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Overdrawn director’s loan accounts

2019-08-23T16:24:33+01:00September 20th, 2019|Categories: Blog, Taxation|Tags: , , |

In a personal or family company, the lines between the directors as individuals and the company are often blurred – the director may lend money to the company when cashflow is tight and the company may lend money to the director or pay personal bills on the director’s behalf. Transactions between the director and the company are tracked via the director’s account. If the director’s account is overdrawn at the end of the accounting period (such that the director owes the company money) and the company is close, there are tax consequences to consider. Broadly, a close company is [...]

Payment on account of capital gains tax

2019-09-02T11:39:14+01:00September 2nd, 2019|Categories: Blog, Property, Taxation|Tags: , , |

From 6 April 2020 new rules apply to residential property gains liable to capital gains tax and from that date, UK residents will be required to make a return and a payment on account of the capital gains tax due within 30 days of the date of disposal of sale. Where the individual is a non-UK resident, the new rules will apply from 6 April 2019. What disposals are within the new rules? For UK residents, the new rules apply to a disposal on or after 6 April 2020 on which a ‘residential property gain’ arises. Certain disposals are [...]

The CGT annual exemption – use it or lose it!

2019-08-23T16:24:19+01:00August 30th, 2019|Categories: Blog, Taxation|Tags: , , |

Capital gains tax (CGT) is normally paid when an item is either sold or given away. It is usually paid on profits made by selling various types of assets including properties (but generally not a main residence), stocks and shares, paintings, and other works of art, but it may also be payable in certain circumstances when a gift is made. Some assets are exempt from CGT, including assets held in an Individual Savings Account (ISA), betting, lottery, or pools winnings, cash held in sterling, jewellery, antiques, and other personal effects that are individually worth £6,000 or less. The most [...]

Give to charity to reduce your inheritance tax bill

2019-08-23T16:24:08+01:00August 27th, 2019|Categories: Blog, Taxation|Tags: , , , |

Making gifts to charity can be an effective way to reduce the amount of inheritance tax (IHT) payable on your estate. Charitable gifts can work to reduce the IHT payable in two ways: reducing the value of the net estate chargeable to IHT; or where the gifts to charity are worth at least 10% of the net estate at death, reducing the rate at which inheritance tax is payable. Lifetime gifts and bequests on death made to qualifying charities and registered housing associations are exempt from inheritance tax, provided that the gift was made outright. Qualifying charities A qualifying [...]

Working from home – claim tax relief for your expenses

2019-08-23T16:00:18+01:00August 23rd, 2019|Categories: Blog, Self Employment, Taxation|Tags: , , |

An increasing number of employees work from home some or all of the time. Where they do so, they may be able to claim tax relief for the costs that they incur from working at home, regardless of whether their employer meets those costs. Nature of expenses Where an employee works from home, they can claim tax relief for the extra costs that are incurred as a result of working from home. This may include the cost of phone calls from the landline, the costs of electricity and gas to heat and light the workspace, power the computer, and [...]

Dividend Allowance

2019-08-23T16:23:01+01:00July 31st, 2019|Categories: Blog, Limited Company, Personal Finance, Taxation|Tags: , , |

Many family-owned companies allocate dividends towards the end of their financial year and/or the tax year, which means that the impact of the reduction in the dividend allowance from £5,000 to £2,000 from 6 April 2018 is only now starting to come to light. Many other taxpayers may not become aware of the change until they complete their 2018/19 tax return, which in most cases, will be due for submission to HMRC by 31 January 2020. The amount of tax payable on a dividend will primarily depend on which tax band the first £2,000 falls in. The tax rates on dividend [...]

Entrepreneur’s relief – the basics

2019-09-02T11:29:46+01:00July 12th, 2019|Categories: Articles & Guides, Blog, Taxation|Tags: , |

Entrepreneurs’ relief is intended to reduce the rate of capital gains tax to a flat rate of 10% on certain qualifying business disposals. Certain aspects of the relief have recently changed, and this may affect any subsequent tax liability. A qualifying business disposal must include a material disposal of business assets. For these purposes, a disposal of business assets is a disposal of: the whole or part of a business; of (or of interests in) one or more assets in use, at the time at which the business ceases to be carried on, for the purposes of the business; [...]

Give from income to save inheritance tax

2019-09-02T11:29:18+01:00July 6th, 2019|Categories: Articles & Guides, Blog, Taxation|Tags: , , |

Within a family scenario, there are many situations in which one family member may make a gift to other family members. However, the way in which gifts are funded and made can make a significant difference to the way in which they are treated for inheritance tax purposes. Not all gifts are equal There is no inheritance tax to pay on gifts between spouses and civil partners. A person can make as many lifetime gifts to their spouse or civil partner as they wish (as long as they live in the UK permanently). There is no cap on the [...]

Annual tax on enveloped dwellings

2019-09-02T11:29:08+01:00July 2nd, 2019|Categories: Articles & Guides, Blog, Property, Taxation|Tags: , , , |

The annual tax on enveloped dwellings (ATED) is a tax that applies, in the main, to companies owning residential property which is valued at more than £500,000. The tax only applies on properties that are classed as ‘dwellings’. This is a property where all or part of it is used as a residence, for example a house or a flat. The ‘dwelling’ also includes the property's gardens or grounds. However, properties such as hotels, guest houses, boarding school accommodation and student halls of residence fall outside the definition of a ‘dwelling’, and thus outside the scope of the tax. [...]

Family companies – optimal salary for 2019/20

2019-09-02T11:28:46+01:00June 25th, 2019|Categories: Articles & Guides, Blog, Limited Company, Taxation|Tags: , , , |

For personal and family companies it can be beneficial to extract some profits in the form of a salary. Where the individual does not have the 35 qualifying years necessary to qualify for the full single-tier state pension, paying a salary which is equal to or above the lower earnings limit for National Insurance purposes will ensure that the year is a qualifying year. New tax rates and allowances came into effect from 6 April 2019, applying for the 2019/20 tax year. These have an impact on the optimal salary calculation for family and personal companies. As in previous [...]

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