Making the decision as to which structure your business operates as can be crucial, whether that be in terms of tax savings, perception to the outside world, keeping things simple or future plans you may have. Sole Trader Tax As a sole trader an individual must pay tax on all profits over and above their personal allowance, for most tax payers the personal allowance is £11,850 for the 2018/19 tax year. Once the personal allowance has been breached tax is paid at the rate of 2
If you operate through your own UK limited company you’ll often want to use the optimum tax planning strategy of extracting money from your company through a combination of dividends and a low salary. How are salary and dividends taxed? For the 2018/19 tax year the personal allowance is £11,850 – this means your first £11,850 of income is tax free. If your only income was your company director salary then any additional salary above £11,850 would be taxed at 20%, and then onc
The first thing to consider when looking to offer shares to new shareholders (eg new directors or investors), is whether you want to transfer existing shares or whether you would be better issuing new shares.In most instances you will be better issuing new shares and that is what we will look at in this article. Authorised share capital The first thing to consider is when your company was formed. If the company was formed under the Companies Act 1985 then you may well find th
Financially supporting your children by paying their university costs can prove to be very expensive if you’re a parent. Especially when you consider tuition fees, rent at the halls of residence, food etc - the costs soon mount up. However there are several ways of funding your children’s university costs tax effectively. Altering your existing share capital to fund university costs Normally when you form your company it is more straight-forward to have just one class of ordi
When you first start your business you may be tempted to use your personal account for business transactions rather than a separate business bank account (especially given you might want to save on charges for running separate accounts). However, you should also be aware that if you are running your business as a limited company, then the company should have its own separate business bank account and you should try very hard to keep business and personal expenditure separate.
Making Tax Digital (MTD) is a government initiative to ‘transform the tax system and see the end of the tax return. One of the main aims of Making Tax Digital is to give every taxpayer better access to the information HMRC hold about their business in order to encourage better tax compliance. Whilst it’s recognised that the majority of taxpayers want to pay the right tax, HMRC estimate that the amount of tax not collected due to avoidable taxpayer errors and carelessness has
Forming a limited company: Methods to form a company Probably the first thing to decide is the method of forming a limited company. This can be done in three different ways: You can register the company yourself with Companies House. You can pay a company formation agent or accountant to do this for you. You can buy a on ‘off the shelf’ ready-made company and then change the name, directors etc. The simplest way is usually having your accountant form the company for you. Form
On Wednesday 22nd November 2017 the chancellor of the exchequer Philip Hammond delivered the 2017 Autumn Budget. Although there were no major surprises for small business in this article we cover the key changes from the budget that may affect you over the coming years. Personal Allowance The amount that an individual can earn tax-free will rise to £11,850 from 6th April 2018 (currently £11,500). This continues the general trend to increase this allowance year-on-year and th