Practitioners purchase Tax, Tips & Tools for a variety of reasons and often have their favourites. We have highlighted a few of these below.
Should I Incorporate?
This has long been a firm favourite of tax professionals. The tax savings from incorporation have gradually diminished in recent years. We are now at the stage where in certain circumstances, where profits are high and extraction of the funds is also high, the incorporation route is actually more expensive. This tool highlights the “headline” tax savings/costs of adopting an incorporation strategy.
Director’s Salary – to Personal Allowance or National Insurance limits?
It is well known that the optimal strategy for extracting company funds is using a low salary and taking the remaining as dividends. However, what constitutes a “low” salary, and in what circumstances might it be beneficial to pay at the rate of £12,570 p.a. instead of £8,840 p.a. or £9.568 for 2021/22? And what are the potential savings? This tool will help answer those questions.
Interest on loan director’s credit balances calculator
It can be beneficial to pay interest on director’s loan accounts when they are in credit. With the first £1,000 or £500 of interest tax free, and the possibility of utilising the £5,000 savings allowance, this is a good “planning point” and results in corporation tax savings, and often personal tax repayments for the director. This model calculates the credit interest. A further tool also included is the ‘Interest on overdrawn loan accounts’, which calculates interest due on Directors loan accounts.
Inheritance Tax Calculator
Calculating the IHT is not as simple as listing the assets and applying a 40% tax rate! The IHT calculator takes into account lifetime gifts, succession relief and various other quirks in the IHT regime.
Systemising the Payroll Function
The payroll function needs to be as streamlined as possible to provide an efficient and profitable service. Use the new employer, new employee and other “standard forms” included in the model to streamline the process for clients.
There are several payroll models which can be used to calculate pay or assist in the audit process when checking calculations. There are also tools to convert Net pay to Gross and some have Scottish income tax rates built in.
CGT Asset Disposal Calculator
This can be used for any asset, but is particularly effective when dealing with properties, which may have complications such as periods of occupancy, periods of letting, etc. This model takes into account all these peculiarities.
VAT Flat Rate Calculator
For smaller clients, the VAT flat rate can have a significant effect on the overall VAT paid and substantial savings can be made. These tools help compare the standard rate versus flat rate to both prove and quantify the benefits of electing one way or the other.
VAT Scale Charge Calculator
The VAT Scale Charge on fuel changes every year, and the amount varies during the year based on the co2 emissions of a vehicle. When clients change their vehicle, the scale rate is likely to change. This is an area that clients either totally overlook or use the same figures as the previous year. This tool identifies the correct rate to ensure they pay the appropriate amount of tax.
Tax Liabilities Summary Report
Advising clients on income tax payable/repayable can involve the creation of tables or extensive use Word documents, and possibly needs manipulation each year. This Excel based tool avoids those issues, is a “professional looking” document, and incorporates a payslip for use of paying by cheque.
Pay s455 tax, pay the interest or have a benefit in kind charge on directors’ overdrawn loans
Which option is best – in terms of practicalities, efficiency, tax and cashflow? Use this tool to test the various scenarios.