• Overdrawn Director Loan Accounts

    To understand overdrawn director loan accounts, we first need to cover why they exist.

    Background

    The situation arises most regularly in owner managed businesses where the business owner has been advised that the best way to minimise the tax burden is to draw a minimum salary (£7,020 in 2011/12), and take any further amounts due in dividends.

    To declare a dividend, one of the requirements of the Companies Act is that the company has sufficient “reserves” to do so.

    “Reserves” in a small business can be defined in one of two ways:

    1. The accumulated profit in the ...

  • Tax update from Peter - Autumn 2011

    1. Lower corporate tax rates are staying; and the 20% corporation tax rate is an attractive alternative to being taxed as a sole trader.

    2. From 5 April 2011, private car business usage claims are now at the rate of 45 pence per business mile. If you do say 3,000 miles on business trips annually, you are owed £1,350 by your company. If your employer does not reimburse you, you can make a similar claim to HMRC.

    3. Company cars remain expensive because of the taxes imposed for personal use. Avoid buying a car through your company unless ...

  • Do owner managed companies need to register at HMRC for payroll?

    If you are the owner of a small business and you trade through a limited company, it is likely that you are set up with a salary for 2011/12 of around £7,020 per annum (2010/11: £5,700). The remainder of your drawings from the company will then be by way of dividend.

    This is good tax planning and ensures that you pay as little tax as possible when corporation tax and personal tax liabilities are combined.

    Salaries are set at this level for a good reason: It is the maximum salary that can be drawn such that ...

  • Haggards Crowther Summer Newsletter

    We very much hope that our newsletters will be of interest to you. In this quarter's newsletter:

    Technical Update: If you own a limited company and use commercial child care
    Haggards Crowther News: Welcome to George Parker
    Client Focus: Little Jack Horners

    In addition to quarterly newsletters, we will also be sending occasional technical updates and reminders. If you have any comments or queries, please do not hesitate to let us know.

    Technical Update: If you own a limited company and use commercial child care

    If you are a director of a limited company and you have a child ...