As a contractor, you may or may not have tax to pay by 31 January. Do you know the ways to pay your tax? Make sure you know the best way to pay your tax bill so you don't miss the deadline and incur any charges or interest.
Whilst the festivities are in full swing in December, and everyone's minds are on having a few days off over the Christmas and New Year period, it can't be ignored that the festive season is also, the tax season.
The new dividend tax as announced in July's Budget, will affect almost all contractors and freelancers trading from within a limited company. A question we are getting asked by many contractors is, are there ways to avoid this?
The July 2015 Budget announced changes to the tax rules on dividends that will inevitably affect most contractors and freelancers that trade using a limited company. It is important to understand the current contractor dividend tax system in detail, the changes that are on the horizon, as well as consider the options available that may help ease the new tax position.
Changes are on the horizon for buy-to-let property owners. It is important to understand these. Separately, the interest on any mortgage or loan taken to buy, improve or maintain the property, is fully deductible.
HMRC is set to gain powers to collect tax debts directly from taxpayers’ bank accounts under the Direct Recovery of Debts (DRD) rules, Finance Act 2015. This is likely to be late September or early October 2015.
One key question asked by contractors and freelancers when trading as a limited company, is, "how is best to extract income from the company?". It is important to understand the differences between drawing money as salary and drawing money as dividends, and the tax treatment of each.
It's good news! For a limited company, the entire cost of a motorbike purchase qualifies for capital allowances; for other motor vehicles the same doesn't necessarily apply, so it could be an option worth considering.
Even though transferring shares to your children is caught by "anti-avoidance rules", which taxes the parents on any dividends paid to the children, it is an area that is still worth looking into for possible tax savings.