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Getting Started

Getting Started

This is what you need to do to take care of your tax obligations when you first become self-employed or start receiving untaxed income: 1. Register with HMRC. 2. After the end of the tax year, submit a tax return. That's it! There's no need to do anything else, as...

Allowable Expenses

Allowable Expenses

For the self-employed, the broad rule is that expenses are allowable if they are ‘wholly and exclusively’ incurred for the purpose of your business. Some expenses, such as your phone contract, which may include both personal and business calls, don’t seem to meet this...

Do you really need a company?

Do you really need a company?

When people are running a business, they often think they need to form a company. In fact there's nothing wrong with running your business as either a self-employed individual, or a partnership if there is more than one of you. Some very large businesses, for example...

Big Mouthfuls Often Choke

Big Mouthfuls Often Choke

If you're self-employed and you travel on business, it's useful to know which expenses are tax deductible. If you get it wrong, you could pay too much tax, or maybe find yourself in trouble with HMRC for paying too little tax. Above all you need to consider why you...

Tax-free party!

Tax-free party!

An annual function or party for employees is tax exempt, provided the cost isn’t over £150 per head.  The amount paid by the employer is tax deductible, and employees aren’t taxed on the benefit they’ve received in going to the party. To...

Give yourself a (tax) free gift

Give yourself a (tax) free gift

There is an exemption from tax and National Insurance for benefits with a value up to £50 each provided to employees and directors. There is no limit to the number of benefits which can be given to an employee, but there is a limit of £300 per year for directors or...

There is such a thing as a (tax) free lunch

There is such a thing as a (tax) free lunch

There is no tax charge for the provision of meals for directors or employees, provided the meal is provided either in a canteen or on the employer’s premises, it’s on a reasonable scale, and it’s available to all employees. So, does that mean family companies without...

Travel for Directors

Travel for Directors

The cost of ordinary commuting is not tax deductible. Ordinary commuting is a journey made to or from home (or any other non-workplace) to a permanent workplace. A "permanent workplace" is one where either the whole duration of the employment contract is spent; or...

How to pay a dividend

How to pay a dividend

Loading...Use the form above to create a dividend voucher. When you press submit, the voucher will be emailed to you - check your spam if you can't see it. A company can pay dividends to shareholders from its accumulated after-tax profits. These can be seen in the...

Accommodation

Accommodation

For the self-employed accommodation costs can be tax deductible where they are incurred wholly and exclusively for the purposes of the trade or profession. Ordinary living costs are not tax deductible. In practice, HMRC tend to allow the costs of overnight...

Making Tax Digital

Making Tax Digital

From April 2019 all VAT returns will need to be submitted through software, under HMRC's Making Tax Digital programme. It will no longer be possible to submit returns through HMRC's website. I use Quickbooks Online and Receipt Bank to help make your record keeping as...

Director’s Salary

Director’s Salary

There is no need to register for PAYE if no employees (including directors) are paid above the Lower Earnings Limit for National Insurance, get expenses and benefits, have another job, or have a pension. The LEL is £116 per week, or £6,032 per year in 2018/19. If a...

Penalties

Penalties

Penalties for late filing of Income Tax, Capital Gains Tax, and Corporation Tax returns are as follows: Missed filing deadline - £100; 3 months late - £10 per day for up to 90 days; 6 months late - 5% of tax due, or £300 if greater; 12 months late - 5% of tax due, or...

Accounting Periods

Accounting Periods

The tax year runs from 6 April to 5 April. The self-employed or partners choose their own accounting period for tax, just as companies do. The period taxed will be the accounting period ending in the tax year for which the return is being prepared. This is fairly...

Working from home

Working from home

A self-employed person who works from home can generally claim more tax-deductible expenses than an employee or director. A self-employed worker can claim the following for use of home: All the costs incurred for exclusively for business purposes A proportion of all...