The following Owner-Managed Businesses guidance note Produced by Tolley in association with Julie Butler provides comprehensive and up to date tax information covering:
This guidance summarises some of the different methods of extracting funds from a newly formed company following incorporation of a sole trade or partnership. Detailed guidance on extracting profits from owner-managed companies can be found in the Effective extraction strategies guidance note.
Salaries can be paid to the directors, either as regular sums or as more infrequent bonuses, and are tax-deductible for the company. If the director has an explicit employment contract, he will be expected by the Department for Business, Energy and Industrial Strategy to receive the National Minimum Wage (NMW) in respect of work carried out under that contract, so it would not be possible to pay such a director solely by way of dividends.
The requirements of Real Time Information (RTI) have made the payment of salary very rigid, and payments must be reported when made. There is also additional administration under this system that may negate any tax benefit from pa
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
The basic rule is that all benefits provided to an employee by reason of their employment are taxable unless there is a specific exemption or other rule that means they are not chargeable to tax.ExemptionsThe main exemptions for employee benefits are in ITEPA 2003, ss 227–326B (Pt 4).Below is an
Income and gains may be taxable in more than one country. The UK has three ways of ensuring that the individual does not bear a double burden:1)treaty tax relief may reduce or eliminate the double tax 2)if there is no treaty, the individual can claim ‘unilateral’ relief by deducting the foreign tax
Why is this important?Tax-free amountEach individual, whether or not they are resident in the UK, is entitled to an annual exempt amount when calculating the taxable amount of their chargeable gains for the tax year (although see the exceptions below). The annual exempt amount is also known as the
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.