Chris Metcalf’s Post

The question on many business owners' lips… In short, the answer is no. Let’s look at an example from April onwards for a director/shareholding taking out £50,000 from a Company that falls into the 26.5% Corporation Tax bracket (maximum relief available). ➡ With a salary of £9,100 and a dividend of £40,900, the after tax position for that person would be £46,769. The after tax cost to the Company would be £47,589 meaning a net tax charge overall of just £820. ➡ If that individual wanted to maintain a net after tax income of £46,769, and on a full salary, then that salary would need to be £62,433. The cost to the Company after tax and Employers NI would be £53,248, meaning a net tax charge overall of £6,480. ➡ However, if the individual wanted to maintain pre-tax income of £50,000 on a full salary, then after tax, that person would have £39,520 left. The cost to the Company after tax and Employers NI would be £42,394, meaning a net tax charge of £2,875. Found this helpful? Follow our page for more accounting advice, updates and tips for businesses 🔔 #dividends #salary #businessowner #director #budget #accounting #accountingtips #businesstips #businessfinance

6 quick ticks to save over £16,000 in tax before the end of the month 💰 As we approach the end of the personal tax year, here are some super simple quick tick tasks, which can help you extract up to £61,300 from your limited company, completely tax free which could save you up to £16,075 in corporation tax this year. 🚀 These are my top tax tips to action by 31st March 2024 💐: 1. Max out your pension contributions: Paying into a private pension is tax-efficient because you’ll reduce your company’s taxable profits and therefore your Corporation Tax liability. For the 2023-24 tax year, the pension allowance is £60,000, meaning you can add £60,000 into your private pension without paying any income tax, and you’ll save up to £15,000 in corporation tax by reducing your taxable profits 2. Claim your £300 trivial benefit allowance: As a director of a small business (with less than 5 shareholders) you can extract £300 from your business completely tax free, per director 3. Salary structure: if you’re setup for a directors only payroll, don’t forget to review your directors salary for the upcoming tax year 4. Claim your £1,000 dividend allowance: don’t forget that included in your dividends for the year, you have a tax free dividend allowance which for the 2023-24 tax year is £1,000 5. Review upcoming expenditure for capital allowances: in the UK we have lots of tax incentives to invest in assets this year, so if you’re planning on purchasing assets within your business, you might like to consider purchasing them before 31st March 2024 to get up to 100% tax relief in this financial year. 6. Book a financial MOT: pop time in your accountants diary to take a deep dive into these before the end of the tax year. #accountant #accounting #tax

Business owners, are you maximising your earnings? In this article, David Tallon, CTA TEP ATT discusses the tax implications of taking a salary versus dividends from your company under the new government. We examine the pros and cons of each option, including tax efficiency, National Insurance contributions, and the impact on personal allowances. This article provides insights to help business owners make informed decisions about their remuneration strategy, considering current tax regulations and potential future changes. For detailed guidance, read the full article here: https://lnkd.in/e6i5bmv2 #TaxPlanning #BusinessStrategy #BusinessOwners #FinancialPlanning #Government

Making £50,000 profit? Wait till you see how much of it you're actually handing over in tax—prepare for a shock! I see lots of videos around the little amount of tax you pay as a director in a ltd company in the UK. Some saying that you only pay £3000 on a £50,000 profit. This is not entirely true. Here's my help sheet to break it down. What tax will I pay on £50,000 earnings in a ltd company    Step 1: Corporation Tax at 25% For an investment company, the Corporation Tax rate is 25%. Step 2: Taking a Salary You can still take a small salary as a director to maximize tax efficiency. Let’s assume you take the tax-efficient salary of £12,570 (the personal allowance for 2023/24): Income Tax: £0 (within the personal allowance). National Insurance Contributions (NICs): £0 (as the salary is within the threshold). This leaves £37,430 (£50,000 - £12,570) in company profits. Step 3: Corporation Tax (25%) The company will pay Corporation Tax at 25% on its profits before dividends. Here’s the calculation: Profit before tax: £50,000 - £12,570 = £37,430. Corporation Tax: £37,430 x 25% = £9,357.50. Step 4: Dividends After Corporation Tax is paid, the company can distribute the remaining profit as dividends. Profit after Corporation Tax: £37,430 - £9,357.50 = £28,072.50 available for dividends. Step 5: Dividend Tax Dividends are taxed after the salary is taken into account. Your income (salary + dividends) will still fall within the basic tax band (under £50,270). Salary: £12,570. Dividends: £28,072.50. Total income: £12,570 + £28,072.50 = £40,642.50 (within the basic rate threshold). Dividend Tax Calculation: Dividend Allowance: The first £1,000 of dividends is tax-free. Dividend Tax at 8.75%: The remaining dividends (£28,072.50 - £1,000 = £27,072.50) are taxed at 8.75%. Dividend Tax: £27,072.50 x 8.75% = £2,368.84. Step 6: Summary of Tax and Income Tax Breakdown: Corporation Tax: £9,357.50. Dividend Tax: £2,368.84. Total Tax: £9,357.50 + £2,368.84 = £11,726.34. Your Total Take-Home Pay: Salary: £12,570. Dividends after tax: £28,072.50 - £2,368.84 = £25,703.66. Total Take-Home: £12,570 + £25,703.66 = £38,273.66. Final Breakdown: £50,000 income to the company results in: £11,726.34 in total tax (Corporation Tax + Dividend Tax). £38,273.66 take-home pay for you as the director. 💡I'm Simon and I buy and invest in property for people that don’t have the time to do so. 👏 Want to earn more on your hard earn savings I can help investing in the UK property market. 

Budget Highlights 2024 In simple words ⭐️ 1. Standard deduction for salaried persons is increased to 75000 as compared to 50000. (Only for the New Regime) 2. Tax rate Slab has been changed for New Regime. 3. For Non-Government Employee, who contribute to the NPS (National Pension Scheme) can avail benefit of exemption of employer contribution upto 14% of his salary as compared to 10%. 4. Tax rate on Short Term Capital Gain on sale of Shares or Securities will now tax at 20% as compared to 15%. The rest will charge at a normal rate. 5. Tax rate on Long Term Capital Gain on sale of Shares or Securities will now tax at 12.5% as compared to 10%. 6. Tax Exemption limit for Long Term Capital gain has been increased to 1,25,000 as compared to 1,00,000. Which means tax of 12.5% will apply only when your Gain is more than 1.25 Lakhs in a year. 7. This Proposed tax rate on Securities has been applicable from Today i.g. 23th July 2024, sale on before that date will be tax at old rate. This will be applicable on both regime Old as well as in New. 8. Earlier tax was not charged on gain on Buyback of shares, but now Buyback gain will be taxed in investor heads at normal tax rate. 9. Securities Transaction Tax(STT) has been increased in Future and Option, so effectively the cost will be high in the hand of the trader. 10. Now any payment made to Partner by Partnership firm falls under TDS and needs to deduct TDS at 10% on or above payment of 20000 p.a. 11. Now onwards Indexation benefit will not be applicable on Long Term Capital Assets on sale of property. 12. The limit for remuneration to the partner has been increased from 3 Lakhs to 6 Lakhs. 13. TDS rate for Commission and brokerage has been changed, now its 2% compared to 5% MOST SHOCKING NEWS FROM THIS BUDGET WE CAN ANALYSE THAT GOVERNMENT SAYING THAT WE DON'T WANT TRADERS CAUSE TRADERS ARE JUST LIKE BETTING, AND THE GOVERNMENT WANT INVESTORS FOR FUTURE TERM . BUT IF WE CAN SEE THAT LONG TERM CAPITAL GAIN TAX HAS BEEN INCREASED BY 2.5% IF GOVERNMENT WANT INVESTOR SO THEY HAVE TO CUT DOWN THE INCOME TAX REGIME SO BY THIS AS A INDIVIDUAL THINGS ABOUT INVESTING MORE IN ECONOMY CAUSE HERE GOVERNMENT DOING NOTHING BUT FOCUSING HOW TO INCREASE THE REVENUE . THAT'S ALL I CAN ANALYSE FROM THIS BUDGET HOPE IT WILL HELP YOU. THANKS .

I'm opining on the extraordinary level of taxes in the UK and how it drags on business growth and job creation. I'll give a somewhat stylistic example of what tax looks like from point of view of an SME professional services company. Let's say you sell £100 of a service: 66% goes to service provider. On your 33% you pay 20% VAT, or £6.6. Assume staff costs are 40% of your revenue, all other costs are 40%, and your EBITDA margin is 10%. Assume the 40% of non-staff costs are all VAT inputs, you get £3.3 VAT back (a generous assumption). On your 40% staff costs, you pay 14% National Insurance or £1.85. On your profits you pay 25% corporation Tax, or £0.83 You have a total tax bill of ~£6 on a post-tax profit of ~£2.5 Taxes > 2 x Profits. Now lets assume: Your service providers and staff are paying an average of 33% income tax+NI, or £26 Your shareholders pay an average rate of 33% on their dividends, or £0.82 Of the original £100 spent: ~£33 was paid to UK PLC. Through PAYE and tax returns your company generates an amount of tax that equates to: ~75% of the total people earnt from working for you. ~1300% of what your shareholders earn. Incidentally, the UK Tax-to-GDP ratio is 37% so I think my example sort of checks out. And still, we have £1.1 trillion in tax receipts and a yet a £120 billion budget deficit. 🤔 The chart below from the Institute of Fiscal Studies is depressing, it covers the period since I started school. I'm not some free-markets extremist and believe in fair and proportionate taxes to subsidise services that markets mis-price, but I must have skipped the class in business school on optimal tax rates. As a business, we want to hire more people, create new jobs and pay top performers more, but even at our size, every 1% increase in the total tax rate is a job lost. I'm half expecting HMRC to hand me my P45 after this post.

Are You Paying Yourself the Most Efficient Way? For UK business owners, balancing salary and dividends is essential for maximising tax efficiency. Here’s a quick overview: Salaries vs. Dividends Salaries: Fixed payments subject to income tax and National Insurance Contributions (NICs) but are tax deductible. Dividends: Payments to shareholders from post-tax profits, subject to dividend tax rates and no NICs. Key Changes in Legislation Corporation Tax: Rising from 19% to 25% from April 2023 (no change for 2024), with marginal relief for profits between £50,000 and £250,000. Dividend Allowance: Dropping from £1,000 to £500 from April 2024. Income Tax Threshold: The highest rate 45% (48% in Scotland) threshold lowers from £150,000 to £125,140 from April 2023 (no change 2024). There is a new tier for Scotland of 45% between £75,001 - £125,140. Strategic Insights: Basic Rate Taxpayers: Dividends are usually more tax-efficient. Higher & Additional Rate Taxpayers: Bonuses might be more beneficial due to full deductions and NIC advantages. Takeaway: Review your income strategy considering the tax rates. While dividends have been a go-to for tax efficiency, new rates make it essential to reconsider the best mix for your situation. There is no one-size-fits-all approach when it comes to paying yourself as an owner of a business. Deciding whether to pay yourself a salary or dividends depends on a range of factors, such as the CT rate, the profile of the company and its shareholders. #FinancialStrategy #UKTaxpayer #SalaryVsDividends #TaxEfficiency 

In the October 2024 UK budget, Chancellor Rachel Reeves presented a wide-ranging plan addressing tax, investment, and social reform. Key elements included significant changes impacting individuals and businesses: 1. VAT: Private school fees will now incur VAT as part of a broader tax reform. The budget did not directly impact VAT rates for other sectors, but targeted zero-rating VAT exemptions were not expanded. 2. Minimum Wage and Personal Allowances: The national living wage will rise by 6.7% to £12.21 per hour from April 2025 and the national minimum wage will rise by 16.3% to £10.00 per hour from April 2025. 3. Employers’ National insurance: Employers will now face a rate increase from 13.8% to 15.5% on earnings above the threshold of £9,100 annually. The Employers' Allowance—which allows small businesses to offset their NI contributions—will increase from £5,000 to £10,500. 4. Tax on Investment Gains and Estates: The lower Capital Gains Tax (CGT) rate from 10% to 18% and the higher rate from 20% to 24%. Business Asset Disposal Relief and Investors’ Relief will gradually rise to 14% starting 6 April 2025, matching the main lower rate of 18% from 6 April 2026, allowing business owners time to adapt to these changes. 5. Corporate and Business Taxes: The corporate tax rate is held at 25%, while the small business tax multiplier will be frozen. Additionally, the non-dom tax regime will end in 2025. 6. SDLT: An increase in the stamp duty surcharge on second homes: Rising from 3% to 5%, effective tomorrow. 🔍 Stay informed and adapt to the new tax landscape! At Deeks VAT Consultancy, we’re here to help you navigate these changes with confidence. Contact us for a consultation today to discuss how these updates may impact your finances. 📞 Contact Us for tailored guidance - 07710553831 Deeks VAT Consultancy Limited #UKBudget2024 #TaxUpdates #DeeksVAT #VATReform #MinimumWage #CorporateTax #InvestmentGains #SDLT #Accountancy

What is the tax efficient salary for THIS tax year 💷 (ending 5th April 25) When we talk to our clients who's income comes from an owner managed business (and generally speaking have no other income), they will typically take a combination of salary and dividends- these are key numbers to consider: 1. The go to tax efficient salary is £12,570 - but for a sole director you will have some employer national insurance payable 2. If you want the stress free no admin tax efficient salary- £9,100 is the figure. You will have no payments due to HMRC 3. When your income closes in on £98k we recommend talking to an accountant - depending on the corporation tax rates payable you may be better off taking all your remuneration as salary There are lots of other implications of switching including impact on cashflow, varying corporation tax rates and the dreaded £100k tax trap. That's why we suggest speaking to someone to plan your remuneration. And the exciting thing is from April 2025 this all changes again 😃 💛💙 Hope this helps you- this is video 2 of 24 so plenty more to check out covering accounts, tax, business, social media and more- please follow Gravitate Accounting and myself to see all the tips 💙💛

5 quick ticks to save over £16,000 in tax before the end of the month 💰 As we approach the end of the personal tax year, here are some super simple quick tick tasks, which can help you extract up to £61,300 from your limited company, completely tax free which could save you up to £16,075 in corporation tax this year. 🚀 These are my top tax tips to action by 31st March 2024 💐: 1. Max out your pension contributions: Paying into a private pension is tax-efficient because you’ll reduce your company’s taxable profits and therefore your Corporation Tax liability. For the 2023-24 tax year, the pension allowance is £60,000, meaning you can add £60,000 into your private pension without paying any income tax, and you’ll save up to £15,000 in corporation tax by reducing your taxable profits 2. Claim your £300 trivial benefit allowance: As a director of a small business (with less than 5 shareholders) you can extract £300 from your business completely tax free, per director 3. Salary structure: if you’re setup for a directors only payroll, don’t forget to review your directors salary for the upcoming tax year 4. Claim your £1,000 dividend allowance: don’t forget that included in your dividends for the year, you have a tax free dividend allowance which for the 2023-24 tax year is £1,000 5. Review upcoming expenditure for capital allowances: in the UK we have lots of tax incentives to invest in assets this year, so if you’re planning on purchasing assets within your business, you might like to consider purchasing them before 31st March 2024 to get up to 100% tax relief in this financial year. #accountant #accounting #tax #UK #Advice #HMRC #CorporationTax