Posts tagged Tax
Sunny thoughts on SIPP, IR35 and the Flat Rate scheme
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More ramblings from John Forbes on a sunny afternoon in our Great Dunmow office in the heart of Essex.
Finally we completed the lease on our new Dunmow offices and moved some furniture in. Fingers crossed BT are ready for our move on 22 August.
Been spending time looking at tax planning again and interestingly at the VAT flat rate scheme which is showing savings for a number of clients – even on my own SIPP I can make nearly £900 out of thin air for doing nothing but use the flat rate VAT scheme – which is fine whilst it only holds property – need to watch out if it does other things!
Lot of client discussion around IR35 in the past week – as always trying to negotiate a distillation of the inherently simple into answers to clients’ inherently convoluted questions – as always it would be lovely to tell them what they want to hear – as always, life ain’t that simple. There are a lot of contractors in Essex and Stantsted is a great route straight in the City so the number of enquiries and clients in this area is always on the up, especially in the current
climate. Unfortunately they all understand the tax savings straightaway, but not the tax costs that go with it, nor the pitfalls and rules that need to be complied with to make the savings!
For more help and advice on IR35 and other tax planning issues, please do not hesitate to contact us at Forbes Accountants.
John,
You may need to pay class 4 NIC
0Just a reminder from John Forbes at Forbes Accountants based at the heart of Essex in Great Dunmow. Please remember if you are self-employed you need to pay your income tax and class 4 NIC on-account payment for 2010/11 by 31 July. 
A company with a 30 September 2010 year end must pay its corporation tax by 1 July 2011. Employers must pay class 1A NICs on benefits by 19 July.
Quarterly payments of PAYE are due by the same date. Monthly payments of PAYE and CIS deductions are due by 19th of every month, or by 22nd if paying electronically. If you or your company will not be able to pay the tax due on time you should contact the Tax Office business payment support line (0845 302 1435) without delay, or we can do this for you. Once the tax due is actually late, even by a day, it is much more difficult to negotiate a reasonable payment plan with the Taxman.
Please note that the Taxman is now very keen to chase every penny of tax owed, and you will start to receive aggressively worded letters if you don’t pay on
time. If you do not react or pay promptly you will receive telephone calls and possibly personal visits from professional debt collectors. The situation can
escalate quite quickly into bailiffs being authorised to seize your goods, or a court judgement being enforced.
If you receive a letter demanding tax due, don’t ignore it. React immediately and call Forbes Accountants and keep more of what you earn.
John.
Contractors
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John Forbes of Forbes Chartered Accountants Great Dunmow, was talking to a contractor today – we set up a meeting as he isn’t happy with the umbrella company he is working through. He pointed me to another Accountants web site where it warns about take home pay calculators and they say – logically, your take home must be 80% if you draw dividends and Corporation tax is 80%. HELLOOOOO Did no one ever hear of IR35 (we can work with you on this!) Assuming that’s not an issue (bit of a big assumption, we would rather check before quoting tax rates) then, what if you make a good living?
After a salary of £7,068 per annum, and using up basic rate tax bands I calculate Profit 100 Corp tax 20 Dividends 80 Higher rate of tax on dividends effective rate of 25% = 20 You are left with 60 Start 100 left with 60 means a 40% tax rate on higher rate income (after 20% on basic rate). Funny that, it’s the income tax rates If you make lots then a higher higher rate kicks in over £150k… So is the saving just in National insurance – well, yes!
Assuming a spouse is not a profit contributor … but that’s another matter. Scary for contractors looking to understand things if they go to the web site I mentioned above! Made me wonder whether we should focus on Contractors Accountants. Just another thought from John Forbes of Forbes Chartered Accountants, Great Dunmow Essex. “Maybe that’s why we are different! John. www.forbesca.co.uk Twitter @EssexAccountant Facebook: Forbes Accountants
