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

The summer 2015 budget included a significant change to the way in which dividends are to be taxed.  The new method will hit small limited company directors, as they usually pay the majority of their company’s profits to themselves in the form of dividends.

Up until 5th April 2016, dividends are paid with a ten percent notional tax credit.  A £9,000 dividend is treated as if it is £10,000 gross suffering a £1,000 tax deduction, before paying the net figure of £9,000 to the shareholder.  The concept of this essentially imaginary £1,000 tax is not an easy one to grasp, nor is it particularly logical.  The important point is that due to the notional tax, basic rate tax payers pay no further tax on receipt of dividends.  Many directors who pay themselves mostly in the form of dividends are used to paying just corporation tax and no personal tax. … Continue Reading

In this blog, we will review the main issues arising from the Summer 2015 budget that affect businesses in the UK.

Personal allowance

The amount individuals can earn before paying tax is being increased to £11,000 from April 2016.

Corporation Tax and Dividends

The rate of corporation tax is being cut to 19% from April 2017 and 18% from April 2020.  Tax on dividend income is being introduced.  Basic rate taxpayers will pay 7.5% tax on dividends received a £5,000 tax-free allowance, with a higher rate and additional rate taxpayers paying 32.5% and 38.1% respectively.

Goodwill on incorporation

Limited companies acquiring businesses set up after 2002 were able to obtain tax relief on any goodwill purchased.  This allowed sole-traders and partnerships to enjoy tax relief on goodwill when they incorporated their own businesses.  Restrictions have now been introduced only to allow tax relief when the goodwill is disposed of or sold…. Continue Reading

There is a new kid on the block when it comes to reducing childcare costs, and it’s called “tax-free childcare”. Unlike childcare vouchers – which we focused on in last week’s blog – tax-free childcare can be claimed by all parents in work, including sole-traders and partnership members…. Continue Reading

What is your biggest monthly expense? It might not be your utility bills or groceries, or even the cost of the home you live in.  If you are a working parent, it could be your childcare costs.  Unlike many other expenses, parents have very little control over how much they spend on childcare and the impact it makes on their monthly budget.  Any help available to reduce the expense, such as the Childcare Voucher Scheme, is well worth considering. … Continue Reading

If you are a company director or have employees, at this time of year you ought to be considering  P11Ds.  These forms can get overlooked amongst the jumble of other, more well-known Revenue requirements like your monthly payroll, CIS returns and VAT returns.  In this blog, we will review the basics of P11Ds to help you decide if they could be needed for your business…. Continue Reading

When compiling your end of year expenses, or even when you are contemplating business expenditure, you will naturally want to know exactly what expenses are tax deductible.  There are some business expenses that are NOT tax deductible despite common sense suggesting they ought to be. There are also differences, somewhat bizarrely, between what a limited company can claim compared to sole-trades and partnerships.  In this blog, we outline some of the major categories of expenses that cause taxpayers some surprise…. Continue Reading