Express Accountancy Ltd

Tax Tips

Tax saving tips for Individuals and Company Directors as well as a useful VAT section :-

General Tax Tips

• Get your tax return in on time (by 30th November at the very latest) - to avoid a £100 penalty.
• Pay the tax on time (The tax is due on 31st January and interest is charged from that date. 28th February is the absolute deadline to avoid a 5% surcharge).
• Keep all your tax related records.
• The Revenue only guarantee to calculate your tax if you get your return to them before 30th September. Otherwise you may need an accountant to help you complete the calculations on your return.
• Use an Accountant - The revenue will help you calculate your tax 'correctly' but they do not usually help you to minimise your tax - Would you ask a crocodile to help you across a river.
• The revenue have more power to start 'enquiries' and they do not have to give you a reason for looking in to your tax affairs.
• We can prepare your tax return for you from as little as £60 + vat.

Tax Tips for Employees

• Check your tax code - Your tax code should be - 543L. Your code would only usually be lower if your company provide you with any benefits (i.e. Car, Medical Insurance etc.), or if you have underpaid tax from previous years.
• Keep all your tax related paperwork i.e. Change of tax code forms, End of Year P60 and P11D, and your P45 if you change Jobs (your new employer will need your P45 when you start a new job).
• If you have children living with you may be entitled to Children's Tax Credit.
• Company Cars can really hammer your tax allowances and leave you with a lot less money in your pocket, the Fixed Profit Car Scheme lets your employer pay you to run your own car. The rate per mile is 40p for the first 10,000 miles and 25p per mile thereafter.
• Mileage Allowances can be set against tax on your tax return at full Fixed Profit Car Scheme rates even if your employer pays mileage at a lower rate. Alternatively the business proportion of the actual costs can be calculated, including some Capital Allowances (depreciation). Even some interest can be claimed on a car loan - see booklet IR125 available from the Inland Revenue website.
• If tax has been deducted on Emergency Tax Code or at Basic Rate there is a fair chance that you could be due for a tax rebate at the end of the year(unless you have more than one job at a time).

Tax Tips for Directors

• The National Insurance system works differently for directors. NI for directors is calculated on a year to date basis, therefore a director can earn £5,435 (08/09) before either the director or the company are due to pay any NI.
• Directors are not usually subject to the minimum wage unless they have a contract of employment with the company.
• If a director leaves an employment where NI has been calculated in the usual fashion, a NI rebate may well be due.
• Directors have to pay tax on Benefits in Kind no matter how high or low their earnings (the £8,500 lower limit does not apply to directors).
• The Directors Current Account is used to track how much is owed by the company to the directors (or vice versa). Often when a company is formed the directors introduce cash or equipment to the business, the value of which should be put into the directors current account for repayment.
• If the Company owes money to the directors it can be paid back without any tax being due (as it is simply a repayment of a loan) and if appropriate should be repaid in advance of salary or dividends.
• If the Directors owe money to the company, repayment should be made within 9 months of the year end, otherwise tax is due on the benefit of the loan.
• Shareholder/Directors should refer to the Limited Company Pages and in particular the Salary or Dividends Calculator which works out the tax savings available by taking dividends in place of salary.
• Directors will usually benefit from also reading our Employee Tax Tips page.

VAT Tips

• Be sure to get your VAT return and payment in on time otherwise you may end up paying interest and penalties.
• If you sell mainly to businesses it may be advantageous to register for VAT even your turnover is lower than the registration threshold (£67,000).
• The first VAT return can be used to reclaim VAT paid on stock held at the date of registration, capital items (such as computers or furniture) purchased before registration and consumables in the six months prior to registration.
• If your turnover is below £150,000 you may be able to register for the flat rate vat scheme which means that you do not have to calculate VAT on each individual sales and purchase invoice.
• Business now qualify for automatic bad debt relief on debts older than 6 months without the need to write to the debtor company.
• If your turnover is below £1,350,000 you may qualify for the annual and cash accounting schemes.
• Vat can only be reclaimed on vehicles if there are no windows or seats in the rear.
• It is only worth reclaiming VAT on motor fuel if there is fairly high mileage, otherwise the scale charges may be higher than the vat reclaimed.