Making Tax Digital for Income Tax (MTD) kicks in on 6 April 2026. If you run a limited company, you’ve probably been wondering whether it affects you. The short answer: your limited company is not affected. You’ll carry on filing your Corporation Tax return (CT600) once a year as normal. HMRC has confirmed there are no plans…
If you’re a UK director lending personal funds to your own limited company and charging interest, there are specific tax rules to follow. One of the most overlooked is the CT61 form, which reports the tax your company deducts on the interest it pays you. This guide explains everything you need to know — simply…
From 1 April 2023, the UK government reintroduced the concept of associated companies in determining corporation tax rates. This change affects how profit thresholds are applied, potentially increasing tax liabilities for businesses under common control. Understanding these rules is crucial for effective tax planning and compliance. What Are Associated Companies? Under the Corporation Tax Act…
If you’re a director and shareholder of your own UK limited company, the new tax year is a great opportunity to review how you take money from your business in the most tax-efficient way possible. This guide covers the ideal salary and dividend mix for 2025/26 — helping you save tax, protect your state pension,…
If you’re planning to lend money to your property investment company to purchase a rental property, you might be wondering if you can claim income tax relief on the interest paid on the loan. Here’s a simplified breakdown to help you understand. The Basics: You may be eligible for income tax relief on the interest…
As an IT contractor or tech business owner trading through a Limited Company, you might be considering employing your children, particularly those aged 16 to 18. This can be a valuable opportunity to introduce them to the world of work, help them develop skills, and support your business. However, it’s crucial to handle this arrangement…
The Spring Budget 2024 aims to halve inflation, reduce debt and grow the economy. Here is the summary of the key points in the Budget Statement affecting tax: A reduction in the rate of Class 1 primary (employees) National Insurance contributions (NICs) from 10% to 8% from 6 April 2024. A reduction in the rate of…
The default position is provided by S.836 ITA 2007, which says that income from property held jointly by spouses/civil partners who are living together is automatically split equally between them for income tax purposes. This 50:50 rule applies regardless of whether the joint owners are entitled to benefit equally from the property. Therefore, if a…
Company cars remain a popular employee benefit. Some company car drivers also receive free fuel for private use. Both employers and employees need to consider the tax implications of company cars before making decisions. Employers will pay class 1A national insurance contributions (NIC) on the benefit. Employees pay income tax on the benefit but do…
Personal and business capital gains are treated differently, depending on whether you are self-employed (as a sole trader or in a partnership) or trade as a limited company Personal capital gains (eg on privately owned shares) and business gains made by the self-employed are dealt with through capital gains tax (CGT), while capital gains made…
‘Anybody running a business needs to be concerned about the possibility of facing a tax inspection,’ says Nicholas Parkes, an ex-tax inspector turned tax information provider. ‘In the Revenue, we always believed you could pick up any file and find something.’ What triggers a tax inspection? According to Parkes, some 7% of tax inspections are…
Corporation tax reliefs and allowances Corporation tax reliefs and allowances help you to minimise your corporation tax liability. It’s worth understanding the different ways in which the annual investment allowance, other capital allowances and allowable expenses are treated Capital allowances and the annual investment allowance Business expenses can normally be deducted from your income when…
Personal Pension Contributions Individuals working as an employee or self-employed/director can contribute to any number of pension plans. Personal contributions made by an individual are unlimited. However there is a limit on the amount of gross contributions that an individual can pay each year and benefit fully from tax relief. Important – Tax relief is…
First, let’s have a quick look at various company tax that a contractor needs to be aware of. Salary – If the company pays the contractor a monthly salary of above £736 then the company will start to pay 13.8% of employer NI. As long as the monthly salary doesn’t exceed £736 a month then…
We explain the basics in deciding between paying yourself salary or awarding dividends from your limited company for the tax year. Your personal circumstances will dictate the exact levels; if your finances are complicated, you should seek professional advice. The following calculations are based on rates and thresholds in England, Wales and Northern Ireland for…
FAQs What is an allowable expense? Won’t my allowable expenses be similar to other businesses similar to mine? What factors are taken into account when apportioning an expense? Are heating, lighting and power costs allowable? Are telephone and broadband costs allowable? Can I claim insurance costs? Can I claim a portion of my council tax?…
The message from the Chancellor was that this is a Budget with three aims: protecting the jobs and livelihoods of the British people strengthening the public finances supporting an investment-led recovery You can read the individual measures and details of some of the numerous consultations below. Rates and allowances 2021/22 2020/2021 £…
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment. To claim, you will…
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19). Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave…
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. Who can apply You can apply if you’re a self-employed individual or a member of a partnership and you: have…
Furloughed workers If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies. If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are…
Support for businesses through the Coronavirus Job Retention Scheme Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. This applies to employees who have been…
First, let’s have a quick look at various company tax that a contractor needs to be aware of. Salary – If the company pays the contractor a monthly salary of above £719 then the company will start to pay 13.8% of employer NI. As long as the monthly salary doesn’t exceed £719 a month then…
There are a number of factors to consider when choosing a structure for your business. So it helps to get an accountant’s advice. Deciding on the structure of your business is one of the most important decisions you make when you first start out as it affects your legal responsibilities, how the general public and…
Relief for investment in venture capital trusts (VCTs) was introduced to encourage individuals to provide capital for unquoted trading companies. The VCT is a quoted company(publicly listed) that buys shares in EIS companies and so an individual is able to invest in a spread of unquoted companies, thus reducing their risk. Tax consequences Income tax Income tax…
The provision of a loan to a director/shareholder, irrespective of employment status, has the following implications: For the company There is a tax charge of 32.5% of the amount of the loan. This charge is paid at the same time as the corporation tax liability(i.e. nine months and one day after the end of the…
VAT is a tax levied within the European Union (EU) only. It is, therefore, necessary to distinguish imports and exports from outside the EU from transactions within the EU Imports from outside the EU Goods VAT is charged on goods imported from outside the EU as if it were a customs duty. It is normally…
Registered pension schemes An individual can set up an investment of funds to provide an income during their retirement in a tax efficient way by making payments into a registered pension scheme. A pension scheme is a savings plan for retirement that enjoys special tax privileges, but only if the scheme is registered with HMRC.…
Let’s have a situation – Sally is an IT contractor who runs her own Ltd company called Sally Solutions Ltd, for many years. She is now planning to lease a Car but she is not sure whether to lease it under company name or personal. Assuming the following details – A new car lease will…
Factoring allows you to raise finance based on the value of your outstanding invoices. Growing businesses, in particular, often find that factoring is a more flexible source of working capital than overdrafts or loans. Factoring also gives you the opportunity to outsource your sales ledger operations and to use more sophisticated credit-rating systems. 1. Getting…
The right start-up financing gives your new business a solid financial base. It makes sure you have the funding to cover your short-term needs and to make the most of opportunities to grow. Working out how to finance your start-up begins with knowing how much money you are going to need and where to find…
Firstly, the personal allowance has increased to £12,500 for 2019-20, which means the first £12,500 of income will be completely tax free. However please note that if your total income exceeds £100,000 in this tax year then for each £1 you earn above £100,000 limit you will lose 50pence of Personal Allowance. This means that…
1. General economic outlook · After nine years of consecutive growth, the Chancellor announced revised GDP growth forecasts of 1.2% for 2019, down from 1.6% (OBR) and 1.4% in 2020 – based on an orderly transition to a new relationship with the EU. The downgraded forecast was given based on notable weakness in business investment in…
Seed Enterprise Investment Schemes (SEIS) was introduced into UK tax provisions from 6 April 2012. The scheme A specialist tool aimed at a small group of investors and entrepreneurs that will assist them in developing a few businesses that might never gain funding. It is only available to individual investors in very small companies; it…
Interest is deducted first from non-savings income, then from interest income and the remaining amount will be set against any dividend income. Relief is not given for interest paid on an overdrawn account or on a credit card, or at a rate that is higher than a reasonable commercial rate of interest. Loans that qualify for tax…
The new tax changes for holding a rental property as an individual, or in a limited company, will need to be carefully considered by landlords. Allowable expenses – From 06 April 2016 (for individuals) and 01 April 2016 (for companies) landlords are able to claim allowable expense i.e the actual cost of replacing furniture (…
First let’s have a quick look at various company taxes that a contractor needs to be aware of. Salary – If the company pays the contractor a monthly salary of above £702 then the company will start to pay 13.8% of employer NI. As long as the monthly salary don’t exceed £702 a month then…
As a director/shareholder of your own limited company, you can withdraw funds from your company in three ways. Salary Dividend Expenses Salary · You can take a reasonable salary each month without paying Tax or Nics. · All you need to do is pay yourself the NET salary as per the payslip at the end of each…
If you are a contractor who just incorporated a Ltd company or already running one, then you can claim a whole range of business-related expenses from your company. All genuine business expenses help reduce your company’s corporation tax by 19%. So here are the top 10 expenses you can claim – Car Mileage – If you…
I have been asked this question on many occasions, so to shed some light on this topic I thought the following comparison between contracting & permanent might be useful. This comparison is purely based on a financial perspective. Contracting Vs Permanent (2018-2019) The first thing that comes to mind when you get a contracting job…
