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  • 2022 – Top 8 Tax Queries

    1. Extraction of profits from your limited company 💪

    We had fun with changing national insurance thresholds and rates but got there in the end! Optimum director salaries might be £12,570 or £11,908 with dividends. Other ways to take money from your company include home office rent, pension contributions and interest on loans made to your company. Dividends were difficult for some where sufficient after-tax profits weren’t achieved and these should be repaid to avoid other tax issues. 

    2. Using tax losses to generate a cash refund 👍

    Limited companies, sole trader and partnerships enjoy different rules with some surprisingly helpful results. By definition, when you have tax losses you’re likely to need a cash injection and the tax system can help you. We’ve made many claims, but also found HMRC needed to be chased more than usual to part with your cash! We’re known for never giving up 🙂

    3. Research and development cash refunds 💰

    Along similar lines, if your company also carried out R&D, we made many claims to get you a cash payment from HMRC to encourage you to do more for the good of the economy. We’re not sure the new restrictions will help you much more from April, however!

    4. Capital allowances – 130% super-deduction and electric vehicles 🚘

    We’ve made many 130% capital allowances claims for limited companies for new equipment and 100% tax relief for new electric cars. If cash has been tight, hire purchase was used to further help with cashflow.

    5. Capital gains tax – residential property 🏠

    Taxpayers selling a rented or second home needed advice and real time tax returns prepared. With many also benefitting from principal private residence relief, or for overseas residents, pre and post April 2015 gains, the calculations got a bit interesting! We’ve used the rules to the optimum to help keep these bills down.

    6. VAT – Overseas business to business services 👥

    It’s very easy to get this area wrong. When you provide services to another business and invoice that overseas company, it’s ‘outside the scope’ for VAT. This is a sweet spot where no VAT is charged by your business and your business is still able to reclaim VAT on all costs as normal. This means you may want to voluntarily register for VAT to recover this VAT if it’s worth the administration of preparing VAT returns.

    7. Rewarding staff 🎉

    We’ve advised on ensuring all taxes are considered: corporation tax, VAT, income tax and national insurance. Annual parties up to £150 for each person and gifts up to £50 cost each are the most tax efficient as long as they’re not in recognition of doing a particular piece of work or meeting a target. Pub or restaurant visits are more problematic. EMI share options are more tax efficient but don’t always suit the company culture.

    8. Off-payroll working and IR35 🙄 

    Again, we had a brief time thinking off-payroll working was behind us, but it ended up staying. We’re seeing more customers of our clients happy to confirm they understand a piece of work is outside these rules and therefore more consultants coming back setting up limited companies. It’s essential to get your Status Determiniation Statement or SDS, otherwise you’re at risk of a very high tax bill.

    Here’s to 2023 and making the most of the system we’re presented with! Happy New Year! 🥂 

  • Tax Free Christmas Parties

    What are the tax free limits?

    You can spend a maximum of £150 including VAT per staff member plus another £150 for a guest in total over a tax year. The main condition is that ALL members of staff at that location must be invited. 

    In addition to the £150 annual party limit, you may also send a gift to staff with a value up to £50 including VAT, such as a Turkey, wine or chocolates.

    What is the tax treatment and accounting required?

    The cost is fully tax deductible with no benefit in kind income tax or national insurance to worry about. Your staff will feel appreciated and you save 19% corporation tax. Ensure that the costs are called Staff entertainment or Christmas party in your Profit & Loss Account.

    The £150 includes all costs such as travel and hotels. Divide the total cost of each function by the total number of people, including guests, to arrive at the cost per head.

    The VAT is fully recoverable when paying for staff entertaining. If you make a small charge to your staff’s guests and pay over a small amount of VAT, the VAT on the total cost for the guests is also fully recoverable.

    Similarly, small gifts up to £50 are fully tax deductible and VAT may be recoverable if only one small gift is made during a year. Perhaps these costs could be called Staff welfare to help keep them separate from your £150 calculations!

    NB Ensure you don’t go over the £150 or £50, otherwise the entire amount is taxable.

    I’m a director and don’t have any staff. Can I benefit from this favourable tax treatment?

    As you are the only director/employee you might think you can’t have a Christmas party – wrong! 

    You can avail yourself of the £150 per head exemption as a member of staff (the only one!) and also a guest. You can also have a gift with a value of up to £50, but you’re likely to be restricted to doing this up to a total annual cost of £300 including VAT so check what other company gifts you’ve taken so far. In this case, we would advise that VAT can’t be reclaimed.

    Now you can have a fabulous tax subsidised Christmas party !

  • Frozen! Temperatures, Allowances & Growth

    Frozen

    Income tax, national insurance, inheritance tax thresholds are all frozen for over 5 years until April 2028 and the VAT threshold frozen at £85k until April 2026. The real cost of this is usually large enough, but in a climate of increasing inflation, it’s even greater.

    Small company owners could aim to take fewer dividends, but they too have to pay higher energy bills and mortgage costs. Sole traders and partners who can’t control the income tax band they’re in may be surprised at the additional income tax and national insurance in future tax bills, possibly encouraging them to become limited companies where they can decide what to take as income. Each case will be slightly different.

    Parents should also remember that the real value at which they have to refund child benefit is reduced, again, another reason to be a limited company to help ensure they don’t have to increase their effective ‘tax’ rate further.

    Reduced

    With capital gains tax tax free allowances reduced from £12,300 to £6,000 from next April 2023 and only £3,000 from April 2024, many more taxpayers, including business owners and landlords, will start to pay capital gains tax on modest gains, costing up to £2,600 of additional capital gains tax.

    Similarly, reducing the dividend tax free allowance from £2,000 to £1,000 next April 2023 to only £500 from April 2024, catches many small investors as well as small company owners who even paying only basic rate tax will pay an addtional annual £131 on top of the additonal £446 previously announced due to the 1.25% dividend tax increase, a total of £577 each year.

    Calling it a reduction in the additional rate threshold sounds harmless, but it introduces the 45% income tax rate at income of £125,140 instead of £150,000. For small company shareholders, this means dividend tax will be 39.35% on income over £125,140. This is after paying at least a further 6% of corporation tax, a total of 25%, in their company. That adds up to a lot of tax for a risk-taker living off uncertain, volatile profits. 

    NB HMRC is unlikely to be sufficiently resourced to deal with the increased number of tax returns, affecting service levels going forward.

    Growth?

    How will any of the above help growth?

    It can’t be a way to encourage smaller businesses to grow beyond inflationary price increases. The additional effort offers little personal reward unless you aim to grow and sell quickly, recognising a capital gain paying 10% tax when you sell up! In the meantime, your dividend tax will be 8.75%, 33.75%, 50.62% or 39.35% depending on income levels. 

    Or you could take the view that you’ll save corporation tax through significant investment waiting for a return in the longer term, taking out smaller, affordable salary and dividends or encourage third party investors to help fund you and your company. 

    For those claiming research and development (R&D) allowances or tax credits, the SME scheme is watered down because of the high levels of spurious claims. The additional reduction to tax was 130% and will become 86% from next April 2023, with the cashback rate being reduced from 14.5% to 10% at the same time.

    The combined effect on £100 of R&D for a loss-making company is a reduction to the cashback from £33 to £18. Hardly a sign of encouragement. It’ll be more valuable to carry forward this tax loss to save higher corporation tax of 25% or 26.5%, if you expect to achieve taxable profits in the near term and in the meantime you can manage your short term cashflow accordingly.

    Summary

    This is a Chancellor and ex-Chancellor who seem to have frozen out small businesses and the contribution they bring to the economy. If there’s a good business idea, the general theme seems to be find an investor or other funding to grow enough so that increased tax bills are affordable. We won’t know if this has worked for some time. 

  • Higher Interest Rates – How Might You Respond?

    If you have excess cash, you’re creating a new profit centre!

    1. Move excess cash into the increasing number of company savings accounts

    There’s no need to just look at your usual bank of course. You’re more likely to get a decent credit interest rate elsewhere even when maintaining instant access in case you have a business need. Corporate savings accounts that we’ve come across include Aldermore, Nationwide and Virgin.

    2. Pay HMRC early

    Along similar lines, get your spare working capital working for you and receive interest from HMRC. After today, HMRC’s credit rate should increase to 2% (being 1% below base).

    3. Negotiate reductions with suppliers for paying early

    If your suppliers would appreciate earlier cash, get something in return for early or prompt payment. This is often going to be a price reduction, but might also be a spec change or preference eg agreeing to deliver to more than one address, or adding a feature you’ve needed for a while but the gross margin didn’t work.

    You might instead choose to invest surplus cash in your business for future growth and resilience which could provide greater long term value for your business.

    If, your cash is tight, you’ll need to work at finding the most appropriate, good value sources of finance and working capital:

    4. Review bank borrowings

    Are you paying high interest rates on overdrafts or unsecured finance? Might you get a better rate using security such as your debtors or other assets? If you need more finance, do it in a planned way getting the cash you need at the best price you can. You may have excess cash at certain times during the year, so ensure this works for you to help fund borrowing costs at other times of the year.

    5. Negotiate with customers for early payment and suppliers for late payment

    If you have a decent gross margin, you may be prepared to give some of your margin away for prompt or early payment. At the other end, your suppliers may be happy with delayed payment for simple interest, a higher price or agreeing to consider them for your next contract.

    6. Lease new plant and equipment, sell owned assets

    If you’d planned expanding with new equipment or need replacement equipment, consider leasing or hire purchase. The total costs will be higher and need to be factored into the increased profits your investment is expected to generate. Build in the different tax treatments into your cashflow calculations. With hire purchase you still get to claim the 130% super deduction, where applicable.

    Consider selling any owned assets, perhaps surplus freehold property space, if it helps keep your business on track. 

    7. Borrow from yourself

    If you have personal cash to lend to the company, your company can refund you in the future tax free and in the meantime pay you interest. This saves the company corporation tax and some of it might be tax free for you.

    If you don’t have cash but can borrow at a better interest rate than your company, you could on-lend to your company. The interest you pay on this personal loan is tax deductible against the interest you receive from your company.

    8.  Attract new investors

    At the more structural end, with an expansion plan you could attract third party investors getting a cash injection in return for shares. The SEIS and EIS tax efficient schemes encourage investors to take more risks in smaller companies.

    If you didn’t have it before, you now have a new ‘treasury’ function within your business which needs optimising to help your business survive. 

  • REAL Mini-Budget: Markets Are King

    Despite many reversals, we can still keep a few things in from last month’s blog on what this means for small businesses: KEPT OR SCRAPPED?

    Consider trading from an Investment Zone – KEPT

    Savings include no stamp duty on commercial property purchases, no business rates and no employer’s NI for new employees on salaries up to £50,270. 

    Investing in plant & equipment is permanently tax efficient – KEPT

    Up to £1m annual spend will receive 100% tax relief permanently. Over the last several years this has been up and down. A simple permanent approach helps businesses plan over the long term. It seems the super-deduction of 130% remains until 31 March 2023, so if investment plans can be brought forward more tax will be saved for purchases before 31 March 2023.

    Consider raising money from external investors – KEPT

    With the certainty of SEIS and EIS continuing and SEIS thresholds increased, more investors may be attracted to invest in new growing businesses. Businesses may find this source easier to access going forward. Employees can also be rewarded through share value growth by increased thresholds for the approved CSOP share option plan. 

    Taking on employees should be more affordable – KEPT

    The reversal of national insurance back down to 13.8% without taking away the increased £5k employer annual allowance helps make employment more affordable. 

    Using temporary limited company freelancers and consultants should be easier – SCRAPPED

    If your business doesn’t require a permanent employee, you may need a freelancer or consultant. The abolition of off-payroll working frees up businesses from spending time on considering whether each supplier company could be deemed to be an employee. The flip side is that the freelancer and consultant need to take their own view as to whether they’re self employed or not, and have the debate with HMRC away from the businesses they work with.

    Business owners rewards are increased – PARTLY SCRAPPED

    Successful company owners will benefit from the highest dividend rate of 32.5% from 6 April 2023. The simple advice must be to keep dividends low before 5 April 2023 because this tax year is subject to the highest dividend tax rate of 39.35%. Within the basic rate income tax band to £50,270, this year’s dividend rate is 8.75% which will reduce back down to 7.5% from 6 April 2023. SCRAPPED

    Sole traders and partners will benefit from the income tax rate reduction to 19% on total income up to £50,270 from 6 April 2023 SCRAPPED and the Class 4 national insurance rate reduction back down to 9% from November, creating a blended reduced Class 4 rate across this tax year. KEPT

    The effective tax rate is still very high on income between £100k and £125k where the personal allowance gets withdrawn. It’s remains important to keep out of this zone if possible usually through taking fewer dividends or making pension contributions. 

    Construction businesses and related trades expansion – KEPT

    The reduction in stamp duty on residential properties seems like an incentive to build more homes across the country. This not only benefits construction companies but any business supplying them.

    The corporation tax and dividend tax increases are particularly problematic where company taxable profits are between £50k and £250k increasing the total tax at these levels by an absolute 8.75%. Investing and growing beyond these levels could still be rewarded. 

  • Mini-Budget: Cash Is King

    All the main taxes, apart from VAT, have been included. What will this mean for small businesses?

    Consider trading from an Investment Zone

    Savings include no stamp duty on commercial property purchases, no business rates and no employer’s NI for new employees on salaries up to £50,270. 

    Investing in plant & equipment is permanently tax efficient

    Up to £1m annual spend will receive 100% tax relief permanently. Over the last several years this has been up and down. A simple permanent approach helps businesses plan over the long term. It seems the super-deduction of 130% remains until 31 March 2023, so if investment plans can be brought forward more tax will be saved for purchases before 31 March 2023.

    Consider raising money from external investors

    With the certainty of SEIS and EIS continuing and thresholds being increased, more investors may be attracted to invest in new growing businesses. Businesses may find this source easier to access going forward. Employees can also be rewarded through share value growth by increased thresholds for the approved CSOP share option plan. 

    Taking on employees should be more affordable

    The reversal of national insurance back down to 13.8% without taking away the increased £5k employer annual allowance helps make employment more affordable. 

    Using temporary limited company freelancers and consultants should be easier

    If your business doesn’t require a permanent employee, you may need a freelancer or consultant. The abolition of off-payroll working frees up businesses from spending time on considering whether each supplier company could be deemed to be an employee. The flip side is that the freelancer and consultant need to take their own view as to whether they’re self employed or not, and have the debate with HMRC away from the businesses they work with.

    Business owners rewards are increased

    Successful company owners will benefit from the highest dividend rate of 32.5% from 6 April 2023. The simple advice must be keep dividends low before 5 April 2023 because this tax year is subject to the highest dividend tax rate of 39.35%. Within the basic rate income tax band to £50,270, this year’s dividend rate is 8.75% which will reduce back down to 7.5% from 6 April 2023.

    Sole traders and partners will benefit from the income tax rate reduction to 19% on total income up to £50,270 from 6 April 2023 and the Class 4 national insurance rate reduction back down to 9% from November, creating a blended reduced Class 4 rate across this tax year.

    The effective tax rate is still very high on income between £100k and £125k where the personal allowance gets withdrawn. It’s remains important to keep out of this zone if possible usually through taking fewer dividends or making pension contributions. 

    Construction businesses and related trades expansion 

    The reduction in stamp duty on residential properties seems like an incentive to build more homes across the country. This not only benefits construction companies but any business supplying them.

    The plan is these measures leave more cash in business’ and their owners’ hands to help the business grow. Let’s hope the economy ends up being King too. 

  • Cost Of Living – Helping Employees

    Salary Sacrifice For Pension Contributions 👏

    It might surprise you to learn that instead of increasing salaries, one technique is to decrease them before they’re earnt, using the reduction to replace existing employee pension contributions with employer pension contributions.

    With pension auto enrolment many employees already make employee contributions, but they and you still pay national insurance on this salary. Instead, save this national insurance of 13.25% for most employees and 15.05% for employers.

    There can be disadvantages if certain mortgage lenders don’t restore the salary for lending purposes, the lower salary might affect government benefits and it needs to be within the national minumum wage. However, it  might be worth a look particularly with an employer national insurance saving for your business too. 

    Cycle To Work Scheme 🚲

    Provide bikes to employees who are happy to cycle to work or were perhaps thinking of doing so anyway to save fares. They won’t need to buy their own bike from after-tax income. The bikes need to be used more than 50% of the time for commuting or business journeys. They are initally lent to employees who may then buy them from you at a second hand value a few years later.

    Trivial Benefits 🎁

    Occasionally treat your employees to a high street voucher for up to £50. This rule can be used for other things such as birthday flowers, but a voucher allows them to choose what they want. Be sure to keep these occasional otherwise they become taxable.

    Refund Working From Home Costs 🏡

    With increased energy bills, employees additional costs of working from home may need to be refunded beyond the £6 per week. Keep records of these additional costs to ensure they don’t become taxable.

    Provide A Company Mobile Phone Or Two! 📱

    Surprisingly it doesn’t matter how much one company mobile phone is used for private calls, there isn’t a taxable benefit on the employee. You could therefore replace their personal phone with a company mobile contract.

    If your employee needs a mobile phone overwhelmingly for business use, you can even provide two mobile phones, with one entirely for business and one for private use.

    Do not reimburse the employee’s phone contract costs as that doesn’t work in the same way.

    Loans Up To £10,000 📆

    Although eventually repayable, loans of up to £10,000 can be made to staff interest free for as long as needed without a tax cost. A small amount may help some employees to get through a short term problem.

    Profit Related Bonuses 📈

    If your business does well, a bonus becomes affordable. Structure it carefully to ensure it achieves your aims, encouraging the behaviour and results you’re after, as well as incentivising staff.

    A Day Off? ☀

    If your staff finish a project on time and budget, meet cost saving targets, or similar, an additional day off doesn’t cost you any cash and creates a lot of goodwill.

    If you’d like to know more please contact your On The Spot Accountant. 

  • 2022 Spring Statement – Spring Bunny or Alice’s White Rabbit?

    National insurance (NI) threshold increases by £3,000

    To help the lower-paid, but also all of us who are directors/employees/self employed, a much welcome simplification measure of aligning the NI threshold of £9,568 with the income tax free threshold of £12,570 will be introduced from July 2022.

    Why July you ask? This shows that the Chancellor has had to make unplanned changes and is probably the time HMRC needs to updates its IT system. He might even have planned to do this in a year or so and has simply brought it forward.

    The stated saving for 2022/23 of £330 for employees/directors is from applying this increase from July. If it had been for a full year at the current 12% rate of NI it would save £360. For sole traders and partners, the calculated part-year saving is £250 because Class 4 NI is only paid at 9%, instead of the employee 12% rate.

    Interestingly, the threshold at which Class 2 NI is paid is jumping from £6,725 to £12,570. Ensure you are registered with the DWP even if you won’t pay Class 2, otherwise you’ll lose contributory years towards your state pension.

    Above the new annual £12,570 threshold, the NI rates will still be increased to 13.25% for employees/directors and to 10.25% for the self employed. Employees with more than one job will benefit even more. Ordinarily one NI threshold is given to each job, not each person.

    National insurance (NI) employer’s annual allowance increase from £4,000 to £5,000

    And employers will still pay 15.05% on earnings above £9,100, although the £4,000 annual allowance will be £5,000. This £5,000 is equivalent to 15.05% on a £42k salary for one employee, or more employees on lower salaries. It does seem to help small businesses afford to employ one or two staff. 

    Director’s annual salary

    This employee NI saving seems to mean that even sole directors pay should now be £12,570 (£1,047 pcm) for most directors, rather than the planned £9,100 (£758 pcm). We will of course advise you in due course. 

    Income tax rate decrease by 1% from April 2024

    Why, you may ask, is NI increasing by 1.25% now, followed by a 1% income tax cut in two years time? It probably has a bit to do with devolved governments who can only adjust income tax, but also being seen to deal with long term care costs through the NI system rather than the income tax system which affects more people.

    What was missing?

    Business miles rate increase – An increase in the longstanding business mileage rate claim from 45p to at least 50p would have been welcome. Did the government want to encourage company electric vehicles instead where there has been a recent increase from 4p to 5p for business miles claims.

    Working from home continued relaxation – From April 2022 it appears we’re back to claiming for each week, not the whole year, and only in your tax return if your employment contract requires you to work from home.

    Threshold where child benefit starts to be taken away – This is £50,000 and is now noticeably out of line with both the income tax and NI thresholds of £50,270. This is becoming a nice additional background money earner for the government.

    Hospitality VAT decrease – This looks set to increase from 1 April 2022. Check your gross profit margins and ensure you still have a sustainable businesss. You may need to increase your prices.

    Will you have a Spring in your step and get through these cost of living increases? If not, do make sure you take advantage of everything that is on offer within the tax, benefit and grant systems.

       

  • 2022 Tax Year End Planning

    Sole shareholder-director – basic rate taxpayers

    If you’re a sole shareholder-director without any other income, you may be taking an annual salary of £8,832 and dividends of £41,168. This keeps you within the basic rate tax band and helps you keep your child benefit. If so, your personal tax bill for this tax year ended 5 April 2022 is £2,657. 

    For the next tax year ended 5 April 2023, your tax bill will increase by £444 because £35,500 of your income will be taxed at 8.75%, an increase of 1.25% on the current 7.5%. 

    Two shareholder-directors – basic rate taxpayers

    Often, two shareholder-directors each take an annual salary of £12,564 to benefit from saving more corporation tax taking advantage of the £4,000 employment annual allowance. Assuming your total income stays under £50,000, your personal tax bill will also increase by £444 each. 

    Both these examples change slightly where the full £50,270 basic rate band is utilised and account is taken of the increase in national insurance thresholds.

    Higher rate taxpayers

    Where your total income is over £50,270 your dividend tax increases from 32.5% to 33.75%, that is, for every £10,000 of dividend the increase is £125. Where dividends are taken up to £100k to retain your £12,570 tax free personal allowance, your higher rate income tax of £16,162 will increase by £622 to £16,784.

    When added to the increase in the basic rate tax band of £444, the total tax increase is over £1k.

    What could I do to save tax of between £400 to £1k?

    Pay more dividends before 5 April 2022 – You might decide to take a few more dividends before 5 April 2022, taking fewer from 6 April 2022, than you normally would.

    Consider adding your spouse as a shareholder – Depending on your relative incomes, you may save dividend tax from spreading out dividends between you.

    Are there other ways to be more tax efficient?

    To help offset this forthcoming tax increase, you might decide to replace existing dividends with:

    1. A new electric car
    2. Employer pension contributions
    3. Life cover premiums
    4. A commercial home office rent
    5. An annual health care check
    6. Smaller items such as an annual party and trivial benefits

    Where you have staff, you’ll pay more employer’s national insurance, an increase from 13.8% to 15.05%. Employing apprentices or veterans saves employer’s national insurance, providing more of an incentive to  employ these favoured groups.

    What about sole traders and partnerships?

    Where you have profits over £9,880, you’ll pay 10.25% Class 4 national insurance from April 2022 rather than 9%. As the threshold has increased this saves a small amount, £28, on the previous year, but aside from this for £10,000 of profit over £9,880, your national insurance bill will increase by £125.

    If you’re planning to invest in plant and equipment or a vehicle you might want to do this from 6 April 2022, to save 10.25% rather than 9% of Class 4 national insurance. 

    Please discuss the details with us to ensure your plans can be carried out in good time. Thank you.

     

  • Top 10 Client Queries During 2021

        1. What claim can I make for home office costs?

          Depending on whether you’re an employee, self employed or an owner-director, your claim can usually be at least £6 per week up to a market rent charged to your company which is included in your income tax return. 

        2. Should I incorporate my sole trader business? How do I incorporate my sole trader business?

          With the increase in dividend tax in 2022 and corporation tax increases in 2023 for many companies, this needs to be revisited. At about £100k to £150k profits you may be better to remain a sole trader, but only if you need to take all the profit out from your company. If not, the tax advantage of spreading your taxable income over several years, is very valuable, particularly if you want to keep your child benefit or tax free personal allowance.

          Often a good way is for you to set up a new company which buys goodwill and other assets from you. At low levels, the goodwill may be taxfree on you. Your company will owe you for these assets which it can repay you tax free when it has the funds. 

        3. How does one of us exit our company?

          If your company has accumulated profits and cash and several other criteria are met, your company may be able to buy your fellow shareholder-director’s shares and cancel the shares. This means you don’t need to find the cash from your personal funds.

        4. What tax efficient choices are there to reward my staff? 

          Many and varied from an annual Christmas Party for everyone, annual health care checks, cycle to work arrangements and small gifts under £50, through to granting share options to senior staff. 

        5. How do I liquidate my company?

          For some small solvent companies, a simple DIY striking off might be approrpriate, but your company can be resurrected in certain situations. Liquidator fees have become more competitive and may enable you to take more accumulated profits out of your company at a 10% capital gains tax rate, which is better than a 32.5% dividend tax rate but more than the 7.5% dividend tax rate where your total income is under £50k.

        6. I don’t understand my company’s accounts. Would you please take over?

          Recent government grants and loans have focussed minds on the advantage of understanding your accounts at some level. We’re seeing quite a few accounts that don’t agree to software or make little sense, which when rectified helps business owners see what’s going on.

        7. What VAT applies to imports and exports? 

          This depends on whether these are goods or services and whether it’s B2B or B2C. With more businesses providing online services which reach consumers outside of the UK, it’s important to understand that local EU VAT is due and how to register and pay EU VAT.

        8. What capital gains tax do I pay on my property sale? 

          This depends on a few factors, mostly whether you’ve ever lived in the property as your home. If it’s never been your home, the entire profit over £12k per owner, after costs of purchase, sale and any capital improvements will be taxed at 18% or 28% or a combination, determined by whether you’re a basic rate or higher rate taxpayer when the property gain is added to your income. If it’s partly been your home, partly rented, a proportional calculation is required.

        9. What pension contributions can I make? Am I claiming enough income tax relief? 

          Broadly, pension contributions are restricted to £40k per year to include all contributions to all schemes by employer and employee. Some unused maximums can be brought forward from previous years but the annual lifetime allowance of £1m must also be considered.

          On the other hand, we often see employee higher rate taxpayers not claiming enough tax relief due to a misunderstanding about how thier pension contributions are paid. Pensions have never been more complicated and many people should take advice from an IFA.

        10. What income tax is due when I work abroad for a UK employer?

          If you are resident and working in another country, you’re usually required to pay tax in that country. We’re seeing some senior staff moving permanently abroad but retaining their UK employment. Their employers are often unclear as to how to deal with local tax systems, instead continuing to pay UK PAYE tax. If this becomes more common it might get more attention from local tax authorities.

    As always take advice specific to your situation as different answers are likely to be appropriate to different people and companies.