What is the meaning of IHT?
‘IHT’ stands for Inheritance Tax, which is the tax due on the value of your home, possessions and cash (your ‘estate’) when you die. There is no tax to pay if the value of your estate is below the £325,000 threshold, or if you leave everything to your spouse or civil partner, a charity or a community sports club.
If you give away your home to your children or grandchildren, the threshold increases to £425,000. The standard Inheritance Tax rate is 40%, but this is payable only on the portion of the estate above the threshold. The HMRC website offers a useful guide to Inheritance Tax here: www.gov.uk/inheritance-tax
There may be some reliefs applicable to your estate - please contact us to talk over what we can do to help minimise Inheritance Tax on your estate.
What is IR35, and can you give me a complete IR35 guide?
IR35 is a short name for ‘intermediaries legislation’. It ensures that contractors supplying services to a company through the worker’s own limited company, or ‘personal service company’, are paying the correct tax and national insurance on the pay they receive.
The full official description is on the HMRC’s site, but if you want to talk it over with an expert, please call us on 01279 772966. One of our team will be happy to help.
If you sign up to be paid through an umbrella company, then IR35 will not apply to you. You will be paid via PAYE, and all your income will be fully compliant with HMRC.
Can we outsource all our payroll and bookkeeping to you?
Yes, we can offer you full bookkeeping and payroll services. Many companies find this option much easier and more affordable than keeping a full-time accountant or accounts department in-house at their firm.
We have years of experience in managing payroll services for SMEs, larger employers, public service contractors, local authorities, and more. We understand how to make sure your staff are paid on time, with all the correct paperwork, payslips and tax payments, and therefore remain happy and hard-working.
We also run all accounts for a wide range of businesses, from sole traders to start-up firms, LLPs, limited companies, charities and larger organisations. Feel free to get in touch for a free initial consultation - we’ll be happy to run through all your needs and explain how we can really help your business.
What is your Tax Investigation Service, and how much does it cost?
On occasion, HMRC will chose to undertake a tax investigation into an individual or company. In most cases, they will have cause to clarify and authenticate your accounting, but in actuality HMRC needs no reason to start an investigation.
This can be a stressful ordeal for any sole trader or small business owner. An investigation can take as long as a year and has the potential to cost you a lot of money if not handled correctly.
As your accountant, we are able to step in, act on your behalf and liaise with HMRC about every detail of your accounting and tax payments. They will not leave any stone unturned, and we will be ready to handle all their questions to make sure that all your accounts are compliant.
The cost varies on a case-by-case basis according to the level of your business and the complexity of your accounts, so we cannot give you a definite figure on this page. Please contact us for an informal discussion and we will be able to assess your individual situation.
How do I pay tax on sales of my property?
In the first instance, it’s best to check if you actually need to pay tax. The HMRC website gives thorough information about Capital Gains Tax, what may be due on the increase in value of property you have sold, and the various tax reliefs that may apply. In the case of the sale of your own home, if it was your only and main residence and you have not let part of it out, you will not need to pay any tax at all.
You may need to pay some Capital Gains Tax on profits gained from the sale of second homes, buy-to-let properties, shares, and other high-value items like antiques or works of art. You will need to calculate the difference in value between what you paid for the item and what you sold it for. However, there may be ways to minimise the tax due, and you should speak to one of our advisers, who will be able to clarify your situation.
Any gains you have made from the sale of property should be declared on your Self-assessment tax form and HMRC will calculate any tax due at that time.
How can I switch my business from Sole Trader to a Limited Liability Company?
It’s easier to switch than you think. You’ll still have the same clients and set-up - but the legal structure of your business will change, and you will have more complex accounting requirements.
As you switch from a Sole Trader to a Limited Company, you will have to inform all your clients, suppliers, lenders, employees and customers of the change. You will need to set up a business account, inform HMRC that you are no longer a sole trader, complete your last self-assessment as usual (next year you’ll submit a return as a director and shareholder), register with HMRC for Corporation Tax, register your new company for VAT, and then also register your company as an employer (so you can pay yourself a director’s salary).
We can help you with all of these tasks and more, making sure that everything is done properly along the way, and then continue to work with you on all your accounting needs.
What is the difference between Corporation Tax and the Self-assessment tax return?
These are both taxes around your business income, but they each deal with very different circumstances.
Corporation Tax is what every limited company in the UK must pay on the profits they make. We can make sure you are officially registered with HMRC, enable you to take advantage of the tax reliefs available for your business and act on your behalf to prepare and submit your accounts.
A Self-assessment tax return is submitted by individuals, not companies, and can relate to many sources of income - from a traditional salary to interest on savings and investments, dividends paid to directors of limited companies, and any income from overseas. All these are taken into account and HMRC will calculate the tax due.
In either case, HMRC has strict deadlines for tax returns and imposes fines or interest payments on tax that is paid late. So it could be in your interest to talk to one of our advisors to make sure your tax returns are in order.
I want to register my business for VAT, can you give me advice on the best scheme to use?
If your turnover is going to exceed the VAT threshold, or you simply want to reduce how much you pay out in VAT, then you will want to register. However, the VAT rules can be quite complex, depending on the kind of goods or services you trade in, and where you source or deliver the products.
We will sit down with you, take the time to get to know your business and recommend the best VAT scheme to suit your operation. Why not give us a call today? A member of our team will be happy to walk you through the options.
Which is the best option for me – limited company or umbrella?
Both options offer you an escape from the trap of daily employment, but the right option for you may depend on your circumstances, the type of work, and how inclined you are to run your own business.
Your own limited company can be the most tax-efficient way to manage your income, but comes with responsibilities and obligations as a business owner. The administration side is more complicated, and compliance with IR35 will be an issue.
Using an umbrella company can prove more expensive, but does take away the admin and stress of running your own company. It also removes the need to worry about IR35, as you would be paid via the company’s PAYE scheme. The suitability of using an umbrella company may also depend on the level of supervision and responsibility you have in your place of work.
The only way to really know which is the best option for you is to consider your priorities and talk to one of our advisors, who give you the best advice based on your personal circumstances.
I need an umbrella company. Do you cover umbrella payroll services?
Yes, we can help you with this. We set up our sister umbrella company SenigPay specifically to help contractors in all industries and the public sector to get paid quickly and efficiently, while remaining compliant with PAYE and all relevant HMRC rules. If we are also handling your accounts, tax and pension requirements, it might make sense to have all your employment needs under one roof.