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Tax Breaks for Directors

Pay less tax, safely and easily

A Tips & Advice book about... 

In a nutshell

This book is a must-read for all directors that want to pay less tax – legitimately. It explains how you can take full advantage of the available tax breaks. It shows all the options, so you can make the right choice in your situation. We’ve also updated this new edition to include all the recent changes, so you’re sure to have the latest information at hand.

In detail

Directors are uniquely placed to manage how and when they take income from their companies for maximum tax efficiency. Knowing which tax breaks to claim can save you a small fortune, but as you'd expect it's not all plain sailing. This book brings the tax breaks within easy reach of all directors. You’ll get a clear view of the various reliefs you can safely benefit from.

  • Salary, dividends and benefits
  • Employer-supported childcare
  • The employment expenses exemption
  • Salary sacrifice arrangements
  • Using your home for business
  • Income shifting
  • Company cars
  • Loans
  • Saving for your retirement
  • Selling your company

Written in plain English, this book allows you to choose the tax-reducing strategies that best suit your personal situation. Simple, safe, secure.

We've created this Tips & Advice book especially for... 

Company directors/shareholders that want to:

  • Keep their tax bill as low as possible
  • Get a clear view on the various available tax breaks

Financial advisors and accountants that want to:

  • Help clients choose the most appropriate tax-saving strategy for their situation

In this Tips & Advice Book you'll read about...

Table of contents

Introduction

Part 1 - Directors only

1. Compensation for being a director

1.1. Introduction

1.2. What form of compensation?

1.3. Directors’ fees

1.4. Tax relief for the company

2. The higher tax rate regime

2.1. Basic rules - tax rates and allowances

2.2. How to maximise tax efficiency on income?

3. Your salary

3.1. Introduction

3.2. Directors’ salary and the NMW and NLW

3.3. Low salaries

3.4. Higher salaries

3.5. What to put on your tax return?

3.6. How much tax will you pay?

4. Directors’ bonuses

4.1. Introduction

4.2. What to put on your tax return?

4.3. What’s the NI cost?

4.4. At what rate will your bonus be taxed?

4.5. Deferring a bonus

4.6. Not drawing the cash

5. Company cars

5.1. Introduction

5.2. Ownership and choice of the car

5.3. What to put on your tax return?

5.4. Making a contribution - cost of car

5.5. Making a contribution for private use

5.6. Optional extras

5.7. Car fuel

5.8. Second company car

5.9. Classic cars

5.10. Vans and double cab pick-ups

6. Using company assets

6.1. Introduction

6.2. What to put on your tax return?

6.3. Examples of using company assets

7. Loans to directors

7.1. Introduction

7.2. How do you set up a company loan?

7.3. What to put on your tax return?

7.4. How much tax will you pay?

7.5. Alternative calculation

7.6. Your company’s tax position

8. Medical bills and insurance

8.1. Introduction

8.2. What’s covered?

8.3. What to put on your tax return?


8.4. How much tax is payable?

8.5. When will you be taxed on medical expenses?

9. Childcare

9.1. Introduction

9.2. How do you set up a childcare scheme?

9.3. Are there restrictions or financial upper limits?

9.4. What to put on your tax return?

9.5. How much tax is payable?

9.6. The new Tax-Free Childcare scheme

10. Expenses

10.1. Introduction

10.2. Exemption since 6 April 2016

10.3. Advances for expenses

11. Working from home

11.1. Introduction

11.2. The £4 tax-free allowance

11.3. Where no homeworking allowance is paid

11.4. Renting a room to your company

11.5. Claiming the cost of home broadband etc.

11.6. Homeworking business rates

11.7. Using your garage

12. Pension contributions

12.1. Introduction

12.2. Company contributions

12.3. Carry-forward relief

Part 2 - Director shareholders

13. Dividends

13.1. Introduction

13.2. The tax break dividend

13.3. Higher rate dividends

13.4. Deferring higher rate tax

13.5. Waiving higher rate tax

13.6. Diverting dividends to save tax

13.7. Tax return entries

14. Tax-efficient salaries

14.1. Introduction

14.2. Tax break - mixing salary and dividends

14.3. National minimum or living wage

14.4. Family salaries

14.5. Spouse’s salary - specific issues

14.6. Spouse’s pension contribution

14.7. Teen wages

15. Director’s loan account

15.1. Introduction

15.2. Charging expenses

15.3. Charging interest on a DLA

15.4. Overdrawn loan accounts

15.5. Keeping loan account records

16. Your company’s landlord

16.1. Introduction

16.2. Charging rent

16.3. Entries on your tax return

16.4. Expenses you can deduct from the rent

16.5. Renting example

16.6. Recovering VAT

16.7. Special 10% CGT tax break

16.8. Selling your property to your company

17. Other NI breaks

17.1. Introduction

17.2. Current NI rates

17.3. Royalties and licence fees

17.4. Director sells assets to company

18. Building up a pension fund

18.1. Introduction

18.2. How much can you put in?

18.3. Carry-forward relief

18.4. Pension fund invests in company

19. Restructuring shares

19.1. Introduction

19.2. Acquiring more shares

19.3. Transferring shares

19.4. Shares to spouse/civil partner

19.5. Shares to other family members

19.6. Share buy-back

19.7. Funding a share buy-back

20. Inheritance tax breaks

20.1. Introduction

20.2. Keeping below the IHT threshold

20.3. Two nil rate bands for spouses

20.4. Business property relief

20.5. Transferring shares during your lifetime

20.6. Shares you transfer on death

20.7. Unwanted shares

20.8. Planning points for your will

21. Selling your company

21.1. Introduction

21.2. Timing the sale

21.3. Sale of assets and trade

21.4. Selling your shares instead

21.5. The inheritance tax angle

21.6. Useful warranties and indemnities

21.7. Entrepreneurs’ relief (ER)

21.8. Before you dispose of your shares

21.9. Associated disposal tax break

22. Year-end planning for directors

22.1. Why is timing important?

22.2. That 5 April date

22.3. Key dates for your company

22.4. When will your company get a tax deduction?

Appendix

The Scottish tax rates 2019/20

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