Tax Advice

Tax Advice, Tax Planning, Tax Preparation, Tax Return Services

Tax Advice 2017-03-13T16:32:35+00:00

Tax AdviceTax represents a significant cost to any profitable business, in addition compliance with reporting obligations, investigations with tax authorities and penalties for non-compliance are a burden for business.

As Reading and London tax accountants we can review your business structure and advise if it is tax efficient and relieve you of any administrative burden of complying with tax legislation.

Expert Tax Advice

Our tax advice services deal with all business tax matters, including; preparing income tax or corporation tax computations, plus preparing and submitting your personal or corporation tax self-assessment returns.

We specialise in advising on and preparing for you all types of personal and business taxes. Click on the tabs and toggles below to display more information on each topic. For further tax information and great tips, check out the tax section of our blog: Tax Articles

You can claim capital allowances when you buy assets that you keep to use in your business, for example on equipment, machinery, business vehicles (cars, vans or lorries). These are known as plant and machinery. You can deduct some or all of the value of the item from your profits before you pay tax.
Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). The deductions count as advance payments towards the subcontractor’s tax and National Insurance. Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.

Further reading – Construction Industry Scheme (CIS): Top Tips

Your limited company must pay Corporation Tax on its taxable profits. Corporation Tax also applies to most unincorporated associations (eg. clubs and co-operatives), and foreign companies with a UK branch or office. Your company must keep records for Corporation Tax.

Corporation Tax reliefs include:

  • Marginal Relief
  • Research and Development (R&D) Relief
  • Creative industry tax reliefs
  • The Patent Box
  • Disincorporation Relief
  • Charities and giving to charity
  • Community amateur sports clubs (CASCs)

Further reading – Corporation Tax: Rates, Examples, Tips

Shares in companies are commonly used by employers to reward, retain or provide incentives to employees. The most common forms of employment-related securities are share options and share awards. These may be provided to employees under a formal “scheme” or “plan”, which will usually have a written set of rules, or as informal “one-off” awards of shares or grants of options. Where employees receive shares or other securities from their employer as a reward for their employment, then the money’s worth of the shares (less anything the employee pays for them) will normally be taxed as earnings.

For example Enterprise Management Incentives (EMI) Schemes reward and incentivise key employees by awarding them shares in the company. A share option is a right to acquire shares in a company, on terms set out in an option agreement. This will specify how many shares an employee may acquire, how much he or she will have to pay for the shares, and when the shares can be acquired through exercise of the option.

Further reading – EMI Scheme Options: Ultimate Guide

Gambling Duties are sub-divided into 7 categories: Bingo Duty, Gaming Duty, Lottery Duty, Machine Games Duty, General Betting Duty, Pool Betting Duty and Remote Gaming Duty.

For example Machine Games Duty (MGD) is a tax you need to pay on your machine games if at least one of the prizes on offer is cash, and it’s more than the smallest cost to play the machine. If MGD applies to you, you’ll need to register and complete regular returns. You must also pay any tax due on time. If your machines only offer non-cash prizes or cash prizes that are less than the cost to play, there’s no MGD to pay, but you might still have to pay VAT.

There are 5 main categories for investment schemes: Collective Investment Schemes, Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS), Social Investment Tax Relief (SITR), and Recognised stock exchanges.

For example the Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. It is important that investors are aware of the rules the company has to observe, not just at the time of the investment but for at least 3 years afterwards. If it fails to meet those rules tax relief will not be given, or, if it has already been given, will be withdrawn. Similarly, it is important that companies appreciate the conditions to be met by investors, so that shares are not issued on which the investor expects to be able to claim tax relief, only to find that no relief is due.

Further reading – Save Tax With EIS & SEIS Relief

IR35 is anti-avoidance legislation designed to tackle tax and NICs avoidance through the use of intermediaries. IR35 seeks to ensure that people who provide their services through their own limited company to disguise what would otherwise be an employment relationship, pay broadly the same amount of tax and NICs as other employees.

Further reading – Contracting & IR35: Do You Qualify

As an employer, you normally have to operate PAYE as part of your payroll. PAYE is HM Revenue and Customs’ (HMRC) system to collect Income Tax and National Insurance from employment.

When paying your employees through payroll you also need to make deductions for PAYE. Payments to your employees include their salary or wages, as well as things like any tips or bonuses, or statutory sick or maternity pay. From these payments, you’ll need to deduct tax and National Insurance for most employees. Other deductions you may need to make include student loan repayments or pension contributions.

If you run payroll yourself, you’ll need to report your employees’ payments and deductions to HMRC on or before each payday. You’ll need to send another report to claim any reduction on what you owe HMRC, eg for statutory pay.

As part of your regular reports, you should tell HMRC when a new employee joins and if an employee’s circumstances change, eg they reach State Pension age or become a director. You have to run annual reports at the end of the tax year – including telling HMRC about any expenses or benefits.

If you start working for yourself, you’re classed as a sole trader – even if you haven’t yet told HM Revenue and Customs (HMRC). You must register and follow the rules for self-employed tax and National Insurance.

There are other business structures apart from being a sole trader.You can become a partner in a business partnership or set up your own limited company. If you set up a limited company, you’re not classed as self-employed but as both an owner and employee of your company. You’ll follow different rules on tax and National Insurance.

Further reading – Business Structures: Sole Trader, Partnership, Ltd Company, LLP

You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England, Wales and Northern Ireland. You pay the tax when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment, eg you take on a mortgage or buy a share in a house

How much you pay depends on whether the land or property is residential or non-residential or mixed-use.

Further reading – Stamp Duty Land Tax: 2015 Ref Chart

Note that you can only charge VAT if your business is registered for VAT. VAT is charged on things like:

  • business sales – eg when you sell goods and services
  • hiring or loaning goods to someone
  • selling business assets
  • commission
  • items sold to staff – eg canteen meals
  • business goods used for personal reasons
  • ‘non-sales’ like bartering, part-exchange and gifts

These are known as ‘taxable supplies’. There are different rules for imports and exports and charities.

VAT-registered businesses must charge VAT on their goods or services, and may reclaim any VAT they’ve paid on business-related goods or services. You must account for VAT on the full value of what you sell, even if you receive goods or services instead of money (eg if you take something in part-exchange) or haven’t charged any VAT to the customer – whatever price you charge is treated as including VAT.

If you’ve charged more VAT than you’ve paid, you have to pay the difference to HMRC. If you’ve paid more VAT than you’ve charged, you can reclaim the difference from HMRC.

Further reading – VAT Threshold: Tax Efficient Top Tips
Further reading – VAT Flat Rate Scheme: Pros & Cons

Capital Gains Tax (CGT) is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive. Some assets are tax-free. You also don’t have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.

CTG rules are split into categories (with their various tax relief types):

  • Property
  • Personal Possessions
  • Shares and investments (Entrepreneurs’ Relief, Gift Hold-Over Relief)
  • Business (Entrepreneurs’ Relief, Business Asset Rollover Relief, Gift Hold-Over Relief, Incorporation Relief)
  • Divorce and separation

For Business CTG, you may have to pay Capital Gains Tax if you make a profit (‘gain’) when you sell (or ‘dispose of’) all or part of a business asset. Business assets you may need to pay tax on include:

  • land and buildings
  • fixtures and fittings
  • plant and machinery, eg a digger
  • shares
  • registered trademarks
  • your business’s reputation

You’ll need to work out your gain to find out whether you need to pay tax. You don’t usually need to pay tax on gifts to your husband, wife, civil partner or a charity.

Income Tax is a tax you pay on your income. You don’t have to pay tax on all types of income.

You pay tax on things like:

  • money you earn from employment
  • profits you make if you’re self-employed
  • some state benefits
  • most pensions, including state pensions, company and personal pensions and retirement annuities
  • interest on savings and pensioner bonds
  • rental income (unless you’re a live-in landlord and get £4,250 or less)
  • benefits you get from your job
  • income from a trust
  • dividends from company shares

You don’t pay tax on things like:

  • income from tax-exempt accounts, like Individual Savings Accounts (ISAs) and National Savings Certificates
  • some state benefits
  • premium bond or National Lottery wins
  • the first £4,250 of rent you get from a lodger in your home

Most people in the UK get a Personal Allowance of tax-free income. This is the amount of income you can have before you pay tax. The amount of tax you pay can also be reduced by tax reliefs if you qualify for them.

Further reading – Income Tax: Rates, Guide, Example Calculations

Inheritance Tax is paid if a person’s estate (their property, money and possessions) is worth more than a certain threshold when they die. This is called the ‘Inheritance Tax threshold’. There are different thresholds for previous years.

Further reading – Inheritance Tax: How To Reduce Or Avoid

You pay National Insurance contributions to qualify for certain benefits including the State Pension. You pay National Insurance if you are 16 or over, an employee earning above £155 a week, or self-employed and making a profit of £5,965 or more a year. You need a National Insurance number before you can start paying National Insurance contributions.

There are different types of National Insurance (known as ‘classes’). The type you pay depends on your employment status and how much you earn, and whether you have any gaps in your National Insurance record.

When you start renting out property, you must tell HM Revenue and Customs (HMRC) and you may have to pay tax. If you don’t, you could be charged a penalty. You’ll also have to pay Class 2 National Insurance if what you do counts as running a property business, eg if all of the following apply:

  • being a landlord is your main job
  • you rent out more than one property
  • you’re buying new properties to rent out

You may also have to report income from property rental on a Self Assessment tax return depending on whether it is over the threshold after allowable expenses.

There are different tax rules for:

  • residential properties
  • furnished holiday lettings
  • commercial properties

Further reading – Property Rental Income Taxes: Top Tips

Self Assessment is a system HM Revenue and Customs (HMRC) uses to collect Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a tax return. If you need to send one, you fill it in after the end of the tax year (5 April) it applies to.

HMRC will calculate what you owe based on what you report. Pay your Self Assessment bill by 31 January (or 30 December if you want HMRC to collect tax automatically from your wages or pension).

How much tax you pay will depend on the Income Tax band you’re in. There’s a different rate for Capital Gains Tax if you need to pay it, eg you sell shares or a second home.

Further Reading – Personal Tax Returns: Top Tips

You don’t pay tax on tax-free savings accounts like Individual Savings Accounts (ISAs) or some National Savings and Investments products, eg savings certificates or Premium Bonds. For most other savings accounts, Income Tax at 20% is deducted by your bank or building society before it’s paid to you.

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. You pay tax on the price you pay for the shares, even if their actual market value is much higher. You may have to pay Capital Gains Tax if you make a profit (‘gain’) when you sell (or ‘dispose of’) shares or other investments. If you own shares in a company, you may get a dividend payment. Only higher or additional rate taxpayers pay tax on dividends.

Your Local Tax Accountants

We have local branches for all your tax advice in London and Reading. We’d be happy to answer any questions you have – via phone, email or via our contact us page form…

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Tax Accountants Reading

5 Theale Lakes Business Park, Moulden Way, Sulhamstead, Reading, Berkshire, RG7 4GB
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Tax Accountants London

1 Kingdom Street, Paddington, City of Westminster, London, W2 6BD
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HMRC Investigation Protection

All of our clients are covered by a tax enquiry fee protection service.

For many years, the risks of an in depth tax enquiry by HM Revenue & Customs (HMRC) have continued to increase. HMRC officers are also now using new, wider powers to visit premises and inspect finance records. As a result, tax enquiries are becoming more complex and the professional costs of defense are rising. So it is as important as it has ever been for you to have protection against such costs.

To provide peace of mind for our client, we have a ‘Tax Enquiry Fee Protection Service’ in place. The service is backed by an insurance policy under which we can claim the costs of defending clients in tax enquiries.

As this service protect both you and your business from adverse costs incurred by HMRC activity and ensures that we are able to represent you at the best possible level and even though other Accountancy Practices charge their clients an additional cost for this service, we here are Goringe Accountants believe this to be invaluable and therefore include this as an element of our overall service package to all out client at no additional cost.

STATS: HMRC Tax Receipts and National Insurance Contributions for the UK

Below are some statistics from the national statistics archives to show how the UK tax receipts have changed over time and also how different tax/duties make up the totals

  • All figures are in millions £ (GBP)
  • 1 Comprises of payments into the Consolidated Fund and all pay-overs of NICs excluding those of Northern Ireland.
  • 2 Total HMRC Receipts includes payments into the Consolidated Fund and all pay-overs of NICs including those of Northern Ireland. As of January 2015, total now gross of all Child & Working Tax Credits (Expenditure): this follows the changes generated by revisions to the European System of Accounts (ESA2010) and the Public Sector Finances Review.
  • 3 Consistent with the OBR definition published i.e. on a cash basis.
  • 4 Gross of tax credits and includes other smaller elements of income tax.
  • 5 Gross of tax credits classed as expenditure (payable) and net of tax credits treated as negative (offset against tax liabilities). As from November 2014 Bank Levy receipts are shown separately and no longer included within the CT total.
  • 6 The majority of UK Oil & Gas companies payments are due in three installments, (Jul, Oct and Jan): receipts are reported in a similar pattern following each installment.
  • 7 Excludes non cash elements which are shown in the table Inheritance Tax: Analysis of Receipts
  • * Provisional

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