Plan your Second Shareholder dividend split
If your company has a Second Shareholder you are, in certain circumstances, able to split the Dividends and each be taxed separately on your share.
This enables both shareholders to use the basic rate band of income tax efficiently.
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Choose correct VAT scheme that suits your business
VAT can be calculated and paid using various scheme like "Flat rate", "Cash Accounting", "Annual Accounting"or "Retail Scheme. Even retail scheme is containing subdivision.
Choosing correct VAT scheme will lower your VAT liability and simplify document management for VAT
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Consider your pension contributions
If you believe that your personal income for the year, which will include Directors' Fees, gross dividends and other income, will take you over the higher rate threshold, you will have a higher rate Personal Tax bill to pay once your Self-Assessment return is completed. With effective tax planning you
can reduce or eliminate this liability through your pension contributions.
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Consider Insurance converage to mitigate risk factors
Depending upon the circumstances please consider having required insurance from the shelf like "Professional Indemnity Insurance", "Public liability Insurance", "Employer
liability Insurance", "Business assets/stock Insurance" or "Personal Insurance
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Company can claim pension contribution as an expense
Contributions made by your company into a pension scheme for you are deductible for Corporation Tax purposes and there are no personal
tax implications up to certain level.
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Claim the correct expenses
You can claim Enterpreneur relief to reduce your capital gain tax bill from 28% to 10% if you are selling your qualifying business assets.
You should be meeting qualifying conditions and there is lifetime limit to enjoy this.
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Entrepreneurs Relief
If you believe that your personal income for the year, which will include Directors' Fees, gross dividends and other income, will take you over the higher rate threshold, you will have a higher rate Personal Tax bill to pay once your Self-Assessment return is completed. With effective tax planning you
can reduce or eliminate this liability through your pension contributions.
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Avoid Directors' Loans
Where amounts have been borrowed from the business but not identified as dividends or salary, they will be classified as directors' loans and shown in the accounts as such. If you leave a directors' loan in the company at the year-end there may be additional tax to pay and your company will
have to provide supplementary returns to HMRC.
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Mortgage interest and wear & tear allowance
You need to report your property income to revenue although you can claim "Wear & tear allowance"if the property is furnished. Please also do not forgot to report mortgage interest as
it will reduce your taxable income.
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Capital Expenditure
Capital expenditure refers to anything tangible that you purchase for your company for future use such as Plant, computer equipment, tools and equipment. Corporation Tax deductions for the cost of the item is given over a number of years mostly. However with ‘Annual Investment Allowance’, whole costs can be deducted from the company profit
before Corporation Tax is calculated.
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The Rent a Room Scheme
The Rent a Room scheme is an optional exemption scheme that lets you receive up to £4,250 of tax-free income from renting furnished accommodation in your only or main home.
You can choose to take advantage of the scheme if you let furnished accommodation in your only or family home to a lodger.
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Ensure tax payments are up-to-date
Ensuring your tax payments are up to date is more about your public presentation of your business than tax savings. HMRC will charge interest on late payments of tax however, and can even instruct debt collectors over outstanding
amounts.
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Private Residence Relief
Private residence relief applies if you have lived in your house and it has been your only residence for the period you have owned it. In this instance you will not have to pay Capital Gains Tax on any money you make when you sell your house.
To qualify a property for this relief certain conditions must be satisfied.
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Class 2 NIC
You should start paying Class 2 NICs as soon as your sole trader business starts. Failure to do so could result in a £100 penalty and
a higher contribution rate. Class 2 NIC contributions are always equal nominal installments.
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VAT registration
The first VAT return can be used to reclaim VAT paid on stock held at the date of registration, capital items (such as computers or furniture)
purchased before registration and consumables in the six months prior to registration.
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Form a limited company business
These days a company only needs one shareholder. If a limited company fails there is less risk to personal and family assets than there is with
sole traders or partnerships. Also tax savings in few cases.
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Child care vouchers
There are special rules which govern the use of child care vouchers which directors of companies and or their company secretaries can make use of; these could save approx £1,000 in annual person tax bill.
Company will be claiming expense of full amount.
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Payroll processing and filling
With new RTI in force please make sure that your payroll are process and filled to
HMRC before your employees are getting payment. This is mandatory now and will invite a penalty if not done as desired.
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Payroll, corporation and self assessment liabilites
Due date to pay you payroll liability is 19th of each month. Due date for Corporation tax is 9 month and 1 day after your yearend date.
Due date for Self assessment balancing payment is 31st January each year.
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Working tax credits
Working Tax Credit is money for working people who are on a low income. It does not matter whether you are working for someone else or are self-employed.
The amount of Working Tax Credit is depending on your circumstances and income.
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Child tax credits
You could get Child Tax Credit for each child you’re responsible for if they are under 16 or under 20 and in approved education or
training. You don’t need to be working to claim Child Tax Credit.
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Child benefit
You’ll usually get Child Benefit
for children you’re responsible for, even if you’re not their parent. Only 1 person can get
Child Benefit for each child. The Government gives you nearly £1000 a year (in year 2015)
for your first child, and over £600 a year (in year 2015) for each subsequent one.
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Housing benefit
You could get Housing Benefit to help you pay your rent if you’re on a low income. Housing Benefit can pay for part or all of your rent. How much you get depends on your income and circumstances.
You can apply for Housing Benefit whether you’re unemployed or working.
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Jobseeker allowance
Jobseeker's Allowance (JSA) is a benefit for people who are not in full time employment, are capable of working and are looking for a job.
How much you get depends on your circumstances.
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Maternity allowance
Maternity Allowance is usually paid to you if you don’t qualify for Statutory Maternity Pay. The amount you can get depends on your eligibility. You can claim Maternity Allowance as soon as you’ve been pregnant for 26 weeks.
Payments can start 11 weeks before your baby is due.
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Employment and support allowance
Employment and Support Allowance (ESA) is money for people who have limited capability for work because of their sickness or
disability but do not get Statutory Sick Pay.
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Disclaimer : The information on this web site is general and for guidance only. Please speak to office for your specific queries and before taking any action based on this information. Information and figures are subject to change, we cannot be held responsible for any consequences as a result
of acting on the information contained in these pages.
