Tuesday, July 25, 2023
Can a director provide services to his own company?
Sunday, May 14, 2023
What is Gift Aid and how does it work for Corporations?
Gift Aid for Corporations
Gift Aid for corporations is different from Gift Aid for individuals in terms of eligibility and benefits. As seen above, individuals who are UK taxpayers can use Gift Aid to increase the value of their donations to charity. For corporations, there is no such thing and the whole tax relief goes to the corporation that gives money to charity.
To be eligible for Gift Aid, corporations must be UK taxpayers and must make a donation to a charity that is registered with HM Revenue and Customs (HMRC). The donation must be made without any conditions attached, and the charity must not provide any significant benefit to the corporation in return for the donation.
There is no limit on the amount that can be given by a company to a charity under gift aid, as long as the company has enough taxable profits to cover the donation and the charity is recognised by HMRC. In particular a donation cannot create a loss for the business. However, as mentioned above, there are some limits on the value of benefits that the company can receive from the charity in return for the donation. The value of the benefits must not exceed 5% of the donation, up to a maximum of £2,500 per donation. Additionally, the total benefit that can be received by a close company or connected persons from the same charity in the same tax year is £250. If benefits exceed these values, the payments will not qualify for relief under gift aid.
Saturday, April 22, 2023
A Fine Balance between Salary and Dividends
How Tax Code Changes Impact Company Owners
Monday, February 26, 2018
Optimal salary for a company director - 2018 update
As in previous years, the main question is whether to pay a salary up to the Personal Allowance level or whether to pay a salary to the level at which National Insurance kicks in. We would generally recommend the second option to reduce administration. TL;DR: if the director has no other income and the Employment Allowance will be used up against other staff salaries then the best option would be for the director to be paid a salary of £8,424 (£702 per month). This should be topped up with £37,926 of dividends.
If the director is owed money by the company however they could also charge interest on their loan account so this may be an additional consideration for some. In the following it is also assumed the director wishes to stay below the higher rate tax band threshold for personal income tax. It is also assumed that they have no student loan balance, are not caught by IR35 and have a full personal allowance. It is assumed they are UK resident and have no other income, capital gains and there is no relief from tax to claim such as gift aid or pension payments.
Monday, August 7, 2017
Additional Reporting Requirements for PSC
You have 14 days to update your PSC register and another 14 days to send the information to Companies House. Companies House will need to be informed if anyone (or any entity):
- becomes a PSC
- ceases to be a PSC; or
- their details change, such as the extent of their control or their address.
Thursday, May 19, 2016
10 Reasons why it's still worth going Limited
There are still a number of benefits however to operate as a Limited Company. Here they are:
1. Better legal protection
As the name suggests, if you run a Limited Company, you are protected in case things go wrong. Assuming no fraud has taken place, you will not be personally liable for any financial losses made by your Limited Company. Those running a business as self employed do not enjoy such protection from financial claims if things go wrong with their business. While it's possible (and recommended) to subscribe to a professional liability insurance, there is always a risk of running foul of the fine print...2. More professional image or status
In some industries, having a Limited Company can provide a more professional image. If you are doing business with larger companies, you may find that they prefer to deal only with Limited Companies rather than Sole Traders or even partnerships. Indeed by being transparent, adhering to regulatory requirements and opening up company accounts to public scrutiny, you are demonstrating that the business is being correctly managed and this inspires confidence.3. Wider availability of some contracts
4. Name protection
Once you register your company with Companies House, your company name is protected by law. No-one else can use the same name as you, or anything deemed to be too similar. As a Sole Trader, you can use a trading name but it's not protected and there is nothing to prevent a competitor to start using the same trading name as you. While it's possible to protect a trading name with a trademark, it will be in practice a lot more expensive than just creating a company with that name.Friday, May 16, 2014
Use of home deduction when using a Ltd
The rent charged should be worked out as being a proportion of the expenses incurred time apportioned to the time that property is available. Expenses that can be claimed include council tax, mortgage interest, heating and lighting costs, water, insurance, broadband connection, maintenance and repair, (this is not an exhaustive list) HMRC business manual BIM47820 deals with allowable expenses and suggested methods of apportionment are dealt with in BIM47815 with some examples at BIM47825.
Sunday, March 16, 2014
Optimum salary for directors: changes this year
There are many salary calculators on the web that you can use but the easiest way in the past has been to take the maximum salary that does not attract taxes nor national insurance, neither for the employee nor for the employee (see our previous article). In 2013/2014 that amount was £7,696 pa. But in 2014/2015, due to the new £2,000 Employment Allowance, there is now a new option for directors' salaries:
- If the company is able to use all the £2,000 Employment Allowance in the year, then the best route for the Director’s salary will be to pay over the LEL but below the secondary level in 2014/15 i.e. £7,956 pa (£663 per month). The rest will have to topped up by dividends as per in the previous years.
Thursday, March 28, 2013
What is the optimum salary for a director?
From 6th April 2013 the rate at which you can pay a salary to an employee without suffering Income Tax and NIC will increase from £7,488 to £7,696 per annum. This is known as the Employers’ Earnings Threshold. If you have Limited Company and pay yourself a small salary then you should consider increasing the salary up to this threshold.
Monday, November 12, 2012
What is the settlements legislation?
However, unless the non-fee-earner is a spouse or civil partner qualifying for a spousal exemption, HMRC could treat all the company’s fee income as that earned by the contractor, and tax them accordingly. The settlements legislation will apply if a contractor gives shares in their contractor limited company to a partner, family member or friend who does not work in the business yet receives an income.
Thursday, December 15, 2011
The Seed Enterprise Investment Scheme
The main points to note are as follows:
- The type of company this applies to is one that has less than 25 employees with assets of up to £200,000 who are preparing to carry on new business
Tuesday, November 15, 2011
Dividends: dos and don'ts
Dividends must be paid out of distributable profits and directors must prepare relevant accounts to confirm the position. If it later transpires there are not enough distributable profits and relevant accounts were not prepared then the dividend is illegal and repayable, and should be disclosed as such.
Friday, September 2, 2011
Pros and Cons of using a Trading Name
A trading name is just a name used instead of the legal name. There is no need to file anything at Companies House nor at HMRC when creating a trading name but there are a still a few things to keep in mind:
- You will need to inform the bank of those trading names so that you can cash cheques for example. While you can create separate accounts, you don't have even though it's good practice.
- Even though no registration is required, the same rules that apply to company formation apply to trading names. For example, the trading name cannot be similar to another company or business name in a way that might be confusing. Also, the use of sensitive words is prohibited as part of a trading name in much the same way as it is for limited company names. You cannot use words like “association”, “group”, “federation” for example.
Monday, May 30, 2011
Owning property via a limited company
Benefits of owning property via a company
1. Flexibility regarding share transfers2. Reduced stamp duty (0.5% vs. up to 5%)
3. Lower tax rates on net rents
4. Indexation allowance on capital gains
5. Profits can be reinvested
6. Income may be extracted by dividends
7. A company has limited liability
Sunday, March 13, 2011
How well do you know your clients?
That's not the case anymore. At TaxAssist Accountants, we have teamed with Red Flag Alert to get extensive data from which you can now benefit. Be it sales, credit control, collection, risk or compliance we have information on every limited company, every PLC, LLP, 3.5m sole traders and 26.7m director records. The data source comes from Companies House, London Gazette, Central Register and Equifax, which provides data intelligence and protection against credit risk. Using those tools you can now:
Monitor your risk
We can provide 'real time' critical automated e-mail alerts when a company being monitored starts to deteriorate. Using various detrimental triggers, we will notify you of changes to your customer/supplier status as they happen, in order to minimise your risk exposure.
Friday, March 11, 2011
How much tax do you pay on dividends?
There used to be 2 dividend tax rates but this changed last year. There are now 3 different rates depending on your tax band. And with the introduction of the new band at 50% called top rate income tax threshold a new band was introduced as well for dividends. Here they are:
- 10% on dividends for income received below the higher rate income tax threshold (£37,400)
- 32.5% on dividends for income received above the higher rate income tax threshold
- A new 'additional' dividend tax rate of 42.5% applies to individuals earning £150,000 or more from April 6th 2010 onwards.
Sunday, January 23, 2011
Extracting profits from your company
If you own a limited company however you have a lot more flexibility and if you are not needing the cash now, you can reduce your tax considerably. In most cases it's just a matter of following those simple steps:
- If, as a director, your only revenue comes from your company, you can extract up to the personal allowance without paying personal taxes and that cost is tax deductible for your company. That amount is currently £6,475 but it should increase up to £10,000 in the next few years. Keep in mind however that if your annual salary is £5,715 or more you will incur some national insurance contribution costs. This is why most directors extract just that amount every year: no tax, no NI and allowable expense for the company.
Sunday, December 26, 2010
Am I insolvent?
Thursday, December 16, 2010
What tax relief for use of home?
Depending on your legal setup, the steps to take to recover some of your personal expenses on use of home are different. For a sole trader, the process is quite straightforward but for a limited company there is a bit more work and paperwork required:
You are a sole trader
You can just deduct a portion of the home cost. The calculation is done as a two step process. First you calculate the total running cost of your home:
- Utilities (Water, Gas, Electricity)
- Insurance
- Rent or Mortgage Interest
- Council Tax
- Maintenance
- Internet and Phone