If your tax code is incorrect, you can use HMRC’s check your Income Tax service to notify them. If you’re not able to use the online service, you may get in touch with HMRC through other contact methods.
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How do I know how much tax to put aside?
When it comes to setting aside money to pay your tax bill, the general rule of thumb percentage for self-employed individuals is 25% - 30%.
This figure will vary depending on the amount of profit you report. If your profit falls between £50,000 - £100,000, it is recommended that you set aside 40% for tax. And if your profit exceed £100,000, you should be setting aside 45% for tax.
Bear in mind that these are general recommendations, and may not be an accurate estimation depending on your circumstances. HMRC's ready reckoner tool can help you work out an approximate figure you need to set away each month. We recommend consulting our Forma accountants if you need further tax advice.
What is Capital Gains tax & what are the rates?
Every business owner, or any individual who sells a capital asset should be aware that a Capital Gains Tax (CGT) may apply. Therefore, it's important that you have a basic understanding of the rules surrounding CGT-and we'll explain more about the essentials in our article below.
Capital Gains Tax (CGT) is a tax paid on profits made when you sell or dispose of an asset. As its name suggests, it's the gain you make that is taxed-and not the amount you receive for the asset.
How do I pay Scottish income tax?
When you fill in your Self Assessment tax return online, you can check the tick box to inform HMRC that you pay Scottish income tax.
If you're employed or get a pension, your tax code will start with an ‚ÄòS'. This is an indication for your employer or pension provider to deduct tax at the Scottish rate.
See HMRC's resource for more information on Scottish income tax.
How do I submit a tax refund?
As a self-employed person, you're not required to make a separate claim for a tax refund, as you can claim it through your Self Assessment tax return.
If you've overpaid your payments on account, you can request a refund by completing form SA303.
Company car tax: The basics explained (and recent changes you need to know)
The tax implications of providing a company car can be complex-and made even more confusing by HMRC's tax changes.
To help you along, we've put together an article that will guide you through the essentials.
We'll start with the basics, explaining who pays for company car tax and how it is calculated, before we run you through a quick summary of tax rates changes that were announced in July 2019.
Our article will likely answer the key questions that you have surrounding company car tax, but bear in mind that it isn't a substitute for professional advice. If you have further questions about tax and how it affects your business, do reach out our accountants at Forma for personalised advice.
What are Capital Allowances?
Capital allowance is an expenditure you can claim on assets you purchase for use in your business.
In addition to the purchase of business assets, you can also claim capital allowances for renovating business premises in disadvantaged areas in the UK, extracting minerals, research and development, patents and more. Further information can be found on the HMRC website.
How do I receive tax free childcare?
To get tax-free childcare, you need to:
What are Benefits in kind?
Benefits in kind-also commonly referred to as fringe benefits or perks-are benefits provided to a director or employee that aren't included in their salary or wages. These can be assets or services, such as company cars, private health insurance or non-business travel and entertainment expenses.
What are Trivial Benefits?
A staff benefit is deemed to be a 'trivial benefit' when:
- it costs £50 or less to provide
- it isn't cash or a cash voucher
- it isn't a reward for an employee's work or performance
- it isn't included in the terms of an employee's contract
You're not required to pay tax on, or notify HMRC about trivial benefits.
How do I receive trading and property income allowance?
"According to HMRC, you can claim trading allowance if you have trading income from:
- Casual services
- Hiring personal equipment
You can claim the property allowance if you have income from land or property.
You won't be able to claim the allowances if you have trade or property income from:
- A business that you or an individual connected to you owns or controls
- A partnership where you or individuals connected to you are partners
- Your employer, or your spouse's or civil partner's employer
You can't claim the property allowance if claim:
- Claim the tax reducer for finance costs such as mortgage interest for a residential property
- Deduct expenses from income from letting a room in your own home, instead of using the Rent a Room Scheme"
How does tax change as a contractor?
The biggest change when working as a contractor compared with say working as an employee is that you will become a lot more aware of the taxes you are paying. This because contractors have a lot more control over their finances and taxes with the added responsibility of making sure this is paid correctly and on time.
What is Capital Gains Tax?
Capital gains tax (CGT) is a type of tax applied to profits made when you sell or dispose of an asset. As its name suggests, it's the gain you make that is taxed-and not the amount you receive for the asset.
You're required to pay CGT when you sell assets such as personal possessions worth £6,000 or more, property that isn't your main residence, your main residence if you've let it out, used it for business or it's very large, as well as business assets.