As accountants, we will help employees with completion and submission of their personal tax returns. HMRC is strict on expenses that can be deducted against employees income and as a result, reduce their tax bill.

However, they are a few areas that are worth explaining that may be of benefit to you as an employee.

You can claim expenses against your salary (employment income) where you have incurred expenses that are “wholly, exclusively and necessarily” in the performance of your employment duties…. Continue Reading

We are frequently asked questions, by buy to let residential landlords, about expenses they can claim against their rental income from buy to let properties. The objective of this blog is to help you on the tricky area of deductible rental expenses.

Revenue Expenditure

Expenses that can be categorised as incurred wholly and exclusively for the purpose of your rental business are allowable deductible expenses against your rental income. These expenses are called revenue expenditure. In plain English “wholly and exclusively” in this context means that the expense was incurred for the sole purpose of your rental business. If there is any personal gain, it should be incidental…. Continue Reading

There are many reasons why you may decide to set up as a limited company. If you are planning on growing your company and can envision a high turnover, setting up a limited company will have many benefits including saving tax.

However, there are many tax bills you need to be aware of and along with it an increase in related admin. Your tax bills will likely to be:

1. VAT
2. Payroll taxes
3. Corporation tax

As a director of the company, you will also need to pay personal income tax which is not through your company…. Continue Reading

Contractors/directors under their limited companies can claim travel expenses from their permanent place of work, their client’s site, a temporary workplace.

To claim these travel expenses, they must satisfy:

• The ‘wholly, exclusively and necessarily in the performance of duties’ test
• The 24-month rule
• The 40% test

… Continue Reading

This is the second part of the two-part series of looking at IR35 and personal service companies.  Carrying on from the last blog, if you are a limited company with just yourself as the director running the company and have only one customer, you are likely to fall into the deemed payment category. This blog will go through some examples and look at other company types that can be affected by IR35.

IR35 Employment status tool

The following examples go through the HMRC checklist (that was in the last blog) to show how they may fall in or out of the IR35 rules.  This is not a definitive test, and each case will be treated differently, but these examples will give you an idea of what to look for…. Continue Reading

This two-part series will look into how contractors with limited companies may be affected by IR35 and what to do to overcome it.

What is a personal service company?

A Personal Service Company or PSC is the name given to a limited company that has been created by a contractor for the purpose of serving one customer only. If that company did not exist, they would be an employee of the customer.  It is also known as an intermediary company. One of the main reasons for creating this company is for the tax advantages…. Continue Reading

This blog covers the frequently asked subject of childcare costs for contractors.

Contractors who work through their own limited company are considered to be employees of the company. Therefore, as an employee of your limited company, you can pay for your child care costs through your business until your child is 15.  It means you can be exempt from tax and national insurance of up to £55 a week or £243 a month on childcare costs.

… Continue Reading

Here are 2017/18 tax Rates and allowances:

 

	2016/17		2017/18
	£		£
Income tax rates – (non-dividend income)
0% – starting rate for savings only note 1	Up to 5,000		Up to 5,000
20% basic rate tax	11,001 – 43,000		11,501 – 45,000
40% higher rate tax	43,001 – 150,000		45,001 to 150,000
45% additional rate tax	Above 150,000		Above 150,000
1  If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income
Scottish rates of income tax                                                                                                   note 2
0% – starting rate for savings only note 1	Up to 5,000		Up to 5,000
20% basic rate tax	11,001 – 43,000		11,501 – 43,000
40% higher rate tax	43,001 – 150,000		43,001 -150,000
45% additional rate tax	Above £150,000		Above £150,000
You pay the Scottish rate if you live in Scotland.
1  If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income. 2  The Scottish Parliament has voted to freeze the basic rate of income tax of 20 per cent, also freeze the higher and additional rates at 40 per cent and 45 per cent respectively, and maintain the higher rate of income tax threshold at £43,000 in 2017/18, as set out in the table above.
Income tax rates – (dividend income new rules from 6/4/2016)
Up to £ 5000  note 1 and 2	0%		0%
£ 5000  – £ 32,000	7.5%		7.5%
£32,001 – £150,000	32.5%		32.5%
Above £ 150,000	38.1%		38.1%
1 From April 2016 the dividend tax credit is abolished and replaced with a new £5,000 tax-free Dividend Allowance 2 From April 2018 the allowance will be reduced to £ 2,000
Child benefit/Guardian’s allowance rates
Higher rate (eldest child only) (per week)		20.70		20.70
Other children		13.70		13.70
Guardian’s allowance		16.55		16.70
1  An income tax charge will apply to taxpayers with income exceeding £50,000 in a tax year, when child benefit is also received by them or their partner. The charge will reduce the financial benefit of receiving child benefit for those with income between £50,000 and £60,000 and remove it completely for taxpayers with income above £60,000.
Personal allowances
Personal allowance – note 2	11,000		11,500
Dividend allowance – note 5	5,000		5,000
Maximum Married couple’s allowance for those born before 6 April 1935 – note 3	8,355		8,445
Married couple’s allowance – minimum amount – note 3	3,220		3,260
Micro entrepreneurs allowance:
Individuals making property or trading incomes below the level of the allowance would no longer need to declare or pay tax, while those who exceeded the level from their can benefit by simply deducting the allowance instead of calculating their exact expenses. For more information see ACCAs  article.	n/a		Allowance- 1,000
Income limit – note 1	100,000		100,000
Income limit for Married couple’s allowance- born before 6 April 1935  note 3	27,700		28,000
Blind person’s allowance	2,290		2,320
Rent-a-room relief – note 6	7,500		7,500
Transferable tax allowance for married couples and civil partners	1,100		1,150
Personal savings allowance for basic rate tax payers – note 4	1,000		1,000
Personal savings allowance for higher rate tax payers – note 4	500		500
1  This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit 2  From 2016-17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth 3  This allowance is subject to the £27,700 income limit. The individual’s married couple’s allowance is reduced by £1 for every £2 above the limit. That reduction only applies after any reduction to their personal allowance The individual’s married couple’s allowance is never reduced below the minimum amount.  The relief for this allowance is given at 10%.  These amounts are subject to indexation – the annual increase in CPI – and have been frozen for 2016-17 at 2015-16 levels in order to prevent any cash loss to individuals as a result of negative growth in CP 4  Basic rate tax will no longer be deducted from personal savings interest. 5  From April 2018 the allowance will be reduced to £ 2,000 6  The government will consult on proposals to redesign rent-a-room relief, to ensure it is better targeted to support longer-term lettings.

… Continue Reading

A stronger, fairer, better Britain were the themes of the Spring Budget 2017. You can read the individual measures below…. Continue Reading