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Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.
The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.
Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.
National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.
As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.
Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.
Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.
Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.
If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.
National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rules and rates apply. National Insurance contributions can significantly increase the amount of tax you pay.
Although it can affect your entitlement to some state benefits, you will almost certainly want to minimise the total National Insurance contributions you and your business pay.
Effective tax planning may allow you to reduce your National Insurance contributions, so seek professional advice - an accountant can help you as part of your overall tax planning.
National Insurance contributions for the self-employed are in two parts. You pay a flat rate of Class 2 National Insurance contributions regardless of how profitable your business is (though low-earning businesses can be exempted altogether). The Government proposal to ablolish Class 2 NICs has been delayed until April 2019.
You also pay Class 4 National Insurance contributions calculated as a percentage of your annual profits above a basic threshold.
National Insurance contributions are calculated and collected as part of your self-assessment tax return. While the detailed calculations will vary, total National Insurance contributions for the self-employed might be about 10% of earnings.
Both employers and employees have to pay Class 1 National Insurance contributions. National Insurance contributions are collected through the PAYE system used for payroll tax deductions.
Employers pay Class 1 National Insurance contributions as a percentage of any employee’s earnings above a basic threshold. Employers also pay Class 1A National Insurance contributions on any taxable employee benefits they provide.
Employees also pay Class 1 National Insurance contributions on their earnings above the threshold. The rates used to calculate employees’ and employers’ National Insurance contributions differ, but the total combined charge typically represents a rate of more than 20% on earnings above the threshold.
The Government has introduced the Employment Allowance, which means that eligible businesses will receive a reduction on their employer's National Insurance Contributions (NICs) each time they run their payroll. The allowance reduces the amount of NICs payable until the allowance of £3,000 has been used up.
The allowance is simple to claim using payroll software. Each time you submit an employment payment summary to HMRC simply select 'Yes' in the 'Employer Allowance Indicator' field as part of your PAYE real time reporting.
The different rates of National Insurance contributions can mean you will pay less if you are self-employed rather than an employee of your own company.
If you operate as a company, you may be able to draw money in the form of dividends. Tax and National Insurance is not payable on dividend income up to the dividend allowance threshold of £2,000 for 2018/19 (previously £5,000 per year for 2017/18). Dividend income over the initial allowance is subject to tax (7.5% for basic rate tax payers, 32.5% for higher rate payers and 38.1% for additional rate payers). But special anti-avoidance rules mean that in some circumstances payments like this are taxable (and subject to National Insurance contributions) in the same way as employment income.