Corporation Tax Archives

Q: Buying a bike? Have you considered the Cycle to Work Scheme?

The Cycle to Work Scheme has been in place for a number of years now and was introduced by the Government of the time to promote healthier living, more physical exercise and to reduce pollution from trips to and from the workplace in a car. There are a couple of tax incentives that anyone operating their own business can benefit from. How does the scheme work? The scheme allows employers to loan bicycles and bicycle equipment to employees as a tax free benefit. This can be you in your capacity as an employee of your limited company, for example. What are the tax benefits? Your company can benefit twofold: 1. By reclaiming the VAT paid when purchasing the bicycle and associated equipment. 2. Through the use of the capital allowances that are permitted in relation to the cost of the bicycle and associated equipment. The above means that the cost of the bicycle and associated equipment is essentially treated as a tax reducing expense for corporation tax purposes. Any conditions associated with the Scheme? The following conditions must be met to qualify for the scheme: 1. Ownership of the equipment does not transfer to the employee and it remains the property of the company. 2. Employees mainly use the equipment for work related journeys. 3. The scheme is made available to all employees of the company. It is relatively easy to take advantage of the Cycle to Work Scheme and to benefit from the associated tax breaks. So if you are buying a bicycle don’t forget to consider the scheme.

Q: What is Corporation Tax?

Corporation tax is a business tax levied on the profits generated by limited companies registered within the UK. This isn’t a tax that applies to large businesses only and applies to all limited companies regardless of size. What is Corporation Tax charged on? The following provides a list of limited company outcomes that give rise to a corporation tax charge: 1. Trading profits 2. Investment returns 3. Gains on the sale of assets (chargeable gains) If the limited company is based in the UK it will be charged corporation tax on profits derived within the UK and from overseas. However, if the company is based overseas with an office or branch in the UK it will be charged corporation tax on profits generated within the UK only. You must register your limited company for corporation tax within the first three months following the commencement of trading. The company may be issued a fine if this date is missed. The current corporation tax rate is 19%. If you need any further details relating to corporation tax then email one of our cheaper accountants.

Q: Dividend Tax Credits Explained

Here at Cheaper Accountant we are often asked about the dividend tax credit and what it is and what it means. So we decided to write a blog post to demystify the dividend tax credit. All dividend payments receive a tax credit equal to 10%. This effectively equates to a 10% reduction in tax on dividends. This means that basic rate tax payers pay 0% income tax on dividend income. The tax credit applies to any individual who receives dividend income from the shares they hold in a company. It really is as simple as that. We won’t go into how to create a dividend voucher and how to calculate the dividend tax credit as that really is another topic in itself. We also believe that this is best left to your accountant. If you’re looking for Cheaper Accounting then check out our website and send us an email for a free quote.