Business Structure
To be, or not to be a Limited company is a question that frequently rears its head when budding entrepreneurs start planning a new business venture. It’s rarely a topic that has a clear answer as there are advantages and disadvantages to a corporate structure and indeed, other alternatives.
Personal Service Companies and IR35
The IR35 legislation is a complex set of rules, and even today, interpreting the correct course of action to take is by no means a simple task.
R&D tax relief for smaller companies
This is a useful relief for small companies engaged in research and development. We have provided a few definitions to help readers decide if their endeavours qualify for this relief.
Capital Gains Tax (CGT)
Unlike Income Tax and Corporation Tax, which are predominantly taxes on income and profits, CGT is a tax based on the profit or chargeable gain you make when you sell, or otherwise dispose of something, for more than you paid for it .
GDPR
Since 25 May 2018, all businesses that collect, store or transfer the personal data of their customers, business prospects or staff will need to comply with the GDPR.
Non-domiciled taxpayers
A Non-domiciled taxpayer, is a person who is not a UK domiciled taxpayer. Domicile is different to residence or nationality. You can only have one place of domicile and it is generally the country where you have a permanent home.
Cash basis accounting for tax
Ordinarily, businesses prepare their accounts on what is called the accruals basis. This means that profit is based on the difference between sales and costs “incurred” in a specific accounting period, not on income received and expenses paid. For example, you may sell goods on credit that are unpaid at the end of your accounts year, and these sales would be included in your profits calculation.
Stamp Duty Land Tax and regional variations
The Stamp Duty Land Tax (SDLT) applies to all property purchases in England and Northern Ireland. Scotland has its own version, the Land & Buildings Transaction Tax (LBTT) and since April 2018, SDLT has been replaced in Wales by the Welsh Land Transaction Tax (LTT).
The Family Home
For most families, buying their home will be the most sought after and largest investment they will ever make. Recognising this, governments have been keen to assist home buyers by exempting the sale of their main private residence from the Capital Gains Tax (CGT) charge. Exemption from CGT is afforded by the Private Residence Relief.
VAT Special Schemes
Why use a VAT special scheme? What are the advantages for traders? Will users actually save money? Generally speaking, the special schemes are offered to simplify the process of submitting returns – thereby saving registered businesses time – and in some cases adopting a special scheme can have positive cash flow consequences.
Corporation Tax
Limited companies have their very own tax regime; it’s called Corporation Tax (CT). Unlike Income Tax, that has its roots in the long distant past, the tax year that determines the rate of CT starts 1 April each year and ends 31 March. This contrasts with the fiscal year for personal taxes that starts 6 April and ends 5 April.
Extracting Company Profits
Businesses that use a corporate structure have a distinct tax-edge over their selfemployed competitors. In a nut-shell, a company pays a fixed rate of Corporation Tax (CT) (19% since 1 April 2018) on all its profits - no additional tax is payable unless the directors and/or shareholders withdraw the post CT profits for their own use.
Salary sacrifice
Salary sacrifice is an expression used to describe the strategy where salary – subject to tax and National Insurance (NIC) – is substituted for alternative benefits that can have a range of NIC, and in some cases, NIC and tax saving implications.
Investment tax reliefs
This fact sheet provides a short overview of approved HMRC schemes that reward investment in business and other enterprises, with various tax reliefs. The schemes covered are: Enterprise Investment Scheme, Seed Enterprise Investment Scheme, and Social Investment Tax Relief.
National Minimum and Living Wage rates
Employers have a legal obligation to pay the required National Minimum Wage (NMW) or National Living Wage (NLW) rates to their employees. It is a criminal offence to ignore these obligations. HMRC police these arrangements and have the right to carry out checks and see wage payment records at any time.
Making Tax Digital
Without a doubt, HMRC’s drive to digitalise tax makes sense, why request an annual return of taxable income when all the data can be pushed to a centralised Personal Tax Account (PTA) in real time?
Buy-to-let landlords
Notwithstanding the increasing changes in the regulatory obligations that landlords have been required to observe in recent years, there have also been quite radical changes to the way in which their property businesses are taxed. This fact sheet highlights two of these changes and offers strategies to minimise their effects. We have also added a short section pointing to the impact of HMRC’s Making Tax Digital changes from 2020.
Pensions auto-enrolment
Since October 2012, a growing number of employers have been obliged to get to grips with the intricacies of Automatic Enrolment (AE). Basically, most businesses in the UK are now obliged to set up and administer a pensions scheme for qualifying employees.
Annual Investment Allowance
The AIA is still one of the most widely used, and generous tax allowances that supports investment by smaller businesses. It allows business owners to write off the full cost of plant, equipment, computers and other capital purchases against their taxable profits (or to increase trading losses) in each tax year.
Inheritance Tax
Inheritance Tax (IHT) is an obligation that most of us will never have to personally pay. It is not a tax that becomes due when you inherit from others, but rather a tax payable by your estate after your demise and on certain gifts that you make during your lifetime.
Income Tax
Income Tax, unsurprisingly, is a tax on income. To be more specific, it is a tax on the income of individuals and non-incorporated businesses. Incorporated businesses have their own tax regime, Corporation Tax.