Directors only tax-saving package

Table of contents

Introduction

1. Salaries

1.1. A director’s perspective

1.2. Minimum salary, the NMW and the NLW

1.3. Salary waiver

1.4. Spouse’s/family members’ salary

1.5. Year-end bonus

1.6. National Insurance employment allowance

1.7. Key points

2. Benefits and expenses

2.1. A director’s perspective

2.2. Tax relief for the company

2.3. School fees

2.4. Moving home

2.5. Cheap loans

2.6. Second company car

2.7. Is a van cheaper?

2.8. Computers, widescreen televisions, MP3 players, etc.

2.9. Childcare vouchers

2.10. Travel and subsistence costs

2.11. Trivial and minor benefits

2.12. Key points

3. The use (and abuse) of dividends

3.1. A director’s perspective

3.2. Timing payments of dividends

3.3. Dividend waivers

3.4. Separate classes of shares

3.5. Dividend income for a spouse

3.6. Dividend income for children

3.7. Key points

4. Pension scheme strategies

4.1. The director’s perspective

4.2. The tax-advantaged pension scheme

4.3. Corporation tax relief for your company

4.4. Salary sacrifice option

4.5. Contribution without earnings

4.6. Ownership of the company’s assets

4.7. Pension fund borrowings

4.8. Contribution for a spouse

4.9. Key points

5. Financing the company

5.1. The director’s perspective

5.2. Claiming interest on loans to buy shares

5.3. Company borrows to acquire assets for your use

5.4. Interest on shareholder loans to the company

5.5. Seed enterprise investment scheme

5.6. Key points

6. Capital allowances

6.1. A director’s perspective

6.2. Timing

6.3. Assets specifically qualifying for a 100% tax deduction

6.4. Hidden allowances

6.5. Key points

7. Buying another company

7.1. The director’s perspective

7.2. Assets or shares?

7.3. Allocation of purchase consideration

7.4. Hive-downs

7.5. Tax due diligence

7.6. Insist on a tax indemnity

7.7. Losses

7.8. Borrowing costs

7.9. Stamp duty

7.10. VAT

7.11. Buy-to-sell shares

7.12. Termination payments

7.13. Deferred consideration

7.14. Key points

8. Reorganising shares

8.1. The director’s perspective

8.2. Gifts of shares to spouse

8.3. Gifts of shares to family members, employees, etc.

8.4. Gift holdover relief

8.5. Preventing unnecessary employment tax charges

8.6. Employee shareholder schemes

8.7. Purchase own shares

8.8. Key points

9. Succession planning

9.1. The director’s perspective

9.2. Preserving business property relief

9.3. Passing on shares to the next generation

9.4. Pre-owned assets tax (POAT)

9.5. Business premises held by you

9.6. Key points

10. Selling your company

10.1. The director’s perspective

10.2. Timing

10.3. Sale of assets and trade

10.4. Sale of shares

10.5. Pre-sale tax planning strategies

10.6. Deferred consideration

10.7. Using a profit warranty

10.8. IHT

10.9. Warranties and indemnities

10.10. Anti-avoidance

10.11. Key points

11. Winding up your company

11.1. The director’s perspective

11.2. Capital distribution

11.3. Availability of entrepreneurs’ relief

11.4. Last minute dividend?

11.5. Phoenix companies

11.6. Key points

12. Going offshore

12.1. The director’s perspective

12.2. Your own offshore accounts/assets

12.3. Your company’s offshore interests

12.4. Costs and compliance

12.5. Offshore jurisdictions

12.6. Offshore friends

12.7. Keeping secrets

12.8. Benefiting from the arrangement

12.9. When selling your UK company

12.10. Key points

13. Trusts

13.1. The director’s perspective

13.2. The post-2006 trusts regime

13.3. Use of trusts

13.4. Tax implications of creating a trust

13.5. The various trusts available

13.6. Key points

14. Income tax planning

14.1. Introduction

14.2. What’s tax free?

14.3. Getting your allowances

14.4. Avoiding the high income child benefit tax charge

14.5. Children’s income

14.6. Overseas income and offshore bonds

14.7. Independent taxation

15. Capital gains tax planning

15.1. Introduction

15.2. What is free from capital gains tax?

15.3. How it works

15.4. Entrepreneurs’ relief

15.5. Losses and gains

15.6. How to avoid the bed and breakfasting rules

15.7. Flipping between your main residence and your second home

15.8. Selling your garden

15.9. CGT and death

15.10. Further timing issues

15.11. Enterprise investment scheme (EIS) and holdover (deferral) schemes

15.12. Seed enterprise investment scheme (SEIS)

16. Inheritance tax planning

16.1. Introduction

16.2. What is tax free?

16.3. The nil rate band

16.4. The seven-year rule and taper relief

16.5. Gifts with reservation

16.6. Keeping value outside your estate

16.7. Skipping a generation

16.8. Two nil rate bands for spouses

16.9. Properly drafted wills

16.10. Changing someone’s will after they have died

16.11. The use of trusts

16.12. Reduce your IHT bill by giving to charity

17. National Insurance planning

18. Year-end tax planning

Appendix

The Scottish tax rates 2018/19

Table of contents

Introduction

I. HMRC online services

1. How to sign up to HMRC online services for the first time

2. How to obtain a new activation code for HMRC’s online services

3. How to add a new HMRC online service to your company’s registration

4. How to sign up and use HMRC’s Business Tax Account

5. How to merge HMRC services on to a single Business Tax Account

II. Dividends, salary, benefits and employment expenses

6. How to pay a director’s bonus

7. How to claim a tax deduction for business expenses

8. How to elect for the alternative method of calculation of a beneficial loan

9. How to create a salary sacrifice arrangement

10. How to keep a mileage record

11. How to pay an interim dividend

12. How to pay a final dividend

13. How to waive a dividend

14. How to report a beneficial loan for directors and employees

III. PAYE and payroll and construction industry schemes

15. How to register your company as an employer for PAYE

16. How to register as a CIS contractor

17. How to set up PAYE basic tools

18. How to set up a new employee without a P45

19. How to set up a new employee with a P45

20. How to make an RTI report without an NI number

21. How to make PAYE, CIS and NI deductions

22. How to pay HMRC advisory benchmark allowances for UK subsistence

23. How to pay scale rate expenses for overseas travel and subsistence

24. How to pay personal incidental overnight expenses relating to business travel

25. How to make a tax and NI-free advance of expenses

26. How to pay HMRC’s approved flat rate use-of-home allowance

27. How to report expenses and benefits for directors and Pay Class 1A NI

28. How to reclaim overpaid NI

29. How to apply the annual earnings period for directors

IV. VAT

30. How to register for VAT online

31. How to register for VAT offline

32. How to update your company’s VAT records with HMRC

33. How to change your company’s VAT status

34. How to apply for group VAT registration

35. How to apply for divisional VAT registration

36. How to opt to use the VAT flat rate scheme

37. How to opt out of the VAT flat rate scheme

38. How to opt to use the VAT cash accounting scheme

39. How to use a VAT retail scheme

40. How to opt to use the VAT annual accounting scheme

41. How to opt to use a special method for VAT partial exemption

42. How to opt to tax a property
(elect to waive exemption from VAT)

43. How to withdraw the option to tax

44. How to use the VAT flat rate fuel charge

V. Corporation tax

45. How to register a company with HMRC

46. How to notify HMRC that your company is dormant

47. How to notify HMRC that your company is active

48. How to file company accounts with HMRC

49. How to amend a corporation tax return

50. How to claim trading losses against trading income of later years

51. How to claim pre-incorporation losses against company income

52. How to claim a deduction for pre-trading expenses

53. How to claim trading losses against current year’s income

54. How to claim trading losses against total income of earlier years

55. How to claim losses when a business ceases - terminal loss relief

56. How to claim group relief for losses

VI. Capital allowances

57. How to make a short-life asset election

58. How to claim the annual investment allowance (AIA)

59. How to elect for capital allowances on equipment fixed to buildings

60. How to elect to use tax written down values on transfer of a business

VII. Directors’ personal tax

61. How to register for self-assessment as a director

62. How to amend your tax code

63. How to claim higher rate relief for pension contributions

64. How to reduce your self- assessment payments on account

65. How to claim an income tax refund

66. How to claim tax relief for homeworking expenses

67. How to claim interest on a business loan

68. How to defer Class 1 NI contributions

69. How to use unused pensions tax allowance from earlier years

70. How to declare and pay a pensions annual allowance charge

71. How to elect to be taxed on joint income

72. How to claim enterprise investment scheme (EIS) relief

73. How to carry back tax relief for the EIS

74. How to claim seed enterprise investment scheme (SEIS) relief

75. How to carry back tax relief for the SEIS

VIII. Buying and selling a business

76. How to claim entrepreneurs’ relief

77. How to claim negligible value CGT relief for your company’s shares

78. How to claim income tax relief for a capital loss

79. How to elect for entrepreneurs’ relief to apply to qualifying corporate bonds

80. How to defer (holdover) a capital gain on the transfer of shares in a company

81. How to roll over a capital gain following the sale of business assets

IX. Other claims and procedures

82. How to create a loan agreement with a director

83. How to challenge an HMRC assessment ruling or decision for direct tax

84. How to challenge an HMRC assessment ruling or decision for indirect tax

85. How to complain about HMRC’s services

86. How to obtain clearance for a transaction from HMRC

87. How to postpone payment of tax relating to an HMRC assessment or decision

88. How to pay tax bills without a payslip

89. How to apply to use HMRC’s alternative dispute resolution (ADR) process

90. How to appeal to the First-tier Tribunal