UK Tax News

Harsher rules on late Tax Return penalties

Published: 09 Jan 2012

Updated: 06 Oct 2023

Written by Ray Coman

HMRC have toughened the penalty system for late tax returns. With effect from the tax year ended 5 April 2011, automatic penalties now apply regardless of your tax liability. As such, even if you have no liability, or were due a refund, you are still liable to a minimum £100 if you were supposed to file a Tax Return and have missed the deadline. Penalties increase more sharply where a tax return is over three months late.

Coman & Co. Ltd. can help you avoid unwanted fines. We offer an efficient, online service. With our system you will be reminded well in advance of any relevant deadlines.

Please contact Coman & Co. Tax Accountants for advice on your tax situation. We are Chartered Tax Advisers and pleased to help with all your personal taxes no matter how straightforward or complicated.

Paying yourself a salary from your own company

Published: 09 Nov 2011

Updated: 16 Nov 2011

By running your business through the company, the question arises as to how to take profits out of the company properly and with the minimum tax.

Where it is just you in the company, you will have a choice to withdraw funds as dividend or salary. Provided you do not have any other income it will save tax to withdraw salary less than your personal allowance and therefore tax free in your hands.

There are three possibilities to consider:

1. Where your salary is below the lower earnings limit, there is no need to run a payroll, and no further reporting requirements.
2. Where your salary is below the earnings threshold, you will have to register as an employer and submit an employer's annual return, but there will be no tax or national insurance to pay.
3. Once you pay exceeds the earnings threshold, you will have national insurance both employers' and employees' and soon after your earnings will exceed the personal allowance and there will be income tax to pay as well.

Filing an employers' annual return is often worthwhile, despite the administrative cost and exposure to late filing penalties. A year could be added to your state pension

Although you will be filing an employers' return the payroll will be basic. This is directors are assessed to national insurance on an annual basis, and therefore it is not necessary to ensure small payments of salary on a monthly basis to remain within the thresholds.

We can help advise on the best split between salary and dividends based on your circumstances and future expectations. Please be in contact for a free meeting.

Charity donations via the company

Published: 12 Sep 2011

Updated: 16 Oct 2023

Written by Ray Coman

A donation made via a company to a UK registered charity can be deducted from profit for tax purposes.  There has to be a gratuitous intent for the payment to be regarded as a donation.  If the company receives a benefit in return the payment is not regarded in the manner of a donation.

Limited company owners are often pay no income tax.  This is because the salary received is less than the personal allowance and the dividend does not give rise to income tax.  In such cases, the charity could not obtain the basic rate tax relief from HMRC.  A donation made via a company would obtain tax relief provided the donations are not more than taxable profits.