Paying yourself

How much do I pay myself?

Whenever you want to pay yourself either log into your client portal or call your personal accountant to see how much you have available to draw. Payments are normally split between dividends, director’s fees (salary), and out-of-pocket expenses. Your personal accountant will calculate all of these for you to ensure that you are being paid as tax efficiently as possible.

How do I pay myself?

This is entirely up to you. The easiest way to pay yourself is to electronically transfer the funds from your business account into your personal account. We will keep all your dividend vouchers for you to ensure that you and your company are 100% compliant with HMRC.

What is a dividend payment?

A dividend payment is the distribution of the retained profits to the shareholders of the business once all liabilities have been met.

How often can I make a dividend payment?

Dividends can be drawn at any point during the financial year (interim payments) or in a lump sum at the end of the financial year (final payment); this of course providing the company has made a profit. Payment of dividends without profit is a breach of the Companies Act 2006 which could lead to prosecution.

Can I take a loan from the company?

Yes, however speak to your personal accountant for further advice so we can discuss the possible implications of this.

Business expenses

Can I claim travel expenses?

Yes. Business related travel to your temporary workplace is a tax deductible expense, however the 24 month rule must be adhered to at all times.

How do I claim mileage?

You are eligible to claim the cost per mile for eligible business travel in your own personal vehicle. Depending on the amount of miles travelled during your company’s financial year will determine the monetary value of your claim. Below is a table which summarises the main travel types using your personal vehicle and the monetary value of eligible claims.

Type of Vehicle Motorcar Motorcycle Bicycle
First 10000 Miles 45p per mile 24p per mile 20p per mile
10000 + Miles 25p per mile 24p per mile 20p per mile

It is important that you retain your fuel receipts in support of your mileage claims. If HMRC were to audit your business they may request that these be presented to evidence your claim.

Can I claim for a lunch?

Yes. Some meal expenses are allowable. Obtain a receipt and forward them to personal accountant who will verify your claims and ensure that your company complies with the rules as set by HMRC.

Can my company provide me with a mobile phone?

Yes. Further advice about claiming for a mobile phone can be obtained from your personal accountant.

Can I claim for using my home as an office?

Yes.  Speak to your personal accountant who is best able to advise you based on your company’s circumstances.

Can the company pay for childcare costs?

Yes. Every employee can claim £55 per week to help with childcare costs as long as they are paying a registered child care provider.

Can I claim for accommodation if I am working away from home?

Yes. If you are required to stay away from home for business purposes then you are entitled to claim back the cost of this accommodation. We will monitor this for you to ensure you are claiming the maximum amount possible.

Can my company pay for dry cleaning?

No. There are however exceptions to the rule such as protective clothing or a necessary uniform.

What entertaining can the company pay for?

Entertaining clients or customers is not tax deductible. Entertaining staff at, say Christmas, does have a £150 per head allowance which can be offset against Corporation Tax.

Do I need a receipt for my expenses?

Yes. Proof is required of all business expenses and must be kept for up to 6 years.

Do you process my invoices and expenses?

At Exchequer Accountancy Services Ltd we do as much or as little as you would like us to. We would advise you to let your personal accountant process your invoices and expenses, however if you want to take care of this then it is entirely up to you.

Can the company pay into my personal pension?

Yes. This is a tax deductible expense for the company.  If you do not have a pension provider then please speak to us and we will refer you to one of our partners.

What insurance do I need?

In the main it is better to be covered for everything just in case. We would recommend speaking to one of our new business consultants who will advise you according to your company’s circumstances.

Business taxes

What is Corporation Tax?

Corporation Tax is that which companies pay on all their profits after the deduction of allowable expenses and salaries.  The rate of corporation tax for companies whose turnover is less than £300k is currently 20% (2014-2015).  Corporation is due to be paid by 9 months and 1 day after the company’s year-end.

Does my company need to be VAT registered?

You must register for VAT if your turnover for the previous 12 months is more than £79,000 (2014-2015) or if you predict your turnover will go over £79,000 during a given financial period. This figure is known as the VAT registration threshold.

When do I pay personal tax?

Some income is taxed at source, for instance salary through the PAYE scheme, other income such as dividends are received net of basic rate tax. Your personal tax return compiles your total income and allowances for a tax year and determines your final tax liability or even a tax repayment. A liability is payable in up to three instalments, 31 January before the tax year end (5 April), the 31 July after the year end and a final balance on the following 31 January.

Running the company

When are my company accounts due?

Your company’s accounts need to be filed with Companies House 9 months after the company’s year end and with HMRC 12 months after the company’s year-end.

What is a Companies House annual return?

Every limited company has a legal requirement to submit an annual return which ensures that the information held at Companies House is up to date. The annual return needs to be filed within 28 days after the company’s made up date (this is the anniversary of incorporation or the date of the last annual return).

Do I need a business bank account?

Yes. A Limited company is a separate legal entity and must have its own bank account.

What is IR35?

IR35 is a HMRC tax legislation that was introduced to identify contractors who are receiving the tax benefits of working through a limited company when they are really a disguised employee of the client. See Exchequer Accountancy Services Ltd’s guide to IR35 for more information.