Archive for August, 2017

Organising a trading name for your company

Monday, August 14th, 2017

We are often asked to register a trading name for an existing company. Usually, this is done so an incorporated business can develop a new brand with a name that is different to their existing company name. Unfortunately, there is no formal process that can be employed to do this; no registrar of trading names. However, there are ways to safeguard the use of a trading name.

The most effective strategy is to register a second limited company, with the required trading name, and keep it on the shelf, dormant. You will have to pay to incorporate the new company, and file annual accounts and other returns, but no-one else will be able to register a company with the same name.

Companies House also advise registering a trade mark if you want to stop other businesses from using your trading name. Here’s what they say on this matter:

You can trade using a different name to your registered name. This is known as a ‘business name’.

Business names must not:

  • be the same as an existing trade mark
  • include ‘limited’, ‘Ltd’, ‘limited liability partnership, ‘LLP’, ‘public limited company’ or ‘plc’
  • contain a ‘sensitive’ word or expression unless you get permission

You’ll need to register your name as a trade mark if you want to stop people from trading under your business name.

You can’t use another company’s trade mark as your business name.

Registering a trade mark can be a drawn out and expensive process, but if you have good reason to protect your business name this may be a worthwhile investment. If you decide to do this, registering a trade mark does not preclude forming a company with the same name, and so a combination of the two would be a belts and braces solution.

Saving to pay tax

Thursday, August 10th, 2017

If you are employed, or receive a pension from a non-State provider, any tax you should pay is probably deducted before payment under the PAYE rules. Assuming HMRC administer this process correctly, any taxes due should be settled in full.

However, the self-employed, those in receipt of significant dividends or bank interest, and retired persons who receive the State Pension in combination with other significant income streams, may possibly owe HMRC unpaid tax at the end of the tax year.

To save to meet these potential liabilities it is necessary to estimate current income, work out any taxes due and be aware of the date on which these likely liabilities will need to be paid. It is then a simple matter of dividing the liability by the time available to arrive at a monthly amount to put by.

If you don’t follow this process, you will have to pay tax on your current income from income in future years. Which is fine if all your income sources continue at the same level, but if your overall income falls, or stops, a disproportionate part of subsequent earnings may need to be allocated to pay past taxes causing financial hardship in those later years.

The same process applies to companies subject to corporation tax. Corporation tax is due nine months after the end of an accounting year. If directors keep a weather eye on current year profits, it should be possible to make some provision for tax on those profits, such that when the tax is due for payment, funds are available to settle.

The solution in most cases is to do the math, and when possible, save out of the income that created the tax liability in the first instance. Readers who would like help to figure out how to do this, please call, we would be pleased to help.

Dying without a Will, bad idea

Tuesday, August 8th, 2017

Many people die without making a Will. In legal terms, this means they die “intestate”. When this happens, the estate must be shared out according to certain rules. Individuals who may benefit under these rules are:

  • Married partners and civil partners at the time of death. This includes separated partners but not divorced partners or a civil partner if a civil partnership has ended.
  • Children, grandchildren and great grandchildren, if the estate is over a certain amount.
  • Parents, brothers and sisters, nieces and nephews.
  • Grandparents, uncles and aunts.

The order in which estates are distributed follow strict rules. For example, if there is a surviving partner, a child only inherits from the estate if it is valued at more than £250,000.

Partners who are unmarried, or not in a formal civil partnership, have no claim on their deceased partner’s estate.

When family groups are affected by divorce, re-marriage, or co-habiting and there are children involved, the actual rights of family members to share in a deceased’s estate can be complex, and may result in assets of the estate being distributed in a way at variance with the unwritten wishes of the deceased person.

The estates of persons, who die intestate and have no relatives, are passed to the Crown under the “Bona Vacantia” rules.

For these reasons, everyone should prepare a Will and make their intentions known and legally enforceable.

Taxation will also need to be considered. Without a Will, Inheritance Tax may take a disproportionate share of an estate. The current rate applied on chargeable assets on death is 40%.

Readers of this article who have not made a Will or considered the Inheritance Tax consequences of their death should take advice now. Failure to do so may create distressing situations for surviving family members and result in a large chunk of your hard-won assets being paid over in taxation. We can help. Please call to arrange an initial fact-find meeting.

Minimum Wage legislation

Thursday, August 3rd, 2017

No-one is going to complain if you pay more than the National Minimum Wage or National Living Wage rates – which ever applies.

However, there are matters you will need to consider if you pay less than the appropriate minimum wage rates.

The minimum wage legislation applies to workers or employees. It does not apply to the self-employed or office holders: an office holder is paid for the duties they perform and the most common example is a company director. This distinction is important, as office holders are not subject to the minimum wage legislation. Unfortunately, directors sometimes negotiate a contract of employment with their company and therefore any salary paid as part of such contract would be subject to the minimum wage legislation.

In other words, it is fine to pay yourself as a director (if you have no contract with your company) at less than the minimum wage. This may be the case, for example, if you have adopted the strategy of paying a low salary and any balance of remuneration as dividends.

HMRC oversee the monitoring of the minimum wage legislation. Accordingly, it is worth reviewing your wage and salary rates from time to time to ensure your business is paying at the correct rates.

Not only will you have to reimburse employees with any shortfall in wage payments, you may also be fined by HMRC.

We can help. If you would like to make sure you are compliant, we can check your payroll and advise if any remedial action needs to be taken.

A list of the current minimum wage hourly rates is displayed below:

  • Aged 25 and over £7.50
  • Aged 21 to 24 years £7.05
  • Aged 18 to 20 years £5.60
  • Under 18s – £4.05
  • Apprentice rate – £3.50

Apprentices are entitled to the apprentice rate if they are either: aged under 19, or aged 19 or over and in the first year of their apprenticeship.

Tax Diary August/September 2017

Wednesday, August 2nd, 2017

1 August 2017 – Due date for Corporation Tax due for the year ended 31 October 2016.

19 August 2017 – PAYE and NIC deductions due for month ended 5 August 2017. (If you pay your tax electronically the due date is 22 August 2017)

19 August 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2017.

19 August 2017 – CIS tax deducted for the month ended 5 August 2017 is payable by today.

1 September 2017 – Due date for Corporation Tax due for the year ended 30 November 2016.

19 September 2017 – PAYE and NIC deductions due for month ended 5 September 2017. (If you pay your tax electronically the due date is 22 September 2017)

19 September 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2017.

19 September 2017 – CIS tax deducted for the month ended 5 September 2017 is payable by today.

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