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 …

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 …

Proactive is not authorised to give pensions advice, and the comments here are a guide to complying with new legislation. It is not a guide to pensions! The figures below relate the tax year 2016/17 and may change every April as each new tax year starts.
Do I need to comply?
You may not need to offer auto enrolment if your business employs no regular staff, but only directors, and none of those directors have a contract of employment. If that’s the case then check this report.
For everybody else, the key points …

We are accountants and tax advisers, and we do not get involved in pension matters. However, this is what we know about the interaction between National Insurance Contributions and the UK State Pension.

If you are following our recommended director shareholder payments pattern, then your salary should be high enough to give you a National Insurance credit, even though you don’t pay Class 1 National Insurance.
A full year at this level is a “qualifying year”. This page https://www.gov.uk/state-pension/eligibility used to say:
“You might not pay National Insurance Contributions because you’re earning less …

In the good old days there was an easy way to work out the optimum pattern of salary and dividends for directors of small UK companies. With the advent of the Finance Bill 2016 the situation has become hopelessly complex and that prompted AccountingWeb to publish a critical blogpost. Here’s the first bit with the all important table:

If you want to see the blogpost in full you’ll have to sign up for membership of AccountingWeb. It’s a free resouce for accountants!
And, as we said in our 30 Nov 2015 blogpost, …

It’s long been a policy of ours that all employee expense claims (and directors’ expense claims) should be supported by receipts, proving that the relevant expenditure has taken place, and that the employee’s claim is for a legitimate business expense. That’s set out in our guide:
Claiming back expenses from your own Limited Company
We don’t need to see every receipt from Pret a Manger for £2.99 sandwiches, but we want the reassurance that you the client make a point of keeping your staff (and yourself) within the rules.

So, here is something …

Do you have a penalty notice from HMRC relating to the late filing of a 2013/14 or 2014/15 Self Assessment tax return?
Then you may be interested in a working practice which HMRC introduced recently, because they don’t have enough staff to check “reasonable excuse” claims. And whatsmore, they have extended the meaning of “reasonable excuse” which used to be limited to things like . .

Death of a close relative
Burglary
Flood

. . . to include a number of lesser reasons which they previously refused to accept. So “reasonable excuse” now includes . …

Significant changes to the taxation of dividends will take effect from 6 April 2016
Planned changes:

10% notional tax credit being scrapped
Introducing a tax free Dividend Allowance of £5,000
Then, dividends tax rates will be set at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.

In short, this means that the majority of owners of small limited companies, who take a small salary and large dividend, will see a significant increase in their personal tax bill. With the exception of the first £5,000 tax free band, …

Two new sets of rules come into force over the next few years.
No more “10% Wear and Tear” allowance
The allowance is being abolished. Starting on 6 Apr 2016, landlords who rent out furnished accommodation will no longer be able to claim the flat rate 10% allowance every year, and instead will be permitted only to claim the actual costs of like-for-like renewals and replacements.
Restriction of loan interest relief
Over a three year period, starting on 6 Apr 2017, the amount of tax relief you can claim for loan interest paid, will …

Proactive is not authorised to give pensions advice, and the comments here are a guide to complying with new legislation. It is not a guide to pensions!
The Government decided in about 2012 to shake up UK pension provision, and as a result, a lot of smaller businesses have to comply with the new laws from 2015 or 2016. It appears that they launched a campaign in Spring 2015, sending letters like this example, to the smallest of UK employers.

Oddly, if the new legislation does not apply to you, then you …