How do companies limited by guarantee pay taxes?



I am getting together a limited by guarantee company and I am wondering about taxes. As we will be a not-for-profit, how are things supposed to work with taxes? We’ll have no profits to tax, obviously, because we are not-for-profit. So what is being taxed, and how?




Hi Daniel,

Limited by guarantee companies are required to register for (and pay) business taxes through HMRC just like limited by shares companies, even if they are run as nonprofits. To do this, you must:

  • Register the company for Corporation Tax within 3 months of starting to trade.
  • Register the company for VAT if its VAT taxable turnover is more than £82,000 (2015-16 threshold) in a 12-month rolling period.
  • Register the company for PAYE if it has any paid employees, including the director.
  • Pay Class 1 Employers National Insurance on employees’ wages.
  • Pay Capital Gains Tax on any income received from the sale of business assets.
  • Pay Stamp Duty on the purchase or transfer of land or buildings.

You can register your company with HMRC for business taxes here. If your company is also registered as a charity, you may be able to get certain tax reliefs.

2 years ago

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