Often small business owners have low incomes, particularly when the business is in the start up phase meaning they may be able to claim
If you live in another EEA country but you are still liable to pay (and actually pay) UK National Insurance contributions (for instance you live in Republic of Ireland but work in Northern Ireland) you may still be able to claim
If you (or your partner) go abroad for up to eight weeks at a time, HMRC will treat you as if you are still in the UK, providing you intend your visit abroad to be temporary. Temporary means you expect it to last less than 52 weeks.
Couples find it complicated – Members of a couple must make a joint claim with their partner. Although this may appear a fairly straightforward and sensible requirement, it is one of the more complicated and problematic parts of the tax credits system. Ask your accountant for help.
Crown Servants are exempt from the absence rules
One area of particular difficulty in determining whether to make a single or joint claim is where one partner is in the UK and the other is not. The interaction with various EU law rules makes this a difficult area.
The Government wants to help working families and currently if you are an employee your employer can help with childcare and could for example buy childcare vouchers of up to £55 per week, the vouchers would be a tax free benefit to the employee. However, if you’re self employed you aren’t an employee so the rules don’t apply.
So recently there has been a consultation on what should be be done in the future.
The key proposals are:
New Scheme to go live in Autumn 2015
Working Families will open Voucher Accounts (self employed or employed)
As parents pay in the government tops up the account with 20p for every 80p paid in
Top up capped at £1,200
To be eligible all parent must work and not receive tax credits or be an additional rate tax payer
Tax Relief on Charity Donations – Are you using Gift Aid? are you a higher rate tax payer entitled to additional relief?
Saving on Inheritance Tax – Many people don’t have a Will let alone any IHT planning!
Making Use of ISA’s – Why get taxed on the interest on your savings if you could have an ISA? Its easy to get an ISA and you can still have access to your ISA savings if you need it, the current ISA allowance is £11,520 or £5,760 for cash ISA’s
You are entitled to plan your tax affairs in a way that makes sure you do not pay more tax than you have to. There are many legitimate ways in which you can save tax, or example by saving in a tax-free ISA (Individual Savings Account), making donations to charity through Gift Aid, claiming capital allowances on assets used in your business or paying into a pension scheme.
Here are 10 ways to pay less tax:
Choose the right business structure for your business – most businesses start out as sole traders but once they start making profits convert to limited companies, this is because sole traders pay income tax starting at 20% and national insurance class 2, £2.70 per week and class 4, 9% on profits between £7,755 and £41,450, whereas, in a company a you could pay the tax and NI free salary of £7,748 and then pay dividends from profits after corporation tax of 20%
Employ your family – Children can legally work from the age of 13 which means they can perform activities which are relevant and justifiable in your business. Each member of your family has a tax free allowance of £9,440 (2013/14).
Avoid earning more than £100,000 – Once you earn over £100,000 you start to lose your personal allowance, when earnings are above £118,880 all of your allowance of £9,440 will have been lost
Pay into your Pension – Currently you can pay £50,000 per year into to your pension
Pay Dividends – Generally directors will take a low directors fee and the rest of their income in Dividends