3.1.4 Other areas Public Sector Changes What are the changes How might this affect you? Summary...

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1 Contents Contents Introduction Advantages of trading as a limited company Tax savings Separate legal entity Shareholders Limited liability Bank loans and overdraft Transfer of ownership Planning for retirement Perception Disadvantages of trading as a limited company Losses Personal guarantees Visibility of results Withdrawing funds Expenses Administration Running a limited company Directors' responsibilities Shareholders agreement Records Signs, stationery and promotional material Signs Stationery and promotional material IR35 issues for contractors & freelancers An overview Substitution Mutuality of obligation Control... 13

2 3.1.4 Other areas Public Sector Changes What are the changes How might this affect you? Summary Taking money out of a limited company Director s salaries Optimum salary Administration Dividends Overview The old rules for dividend taxation pre 2016/ The new rules for dividend taxation post 2016/ Dividend paperwork Optimum salary vs dividends Strategy 1: Take a salary below the NI Primary Threshold Strategy 2: Claim the Employment Allowance Other dividend levels Leaving money in your business Other considerations Student loan repayments Child benefit Earnings above 100, Multiple shareholders Directors loans Directors credit balances Other ways to get money out of your company Income Splitting The strategy Making your spouse a shareholder The Risk How many shares How to issue shares to your spouse On incorporation After incorporation Paying a dividend... 36

3 5.2.5 Making your partner a shareholder Paying your spouse a salary Alphabet shares Dividend waivers Corporation Tax How corporation tax is calculated Corporation tax rates Registration Filing Dates of Returns Penalties for late filing Payment Dates for Corporation Tax CT61 Returns Time limits for correcting and enquiring into tax returns Accounting profit Prepayments Accruals Depreciation Deferred tax An overview An example Bad debts Allowable business expenses Out of pocket expenses Benefits in kind What are they? An example Tax free benefits Trivial benefit allowance Mobile phone Broadband/internet Travel costs What is business travel? HMRC s definition of a business journey is one which either involves travel: Temporary workplace Temporary workplace further rules What happens if there is no permanent workplace? Travelling appointments... 53

4 Home based employees Business mileage VAT on fuel element of AMAP Bicycles Claiming mileage Company bicycle Other Travel Costs Hotel and subsistence Hotels & Other Accommodation Subsistence Overseas trips Accounting fees Software Computer and office equipment Working from home (use of home as office) Mortgage interest relief restriction How will this work in practice? Subscriptions and publications Subcontractors Training costs Clothing and uniform Medical expenses Charitable donations Childcare vouchers Tax-Free Childcare Who will be eligible? How will it work? Pension costs Personal contributions Employer contributions Summary Entertaining customers/suppliers An overview Should I bother recording client entertaining in my accounts VAT Gifts... 74

5 Room Hire Entertaining employees An overview Who counts as an employee Mixed events employees and others Christmas party Gifts Non-allowable business expenses Non-staff entertaining Working lunches Personal clothing Parking fines HMRC fines and penalties Gifts to customers Depreciation/Capital allowances Company Cars Private vs business use CO2 emissions on the car How is the deemed cash benefit in kind calculated? Claiming the cost of the car Leasing a car? Paying for fuel VAT on private fuel What s the alternative to a company car? Company van Is it a van? Administration VAT and corporation tax Personal tax Auto-enrolment What is automatic enrolment? Will it affect me? When will it affect me? What do I need to do? How much will it cost me? Administration - before your staging date Administration - after your staging date... 97

6 14.8 Self-employed and directors of companies Directors Loans The Rules Joint loan accounts The cost to you Averaging method Precise method The cost to the company Beware the bed and breakfast rules Writing off your loan Summary VAT When to register for VAT Reclaiming VAT on expenses incurred before registration Pre-registration VAT on goods: Pre-registration VAT on services: VAT administration To register for VAT Who should you issue a VAT invoice to What to include on a VAT invoice Time of supply Records to keep for VAT Filing your VAT return online Filing deadlines Payment deadlines Direct debit Other payment methods Surcharges and penalties Surcharges Penalties Charging VAT to Charities VAT MOSS Definition of VAT MOSS Registering for MOSS Filing your VAT return MOSS VAT return

7 UK VAT return How to calculate the VAT payable Reclaiming VAT on expenses VAT schemes Cash accounting Overview Eligibility How to join and leave Return and payment deadlines Advantages Annual accounting Overview Eligibility How to join and leave Return and Payment deadlines How much to pay Advantages Flat rate Overview What are the changes? Who will be regarded as a limited cost trader? What are goods as far as the new rules are concerned? An example Who are these measures aimed at? What action do you need to take? Are there any other changes you need to be aware of? Eligibility How to join and leave Advantages Overseas VAT Issues to be aware of VAT on cars VAT on fuel VAT on parking VAT on staff business expenses

8 VAT on business entertaining VAT on staff entertaining Tax Data Personal Income Tax Rates Corporation tax National Insurance Student loan deductions