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Where your limited company, rather than you personally, meet the cost of your training, the training exemption is very wide-ranging. Your limited company may pay for a wide variety of training costs without triggering any tax liability for the you. In fact the concept of ‘work-related training’ is drawn so widely that it can encompass almost any activity that is not purely recreational.

To ensure you qualify

- For any training courses or material that you require, ensure the contract/purchase order/purchase invoice contains your company name;
- Get your company to pay for the training directly from the business bank account

How not to qualify

More than likely, any claim you make for training will be disallowed in the following circumstances;
- You arrange for the training yourself, personally;
- You pay for the training from your personal bank account;

If these two conditions exist, in reality there is little point in making a claim for the training as a tax deductible expense, because in all likelihood it won’t be.

If you have a need for some short term funding, taking a loan from your company is straightforward, and can help plug any short term cash flow problems you may have. And if you are a higher rate tax payer in the current tax year and don’t want to attract the top end tax that your dividends do, taking a loan can often be the best way to go.

There are some rules though, and this brief guide gives you a quick outline of what they are. If you have any more questions about this, feel free to get in touch with us.

1: Loan less than £5,000

This is the simplest scenario. There is no personal tax benefit charge on taking a loan of less that £5,000 from your company, and this is a good way to get access to company funds in the short term.

2: Loan greater than £5,000

The tax office regard a loan of over £5,000 as a personal taxable benefit. Note the entire loan is assessed as a personal benefit, not just the amount exceeding £5,000. To eliminate the personal taxable benefit, you need to pay your company interest from your personal bank account on the loan balance at a rate of 4.75% (as at today – check http://www.hmrc.gov.uk/rates/interest-beneficial.htm to get the latest rate). This loan rate is set by the HMRC.

We suggest the loan interest is calculated and paid annually for every personal tax year the loan is outstanding (ie for each year to 05 April). The interest is calculated on the average loan balance for the year, and we can help you with this calculation. Please just ask us.
You will also need to draw up a loan agreement between yourself and your company to record the loan details, and interest payments that will be made. We can help you prepare this too.

IMPORTANT 1

The loan needs to be repaid back into your business bank account within nine months of your company yearend. So if your example you took a loan on the 01 July 2008, and your company year-end is 30 November 2008, then the loan needs to be repaid by 30 August 2009. You can find your company year-end date under the heading ‘Company year end’ on your No Worries online ‘My Company Operations’ page.

IMPORTANT 2

If the loan is not repaid within nine months of the company year end, the company will incur a tax charge of 25% of the loan balance outstanding at year end. This tax is ‘temporary’, and is repaid back to the company once the loan balance is settled.

If, for whatever reason, you do not have a National Insurance (NI) number, and you intend to work in the UK, you need to apply for one.

1: What is a National Insurance number?

Your National Insurance number is your own personal tax account number, it is unique to you and you will keep the same one all your life (e.g FH123456A).

The number makes sure that the National Insurance contributions and tax you pay are properly recorded on your account. It also acts as a reference number when communicating with the Department of Work and Pensions (DWP) and Her Majesty’s Revenue and Customs (HMRC).

You must keep your number safe and not disclose it to anyone who does not need it, this will help to prevent identity fraud.

2: When to apply for a National Insurance number

You must apply for a National Insurance number if:
• You need claim benefits and/or tax credits
• You have the right to work in the UK
• You are entitled to and have applied for a student loan

How to apply

If you have the right to work in the UK and you are looking for or starting work, telephone Jobcentre Plus on 0845 600 0643 to apply for a National Insurance number. Lines are open 8.00 am to 6.00 pm, Monday to Friday.

3: Applying for a National Insurance number

Jobcentre Plus will arrange an Evidence of Identity (EOI) interview for you or send you a postal application. They will confirm the date, time and location of your interview. They will also tell you what information and documentation is required to support your application.

What to expect at the ‘Evidence of Identity’ interview

The interview will usually be one-to-one (unless, for example, you need an interpreter). You will be asked questions about who you are, why you need an National Insurance number, your background and circumstances. During the interview an application for an National Insurance number form will be completed and you will be asked to sign this form.

If you don’t have any official documents you still have to go to the interview. The information you are able to provide might be enough to prove your identity.

Proving your identity

You will need to prove your identity to the Department for Work and Pensions (DWP) if:
• you are starting work or looking for work and need an National Insurance number
• you need an National Insurance number in order to claim benefit, pension or allowance

DWP will accept a range of documents (originals, not photocopies) when you are proving your identity. The following list is not exhaustive and you should always bring as many identity documents as you can to your interview, for example:
• valid passport (UK or foreign)
• national identity card (UK or foreign)
• residence permit or residence card (including biometric immigration residency documents)
• full birth certificate
• adoption certificate
• full marriage certificate
• civil partnership certificate
• driving license (UK or foreign)

If you do not have any of these (or any other) identity documents, then you can still apply for a National Insurance number and the information you supply will be checked and may be sufficient to prove your identity.

What happens after the interview

If you were asked to provide additional information you will need to do this by the agreed date. Jobcentre Plus will then write to you letting you know whether your application has been successful or not and notifying you of your National Insurance number where appropriate.

You should tell your employer your National Insurance number as soon as you know it.

4: Useful links

If you would like to know more about National Insurance below are a couple of suggested useful links.

• http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4015904

• http://www.hmrc.gov.uk/nic/ynino.htm

If you were a Director of a limited company at any time between 06 April 2008 and 05 April 2009 (regardless of whether you traded through it or not) you need to complete a 2008/09 personal self-assessment tax return for the HMRC.

The deadline for filing your tax return online is 31 Jan 2010.

If you have asked us to complete your tax return for you, please ensure you have responded to our requests for action, or information. As its a very busy time of year for us, the sooner, the better. If we are still waiting for information from you after 20 January 2010, then you run the risk of us not getting your tax return submitted in time.

And if you have any questions at all about this, please feel free to get in touch.

Christmas is nearly upon us, so would like to ensure you all know about of our office opening hours over the Christmas break.

Office closes: 24 December 2009 at 1:00pm

Office opens: 04 January 2010 at 8:30am

We would like to wish all our clients a very merry Christmas, a safe and enjoyable New Year, and we will see you all in 2010.

Just a minor note, but one that will be appreciated by our clients.  As announced by Chancellor Alistair Darling in his Pre-Budget Report speech to the House of Commons, the corporation tax rate for small companies will remain at 21% for 2010.

Last year he proposed a 1% increase in the small companies’ rate of CT from 21% to 22% – this will now be deferred for a year.

Extra for Experts

The small companies tax rate of 21% applies to all qualifying companies with profits at a rate not exceeding £300,000.

The main rate of corporation tax is 28% (unchanged for 2010 also). This kicks in on profits, once they exceed £1,500,000.

Effective from midnight on 31 Dec 2009, the standard rate for VAT changes from 15% to 17.5%. The following information is for our VAT registered clients.

A brief summary on the effect of this VAT rate change:

The following information will in all likelihood apply to nearly all of our clients who supply services on a continuous basis to their client(s). If after having read it you are still not sure how to apply the new VAT rate, please take a look at our detailed guidance further down.

(1)   If you raise an invoice for any period of work up to (and/or including) 31 December 2009, you will invoice your client at the VAT rate of 15%;

(2)   If you raise an invoice for any period of work starting from 01 January 2010 onwards, you will invoice your client at the VAT rate of 17.5%;

(3)   If you raise a single invoice for a period that straddles the 01 January 2010, you have two options;

Option 1 -  Detail on the invoice the split in period, and assign 15% and 17.5% for the period before 01 January 2010, and the period after, respectively (note, within your No Worries online bookkeeping system, only one VAT rate can be used per invoice), or;

Option 2 -  Use the 17.5% VAT rate on the whole invoice;

A more detailed summary on the effect of this VAT rate change:

If you feel our general guidance above does not cover your situation, or you would simply like to know more about this, please read on.

Some Basic Rules

(1)   Standard rate VAT must be charged by a VAT-registered person (or company) when a supply of goods or services within the scope of standard rate VAT is made;

(2)   The date a supply is made, is determined by the tax point rules, which help determine what VAT rate should be used;

(3)   For goods or services the basic tax point is usually when the goods are shipped or when the service has been completed;

(4)   However this can be over-ridden by the actual tax point, which occurs when either;

1. You raise an invoice for the supply of goods or services within 14 days of its basic tax point date – then you use the invoice date as the actual tax point date, or;
2. You issue a VAT invoice, OR receive payment, prior to the basic tax point – then you use the date you issue the invoice or receive payment as the actual tax point date;

There are however optional rules that override the actual tax point date, to be used around the period of a VAT rate change. You do not need to notify the HMRC when using this treatment.

Optional Rule 1 – For goods or services supplied before 01 January 2010

If you issue a VAT invoice after 01 January 2010, for work that that was done before 01 January 2010, you can choose to apply the VAT rate of 15%.

Optional Rule 2 – For goods or services supplied after 01 January 2010

If you issued a VAT invoice or received payment before 01 January 2010 for work that will be done after 01 January 2010, you can choose to apply the VAT rate of 17.5%.

Optional Rule 3 – For goods or services supplied spanning 01 January 2010

If you issued a VAT invoice or received payment before 01 January 2010 for work that will be done spanning 01 January 2010, then you can charge the entire supply at 15%.

If you issued a VAT invoice or received payment after 01 January 2010 for work that will be done spanning 01 January 2010, then you can charge the entire supply at 17.5%.

If you can demonstrate that the apportionment of work done before and after 01 January 2010, then you can apply the VAT rates of 15% and 17.5% respectively.

With Christmas nearing, there is an excellent opportunity to spend some of your hard earned money completely tax free by having a Christmas party, or even two…..

Be careful though – make sure you abide by the rules.

The Rules:

You have the opportunity to spend £150 (incl any VAT) per head at your own office Xmas party. The cost is completely tax deductibe for your company, and there is not personal benefit tax on you.

You must invite all Directors and employees along to your party.

The £150 per head can be spent on whatever you like. Food, alcohol, accommodation, paint-balling, theatre tickets – anything.

You can take one partner. So if you are the only Director of your company, your company Christmas party will have a maximum of two people attending.

This isn’t an allowance – you actually have to spend the money, and keep your receipts.

The total cost per head, CANNOT exceed £150. If it does, the whole lot become taxable, which then makes the party pointless (from a tax-saving perspective).

You cannot pick and choose your office party expenses, up to the £150 per head maximum. For example, if you are the sole Director of your company, and decide to have a Christmas party my yourself at the local pub, the maximum you can spend is £150. If it turns into the best Christmas party ever, and you end up spending £210 at the bar, you cannot elect to claim just £150 of the bar tab. The total party cost was £210, which would be entirely taxable, therefore resulting in no tax savings. Avoid this scenario at all costs.

You can have more than one annual party. For example, if you are the sole Director of your company, and decide to have a Christmas party with your friend/partner as your guest, the total allowable amount you can claim is £300. If you have one Xmas party costing £90, another for £100, and a third for £105, you are still below the £300 threshold overall, so its fine.

In fact, you can have an annual party whenever you like – even in the middle of summer (and call it a annual summer party, obviously). The £150 per head limit cannot be exceeded per year – so keep the cumulative party expenditure below this threshold between 01 April to 31 March.

When your record the expense within your No Worries online account, give a description like “Annual Xmas party – food and beverages” – just so we allocate it correctly within your accounts.

Just like any other company expense, your company does actually need the funds to cover the cost of your Christmas. If you have sufficient retained earnings then this will not be a problem. If not, pay yourself a smaller dividend next time you make a divdiend payment. Remember, dividends are paid out of post-tax company profits – however the Christmas party expense is paid out of pre-tax company profits, so will reduce your overall tax laibility.