HMRC have just issued a reminder that the deadline for submitting your 2011-12 Employer Annual Return  your P35 is 19 May 2012.

Typically, they forget to mention that if you haven’t already registered for PAYE Online you mustn’t leave it until the last minute because you’ll need to wait to receive an Activation Code in the post before you can start to file online. This will take up to a week to arrive. The very latest you should register, according to HMRC, is a week before the deadline.

End of year accounts/corporation tax return almost sorted for another year, thanks to the efficiency of @StuartJones yet again.

May 8, 2012 13:41 via Twitter for MacReplyRetweetFavorite

@lukeredpath

Luke Redpath

Thanks Luke.

Like so many tax issues, a simple question produces a complicated answer! Rather than follow this route I shall simplify it by introducing the following assumptions:

1. The director wants a salary which saves the most tax and National Insurance; but
2. Wants to preserve his/her entitlement to state benefits.

To preserve your entitlement to a state pension you need a certain number of qualifying years. In 2012/13 you need to have £5,564 or more of earnings. This figure is 12 times the Lower Earnings Limit (LEL) of £464 (well nearly!).

Paying yourself a salary of this amount would mean that 2012/13 was a qualifying year and neither you nor your company would pay any tax or National Insurance.

Sadly tax isn’t that easy. If your salary is only £5,564 and you have no other income, you’re wasting £2,541 of your personal allowance. The obvious answer of paying yourself £8,105  isn’t the right answer though because the cost of the extra National Insurance will cancel out the tax savings. Neither is paying yourself £7,488 to avoid paying the National Insurance above the Secondary Threshold.

In this situation, the optimum salary is £7,605 per year (£634 per month) It will cost £16.15 in Employer’s National Insurance but it will save more than £400 in corporation tax compared to paying  the LEL of £5,564.

Yet another copy of VAT Notes has  been released by HMRC.

I have said previously that it isn’t the most exciting read you’ll come across but HMRC do expect you to read it (even though they don’t send you a copy any more!)

VAT Notes 1 2012 Budget Supplement

I was delighted with Berg Kaprow Lewis’ remarks about the seemingly different treatment of “civil service” service companies from the rest.

Things have got so bad that I now have a new category Them and Us to highlight the two-tier tax system that we now have in the United Kingdom.

If you have a PAYE scheme but haven’t had to maintain any form P11s* during the tax year you don’t need to complete an Employer Annual Return (P35) – but you do need to tell HMRC that you won’t be completing one. If you don’t, they may send you unnecessary reminders or penalty notices.

HMRC strongly recommends you notify them online that you have no return to make because it’s quicker, cheaper and easier than writing or calling and HMRC will also confirm via email that they have received your online form.

The online form is here.

* What is a P11?

This weeks issue of Private Eye has highlighted that,on four separate occasions between October 2002 and 2006, Philip Green said he bought Arcadia which contradicts what he told the BBC last week.

To add insult to injury, Private Eye reveals that

Revenue boss Dave Hartnett took calls personally from Green in 2004 when a court case threw into question such fiscally convenient husband and wife arrangements.

So if you’re worried about income splitting just phone HMRC and ask to speak to Dave Hartnett!

P.S. Private Eye kindly states that Mr & Mrs Green’s arrangements have remained undisturbed

The above title belongs to a recent article in the blog of the CEO of the Institute of Chartered Accountants in England and Wales which ends with;

Small businesses today are tomorrow’s Dysons and Microsofts, and we think they need Government support as much if not more than the big businesses that have already made it.

I am delighted that my Institute has:

1. Said the Budget has failed small businesses;
2. Said what I said yesterday ( I know they said it first but I didn’t read it until after I wrote my comment!)
3. Decided to stand up for small businesses (for the first time in forty years as far as I’m concerned)

Unless you’re a member of the more separatist congregations of the Brethren, often wrongly referred to as the Plymouth Brethren you’re going to have to submit your end of year PAYE forms (P35 and P14s) online.

The deadline is Saturday, May 19 but if you haven’t already registered for PAYE Online don’t leave it until the last minute because you’ll need to wait to receive an Activation Code in the post before you can start to file online. This will take up to a week to arrive. The very latest you should register, according to HMRC, is a week before the deadline.

Personally, if you haven’t registered yet, I would advise you to do it now rather than risk HMRC and postal delays.

Finance Bill: Main corporation tax rate agreed http://t.co/W5IIYdDP

April 30, 2012 08:58 via webReplyRetweetFavorite

@tax_journal

Tax Journal

The government is extremely proud of its corporation tax reductions but most small businesses will still be paying the same amount of tax this year as last . Only 1% of my client’s will benefit from this reduction as opposed to big business who will receive the vast majority of the benefits.

David Gauke, the Exchequer Secretary, said:

‘By cutting the corporation tax rate, we increase the return on investment. By increasing the return on investment, investment is increased, which is good for the economy as a whole, whether it be big or small businesses.’

Hands up everyone in a small business who believes that political claptrap, and, if you did raise your hand, would you mind telling the rest of us why I’m wrong. [contact-form]