Category: Tax

Profit extraction in 2020/21 – What is the optimal salary?

A popular tax-efficient profit extraction strategy used by personal and family companies is to take a small salary and extract further profits as dividends. Where this approach is adopted, the starting point is to determine the optimal salary. While this will depend on personal circumstances and there is no excuse for not doing the sums,…


Help for Self Employed

New self-employed income support scheme Bad news for company owners!Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes. Speaking live from Downing Street, the Chancellor says that…


Winding up your personal service company

Where the personal service company is not needed, the question arises as how best to wind it up and extract any remaining cash. Striking off Striking off can be an attractive option where the personal service company can pay its debts and has less than £25,000 left in the company to extract. The advantage of…


COVID-19 Update From HMRC

It seems that anywhere we look, we can’t escape the blasted Corona! Here’s the latest announcement by the chancellor, Rishi Sunak on Friday 20th March. COVID-19: support for businessesCOVID-19: guidance for employees COVID-19 support for businesses The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and…


Reduced payment window for residential property gains

Currently, capital gains on the sale of residential property in the UK are reported on the self-assessment tax return and the total capital gains tax liability for the tax year is payable by 31 January after the end of the tax year. Thus, the capital gains tax on residential property gains arising in the 2019/20…


Potential benefits of putting a property into joint name prior to sale

Where a property qualifies in full for private residence relief, it is perhaps academic, from a tax perspective at least, whether a couple own it jointly or it is the one name only. In either case, the relief shelters any gain that arises and there is no tax to pay. However, where a gain is…


Making the most of pension tax allowances

Pension savings can be tax efficient as contributions to registered pension schemes, attracting tax relief up to certain limits. Limit on tax relief Tax relief is available on private pension contributions to the greater of 100% of earnings and £3,600. This is subject to the annual allowance cap. Tax relief may be given automatically where…


Reporting low emission vehicles – Changes from April 2020

From 6 April 2020, new appropriate percentage bands – and new lower charges for low emissions cars – will apply for company car tax purposes. From the same date, the way in which carbon dioxide emissions are measured is also changing. This means that in order to find the correct appropriate percentage for working out…


Properties not let at a commercial rent

There may be a number of reasons why a property is occupied rent-free or let out at rent that is less than the commercial rate. This may often occur where the property is occupied by a family member in order to provide that person with a cheap home. For example, a parent may purchase a…


Legal and professional fees – Capital or revenue?

At some point, a landlord is likely to incur legal and professional fees in connection with the running of their property rental business. It is easy to fall into the trap of assuming that these costs can be computed in calculating taxable profits if they are incurred wholly and exclusively for the purposes of the…