Before the dividend taxation regime was overhauled in April 2016, the tax payable on dividends was calculated via a system of ‘grossing up’ net dividends via a tax credit system.
Tax / Accounts
- If you're an umbrella contractor, then your tax and accounting needs are very simple, as you're taxed as a standard employee - with tax and NI deducted at source.
- Limited company contractors have to account for a) company tax, and b) personal tax, but a good contractor accountant can do this on your behalf.
- Find out about the taxes you'll encounter as a contractor, and how to pay yourself as a contractor.
- Find out how much contractor accountants charge in our contractor accountants comparison table.
With many contractors keen to draw down significant dividend income before the new dividend rules commence on 6th April, we look at the crucial issue of timing and when, legally, dividend payments are deemed to have been made.
If you want to declare a limited company dividend, you must create two documents each time – board meeting minutes to record the director’s decision to distribute company funds, and a dividend voucher for each shareholder. Includes example templates.
If you receive any services or benefits from your contractor company, in addition to your salary, they may be classified as ‘benefits in kind’ – and taxable. Here, we look at how such items may be taxed, and some of the common errors made by contractors when it comes to reporting these benefits.
Depreciation is the accounting term for the devaluation of assets over time. Here we look at how any assets you may buy (such as a new server or PC) are treated for tax purposes in your company accounts.
There may be times when you want to drum up some new business by entertaining a would-be or existing client, but you may be unsure if you can reclaim the costs from your contracting business.
The end of the tax year is fast approaching, which means you may be thinking about making a few resolutions to help you run your business better over the next 12 months.
Keeping accurate accounting records is an essential task for every successful contractor. Not only can you ensure that you stay on the right side of the taxman, but you should also be able to see exactly what your financial situation is at any moment in time.