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May Questions and Answers
Newsletter issue - May 2014
Q. If a director takes a £25,000 loan from his company and agrees to pay interest at say 3.5%, does this need to be declared on the company's tax return or on a form P11D?
A. This must be shown on the company's corporation return if it has not been repaid to the company within nine months of the end of the accounting year in which this was made. This will generate a corporation tax charge equivalent to 25% of the outstanding amount. The amount of interest paid on the loan is irrelevant for the corporation tax charge.
However, if the loan is made for a fixed period at a fixed interest rate which is equal to, or higher than, the official rate of interest (now 3.25%), there is no benefit in kind charge for the director personally, and no need to report this on the form P11D.
Q. If my employer leases a car to me at the fair market value for such a lease, which I pay in full to the employing company, will I be taxed as if I had the use of a company car with no lease?
A. The law that taxes company cars was recently changed to ensure employees are always taxed on the provision of a company car, irrespective of how that car is provided. So although you lease the car from your employer you will still be subject to the benefit in kind charge, which is calculated as a percentage of the vehicle's list price when new. The percentage varies from 0% to 35% depending on the vehicle's CO2 emissions. Any amounts you pay to your employer for the personal use of the car reduce the benefit in kind charge, but you will not be better off using the leasing arrangement.
Q. My husband supports the IT and telecoms systems used by my company, which pays him £150 per week through the payroll for this work. Can the company also pay a small pension contribution on his behalf?
A. Yes your company can pay a pension contribution for your husband as he is an employee of the company, although as he earns less than the personal allowance (£10,000 per year) the company is not obliged to auto-enrol him in a pension scheme. The company can claim a tax deduction for his wages and pension contribution, as long as that total sum is not excessive for the work he does. You may want to get some comparable quotes for IT and telephone systems support to check you are paying a fair rate for the work he does.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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