Below are a number of useful links we can recommend:
Starting a business – http://www.hmrc.gov.uk/startingup/help-support.htm
HMRC – self-employment or employment – http://www.hmrc.gov.uk/employment-status/
Income Tax Rates – http://www.hmrc.gov.uk/rates/it.htm
How to Pay tax – http://www.hmrc.gov.uk/payinghmrc/
UK minimum wage – https://www.gov.uk/national-minimum-wage-rates
Tax Codes explained – http://www.hmrc.gov.uk/incometax/codes-basics.htm
Downloadable HMRC forms
64-8 Form – http://www.hmrc.gov.uk/forms/64-8.pdf
Starting a new limited company – http://www.hmrc.gov.uk/ct/getting-started/new-company/start-up.htm
Self Assessment Blank Payslip – http://www.hmrc.gov.uk/payinghmrc/payslip-sa.htm
Q – When must I register for VAT?
If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £79,000, or you expect it to go over that figure in the next 30 days alone, you must register for VAT.
Q -Can I register for VAT voluntarily?
There are potential cashflow advantages of being able to charge VAT on your sales and claim back VAT on your purchases, which you may benefit from depending on your circumstances. Please contact us for further information if you think you may benefit from voluntary registration.
Q – Am I better of as a sole trader or limited company?
To answer this question there are many different considerations but the main one is the tax saving that can be made by trading through a Limited Company vs self-employed. The savings depends upon individual circumstances but are made on tax and national insurance.
Q – How often can I have a dividend from my company?
In order to pay a dividend, the company must have sufficient distributable profits, therefore a set of accounts should be drawn up before declaring a dividend. The board of the limited company must agree and minute the decision and a dividend voucher must be issued with the dividend payment. The frequency of the payment is largely irrelevant as long as the process is correct.
Q – Do I pay tax on dividends I receive from my company?
If you don’t pay any income tax or pay it at the basic rate of 20%, there is no tax to pay on dividends. If you are a higher (40%) or additional rate (45%) tax payer you will have to pay 25% or 30.5% respectively on the dividends. The tax liability due is calculated in your self-assessment tax return.
Q – How do I register for self-assessment?
The first step is ensuring you are registered for self assessment as you will need a Unique Tax Reference (UTR). You can register be telephoning HMRC on 0845 900 0444 or by clicking here.
This process will take around 2 weeks to complete, so please don’t leave it to the last minute and don’t wait for HMRC to send you a notice to file a return, the onus is on you to contact the to register.
Q – When must I file my tax return and pay my tax?
You can still file a tax return on paper but it must be with HM Revenue & Customs by midnight on 31st October. In the rare situation where you are sent a notice to file a tax return after 31st July then you can file it on paper within a maximum of 3 months from the date you receive the notice.
If you need/want longer to prepare and file your return, then it can be filed up to midnight on 31st January but must be delivered online using the HM Revenue & Customs website or commercial software. SJO file all returns online to speed processing at HMRC, which is especially beneficial when a client is expecting a tax rebate.
Once again there is a special situation where an extension is allowed, specifically where the notice to file a tax return is received after 31st October, you are allowed three months to file from the date the notice is received.
If you are employed and the tax you owe is less than £2,000 then it is possible to have this collected via your salary, however, in order to do so, the return must be filed no later than midnight on 30th December.
Please remember that if your tax return is late then a fine of £100 per person, trust or partner is applicable.
Normally tax due under self assessment is due to be paid by 31st January. Interest is charged for amounts received after this date. You should not wait for a bill from HM Revenue and Customs before paying your tax, especially if you have filed your return close to 31st January.
SJO prepare calculations for all our clients so they know how much tax and national insurance is due to be paid.
Q – I can’t afford to pay my tax bill. What should I do?
If you are in a position where payment will be difficult or even impossible, then the main advice is to talk with HM Revenue & Customs, rather than bury your head in the sand and hope it will go away.
We have had a number of discussions with HM Revenue and Customs about clients with payment difficulties and we have always found that if you are open and honest with them, they will try to be accommodating with your circumstances. They do expect that you will take responsibility for the liability and have done everything you can to get as much paid as possible. In our experience, it is better to speak with HMRC as soon as possible and not leave it until January to contact them.
The first step is to work out what you could afford to pay and when, if it will take more than a year to pay, then that’s what it will take – which is not to say it will be agreed, but at least you have a starting point.
The second step is to approach the payment support service to ask for an agreed schedule for payment. They can be contacted on 0845 302 1435 and you will need your tax reference when calling.
There can sometimes be a delay in obtaining approval for the repayment schedule. Our advice is assume it has been agreed and start making your stage payments. This shows good faith and starts to reduce the debt and we have found it can be the difference in getting a difficult case agreed.
If circumstances deteriorate, then ring them again. If you have kept matters up to date you will stand a better chance to renegotiate.
Q – How easy is it to change accountants?
How to change accountants
Changing accountants is as straightforward as selecting your new provider – all administration should be organised between your current and your new accountant without your involvement.
Find a new accountant, you should take your time to ensure the new accountant will meet all your needs and expectations and has experience in the type of business you are running. Once you are happy you have found a suitable accountant you should appoint them to act for you. At the same time you should inform your existing accountant that you are leaving them and that they have your permission to pass over all details/documents to the new accountant when requested. This can be done in writing or via email.
Your new accountant will write to the old accountant as a professional courtesy requesting all documents that are held on behalf of yourself, as the client, and clearance to act. At the same time you should provide all information you hold to the new accountant that they request.
This is the step that takes the longest because it relies on the old accountant providing all takeover documents (copies of accounts, CT600’s, trial balance, VAT returns etc.) in a timely manner. Provided the old accountant co-operates then the delays should be minimal and your new accountant will be able to start bringing your file up to date.
With the file up to date you will now be in a position to make use of your new accountant when necessary and your new accountant will be in a position to process your paperwork.
Things to watch out for when transferring accountants:
- You may wish to avoid transferring part way through the company’s financial year as this may give rise to additional ‘takeover’ or ‘catch-up’ fees, meaning you are, in effect, paying twice for your accounting needs
- There will be delays in receiving a full service from the new accountant if the old accountant is not forthcoming in providing all the takeover information as requested
- Check carefully with your old accountant regarding transfer or termination fees. SJO do not charge any termination fees if you decide to cease using our services.