Originally written by Stuart Clark on Small Business
As we head towards a new tax year, it always surprises me how many tax myths small business owners believe, when knowing the truth could actually put more money in your pocket.
Did you know for example that (depending on your circumstances) you could potentially extract over £25,000 tax free from your company (in fact better than tax free as the company can get corporation tax relief so the cost is less than £21,500).
This often means speaking with professionals (your accountant and/or IFA) but here are some quick small business tax myths and tips:
#1 – There is no difference between taking salary and a dividend
Some while ago I did a video that demonstrated increased cash in hand for the business owner of almost £6,000 on profits of £50,000 (based on 2019/20 tax rates). What would an extra £500 a month allow you to do?
#2 – I can just take money out the company when I want, and the accountant will sort my dividends out when I do my year end accounts
This could be illegal and open the company up to PAYE liabilities. Backdating dividends is illegal. It is vital that tax planning is done
Tag Archive for Tax Relief
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7 tax myths for small business owner/managers exploded
by Stuart Clark • • 0 Comments
Originally written by Stuart Clark on Small Business
As we head towards a new tax year, it always surprises me how many tax myths small business owners believe, when knowing the truth could actually put more money in your pocket.
Did you know for example that (depending on your circumstances) you could potentially extract over £25,000 tax free from your company (in fact better than tax free as the company can get corporation tax relief so the cost is less than £21,500).
This often means speaking with professionals (your accountant and/or IFA) but here are some quick small business tax myths and tips:
#1 – There is no difference between taking salary and a dividend
Some while ago I did a video that demonstrated increased cash in hand for the business owner of almost £6,000 on profits of £50,000 (based on 2019/20 tax rates). What would an extra £500 a month allow you to do?
#2 – I can just take money out the company when I want, and the accountant will sort my dividends out when I do my year end accounts
This could be illegal and open the company up to PAYE liabilities. Backdating dividends is illegal. It is vital that tax planning is done
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Sajid Javid cools talk of raising national insurance threshold to £12,500
by Timothy Adler • • 0 Comments
Originally written by Timothy Adler on Small Business
Chancellor Sajid Javid has managed expectations about the Government lifting the national insurance threshold to £12,500 if it wins the election.
Blindsided by a question from a factory worker in Teeside as to whether tax cuts were for the rich, an apparently stung Boris Johnson blurted out that his government would be “cutting national insurance up to £12,000”.
Johnson said: “If you look at what we’re doing, and what I said in the last few days, we’re going to be cutting national insurance up to £12,000, making sure we cut business rates for small businesses, we are cutting tax for working people.”
>See also: Boris Johnson offers small firms nearly £500m worth of tax cuts
However, Javid told Sky News that the plan to raise the NI payment threshold to £12,500 is an “ambition” which will “not necessarily” be reached in the next parliament.
NICs are taken from workers’ salaries and used to fund the NHS, benefits and the state pension. Workers are charged 12pc on earnings between £8,628 and £50,000.
If re-elected the Conservatives would definitely raise the threshold for millions of small business workers for them to only start NI at £9,500 next year, compared with £8,632
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6 tax breaks every small business should know about
by David Redfern • • 0 Comments
Originally written by David Redfern on Small Business
When setting up and running a small business, it’s very often “all hands-on deck”, with all efforts focused on the day-to-day running of the business. It is easy, therefore, to forget about areas such as tax relief which don’t come under the daily management of your business. However, forego these tax breaks and you could miss out on ways in which you can make your business more efficient and competitive.
A number of tax breaks are applicable to small businesses, some which are industry specific and some which are generally applicable to all SMEs.
If your business meets the HMRC-qualifying criteria, these tax breaks could significantly lower your tax bill, making your business more profitable and efficient with little extra effort on your part.
The following tax breaks are available to SMEs so let’s take a look and see if your business could be eligible:
Employment Allowance
If your business has employees which you pay through PAYE, Employment Allowance is worth up to £3,000 off your employer’s Class 1 National Insurance bill per tax year. It reduces your employer’s National Insurance bill each time you run your payroll until the £3,000 is used up or you reach the
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Why small businesses are missing out on millions in R&D tax credit relief
by Mark Tighe • • 0 Comments
Originally written by Mark Tighe on Small Business
Businesses grow by increasing sales. The more and the faster you sell, the quicker you will grow, conventional wisdom tells us. However, there are ways to accelerate or boost business growth without the constant need for new sales or new customers, and these rest largely on one key ingredient: innovation.
First, we should define this overused term.
Innovation does not refer only to new products or ideas but can apply to new ways of doing things, such as altering business models to better suit the needs of customers and staff or adapting processes to improve the end product or service.
All these things could, of course, help you sell more. But such innovations usually require significant time and financial investment before they become commercially viable — and not all “innovations” will prove to be successful.
But even failed innovations can bring rewards that can benefit your bottom line, providing extra capital that can be reinvested to fuel further business development.
It does this through two main vehicles — research and development (R&D) tax credits and Patent Box tax credits.
These two forms of government tax relief are designed to reward and encourage greater innovation across the UK business sector
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Tax relief and fintech could help self-employed to save more into pension
by Michael Somerville • • 0 Comments
The Government will look to nudge self-employed workers to save towards a pension with the help of tech but tax reliefs may provide more effective in the long-run. The amount of self-employed workers who save towards their pension has more than halved in ten years, from 30 per cent in 2006/07 to 14 per cent
The post Tax relief and fintech could help self-employed to save more into pension appeared first on Small Business.
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How my business benefited from R&D tax relief and EIS
by Ben Lobel • • 0 Comments
There’s no doubt setting up a new company is an administrative headache. Once the compliance work for Companies House is sorted, you have to address the laws and rules associated with employing people – including the mind-numbing complexity of pensions auto-enrolment – and source various insurances. An optional administrative burden that, with hindsight, we’ve discovered
The post How my business benefited from R&D tax relief and EIS appeared first on Small Business.
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Are you aware of capital allowance tax relief?
by Owen Gough • • 0 Comments
Two in five UK SMEs (39 per cent) that own their own business premises are unaware that they can claim a valuable form of tax relief called ‘Capital Allowances’, according to a survey published today by Catax, the specialist tax reliefs expert. Capital Allowances are a tax relief available on the ‘intrinsic fabrication’ of a commercial
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Tax relief: Avoid the two common pitfalls that can disqualify you
by Ben Lobel • • 0 Comments
There are many reasons why entrepreneurs start a company and although making money isn’t always at the top of their list, it’s definitely a big factor. The government wants to encourage the creation of start-ups and, presumably in return for all the risks and hardship entrepreneurs will encounter along the way, offers incentives in the
The post Tax relief: Avoid the two common pitfalls that can disqualify you by Ben Lobel appeared first on Small Business.
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Get clued up on your tax relief and save money
by Ben Lobel • • 0 Comments
Tax relief can be very useful for small business owners, helping you get money off things you may use every day in the course of running your business. One useful tax relief business owners can claim is Annual Investment Allowance (AIA). With this, owners can deduct the full value of an item, such as a
The post Get clued up on your tax relief and save money by Ben Lobel appeared first on Small Business.