Monthly Archives: August 2017

Self employed taxed on profits not drawings

We are often asked by self-employed clients to explain why their tax bills are high in proportion to the amount they withdraw from their business as “wages”.

In truth, the self-employed do not take a wage, this would imply that the cost of their “wages” is a deduction for tax purposes, and this is not the...

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Pension scams

The government has proposed a wide-ranging ban to prevent pension scams. The consultation listed the sorts of phone conversations that the government intends to fall within the scope of the ban. These included:

  • offers of a ‘free pension review’, or other free financial advice or guidance
  • assessments of the performance of the individual’s current pension funds
  • inducements to...
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Where is my profit, it is not in the bank

This is a question we are regularly asked by clients. Usually, the conversation is triggered when we discuss the end of year accounts.

Before we explain why profits are not always represented by cash in the bank, we need to define the term “profits”. Profits are the difference between what you sell and the costs associated...

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Rent a room at home tax free

On the face of it, the rent-a-room relief is straight forward: if your gross rents from letting are not more than £7,500 in the current tax year, there is nothing you need to do, this income is free of tax; but beware the small print.

Gross rents are defined as the rental income you receive (before...

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Involving children in your business

Whilst it is possible to involve your children in your business, this is a strategy that should be approached with caution.

Giving shares in your company to minor children is perfectly possible, but any dividends that you pay to under eighteens will be treated as if the income belonged to the relevant parent. HMRC would invoke...

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Organising a trading name for your company

We are often asked to register a trading name for an existing company. Usually, this is done so an incorporated business can develop a new brand with a name that is different to their existing company name. Unfortunately, there is no formal process that can be employed to do this; no registrar of trading names....

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Saving to pay tax

If you are employed, or receive a pension from a non-State provider, any tax you should pay is probably deducted before payment under the PAYE rules. Assuming HMRC administer this process correctly, any taxes due should be settled in full.

However, the self-employed, those in receipt of significant dividends or bank interest, and retired persons who...

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Dying without a Will, bad idea

Many people die without making a Will. In legal terms, this means they die “intestate”. When this happens, the estate must be shared out according to certain rules. Individuals who may benefit under these rules are:

  • Married partners and civil partners at the time of death. This includes separated partners but not divorced partners or a...
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Minimum Wage legislation

No-one is going to complain if you pay more than the National Minimum Wage or National Living Wage rates – which ever applies.

However, there are matters you will need to consider if you pay less than the appropriate minimum wage rates.

The minimum wage legislation applies to workers or employees. It does not apply to the...

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Making Tax Digital E common sense prevails

Making Tax Digital (MTD) is the government’s latest attempt to fully digitise the process of collecting data from taxpayers so they can speed up the process of calculating how much tax you owe.

Until recently, we were facing radical changes to the tax system to accommodate this objective. Businesses (including landlords) were to be required to...

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