Tax FAQs

Can I claim tax relief on my permanent health insurance payments?

Permanent health insurance policies are intended to provide you with an income should illness prevent you from working. If your employer pays the premium on your policy, they will obtain a tax allowance on the payment they make and you will have to pay tax on any benefit that you receive.

If you make the payments, whether as an employee or as a self-employed person, you will not obtain any tax relief, but any benefits paid to you under these circumstances would be tax free.

How do I work out how much tax I have to pay and when to pay it?

If you have to complete a Tax Return, included in the package will be a tax calculation guide for you to follow. The main thing to bear in mind is that if you get your Tax Return submitted by 30 September each year, HM Revenue & Customs will work out for you how much tax you have to pay and when you have to pay it.

In principle, you make two payments a year. On 31 January each year you will pay the balance of the previous year's tax still owing plus one half of the previous year's tax liability as a payment on account for the following year. On 31 July each year you will pay the second half of last year's tax liability. On 31 January following, you will find yourself paying any balance of tax that is due plus one half of next year's tax liability based on this year's total tax bill and so on.

How do I know if I have to fill out a tax return?

You need to fill out a tax return if you:

· are self-employed

· are in a business partnership

· have income from land and property which is more than £2,500 (or less if the tax cannot be dealt with through the PAYE coding system)

· are a director

· incur taxable capital gains

· are sent one

If you're in any doubt, contact your local Tax Office and get HMRC to confirm whether you should fill out a tax return.

How is Corporation Tax assessed and paid?

Corporation Tax is accounted for in 12-month periods, unless the accounting period from its commencement to the first accounting date, or the last period of operation, is less than 12 months.

Every company has to fill in an annual Corporation Tax Return (Form CT600) and this Return has to be submitted by the company secretary or the directors within 12 months of the end of the accounting period.

Small companies must pay Corporation Tax nine months after the end of the accounting period, but big companies have to pay Corporation Tax at more frequent intervals.

What is Corporation Tax?

Corporation Tax is the tax that limited companies and unincorporated associations (such as clubs) pay on their profits. It's a tax on the profits of the company; profits include interest and capital gains.

What capital gains tax relief is there for the sale of business assets?

In principle, you are liable to capital gains tax in respect of the sale of any assets used in your business. However, if all of the sale proceeds are invested in further business assets that are purchased within one year before or three years after the sale, you can claim ‘rollover relief ’ as a result of which the gain on the disposal rolled over into the cost of the new business assets acquired. Therefore, no tax is paid until the new business assets are sold, unless they too are replaced.

For these assets to qualify they must be either land and buildings, fixed plant and machinery, goodwill, milk and potato quota or other agricultural quotas including payment entitlements under the Single Payment Scheme. Motor vehicles don’t qualify.

I'm self-employed; how do I claim tax-deductible expenses?

If you are self-employed you can claim tax-deductible expenses by completing the relevant parts of a tax return.

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