“IR35” might sound like an innocuous term, but the tax law it describes is anything but. All limited companies and partnerships that provide services to their clients ought to be aware of the basics of what IR35 entails, as the tax consequences of ignoring this legislation could be very costly…. Continue Reading

A considerable amount of legislation and case law has built up around defining tax deductible expenses: rules are constantly being changed and clarified.  Additionally, whether or not an expense is tax deductible can depend on the legal form of your business (i.e., whether you’re a sole trader or limited company) and even the timing of the expense for plant and machinery…. Continue Reading

“National Insurance” is a sneaky form of tax that many overlook.  It was first introduced in 1911 to support people who were unemployed, perhaps due to sickness.  Several revisions have been made in the more than 100 years since its inception and it is an important form of tax whose payment rates affect how much state pension and other benefits workers receive.  In this blog, intend to provide a brief guide to National Insurance. We will look at what National Insurance is, how much it is and a recent change that has been brought in to simplify the system…. Continue Reading

When a person first becomes self-employed, the first tax bill can have an extra sting in it if they are required to make “payments on account”.  There is a lot of confusion about what these represent, and when they are due for payment, so we hope to make them a little clearer in this blog and show you how to reduce payment on account.

If your tax bill exceeds £1,000, not only are you required to pay the full tax bill by the following 31st January, “payments on account” in January and six months later in July must also be made towards next year’s tax bill.  Each payment is equal to half the previous year’s tax bill.  An example is the best way of illustrating how this works:… Continue Reading

Limited companies in the UK must prepare annual returns and annual accounts.  These two documents have nondescript sounding names and share a requirement to be filed at Companies House every year.  The similarity between them means it can be very easy to confuse the two. Briefly stated, “annual accounts” report the financial data over a period of time (usually a year), whereas an “annual return” reports the administrative and legal data about a company.  … Continue Reading

The government is gradually rolling out “Universal Credit”, a form of benefit that is replacing Working Tax Credit, Child Tax Credit, Income Support, Employment and Support Allowance, Housing Benefit and Jobseeker’s Allowance. Universal Credit is designed to ensure that people who are working will be better off than if they are out of work.

That being said, company directors and the self-employed cannot apply for universal credit.  Existing benefits remain available to be applied for instead. Self-employed people who are transferred to universal credit by the government will find there are repercussions including more administrative burdens to bear, which we will consider in this blog…. Continue Reading

Every year, we Brits donate billions of pounds to charity. How do these donations affect our tax? This blog explores tax efficient charitable giving.

Gift aid

Charities will almost always ask donors to fill out a “gift aid” declaration.  This allows the charity to claim 25% of the donation from the Revenue, being the tax the individual has suffered before making the donation. For example, if Jim earns £10 gross, 20% tax (£2) is deducted and paid to the Revenue and Jim receives £8 which he donates to Oxfam.  As he has completed a gift aid declaration, Oxfam will claim back 25% of his donation, £2, from the Revenue, which is equal to the tax paid…. Continue Reading