Limited companies

The legal and taxation regime for limited companies continues to change. The main rate of corporation tax commencing 1 April 2011 is 26%, while the small companies' rate is 20%.

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The tax system for companies

Details of corporation tax and company tax returns.

If two or more companies are controlled by the same person or by “connected persons” (such as husband and wife, or father and daughter), the amounts above are divided by the total number of companies.

Tax and the company car

Details of how the tax system works with company cars.

Company bonus or dividend?

In many small companies, the owners are also the directors, and this gives considerable scope for deciding how profits should be taken out of the company.

Entrepreneurs' relief

The relief is intended to replace Business Asset Taper relief for disposals by smaller business owners. It produces a net tax rate of 10% on the disposal, although for those making modest gains there is a slight increase in the actual tax burden compared to that payable under business asset taper relief because the CGT annual exemption saves less tax under this relief (at 18%) than it did under taper relief (at 40%).

Tax saving strategies

Expenditure incurred before the company year end might reduce the current year's tax liability instead of next year's. Bringing forward expenditure by even a few weeks on, for example, building repairs, advertising, sales and marketing campaigns, and any other item deductible from profits can accelerate the tax relief by twelve months.

Claiming expenses - it's all or nothing

The rules which determine what expenses can be deducted from profit for tax purposes are essentially the same whether you trade through a limited company or a sole trade or partnership.

Benefits in kind and expenses payments

Benefits in kind are assessed on all directors and employees whose salary and benefits combined are £8,500 or more. Remuneration by way of benefits is often attractive to employees, especially if they are paying the higher rate of income tax, because the benefit may either be tax free or subject to less tax.

Corporation tax

Details of corporation tax rates and bands.

Penalties for late returns

Make sure you do not become liable to any of these penalties.

Main capital allowances

A summary of the main allowances available.

Industrial buildings allowance

Capital allowances for the construction costs of industrial buildings or structures fall under several different headings, but collectively they are known as industrial buildings allowances.

Interest and tax payments

HM Revenue & Customs charges interest on underpayments of tax, and pays interest (repayment supplement) on overpayments. The rate of interest paid on overpaid tax is lower than the rate charged on underpayments, and interest rates are adjusted frequently in line with commercial interest rates.

Business deductions

In order to attract a deduction in computing the profits of a trade or business any expenses must be incurred wholly and exclusively for the purpose of the trade. Capital expenditure is not an allowable expense (capital allowances are claimed on these costs), and certain other expenses are barred by statute.

Companies Act 2006

The Companies Act comprises approximately 1,300 sections and introduces new legislation which reflects the changing business environment.

Companies House - forms you need to know about

There are over 100 forms prescribed by the Companies Act 2006. We list below the main forms and include a link to all the forms which can be downloaded direct form Companies House.

Should you form a limited company?

We are often asked, 'Should I form a limited company?' The reality is that there is no easy answer. Each situation has to be judged individually. As well as the obvious issues of tax and national insurance.

Forming a limited company

The provisions relating to company formation are contained in Parts 1 to 7.

Buying a company 'off the shelf'

If time is an important factor, you can consider buying a ready-made company. The exact procedure will depend on the company formation agents, including online agents, involved.

The law and directors' responsibilities

Who is a director? What are their legal responsibilities?

Statutory records

It is essential that you keep your company's statutory records up-to-date. Do not underestimate the importance of these records - they are definitive proof of the company's legal existence and its members.

The company secretary

The position of company secretary in a private company is now optional. Thus a company can operate with a sole director.

Essential record keeping

Suggestions on how to reduce the time taken in accounts preparation.

Getting the company struck off

A private company (not subject to insolvency proceedings) can apply to the Registrar of Companies to be struck off the register and dissolved.

Could your business survive without you?

As accountants and business advisers we get to know our clients very well. From our position, it is all too clear to us that many clients are too focused on 'today' to give serious thought to the future.

'Green' travel arrangements

There are a number of schemes intended to encourage employers to make arrangements for their staff to travel to work by more environmentally beneficial methods.