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Will the nasty taxman come knocking on your door soon?

HM Revenue are actively targeting small businesses

We’re all aware of the multi-national companies that seem to be able to avoid paying a fair amount of tax, but we don’t often hear of the other corporates who manage to be able to negotiate cushy arrangements with the tax man.
Large corporates have exceedingly deep pockets to pay for specialist legal and financial teams and are often more than a match for the Inland Revenue. Unfortunately this means that the softer target of small businesses are now beginning to experience the uncomfortable attentions of the tax man.Read More

Salary, dividends or something else?

Is there a more efficient way of taking income from your company?

For most Company Directors, taking a salary higher than the National Insurance threshold is not a particularly tax efficient way to receive renumeration from their company. Taking income as dividends has always been a better choice. However, from April 2016, dividends over £5,000 per annum are taxed at 7.5% for a basic rate tax payer and 32.5% for higher rate tax payers. This means that it’s worthwhile looking at other ways to receive income.

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How will the proposed mortgage tax relief changes affect landlords?

If you own a buy to let residential property or a second home then the rules for claiming mortgage interest as a cost against your profit are changing.

When George Osborne announced this tax change in the summer 2015 budget, he implied that the extra tax would only hit higher-earning landlords.

Whilst it’s true that every mortgaged landlord who pays 40% or 45% tax will indeed pay much more under his proposals, some basic-rate taxpayers will also pay more tax. This is because the change will push them into the higher-rate bracket, even though they earn no additional income.

In fact, contrary to the Chancellor’s suggestion, the only buy-to-let investors who will not be hit are the very wealthy who buy property in cash and who don’t need a mortgage.

The future change is landlords’ inability to deduct the cost of their mortgage interest from their rental income profits. In other words, tax will be applied to the profit made before deducting the mortgage interest.

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