Common questions about taxes
Since when until when tax year runs?
Every Tax year starts on 6 April and ends 5 April following a calendar year. For example the tax year 2011-12 runs from 6 April 2011 until 5 April 2012.
What is the amount of current tax free allowance?
In the tax year 2010-11 the first earned £6475 is free of income tax. In the tax year 2011-12 it will be the first £7475.
Do I have to submit a Tax Return and by what date should I action it?
People who are self-employed, directors of limited companies and others who had untaxed income (i.e. from renting a property) must submit their Tax Return to HM Revenue & Customs. HM Revenue & Customs can also ask any person to submit Tax Return to them. The Tax Return has to be received by HM Revenue & Customs by 31 October (paper returns) or 31 January following the end of tax year.
How long will I need to wait for overpaid income tax to be paid back to me?
It depends on many factors; however if all necessary documents are available (all P45s, P60s) it normally takes around 3 weeks to have money on the account or receive a cheque.
Am I owed any tax?
If you have overpaid income tax then the amount overpaid is due to you. It usually (but not always) happens if:
- you haven’t worked throughout whole tax year
- you have changed your jobs often
- throughout tax years there were gaps in employment
- you have worked under CIS scheme and your yearly income was low
For employees: If you have all your P45 / P60 documents for the tax year, please either call or e-mail us and provide your cumulative yearly income (gross to date from all documents) and cumulative tax (gross to date from all documents) and we will let you know if and how much tax you are due.
I was employed and I also worked as self-employed. Do I have to make Tax Return on self-employment income only?
You have to declare both incomes on one Tax Return. Your Tax Return includes all sorts of income throughout the tax year. However if you undertake self-employment work, you are also employed and your income from self-employment is low, you might be excluded from paying Class 2 National Insurance contributions (currently £2.70 per week).
Do I have to pay Class 2 National Insurance contributions (£2.70 per week) if I am on low income?
If your expected profits are very low for the whole the tax year, then you can apply to be excluded from compulsory payments in that tax year. However if you do so, you might loose entitlement to some of the state benefits and those year might not be counted towards your basic state pension.
I would like to establish limited company. What returns will my company need to make?
Most importantly every year your company will have to submit (different time limits might apply):
- Corporation Tax to HMRC and Annual Accounts to Companies House
- Annual Return to Companies House
- Month to month payroll (if you pay wages to yourself or your employees) and submit monthly RTI returns
- Quarterly VAT returns
- CIS monthly returns for construction industry companies operating CIS scheme
In addition to the above Directors are required to submit their personal tax returns as well.
What form of business is better for me – self-employment or limited company?
To be able to give you precise answer, I would need to know your circumstances and requirements. Both forms have their positives and their negatives. For example having limited company usually implies higher costs; however other businesses prefer to deal with limited companies rather than self-employed. This means that limited companies have potential to generate higher profits, which in return could compensate higher running costs. We strongly recommend to book an appointment upon which we can find best cost effective solution for your business.
Common questions about benefits
Am I entitled for Housing Benefit if I am homeowner (either in or outside of UK)?
In most cases unfortunately not; however there are some exemptions. Your situation will be checked upon the appointment and most appropriate advice will be given to you depending on your circumstances.
Am I entitled for Child Benefit / Child Tax Credit if my children are not living with me in the UK?
Generally yes, however providing certain conditions are met. Most important are that your children are living in another EEA (European Economic Area) country, you are financially responsible for them (proof of financial support might be needed) and you have a right to reside in the UK.
My household income is above £45.000. I have one child. Am I entitled to any state benefits?
Most likely yes, currently you should be entitled to Child Benefit (if your or your partner’s income is below £60000). Depending on your rent, an area where you live and if you use childcare you might be entitled to other benefits. In some circumstances you might even be entitled to Housing Benefit. There are many families who are entitled to some benefits despite having reasonably high income. It is always good to check your entitlement based on your actual circumstances and income.
How long will I need to wait for a decision on my benefit claims?
Housing Benefit – usually two weeks. Sometimes it might take slightly longer, especially if you were not able to present all required documents to the Council upon submission of your application. Councils have to follow very strict time limits and if you provide all required documentation on time, you must receive decision within 2 weeks. SAFI Advisory Services can also help you if Council is not able to make decision on your benefit on time.
Tax Credits – usual waiting time is between one to three months, depending on your circumstances. However in more ‘complicated’ cases the waiting time can be extended. For example it might take months for the office to make decision on your claim when your family resides permanently in another EEA country or your partner does not yet have National Insurance number.
Child Benefit – usually it is between one to six months depending on your circumstances. You are likely to wait even longer if for example your child does not live with you, your partner and child live in another EEA country and that country also pays child benefit for your child.
Most other benefits (Maternity Allowance, Jobseeker’s Allowance) – usually around one month.
It is important to know that every benefit entitlement is calculated from the time of making claim (for some it also includes back payments). Therefore even if you have to wait for few months for the decision, the initial payment will cover whole period since the claim was made.