Beware self employed contributions trap

September 5th, 2017

To qualify for the full, new State Pension you will need to have 35 years of contributions. At present, the self-employed pay Class 2 (a fixed weekly amount of £2.85) and Class 4 contributions (9% of profits between £8,164 and £45,000, and 2% of profits over £45,000), but only the Class 2 payments contribute towards […]

Self employed taxed on profits not drawings

August 31st, 2017

We are often asked by self-employed clients to explain why their tax bills are high in proportion to the amount they withdraw from their business as “wages”. In truth, the self-employed do not take a wage, this would imply that the cost of their “wages” is a deduction for tax purposes, and this is not […]

Pension scams

August 30th, 2017

The government has proposed a wide-ranging ban to prevent pension scams. The consultation listed the sorts of phone conversations that the government intends to fall within the scope of the ban. These included: offers of a ‘free pension review’, or other free financial advice or guidance assessments of the performance of the individual’s current pension […]

Where is my profit, it is not in the bank

August 23rd, 2017

This is a question we are regularly asked by clients. Usually, the conversation is triggered when we discuss the end of year accounts. Before we explain why profits are not always represented by cash in the bank, we need to define the term “profits”. Profits are the difference between what you sell and the costs […]

Rent a room at home tax free

August 22nd, 2017

On the face of it, the rent-a-room relief is straight forward: if your gross rents from letting are not more than £7,500 in the current tax year, there is nothing you need to do, this income is free of tax; but beware the small print. Gross rents are defined as the rental income you receive […]

Involving children in your business

August 16th, 2017

Whilst it is possible to involve your children in your business, this is a strategy that should be approached with caution. Giving shares in your company to minor children is perfectly possible, but any dividends that you pay to under eighteens will be treated as if the income belonged to the relevant parent. HMRC would […]

Organising a trading name for your company

August 14th, 2017

We are often asked to register a trading name for an existing company. Usually, this is done so an incorporated business can develop a new brand with a name that is different to their existing company name. Unfortunately, there is no formal process that can be employed to do this; no registrar of trading names. […]

Saving to pay tax

August 10th, 2017

If you are employed, or receive a pension from a non-State provider, any tax you should pay is probably deducted before payment under the PAYE rules. Assuming HMRC administer this process correctly, any taxes due should be settled in full. However, the self-employed, those in receipt of significant dividends or bank interest, and retired persons […]

Dying without a Will, bad idea

August 8th, 2017

Many people die without making a Will. In legal terms, this means they die “intestate”. When this happens, the estate must be shared out according to certain rules. Individuals who may benefit under these rules are: Married partners and civil partners at the time of death. This includes separated partners but not divorced partners or […]

Minimum Wage legislation

August 3rd, 2017

No-one is going to complain if you pay more than the National Minimum Wage or National Living Wage rates – which ever applies. However, there are matters you will need to consider if you pay less than the appropriate minimum wage rates. The minimum wage legislation applies to workers or employees. It does not apply […]