Another newbie with a list of questions. I’ve asked my accountant these questions but they don’t seem to be helping much, I suspect it could be that I’m not asking the questions correctly or I have some basic errors in my understanding so I would appreciate any input to help me, help them, understand me.
I have read the beginners guide and tried a few search strings here but can’t cover all of my questions off.
My situation:
- First contract and I have set up a new limited company, started in August 2012. Projected annual turnover £120K.
- Yes, I have an accountant and the basics such as VAT reg, tax efficient salary and putting money aside for Employer NI & Corp tax are taken care of.
- I had a permanent role from April 2013 until August 2013 and I earned 35,000 GBP pre-tax in this period. (Role did not work out which caused me to finally pull the trigger on contracting as a career choice long term)
- My monthly personal expenditure (rent/bills and supporting a partner who is a full time student) is quite high at the moment so I need around 4500/5000 GBP a month after tax for living costs. For future tax years I want to get this down (reduce rent etc…)in order to save/invest in a pension but this is not a short term fix.
Questions:
- My previous, permie, employer issued a P45 with a ‘Week 1, Month 1’ 810L tax code. When I run payroll I’m not seeing any tax or NI being taken off for August (on around 1100 GBP salary) and for September I see 100 GBP of Income tax and 0 NI (same salary) My accountant says this is due to the ‘week 1 month 1’ code (parts 2/3 of the P45 also did not even list my previous income) but I called HMRC and they say I should be paying tax based on that code (on anything over 675 GBP a month). Is this just a bad P45 from my previous employer or is it the accountancy software that is wrong?
- As I have a previous income of 35k this tax year, I can’t see any way of avoiding going into higher rate tax this year (given the high monthly income I need for now, probably into Q2 2013) Are there any options or do I just need to bite the bullet?
- If I am going into higher rate tax then what is the sensible way to ensure I am prepared for paying the tax when SA time comes around? Should I save 25% of the dividend I pay myself each month in a personal savings account or do I not understand this correctly? I want to prepare and not be hit with an unexpected bill, I’ve seen it mentioned that HMRC ask for more than just the actual tax owed, something about ‘on account’ but this has left me a little lost.
- If my accountant is offering just a basic book-keeping/HMRC forms and account filling service, do you recommend I switch to another accountant that would give me more support in terms of tax planning, or would engaging a contract specific IFA help? (I’m thinking more about future tax years here as I think I’m pretty limited in terms of options this year by the previous income)
Thanks for any help!
Kevin
I have read the beginners guide and tried a few search strings here but can’t cover all of my questions off.
My situation:
- First contract and I have set up a new limited company, started in August 2012. Projected annual turnover £120K.
- Yes, I have an accountant and the basics such as VAT reg, tax efficient salary and putting money aside for Employer NI & Corp tax are taken care of.
- I had a permanent role from April 2013 until August 2013 and I earned 35,000 GBP pre-tax in this period. (Role did not work out which caused me to finally pull the trigger on contracting as a career choice long term)
- My monthly personal expenditure (rent/bills and supporting a partner who is a full time student) is quite high at the moment so I need around 4500/5000 GBP a month after tax for living costs. For future tax years I want to get this down (reduce rent etc…)in order to save/invest in a pension but this is not a short term fix.
Questions:
- My previous, permie, employer issued a P45 with a ‘Week 1, Month 1’ 810L tax code. When I run payroll I’m not seeing any tax or NI being taken off for August (on around 1100 GBP salary) and for September I see 100 GBP of Income tax and 0 NI (same salary) My accountant says this is due to the ‘week 1 month 1’ code (parts 2/3 of the P45 also did not even list my previous income) but I called HMRC and they say I should be paying tax based on that code (on anything over 675 GBP a month). Is this just a bad P45 from my previous employer or is it the accountancy software that is wrong?
- As I have a previous income of 35k this tax year, I can’t see any way of avoiding going into higher rate tax this year (given the high monthly income I need for now, probably into Q2 2013) Are there any options or do I just need to bite the bullet?
- If I am going into higher rate tax then what is the sensible way to ensure I am prepared for paying the tax when SA time comes around? Should I save 25% of the dividend I pay myself each month in a personal savings account or do I not understand this correctly? I want to prepare and not be hit with an unexpected bill, I’ve seen it mentioned that HMRC ask for more than just the actual tax owed, something about ‘on account’ but this has left me a little lost.
- If my accountant is offering just a basic book-keeping/HMRC forms and account filling service, do you recommend I switch to another accountant that would give me more support in terms of tax planning, or would engaging a contract specific IFA help? (I’m thinking more about future tax years here as I think I’m pretty limited in terms of options this year by the previous income)
Thanks for any help!
Kevin
Comment