What directors need to know about personal taxation

If you are the director of a limited company, then it’s vital to remind yourself that you and your limited company are separate legal entities. This makes the taxation situation for limited companies different to that for non-limited companies. A limited company’s director and employees pay income tax via the PAYE system, as well as employees’ National Insurance Contributions (NICs). Our accountants in Richmond and the wider Surrey area here at Freelancer Accounting (http://www.freelanceraccounting.com) can provide advice relating to all aspects of personal taxation for directors.

The directors and employees of limited companies have taxable income on which they must pay income tax. HMRC has a system for the collection of income tax from directors’ and employees’ pay as they earn it, known as PAYE (Pay As You Earn), with the tax being deducted monthly. It is the responsibility of the employer to deduct income tax and NICs from the pay of its employees, before submitting the deductions to HMRC. The 19^th of each month is normally the deadline for this, although quarterly payments may be possible if your average monthly payments are not likely to reach a minimum of £1,500. 

As a prospective or current client of our accountants in Surrey, you should also be aware of the taxation of directors and employees on benefits in kind, such as medical insurance or a company car. Employers are also required to pay class 1A NICs on benefits, with a form P11D being used to declare them on an annual basis.

Freelancer Accounting can assist with all aspects of personal taxation

All freelancers have their own tax responsibilities in the form of personal income tax and employees’ NICs, in addition to business taxes, and the small business accountants of Freelancer Accounting can provide any advice that you require on aspects of personal taxation. You may require advice on the Self Assessment system, for example, within which most freelancers fall. This makes necessary the submission of a personal tax return for each tax year ending 5^th April, and it needs to be correct and submitted in time if you are to avoid being charged interest and penalties.

Clients of our accountancy services typically need to complete a tax return due to being a director of a limited company, a sole trader or a freelancer with income exceeding £100,000. Generally speaking, you’ll need to complete an annual tax return if you have tax to pay outside of ordinary employment, pension income and small amounts of investment income – and you are responsible for informing HMRC on an annual basis if you need to complete a return.

When it comes to Self Assessment, our accountants for freelancers can give you advice on when to fill in the form, the consequences of failing to file a tax return on time, what actually appears on the form and even personal tax on dividends. Contact Freelancer Accounting (http://www.freelanceraccounting.com) now if you are a limited company director who requires the highest standard of tailored advice.

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.