There are broadly three ways to extract income from your company but none of them is singularly the most tax efficient. What factors should you be considering when deciding which one to use? Topping up your income Choosing tax and NI-efficient types of income to draw from your company can make a big difference to its worth to you. As
Pros and cons of employing family. Sharing your business income with your family is good for them and can be tax efficient for you. However, you might have to justify their salaries to HMRC. What arguments can you use to help your case? Tax deductible or not A particular area of contention between businesses and HMRC is whether an expense
Giving a share of your business to your spouse can reduce the tax bill on its profits. Alternatively, you could sell part of the business to them which can save even more tax. How’s it done? Family (tax) planning Owning your company jointly with your spouse, rather than on your own, is standard planning where one of you pays tax
Writing off an overdrawn director’s loan account can be tax efficient. The trouble is it can come with a large NI bill. Is there a more tax and NI efficient option? Director’s loan accounts You probably already know about the tax that can result if you borrow money from your company. But to recap, you’ll be taxed on 2% of
If you have to travel on business HMRC accepts the cost as a tax deductible expense. However, it argued the opposite in a high profile tribunal case. Why and what was the outcome? The taxes act Tim Healy (H), the well known TV actor (Auf Wiedersehen Pet), lived in Cheshire, but was required to work in London for a period
You switched from working in the office to working at home a while ago. You’ve heard that this can result in a tax bill if you move home, is that the case? Do your homework Working from home is increasingly commonplace and misunderstandings about the capital gains tax (CGT) and VAT consequences when you sell are equally common. Capital gains
The rules regarding pre-registration VAT have always been a source of confusion. HMRC’s tinkering of its own internal guidance has made matters worse. What do you need to know to ensure you reclaim all that you’re entitled to? HMRC’s guidance HMRC’s guidance manuals are supposed to provide in-depth information about the tax rules, primarily for its staff, but also
Special tax rules block relief for business entertainment costs. However, the rules can be applied in different ways. What are the dos and don’ts? Business entertainment As you probably know, both income and corporation taxes rules block businesses from claiming a deduction from profits for expenses they incur on entertainment, such as taking customers or suppliers out for a
You’re devoting a lot of time to getting your brand new company up and running. If it pays you for your efforts will HMRC allow it to deduct the cost of this pre-trade expense from its taxable profits? Start-up costs The amount and type of start-up costs which businesses incur vary widely, as can the time it takes for them
