Since the introduction of the Dividend Allowance and the Interest Allowance in 2016, compounded by the new Scottish rates of tax in 2017, there is no easy way to work out the optimum pattern of salary and dividends for directors of small UK companies.
Here’s a rough guide to what you might want to pay yourself and what sort of personal income tax reserve you may need to keep. Remember, that this is in addition to your company preparing its own corporation tax reserve. A company can only pay dividends from …

HMRC have incorrectly calculated a series of 2016/17 tax liabilities, and in mid 2016 they sent incorrect sample calculations to software houses. As a result, the software houses have been compelled to write those inaccuracies into their 2016/17 tax return packages.
HMRC were notified of this problem in November 2016. I first learnt of it in January 2017, and now it transpires (on 29 March 2017) that HMRC have not been able to rewrite their internal software in time for the 2016/17 tax return filing season! And, that means that the …

The VAT Flat Rate Scheme changes from 1 Apr 2017 when new rules come into force in a heavy handed attempt to combat abuse of the system. The FRS differs from standard VAT accounting because you pay a percentage of your business turnover rather than paying the actual VAT arising on the difference between sales and purchases.
You continue to charge clients the headline rate of 20% VAT and you can potentially benefit by remitting a smaller percentage to the taxman. The FRS rates differ from sector to sector, but for …

On Saturday 21 Jan 2017 the National Audit Office in Victoria opened its doors to a range of geeks and devotees, both within and beyond Government, for the now annual unconference called UKGovCamp. This one was special, the 10th event, and there was a considerable buzz among the 220 participants.
Somehow, my session ended up in a very early slot (one of eight concurrent streams) and a small, intense discussion of IR35 took place.
This is an extremely complex subject. I have recently concluded an IR35 enquiry for a client. It took …

There is no specific tax deduction for a “Christmas party” but HMRC does allow a measure of tax relief for “an annual event”.

Generally, staff entertainment is considered as a “Benefit in Kind”, and directors and employees need to pay tax and national insurance on the amount of the benefit.
Here’s the one way to avoid a “Benefit in Kind”.  As a company director, you are entitled to provide an annual event for yourself, any staff you employ, and your partner, and reclaim the costs against the company. Proved that the cost …