Do you have a second income as well as being employed?
It is quite common now-a-days to be employed in a PAYE job, but also to work for yourself, often not just for the money sake but due to the skills you have being in demand. However, people often don’t think they need to declare this income as part of their annual earning for tax to HMRC. And that’s where they are wrong.
So you want to start a limited company?
Are you really sure? Do you know why you want to have a limited company? Do you know the tax implications of a limited company? Are you a highly organised person and slightly schizophrenic to be able to split yourself from the company financially and operationally?
Yes, there MAY be tax advantages to being a company depending on the income/profit level of the company, but there are thresholds of effectiveness and subsequent budgets may change it. If being a company is marginal for tax purposes at the moment, then it is not a good enough reason. Limited liability may come into play; a divorce on the cards and want to limit access to funds; or just for the kudos of being a company. Some bigger companies only want to trade with other companies as the perception of being a company is better than being a sole trader. BUT, you have to be ready for it or have people around you that can deal with all the accounting and admin headaches.
Several months ago I wrote a blog about the Marriage Allowance transfer ability – where one person can transfer £1060 of their personal allowance to their spouse. You were able to sign up for it via the HMRC website which made it a permanent election until revoked. As accountants, we heard nothing more after that.
It is now time to start submitting you 2015/2016 tax return. The election to transfer the £1060 can be made at this time if you are one of the “lucky” millions of people that need to complete a return.
