Taxation

Limited companies, Tax, dividends, National Insurance

The best way to pay yourself is through your own Limited company. You go on your own payroll which reduces company tax and then top up your personal income each month with a dividend paid from profits. This dividend is free of National Insurance (NI) and taxed at a lower rate than normal income. You should always check that your NI is fully up to date at hmrc.gov.uk.

Paying tax online

Go to www.tax.service.gov.uk/pay    – pick what tax you wish to pay, do not sign in, insert your reference for that particular tax and then pay by card or bank transfer. If you wish to still pay by cheque you can forward an HMRC payable cheque via your Accountant. If you cannot pay your taxes on time you need to telephone HMRC on their time to pay help line on 0800 0159 559 and discuss payment terms.

Directors Loans

Directors Loans – If a director takes non PAYE wages from a Limited company either as a loan or if the profits are not there to pay a Dividend, then the Director has received a loan. If the loan was greater than £10,000 and the loan is not repaid within 9 months of your year end, then the company is taxed at 32.5% on the outstanding loan and the Director is taxed as having taken a Dividend. A Directors loan [...]

Self assessment penalties

Remember there is a 5% unpaid tax surcharge if your personal tax remains unpaid at the end of February, July and the following January. There is also a £10 daily penalty if your personal tax return is not filed by 30th April of the following year up to a maximum £900. There is then an additional 5% or £300 (whichever the greater) charged if your tax return is still not filed by the end of July and again by [...]

HMRC installment plan

HMRC have announced that all 2020 personal tax owed, less than £30,000, may be paid over a year by monthly installments, penalty free if you contact them and agree the plan before 31st March 2021. The same plan is on offer for all companies that cannot pay the deferred VAT quarter due to Coronavirus last year. Contact HMRC using your online account to agree the plan or telephone them.

Budget 2021

Budget 2021 Main points – Furlough scheme extended to 30/09/21 at 80% of pay until 30/06/21 and then 70% until 31/07/21 and then 60% for the remaining 2 months SEISS grant announced for Feb-April again at 80% of profits and then from May the grant will lower if your profits are not reduced by more than 30% of usual. This is available to all the self employed who have submitted a 2020 tax return Business rates holiday for retail and hospitality is [...]