Tax Tips - June 2012

There is a lot happening in the tax world this month so please have a look through the below five important tax tips for you to think about.

1. If you have received notices from HMRC informing you that you have under or overpaid tax for the year 2011/12 then this is a result of an annual check of PAYE carried out by HMRC and that an underpayment will most likely be coded out in your PAYE code.

2. There could be potentially a large tax saving if you you regularly draw a large bonus remuneration or dividend from your company and you defer this income until after 5th April 2013 where the tax rates get reduced slightly.

3. Another warning about various marketed tax schemes is that these are often very expensive to get involved in and more importantly that they can ultimately be found to be ineffective by HMRC and the courts, or event countered by retrospective legislation.

4. Are you involved in software development? Then you could take advantage of the extremely advantageous and generous tax relief known as research and development relief. Provided you can show that the various conditions are met then you could obtain a tax deduction of 125%.

5. We have seen over the past few years a rise in the popularity of personal service companies. The main area of concern for HMRC is that employees could provide their services through a medium of a company and as a result avoid PAYE and National Insurance. In the light of this HMRC has produced a business entity test which asks the customer a number of questions and scores the results on a points system. This is a good measure in determining whether someone is caught by the IR35 legislation. Consider applying this test in determining your risk factor.

I hope you have found these useful and should you require any tax assistance please do not hesitate to get in touch

Yours in tax

Mitch the Tax Man 

mitch@ljd.uk.com

P.S. As previously mentioned, I like to grow my business on a referral basis. I would therefore very much appreciate if you could suggest to me any colleagues, friends or family members of yours who might be interested in our services and I can guarantee my utmost discretion and professionalism