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Specialist accountants for Limited company contractors and freelancers

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PEP16 Small Practice

By PaperRocket Accounting, Dec 7 2017 12:20PM

There are a few different ways to withdraw funds from your limited company, but which is right for you?



Salary


• You will most likely be taking the same amount on the same day of each month.

• An RTI submission must be made to HMRC to inform them of the salary being taken.

• If you exceed certain thresholds, you may pay tax and employees national insurance on the amount, which is deducted at source by your company. You will be paid the net amount.

• On top of this, if you exceed the threshold, the company will have to pay employers national insurance to HMRC.

• Monthly or quarterly, the limited company will need to make a payment to HMRC in respect of the tax, employees NI and employers NI.

• The salary is treated as a company expense and the company will receive corporation tax relief on the amount.



Dividends


• These can taken on random days, and months apart.

• A dividend declaration form should be completed and kept for the company records.

• Any tax due on the dividend will only be payable once the self assessment return for that tax year has been completed and filed.

• Dividends are taken from the company profit after corporation tax. Therefore, a dividend can only be taken provided the company has the profit available to do so.



Expense reimbursement


• If you have paid for any company expenses personally, you are then entitled to reimburse yourself for them.

• This can be done at any time. You can either reimburse yourself after each expense incurred, or alternatively, add a few up and reimburse yourself weekly, monthly, quarterly etc.

• As with any company expense, receipts must be retained.

• There will be no tax implications on this payment as it is simply a reimbursement of an amount you are owed.



Director’s loan


• If you only want to temporarily take money out of the company, with the intention of paying it back, you can take a loan.

• As long as the loan is below £10,000, you will not need to repay the amount to the company with any interest.

• If the loan is over £10,000, you will need to repay the amount with at least interest of at least 3% p/a to prevent the loan being treated as a benefit in kind and therefore attracting additional tax/ni.

• As long as the loan is repaid within 9 months of the company year end in which it was taken, there will be no additional corproration tax to pay. For example, if your company year end is 30th September 2017 and you take a loan in July 2017, it would need to be repaid by 30th June 2018.

• If the loan is not repaid within 9 months of the company year end in which it is taken, you will need to pay additional corporation tax to HMRC on the amount at a rate of 32.5% of the loan amount. This will be due with your normal corporation tax payment for that company year. You will then be able to reclaim that additional tax from HMRC once the loan has been repaid, but this can take a long time, so it is generally advised that repayment is made in time to avoid this.


So, as you can see, there are various different ways to withdraw funds from your company. The above gives an overview of these, but it is always a good idea to speak to your accountant to discuss which method(s) will work best for you.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




By PaperRocket Accounting, Dec 6 2017 11:17AM

We’re incredibly excited to announce that PaperRocket Accounting has been nominated for ‘Best Contractor Accountant (Small/Medium)’ in the annual ContractorUK Reader Awards!


The ContractorUK awards are a great opportunity for contractors around the UK to vote for the companies that have provided them with excellent service throughout the year in a number of different categories.


Sarah Solo, director of PaperRocket Accounting says ‘At PaperRocket, we are proud of the excellent level of service that we strive to provide our clients, and being nominated for such an award is an incredible honour’.


So, if you fancy spreading the festive spirit and voting for PaperRocket, please do visit here. Thank you!




PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Dec 1 2017 11:45AM

In the chancellor’s recent budget, he briefly referred to the marriage tax allowance, and how it can now be claimed even if your spouse has died since 2015- but do you know what the marriage tax allowance is, and more importantly, are you eligible for it and not claiming?


There is also a little-known benefit for grandparents who give up work to look after their grandchildren. In 15/16, less that 1,300 grandparents took advantage of this, when it is estimated that around 100,000 could be entitled.


With both allowances so easy to claim, can you afford not to read on and make sure you’re not one of the thousands missing out?



Marriage Tax Allowance


The marriage tax allowance is a way in which one member of a couple can transfer a proportion of their personal allowance to the other.



Who qualifies?


You will only qualify if all the below apply to you:


• You are married or in a civil partnership.

• One of you needs to be a non tax payer, i.e. earning £11,500 or less.

• The other person needs to be a basic rate tax payer, i.e. earning between £11,501 and £45,000.

• Both need to have been born after 6th April 1935.



So how does it work?


The maximum the untaxed partner can transfer is £1,150 (10% of the personal allowance), regardless of how much they earn. This equates to a saving of £230 for the tax payer as they now have an extra £1,150 that they would have been taxed on at 20%.


The best news is that, if you were also previously eligible, it can also be backdated to April 2015, when this new allowance was brought in. That means that you could receive £212 rebate for 15/16 and £220 rebate for 16/17 as well!



How do I apply?


It is so easy, and can be done online at https://www.gov.uk/marriage-allowance/how-to-apply. However, it must be the non tax payer who makes the application.



Grandparents National Insurance Credits


In this day and age, with spiralling childcare costs, it is becoming more and more common for grandparents to retire and help look after their grandchildren. However, by no longer receiving income and making national insurance contributions, this means that they could be losing £231/year from their state pension.


So, 5 years ago, the government introduced a scheme designed to protect the pensions of grandparents who do just that.



Who qualifies?


You will only qualify if all the below apply to you:


• A grandparent/family member caring for a child under 12.

• Someone under state pension age who lives in the UK.

• The child’s parent is entitled to child benefit and has a qualifying NI year, therefore meaning they don’t need the NI credit that comes with the child benefit.

• The child’s parent gives their consent to this.



So how does it work?


Currently, if you are retiring after April 2016, you will need 35 years qualifying working years to receive the full state pension.


A parent who receives child benefit for a child under 12 automatically gets NI credits towards their state pension. Therefore, if that same parents goes back to work and pays NI, they don’t need that credit as it is already a qualifying year for them. Instead, they can transfer this credit to the grandparent who is caring for the child.


Once again, this can also be backdated, right back to April 2011 if necessary!



How do I apply?


You will need to complete a CA9176 form (www.gov.uk/government/publications/national-insurance-application-for-specified-adult-childcare-credits-ca9176) to be sent to HMRC. Both the grandparent and parent must sign the form.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




By PaperRocket Accounting, Nov 28 2017 03:00PM

Not for the first time, there were a lot of people watching the Budget last Wednesday with a sense of foreboding. It seemed a dead cert that Chancellor Philip Hammond was going to announce that the controversial IR35 reforms that have already caused no end of problems in the public sector, were going to be rolled out to the private sector. Scathing articles were written, contractor forums were full of speculation, petitions were signed- it was surely a case of when, not if.


And then… nothing! We had Brexit, jokes, Stamp Duty, more jokes, railcards… but no mention of the dreaded IR35 reform. Was this announcement going to be hidden in the Red Book (the 93 page document that accompanies the Budget with the ‘nitty gritty’ details) instead?


Well, not exactly. There was no announcement of the legislation rolling out into the private sector, but instead, the Chancellor stated that the government would be looking into how this has affected the public sector, and staging consultations to discuss the impact of bringing it into the private sector.



What exactly was said in the Red Book?


Section 3.7 of the Red Book stated:


“The government reformed the off-payroll working rules (known as IR35) for engagements in the public sector in April 2017. Early indications are that public sector compliance is increasing as a result, and therefore a possible next step would be to extend the reforms to the private sector, to ensure individuals who effectively work as employees are taxed as employees even if they choose to structure their work through a company. It is right that the government take account of the needs of businesses and individuals who would implement any change. Therefore, the government will carefully consult on how to tackle non-compliance in the private sector, drawing on the experience of the public sector reforms, including through external research already commissioned by the government and due to be published in 2018.”



And what does this actually mean?


At the moment, it is still rather vague. We do not know who is conducting the external research, and neither do we know when any consultations will take place. However, the hope is that the independent research is carried out thoroughly and highlights to the government the already damaging effect that it has had on the public sector.


Throughout 2018, it is likely that we will see large and small businesses in the private sector stepping forward to have their say on why the reform would be a disaster. CEO of IPSE, Chris Bryce, has stated that they are “ready to join the consultation to ensure it takes into account the needs of the legitimately self-employed and accurately reflects the heavy damage the changes to IR35 have caused to the public sector.” They are also urging all contractors to write to their local MPs to have their say on the negative impact that rolling out this legislation will have.

Even Unite, the UKs largest trade union, has warned that extending to the private sector ‘could result in tens of thousands of workers being taxed like millionaires’.


After months of speculation and concern amongst contractors, this is the best outcome we could have realistically hoped for from the Budget. However, when it comes to IR35 and the private sector, we are certainly not out of the woods yet, and 2018 is surely bound to be a pivotal year.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.




By PaperRocket Accounting, Nov 24 2017 12:02PM

‘Tis nearly the season to be jolly, and what could be jollier than treating your staff (or even yourself!) to a festive treat? Whether it be a meal out, bottle of prosecco, or even a gift card, sometimes it’s nice to boost morale and make your staff feel appreciated. However, you don’t then want them to be hit with additional tax and NI for your generosity when it gets treated as a benefit.


Well, provided you stick to a few simple rules, your gift will be deemed to be a ‘trivial benefit’, and there will be no additional liabilities for the recipient.


The Rules:


There are of course criteria that must be met to be able to claim a trivial benefit. These are that the benefit must not:


• Exceed £50 (not even by 1p or the whole amount becomes taxable). If, for example, you take a number of staff out for a meal, this can be averaged out per head.

• Be cash (although gift vouchers are allowable, provided they can’t be exchanged for cash).

• Be a reward of normal employment duties.

• Be part of any contractual obligation/salary sacrifice scheme.


As with any business expense, you will also need to ensure that you retain the receipt(s) for the expense, and keep a note of what it was in respect of, to prove it did not breach any of the above. Provided that all of this criteria is met, the recipient will not have to pay any tax or national insurance on the benefit, and the company will receive corporation tax relief on the amount.



Company Director? You can treat yourself too!


And the great news is that this also applies to company directors. The only difference being that whilst for staff, there is no cap to the amount of trivial benefits that can be provided, for directors, there is an annual £300 cap. Again, each benefit must not exceed £50, and receipts must be retained.


These trivial benefits are on top of the annual staff entertainment allowance of £150/year, so why not take the opportunity to make your staff feel even more appreciated and bring in the festive cheer early (all whilst cutting that corporation tax bill!).



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


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