Getting paid from your business

Getting paid from your business

We all love being paid for doing our work whether you are employed or self-employed. However, following changes in the tax on dividends introduced in April 2016, those of you who are your own boss will almost certainly need to reconsider what you should pay yourself as a salary or dividends from your limited company. In this article, we outline what methods directors of their own company might use, before you discuss what action to take with your accountant. A Salary In 2016, the employment allowance for sole director limited companies was abolished but paying yourself a salary may still have many advantages. By receiving a salary in excess of £490 per month, you maintain your National Insurance records which gives you access to certain…

EU VAT

EU VAT

There are few things that strike more fear into my heart than EU VAT, apart from perhaps spiders. In the age of the internet as it becomes increasingly easy to buy and sell abroad, so EU transactions are becoming a more common feature in the small business VAT returns. EU VAT cannot be avoided, (a bit like spiders) so it’s best to make peace with it and learn to understand it. But this is easier said than done, as we’ve found researching this article. The idea of the EU VAT rules are so that small businesses can trade within the EU area without having to register for VAT in every single EU country. Although the rules are complicated, the alternative would be a lot more work…

Small business Taxes and what you need to know

Small business Taxes and what you need to know

Starting your own business is a truly exciting life decision, allowing you to pick your own gigs and do things your way. On the other hand, failure to get familiar with the small business taxes you’ll need to pay can have major consequences when the taxman cometh. To help you get a better idea what you’re expected to pay as a freelancer, contractor, or small business owner, here’s a quick-fire explanation of the main small business taxes. Corporation Tax What is Corporation Tax? Corporation Tax is applied to limited company profits after employees’ salaries and other business expenses have been paid, but before dividends are withdrawn. Sole traders don’t need to pay Corporation Tax. How and when do you pay Corporation Tax? UK-based limited companies are required to…

Changes Contractors Need to Know About IR35 Rule

Changes Contractors Need to Know About IR35 Rule

How could they affect your earnings if you work for public-sector clients? 1. IR35 rules seek to ensure fairness… According to HMRC: “The off-payroll rules (known as IR35) ensure that individuals who work through their own company pay employment taxes in a similar way to employees, where they would be employed were it not for the personal service company or other intermediary”.  2. A significant change has happened… From 6 April 2017, all public-sector organisations will be responsible for determining the employment status of all “off-payroll” workers – including contractors and freelances – engaged through “intermediaries” such as PSCs (ie personal service companies) and third-party agencies. According to HMRC: “Use of intermediaries [could]: reduce or avoid an individual worker’s personal tax/NICs liability; and reduce or…

The VAT Flat Rate Scheme Changes Contractors need to be aware of

The VAT Flat Rate Scheme Changes Contractors need to be aware of

Significant changes to the VAT Flat Rate Scheme come into force on 1 April 2017 and will affect the amount of VAT some contractors and small businesses have to pay.  Despite being announced in the 2016 Autumn Statement, very little information has been released by the Government about exactly how the changes will be implemented and the type of expenses that will be allowed. To help you prepare your business for the arrival of the changes, we have put together this guide to the new VAT Flat Rate Scheme with the information that’s been released to date. How does the Flat Rate Scheme currently work? The VAT Flat Rate Scheme is a method of VAT accounting that was introduced to make it easier for small…