The more expensive your company car is, and the higher its CO2 emissions, the greater the tax bill is for you and the NI bill is for your company. To reduce both bills you can contribute to the car purchase- remember, the higher the tax and NI, the greater the savings. The maximum contribution that affects the tax and NI payable on a company car is £5,000 (anything higher will not have an effect!). You can borrow up to £5,000 interest free from your company to contribute to this payment. After three years, if your company sells the car and uses the proceeds to reduce the loan and write off the balance. So, for a car that costs £40,000 the net tax and NI saving is more than £1,000!  To find out more information and to see how we can save you money get in contact today on 01622738165!

Did you know that you can make gifts during your lifetime that can affect the inheritance tax (IHT) payable on death? The rule is; gifts by one individual to another during the seven years before they die become liable to IHT. Completing IHT forms requires executors to look through the deceased’s financial records for at least seven years before the death to look for gifts. These are then recorded on the IHT forms, specifically the IHT403. On the IHT403, HMRC states “Do not tell us about any gifts where the total value was £3,000 or less in any tax year, small amounts of £250 or less”, however if cash gifts of £3,000 or less are ignored, then the “normal expenditure out of income” exemption will be overlooked (This exemption must be “normal expenditure” which means that it must be gifts that form a pattern over multiple years). This means that HMRC will be demanding IHT that it wasn’t entitled to!  This can get quite confusing, let us look over your IHT form or set up a plan to ensure you get the “normal expenditure out of income” exemption! Give us a call on 01622 738165 today!

Dividends are paid to shareholders from the current year profits (usually!). According to the Companies Act 2006, dividends can only be paid from distributable profits. When a company pays dividends without sufficient profits, this makes them illegal dividends. Any director authorising illegal dividends will have to repay the dividends as well as any shareholders who knew or suspected those dividends were illegal. Previously, HMRC argued that unlawful dividends were salary payments (because this meant greater tax liability!) but now, HMRC are more willing to treat them as director’s loans. The unlawful dividends must be attributed proportionally to each shareholder and recorded as a loan in the company’s records. Shareholders must repay the loans (but there is no specified deadline!). However, if the loan is not repaid within nine months after the company’s accounting period ends, the company will face a corporation tax charge of 33.75% on the outstanding amount. If a single shareholder owes the company more than £10,000 (including any other amounts owed) a taxable benefit in kind applies. It is also possible to waive the outstanding loan to avoid any illegal dividends, but this may lead to taxable consequences! To find out more and to avoid the chance of illegal dividends, get in contact today on 01622 738165 and the team will be more than happy to help!

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Did you know that in 2023 embezzlement (by managers or employees) was the most common type of fraud? Insider fraud can take many forms such as generating/paying false claims, payroll or invoices, falsifying timesheets and forging documents. But how do you spot this? Employee behaviours to watch out for are: - Working excessive hours at unusual times of the day (when the office is empty!) - Not taking annual leave (they don’t want others covering their work in their absence) - Introducing overly complicated working practices (such as for invoicing) - Hiding what they are doing from other staff - Living beyond their means (having an expensive car etc) - Personality changes (more secretive or anxious) To minimise the opportunity for fraud, put set procedures and controls into place such as: - Authorisation for transactions - Separate duties (ensure 1+ employees handle key financial tasks) - Independently monitor data and documents - Conduct regular audits - Put a reporting procedure in place for anyone who is suspecting fraud If you suspect fraud is taking place, act quickly to investigate the matter. Preserve evidence and do not rule out third parties that may be involved. Evoke disciplinary procedures and report suspected fraud to the police. Remember you can dismiss any employee for gross misconduct based on any evidence you do have available; even if they say “no comment” at any disciplinary hearing.

Is your home your workplace? Will this affect your right to tax relief? Travel costs are not tax deductible if they are for an ordinary commute between home and a permanent workplace (usually your employer’s premises!). But travelling between home and a temporary place of work (e.g. a customer’s premises) would be tax deductible! HMRC are now saying that there are some circumstances when travel could be deductible from one workplace to another (e.g. from your home to your employer’s workplace). What matters is whether you’re required by your employer to work at home!  So, if an employer agrees to you working from home some of the time, make sure it is written into the contract that you will receive tax relief when travelling between workplaces!

If you make a capital gain from either a sale or transfer of a UK property on which tax is payable, you MUST declare it to HMRC and pay the tax within 60 DAYS from the completion of the sale/transfer. To declare it to HMRC, there is a new form available from HMRC’s website. This means that it can be filled out online before printing and sending to HMRC. But watch out- HMRC say this paper form should only be used in certain situations, otherwise we can help you create an online capital gains tax account.  Just give us a call on 01622 738165 and we can get that sorted today!

HMRC does not like when company owners dip into their companies’ bank accounts whenever they feel like it to pay for anything personal. However, according to tax and company law, there is nothing wrong with it! HMRC objects because they believe that it is difficult to spot unruly individuals and fraud transactions. Therefore, you must ensure that you are properly recording each transaction (stating whether it is a personal/company bill) and any tax/NI consequences are dealt with correctly. When the company pays a personal bill, it counts as earnings and so is taxable like a salary and PAYE tax and Class 1 NI is payable. However, the company must account it to HMRC for tax and NI if the amount was net salary paid to you. This can get tricky, and it may be more tax-efficient to use dividends- if you are unsure how this works, we can walk you through it! Tax and NI can be entirely avoided if the company paid the bill but treated it as a loan to the individual. But remember ultimately the loan would have to be repaid, or written off, and this may only be possible with an extra salary or dividend to clear the loan. This can trigger similar tax/NI liabilities! In certain situations, there are options that are tax and NI free, and we can help you figure that out! Give us a call on 01622738165 for a quick chat and we can sort it out for you!

When it comes to self-assessment tax returns, HMRC tends to be “process now, check later”; so, they assume that it is correct, but they reserve the right to later make enquiries about it! There is a deadline for taxpayers to amend their tax returns or HMRC to start an investigation. For personal tax returns HMRC must deliver an enquiry notice within 12 months from the filing date of the return (usually, the filing date will be 31 st January!). If you submit your tax return after the normal filing date (or submit on time and amend later) the enquiry deadline is extended to the next quarter-end date (31 st January, 30 th April, 31 st July and 31 st October). For companies, a notice of enquiry must be delivered within 12 months from the normal filing date of a corporation tax (CT) return (the normal filing date is twelve months from the end of your company’s accounting period). Like the personal tax returns, this deadline is extended for late or amended returns (e.g if a return wasn’t submitted until 10 th May 2025, HMRC has until 31 st July 2026 in which to start an enquiry). However, if HMRC miss the enquiry deadline, they have a secret weapon to use called “discovery rules”. These rules mean that they can make a limited enquiry into your or your company’s tax affairs. If they suspect that tax has been underpaid (due to carelessness or by deliberate action) and they could not have been expected to be aware of the circumstances by the time the enquiry deadline has passed, HMRC will also issue a discovery assessment.  This assessment is usually up to 4 years from the end of the tax year in which the underpayment occurred, or the assessment was used. This will be extended to 6 years if the error/omission from your tax return was deliberate and to 20 years if it was deliberate and you tried to hide the error.