How to use the cash in your company tax efficiently

Don’t let taxes drain away your valuable cash reserves. So are you sitting on a part of cash in your limited company and not sure what to do with it? Many entrepreneurs holding onto their company’s cash reserves because withdrawing it as a dividend would, or even salary would result in a large income tax payment.

So they’re possibly struggling to work out how Jesus money in the best way and how to invest this money maybe in property or other assets. So one option they may not be aware of is to structure their companies so that they can transfer cash tax free as a dividend or inter-company loan to another company within their corporate group.

For example, this could be a special purpose vehicle to invest in. . So that would mean their property portfolio would just grow a lot faster cuz there’s no income tax leaks. So alternatively, they could use the money to just grow their existing business faster, maybe investing it in more marketing or inventory or something like that.

However, setting up a formal corporate group with h. Has to be done properly. So it’s recommended that you seek the advice of a good accountant before making any decisions regarding your cash distribution. There’s just, there’s so many different ways of doing it and some are much more tax efficient than others.

What do you think about using your company’s cash in this, in a tax efficient way like this?

Do you know the common triggers for HMRC Investigations?

Do not give HMRC a red flag to investigate you play safe. It’s absolutely essential to be aware of the common triggers that can prompt a HMRC investigation. So these investigations can just waste a lot of your time. They can incur a lot of cost in getting someone to help you, and they can also lead to a substantial penalty.

So it’s very important to know about these five triggers and make sure you avoid them at all. One failure to include income on your self-assessment tax return. So the first thing HMRC looks for is if you have failed to include any sources of income or your tax return. This could include rental properties, foreign income from gains.

Crypto gains and and many more types of income. Two Undeclared bank accounts and investments. HMRC has access to vast amounts of information and can easily crosscheck if you have undeclared bank accounts, even if they only have small amounts of interest. The same goes for foreign accounts and investment portfolios and also crypto assets.

Three. Overstated expenses for self-employed or property business. So if you’re self-employed or have a property business, HMRC can compare the expenses you’ve claimed in one year against another year. So if there’s a significant difference or a loss this could trigger an investigation. Also, if things just look a bit unreasonable.

Four incorrect claims for business asset disposable relief. So claiming business asset disposable relief in the wrong way, such as not including the necessary notes or ticking the right boxes can also prompt an investigation. Five late tax returns or reclaiming refunds. So if your tax returns are late or you reclaiming a refund, this can open up an investigation.

HMRC typically starts with one area and then uses that as a basis to examine the rest of the. . So in conclusion, it’s absolutely crucial to stay on top of your tax affairs and have a good accountant helping you. So please follow in like this video to get my latest tax tips and also get in touch with me via the website in my profile if you’ve got any questions.

So, or if you need any help with anything. So, have you ever received a nudge letter or investigation from HMRC, and how did you handle it and how did it go? Please share your experience in the. That’s all for now. Bye.

How is mortgage interest allowable as a UK tax relief?

So how is mortgage interest allowable as a relief in your tax return in the UK? Well, it depends if you own the prop investment property in your own name, personally, or if you do it for a company. So this was all made much more complicated by George Osborne, a few years ago when he introduced Section 24.

And basically he clobbered. Investment landlords who own property in their own name because for some reason he thought they were a bad thing. In fact, they are a good thing because they’re helping the supply of rental property in the uk, which is really important. In the old days, if a landlord had investment property and mortgage interest, then the full cost of that mortgage interest was allowable.

But, now the situation is none. None of it is liable in the first calculation, but you. Entitled, once you’ve worked at a tax bill, you can take 20% of the mortgage interest. Off your tax payment, which is sort of okay if you’re low rate taxpayer, but if you are a high rate taxpayer, you are getting 20% relief, but you’re paying 40% or 45% tax on your income, your rental income.

So in other words, your clobbered, you’re paying excess tax. This might not be so bad if you just have one or two rental properties, but if you have more and more properties. This could be a significant expense and you could end up paying a fortune in tax. So normally for that reason, most property investors tend to get five properties for a limited company, and for most people, that is by far the better solution, even though it does involve a few more complexities with compliance and so on.

But the good news is that all your mortgage interest relief for a company. Fully deductible against your corporation tax on your rental income for that, those properties. So many people also, if they’ve got lost properties, their name are thinking about. Transitioning them to a company, just selling them to a company that I own.

This has a lot of benefits, but unfortunately being a transfer, then there’s a couple of gain tax on the sale, and there’s stamp duty to pay on the purchase but so it could work out quite expensive, but there are reliefs available if you do it properly, if you are very careful and so on. And you fit the criteria, but it’s very important to get expert advice.

So please get in touch if you are in that situation or you want to explore that. Or have you got any other tax related or cancer related questions? Please post your comments below.

Maximize Your Child Benefit

Do you get child benefit? If so, you need to watch and understand this video if you are a UK taxpayer. So if you or your partner earn more than 50,000 pounds perham, you may have to pay some of that benefit back in the form of taxes. So you will need to register for self-assessment and declare both your income and the child’s benefit you received for.

And then you’ll have to pay back a portion of the child benefit every January through self-assessment. So some families who earn over 50,000 pounds have chosen to stop receiving child benefit to avoid paying back taxes. However, it’s important to note that even if you don’t want to receive the benefit, you should still fill out the child’s benefit form and register your child with.

This is very important because your child’s national insurance number will be linked to their HMRC record and they’ll need it when they turn 16. So even if you don’t want the child benefit, just make sure to, to register a child with HMRC by filling out the form. And as always, uh, get in touch with me if you’ve got any tax related or counting related questions or need any help in that regard.

So, are you affected by this child benefit? let us know in the comments.

HMRC Is Cracking Down On Crypto In 2023

So UK crypto tax update for 2023. So make sure we disclose your gains, or you could face big penalties. If you’re in any type of cryptocurrency and you’re resting in the UK, you need to know how much tax you have to pay. HMRC views Bitcoin and other cryptocurrencies as taxable assets and has the data sharing program with UK exchanges.

So because HMRC sees crypto as a couple asset, that means that when you dispose of. You will need to pay capital gains tax and disposals include things like selling crypto for a fiat currency or another cryptocurrency, or spending it on Goodson services or gifting it. Also, the government recently announced a cut to the capital gains tax allowance from 12,300 to 6,000 pounds from April, 2023.

So don’t get caught out. Find out how much tax you have to pay on your crypto disposals in the UK now, and. Did you know about this? What do you think about it? And do you have any questions? And you might like to consider if you’ve got any disposals, the timing of it, maybe it’s better to dispose of it before April or after April, depending on your own personal situation and what allowances you are using for other things.

Internal Rate of Return – the secret wealth metric

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IRR – internal rate of return. The secret wealth metric

IRR is a much more powerful, flexible and useful tool than ROCE (return on capital employed). It allows you to find the return on multiple streams of cash in and out in the future. So it allows you to compare different strategies, projects and investments objectively.

By reducing complexity down to one metric, makes it very easy to choose how to invest your money.

Check out https://redboxfinancial.com for more info

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Please also comment below on what you would like the subject of future videos to be about.

Are any crypto activities tax free?

Did you know all about these? And do you know what type of crypto transactions are taxable in the UK? Let us know in the comments!

Can HMRC Track Your Crypto? You Might Be Surprised!

1. HMRC has a data sharing program with all UK exchanges.
2. HMRC has transaction data from as far back as 2014.
3. HMRC has access to the KYC information you provided to exchanges or wallets.
4. HMRC has been working with large crypto exchanges to share customer information.
5. HMRC uses this information to send reminders to report crypto and pay taxes.
6. Coinbase began contacting customers with more than £3,000 in crypto in January 2022 to inform them of information sharing with HMRC.

How do you feel about HMRC tracking your crypto transactions? Let us know in the comments!

Avoid the UK’s 60% Tax Rate

In the UK, earning over £150K means you’ll face a 45% tax rate on your salary. 

But, did you know there’s a sneaky 60% tax trap for those earning between £100K and £125K? That’s right, the £25K in that range is taxed at a whopping 60%. 

Every £2 you earn over £100K means your personal allowance decreases by £1, making your tax rate soar. 

So, smart earners in this bracket boost their pension contributions to lower their taxable salary and keep more of their hard-earned cash. 

Don’t get caught in the 60% tax trap – plan your finances wisely!