All companies spending at least £10,000 in their accounting year on qualifying R&D are entitled to claim a deduction when calculating their taxable profits of:
- 175% of qualifying expenditure for SMEs in respect of expenditure incurred on or after 1 August 2008 rising to 200% from April 2011 and 225% from April 2012, subject to EU approval under the State aid rule
- 130% of qualifying expenditure for larger companies until 31 March 2008
Companies can claim R&D tax credits for their revenue expenditure on:
- employing staff directly and actively engaged in carrying out R&D
- paying a staff provider for staff provided to the company who are directly and actively engaged in carrying out R&D
- consumable or transformable materials used directly in carrying out R&D (broadly, physical materials which are consumed in the R&D)
- power, water, fuel and computer software used directly in carrying out R&D
Lots of businesses carry out R&D and never claim, so why not see if your R&D qualifies?
Yes £50,000, thats how much you could save in employers NI if your business qualifies for the regional employers NICs Holiday.
Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the employer NICs that would normally be due – for each of the first ten employees they take on.
The National Insurance contributions (NICs) holiday is available to new businesses that start up during the period from 22 June 2010 to 5 September 2013.
The types of business that may be able to apply for the holiday are:
- a sole trader, company or partnership that begins to carry on a trade, profession or vocation
- a property business or investment business
- a new trading charity whether or not it is carrying out activities with a view to profit
Managed Service Companies do not qualify for the holiday.
If you have recently started a new business its well worth finding out if it will qualify.
In the current economic climate every business needs to look for new ways to improve but few businesses take advantage of the HMRC approved schemes
Basically there are 2 types of award:
Encouragement Awards where the employer can pay £25 tax and NI free
Financial Benefit Awards where employees can be paid up to £5000 tax and NI free
Financial benefit awards are exempt from tax and NICs up to the greater of the following, subject to an overall limit of £5,000:
- 50 per cent of the financial benefit you reasonably expect the suggestion to lead to in the first year following its adoption
- 10 per cent of the financial benefit you reasonably expect in the first five years following adoption
Sounds like a win win to me
If you have a business, the chances are you will need to operate a payroll.
When you set up in business the easiest and quickest way to register a payroll is on line
Once your payroll is registered its worth obtaining dispensations to hopefully avoid or at least reduce the need for P11D’s
Having registered your payoll you will get a pack in the post from HMRC which will include a CD ‘Basic PAYE Tools’ this CD has everything you need to run your own payroll for free, as an alternative you can download ‘Basic PAYE Tools’
Its a great bit of software and you can set up multiple business and create employee databases.
The only thing it doesn’t do is produce payslips, but you can do that easily yourself by creating your own template in Word or Excel.
IR35 came into existance in 1999, it was created to prevent workers previously employed from creating a limited company and then benefiting from lower taxes and national insurance through the use of dividends and expenses.
HMRC believed that it would generate £220 million a year in National Insurance Contributions and £80 million in Income Tax, but it has actually only generated around £1.5 million a year and HMRC have brought a number of cases before the courts, the latest being MBF Design Services Ltd v Revenue and Customs (2011) and ECR Conculting Ltd v Revenue and Customs, the taxpayer was successful in both cases.
I was reading an article in Accounting Practice about the MBF Design case and HMRC assisted a Foreign Airbus UK employee to prepare his statement but apparently because the employee struggled to read the statement or be examined on it the tribunal were unconvinced.
I have always found QDOS to be an invaluable source of help in the field of IR35 and you can download free guides and contracts using this link
I love free things, don’t you?
I discovered TAS books basics a while ago
It is absolutely totally free and for a small business its ideal, its much better than trying to create your own system using spreadsheets. If you are a new business starting out why not give it go.
It seems the taxman has got bored with chasing the self employed and moved on to the middle classes and white-collar professionals as highlight in this article in the Sunday Express today
Doctors and Dentists are now top of the hit list.
Chancellor George Osborne has branded tax-evaders “leeches”, convictions for tax evasion have jumped 38% over the past year to 148 for the year to March 2011.
Sometimes tax issues can arise from simple mistakes and misunderstandings, if your accounts and records need to be reviewed now is the perfect time to seek help from your accountant.
The recent press has been full of details of HMRC investigations into small businesses and individuals to try to get more tax in and penalties, the taxman is trying to recover £3.8bn in PAYE. Current figures (quoted in the Sunday Telegraph today) show that 25000 people have had their debt written off by citing the Extra Statutory Concession A19.
The Low Income Tax Reform Group has some excellent guidance on A19 and template letters, check out this link for details