Invest NI No Nonsense Guide 11 (PDF) - Invest Northern Ireland

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Sorting out your taxand National Insurancewww.hmrc.gov.uk/paye● To register for HM Revenueand Customs Online Servicesor file PAYE forms online, visithttps://online.hmrc.gov.ukTax forms when anemployee leaves ordiesIn both cases, you complete aP45 formWhen an employee leaves, fill ina P45 with details of their grosspay, tax code and tax deductedin the year to the date of leaving.You then send one part of theform online to HM Revenue &Customs and give the otherthree parts to the employee.If an employee dies, completea P45 and send all four partsof it to your HM Revenue &Customs office.Next steps● Visit www.nibusinessinfo.co.uk/taxes● Further information isavailable from HM Revenue &Customs. Contact 0845 60 70143 or visitwww.hmrc.gov.uk/paye● To register for HM Revenueand Customs Online Servicesor file PAYE forms online, visithttps://online.hmrc.gov.ukBusiness vehiclesand taxThe tax you pay related tovehicles used for your businessdepends on a variety ofelements, including the legalform your business takes andyour employment statusEvery vehicle must display a taxdisc, though some vehicles areexempt from vehicle excise duty(for example, historic vehiclesand purely agricultural vehicles).The rates vary; check with theDriver and Vehicle Agency (seeNext steps below).Personal taxation on the useof cars for business works in twoways: one for the self-employedand another for employees,including directors of limitedcompanies (see Next steps below).If you are self-employed, youhave two choices.You can claim the actualexpenses of using a vehicle forbusiness when you are workingout your profits. If you take thisoption, you can also claim capitalallowances if you own the vehicle(see Next steps below).Alternatively, you can usethe rates from the ApprovedMileage Allowance Payments(AMAP) scheme to calculateyour vehicle expenses using afixed rate for each business mile.Rates depend on the level ofmileage — full details are on theHM Revenue & Customs website.Under this system, you cannotclaim for capital allowances orany interest you pay on a loan tobuy the vehicle.In both cases you must keepadequate records to back up thefigures on your tax return.If you are employed, the rulesare different. If the businessmakes a car available to anemployee for their private aswell as business use (a ‘companycar’), the employee will normallybe taxed on it as a benefit.Remember: you will be treatedas an employee for tax purposesif your business is a limitedcompany.Employees will not normallybe taxed on the use of thevehicle if — including the valueof the vehicle benefit — theyearn less than £8,500 in a taxyear or if they use a pool car ofthe business. (This is a vehicleroutinely used by more thanone employee and not kept atan employee's home when notbeing used for business, norused privately in any other way.)Otherwise, employees aretaxed on the benefit, the chargebeing a percentage of thevehicle’s list price. For almost allcars, the tax depends on the levelof carbon dioxide emissions andthe fuel the vehicle uses. There isgenerally a lower tax charge onmore energy-efficient cars.If employees receive any fuelfor private use which they do notpay for themselves, they will alsobe taxed on this benefit.If employees use their owncars for business purposes, theycan be reimbursed under theApproved Mileage AllowancePayments (AMAP) scheme at aset rate per business mile.The rate depends on thenumber of business miles theytravel. If you pay the employeeno more than the maximumcalculated using the appropriate21The No-Nonsense Guide
22rate, you can make the paymentfree of tax and NationalInsurance.Businesses that make vehiclesavailable to employees for theirprivate use must annually reportthe taxable value of the benefitto HM Revenue & Customs onform P11D. Employers must alsopay Class 1A National Insuranceon the taxable value of cars andfuel made available to employeesfor their private use. Thereare also VAT rules on businessvehicles (see Next steps below).If your business buys a car,it can claim a capital allowance(see Next steps below). If yourbusiness leases vehicles, the costcan be deducted from taxableprofits.The rules in this area arecomplex. You should checkthe position with HM Revenue& Customs or consult youraccountant.Next steps● See VAT on business vehicles,page 29● See Allowances for equipmentand premises, page 15● See Employed orself-employed?, page 10● Visit www.nibusinessinfo.co.uk/businessvehicles● You must arrange your vehicleexcise duty on any businessvehicles. Contact the Driverand Vehicle Agency:0845 402 4000;www.dvani.gov.uk● HM Revenue & Customs cangive you further informationon business vehicles and tax.Contact the New EmployerHelpline: 0845 60 70 143. Ifyou are self-employed, call theSelf Assessment Helpline:0845 900 0444.● Further information abouttax on business vehicles isavailable on the HM Revenue& Customs website:www.hmrc.gov.uk/cars● For more information read:Using Your Own VehicleFor Work — Information ForEmployees. Contact theHM Revenue & CustomsEmployer Orderline:08457 646 646;www.hmrc.gov.uk/mileageSpecial tax rulesfor the constructionindustryThe Construction IndustryScheme (CIS) provides aset of rules for the paymentof income tax and NationalInsurance if you are in theconstruction industryIn the construction industry,businesses fall into two maincategories: contractors andsubcontractors (though itis possible for a business tobe both a contractor and asubcontractor).A contractor is any personor business that pays othersto carry out constructionwork. (Businesses outsidethe construction sector canbe classified as contractors iftheir construction expenditureaverages more than £1 millionover three years.)Broadly, a subcontractor is anyperson or business that carriesout construction work.Contractors must register withHM Revenue & Customs. Theymust also must verify the taxstatus of subcontractors beforepaying them for the first time— HM Revenue & Customs willdetermine whether the paymentshould be gross or whetherdeductions should be made.The standard rate ofdeduction is 20 per cent. Ahigher rate of 30 per centapplies for subcontractors thatHM Revenue & Customs has notbeen able to verify.Contractors must make amonthly return to HM Revenue &Customs detailing the paymentsmade to all subcontractors.Subcontractors must alsoregister with HM Revenue &Customs. They can apply to bepaid gross by contractors if theymeet turnover, business andcompliance criteria.Next steps● Visit www.nibusinessinfo.co.uk/constructionindustry● You can get further detailson the Construction IndustryScheme from HM Revenue &Customs. Contact0845 366 7899;www.hmrc.gov.uk/cisYour business ratesThe No-Nonsense Guide
Page 1 and 2: The No-Nonsense Guide 2012 NI editi
Page 3 and 4: ContentsForming a business 4Sole tr
Page 5 and 6: When you are setting up a business,
Page 7 and 8: It worked for meHow I wentaboutform
Page 10 and 11: Forming a businessCheck for changes
Page 12 and 13: Sorting out your taxand National In
Page 26 and 27: What VAT will meanfor youCheck for
Page 28 and 29: What VAT will meanfor youYou also n
Page 31 and 32: All you need to know about the rule
Page 33 and 34: You also need business adviceThis g
Page 35 and 36: It worked for meHow Imade surewe go
Page 37 and 38: You also need business adviceThis g
Page 39 and 40: 38implement the health and safetypo
Page 41 and 42: All businesses own assets called in
Page 43: It worked for meHow Iprotectedmybus
Page 46 and 47: Protecting yourintellectual propert
Page 48 and 49: Is your business in aspecialised se
Page 50 and 51: Trading regulationsand data protect
Page 60 and 61: Recruiting yourfirst employeeCheck
Page 62 and 63: Recruiting yourfirst employeeYou al
Page 64 and 65: Understandingemployees’ rightsChe
Page 66 and 67: Understandingemployees’ rightssch
Page 68 and 69: Understandingemployees’ rightsChe
Page 70 and 71: Understandingemployees’ rightsor
Page 72 and 73:
Understandingemployees’ rightsChe
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Understandingemployees’ rightsAar
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Understandingemployees’ rightsYou
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Understandingemployees’ rights}Re
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Understandingemployees’ rightsYou
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Resolving problemswith employeesChe
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Resolving problemswith employees}If
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Resolving problemswith employeesThe
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Resolving problemswith employeesYou
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Resolving problemswith employeeswee
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Government advice andsupport for yo
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Useful contactsNow you have reached
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Useful contactsVenture Capital Asso
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