Tax question - I'm a contractor on 1st contract
Discussion
I became a contractor last year, but have been rather sticking my head in the sand re: my tax and the paying thereof.
Basically, for the first few months of the contract I took everything out of the business account as we needed the funds for various projects. We've picked up since then in terms of setting aside monies to pay for the tax bill, but we are still a way behind "the game" if you see what I mean.
I haven't organised an accountant yet either. I know, I know. This will be done very soon.
In terms of tax - if I come up short this year can I hold some over and pay next year? Or will I get stung? I think I'm right in saying I can do one annual return which is paid in December for the previous financial year? Is this correct?
Thanks for any pointers for this naive fool
Basically, for the first few months of the contract I took everything out of the business account as we needed the funds for various projects. We've picked up since then in terms of setting aside monies to pay for the tax bill, but we are still a way behind "the game" if you see what I mean.
I haven't organised an accountant yet either. I know, I know. This will be done very soon.
In terms of tax - if I come up short this year can I hold some over and pay next year? Or will I get stung? I think I'm right in saying I can do one annual return which is paid in December for the previous financial year? Is this correct?
Thanks for any pointers for this naive fool
hornetrider said:
I became a contractor last year, but have been rather sticking my head in the sand re: my tax and the paying thereof.
Basically, for the first few months of the contract I took everything out of the business account as we needed the funds for various projects. We've picked up since then in terms of setting aside monies to pay for the tax bill, but we are still a way behind "the game" if you see what I mean.
I haven't organised an accountant yet either. I know, I know. This will be done very soon.
In terms of tax - if I come up short this year can I hold some over and pay next year? Or will I get stung? I think I'm right in saying I can do one annual return which is paid in December for the previous financial year? Is this correct?
Thanks for any pointers for this naive fool
Hold over relief is only available upon the disposal of business assets and the replacing thereof iirc. Capital gains wise anyways.Basically, for the first few months of the contract I took everything out of the business account as we needed the funds for various projects. We've picked up since then in terms of setting aside monies to pay for the tax bill, but we are still a way behind "the game" if you see what I mean.
I haven't organised an accountant yet either. I know, I know. This will be done very soon.
In terms of tax - if I come up short this year can I hold some over and pay next year? Or will I get stung? I think I'm right in saying I can do one annual return which is paid in December for the previous financial year? Is this correct?
Thanks for any pointers for this naive fool
You need to talk to an accountant and NOW!
[fellow contractor who didnt know his taxed-arse from gross-elbow not so long ago!
]What was the date of incorporation?
Has the company been set up for PAYE?
Does it need to register for VAT?
How does the company plan to pay its Corporation Tax liabilities (if it has any)?
How do you as an individual plan to pay your personal Income Tax and National Insurance liabilities arising from what you extract personally from the company?
Has the company been set up for PAYE?
Does it need to register for VAT?
How does the company plan to pay its Corporation Tax liabilities (if it has any)?
How do you as an individual plan to pay your personal Income Tax and National Insurance liabilities arising from what you extract personally from the company?
Eric Mc said:
1. What was the date of incorporation?
2. Has the company been set up for PAYE?
3. Does it need to register for VAT?
4. How does the company plan to pay its Corporation Tax liabilities (if it has any)?
5. How do you as an individual plan to pay your personal Income Tax and National Insurance liabilities arising from what you extract personally from the company?
EEEK!2. Has the company been set up for PAYE?
3. Does it need to register for VAT?
4. How does the company plan to pay its Corporation Tax liabilities (if it has any)?
5. How do you as an individual plan to pay your personal Income Tax and National Insurance liabilities arising from what you extract personally from the company?
Ummm....
1. Sept 06
2. Don't know *cough*
3. Probably now, turning over 60-80k P/A ?
4. Ummm, was planning to salary the Director at minimum wage and pay the rest of gross income as dividends. Have put aside some monies to afford this but not enough as of today.
5. Errr.... not so sure
Yes, I do need to speak to an accountant!
1. The EXACT date of Incorporation is needed to determine what the annual accounting period for the company is going to be. That, in turn, determines when the various deadlines the company must meet as part of its normal statutory duties i.e. filing accounts at Companies House, submitting the Corporation Tax return to HM Revenue and Customs etc.
The default setting for a company's financial year end is the end of the calender month in which it was incorporated. Therefore, if the company was set up on 16 September (say), then Companies House will allocate it a year end of 30 September. As the company was set up in September 2006, then its first set of accounts will cover the accounting period from the date of incorporation to 30 September 2007.
If you do not want the company to have a 30 September year end, you can apply to Companies House to have the year end changed to a calender month end that suits you best. I always think 31 March is the best year end for limited companies.
2.As you do not seem to know whether the company has been set up for PAYE or not, my hunch would be that it isn't. If it isn't, the next question needs to be, should it register for PAYE? In my opinion, ALL companies which pay monies to their directors (even if largely through dividends) ought to register for PAYE as there are other reasons why PAYE returns should be made other than paying over PAYE and NI.
3. If your turnover has exceeded £64,000 within the year , it MUST register for VAT (unless the bulk of its sales are VAT exempt or Zero Rated - which I doubt).
4. The dividend/salary mix is common - although salaries need to be declared through the PAYE system as outlined above, even if no PAYE or NI is due. Dividends will be returned on your personal Self Assessment tax return and any tax arising on the dividends paid through the Self Assessment payment system.
5. PAYE and NI on salaries is paid through the company under the PAYE system. Tax on dividends is paid (as explained above) by you personally through the Income Tax self assessment system.
Hope that helps.
The default setting for a company's financial year end is the end of the calender month in which it was incorporated. Therefore, if the company was set up on 16 September (say), then Companies House will allocate it a year end of 30 September. As the company was set up in September 2006, then its first set of accounts will cover the accounting period from the date of incorporation to 30 September 2007.
If you do not want the company to have a 30 September year end, you can apply to Companies House to have the year end changed to a calender month end that suits you best. I always think 31 March is the best year end for limited companies.
2.As you do not seem to know whether the company has been set up for PAYE or not, my hunch would be that it isn't. If it isn't, the next question needs to be, should it register for PAYE? In my opinion, ALL companies which pay monies to their directors (even if largely through dividends) ought to register for PAYE as there are other reasons why PAYE returns should be made other than paying over PAYE and NI.
3. If your turnover has exceeded £64,000 within the year , it MUST register for VAT (unless the bulk of its sales are VAT exempt or Zero Rated - which I doubt).
4. The dividend/salary mix is common - although salaries need to be declared through the PAYE system as outlined above, even if no PAYE or NI is due. Dividends will be returned on your personal Self Assessment tax return and any tax arising on the dividends paid through the Self Assessment payment system.
5. PAYE and NI on salaries is paid through the company under the PAYE system. Tax on dividends is paid (as explained above) by you personally through the Income Tax self assessment system.
Hope that helps.
hornetrider said:
Cheers for the tips and the email old bean... I'll look into the exact details and maybe give you a call in due course!
If I could offer... due course sounds slow! If I were you I'd get onto an accountant now. You could have it all sorted by the end of the week and at least know how much you owe the company have it covered with loan notes if you can't pay it back within the accounting year and just concentrate on getting your corp tax and any due VAT paid.p.s. If your incorporation date was September you might have to get it sorted this week!
That depends on when the VAT Compulsory Registration when or is going to be breached. But, as you infer, it could be quite soon. In addition to this, there may be PAYE or Self Assessment tax liabilities already generated in respect of incomes drawn by the director in the period from the commencement of trading to 5 April 2007.
Gassing Station | Business | Top of Page | What's New | My Stuff