Accountancy Blog

Salary or dividend – what is best?

What combination of salary and dividend should you take in 2017/18

As the owner and director of your own company, you can choose how and when to extract funds from your company. As almost all the funds you take out will create a tax charge in your hands, you may want to leave a proportion of the money in the company until you really need it.

The tax charge you pay will depend on how your payment is categorised, such as salary, dividend, interest, rent or a loan. This article looks at the tax differences between extracting funds as a salary or a dividend.

For your company to pay you interest or rent, you must provide it with a sum of money or a property to use. Taking a loan from your company can be tax-efficient, but only when the loan is outstanding for a relatively short period of time. More…

Planning your retirement – it’s never too early to start

Whatever your age, it’s never too late to start saving to retire.

It’s more important than ever to start your retirement planning from an early age, however dull a prospect that may sound to younger generations.

Putting money into a pension each month will provide you with a regular income once you retire.

There are three types of pension:

  • state pension – you receive income from the state once you reach a certain age
  • workplace pension – contributions from your salary, your employer and government
  • personal pension – aimed to supplement other pensions or for the self-employed.

More than seven million workers have been automatically enrolled into workplace pensions since the policy was introduced in 2012, with the figure set to pass ten million next year.

The days of relying on a state pension to cover the costs of your retirement are long gone. Consumer watchdog Which? calculates the average person currently needs an annual income of £26,000 to fund a comfortable retirement, which is why the earlier you start saving the more financially stable you will be later in life. More…

Data protection changes – what you need to know

Businesses are preparing for the General Data Protection Regulation, which comes into force from 25 May 2018.

All businesses holding personal data will need to ensure their procedures are fit for purpose and compliant when the new rules take effect next year.

Those businesses found non-compliant may face fines of up to €20 million – or 4% of annual global turnover. More…

Second payment on account deadline reminder

The second annual deadline to submit advance payments towards your self-assessed tax bill for the previous year is due on 31 July 2017.

‘Payments on account’ take place every six months – on 31 January and 31 July – and include class 4 national insurance contributions if you’re self-employed.

Each payment is half your previous year’s tax bill and payments are due by midnight on both dates.

Any tax left over after you’ve made your payments on account needs to be paid as a balancing payment by 31 January next year. More…

Rejected contracts hit SMEs in the pocket

47% of small businesses lost out on up to £10,000 in the last year due to turning down work contracts and orders, according to a study.

Out of 501 companies surveyed by Hitachi Capital Invoice Finance, 26% rejected contracts worth up to £5,000 while 21% snubbed deals worth between £5,001 and £10,000.

Almost one in five (19%) turned away work because of unfair demands from customers, whereas only 8% rejected contracts due to lack of finance. More…

HMRC urged to extend executors’ inheritance tax deadline

Royal London is calling on HMRC to change inheritance tax (IHT) rules on larger estates to allow executors more time to pay complex tax bills.

Under current rules, the executor of a will can manage a person’s estate following their death by applying for a ‘grant of representation’ – otherwise known as probate.

The process involves valuing the estate, paying any outstanding debts or taxes and distributing the estate in accordance with the deceased’s wishes.

The deadline for IHT bills on an estate is six months after the person’s death. More…