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Free Guides for new and growing businesses from HRBS - fixed fee accountants and business advisors

Loans to directors

loans to directors Loans to directorsThe good news … a company can loan a director up to £10,000 without shareholder approval.

The bad news … HMRC consider interest free loans to directors as benefits in kind.

Where the loan (or total if more than one loan) is over £5,000 the benefit (interest), calculated at the HMRC official interest rate (currently 4% pa) is taxable and must be reported on form P11d by 6th July and included in the director’s personal tax return.

If the director pays the company interest (minimum 4% pa), there is no benefit in kind.
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Charge rent for use of your home office

hrbs.biz guide to home office rent agreement Charge rent for use of your home officeAs a limited company company director you can charge your company a rent for using a room in your home as an office. We recommend that you have a rental agreement in place between you and the company and we have made available a selection of agreements available for free download here at HRBS.biz.
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Save Tax and National Insurance with your limited company

hrbs.biz guide to saving tax and national insurance with a limited company Save Tax and National Insurance with your limited company
It is possible to reduce your (UK) personal tax and national insurance by running your business via a limited company.

The amount of tax and NI you can save will depend upon several factors including the company’s profitability, your personal circumstances and the amount of funds you wish to withdraw from the business.
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How to form a limited company

hrbs.biz guide to forming a limited company How to form a limited companyMany businesses are making the change from being a sole trader to running their business through a limited company to take advantage of the limited liability and also the opportunity for tax planning.

An extended version of this HRBS.biz “How to form a limited company” guide can be downloaded as a free pdf here.

Click here for the “How to save tax and National Insurance” article.

Suppliers and customers often prefer to deal with a limited company as it can imply stability, longevity and also the company’s accounts and details of directors are in the public domain. This makes it easier for credit reference agencies and debt insurance providers to recommend credit limits. Unfortunately your competitors can find out about your company’s performance, ownership and mortgages etc at Companies House from only £1!
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Maximise use of your basic rate tax band

hrbs.biz guide to maximising the use of your basic rate band Maximise use of your basic rate tax bandI originally posted this article on the a4uforum in March 2007, and have updated it for the current (2013/14) tax thresholds.

We recommend to all our clients that they maximise the use of their basic rate band. This can be done by declaring interim dividends to take total taxable income upto the maximum at which the basic rate will still apply.

As dividends have a 10% tax credit attached, this tax credit can be used to effectively pay your personal tax liability on the dividend.

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A quick guide for your new limited company

hrbs quick guide to limited company A quick guide for your new limited companyGetting at your profits

Extracting your profits from your company can be by a mix of wage (ie under PAYE) and dividend. In order to pay a dividend the company must have sufficient after tax profits. ie for a £10,000 dividend to be paid the company must have at least £12,500 pre-tax profits (corp tax rate of 20%).

Do not be tempted to withdraw more than is legally available as dividend, as it would be void and treated as a loan repayable to the company. If the loan is to the director it would be a taxable benefit in kind if over £5,000 .

For more on how to extract your profits in a tax efficient way, read our article “Save tax and National Insurance with your limited company”.

Click here to read the rest of this guide (A quick guide for your new limited company)

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