Image Image Image Image Image Image Image Image Image
Select a Page

News

Nimbus

By Nimbus

March 20, 2013

2013 Budget – Main points for Small Business

March 20, 2013 | By |

What are the main points from George Osborne’s 2013 Budget that effect small business in the UK:

  • From 1 April 2015 all corporations will pay 20% tax
  • From 1 April 2014 all businesses will receive an annual allowance of £2,000 to offset against employer’s class 1 national insurance contribution
  • The introduction of cash accounting for small businesses, more on this in a later blog
  • HMRC will try to simplify the collection of class 2 national insurance contributions for the self-employed
  • Personal tax allowance to be £10,000 from 5 April 2014
  • Basic rate tax limit will be reduced, again, to £31,865 from 5 April 2014
  • Directors loans to increase from £5,000 to £10,000 without becoming a beneficial loan
  • VAT threshold increased to £79,000 from 1 April 2013 and deregistration limit £77,000
Small Business
Nimbus

By Nimbus

March 7, 2013

Receipt Bank Integration

March 7, 2013 | By |

Are you bored of entering receipts into your accounting software? Do you find yourself looking through piles of paper receipts? If so, receipt bank can provide another way to manage your records.

Founded in 2010, Receipt Bank is a great asset to all small businesses. It allows you to send all of your receipts by post, e-mail or even photograph on the new IPhone App. Receipt bank will extract all relevant information from each receipt such as supplier, date, amount, VAT etc and export them to your cloud accounting software, including Xero, FreeAgent, Dropbox and more.

When sending to Xero or FreeAgent, Receipt Bank will even code the details to a suggested account, ‘travel’ for example.  All you have to do is confirm these suggestions and once you’re happy, transfer all receipts at once to your online accounting software. This saves an immense amount of time in data entry that can be better spent on other, profit making tasks.  All scanned items are stored securely on your online receipt bank account, as well as your online accounting software and can be accessed with ease.  This digital copy of the invoice complies with HMRC rules, so the paper copies can be disposed, so this cloud solution will even save you storage space!

At very affordable prices for all sized businesses, this tool can really make a difference in saving time, money and effort.

At Nimbus Accounting we recommend Receipt Bank to our clients, if you want to know more, call one of our qualified accountants today. 

Small Business
Nimbus

By Nimbus

March 6, 2013

What dividend and salary to pay yourself in 2013/14?

March 6, 2013 | By |

 
As the 2012/13 tax year comes to an end, there is another change in your personal allowance and tax thresholds to be aware of, coming into effect from 5 April 2013. The question this raises is “How should you extract profits from your business is the most tax efficient manner for 2013/14?”

As always the extraction of funds needs to be a mixture of dividends and salaries, but what is the best solution to utilise all of your allowances while minimising your personal tax liability? We have two methods below, one taking a salary within the national insurance threshold and the other taking a salary within the personal allowance threshold, which will give rise to a small national insurance bill.

Option 1 – Taking a salary within the national insurance threshold

The national insurance threshold for 2013/14 is £148 per week, therefore you can pay yourself an annual salary of £7,696 (£641 per month).

The basic rate tax band has fallen from £34,370 to £32,010 (any amount over this figure would attract personal tax on dividends), taking into account the above salary and the tax credits on dividends you could take £30,379 of net dividends in 2013/14 before paying any personal tax.

 

Option 2 – Taking a salary that utilises your personal tax free allowance

The personal tax free allowance for 2013/14 has increased from £8,105 to £9,440, which would be a monthly salary of £786. However, with an annual salary of £9,440 you will incur an employee national insurance bill of £203.04 and an employer’s national insurance liability of £240.67.

Based on the above salary of £9,440 you would be able to take dividends of £28,809.

With this option, due to the increase in salary and the additional employer’s national insurance contribution, there will be a corporation tax saving of £396.94. If we compare the two options we can see the difference in net take home pay.

 

Option 1

Option 2
Salary

7,696

9,440
Dividends

30,379

28,809
Employees NI deductions

–

(203)
Take Home pay

38,075

38,046

 Total salary and dividends

38,087 

38,249 
Employers NI

–

(240)
Corporation Tax Saving

–

397
Net over all position

38,075

38,092

As you can see, by extracting the funds by option 2 you are £29 worse off personally, due to incurring national insurance (£38,075 vs £38,046).  When you consider the overall wealth, including the company, you are worse off by a further £17, so £46 in total. Option two also requires paying PAYE deductions every quarter, so increased administration on top of the cost.

 You may want to take more money out of your company, more options to consider include:

  • Additional shareholders
  • Pension contributions
  • Gift Aid

If these are not an option then the higher rate of tax on dividends ranges from 25% (of the net dividends, up to a total gross income from all sources of £150,000) to 30.5%.

The above calculations are based on an individual under 65 years old and not receiving any other income. They are also for illustration purposes only and do not constitute tax advice. We would recommend that you seek professional advice before planning your own tax strategies.

At Nimbus Accounting, our aim is to make sure all of our clients minimise their tax liability, to help them grow and develop their businesses in these tough economic times. 

 

 

Tax

Get in Touch