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News,May 2018

buying a car through limited company

Things You Need to Know While Buying a Car Through Limited Company

30/04/2021Limited Company , VAT

New rules have been introduced from 6 April 2020 for buying a car through a limited company. If you buy a car through a limited company, you need to pay personal tax on it and your company will pay national insurance. This is done because HMRC believes that you’re using the car for your private use as a benefit in kind that other employees are not eligible for. Let’s dive into the details.   How Much Tax and National Insurance is Payable?   Tax and NI are crucial as their calculation depends on the list price of the car (even if it’s second-hand). These rules are quite difficult, but you can visit HMRC online company Car Tax Calculator or contact us to find out your tax and NICs. For example, VW Beetle will cost you around £1,326 in personal tax (£2,652 for higher rate taxpayer) £915 in employers’ NIC. (A total of £2,241 or £3,567 as a higher rate taxpayer). If your company is paying for car fuel, then you need to pay more tax and NIC. For instance, your company provides you the fuel, an extra amount of £1,542 is payable as a personal tax (£3,085 as a higher rate taxpayer), and an additional £1,064 in the employer’s National Insurance contributions. As a basic rate taxpayer, you pay a great amount of £4,847 as tax and NIC for car and fuel, and £7,716 if you’re a higher rate taxpayer.   Need an accountant for expert advice, leave your query here!   Here the question arises that why you are using the company’s fund to buy your own car and then be taxed on using your personal car?   Legitimate Ways around Tax and NICs:   Instead of buying a car through a limited company, buy the car with your own money and pay the company 45p per mile for your business miles (25p over 10,000 miles). Go for a commercial vehicle instead of a car. You may ask it from a showroom to know the classification of the vehicle. To get rid of employer NIC and tax, make sure that the car purchased by a company is a pool car. It should be for all employees and should not be parked at any individual’s address.   Can you Claim VAT On Car?   You can claim VAT on the commercial vehicle but not on the car.   CruseBurke can reduce your taxes and NICs, contact now!   Saving Corporation Tax:   The corporation tax claim on the purchase is very small. You have the choice to deduct 8% of the cost of the car from your profit and save only 19% of corporation tax. It means on a car that is costing £15K, you can save up to £228 tax. However, the full cost can be deducted from your profit of the commercial vehicle (after claiming back the VAT). That’s a tax saving of £2,850 on a £15k commercial vehicle (instead of £228 on a car).   Wrapping Up:   It is better to buy a commercial vehicle instead of a car through a limited company.  You’d be charged a heavy personal tax and NIC on buying a car through a limited company, but you can’t claim VAT and you’ll save a small amount of corporation tax. On the other hand, if you buy a commercial vehicle through a company, you pay a little personal tax and NIC and can save a great amount of corporation tax and claim the VAT back. Hope this information would be useful if you want to buy a car through a limited company.   For professional support, contact Cruseburke!   Disclaimer: This blog provides general guidance about the topic and shouldn’t be considered expert tax advice. The figures may change with time.

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private limited company

Advantages & Disadvantages of a Private Limited Company

29/04/2021Limited Company

One of the most famous business structures in the UK, a private limited company is limited by shares. But you might be curious to know the advantages and disadvantages of private limited companies. Let’s find out…     Advantages of a Private Limited Company Following are some of the common advantages: 1. Limited Liability: One of the best benefits of a limited company is that it’s a separate entity allowing the owner to keep personal possessions separate from the business. This means that they are not subject to their personal liability. In case if your business faces any loss or difficulty, the personal assets of shareholders will be protected against it. 2. Tax Efficacy: This business type is tax-efficient where you only have to pay 19% of the corporation tax on the profit earned as a limited company. In contrast, sole traders pay 20-45% income tax on their profits. Reach out to save your taxes. 3. Separate Entity: A Limited company is a separate entity. A limited company is separate from its owner. Unlike sole proprietorship where the owner and business are considered a single entity, the owner of a limited company is protected against any danger and business failure. Being a separate body, a limited company can enter into a contract and is liable for any business activity. 4. Credibility: As a limited company, you have to register at the company’s house to establish its credibility as no other person can use the business name and trademark. In this way, your business can easily be found online. Moreover, a limited company is considered more prestigious and authentic than a sole proprietorship which makes it professional. It can attract large numbers of customers and investors. As a limited company owner, you can easily receive business loans from banks and financial bodies. 5. Pensions: As an owner of a limited company, you can put in pre-tax into a company pension scheme. Directors can save money in this way and can invest it in a personal pension scheme. Disadvantages of a Limited Company: Here are some drawbacks of a private limited company: 1. Difficult and Expensive to set up: Setting up a limited is more difficult than sole proprietorship. As a sole proprietor, you need to register to HMRC. On the other hand, you need to register to companies house as a limited company. There are more legal responsibilities and documentation than sole proprietorship. You need to pay registration fees to set up a limited company. 2. Administration Responsibilities: One of the main disadvantages of a limited company is its administrative duties and responsibilities which makes it difficult to operate. On annual basis your company has to file: Annual Accounts Annual Returns Corporation tax returns Personal tax returns as a director This means you have to spend a lot of time and energy on paperwork. However, luckily there are a lot of accountants who can help. At CruseBurke, we have a team of qualified accountants who can manage the financial responsibilities of your business. Reach out to us now. You should remember that due to these complex regulations and duties, limited companies are considered respectable and credible. 3. Legal Duties: As a limited company, there are many legal duties you need to do including running the company, safeguarding the company’s assets and many more. You have to perform all the duties complying with the government laws which makes it more difficult to operate a limited company than other business types. 4. Complex accounts: Managing the finances of a limited company can be troublesome. You need to record transactions on a monthly basis and sometimes you need to record transactions on a daily basis. Here, you need to keep a record of tax returns, business expenses and need to keep up to date business accounts. Mistakes and errors in business accounts and filings tax returns can cause heavy penalties, therefore you need to contact an accountant for professional services. Contact us to get affordable accounting services! 5. Public Records: When you register your business to a companies house, you provide the information of companies’ accounts, shareholders, directors, and records. This information is published by companies house and can be accessed by anyone. This disturbs the privacy of the company, while in sole tradership, your privacy remains safe. Quick Sum Up: We have discussed the advantages and disadvantages of a private limited company. Now it’s up to you to decide whether a limited company suits your circumstances and needs or not. Before setting up a company, it is essential to find out its pros and cons to be ready beforehand. And our blog has covered it all. Hope it was helpful. Can’t find what you are looking for? why not speak to one of our expert accountants in London and see how we can help you are looking for. For further guidance on setting up a limited company, contact us for help. Disclaimer: This blog provides general information on the limited companies.

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ncorporation of A Company

3 Ways Involved in Incorporation of A Company UK

23/04/2021Limited Company

The UK is one of the world’s best markets to start a business. You can gauge the business-friendly culture of the UK by the great numbers of private businesses which are around 6 million currently. But the incorporation of a company in the UK might be a challenging task. So, in this blog, we’ll talk about the process of incorporating a company in the UK.   What is Incorporation? Incorporation means registering your business as a limited company. Your business as a limited company can’t operate without registering it to companies house as per the Companies Act 2006. After incorporating a company, you need to file annual accounts and confirmation statements annually. It is advisable to get the help of an accountant to know whether a limited company is suitable for your business. Get in touch with us now!   Who can Incorporate a Company? Individuals and companies can incorporate a company by mentioning their name in the memorandum of association. Children under the age of 16 can’t legally incorporate a company.   Types of Company: Typically, four companies fall under the category of limited company: Private unlimited company Public limited company Private company limited by guarantee Private company limited by shares Need help! Talk to our accountants to choose the type that suits you.   Ways and Fees to Incorporate a Company: There are three ways for incorporation of a company: 1. Electronic Filings: The normal fee for electronic filings is £10, but after 11 am it’s £30. Normally it takes 24 hours to process. There are multiple software that allows electronic incorporation. Additionally, for the ease of regular customers, many incorporation agents and software providers have also started the service by charging a little.   2. Web Services: One of the convenient ways to incorporate a company to companies house and HMRC is through web services. You can establish: a private company limited by shares a private company limited by guarantee a Community Interest Company (CIC) The normal fee to set up is £12, but for CIC it’s £27. You can only pay through PayPal or card.   3. Paper Filings: Paper documents that are sent to the relevant office and take more time than electronic filings. Its registration fee is £40. This fee is £20 if your company is located in Wales or it is an unlimited company. It normally takes 5 days to proceed and you should pay cheques to the companies house.   Documents Required for Incorporation: Form IN01 to register for a limited company with a fee Memorandum of association Articles of association Additional information (if needed)   What Next? Remember to submit all the required information about your company in form IN01. Submit a registered office address. You must have a registered office address to companies house to receive any documents or posts. When your incorporation process is completed, you’re given a certificate of incorporation as evidence of your registration. Congrats! You’re incorporated now.   Quick Wrap Up: If the process seems challenging, our team of CruseBurke will do the incorporation of a company uk for you. We can provide you professional advice for the growth of your business. Moreover, you can get accounting and taxation services for your business at an affordable rate. Need further guidance Contact us today! Disclaimer: This blog provides a general understanding regarding the incorporation of a company.

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dividend allowance 2020/21

How Can a Self Employed Personnel Benefit From £2,000 Dividend Allowance 2020/2021

01/02/2021Limited Company , Tax Issues , Tax Saving Tips

All taxpayers can claim their tax-free dividend allowance. Dividend Allowance 2020/21  is set at £2,000. This is a golden opportunity for all the self-employed personnel to registered for self-employed. If you’re thinking of making the switch, you need to do it right now.   Let’s Discuss the Nature of Allowance If you own a limited company, and you’ve registered it as a self-employed. The good news is that you can take out some money as dividend allowance 2020/21. You can even take out these dividends if you’ve got some shares in the company. The ‘dividend allowance’ is at zero rate band. You don’t have to pay taxes on these dividends, but these count towards band earnings. If you’ve not utilized any personal allowance, you can also avail dividends under the personal allowance. These will be counted as free of tax.   What Dividends are Not Covered by the Allowance If your dividends are not shrouded under dividend allowance or personal allowance, count them as taxable. These dividends will be taxed under regular tax rates. Dividends are considered as the prime source of income if the taxpayer has other sources of income too. The dividend is taxed at 7.5% such that it falls under the basic rate band. At 32.5% to the extent that it falls within the higher rate band and at 38.1% to the extent that it falls within the additional rate band. All these tax rates are applicable in 2020/2021.   How to Use the Dividend Allowance 2020/2021? If you’re not using the dividend allowance in 2020/2021, you might end up losing it. The tax year comes to an end in 5th April 2021, so it’s a good option to review what dividends you’ve taken up, and what dividends do you wish to take up in the future? The COVID-19 may have an impact on your shared income. And this changes things overall for you. Whether you’re a self-employed individual or taking up dividends from a family investment, you might want to take up more of these dividends to make sure that you’re utilizing your allowance. Remember that dividends can be only paid from retained earnings.   Can you Pay Dividends if your Business is Facing any Losses? Paying Dividends from your company’s income is not affected by losses. If your business faced loss in 2020/2021, and there are any chances of profit that can compensate for the losses as well as for the dividends then go forward and avail them. It’s important to go by the company law requirements and pay your dividend allowance 2020/21 using the alphabetic share structure if you own family business. Like one shareholder has A-class share, another shareholder has B class share. This is helpful in using all your family member’s dividends.

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overseas company

Here’s Our 101 On How to Register an Overseas Company

07/01/2021Accountants , Business Growth Ideas , Limited Company

If you’re looking forward to registering as an overseas company in the UK, we’ll take you through a step-by-step process to make sure you’re doing it right. You must register for the company of company house if you’re starting out to set up a new business in the UK.   What’s the Eligibility Criteria? If you’ve already got a base in the UK, you can register for the business. This means that if you visit UK frequently for business purposes or you’ve already set up space, you can carry out business in the UK. Some firms can still not register as an overseas company. These include partnerships and unincorporated bodies. If you don’t have a base in the UK, you don’t need to register for the company’s house. Let’s say you’ve already invested in a property (we can consider this as setting up a base) make sure you’re filing the corporate taxes.   What Forms Do You Need to Fill Out? Make sure you’re filling out form OSIN01. Make sure you send it out to the company’s house within 1 month from the time you started out on that particular business. If you’re worried about what address do you need to send it out to, don’t worry about that.  The address is there on the form. You might end up paying 20 Euros as the registration fee with the form. For the ease of the taxpayers, HMRC gives you the option of paying it either through a paycheque or postal order.   What if you Need to Change any Details on the Forms for your Company? Make sure you’re telling companies house within 14 days if there are any changes in your company details. These can include: Your decision to change the name of the company. Your decision to change the address of the company. What business your company does? Any changes in the roles of directors, or other authorized personnel. Your decision to work on changes in the company information. For example, you want to expand on the details of the accounting requirements or the powers of the secretaries or directors. Changes in company constitution on the form We hope the following information has helped you set up an overseas company in the UK. This was one popular question asked particularly by the business owners of the US, Africa, and Asia. Therefore, we’ve summarized all the relevant information we’ve received from all the channels.

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accountants for limited companies

Why Hiring a Limited Company Accountant Is Beneficial?

07/12/2020Accountants , Limited Company

Some people manage their finances independently, and others set up a limited company. This is understandable enough, since overseeing a company’s accounting and tax affairs can be quite stressful and tedious. Even people with prior experience run into difficulties and get rather tired from the specifics. Whichever of those categories you fall under, one of the best things you can do during the early days of your business is lookout for limited company accountants.   What is a Limited Company in the UK? A good majority of limited companies wind up hiring limited company accountants to oversee their company’s ongoing accounting and tax affairs, alongside helping with the set-up process from the beginning. There have been many accountancy firms dedicated to small companies that emerged over the past several years. That is largely facilitated by web-based accounting systems getting major advances, which makes both accountants and clients’ lives much easier. Outsourcing the tax work of your firm to accountants in Croydon is incredibly cost-effective. Professional Accountancy There are several benefits to hiring a limited company accountant. They can cover a wide range of specific tasks that can help your business: Annual accounts completion Company Tax Return completion Handling initial tax registration forms of your company, which includes corporate tax, value-added tax (VAT), and registering your business under ‘employer’ so you can do payroll for both the director and employees Completing HMRC payroll-related forms General bookkeeping Setting up a limited company bank account on your behalf Preparing the quarterly VAT returns of your company Provide tenancy references Setting up and running a payroll system in order to process salaries Setting up the limited company, if you have not yet done so Submission of Confirmation Statement per annum If you provide professional services, facilitating or conducting IR35 contract reviews For an additional fee, the limited company accountant you hire can also complete your personal tax returns. In turn, of course, there are things you have to do for your accountant so they can do their job to the best of their ability. As a director, remember that no matter what happens, your accountant is not responsible for the accuracy and timeliness of your tax returns; you are. Check-in with your accountant with regards to paperwork that needs to be reviewed, such as corporation tax. Constantly update your accountant with changes, such as company personnel changes and salary levels. Ensure records of all income and expenses are regularly uploaded, whether via third-party software or otherwise. Respond immediately to your accountant when you’re asked to provide records like bank records.   Conclusion Ultimately, hiring a limited company accountant will save you precious time and resources that you can funnel to other parts of your business. It also saves you stress and any possible doubts with the details of your company’s finances. Once you’ve decided to work with a professional accountant, the next step is to find a reliable accountant to help with your business’s financials. On the lookout for accountants for limited companies? Reach out to us today! We provide a wide range of tailored accounting and taxation services to solo entrepreneurs all the way to small and medium-sized businesses.  

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