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January 2020 Questions and Answers

2020-01-03T12:01:06+00:00January 10th, 2020|Categories: Questions & Answers|Tags: , , , , |

Q. I am the sole director and shareholder of a limited company, which has been trading for many years. Last year, I took an extended holiday and travelled around the world with my wife. We were away for twelve months in total. Whilst I was away the company continued to collect outstanding payments, but it did not receive any other income. Now that I am back, I have taken on another director/shareholder (50%) and company trading has resumed. Should I have informed HMRC that I was going away and how should the losses in the period of temporary non-trading [...]

Should I incorporate my business?

2020-05-15T19:37:27+01:00December 27th, 2019|Categories: Blog, Business, Limited Company, Self Employment|Tags: , , |

As things currently stand, the expected cut in the main rate of corporation tax to 17% from April 2020 is unlikely to happen, but current corporation tax rates remain pretty favourable. There are also other areas where company formation may help save tax. The costs and regulations involved with running a company are usually greater than trading as a sole trader or in partnership, and should not be overlooked. In addition, incorporation generally means an increase in administration, which some businesses may find burdensome. The starting point for dealing with companies and company directors is to remember that a limited company [...]

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 [...]

May 2019 Questions and Answers

2019-09-02T11:22:43+01:00May 22nd, 2019|Categories: Questions & Answers|Tags: , , , , |

Q. I have realised that I made a mistake on my most recent VAT return. What do I need to do to put things right? A. You can make adjustments to correct errors on past returns if the error: - was below the reporting threshold (broadly, less than £10,000, or up to 1% of your box 6 figure (up to a maximum of £50,000); - was not deliberate; and - relates to an accounting period that ended less than 4 years ago. When you submit your next return, add the net value to box 1 for tax due to HMRC, [...]

Checking directors’ expenses

2019-09-02T11:21:32+01:00March 4th, 2019|Categories: Blog, Taxation|Tags: , , , |

As 31 March approaches, many companies will be getting ready to tie up tax matters for their financial year-end. Now is a time to ensure that everything is in order regarding directors' expenses and review loan account record-keeping procedures. This is particularly so as HMRC report that they commonly find errors in relation to directors' loan accounts when making routine reviews of company tax returns. The statutory rules for computing taxable profits exclude companies from deducting expenditure unless it is incurred 'wholly and exclusively' for the purposes of the trade. As companies are separate legal entities that stand apart from [...]

What Expenses Can I Claim Through a Limited company

2019-09-01T22:07:16+01:00August 18th, 2018|Categories: Blog, Limited Company|Tags: , , |

As the Director of your own limited company, you can claim expenses on costs you have incurred on certain business-related items and activities. Are you aware of the limited company expenses you may be able to claim? You can claim a variety of expenses through a limited company, however the types of expenses you can claim tax relief on must be directly related to your contractor business and are classed as tax-deductible. If you incur an expense that is tax-deductible, your limited company can receive a Corporation Tax saving on this expense. Corporation Tax, which is 19% for the tax [...]

Dividend Allowance

2019-09-01T11:41:36+01:00September 26th, 2016|Categories: Limited Company|Tags: , , , |

Legislation included in Finance Bill 2016 implements the new 0% rate for dividend income, as well as changing the rates of tax for dividend income. Once enacted, the changes will apply from 6 April 2016. Broadly, the new nil rate applies to the first £5,000 of a person's dividend income and is available annually. From 6 April 2016, UK residents pay tax on any dividends received over the £5,000 allowance at the following rates: 7.5% on dividend income within the basic rate band; 32.5% on dividend income within the higher rate band; and 38.1% on dividend income within the [...]