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Why is trading through a Limited Company tax efficient?

You can pay yourself in the form of Dividends which do not attract either employee or employer's national insurance.

What if I already have a company set up?

Freestyle Accounting can take over the administration for you.

What if my contract fails IR35?

That contract would be treated as within IR35 and the required tax and NI would be charged. This would be after all allowable expenses, personal contributions and an allowance of 5% of invoices to cover notional expenses.

Does National Minimum Wage apply to Directors?

No, it does not unless you happen to have a formal contract of employment with your limited company which would be unusual for owner managed businesses. One of our accountants will contact you when you join to discuss the level of salary which is most appropriate for your circumstances.

Do all expenses require receipts?

Yes, except for mileage which does not.

Can I claim working from home?

This is a complex area. A small amount (£156) is normally allowable but please see our factsheet in our Contractor Area under Articles and factsheets - Contractor Expenses - Claiming for use of home as office.

I have a spouse working within the business. Can I take this into account?

We would provide advice on a case by case basis once we know the facts. As a general rule it is ok to pay your spouse a small salary but: -the amount must be reasonable - must equate to what you would pay to a third party for the same duties - must actually be paid to your spouse. However, it is possible for your spouse to be a shareholder in your business and receive dividends. Please talk to one of our accountants for further advice.

Where will the registered address for my limited company be?

This will be Freestyle Accounting's address in Coventry.

What happens when I join?

We form your company for you, and if you require, we can assist in opening a company bank account for you. We will also commence registering you and your company with all of the relevant government bodies.

How long does it take to set up the Limited Company?

We normally state 24 hours but in most cases it is less than this.

How long does it take to organise the VAT and Corporation tax registration?

We can do this as soon as we have your contract and bank account details. HMRC can take about 4 weeks to send your registration certificate.

How long do the IR35 checks take?

Our specialists have confirmed that they will report back within a week, although in most cases it is quicker than this.

If I open the Company bank account via Freestyle, how long does it take?

If you use Freestyle to open an account with Cater Allen, this can usually be arranged in a week.

How is corporation tax applied?

Corporation tax is payable on business profits, and is not affected by the level of dividends. Higher rate personal tax is payable on dividends over the higher rate threshold.

Does Freestyle Accounting have a ‘tie in’ period?

There is no tie in period; you are free to leave at any time without penalty. If we form a company for you and you decide to leave before starting to use the rest of the service then we would levy a charge of £125 plus VAT for carrying out the company formation.

Can I claim pre-trading expenses?

You can claim anything that you would have been able to claim whilst you were trading, and examples of such expenses are accountancy fees, rent, rates or stationery, etc. (s. 61 CTA 2009) You cannot claim the cost of a company formation as this is deemed to be a capital expense rather than a revenue expense and a tax deduction cannot be claimed regardless of when it is incurred.

Can I claim for my broadband costs via my limited company?

If the broadband connection is in the name of the limited company and any personal use is purely incidental, and does not incur additional costs, then there will not be any tax or national insurance consequences. If personal use is significant, and you do not reimburse your company for the personal use, then you will be taxed on the personal use as a benefit in kind and your company will have to account for Class 1a national insurance. Where you do not have a broadband connection and you can show that this is required to do your work, then HMRC accept that this may be claimed; where, however, you already have broadband, this cannot be claimed. (s. 316 ITEPA 2003)

Can I claim for entertainment expenses via my limited company as I know there are restrictions?

The cost of entertaining clients is not tax deductible and any input vat cannot be reclaimed. You may claim the costs of entertaining staff and their guests, up to certain limits, and provided that it isn’t merely incidental to entertaining clients. With regard to staff entertaining, you are allowed to claim the cost of one or more annual functions, as long as the cost to the company does not exceed £150 pa for each person who attends.

 

 

Freestyle Accounting – Limited Company Contracting Made Easy!

0800 954 2101

tax@freestyleaccounting.com