Michael Sohor & Co is now known as Tamen Accountants. This is a name change only - we are the same dedicated team, and look forward to serving our valued clients for many years to come.
Am I affected by IR35?
If you’re a contractor or freelancer operating through a limited company, you might be affected by IR35. The rules on this have changed recently so that it is now the end client (if they are a medium or large sized company) who is responsible for determining the employment status of any contractor. Determining IR35 status is not always straight forward and there are numerous factors which can affect the decision. Our advice would depend on your individual situation.
What is the Domestic Reverse Charge for VAT?
This measure was introduced on 1 March 2021 in an attempt by HMRC to prevent VAT fraud. Supplies are within the scope of DRC if the work is within the scope the CIS scheme, and the customer is not the end user. For further guidance, see our downloadable guide on the DRC.
Can I get any tax relief on a used commercial property?
You might be able to claim capital allowances on what is known as the “integral features” of the property. Generally, these are the hot and cold water systems and main wiring within the property. Other items are rarely seen in practice. This is a complex area and advice must be tailored to your situation.
Is it better to be a sole trader or a limited company?
Generally, there is a tax advantage for businesses operating though a limited company because the rate of Corporation Tax paid by companies is lower than the rate of Income Tax and National Insurance paid by sole traders. However, a limited company comes with various complications which means this option not right for everybody. Our advice will be tailored to your individual situation.
Can I claim expenses for working from home?
Yes, you can. The simplest method is to use the HMRC approved rate of £6 per week which is £312 per year. If you want to claim more than that, then you need to work out the actual proportion of your expenses which relate to business use. That means you must work out the proportion of your own home which is devoted to office use and apply that proportion to your usual household bills. Bills which you could claim for include items such as council tax, mortgage interest, insurance, gas and electricity.
How do I employ someone?
To pay an employee you must set up a payroll scheme which is registered with HMRC. You must ensure that the employee is paid at least the statutory minimum wage and you are responsible for making deductions for Income Tax and National Insurance, if appropriate. You must also set up a workplace pension scheme if your employees earn enough.
Should I get a company car or not?
It depends on the type of car you are considering. Generally, cars which run on petrol or diesel alone are not worth running though a company; the benefit in kind (BIK) tax is too expensive. Hybrid cars and pure electric cars are very tax-efficient, and therefore might be worth putting though a company. However to benefit from the most generous tax deductions in your company the car must be new and unused and 100% electric. This means a significant financial commitment.
Can I get tax relief on school fees?
Not directly. However, you could create a trust which would receive dividends. The dividend income would then be used to pay school fees. This type of planning is quite complicated and relies on you giving away some of your trading company to the trust. If you have grandchildren which you’d like to support in this way it may be worthwhile, as the tax savings are potentially significant.
Can a self-employed person get a mortgage?
You can get a mortgage as a self-employed person, but you will need to provide extra information to the lender compared to a salaried employee. Please note that director shareholders with a 20% or more shareholding are generally treated as “self employed” for mortgage purposes, even if they operate through a limited company as an employee. You will need to provide a summary tax calculation, known as an “SA302” plus a tax year overview, which can be obtained from HMRC free of charge. Sometimes the lender will request an accountant’s certificate. You should have at least one year’s trading history, and preferably two, before applying for a mortgage.
Can I claim VAT on my vehicle?
When you lease a vehicle, you can reclaim VAT on the monthly lease payments. When you buy a vehicle on Hire Purchase you can reclaim all of the VAT up front. Please note, VAT on cars is subject to a 50% restriction. You can only claim half of the VAT on cars. On vans you can reclaim all of the VAT.
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Chartered Tax Advisors
Our tax experts we can make sure all your tax returns are filled out and submitted in the most efficient way. Get in touch to find out more about our tax return services.