How can I withdraw cash/profit from the company?

You can withdraw via a salary, dividend, or director loan account. There are different tax implications for different options. For more information, please contact us at 02079938850.

What is the tax implication on overdrawn director’s loan account?

If your director’s loan accounts at the year-end date are overdrawn, then you may need to pay extra tax. However, if you pay the loan within 9 months and 1 day of the year-end, you do not have to pay tax. In the other scenario, if a loan is not paid after 9 months and 1 day of the year-end, any overdue amount of a director’s loan account, the company pays an additional 32.5% corporation tax.

I have a Ltd company, and I would like to pay from company into my personal pension. It's beneficial option ?

Yes, the pension contributions paid to an approved pension scheme are deductible expenses for employers.

Is insurance an allowable expense for the business?

Insurance cover is an allowable expense if you can prove that the cover is necessary solely for business purposes. Some of the business insurance includes professional indemnity insurance, public liability insurance, and employers' liability insurance.

What is employment allowance?

The employment allowance is a reduction of up to a certain amount a year in the employer's national insurance for certain employers.

Am I allowed to pay employee in cash?

Yes, it is legal to pay employees in cash. But you might come under more security if you do. Paying employees in cash is often associated with avoiding taxes. If you decide to pay employees in cash, remember to take out taxes and deductions before giving them their final take-home pay. And keep an accurate record in case you do come under the IRS’s watch.

How long does it take to incorporate a company?

Based on the package you choose, Makesworth Accountants can help you incorporate a limited company on the same day you provide us with information. Usually, limited companies are incorporated within 1 day. This, however, depends on the workload at Companies House.

Broadly speaking, any person or entity who holds more than 25% of the company's shares is a person with significant control (PSC). Such a person is to be reported to Companies House, and the company needs to keep an updated PSC register.

What happened if I miss deadline?

If you missed the deadline, you need to pay a £100 penalty to HMRC for non-submission of your tax return online.

What happens if I realize I’ve made a mistake after I’ve sent the return in?

You have one year from the annual filing date (January 31)) to make any changes.

If I pay tax through the PAYE (Pay as You Earn) system but I have received a Notice to file Tax Return. Do I have to fill it in?

Yes, if you receive notice, you must complete it and return it on time. You should notify HMRC with full details of all your income and capital gains tax by filing an online tax return.

Frequently Asked Questions(FAQs)

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Here’s a selection of our most frequently asked questions(FAQs). If you can’t find the answer you’re looking for, our team are on hand to help.

Accounts

The expenses that incurred wholly and exclusively for business purpose can be claimed as expenses. For more details on what specific expenses can be claimed based on the nature of business, please contact us on 02079938850

You can withdraw via salary, dividend or director loan account. There are different tax implication with different options. For more information, please contact us on 02079938850.

If your director’s loan accounts at year end date is overdrawn then you may need to pay extra tax. However, if you pay loan within 9 months and 1 day of the year-end, you do not have to pay tax. In other scenario, if loan is not paid after 9 months and 1 day of the year-end, any overdue amount of a director’s loan account- company pays additional 32.5% corporation tax.

Yes, the pension contributions paid to approved pension scheme are deductible expenses for employers.

When you use your personal vehicle for business purpose you can claim business mileage. HMRC has guidelines in place to determine if the journey qualifies for Business mileage. To find out more, please contact us on 02079938850

In order to qualify as travel expense, the expense should be wholly, exclusively and necessarily for business purpose.

Expenses that are incurred before the incorporation of your company can be claimed as long as they would be allowable if already trading. Such pre trading expenses include: equipment purchase, fees paid to Business advisors and market research, travelling costs to meet potential customers and suppliers

You can claim business related phone and car expenses based on the usage for the business purpose.

The deadline for filing your corporation tax return is within 12 months of the end of your company's accounting period. However the deadline for paying your corporation tax is within 9 months plus 1 day from the end of the accounting period. To help manage your company's filing deadlines, please contact us on 02079938850.

Insurance cover is allowable expense if you can prove that the cover is necessary solely for business purpose. Some of the business insurance includes Professional indemnity insurance, Public liability insurance and Employers' liability insurance.

Payroll

The employment allowance is a reduction of up to certain amount a year in employer’s National Insurance for certain employers.

You don’t need to set up and run payroll if you don’t have any employees and the company doesn’t pay any salary. If the company has a PAYE scheme (e.g. because the company is reimbursing expenses) then you should be running payroll and filing RTI.

RTI stands for Real Time Information and it’s the new way to report wages, salaries, PAYE and National Insurance to HMRC. Traditionally, PAYE data would be submitted at the end of the Tax Year, but the new changes will require data to be submitted to HMRC online whenever employees are paid.

Yes, it is legal to pay employees in cash. But, you might come under more security if you do. Paying employees in cash is often associated with avoiding taxes. If you decide to pay employee in cash, remember to take out taxes and deductions before giving employees their final take-home pay. And keep accurate record in case you do come under the IRS’s watch.

Yes, If the company enters into a service contract with the director, the terms which make the director an employee under the usual common law test, then the director becomes an employee and can process payroll.

You need to keep all payroll records for at least three years according to the FLSA. And, you must keep all records or employment taxes for at least four years after filing the fourth quarter of the year, according to IRS.

Compliance

Based on the package you choose, Makesworth Accountants can help you to incorporate a limited company on the same day you provide information to us. Usually Limited companies are incorporate within 1 day. This, however, depends on the workload of Companies House.

Each year Companies registered in the UK need to file a confirmation statement which is to verify that important company data registered at Companies House and displayed on the public register is accurate and up to date. As a director of a limited company, you have an obligation to file it within 14 days of your incorporation anniversary.

Year-end accounts of the company need to be filed to Companies House within 9 Months after the year-end. Corporation tax has to be paid within 9 months and 1 day of the year-end. We will ensure that all the accounts are filed well in time.

Broadly speaking , any person or entity who is holding more than 25% shares of the company is a Person with Significant Control (PSCs). Such person is be reported to Companies House and company need to keep updated PSC register.

There is no statutory requirement to appoint a secretary.

Self Assessment

UTR - Unique Taxpayer Reference UTR is the 10 digit numeric number which is allotted by HMRC after registering under Self-Assessment.

Payment on account is the advance tax collected by HMRC on the basis of your previous year’s tax bill. It is collected twice (50% each) in a tax year, usually this is 31st January & 31st July.

Marriage allowance is the tax relief provided by the government to all married couple to support their partner financially. You can transfer 10% of your personal allowance to your partner if your income is less than personal allowance limit. It will help your partner to reduce his tax liability.

If you missed deadline you need to pay £100 penalty to HMRC for Non submission of tax return online.

You have one year from the annual filing date (31 January) to make any changes.

Yes, If you receive notice you must complete and return it on time. You should notify to HMRC with full details of all your Income and Capital Gains Tax by filing online Tax Return.

If your Net income exceed £100,000 the allowance has been reduced by £1 for every £2 over this limit. This means your personal allowances is zero if your income is £123700 or above.