Ltd company tax for dummies....
Discussion
I am going to watch this thread, since I have recently found out that a number of my tenants, some Doctors, bank employees, redundant bank VAT staff, have formed their own Limited companies.
One works with a London based Asian bank, yet has created a clothes manufacturing Limited company, the same registered at a Blackpool address.
Another tenant (divorced with one teenage daughter) was recently made redundant by a bank, has recently set up an accountancy Limited company. I pretty sure he has no clients.
And yesterday a tenant who is a Doctor working within NHS, informed me that he had formed his own Limited Company.
Lastly, a Property Management Company that I recently carried out a search on, had formed six (6) Limited Companies, ranging from Accountancy, IT, Property Maintenance etc. etc.
All of the above appears to me to be for reducing tax, but when I ( residential landlord) have approached accountants for help, advice in forming a Limited Company, their response has always been "not worth the effort".
One works with a London based Asian bank, yet has created a clothes manufacturing Limited company, the same registered at a Blackpool address.
Another tenant (divorced with one teenage daughter) was recently made redundant by a bank, has recently set up an accountancy Limited company. I pretty sure he has no clients.
And yesterday a tenant who is a Doctor working within NHS, informed me that he had formed his own Limited Company.
Lastly, a Property Management Company that I recently carried out a search on, had formed six (6) Limited Companies, ranging from Accountancy, IT, Property Maintenance etc. etc.
All of the above appears to me to be for reducing tax, but when I ( residential landlord) have approached accountants for help, advice in forming a Limited Company, their response has always been "not worth the effort".
The trouble is, any book is almost out of date as soon as it is published. We have already had two budgets this year and there will be the Autumn Statement tomorrow - so company taxation has already changed fundamentally in this year alone.
Many of those people described in the above post may already be regretting their decision to form limited companies.
The simple rule is that, if you are only a basic rate taxpayer, forming a limited company will not save you much tax. It begins to make sense when a person's income goes into the Higher Rate Tax bands. But, as I said, we live on shifting sands when it comes to the tax treatment of company profits and the extraction of same.
Many of those people described in the above post may already be regretting their decision to form limited companies.
The simple rule is that, if you are only a basic rate taxpayer, forming a limited company will not save you much tax. It begins to make sense when a person's income goes into the Higher Rate Tax bands. But, as I said, we live on shifting sands when it comes to the tax treatment of company profits and the extraction of same.
Wings said:
I am going to watch this thread, since I have recently found out that a number of my tenants, some Doctors, bank employees, redundant bank VAT staff, have formed their own Limited companies.
One works with a London based Asian bank, yet has created a clothes manufacturing Limited company, the same registered at a Blackpool address.
Another tenant (divorced with one teenage daughter) was recently made redundant by a bank, has recently set up an accountancy Limited company. I pretty sure he has no clients.
And yesterday a tenant who is a Doctor working within NHS, informed me that he had formed his own Limited Company.
Lastly, a Property Management Company that I recently carried out a search on, had formed six (6) Limited Companies, ranging from Accountancy, IT, Property Maintenance etc. etc.
All of the above appears to me to be for reducing tax, but when I ( residential landlord) have approached accountants for help, advice in forming a Limited Company, their response has always been "not worth the effort".
I'm both a Ltd Co Contractor (IT), and a Residential LandlordOne works with a London based Asian bank, yet has created a clothes manufacturing Limited company, the same registered at a Blackpool address.
Another tenant (divorced with one teenage daughter) was recently made redundant by a bank, has recently set up an accountancy Limited company. I pretty sure he has no clients.
And yesterday a tenant who is a Doctor working within NHS, informed me that he had formed his own Limited Company.
Lastly, a Property Management Company that I recently carried out a search on, had formed six (6) Limited Companies, ranging from Accountancy, IT, Property Maintenance etc. etc.
All of the above appears to me to be for reducing tax, but when I ( residential landlord) have approached accountants for help, advice in forming a Limited Company, their response has always been "not worth the effort".
When contracting to other Ltd companies it makes a lot of sense to be Ltd and VAT registered. In fact its very difficult to do it through anything other than a Ltd company (or Umbrella).
If your tenants are trading in one field, but claiming to be in another then it may well be to get a better FRS VAT rate, which would be fraud.
As a residential landlord its just not worth it, there really are no benefits as your dealings are between you and other private individuals.
Also its very likely that Contracting through a Ltd company will be very different after tomorrows Autumn statement.
Edited by 98elise on Tuesday 24th November 12:47
I was thinking more in line with this article, link below.
http://www.telegraph.co.uk/finance/personalfinance...
http://www.telegraph.co.uk/finance/personalfinance...
Wings said:
I was thinking more in line with this article, link below.
http://www.telegraph.co.uk/finance/personalfinance...
May 2015 is already dangerously out of date regarding general advice on companies and how they may save you tax.http://www.telegraph.co.uk/finance/personalfinance...
Don't be daft,assuming your tax and associated issues are relatively simple and straight forward get an accountant or suitably experienced person to do it for you until you have gained more experience in such matters.Once you are more confident in managing your personal financial affairs you might then feel able to tackle the issue yourself.
On relatively small businesses any potential 'gains' available through slick accounting can soon be swallowed up if you get it wrong.Mr Inland Revenue does not like it when he thinks he's getting 'rolled over' or someone is taking the ....! A small 'routine' discussion can open a very large can of worms ! remember that a business submission can end up with you having to answer questions about your personal taxation matters.(thats not supposed to happen but you have to be naive to believe it doesn't).Paying a professional to do things like this releases pressure on you and you can spend the time you have saved doing far more productive things.
On relatively small businesses any potential 'gains' available through slick accounting can soon be swallowed up if you get it wrong.Mr Inland Revenue does not like it when he thinks he's getting 'rolled over' or someone is taking the ....! A small 'routine' discussion can open a very large can of worms ! remember that a business submission can end up with you having to answer questions about your personal taxation matters.(thats not supposed to happen but you have to be naive to believe it doesn't).Paying a professional to do things like this releases pressure on you and you can spend the time you have saved doing far more productive things.
I do have an accountant and he is filing both my personal and business accounts.
However, there are also tricks and ideas which you might be able to implement, that is what I mean. For example, this week I saw my accountant and he asked about my business mileage. I said I don't bother to record it because I charge a "time" rate instead of a miles rate. He said no, I can still charge the company my mileage rate at 45p per mile for the first 4000 miles. Sooo, now I have to go back and identify my business trips and the mileage etc.
There must be other tips out there - and also I wanted a general understanding (if that is possible) of business tax and Ltd company tax etc.
However, there are also tricks and ideas which you might be able to implement, that is what I mean. For example, this week I saw my accountant and he asked about my business mileage. I said I don't bother to record it because I charge a "time" rate instead of a miles rate. He said no, I can still charge the company my mileage rate at 45p per mile for the first 4000 miles. Sooo, now I have to go back and identify my business trips and the mileage etc.
There must be other tips out there - and also I wanted a general understanding (if that is possible) of business tax and Ltd company tax etc.
Jasandjules said:
I do have an accountant and he is filing both my personal and business accounts.
However, there are also tricks and ideas which you might be able to implement, that is what I mean. For example, this week I saw my accountant and he asked about my business mileage. I said I don't bother to record it because I charge a "time" rate instead of a miles rate. He said no, I can still charge the company my mileage rate at 45p per mile for the first 4000 miles. Sooo, now I have to go back and identify my business trips and the mileage etc.
There must be other tips out there - and also I wanted a general understanding (if that is possible) of business tax and Ltd company tax etc.
Mileage is 45p per mile for the first 10,000. 25p per mile after that.However, there are also tricks and ideas which you might be able to implement, that is what I mean. For example, this week I saw my accountant and he asked about my business mileage. I said I don't bother to record it because I charge a "time" rate instead of a miles rate. He said no, I can still charge the company my mileage rate at 45p per mile for the first 4000 miles. Sooo, now I have to go back and identify my business trips and the mileage etc.
There must be other tips out there - and also I wanted a general understanding (if that is possible) of business tax and Ltd company tax etc.
But that is on personal vehicles, ie. the business doesn't pay for costs related to them (fuel, repairs, tax, etc).
Jasandjules said:
I do have an accountant and he is filing both my personal and business accounts.
However, there are also tricks and ideas which you might be able to implement, that is what I mean. For example, this week I saw my accountant and he asked about my business mileage. I said I don't bother to record it because I charge a "time" rate instead of a miles rate. He said no, I can still charge the company my mileage rate at 45p per mile for the first 4000 miles. Sooo, now I have to go back and identify my business trips and the mileage etc.
There must be other tips out there - and also I wanted a general understanding (if that is possible) of business tax and Ltd company tax etc.
That is such a normal claim that I wouldn't even look on it as a "tip". However, there are also tricks and ideas which you might be able to implement, that is what I mean. For example, this week I saw my accountant and he asked about my business mileage. I said I don't bother to record it because I charge a "time" rate instead of a miles rate. He said no, I can still charge the company my mileage rate at 45p per mile for the first 4000 miles. Sooo, now I have to go back and identify my business trips and the mileage etc.
There must be other tips out there - and also I wanted a general understanding (if that is possible) of business tax and Ltd company tax etc.
Do you reclaim from your company for costs of the business that you have paid personally out of your own pocket. That is very normal for small businesses as it is very likely that you do,. now and then, pay for items for the business using your own personal cash, bank or credit card.
Do you make any claim for "Business Use of Residence". It is not always appropriate but if it is, HMRC will allow a claim to be made.
Found it:-
Contractor Group being duped by Conservatives over IR35
http://www.itcontractor.com/contractor_group_being...
http://www.computerweekly.com/feature/Tories-will-...
Contractor Group being duped by Conservatives over IR35
http://www.itcontractor.com/contractor_group_being...
http://www.computerweekly.com/feature/Tories-will-...
Eric Mc said:
That is such a normal claim that I wouldn't even look on it as a "tip".
Do you reclaim from your company for costs of the business that you have paid personally out of your own pocket. That is very normal for small businesses as it is very likely that you do,. now and then, pay for items for the business using your own personal cash, bank or credit card.
Do you make any claim for "Business Use of Residence". It is not always appropriate but if it is, HMRC will allow a claim to be made.
Well, I didn't realise I could charge my travel time then charge my business the 45ppm....... I thought it was one or the other..Do you reclaim from your company for costs of the business that you have paid personally out of your own pocket. That is very normal for small businesses as it is very likely that you do,. now and then, pay for items for the business using your own personal cash, bank or credit card.
Do you make any claim for "Business Use of Residence". It is not always appropriate but if it is, HMRC will allow a claim to be made.
Yes, I do that - have a spreadsheet of monies I pay in, I actually then have it as a loan and get the interest I would have got on the money too.
Yes, the home use is being dealt with by my accountant as well given I do a lot of work from home.
Jasandjules said:
Well, I didn't realise I could charge my travel time then charge my business the 45ppm....... I thought it was one or the other..
Yes, I do that - have a spreadsheet of monies I pay in, I actually then have it as a loan and get the interest I would have got on the money too.
Yes, the home use is being dealt with by my accountant as well given I do a lot of work from home.
#Yes, I do that - have a spreadsheet of monies I pay in, I actually then have it as a loan and get the interest I would have got on the money too.
Yes, the home use is being dealt with by my accountant as well given I do a lot of work from home.
I presume when you say "Well, I didn't realise I could charge my travel time" you are talking about charging your travel time to your customers?
Assuming that is what you meant, you can charge whatever you want to to your customers - as long as, of course, your customers are in agreement with how and what you charge them. That is a commercial decision you must make.
Irrespective of whether you wish to recover your travel costs directly from your customers, that does not negate the fact that travel costs will have been incurred by your business and, as such, these costs will be offsetable as a cost "wholly and exclusively incurred in respect of the trade".
HMRC allows two approaches. You can either offset the actual costs incurred i.e. process the original expense amounts through the business in the normal way. Or, in the case of motoring costs, an amount equivalent to 45p per mile for the first 10,000 business related miles and 25p thereafter can be entered as the motoring cost incurred during the year.
The important thing to know is how HMRC defines "business related" travel. The fairly recent "Saamadian" case highlights what HMRC considers allowable and, more importantly, not allowable.
http://www.accountingweb.co.uk/article/samadian-mi...
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