Business
Business mediums:
Sole traders
Partnerships
o Require majority agreement UNLESS
New director
Change partnership agreement
Change nature of the business.
o Partnership Act will not deal with salary, holiday etc- all is
divided equally and retirement of a partner will automatically
end the partnership.
o Retiring partner should let all clients know, post in London
Gazette, take name off letterheads and take name off website.
Novation agreements can also exclude liability for
existing debts.
o No right to expel a partner.
o When a partnership is being dissolved, interest will accrue at
5% per year until the share is received.
o Goodwill is calculated at 2 years profit, and will increase the
worth of the business when it is sold.
Must be sold as a going concern to sell with goodwill.
o A business will be liable for those acting with both actual and
apparent authority
If the third party believes them to have authority as a
partner, and it is the kind of transaction that a director
would have the authority to enter not.
Could get an indemnity from that partner however.
Limited liability partnerships:
o Incorporated
o They pay income tax and capital gains tax
o Death of a member will not end an LLP.
o Salaried members:
80% their income is fixed, not dependent on profits of
the LLP
Do not exert a lot of influence
No more than 25% of their disguised salary is what they
put into the LLP.
They are treated as employees for tax purposes.
o Form LLINO1 to form an LLP.
Limited partnership:
, o One partner puts money into the partnership, and their
liability is limited to the amount they put in, and the other
manages the partnership and is strictly liable.
Private companies:
o Do not need a secretary
Public companies:
o Do need a secretary
o If their share capital over £50,000
Memorandum of association is just a formal thing, saying that they
want to form the company at that time.
From IN01 to form a company- send this with the Articles and
names/addresses of directors, any secretaries, office…
Tax:
If a client has been informed they have breached anti-avoidance
rules, they can make written representations, otherwise HMRC can
adjust tax as is just and reasonable.
o Any enabler may also have to pay.
Anyone making taxable supplies over £90,000 must charge VAT,
otherwise they can opt to tax.
VAT must be paid a month after the end of that quarter.
Zero rated VAT supplies
o Can still charge VAT at 0% and recover VAT
o The fact that they are selling zero rated VAT supplies does not
determine whether a business needs to be VAT registered- still
depends on the amount of trading it does in taxable supplies
overall.
SO- Selling £90,000 of books still means you need to
register for VAT
o Books, children’s clothes, food
UK VAT law allows zero-rating of exported goods provided the
supplier has sufficient commercial evidence that the goods have
physically left the UK
Exempt VAT supplies:
o Cannot charge or recover VAT
o Education, healthcare, finance, sale of property, property
insurance.
Need to file VAT returns quarterly, and pay within 1 month of the
end of the quarter.
Need to retain all VAT records for 6 years.
Trading profit:
, o Income from trade
o Minus deductible expenditure
o Minus capital allowance
18% WDA applied to pool, as well as any leftover once
the full expensing allowance has been applied
£1 million allowed for companies
Unlimited for companies purchasing brand new
machinery.
Income tax:
o Total income
Including savings and dividends.
o Minus allowable reliefs
Payments of interest on qualifying bank loan
o Minus personal allowance
£12,570
o Tax rates for NSNDI
20% = 0 – 37,700
40% - 37,700 – 125,140
45% - over 125,140
o Tax rates for savings
First minus £1000 if a basic rate taxpayer, and £500 if a
higher rate taxpayer (personal savings allowance)
Same tax bands as above, except £0 - £5000 of savings
are taxed at 0%
o Tax rates for dividends:
£500 off for all dividends.
8.75% = 0 – 37,000
33.75% = 37,700 – 125,140
39.35% = over 125,140
o Marriage allowance: £1260 can be added on to you personal
allowance if your spouse is also a basic rate taxpayer and they
have not used all of their personal allowance.
o Blind people get an extra £3130 free
o Free £1000 off for property and trading allowance.
Tax year begins 5 April
Start up relief / early trade loss relief:
o If a taxpayer loses money in the first 4 years of a new
business, they can offset loss against the 3 years prior,
starting with the earlier years first.
Carry across relief / carry-back relief
o Losses are set against the gains from that year
Business mediums:
Sole traders
Partnerships
o Require majority agreement UNLESS
New director
Change partnership agreement
Change nature of the business.
o Partnership Act will not deal with salary, holiday etc- all is
divided equally and retirement of a partner will automatically
end the partnership.
o Retiring partner should let all clients know, post in London
Gazette, take name off letterheads and take name off website.
Novation agreements can also exclude liability for
existing debts.
o No right to expel a partner.
o When a partnership is being dissolved, interest will accrue at
5% per year until the share is received.
o Goodwill is calculated at 2 years profit, and will increase the
worth of the business when it is sold.
Must be sold as a going concern to sell with goodwill.
o A business will be liable for those acting with both actual and
apparent authority
If the third party believes them to have authority as a
partner, and it is the kind of transaction that a director
would have the authority to enter not.
Could get an indemnity from that partner however.
Limited liability partnerships:
o Incorporated
o They pay income tax and capital gains tax
o Death of a member will not end an LLP.
o Salaried members:
80% their income is fixed, not dependent on profits of
the LLP
Do not exert a lot of influence
No more than 25% of their disguised salary is what they
put into the LLP.
They are treated as employees for tax purposes.
o Form LLINO1 to form an LLP.
Limited partnership:
, o One partner puts money into the partnership, and their
liability is limited to the amount they put in, and the other
manages the partnership and is strictly liable.
Private companies:
o Do not need a secretary
Public companies:
o Do need a secretary
o If their share capital over £50,000
Memorandum of association is just a formal thing, saying that they
want to form the company at that time.
From IN01 to form a company- send this with the Articles and
names/addresses of directors, any secretaries, office…
Tax:
If a client has been informed they have breached anti-avoidance
rules, they can make written representations, otherwise HMRC can
adjust tax as is just and reasonable.
o Any enabler may also have to pay.
Anyone making taxable supplies over £90,000 must charge VAT,
otherwise they can opt to tax.
VAT must be paid a month after the end of that quarter.
Zero rated VAT supplies
o Can still charge VAT at 0% and recover VAT
o The fact that they are selling zero rated VAT supplies does not
determine whether a business needs to be VAT registered- still
depends on the amount of trading it does in taxable supplies
overall.
SO- Selling £90,000 of books still means you need to
register for VAT
o Books, children’s clothes, food
UK VAT law allows zero-rating of exported goods provided the
supplier has sufficient commercial evidence that the goods have
physically left the UK
Exempt VAT supplies:
o Cannot charge or recover VAT
o Education, healthcare, finance, sale of property, property
insurance.
Need to file VAT returns quarterly, and pay within 1 month of the
end of the quarter.
Need to retain all VAT records for 6 years.
Trading profit:
, o Income from trade
o Minus deductible expenditure
o Minus capital allowance
18% WDA applied to pool, as well as any leftover once
the full expensing allowance has been applied
£1 million allowed for companies
Unlimited for companies purchasing brand new
machinery.
Income tax:
o Total income
Including savings and dividends.
o Minus allowable reliefs
Payments of interest on qualifying bank loan
o Minus personal allowance
£12,570
o Tax rates for NSNDI
20% = 0 – 37,700
40% - 37,700 – 125,140
45% - over 125,140
o Tax rates for savings
First minus £1000 if a basic rate taxpayer, and £500 if a
higher rate taxpayer (personal savings allowance)
Same tax bands as above, except £0 - £5000 of savings
are taxed at 0%
o Tax rates for dividends:
£500 off for all dividends.
8.75% = 0 – 37,000
33.75% = 37,700 – 125,140
39.35% = over 125,140
o Marriage allowance: £1260 can be added on to you personal
allowance if your spouse is also a basic rate taxpayer and they
have not used all of their personal allowance.
o Blind people get an extra £3130 free
o Free £1000 off for property and trading allowance.
Tax year begins 5 April
Start up relief / early trade loss relief:
o If a taxpayer loses money in the first 4 years of a new
business, they can offset loss against the 3 years prior,
starting with the earlier years first.
Carry across relief / carry-back relief
o Losses are set against the gains from that year
