When you first form a limited company, the formation agent will arrange the issue of the Subscriber Shares.
Following that you can allocate new shares using Form 88(2)
Before the Companies Act 2006 companies had authorised share capital so before issuing shares:
- Check the Memorandum and Articles
- Check any Shareholder agreements
As your company grows, the shareholders may need to transfer shares to new shareholders. To do this you need to:
- Inform Companies House on the next Annual Return (you can only tell companies house who the shareholders are on an annual return so it could be a while before companies house get to know the the shareholders have changed)
- Your Bank and Professional Advisers will need information on changes to Shareholders
Your shareholders need to be aware that if they give away shares or make a gain from selling shares they may be liable for Capital Gains Tax, however, they may be entitled to tax relief like the Entrepreneurs Tax Relief and that each year there is an exempt amount of capital gains for individuals.
At a time when HMRC are writing to employees who have underpaid tax because they were on the wrong tax code for 2011/12, it might be worth giving some thought to unclaimed tax reliefs
Here’s the top ten list of our biggest tax wastes:
|Area of Tax Wastage
||Amount of Wastage
|Income-related Tax Credits
|Tax relief on pension contributions
|Tax relief on charity donations
|Savings on Inheritance Tax
|Making use of ISAs
|Avoiding penalties for late filing of tax return
|Savings on Capital Gains Tax
|Making use of Employee Share Schemes
|Income tax and Personal Allowances
|| £83 million
£12.6 billion is an incredible amount of money and I am sure many people aren’t even aware that they could be claiming tax relief or refunds, so why not check what you could claim and makesure your tax is right.
For those who haven’t heard of Bartercard.
Bartercard is the World’s largest business to business Trade Exchange servicing over 75,000 trading members across 6 countries with the World’s largest computerised Barter Network
Basically members exchange goods and services instead of cash and a Trade Pound has the same value as a Pound Sterling.
Bartercard is reported in your accounts in the same way as a Bank Account.
My Bartercard contacts tell me that currently one of the most popular ways to use Bartercard is to repay Directors Loans, the Director sells or auctions personal items, selling via Bartercard is easy and members are always keen to buy, they then use the Trade Pounds to repay the Directors Loan.
I know you might say why don’t you just sell for cash, which you could do, but because some products such as electrical items are in short supply in Bartercard, on the auction site (much like EBay) they will almost certainly be sold for a premium price.
Once you have paid off your directors loan you may be eligible for a Corporation Tax refund. https://stevejbicknell.com/2012/01/02/pay-off-your-directors-loan-and-reclaim-corporation-tax/
The construction industry has a large number of self employed subcontractors covering most trades, they often work for a variety of Contractors on multiple sites, which generally means that each year they need help with their self assessment returns.
Here are some suggestions to help:
1. If you are paid net of deduction makesure you have a complete set of Payment Deduction Statements http://www.hmrc.gov.uk/forms/cis-payment-deduction-statement.pdf these statements show how much tax has been deducted and you will be able to use these statements to reclaim that tax on your self assessment return, often the CIS deductions will mean that too much tax has been paid
2. Travel – Self employed workers claim all of their travel and motoring costs and exclude a % for private use
3. Clothing & PPE – gather together all the receipts you have for specialist clothing and PPE
4. Vehicles, Tools, Plant and Equipment – these items of expenditure may be eligible for Capital Allowances and the Annual Investment Allowance (£25,000 for 2012/13) if you have any private use then this will need to be assessed and excluded
5. Other Expenses – You will need details of Insurance, Accountancy, Materials, Bank Charges, Phones, Stationery, and anything else you spent money on
It might seem boring but collecting the information noted above could save you thousands.
I have always thought that National Insurance (NI) is a strange tax compared to PAYE because:
- For normal employees it isn’t cumulative its based on their earnings in a month or week (although Driectors can opt for Cumulative)
- It only applies between the ages of 16 and retirement
- Its applied at different rates to the Self Employed and there are 4 classes of NI
But the thing that seems totally bizarre to me is that for each job you have you get new NI limits, so if you had a variety of part time jobs you might not pay any National Insurance because your earnings were below the threshold in them all.
This also applys if you are Director, you get a new cumulative limit with each employer.
The current main Class 1 rates are 12% for employees and 13.8% for employers
If you’re employed you pay Class 1 National Insurance contributions. The rates are:
- if you earn more than £146 a week and up to £817 a week, you pay 12 per cent of the amount you earn between £146 and £817
- if you earn more than £817 a week, you also pay 2 per cent of all your earnings over £817
Apart from having multiple jobs or changing jobs here are a few ways that you can save NI:
- Salary Sacrifice https://stevejbicknell.com/2011/10/22/salary-sacrifice-could-save-45-8-in-tax-and-ni-how-does-it-work/
- Special NI Holiday Schemes https://stevejbicknell.com/2011/10/15/holiday-pay-without-any-national-insurance-to-pay/
- Regional Employer NI Holiday – save up to £50,000 https://stevejbicknell.com/2011/10/08/reduce-your-ni-bill-by-50000/
- Benefits in Kind – for example Gym membership or Assets placed at the employees disposal – Tax and Class 1A NI is payable but the employee doesn’t pay NI – basically any of th brown boxes on the P11D https://stevejbicknell.com/2011/11/07/tax-free-fitness/https://stevejbicknell.com/2012/04/14/directors-loan-vs-private-use-of-company-assets/
I have been looking at the Tax Relief impact on Pension Investments
Lets say you invest £10,000 per year of earned gross income, increasing each year by 3% for inflation and see the effect of tax relief at 40% and 20%, assuming a return on the investment of 7% (which you should get with Commercial Property Investment)
|40% Tax Rate
||20% Tax Rate
Even when you consider:
- Your money is locked up till you are 55
- You pay tax when you take money out of the pension
- You can get 25% out of the pension tax free
The difference in growth is massive
If you do salary sacrifice you can increase the tax effect by saving national insurance too.
So why aren’t more people investing in pensions?
If you have a company car the chances are Benefit in Kind tax will be a concern for you, HMRC have a calculator to work this out
But both you and your company could be better off with a Low Emmission or Electric Car.
If you buy a new car for your business that has CO2 emissions of 110 grams or less per kilometre (g/km) driven, or is electric, you can qualify for a 100 per cent first-year capital allowance. This allows you to offset the whole cost of the investment against taxable profits in the year you make the purchase until 31 March 2013.
New cars have fuel economy labels which show how fuel efficient they are. The label shows how much CO2 the car emits and also how much vehicle tax you will have to pay each year. Lower CO2 emissions mean lower vehicle tax and lower running costs.
Benefit in Kind
Currently zero emmission electric cars have zero benefit in kind but this is set to change in 2015 when the rate will be 13%.
A 5% Benefit in Kind band is now in place for cars that emit below 75g/km CO2, but this will also change in 2015.
Back in December I did a Blog about how to make your claim https://stevejbicknell.com/2011/12/20/how-to-claim-tax-relief-for-employment-expenses/
But many employees don’t seem to realise that they could be entitled to Flat Rate Expenses
If you have to spend money on tools or specialist clothing for your job you may be entitled to either:
- tax relief for the actual amounts you spend
- a flat rate deduction
Flat rate deductions are amounts that HM Revenue & Customs agreed nationally – or sometimes locally if conditions are very different – with trade unions or other bodies.
The deductions cover what’s typically spent each year by employees in different trades. For example, someone working in the clothing industry can get a deduction of £60 each year. A cabinet maker can get a deduction for £140 while the deduction for a stone mason is £120.
You don’t have to be a member of a trade union to get the deduction. You’ll also benefit from less paperwork – you won’t have to keep a record of all the individual amounts you spend.
There is a full list of the Flat Rates at
For example, I am the FD of SCA Group, we employ Scaffolders and the rate for Scaffolders is £140 per year, at 20% tax that means £28 as a tax refund.
Mileage for the current tax year can be reclaimed at a maximum of 45p per mile for the first 10000 miles then 25p after that
Most people are already using these rates, but a large number of businesses don’t reclaim the VAT on the Fuel element – see VAT Notice 700/64
8.7 My employees are paid a mileage allowance, how do I work out my input tax?
You work out your input tax by multiplying the fuel element of the mileage allowance by the VAT fraction. You can do this for all fuel bought
The allowance paid to employees must be based upon mileage actually done.
|Company cars: advisory fuel rates
|The rates below apply from 1 December 2011.
|1400cc or smaller
|1401cc to 2000cc
|Bigger than 2000cc
|1600cc or smaller
|1601cc to 2000cc
|Bigger than 2000cc
So this is how to work out the claim:
1000 business miles = 1000 x 45p = £450
On which VAT (assuming a 2000cc (bigger) Diesel) 1000 miles x 18p divided by 1.2 x 20% VAT = £30 VAT to reclaim
For large businesses there could be a lot of VAT to reclaim
A classic car is one where:
- the age of the car at the end of the year of assessment is 15 years or more and
- the market value of the car for the year is £15,000
I found a 1968 Jaguar MkII for sale for £15,000 on
The Mark 2 gained a reputation as a capable car among criminals and law enforcement alike; the 3.8 Litre model being particularly fast with its 220 bhp (164 kW) engine driving the car from 0-60 mph (97 km/h) in 8.5 seconds and to a top speed of 125 mph (201 km/h) with enough room for five adults. Popular as getaway cars, they were also employed by the Police to patrol British motorways.
The Mark 2 is also well known as the car driven by fictional TV detective Inspector Morse played by John Thaw
Assuming the list price was £2,000 (I can’t find the actual list price), the taxable benefit in kind would be £2,000 x 35% (maximum)x 40% (higher rate tax) = £280
As long as the Market Value is below £15,000 these rules apply above £15,000 the market value is used for the calculation, you can pay for your private fuel to avoid the tax on that.