply for gross payment status (0%) if they meet HMRC’s turnover, compliance and business tests. CIS deductions are credits against the subcontractor’s tax and NIC liability.

A P11D is the form employers use to report benefits in kind and expenses provided to directors and employees during a tax year. Benefits in kind include company cars, private medical insurance, interest-free or low-interest loans, living accommodation, and vouchers. P11D forms must be submitted to HMRC by 6 July following the end of the tax year. A P11D(b) form must also be submitted declaring the total Class 1A National Insurance due on all benefits (payable by 19 July / 22 July). Failure to file P11D forms on time results in automatic penalties of £100 per 50 employees per month or part-month.

From 1 April 2025, the National Living Wage (for workers aged 21 and over) is £12.21 per hour. The National Minimum Wage rates are: £10.00 per hour for ages 18–20; £7.55 per hour for ages 16–17 and apprentices in their first year or under 19. Employers must pay at least these rates for all hours worked, including overtime. Failure to pay the correct minimum wage is a criminal offence and can result in HMRC naming and shaming employers. DKAT ensures your payroll always reflects the current rates and updates automatically when rates change.

HMRC uses a sophisticated data-matching system called Connect to cross-reference tax returns against data from banks, the Land Registry, Companies House, the DVLA, online marketplaces (eBay, Airbnb, Etsy), letting platforms, and overseas tax authorities. Common triggers include: undeclared rental income; lifestyle inconsistent with declared income; unusually low turnover for your industry; a significant unexplained drop in income; and discrepancies between your return and third-party data. HMRC also selects a proportion of returns randomly for enquiry to maintain deterrence — being selected does not necessarily mean HMRC suspects wrongdoing.

Do not respond to HMRC directly before taking professional advice. Note the deadline on the letter (usually 30 days) and contact DKAT immediately. We submit a 64-8 agent authorisation form, requiring HMRC to deal with us rather than you directly. We review every piece of correspondence, assess whether HMRC’s requests are proportionate and within their statutory powers (under Schedule 36 Finance Act 2008), and prepare and manage the response. Responding without professional guidance is one of the most common ways enquiries are extended or penalties increased.

HMRC runs three main types: an Aspect enquiry focuses on a specific item in your return (one expense, one income figure) and is the most common and least serious. A Full enquiry under Section 9A or Section 12AC of the Taxes Management Act 1970 examines your entire return, triggered by a discrepancy or random selection. A Code of Practice 9 (COP9) investigation is HMRC’s most serious civil procedure, used where fraud is suspected, and carries the highest penalty risk and the potential for criminal referral. COP9 requires immediate specialist legal and accounting representation.

Penalties for late self-assessment filing: £100 automatic penalty (even if no tax owed); £10 daily from 3 months (up to £900); 5% of unpaid tax or £300 (whichever is greater) at 6 months; and a further 5% or £300 at 12 months. For inaccurate returns, penalties are a percentage of the Potential Lost Revenue (PLR): 0–30% for careless unprompted errors; 15–30% prompted; 20–70% deliberate unprompted; 35–70% deliberate prompted; up to 100% for deliberate and concealed behaviour. Interest on unpaid tax accrues at the Bank of England base rate plus 2.5% from the original due date.

Yes, and it can significantly reduce penalties. An unprompted voluntary disclosure — made before HMRC has opened an enquiry or specifically asked about the issue — attracts substantially lower penalties than a prompted one. For careless inaccuracies, an unprompted disclosure can result in a 0% penalty (compared to 15–30% for a prompted disclosure). The key is both timing and quality — HMRC gives credit for “telling” (what was wrong), “helping” (providing full information), and “giving” (access to records). Always take professional advice before making a voluntary disclosure, as the framing and completeness of what is disclosed directly affects the outcome.

The 64-8 is the HMRC authorisation form that allows your accountant or tax adviser to act on your behalf with HMRC. Once submitted, HMRC is required to correspond with your agent rather than you directly for the taxes covered by the authorisation (income tax, corporation tax, PAYE, VAT, CIS). The form can be submitted online or by post. DKAT submits a 64-8 for every new client as a first step, ensuring that any HMRC correspondence comes to us and can be reviewed before any response is given. For HMRC investigations, having a 64-8 in place immediately is critical to controlling the flow of information.

Limited companies must file their statutory accounts at Companies House within 9 months of the accounting year end (for private companies). The company tax return (CT600) and iXBRL accounts must be filed with HMRC within 12 months of the accounting period end. Corporation tax must be paid within 9 months and 1 day of the accounting period end (for small and medium companies — large companies pay by quarterly instalments). Late filing at Companies House results in an automatic penalty starting at £150 and rising to £1,500 for accounts more than 6 months late. Filing at HMRC late results in a £100 penalty.

For the 2025/26 financial year, corporation tax rates are: 19% (small profits rate) on taxable profits up to £50,000; 25% (main rate) on taxable profits above £250,000; and a marginal effective rate between 19% and 25% for profits between £50,001 and £250,000 using the marginal relief formula. These thresholds are divided by the number of associated companies — a company with two associates would have thresholds of £16,667 and £83,333. Both thresholds and rates are unchanged from 2023/24 and remain in force for 2025/26.

Micro-entity accounts (FRS 105) are available to companies meeting at least two of: turnover ≤£632,000; balance sheet total ≤£316,000; no more than 10 employees. Only a balance sheet is required — no profit and loss account is publicly filed at Companies House. Small company accounts (FRS 102 Section 1A) are available to companies meeting at least two of: turnover ≤£10.2m; balance sheet ≤£5.1m; no more than 50 employees. Abbreviated accounts can be filed at Companies House. Full accounts under FRS 102 or UK-adopted IFRS are required for medium and large companies. DKAT prepares accounts under whichever standard applies to your company.

R&D tax relief rewards companies investing in innovation. From 1 April 2024, the old SME and RDEC schemes were merged into a single merged RDEC scheme providing a taxable above-the-line credit of 20% of qualifying R&D expenditure (effective benefit approximately 15% after corporation tax at 25%). Loss-making companies can surrender the credit for a cash payment. A separate scheme — the Enhanced R&D Intensive Support (ERIS) scheme — provides a 27% credit for R&D-intensive SMEs (where qualifying R&D expenditure is at least 30% of total expenditure). Claims are made via the CT600 and require a pre-notification to HMRC within 6 months of the accounting period end for accounting periods beginning on or after 1 April 2023.

A director’s loan account (DLA) records money a director borrows from or lends to their company. If the DLA is overdrawn (i.e., you owe money to the company) by more than £10,000 at the end of the accounting period, interest at HMRC’s official rate must be charged or a benefit in kind arises (reported on P11D). If the overdrawn balance is not repaid within 9 months and 1 day of the accounting period end, the company must pay a Section 455 tax charge of 33.75% of the outstanding balance. This charge is repaid when the loan is eventually repaid. Overdrawn DLAs also require declaration in the company tax return and the directors’ self-assessment returns.

iXBRL (Inline eXtensible Business Reporting Language) is a data format required by HMRC for all corporation tax returns filed online. Statutory accounts submitted with the CT600 must be tagged in iXBRL format so HMRC can process the data automatically. This applies to all UK limited companies filing corporation tax online, regardless of size. In practice, iXBRL tagging is handled by professional accounting software — DKAT uses fully compliant software to prepare and file your accounts and CT600 in the correct format. There is no additional cost or action required from you.