Corporation Tax

Potts & Co Accountancy

Tax Data 2019-20

By | Budget Update, Corporation Tax, HMRC, Inheritance Tax (IHT), Personal Tax, Potts & Co Accountancy & Business Advice News, VAT

All figures are annual amounts Tax

Personal allowance £12,500
Allowance withdrawn from £100,000
Transferable marriage allowance £1,250
Trading income £1,000
Property income £1,000
Rent-a-room £7,500
Tax on earnings
Earnings to £34,500 20%
£34,501 to £150,000 40%
Over £150,000 45%
Tax on earnings for Scottish residents
Earnings to £37,500 20%
£37,501 to £150,000 40%
Over £150,000 45%
Thresholds and rates for Scottish taxpayers TBA
Tax on interest
First £5,000 0%
20% taxpayers £1,000 @ 0%
40% taxpayers £500 @ 0%
Balance taxed at marginal rates
Tax on dividends
First £5,000 0%
Balance in band to £37,500 7.5%
£37,501 to £150,000 32.5%
Over £150,000 38.1%
National insurance
Class 1 employers 13.8% over £8,632
Under 21 (apprentices 25) 0% to £50,000
Class 1 employees 12% on £8,632 to £50,000;
2% above £50,000
Class 4 self-employed 9% on £8,632 to £50,000;
2% on profits above £50,000
Class 2 self-employed
Voluntary if profits under
Class 3 voluntary £780
Employment allowance
Set against employer’s Class 1 NIC
(Not available for one-person companies)
Pension contributions
No earnings £3,600 gross
Otherwise 100% of earnings
Annual contribution caps:
No pension taken
Some pension taken
Adjusted income over £150,000:
annual cap tapered to
Lifetime pension fund cap £1,055,000
Corporation tax
All profits 19%
Registration turnover £85,000
Deregistration turnover £83,000
Standard rate 20%
Reduced rate 5%
Inheritance tax
Nil rate band £325,000
Residence nil rate band £150,000
Excess taxed at 40%
Where 10% left to charity 36%
Capital gains tax
Within basic tax rate 10%
Higher tax bands 20%
Surcharge for residential property
and carried interest
Entrepreneurs’ relief 10%
Investors’ relief 10%
Annual exempt amount £12,000
Potts & Co - Accountancy & Business Advice

Paying HMRC

By | Corporation Tax, HMRC, VAT

Paying tax should be easier now that HMRC accepts payments through the Faster Payments system. This can be used to transfer funds almost instantaneously, on any day of the year, 24 hours a day.

The maximum transaction value is £250,000, but individual banks have their own limits, which can be as low as £10,000 for business accounts. Remember to check your own bank’s transaction limit if you plan to pay a large bill, such as VAT, using Faster Payments. Where the limit is not sufficient to cover the VAT bill the whole payment will fail, resulting in a late payment.

If your business made one or more late VAT payment or return in the previous 12 months, the next default could result in a surcharge penalty. This will range from 2% to 15% of the late paid VAT, even if your payment is only one day late. Businesses with turnover under £150,000 are permitted to make more defaults in a year before suffering a surcharge penalty, which is only applied where the penalty exceeds £400.

Paying HMRC from an overseas bank account is more difficult, as the taxpayer needs the IBAN number and bank identifier code for the HMRC bank account. These details are published on GOV.UK. But be careful to pick up the IBAN number for the account specific to the tax you are paying: there are different accounts for different taxes.


Directors’ Loans

By | Corporation Tax

When a company which is controlled by its directors, or by five or fewer shareholders, makes a loan to a director or shareholder, it must pay an extra corporation tax charge set at 25% of the loan.

That corporation tax charge is only payable if the loan is outstanding nine months after the year end and it can be reclaimed from HMRC when the loan is repaid.
This corporation tax charge will rise to 32.5% for loans made on and after 6 April 2016.

The change aligns the tax payable in respect of a loan from a company with the tax payable on a dividend paid to a higher rate taxpayer, although the tax on the loan can be reclaimed by the company, whereas dividend tax paid by an individual can’t be reclaimed.


Corporation Tax – Rates

By | Corporation Tax, Potts & Co Accountancy & Business Advice News

All sizes of company in the UK pay corporation tax at the main rate of 20% (except in the oil and gas sectors).

The main rate will drop to 19% on 1 April 2017 and to 17% on 1 April 2020, making it the lowest rate of corporation tax amongst the G20 countries.

Corporation Tax – Payment dates

Companies with profits over £1.5 million pay corporation tax in quarterly instalments starting in the seventh month of the accounting period. Those companies or groups with profits over £20 million will see the timing of those instalments accelerated by four months, but not until 2019.



By | Corporation Tax, Potts & Co Accountancy & Business Advice News

Companies who make losses may change their trade in order to achieve a profit. In some cases the losses made in early periods can become trapped and unusable, as tax law prevents a loss from being set against profits from a different trade.

From 1 April 2017 such restrictions on the use of losses will be lifted. A company will be able to carry forward losses to use against profits made from any activity. This is a very welcome change, particularly for small businesses with more than one activity.

Companies with profits over £5 million will be able to relieve losses against only 50% of their profits; the £5 million threshold will apply across a group of companies. Banks will be restricted to setting losses against 25% of their profits with effect from accounting periods starting on and after 1 April 2016.