As with individuals, businesses are required to pay tax. Sole traders and partnerships pay tax through personal tax returns whereas limited companies pay corporation tax.
We actively work with clients to minimise their overall tax bill. This includes advising on the timing and acquisition of capital equipment, pension contributions and R&D tax claims which can have a significant impact on the tax paid to HM Revenue and Customs.
In addition to tax planning, our qualified staff scrutinise business expenses to check their deductibility and to make sure that they are dealt with tax-efficiently.
We also have significant experience in dealing with more complex VAT matters and problems.
As an example, company cars can be a very tax-efficient way to compensate staff and directors - but only in very limited circumstances. We recently advised a client where a company car was costing a director in excess of £5,000 a year in personal tax.
What is it?
Annual Tax on Enveloped Dwellings (ATED) is payable by companies that own UK residential property valued above a certain amount. This tax is payable each year.
You’ll need to complete an ATED return if your property:
Let us help you get it right.
The CBI has published a statement of principles outlining how companies should conduct their tax affairs to improve transparency and understanding, including those set out below.
Does your accountant help you do this?
From the 2013/14 tax year small businesses can use the cash basis to calculate business profits.
Your business profits are calculated when money actually comes in and goes out of your business (rather than on the traditional accruals basis which uses the date that your sales are invoiced and that you receive bills from your suppliers). This means that you will only pay tax on amounts you have actually received, netting off payments you have actually paid.
While a much simpler basis in theory, there are certain situations where the cash basis is not beneficial. Briefly, the cash basis is unlikely to suit you if you:
Also if your business is growing, changing from the cash accounting to the accruals basis when you exceed the limits can have a significant impact on your results. Before opting for the cash basis please do talk to us about what is best for your business.
Is this right for you? Let us advise you or it could cost you dear.
Now the EIS Scheme can provide a massive boost for growth for a small business. Let us advise you.
It is quite common in small family companies for each of the shareholder-directors to have a Director’s Current Account or Loan Account with the company (with balances owed by the company to the individuals). These often arise if an earlier sole trader or partnership business has been incorporated and the value of the business and net assets transferred to the company are left as owing to the shareholder-directors. Over time as cash is available this balance may be repaid by the company without any tax consequences.
Tax problems arise, however, where a shareholder-director overdraws on the funds on their Current Account or Loan Account such that they owe money to the company. Firstly, if the amount owed exceeds £10,000 at any time, there will be a benefit in kind charge in respect of the interest-free loan which will have to be reported on Form P11D after the tax year end and income tax will be payable on this benefit. Secondly, whatever the size of the overdrawn balance, if the individual is a shareholder and the loan is not fully repaid within 9 months of the company year end, the company will have to pay a tax charge equal to 25% of the loan outstanding. This tax will be repaid by HMRC in the event of the loan being repaid or written off, but not until 9 months after the period in which the payment or write off occurs and consequently there can be a significant cash-flow impact.
Some companies have tried to avoid this second type of charge by ensuring loans are repaid either shortly before the year-end or the 9 month period and then the individuals draw down the funds again after a short period of time. HMRC are now clamping down on this practice and we are expecting more enquiries in this area.
Let us help you control your company/personal finances.
Many people make the basic assumption that a farm will qualify for Agricultural Property Relief for Inheritance Tax purposes even if it doesn’t qualify for Business Property Relief. As time passes however, the main core farming business can change.
You need to take some SERIOUS ADVICE if you answer yes to any of the following questions:-
All these things might significantly increase your family’s Inheritance Tax bill.
Let us help you get the planning right
There has been a recent tax case about resurfacing a farm drive. HMRC contended that it was not a repair but a capital improvement. The Treasury agreed with the taxpayer that, despite the fact that it was a different surface – concrete as opposed to tarmac, it was not a new drive and the cost was allowed for income tax purposes.
Let us help you through the jungle that is repair/replace.
National Insurance Contributions - Are you paying too much?
It is very easy to pay too much in National Insurance Contributions. The following information could help you to get this right.
In brief, unlike income tax where “the more you earn, the more you pay”, there is an annual maximum amount of National Insurance Contributions payable. Where an “earner” only has one employment, the operation of the PAYE system will ensure that no more than the maximum amount is paid. Where there is more than one employment or where there is employment and self employment, the payment of Class 1 contributions on two employments or the payment of both Class 1, Class 2 and Class 4 contributions may mean that excessive amounts are paid.
Excess payments can be repaid after the year end once the actual position becomes clear. Alternatively the “earner” may defer the payment of National Insurance Contributions in certain circumstances and will then have to pay any additional contributions due once the correct position is calculated after the year end.
Let us help you ensure you maximise your state pension but limit how much NIC you pay or it is really just another "tax"