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Tax

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Tax - Business and Personal

 

Tax Deadline Calendar for SMEs

 

Click on this link to download a 2009/10 tax deadline calendar specifically produced from SME business by HMRC in PDF format, or go to the Business Link website to view the document

Plumbers Tax Safe Plan: useful links

 

You must notify by 31 May 2011. At this stage you just need to submit your details, tax reference and NI number.

for more information ....

If any of the above links stop working, click here for details: http://www.hmrc.gov.uk/trades-disclosure/notify.htm

Are you owed a Tax Rebate?

 

Check out the easy to use calculator at Martin Lewis’s MoneySavingExpert.com

Tax-free payment for Mum-to-be

 

Mothers-to-be can now claim a tax-free cash bonus of 190.

The new Health in Pregnancy Grant (HiPG) is a one-off payment intended to help pregnant mothers stay fit and healthy in the run up to the birth, and help meet some of the costs as the big day approaches.

Asset Protection Trust

 

Every five minutes someone is forced to sell their home, to pay for their care.  Residential care fees typically cost between 2,500 and 5,000 per month.  If you dispose of any capital assets, property or investments the county Council may take act as if those resources were still yours and charge accordingly.

The solution is an Asset Protection Trust.  Ask for more details.

Self Assessment Tax Returns

 

Download our 2009 Self-Assessment Tax return checklist for a simple guide on what information you’ll need to fill in your return.  In order to make sure that you comply with the current legislation and legitimately claim all you are entitled to we advise you to speak with a trained tax adviser.  Feel free to give us a call, or send an e-mail by clicking on the Tax Help link on the right claim and we’ll get right back to you.

 

The SA (Self Assessment) Tax Return can be daunting.  To keep you on your toes our friends at HMRC have changed the layout for 2007/2008.  Don’t worry!  We are here to help.   Tax Help is at hand - simply click on the link and send us an e-mail or give us a call.

Self Assessment involves completing an online or paper tax return in order to tell HMRC about your income and capital gains (profits on the sale of certain assets), or to claim tax allowances or reliefs against your tax bill.

There are different types of tax return and different 'supplementary pages' you may need to complete depending on your circumstances. There are also deadlines for sending your tax return in - and penalties and interest charges if it arrives late.

 

Self Assessment payment deadlines
The deadline for making Self Assessment tax payments depends on how and when you receive your Self Assessment tax return.

If you were sent a tax return (or ‘Notice to File’ if you file online) by the previous 31 October, then you must pay HMRC any balance of any tax you owe by 31 January. This is also the date by which you may be asked to make any first 'payment on account' for the current tax year. If you are due to make payments on account, the deadline for making a second payment on account is 31 July for tax owing for the preceding tax year.

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Record keeping for the Self-Employed
By law, you must keep business records for at least five years and ten months after the end of the tax year the records relate to. You can be charged up to 3,000 for failure to maintain or retain the records you need to make a tax return.
You'll need to keep your business records and personal records separate. Most businesses find that it helps to have a separate business bank account.

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Other records you must keep
All businesses are different and there are many specific types of detailed record that may need to be kept. Some examples of records you should keep include:

  • cash book
  • petty cash book
  • order notes and invoices
  • copy sales invoices
  • details of any other business income received
  • details of any private money brought into the business
  • till rolls or other form of electronic record of sales
  • details of any other income
  • any cash taken out of the till to pay small business expenses
  • bills and invoices for purchases and expenses
  • a record of stock on hand at the end of the year
  • all bank and building society statements, pass books, cheque stubs and paying-in slips which include details of business transactions

All this information will be useful in completing your Self Assessment return. You'll need to keep certain records and hold on to them for several years so that you can back up the information you put on your return.

 

 

Tax Returns for Partners and Partnerships
If your business is run as a partnership you'll have to file an individual Self Assessment tax return. You'll also have to fill in the partnership supplementary pages - SA104.
The nominated partner must also file a Partnership Return - SA800 - showing each partner's share of the profits or losses. This might include supplementary pages too, depending on what types of income the partnership has.
The nominated partner is responsible for filing the partnership return but you'll be jointly liable with your other partners for any penalties, surcharges and interest if the return is late or inaccurate.
Each partner is personally responsible for paying the tax and Class 4 National Insurance contributions due on their share of the partnership profits

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Basic records you must keep
Your basic partnership records should include:

  • a record of all the partnership's sales, with copies of any invoices you've issued
  • a record of all your purchases and expenses
  • invoices for all the partnership's purchases and expenses - unless they're for very small amounts
  • details of any amounts partners personally pay into or take from the business
  • copies of the partnership's bank statements

The nominated partner uses these records to work out:

  • the partnership's business profit
  • each partner's share of the profits - this goes on the supplementary partnership pages that you and your partners fill in with your individual tax returns

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Funding a contribution to save tax on cars

With the new higher rates of tax edging nearer we’re all looking for ways to dodge the increases. Paying yourself extra dividend income may seem an odd way to lower your tax bill, but what if you use it towards the cost of a new car?

Higher rates
Higher taxes are now only six months away. From April 6 2010 the official top rate of income tax will be 50%, but as we’ve explained before, the true rate in some circumstances can be 60% or more. So, when someone suggested to us that paying company directors/shareholders more income could save tax, we thought they were slightly mad. But it makes perfect sense; the key is in the timing and how you use the money.

Dividend plan
Stage one of the scheme is for your company to pay you an extra dividend before April 6 2010. Ideally, this should be 6,666. There will be higher rate tax to pay on this, but it will be at the current level rather that the new higher rates. Under self- assessment your personal tax bill on this won’t be payable until January 31 2011:

Dividend paid, say, March 31 2010

6,667

Tax credit

740

Taxable amount

7,407

Tax due at 32.5%

2,407

Less tax credit

740

Net tax due January 31 2011

1,667

Net dividend available

5,000

Trap. Don’t miss the April 5 deadline. In some cases dividends are only treated as paid at the date they are available to be drawn, not at the date they are voted.

Tip. To make sure that a dividend is treated as paid on a certain date, draw and bank a company cheque several days before. If immediate cash flow is tricky, you can write a cheque back to the company almost immediately.

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What next?
You’ve dodged some tax by paying the dividend before the new rates kick in, but it can be improved further. If you’re looking to replace or buy another company car, you can use the extra dividend to contribute to the capital cost. This can create a real tax saving. Say you want a mid-range car, for instance, a BMW with CO2 emissions of 205 g/km. Each year you would be charged tax equal to the car’ ;s original list price multiplied by 30%. But instead you could use your extra dividend as a contribution to the cost of the car. This is knocked off the list price, to a maximum of 5,000, hence the level of dividend, before the car benefit is calculated.

Number crunching
The tax on the benefit-in-kind is reduced each year you continue to use the company car. Based on the example of the BMW, the annual tax saving would be:

Capital contribution

5,000

Rate of charge based on CO2

30%

Reduction in taxable BiK

1,500

Tax saved at 50%

750

Saving over four years of use

3,000

So, the dividend has cost you additional personal tax of 1,666, but over the four-year life of the car car you’ve dodged 3,000 tax, a net gain of 1,334.

More savings. Because your car benefit is reduced so is your company’s corresponding NI. It will save 192 per year (at current NI rates). Over four years that’s 768. The overall saving to you and your company is 2,102!

Pay a dividend prior to April 6 2010 to avoid the new higher rates of tax. Use up to 5,000 of it to contribute to the cost of a company car to reduce the benefit-in-kind tax. It could, for example, save 2,102 tax and NI over four years.

 

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Copyright 2008. All rights reserved
Vector Accountants LLP

Vector Accountants in St Ives, Huntingdon are professionally trained business advisers and management accountants specialised in helping SME companies be successful; as well as bookkeeping and VAT returns we offer executive coaching and mentoring for new business, start ups and established companies looking to improve performance, increase profits and pay less tax. 

Located between Huntingdon, Cambridge and Peterborough we typically serve clients in the East of England (Cambridgeshire, Suffolk, Norfolk, Essex, Lincs) and the East Midlands (Bucks, Beds, Herts, Leics), but with a global network of  professionally accredited  advisers and accountants in 28 countries across the globe location is not a limitation.

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