How much should you pay yourself from your limited company before you get taxed?

Posted on June 17, 2013 by admin | Permalink 0

With much fanfare, the personal allowance from 6 April 2013 was increased to £9,440.  This means for the average employee, they will pay 0% tax on earnings up to £9,440

However, if you are a director of a limited company, this figure doesn’t mean much since the optimal way to pay yourself as a company director (for the year ended 5 April 2014) is:

Salary £7,696
Dividends (net) £30,379

Total £38,075

If you pay this every year, you will pay no income tax (as long as you don’t have earnings from other sources).

You may notice that this is a lower amount than last year and you would be correct.  Since with one hand they have upped the 0% band, with the other hand they have increased the higher rate band (the band where you pay 25% tax on your dividends).

So be careful when you are paying yourself from your limited company that you don’t go over this figure.

If you can take out more, make sure it is planned correctly so you don’t pay the income tax. (58)

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Have you claimed the research and development tax credit in your business?

Posted on May 27, 2013 by admin | Permalink 0

There are lots of tax breaks that companies don’t take advantage of.  Mostly because they don’t know they are available or it seems too time-consuming to sort out.

A classic one from my perspective as an accountant is the research and development tax credit (R&D tax credit).  I saw one (admittedly unverifiable) statistic that stated that only 7% of all the companies that incurred research and development costs actually made a claim.

Its probably because the words ‘research and development’ suggest men in white coats excluding the majority of businesses.  However, the definition is very broad and can include lots of different types of businesses.

Companies can claim an enhanced deduction at a rate that will depend on whether they are large or small and medium sized companies (SMEs). SMEs can claim a deduction from taxable profits of 225 per cent of their qualifying R&D expenditure and. if loss making, will be able to claim a cash payment in return for forfeiting a proportion of their losses.

If you think there may be scope for a claim – email me at russell@rsaccountancy.co.uk (86)

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Business, Tax ,

Make sure you claim back the expenses that you charge your customer

Posted on May 21, 2013 by admin | Permalink 0

A very easy way of paying slightly more tax than you need to is if you run a business that charges your customers expenses.

These expenses could be anything from travel, stationery, hotel bills etc.  You agree with your customer that you will re-charge these and you remember to invoice them.  So far, so good.

However, you then have to remember to include these recharges in your overall expenses in your accounts.  If you include them on the sales and include them in the expenses.  The overall tax effect is zero.

But if you include them in the sales and not on the expenses, the recharges will just count as normal sales, this will artifically increase your profit and you will therefore pay too tax on this.

So if you do recharge your customers, make sure that you include the recharges in your expenses to avoid paying the extra tax. (89)

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Dealing with HM Revenue & Customs yourself can damage your health

Posted on May 20, 2013 by admin | Permalink 0

Dealing with HM Revenue & Customs is something that we do for all our clients.  Whether a client is a small business or a large business, speaking to HM Revenue & Customs should always be done by us.

The main reasons for this is that a) it saves the client time (we have an accountants hotline) and b) it means that we can deal with any query/issue quickly and the client doesn’t need to worry about it.

There is now a third reason which I discovered over the weekend in an article in the Times – going through HM Revenue & Customs helplines is, apparently, the equivalent of “Dante’s circles of Hell”.

A guy called Nigel Clarke, an IT manager, has spent 7 years making 12,000 calls to centres to produce a guide on call centre short cuts.  He says that HM Revenue & Customs is one of the worst offenders and that it can take up to 6 minutes to get through.

As one of Britain’s busiest call centres, HM Revenue & Customs, receive 79 million calls per year or a potential 4.3 million working hours just navigating menus.

So to improve your health – make sure that we do this for you.

If you aren’t a client, here is a snippet from Nigel’s very useful guide:

HMRC (0845 3000 627)
Income tax inquiries for individuals
Usually takes 4 minutes 35 seconds, with 74 menus over 6 levels.
Dial short-cut: 1-Hold-1-3-2-2

To see more of Nigel’s work, go to:
www.pleasepress1.com (100)

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Tax ,

Dial 999 for tax and accountancy emergencies….

Posted on May 16, 2013 by admin | Permalink 0

Its always struck me as strange that the accountancy industry (like most financial professional professions) close at 5.30pm.

What do you do when you really need to speak to an accountant and it is after 5.30pm?

Until now, nothing.

Until now…..

Since I have introduced a radical new way of helping our clients….(drum roll)…..

Today we are introducing our

“Tax and Accountancy emergency hotline”.  24/7, 365 days a year – you can speak to an accountant.

If its 3am and you are worried about a tax bill, a letter from HM Revenue & Customs or just can’t work out how you are going to pay your wages – we are here to help.

There is one catch though.

You have to be a client of Russell Smith Chartered Accountants.  This number is only available to clients of Russell Smith.

If you are reading this and you are client, please email me at russell@rsaccountancy to obtain your secret emergency hotline number.

Never again will you have a sleepless night due to a tax or aco (90)

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Accounts, Business, Tax ,

Margaret Thatcher, Alex Ferguson and leadership

Posted on May 9, 2013 by admin | Permalink 0

An interesting comment tonight on my favourite (only) television program – ‘This week in politics’

Michael Portfolio was remembering how he had to be fully prepared and briefed on all the details before he met with Margaret Thatcher.  He said how much this kept him on his toes such was the fear that he would be exposed as a fraud and not up to the intellectual benchmark of the Prime Minister.

He also said that he didn’t fear John Major half as much and consequently didn’t prepare as much and therefore was not as good a politician.

Much has been written about Alex Ferguson this week but he clearly caused the same amount of fear in his players (often multi-millionaires themselves) and again, had a standard of skill and behaviour on and off the football field that he wouldn’t compromise.

Unsurprisingly, from these strong leaders, results were achieved and their will was carried out.

In any kind of organisation but especially business a lack of leadership could be the one thing holding you back from achieving the profits you desire.  Leadership skills often have to be learned by business owners and don’t come with the manual of how to do the ‘business-owner’ job but as any business grows, it is this skill, above all others, that is essential to high profits and continued, sustained growth. (95)

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Business, Directors, Entrepreneur

How to get a ‘time to pay’ payment plan with HM Revenue & Customs

Posted on May 8, 2013 by admin | Permalink 0

In 2008, the government introduced the ‘time to pay’ scheme.  This was to enable businesses to receive a payment plan on outstanding PAYE/NI or VAT.  It was implemented to ease the early effects of the recession.

It was a huge success and many businesses applied for payment plans.  They did so because they were generally struggling to pay.  Also, many businesses did so because it was cheap debt (the interest rate being far lower than a bank loan for example).

After seeing the number of applications to the scheme, the government reined in the applications.  Businesses, who previously had relied on receiving a payment plan now were refused and it become increasingly difficult to get them.

If you are in this position and you need to receive some flexibility on payments to HM Revenue & Customs, here are some tips:

1. As a general rule, if you are struggling to pay creditors, the first thing to do is to talk to them.  So if the creditor is HMRC then do communicate to them
2. It is always better for your accountant to speak to them.  All our services include – dealing with HM Revenue & Customs – we never want our clients to speak to them.
3. Know your numbers - know exactly what tax (VAT, corporation tax, income tax, PAYE/NI) is outstanding and how much (it may not be all outstanding)
4. HMRC will often ask if you have tried to get finance elsewhere (not just banks, but family friends and your own pocket) – have a good answer for this
5. In most cases, they do ask for numbers – profit and loss budgets, cash flow forecasts – so make sure the accountant has this in hand

If you are struggling to pay HM Revenue & Customs and need to negotiate a time to pay scheme, do speak to me on russell@rsaccountancy.co.uk.  On current records, we have a 100% success rate on obtaining payment plans which dates back to 2008. (93)

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Accounts, Business, Planning ,

Is all accounting software going online?

Posted on May 7, 2013 by admin | Permalink 0

Last July, I blogged about the different accountancy packages out there…..

http://www.rsaccountancy.co.uk/blog/which-accountancy-package-should-you-use-in-your-business/

Since then, I’ve had a real surge of interest in the online package – Xero.  There are others, as you’ll see from my blog post, but Xero is the one that most people are talking about.

We have quite a few clients now on Xero and there are some features on it that really are great, like the bank reconciliation part (where you import bank statements), checking and raising sales invoices and then emailing to clients on your iphone is also pretty cool.  Some of our creative clients really love it and like the other online packages, it enables us to dip into the numbers and help clients easier.

Up to now, for many small businesses (especially start ups) we have to persuade them to stop using SAGE (a great package if you are an accountant, not so much if you are anybody else).  Online packages like Xero provide a great alternative.

Except now we have SAGE One.  The SAGE answer to the glut of online packages.

I haven’t used it yet, if anybody out there has – get in touch, I’d love to hear how it compares to the others – russell@rsaccountancy.co.uk

By the way, not only is all accounting software seemingly going online, all software full-stop is going online as well……which is a great thing, more on this on a future blog. (101)

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I thought everybody loved Apple but apparently not…….

Posted on May 2, 2013 by admin | Permalink 0

I’ve recorded a special message today on our YouTube channel.

You can see it here…..

http://www.youtube.com/RussellSmithtips

 

So, I’m now getting calls from clients saying that they don’t want the Apple ipad 3 with retina display.  They’d rather have the Samsung Tab2 tablet which is the second prize.

No problem.  Get your tax return info in by 31 May 2013 and your name goes in to the draw for the Apple Ipad 3, Samsung Tab (99)

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Tax

Get your tax return in, get an Apple Ipad 3 (with retina display!)

Posted on May 1, 2013 by admin | Permalink 0

Competition alert!

This year, for all our clients, if you send us your personal tax return information by 31 May 2013, you will be entered into a prize draw with 3 very special prizes……

Third prize…

£75 of high street vouchers (yes!)

Second prize:

Samsung Galaxy Tab2 (yessss!)

and for our first prize:

Apple ipad 3 with retina display (yessssssssssssssssssssssssss!)

If you are struggling with what information to send us – email me at russell@rsaccountancy.co.uk

You have 31 days from now

  (106)

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Accounts, Tax