An Introduction to Tax and National Insurance for Business

An Introduction to Tax and National Insurance for Business

As a business owner, the complex web of tax and National Insurance obligations that apply to you can be extremely daunting, and it is difficult to know where to begin. Luckily, you will have this article to help you – below, you will find a comprehensive run-down of the taxes, schemes and reliefs which are likely to affect you and your business Which taxes affect my business? Every business is different. If you are a small sole trader, your tax obligations are likely to be fairly simple, limited to just income tax and NI, but larger businesses will have more complex obligations. Broadly, the taxes you are likely to come across include: Income tax. Both employees and self-employed people pay income tax, as long as income exceeds £10,000 (in the 2014/15 tax year). If you are an employer, you... »

Taper Relief

In April 2008 Taper Relief was replaced by Entrepreneurs Relief. This business advice article exists purely for reference purposes. Taper Relief was introduced in 1998 to replace indexation and to encourage long-term investment. Taper Relief was extended dramatically throughout its ten years until it was replaced by Entrepreneurs’ Relief in 2008. Taper Relief was useful for the disposal of assets, particularly those with qualifying business use, and provided a valuable reduction on the amount of Capital Gains Tax payable. Two years after Taper Relief was introduced the Finance Act 2000 extended the definition of a business asset, making the Capital Gains Tax rate applicable to even more taxpayers. The Finance Act 2002 then reduced the minimum holding period, making taper relief appli... »

Tax Self-Assessment

The self–assessment system imposes the major burden for tax compliance on the taxpayer, rather than on the tax authorities. What is self–assessment? The UK self assessment regime for individuals has now been in place for over a decade. Self assessment puts the onus on the taxpayer to complete returns accurately and on time. Tax must be paid on set dates but HM Revenue and Customs (HMRC) can be asked to compute the amount. Penalties may be charged for failing to comply with the requirements of self assessment. Who is affected? Self assessment affects all non–corporate UK taxpayers, including executors, trustees and individuals. It particularly affects those who: are sent a tax return each year have income which is not taxed at source are liable to higher rates of income ta... »

Inheritance Tax

Inheritance Tax (IHT) is usually paid on assets held at death but can also apply to trusts or gifts made within someone’s lifetime and also trusts or gifts within seven years of death. According to Her Majesty’s Revenue and Customs (HMRC) most estates do not have to pay inheritance tax because they are valued at less than the threshold which is currently £325,000 (Tax year 2012-2013). Any amount over the threshold is payable at a rate of 40% or reduced rate of 36% if the estate qualifies as part of a charitable donation. For married couples and civil partners the threshold can be as high as £650,000 if one partner transfers the "nil rate band", their unused Inheritance Tax threshold, to their other half when they die. Inheritance Tax Exemptions and Reliefs... »

Enterprise Investment Scheme

The Enterprise Investment Scheme offers generous income tax and capital gains tax reliefs to investors in certain companies. The reliefs are available to ‘qualifying individuals’ who subscribe for ‘eligible shares’ in ‘qualifying companies’ undertaking ‘a qualifying business activity’. The regime is currently under review, but the consultation is ongoing. What are the investment limits? Individuals may invest any amount in Enterprise Investment Scheme shares. However, only the first £400,000 invested in any one tax year (£200,000 prior to the tax year 2006/07) will qualify for income tax relief and capital gains tax (CGT) exemption. For this purpose a husband and wife are treated separately. Individuals must subscribe a minimum of... »

Discretionary Trust, Wills & Inheritance Tax

Although any unused nil rate band is transferred to a surviving spouse or civil partner, making provision for a discretionary trust in your will could still be worthwhile. How do the inheritance tax rules work? The first slice of any individual’s estate, including gifts that they have made in the last seven years, is generally free of inheritance tax. This slice, referred to as the ‘nil rate band’, was increased to £325,000 from 6th April 2012. Inheritance tax is charged at 40% on the amount that exceeds the nil rate band. Any unused nil rate band can now be transferred to a surviving spouse or civil partner. This means that where the second death occurs on or after 9th October 2007, the benefit of any unused nil rate band on the death of the first spouse is transfe... »

Employees & Company Car Tax

A guide for company car drivers from ComCar The emissions–based regime for taxing company cars has been in force since April 2002. Introduction The provision of a fully expensed company car is still a common employee benefit. Some even suggest that it will become more popular as shortage of finance and soaring insurance costs cause “cash takers” to give up their allowance and move back to the company car. The success of salary sacrifice could also increase the size of the company car park. Taxation policy is strongly focused on the CO2 emissions of the vehicle, perhaps making this the area where environmental taxation is at its most advanced as well as its highest level in terms of tax per tonne of CO2. There are implications for income tax, VAT, Employers and Employees n... »

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