Tax Tips

Top Ten Tax Tips
Top Ten Tax Tips
Autumn Seminars 2010

Tax is taxing – take care
Tax is taxing take care

• Disclaimer: The contents of this presentation and handouts
provide only an overview of the regulations in place at the
time, and no action should be taken without consulting with
the detailed legislation or taking professional advice.

2 www.piperhulse.com Piper Hulse ‐ Accountancy & Business Advisory Tel: 01785 850 060

Tax Evasion
Tax Evasion


Tax Avoidance
Tax Avoidance


#1: VAT – Flat Rate Scheme
#1: VAT Flat Rate Scheme
Revenue £100,000 £100,000 £100,000 £100,000
VAT on Revenue £20,000 £20,000 £20,000 £20,000
Revenue incl
Revenue incl VAT £120,000
£120 000 £120,000
£120 000 £120,000
£120 000 £120,000
£120 000
Costs VAT’able £10,000 £20,000 £10,000 £20,000
VAT on purchases £2,000 £4,000 £2,000 £4,000
NET VAT £18,000 £16,000 £18,000 £16,000

FRS VAT % 14% 14% 12.5% 12.5%
FRS VAT £16,800 £16,800 £15,000 £15,000

Better / (Worse) off £1,200 (£800) £3,000 £1,000


#1: VAT – Flat Rate Scheme
#1: VAT Flat Rate Scheme
• VAT taxable turnover less than £150,000 to join
VAT t bl t l th £150 000 t j i
• Once in can stay in until it reaches £225,000
• Charge VAT to customers at normal VAT rates
Charge VAT to customers at normal VAT rates
• Pay HMRC a flat % of revenue, different by trade e.g.;
– Range 4% to 14.5%
– C
Catering & restaurants 12.5%
i & 12 5%
– Management consultancy 14%
• Includes CAPEX – unless single items > £2k each
g
• No need to do VAT accounting on purchases and sales
• Good where purchase costs are low and predictable
• 1% reduction in first year of VAT registration
% d i i fi f i i
• See www.hmrc.gov.uk/vat


#2: Business mileage


• 40p / mile for first 10,000 miles
• 25p / mile thereafter
• Must be valid business miles
• Can t include to and from work
Can’t include to and from work
• If employer pays lower, the employee can claim the
difference in their tax return
difference in their ta ret rn
• Keep mileage records and diary / receipts


#3: Expenses
#3: Expenses

• A business expense is any expenditure that is
claimable through the business as long as it is
a “wholly, exclusively and necessary” expense
“ h ll l i l d ”
that was incurred by the business for its
performance of day to day duties and there is
performance of day to day duties and there is
no duality of purpose for mixed business and
personal usage.

#3: Business expenses – a long list
#3: Business expenses a long list
• Use of home for business – apportionment
• Professional fees – on approved HMRC list
• Pension & life insurance – take advice
• Health check & Eye test (VDU usage)
Health check & Eye test (VDU usage)
• Charitable donations
• Mobile phone

• http://www.hmrc.gov.uk/paye/exb/a‐z/a/index.htm


#4: The ball & chain
#4: The ball & chain
• £6,475 each
• Transfers tax
free
• Don’t forget IHT
Don t forget IHT


#5: The chimney sweep
#5: The chimney sweep
• £6 475
£6,475 personal allowance
l ll
• 13 Year olds +
• <16 no National Minimum
Wage
• 7am to 7pm only
• 2hrs Sunday
• But can’t send down the
mine or put in the factory
anymore!
• Check the rules

#5: Employing children
#5: Employing children
If you are under compulsory school leaving age you can only be
If you are under compulsory school leaving age you can only be
employed in certain permitted occupations:
• delivering newspapers, milk, groceries, foodstuffs, flowers or drapery
goods
• office work, except in premises licensed for the sale of intoxicating liquor,
betting or gaming
betting or gaming
• hotel and catering work except in the kitchen or portions of premises
licensed for the sale of intoxicating liquor
• work as a shop assistant, excluding any premises licensed for the sale of
intoxicating liquor, betting or gaming
• domestic work
domestic work
• light agricultural work or horticultural work for your parents.

13 www.piperhulse.com Piper Hulse – Accountancy & Business Advisory Tel: 01785 850 060

#6: MP s Flipper – Principal Private Residence
#6: MP’s Flipper – Principal Private Residence

• Principal Private Residence relief (PPR) on the family
home, whether the sole property or elected to be
the main residence.


#6: PPR conditions
#6: PPR conditions
Certain periods are deemed to be occupation;
Certain periods are deemed to be occupation;
• Any non occupation in first yr due to building or
renovation
• The last 3 yrs of ownership provided that at sometime
the house has been the PPR
the house has been the PPR
• Up to 4 years where the absence is due to employment
elsewhere in the UK
elsewhere in the UK
• Any period where the absence is due to employment
outside the UK
outside the UK
• If let the gain is apportioned between PPR and letting,
with the latter qualifying for £40k letting relief
with the latter qualifying for £40k letting relief

20% Off for cash
20% Off for cash


#7 & #8: Incorporation & Dividends
#7 & #8: Incorporation & Dividends
Profit before Sole Trader  & Partnership Limited Company
remuneration
Remuneration No flexibility Flexibility e.g.
plan All classed as Self Employment / Salary = £5.7k
Partnership income
Partnership income Dividends = Remainder
Dividends Remainder
Tax Payable NI Class 4 – 8% * NI Class 1 (ee & er) 23.8% *
Income Tax – 20%/40%/50% Income Tax – 10%/32.5%/42.5%
Corporation Tax 21%
Corporation Tax 21%
Income Tax No flexibility Flexibility
Timing Due as profits arise Due when dividends paid
£30k £9.3k
£9 3k £6.9k
£6 9k
£50k £17.2k £12.7k
£70k £26.7k £21.3k
£90k £36.3k £30.7k

• p g y g
Example scenario, savings vary according to circumstances.
• *  The NI rates quoted are the starting rates, they reduce as incomes increase

#9: Entrepreneurs Relief
#9: Entrepreneurs Relief
• 10% rate of Capital Gains Tax for qualifying sales
• Main rate = 18% or 28% (in take above income tax
threshold)
• £5m lifetime limit
• Applies to Sole Trader, Partnerships & Ltd Companies
p
• Must own the business for the 12 months prior to
the sale
p
• Available for associated disposals
– E.g. Sell Limited company & privately owned business
property together in the same transaction


#10: ISAs
#10: ISAs
• ISA ‐ £10,200 – Annual Limit per person
– £5,100 maximum for cash ISA
£5,100 maximum for cash ISA
– Invested from post tax earnings
–T f
Tax free one inside ISA (Income & CGT)
i id ISA (I & CGT)
– Can transfer between fund managers and retain
ISA status
– Can take money out when you like
– Can invest in a wide variety of investments


Tax Tips

Recommended

Recommended

More Related Content

Viewers also liked

Viewers also liked (6)

Similar to Tax Tips

Similar to Tax Tips (20)

Recently uploaded

Recently uploaded (20)

Tax Tips