Running your own business is no easy task even for an experienced business owner. At the very least, you will want to manage your business within the legal parameters set out by HMRC but also ideally, you will want to work as tax efficiently as possible whilst meet your tax obligations and keeping a good record with the taxman.
In this blog we review the typical issues that arise with HMRC that cause business owners to be unnecessarily penalised.
What is my optimum salary level?
As a director and owner of a limited company, you are entitled to pay yourself a salary at whatever salary level you like. However, you do need to be aware of the tax implications when making a decision on the amount you wish to pay yourself, and in this blog we review the options available to you to ensure you are working as tax efficiently as possible.
You will be aware of the tax benefits of a limited company structure, including the opportunity to reduce your corporation tax bill by paying yourself a salary and/or dividends. Another significant advantage of paying yourself a salary is that if you do so at the Lower Earnings Limit currently set at £6,136 for the 2019/20 tax year, you will be entitled towards a state pension at retirement. This low level of salary therefore is a good starting point when deciding the level of salary that works best for you.
You can qualify for up to £3,000 per year in tax relief
On occasion, HMRC provides one-off exemptions to UK companies, for example, tax-exempt staff Christmas parties, whereas the Employment Allowance is just that – an annual allowance to eligible employers of up to £3,000 in a given tax year via a reduction of Class 1 Employer National Insurance Contributions (NICs). The Employment Allowance was introduced in 21014 to encourage recruitment by UK firms, and specifically for small businesses to stimulate economic growth.
To be a contractor often means that you have to understand precisely how your position works within the confines of the law to ensure you operate legally.
However, the government reforms of working roles which are off-payroll, known as the IR35 legislation, currently in place for public sector companies and to be rolled out to the private sector this time next year, means that any contractor has to stop and think carefully about how they operate to make sure they’re still working within the confines of the law.
We’re going to be taking a look at whether you can continue to act as a limited company in spite of these new changes.
If you are self-employed and work from home there are expenses that you can claim for, although the rules set out by HMRC are complex and detailed and therefore each claim should be given due consideration being careful to keep within HMRC rules.
In this blog, we look at the key expenses where it is possible to claim as an allowable expense whilst working from home. As this is a complex subject, we do suggest calling us for information to receive tailored advice on your own personal circumstances.… Continue Reading
As requested by many clients, we are pleased to provide tax efficient optimum level of dividend and salary for the tax year 2019/20 (1 April 2019 to 31 March 2020).Please see the figures below. These are for each director/shareholder:
Total Gross income £50.000
If you would like any further information, please contact Southside Accountants in Wimbledon.
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.
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:
