Posts Tagged ‘tax credits’

Tax credits

Wednesday, January 13th, 2010

Tax credits are available to those who are working at least 16 hours a week, although if you do not have any children under 16 in the household (or up to 18 if still at school) you will need to be working for 30 hours a week.

For a couple claiming for themselves only, the entitlement to tax credits ends at income of £18,000, but if your income this year has been reduced by either the recession or claims for Annual Investment Allowance, then a single year of very low income could give rise to two years in which tax credits can be claimed – which could amount to a total of up to £9,050. This would be the case even if the income returned to its former level in the second year because increases in income of less than £25,000 are ignored when re-computing tax credits.

Tax credit awards cannot be backdated by more than three months so you must claim early in the tax year to get the full entitlement for the year. Once you have started claiming, a renewal pack is sent out at the end of the year. This allows the claim to ‘roll on’ from one year to the next.

Changes in circumstances such as giving up work must be notified within one month. If you are late telling HMRC about a change that adversely affects your entitlement you can incur a significant amount of tax credit debt, which in some cases can be demanded in a single prepayment demand.

Tags: HMRC, tax credits
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Children and tax

Tuesday, January 12th, 2010

Children and tax

Children have their own tax allowances and can use these against their own income, but anti avoidance law prevents parents from transferring investments to unmarried children under 18 so that they benefit from the income tax allowances. No more than £100 of income can be transferred in this way.
If children are employed in a business owned by the parent then income can be paid to them as wages. This is an acceptable route to take provided legislation designed to protect children from exploitation is observed. National Insurance contributions will be due on the wages paid that exceed the limit (currently £110 per week) once the child is 16. You must observe normal PAYE obligations when you employ a child, so they should complete form P46 and you should put them on the payroll if they are paid more than £95 per week.
Income paid on a child trust fund investment is not taxable on the child or the parent even where the invested funds come from the parent.

Tags: Income tax allowances, national minimum wage, tax credits
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Pre Budget Report 2009 – a personal view

Monday, December 21st, 2009

More tinkering with the economy = Another missed opportunity

One simple measure could have been taken to reinforce the elements of cost control and economy – like actually raising the VAT rate to 20% (rather than just back to 17.5%). (more…)

Tags: Gordon Brown, Income tax allowances, Inheritance Tax, Kevin Beare, National Insurance Contributions, national minimum wage, tax credits, tax relief, UK Corporation Tax, UK VAT
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Pre-Budget Report 2009

Thursday, December 10th, 2009

Your guide to the Chancellor’s Statement I 9th December 2009

Alistair Darling’s announcements include unexpected tax increases

In his final Pre-Budget Report before the next General Election, Alistair Darling faced the twin dilemmas of a soaring public finance deficit and a recession-driven reduction in Government income. While conceding that the economy in 2009 had shrunk by more than previously forecast, the Chancellor stuck to his predictions for a modest return to growth in 2010.

The Chancellor also outlined Government ambitions to reduce the budget deficit by half within four years. Some spending cuts were put forward, including a planned public sector pay settlement cap. As for boosting Government income, VAT returns to a standard rate of 17.5 per cent (though no higher as some feared) and there is to be a further increase of 0.5 per cent in employers’ and employees’ national insurance contributions as from April 2011. Time will tell whether Mr Darling’s final Pre-Budget Report speeds the slow economic recovery. (more…)

Tags: Gordon Brown, HMRC, Income tax allowances, Inheritance Tax, National Insurance Contributions, Pensions, tax credits, tax relief, UK Corporation Tax, UK VAT
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Buying a Business

Thursday, December 10th, 2009

Buying an established business that someone else wishes to sell provides a path that many follow to fulfil the desire to enter into business or expand existing operations. Like buying a second hand car or house the need for care and due diligence is essential as this could represent the opportunity to achieve ambitions, but could also be the route to financial disaster, as Lloyds Banking Group discovered after they had acquired HBOS – seemingly with little attention to the financial situation of their acquisition.

Advantages of buying a business
One of the main reasons for buying an existing business is the partial elimination of the time and stress in establishing and growing a business. While the initial outlay may be greater this is almost certain to be represented by underlying assets. Any deficiency in asset value is normally represented by what is known as ‘goodwill’ – the difference between the price of the business and the underlying value of the net assets. That is the price of being able to operate an existing business and generate cash flow and profits. It may also be easier to secure financing for an existing business, provided there is a positive track record and the purchaser is considered a suitable person or company for running the business successfully.

A new business may be acquired through a franchise. Other business types include internet or mail order businesses.

Disadvantages of buying a business
Often the biggest hurdle to buying a small business outright is the initial purchasing cost. As the business concept, customer base, brands and other fundamental work are already established the financial costs of acquiring an existing business are usually greater than starting one from nothing. Other possible disadvantages include hidden problems associated with the debtors or stock that may not be worth what they are valued at. Good research and professional advice are essential ingredients on the path to acquiring a business.

Other disadvantages of buying an existing business include:

(more…)

Tags: Anti money laundering checks, Bank account, Corporate ID fraud, Due diligence, KYC, National Insurance Contributions, tax credits, tax relief, UK VAT
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