Budget summary: Spring edition 2016

Allowances and Tax Bands: In 2017/18 the personal allowance will be £11,500 and the basic rate limit will be increased to £33,500. As a result, the higher rate threshold will be £45,000. Changes to Dividend Taxation A new Dividend Allowance is to be introduced for 2016/17 onwards. The current system...

HMRC’s new powers to demand tax

New rules are being introduced to allow HMRC to issue enforceable tax assessments. The new rules say that HMRC can base the new type of assessment on information it receives from you or other sources, e.g. your company, bank etc. HMRC will use the new style assessments from July 2016....

What is the difference between a sole trader and limited company?

Sole trader is an individual who carry on business with a view to making profit without incorporating a legal form. A limited company is a legal entity separate from a sole trader in its own right. Sole trader can not be an employee of his or her business while the...

What is Real Time Information?

Real Time Information is a system set up by HMRC to collect weekly and monthly deductions made from employees’s earnings online. So it is employer’s responsibility to ensure that right tax and national insurance deductions have been made and submitted to HMRC on a weekly or monthly basis depending upon...

How much tax and national insurance should I pay?

If you are on weekly payroll then you pay tax on weekly earnings above £204.00 and national insurance earnings above £155.00. If you are on monthly payroll then you pay tax on monthly earnings above £884.00 and national insurance earnings above £670.00.

What is Payroll?

A list of employees receiving wages or salaries, with the amounts due to each.

Dividends

The new dividend tax regime is coming into force from 6 April 2016. The widely held opinion is that incorporation will still be more tax efficient than a sole trade, but that the savings will be reduced. The new rules will introduce a £5,000 dividend allowance (which uses up part of...

Investments

If you have money to invest you could go for one of the government’s tax advantaged schemes like ISA or Enterrprise Investment Scheme or Venture Capital Trust as an alternative to pension contribution. The one major drawback with pension is that you can not get your money until you reach...

CIS Returns

If you are registered as a contarctor for the purposes of HMRC’s Construction Industry Scheme ( CIS ), you must submit a report each month giving details of subcontractors you have paid and CIS deductions. You need to send a report even if you have not paid anyone, in which...