In this article, we give you an overview of the basics of limited company tax as written by the senior accountant from Dolan Accountancy. This includes the various taxes you will be liable to pay (or collect) as a limited company, and when you have to pay them.
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If you have started a business or are thinking about starting one, then you will need to decide on a business structure. You can choose to create a limited company, work as a sole trader or a partnership. Each business structure varies, especially when it comes to accounts and the bookkeeping. Sole trader owners are classed as self-employed, therefore they have their own set of tax rules and regulations to adhere to.
If you are a limited company director, you are liable to pay both employers’ and employees’ National Insurance Contributions on any salaries you pay above the current threshold.
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Readers question: I was wondering if I could get some advice about being self-employed and living abroad. I want to open a business account as a sole trader in the UK and pay my national insurance and pension to the UK. However, I live in Slovenia with temporary residency, as I am a British citizen. I live here as I got married to a Slovenian. I wanted to know how can I open as a sole trader as I work from home online teaching on a platform based in Asia. They just pay my salary nothing else. What would I have to pay to Slovenia as I live here and would I have to pay double social security? Or claim my benefits from the UK when I need them. Also, would I need a virtual office in the UK? My students, I just interact with them from the website the company provides.
With Brexit and the uncertainty at No. 10, it’s becoming increasingly hard to predict what upcoming legislation will be enforced and when – leaving businesses, landlords and the self-employed all striving for clarity.
Readers question: I have set up my own catering company at the moment and I am doing the food in a large Irish bar in Edinburgh. I will be paying my employee and buying all the food stock etc. My query is, would I be better off being an employee of my company and paying tax NI as normal with the addition of employer NI, or would I be better to take dividends monthly as my salary, my salary will be £40,000 per annum.
Giving back to the community and giving to charities has become a core part of most small business culture. From the Federation of Small Business (FSB), a ‘Small Business, Big Heart’ was published highlighting the ‘giving back’ attitude of small businesses in the UK. It is, therefore, the time for the Government to deliver on the National Insurance Contributions manifesto promise (NIC’s), which consisted of a year holiday from the NIC’s for small businesses.
The chancellor has delivered his most small business friendly Budget to date. The Budget has bought in good news for the anxious small businesses. There is always a nervous environment pre-Budget, and small business owners can now breathe a sigh of relief. From the VAT threshold being kept at £85,000 to the fuel duty to be frozen for the ninth year running, the chancellor has been praised by the small business community.
The press coverage of the current outcry over public sector figures working via their own personal service companies has resulted in many inaccurate tax claims being made by the media.
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