Want to insure you have paid sufficient NI and will get the full state pension? HMRC have created a link where you can very quickly get an overview and all the information you need. Just follow https://www.gov.uk/check-state-pension
Are HMRC chasing you regarding PAYE, Corporation Tax, personal tax or an underpayment of any tax? If the answer is yes if you give us a copy of the correspondence we can have a look at it for you and liaise with HMRC for you to resolve the issue.
Dormant Companies are defined in 2 different ways by Companies House and HMRC:
A Dormant company at Companies House is if any transaction goes through the business, then you are not dormant. There are exceptions to this such as paying the fee for the Confirmation Statement, changes to shareholding etc. meaning if you have bank charges going through when you haven’t made any sales, then your company is not dormant.
HMRC state that if you are not trading then you are dormant meaning if you have don’t have any trading income or expenses you are classed as dormant with them.
If you have any further questions about dormant companies then please let us know.
PAYE
You must pay your PAYE bill to HM Revenue and Customs by the 22nd of the month (or the 19th of the month if paying by cheque through the post).
If you are in the CIS scheme as a subcontractor, you may be able to apply for gross status where rather than being taxed monthly, you pay at the end of the year. If you would like to know if you are eligible for gross payment status, please contact us.
I recently saw a leaflet for something I could be have been interested in. At the point of taking the next step I looked for an email address to email to arrange a meeting to discuss their offering. My impression of this business suddenly did a nose dive on the professionability scale. They had a hotmail email account. Was this a part time business? Another person involved in this business had an email address sexysuzy@……. For the cost of a domain running at around £6 for 2 years, why had they not grabbed it?
I then saw that they had a website with the business domain so why were they not using the domain with an associated email address? This person had a good website so I proceeded to email.
Not getting a reply I telephoned the number on the website but it went to the home phone answerphone. Had I got the wrong number?
It took three weeks for an email reply which was full of apology. Was this person taking their business seriously? Could they cope with the work I was proposing to give them?
We met up and he gave me his business card. Oh dear! I think it was a DIY job from Staples and was completely mismatched to the website. It was poorly thought out, poorly printed and was misaligned. It gave incomplete information and contained spelling mistakes.
This business was giving out all the wrong messages before we had had the opportunity to work together.
The meeting went well but the jury is still out as to whether to use him. I have my doubts.
What is the point of all this? This person could have made a much stronger impact with so little effort.
Had he had a consistent brand image – domain, logo, standard of presentation, my impression would have been very different.
Had the telephone been answered by a human or by a professional answerphone, my impression would have been very different.
Had the initial response been earlier and the final proposal sooner after the meeting, my impression would have been very different
By the time we got to the end of the sale process, I had lost confidence in this person which is such a shame. Time will tell if I made the right decision.
When a company is incorporated at Companies House, it must have at least one share. Most commonly shares are in £1 increments although this is not compulsory. One penny, 25p, 50p and £5 per share are not unusual. Ordinary A shares come with full voting rights. Not all shares carry voting rights. Typically, A shares do and the others don’t. ‘Alphabet shares’ can be issued and it is most usual to have A shares for the directors and B shares for example, to the spouses, partners, children or employees. Corporate entities can also be shareholders. It is acceptable for one individual to hold more than one class of share in a company.
If you are over the age of 16, you can be a shareholder. You do not need to be a director to be a shareholder, nor do you need to be a shareholder if you are a director.
If you are a shareholder of a limited company and the company declares a valid dividend, you are entitled to receive a dividend should a dividend be issued to your class of share. Just because you are a shareholder, it does not guarantee you will receive a dividend.
A company can only pay a dividend if it has distributable reserves. This means it has made a profit after tax has been deducted. Dividends can be taken at any time but it is advised to take no more frequently than quarterly. Quarterly, half yearly or annually are all acceptable. Doing so more frequently may be construed as salary by HMRC and be liable to personal income tax and national insurance at the prevailing rates. Issuing a dividend monthly for £1200 and a salary of £987 is not realistic. Profits rise and fall from month to month. In the example below a company makes modest profits and every quarter calculates how much can be extracted in dividends. You will see that the profits rise and fall over the course of the year and in this example, a total of £3807 can be taken in dividends over the course of the year.
|
Jun- 17 |
Jul- 17 |
Aug-17 |
Sep-17 |
Oct- 17 |
Nov-17 |
Dec-17 |
Jan- 18 |
Feb-18 |
Mar-18 |
Apr- 18 |
May-18 |
Annual figs |
|
|
SALES |
£3,000 |
£3,250 |
£1,200 |
£1,750 |
£2,400 |
£2,500 |
£1,200 |
£1,750 |
£4,000 |
£2,700 |
£2,550 |
£2,700 |
£29,000 |
|
COST OF SALES |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£50 |
£600 |
|
GROSS PROFIT |
£2,950 |
£3,200 |
£1,150 |
£1,700 |
£2,350 |
£2,450 |
£1,150 |
£1,700 |
£3,950 |
£2,650 |
£2,500 |
£2,650 |
£28,400 |
|
EXPENSES |
£2,000 |
£2,500 |
£1,200 |
£2,000 |
£2,000 |
£2,000 |
£2,000 |
£2,000 |
£2,000 |
£2,000 |
£2,000 |
£2,000 |
£23,700 |
|
NET PROFIT |
£950 |
£700 |
£50 |
£300 |
£350 |
£450 |
£850 |
£300 |
£1,950 |
£650 |
£500 |
£650 |
£4,700 |
|
CT @ 19% |
£181 |
£133 |
£10 |
£57 |
£67 |
£86 |
£162 |
£57 |
£371 |
£124 |
£95 |
£124 |
£893 |
|
PROFIT AFTER TAX |
£770 |
£567 |
£41 |
£243 |
£284 |
£365 |
£689 |
£243 |
£1,580 |
£527 |
£405 |
£527 |
£3,807 |
|
AMOUNT AVAILABLE AS DIVIDEND |
£1,296 |
£405 |
£648 |
£1,458 |
£3,807 |
Put simply, dividends are profit (sales minus expenses) after tax provision (19%) calculated on a quarterly basis. It is not necessary to issue a dividend if you don’t want to but if you do, the guidance in this notice should be used.
The bookkeeper/business owner prepares the management accounts which shows CT provision and calculates the dividends available for distribution. A meeting is held and it is agreed what dividends will be issued. Take the example above. In Q1 a profit of £1296 was available. Let us say there are 3 classes of share.
John holds 1 A share and 1 C share
Janet holds 1 B share
Susan holds 1 D share
At the meeting, it is agreed to issue 100% of the profits equally between the 4 classes of share
25% of £1296 is £324 per share category.
In this example, John gets £648 and Janet and Susan each get £324. Minutes and dividend vouchers need to be issued to John, Janet and Susan each time a dividend is issued.
Let us suppose in Q2, the dividend is only issued to the B share holder. 100% of the dividend (£405) goes to Janet.
John could use any combination he wants to distribute the dividends.
For the year ending 5/4/18, each shareholder is entitled to receive £5000 tax free in dividends. For the year ending 5/4/19, each shareholder is entitled to receive £2000 tax free. Each shareholder is required to submit a personal tax return declaring their dividend income. Dividends over the initial tax free allowance are taxed at 7.5% up to £34,500, the dividends are taxed at 32.5% with no national insurance contributions currently required.
Doing your bookkeeping on a regular basis and producing and acting upon management accounts is crucial. With MTD (Making Tax Digital) coming in in April 2019, it will be necessary for companies to submit their accounts on a quarterly basis to HMRC. By doing your bookkeeping regularly, you will ease the pain of having to do this. If you need more help or advice concerning dividends or bookkeeping, please contact us for an exploratory meeting.
We can run your payroll for you and save you the worry of meeting HMRC’s strict compliance rules and missing important deadlines. When we run your payroll, whether it is weekly, monthly or 4 weekly we will email you the following documents;
Our fees for payroll from April 2019 are as follows;
Employees and new scheme
Auto-enrolment for setting up new scheme
Childcare voucher schemes allow an employee to receive childcare vouchers in lieu of up to £55 per week of their wages and no tax or national insurance will be paid on this. However, this scheme was closed to new applicants with effect from 4th October 2018 (although the scheme continues to run for successful applicants prior to that date, provided certain conditions are met).
The government has introduced a new childcare scheme, called Tax-Free Childcare. This could provide up to £500 every 3 months, up to £2000 per year, to help with childcare costs for each child. The funds must be used for approved childcare. Therefore, the childcare provider must be signed up to the scheme.
To qualify for Tax-Free Childcare, the claimant and partner must be in work for 16 hours a week. Single claimants may also apply. It is possible to claim if on sick leave, annual leave or parental leave (although it is not possible to claim for the child for whom the parental leave is being taken). If the claimant is not working but the partner is, then it may still be possible to qualify if in receipt of certain benefits or allowances.
Child(ren) are eligible up to 1st September following their 11th birthday. Adopted children are also eligible, but foster children are not. If a child is disabled, then it may be possible to qualify for Tax-Free Childcare for longer.
It is possible to receive Tax-Fee Childcare at the same time as receiving 30 hours free childcare if eligible for both. However, it is not possible to receive Tax- Free Childcare at the same time as receiving Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers (if already in receipt of childcare vouchers prior to 4th October 2018).
The HMRC website has a “childcare calculator” link, designed to help work out whether Tax – Free Childcare is the best option, as opposed to other benefits. It is also possible to apply online for Tax – Free Childcare, again through the HMRC website.
Please contact Tracy if you would like any further information on this.