FAQ’s

Struggling to understand tax jargon? Wondering why you are paying what you are? Let us help you with our FAQs

FAQ

Tax Questions

Am I paying too much tax?

Use our tax calculator link and type in your relevant information (salary, pension and student loan payments, charitable gift donations). If you are still unsure contact us and we will respond with a free consultation on ways to assist you.

Can I reduce my taxable income?

There are many ways to reduce your taxable bill legally whether you are an employee or self employed.

A few options are:

  • Paying into a pension scheme/ increasing your pension contribution.
  • If you have a child under 11 have you considered if you are applicable to the tax-care childcare scheme.
  • Provide a charitable donation
  • Make the most of your ISA allowance each year.

For more options please contact us or refer to our resources pages.

How does the VAT Flat Rate Scheme Work?

This scheme was designed to simply the VAT process. The rate charged by the Business on their invoices remains at 20% but what pay back to HMRC can be reduced (to potentially 14.5% if you are in the IT sector).

For more advice on this and whether this is applicable to yourself please contact us

Where do i find my tax allowance?

This will depend on your annual salary. If it is below £100,000 then see below:

Annual Tax free allowance:

  • 2018/19 : £11,850
  • 2019/20: £12,500
When do i have to register for VAT?

You must register for VAT if you are a business ( e.g. sole trader, limited company) and:

  • Your business had a VAT taxable turnover of more than £85,000 over the last 12 months.
  • You expect your VAT taxable turnover to be more than £85,000 in the next 30-day period.

You might also need to register in some other cases, depending on the kinds of goods or services you sell and where you sell them.

What is Corporation Tax?

Is a tax that all limited companies must pay. It is a tax based on the profits the company makes.

FAQ

Income/Deduction Questions

How do I declare additional income from another job?

This is dependent on your set up:

  • If you are getting paid directly via PAYE then you do not need to do anything.
  • If this is another source of income and not declared to HMRC then you will need to register as self employed and submit an Annual Self Assessment return.
  • If it is via your limited company, you will need to declare this in your self assessment annual return.
Why are my student loan deductions so high?

This will be dependent on the student loan plan you are on. These are :

  • Plan 1 : For students who took a student loan pre September 2011.
  • Plan 2: For students who took a student loan from September 2012 and after.

Dependent on which plan you are on will determine your minimum monthly earning threshold before you pay contributions towards your student loan. Only once you exceed this threshold, will you begin paying towards your loan.

E.g. For every £1 you earn above the threshold, you will pay 9% back.

For more information on the thresholds refer to the link here

What expenses can I claim when I am self-employed?

Depending on how you are trading as self-employed there are numerous expenses that are applicable:

Travel expenses for a temporary contract that is under 2 years is tax deductible. Once your contract with that company surpasses 2 years, it is no longer classed as a temporary place of work and travel expense is no longer tax deductible.

If you are part of a qualified body and have annual membership this is also tax deductible. E.g Accountants, Lawyers, Doctors, dentists and many more.

 For further information contact us

 

What is PAYE?

Pay as you earn (PAYE) is the system income tax is deducted directly from your salary before you receive it.

Therefore the tax is paid directly to HMRC before it even reaches you. National Insurance and student loans may also be deducted at this stage.

Should I pay into a pension? I have 30 years ahead of me before i retire.

There is no simple yes or no answer to this question and is dependent on several aspects. But paying a small contribution from a young age will add up and provide a larger pension pot to draw out come retirement (whether monthly or lump sum).

How does paying into a pension work:

The current minimum contribution by an employee is 5% of your gross salary.The current mininum contribution of your employer is 3%.

So instead of being paid 5% of your monthly salary, it will directly be paid into your pension pot.

In addition pension payments contribute to tax relief.

Should I go Limited or PAYE/Umbrella?

This is dependent on your situation/ long term aspirations, as there are benefits to both options.

PAYE:

  • You get Statutory Sick Pay
  • Entitlement to paid time off and paid leave for death of a family member.
  • Paid maternity/paternity leave

Self Employed (Limited/Umbrella):

  • Dependent on if it is day rate or fixed term, your pay is usually higher.
  • You can claim expenses that are essential to you to complete your work.

For more assistance in determining which is most suitable for your needs, contact us so that we can provide you with a detailed breakdown of the best options for you.

FAQ

Tax GP Ltd Questions

Require more information on why to choose us, our fees and next steps..

Why Should I choose you for my accounting and tax needs?

We will provide a bespoke service to your individual needs. After an initial consultation free of charge, we will provide you with advice to best suit your needs.

What are your fees?

Our fees are dependent on your needs and requirements. Once we have assessed your requirements, we will provide you with a quote. For more information contact us.

I want to use your services so what do i need to do?

The best option is to get in contact with us either by phone, email or via our contact us page. We will then gather your requirements and arrange a suitable time to discuss this with you.