1. AccountancyPlace

2. What we will cover today
Sole Trader v Limited Company
Personal Tax
Corporation Tax
Other Tax Issues
Tax Tips

4. Sole Trader You are Business Owner Self Employed Pays Income Tax & NI
Liable for Loss

5. Sole Trader Registration
Self Employment
HMRC - within 3 months of starting
Simple Form
If you have not registered – please speak to us and we will get you registered

6. Sole Trader Important Dates
Tax Year Ends 5 April
Tax Return submission 31 Jan
Tax Payment 31 Jan & 31 July

7. Limited Company Business separate legal entity
You are Shareholder & Director
Company pays Corporation Tax
Limited Liability
Improved Perception

8. Limited Company Registration
Register at Companies House & HMRC
Cost £ 50

9. Ltd Company Dates Accounts and Company Tax Return to HMRC
Accounts to Companies House
8 Months after Year End
(year end is 12 months after company registered)
Annual Return to Companies House

10. TAX

11. Personal Tax

12. Personal Tax Year End The tax year ends on 5th April 2016
Tax Year 6th April 2015 to 5th April 2016

13. Tax Return Issues you a Tax Return HMRC Soon after the 5th April 2016
Also known as the Inland Revenue or Tax Man!!!
Issues you a Tax Return
Soon after the 5th April 2016

14. Tax Return Requires Tax Payer to complete a tax return
Tax payer calculates the tax payable
Tax must be paid on set dates
Errors and there are penalties!

15. Tax Return Information
Self employment
Employment
Interest received
Dividends received
Pension contributions
Charity donations
Rents received
Capital gains (selling of shares/investments etc..)

16. Time Scale Receive Tax Return soon after 6th April 2016
This requires to be completed and submitted to the HMRC by
31st January 2017
Tax Return information is for one year 6th April 2015 to 5th April 2016

17. Tax Payments
31 January 2017 & 31 July 2017

18. How we help you
April 2016 – we send our checklist June 2016 onwards - you start receiving letters/ s/phone calls We remind you about Tax payment deadlines

19. On the Profits of Business we pay
Self Employed
On the Profits of Business we pay
Income Tax
&
National Insurance

20. (personal allowance for 6 April 2016 to 5 April 2017 - £ 11,000)
Income Tax
For the Tax Year ending 5th April 2016 the first £ 10,600 is tax free – this is known as the “Personal Allowance”
After this?
(personal allowance for 6 April 2016 to 5 April £ 11,000)

21. Income Tax Rates
After the first £ 10,600 20% between £ 10,600 to £ 42,385 40% between £ 42,386 & £ 150,000 45% over £ 150,000

22. National Insurance Class 2 - £2.80 per week
(if profits > £ 5965)
(abolished from April 2018)
Class 4 – 9% on profits between £8,060 and £42,385
plus 2% on profits above
£42,385

23. How Tax is calculated
Example A N Other starts self employment on the 6th April To the 5th April Fees earned are £77,000. To the 5th April 2015 – Expenses are £7,000. Profit £70,000 (£77,000 - £7,000)

24. Profit £ 70,000 Less Personal allowance (£ 10,000) £ 60,000 First £ = £ 6,373 Next £ = £ 11,254 Total £60,000 £ 17,627 Income Tax

25. National Insurance Calc
Class 4 NIC
9% profits between £7,956 -£41,865
plus 2% on profits above £41,865
(41,865 – 7,956)
9% £ 3,051.81
(70,000 – 33,909)
£36,091 @ 2% £
Total £ 3,773.63
National Insurance

26. To Pay 31 Jan 2016
Income Tax £ 17, Class 4 NIC £ 3, Total £ 21, Is that all?

27. PLUS ADVANCE (on account)
Income Tax & Class 4 NIC
For year ended 5th April 2015
£ 21,400.63
PLUS ADVANCE (on account)
For Y/E 5th April 2016
(50% of tax due for 5th April 2015)
(£ x ½)
£ 10,700.32
TOTAL PAYMENT ON
31 JAN £ 32,100.95

28. Next Tax Payment
31st July 2016 (2nd payment on account) £10,700.32

29. Whats Next ? 5th April 2016 arrives Accounts produced Tax Calculated
Example
For the year ended 5th April 2016
Income Tax & Class 4 NIC is
£ 28,000.00

30. Tax for the Year 5th April 2016 £ 28,000.00
Tax Payment 31 Jan 2017
Tax for the Year 5th April 2016
£ 28,000.00
Paid 31/01/ ( £ 10,700.32)
Paid 31/07/ ( £ 10,700.32)
£ 6,599.36
Plus 1st POA £ 14,000.00
(28000 x ½)
Total £ 20,599.36

31. Good News
We do the tax calculations for you & ensure you pay them on time But in order to do so we need information from you.

32. Saving for Tax
Tax is payable on due dates 31st Jan & 31st July Therefore it is essential you save 25% of your income for this

33. 2016 Corporation Tax

34. Corporation Tax Tax @ 20% Paid once a year 8 months after year end
Tax paid by Company
Corporation Tax 20% Paid once a year 8 months after year end

35. Any Other Tax paid by Company?
No – only personal tax on monies paid to yourself Eg. Salary & Dividends

36. Dividends (before April 2016)
Dividends attracted a tax credit Therefore for basic rate tax payers (income below 40% level) there was NO further personal tax Minimum Salary (personal allowance) & Dividend up to 40% Level

37. Tax Saving via Ltd Company
Profit £ 15,000 Tax Saving £ Profit £ 25,000 Tax Saving £ Profit £ 50,000 Tax Saving £ All change from April 2016

38. From April 2016
From April 2016, the Government will remove the Dividend Tax Credit and replace it with a new tax-free Dividend Allowance of £5,000 a year for all taxpayers.

39. From April 2016
Any dividend income over that level will be subject to income tax at the following rates: 7.5% for basic rate taxpayers 32.5% for higher rate taxpayers 38.1% for additional rate taxpayers

40. From April 2016

41. Corporation Tax Changes
The Government has announced an objective to reduce the main rate of corporation tax from its current level of 20% to 18% by the end of this parliament, which is in The overall rate of corporation tax is to be cut to 19% in 2017 and then to 18% in 2020.

42. Other 2016 Issues

43. National Living Wage
As of April 2016, the Government is introducing a new minimum wage of £7.20, which will rise to £9 by 2020.

44. Employment Costs
The Chancellor announced a 50pc increase to the national insurance employment allowance from £2,000 to £3,000, which will help small business owners to reduce their wage bill and could offset the New Living Wage

45. Employment Costs
Directors of limited companies who are the only employee, will no longer benefit from the Employment Allowance and there are no new incentives or support for entrepreneurs launching a solo start-up business.

46. Annual Investment Allowance
The Annual Investment Allowance allows small-to-medium-sized firms to make tax-deductible investments in equipment, plant, and machinery, encouraging businesses to invest in future productivity and growth. The Annual Investment Allowance is £200,000 (effective £ 200,000)

47. Tax Simplication !!!!
Quarterly Accounts 4 times the headache

48. Tax Tips

49. Be organised
Utilise personal allowances
New and unused Car, CO2 emissions are 75g/km or less (or car is electric) – First year allowance
Travel expenses
Charity donations
Pension
Use of home

50. Buy to Let Property

51. Buy to Let Property
New rules are to be introduced on the deduction of finance costs on rented properties, currently fully allowable against property income.

52. Buy to Let Property
The measure is to affect those that pay tax at a rate higher than the basic rate of income tax (20%) and will eventually restrict their deduction of this type of expense to just the basic rate.

53. Buy to Let Property
The measure will be introduced in the tax year and will be tapered in over the following years to give landlords time to adjust.

54. Buy to Let Property
40% taxpayer in the year will be able to claim three quarters of their finance costs for a tax deduction at 40%, with the remaining quarter deducted at 20%.

55. Buy to Let Property
in , half of the finance costs will be deductible at 40%, with the remainder at 20%. In , a quarter of the finance costs will be deductible at 40%, with the remainder at 20%. Finally, from onwards, all deductions for finance costs against property income will be deductible at 20%.

56. FREE 1 to 1 meeting
Tax
Accounts,
Business,
Startups plans
Etc…..

57. www. accountancyplace. co. uk e info@accountancyplace. co
e t / m
103 Washway Road, Sale, M33 7TY