Are you a company director or shareholder? Do you know how your dividends are taxed? What about the impact of the new health and social care plan? Understanding how dividends are taxed Dividends have their own tax rules and their own rates of tax. The rules and the rates apply in the same way regardless of whether the dividends are paid from your personal or family company as part of a profit extraction strategy, or whether they represent investment income on shares. As par

Although married couples and civil partners are assessed individually for capital gains tax purposes and each has their own annual exempt amount, a special rule allows them to transfer assets between them at a value that gives rise to neither a loss nor a gain. This can be very useful from a tax planning perspective. The special rule applies only where the spouses or civil partners are living together or, where they separate, until the end of the tax year of separation. Opera

As furlough comes to an end, you may need to consider letting staff go. If this is the case, you will need to budget for the Class 1A liability, as well as the cost of the termination packages. Taxation of termination payments: Recap Where an employee’s employment is terminated, the employee may receive termination payments, such as pay in lieu of notice and ex-gratia lump sums, in additional to normal wages and salary payments. Normal payments from the employment, such as sa

Good monthly processes and some up front preparation are the formula for successful accounts and tax Is your business year end coming up? Get prepared now with this handy checklist. Dates and deadlines Firstly, check you know when your key dates and deadlines are. If you are a company, the accounting year end is the date shown on the Companies House register. Unless it has been changed, this should fall every year at the end of the month in which the company was first regist

If you became self employed in 2020 or 2021, it’s likely that you weren’t eligible for any government grant, probably realised a loss too. If this is the case, you can offset these losses against future income to reduce your tax. Relief for losses in the early years of a trade It is not uncommon to realise a loss in the early years of a trade. However, traders who commenced their self-employment in 2019 or 2020 may also have suffered as a result of the pandemic. Although the

For personal and family companies, a tax efficient strategy for extracting profits is to take a small salary and to extract any further funds needed outside the company in the form of dividends (see https://www.janesaccounting.co.uk/post/tax-optimal-salary-for-2021-22). However, while there are no restrictions on taking a salary if the company is making a loss, the same is not true of dividends. Do you have retained profits? Dividends can only be paid out of retained profits

What is a valid VAT invoice or reciept? Don't get caught out with the wrong paperwork. HMRC will only accept claims for input VAT when accompanied by a valid VAT invoice or reciept. So what does a valid VAT invoice or reciept look like and what does it have to include? What ISN'T a valid VAT invoice? Sorry - none of the following are acceptable for the reclaim of input VAT on your VAT return: E-mail confirmations Delivery notes Order summary Order confirmation Pro-forma invo

Are you running a family business? You might be eligible to reduce your Class 1 bill by up to £4,000. The Employment Allowance is a National Insurance allowance that enables eligible employers to reduce their employers’ (secondary) Class 1 National Insurance bill by up to £4,000. However, not all employers can benefit – there are some important exclusions. Eligible employers To qualify for the Employment Allowance, the employer’s Class 1 National Insurance liabilities for 202

To encourage companies to invest, enhanced capital allowances are available for expenditure incurred within a limited two-year window. If you’d like your company to benefit from the super-deduction, you’ll need to time your investments carefully. Super-deduction - 130% on new assets The super-deduction will allow companies to claim capital allowances of 130% for expenditure on new assets that would otherwise qualify for main rate (18%) plant and machinery capital allowances w

Take advantage of the enhanced carry back of losses Many businesses have suffered losses as a result of the Covid-19 pandemic, and where a business has made a loss, various options are available to obtain relief for that loss. The challenge is to make the best use of the loss. To help loss-making businesses, legislation will be introduced to increase temporarily the period for which a business can carry back a loss from one year to three years. The extended carry back is avai

You only have 30 days to report and pay any tax Thinking of selling a second home or investment property? You have to move fast to report the gain and pay the tax Unlike a gain on the sale of a main residence, which qualifies for private residence relief (as long as the associated conditions are met), any gain that arises on the sale of a second home or an investment property (such as a buy-to-let property) will be liable to capital gains tax. Since 6 April 2020, different ru