What is a tax code?

Your tax code is used by your employer or pension provider to work out what tax-free pay you are entitled to and how much Income Tax to take from your pay or pension.  HM Revenue and Customs (HMRC) will tell them which code to use.

If you are employed and have only one source of income, and there is nothing unusual about your circumstances or history, you will most likely have a tax code of 1257L from April 2021 (in England). The “L“ indicates that you are entitled to the full personal allowance, but there are a variety of different letters you might see. The personal allowance from 6th April 2021 to 5th April 2022 will be £12,570 but the last digit is dropped when constructing the tax code.

If you have more than one job, you may find that your personal allowance is split across the two workplaces. Otherwise, you may have 1257L on one job and BR on the other. HMRC will apply a BR code when it believes you are a basic rate taxpayer and that your personal allowance is being used in full against another source of income you have. Any income with a BR code will be taxed at 20%.

Your tax code is important because it will affect how much tax you pay. When HMRC issues you with a tax code, you should make sure you check the calculations.

Use the check your Income Tax online service within your Personal Tax Account to find your tax code for the current and past year. If you think your tax code is wrong, you can update your employment details directly on your Personal Tax Account.

More information about tax codes can be found here.

Can I employ my own children?

Children are staying at home as a result of COVID-19 lockdown. Also school summer holidays are approaching soon, unfortunately not showing a lot of promise that holiday destinations and clubs will re-open soon. If you have older children at home, you must be aware that it is an expensive and potentially frustrating time of year.

Moreover, it is harder now for young people to find temporary part-time jobs. When they are back at school or college they might not have the spare time to keep jobs in the long term. Meanwhile, having some work experience is more important than ever to differentiate yourself on UCAS forms and other training scheme applications. As a business owner, you have unique advantage over other people in paid employment and can do something about it.

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Some Of The Most Unbelievable Excuses For Late Tax Returns

The top list of failed excuses for late returns released by HMRC:
  1. I couldn’t file my return on time as my wife has been seeing aliens and won’t let me enter the house.
  2. I’ve been far too busy touring the country with my one-man play.
  3. My ex-wife left my tax return upstairs, but I suffer from vertigo and can’t go upstairs to retrieve it.
  4. My business doesn’t really do anything.
  5. I spilt coffee on it.

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Coronavirus Bounce Back Loan Scheme – guide to the scheme and making a claim

The Bounce Back Loan Scheme (BBLS) has been designed to provide financial support to businesses across the UK that are losing revenue, and seeing their cash flow disrupted, as a result of the COVID-19 outbreak. BBLS allows to get access to funding quickly.  

The Government will provide banks with a 100% guarantee for the loan and pay any fees and interest for the first 12 months. Repayments will not have to be made by businesses during the first 12 months. The online application process is very straightforward and effortless. Therefore, with a very attractive interest rate of 2.5%, these loans have been attracting a lot of interest from businesses struggling with their cash flow during these difficult times. Treasury data as of 24 May showed more than 650,000 businesses have accessed coronavirus-linked finance schemes, amounting to £27.5bn.

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Reasonable Excuses For Late HMRC Tax Return Filing

You can appeal against some HMRC penalties if you have a reasonable excuse for your late tax return or payment being late.

What may count as a reasonable excuse?

A reasonable excuse is something that stopped you meeting a tax obligation that you took reasonable care to meet.

For example:

  • you had a serious or life-threatening illness
  • you had an unexpected stay in hospital that prevented you from dealing with your tax affairs
  • your partner or another close relative died shortly before the tax return or payment deadline
  • delays related to a disability you have
  • service issues with HM Revenue and Customs (HMRC) online services
  • your computer or software failed just before or while you were preparing your online return
  • a fire, flood or theft prevented you from completing your tax return
  • postal delays that you could not have predicted
  • currently HMRC will also  consider coronavirus (COVID-19) as a reasonable excuse for missing some tax obligations (such as payments or filing dates).

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Self-employed / freelancer – 17 things you can claim for in your self-assessment

Generally speaking, you can deduct from your turnover all costs which are wholly and exclusively for the purpose of carrying out your business.
Expenses you may be eligible to claim are:

1. Travel and accommodation
You can claim travel, accommodation and parking costs on business trips. You can also claim reasonably priced breakfast and evening meals on overnight business trips.
Also, you can add running costs of a business vehicle. This includes petrol, road tax, MOT, insurance, repairs and servicing. Additionally, the cost of buying a vehicle might qualify for capital allowances. Note, if you also use the car or van privately, you can claim only the proportion of vehicle’s expenses.

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Claiming home office expenses – SOLE TRADERS

If you are self-employed and work from your home, you can claim for a wide range of expenses against your income tax bill. However, you have to be careful to only apportion costs which have been genuinely incurred in the running of your business.
As the sole trader you can claim a proportion of almost all household expenses. However, there are two golden rules for claiming home office costs as an expense. Firstly, you must run your business from home, not just sort your business post at home while work at clients’ premises only. Secondly, the cost that you claim for has to be genuinely incurred in the course of running your business.

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9 WAYS TO CUT YOUR TAX BILL – allowable expenses for Employees

If you are employed, you are limited in what you can offset against Income Tax. However, there are still a few useful tips to reduce taxable income:

1. Mileage allowances
If you use your personal car for work and the mileage allowance that your employer pays you is less than the HMRC rate, you can claim the balance. The first 10,000 business miles can be claimed at a rate of 45p per mile. Over 10,000 miles the allowable HMRC rate drops to 25p per mile. Additionally, you can claim 24p per business mile for motorcycles and 20p per mile for bicycles. If you are paid less than these rates by your employer, you can claim the difference on your self-assessment return.

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HOW TO CLAIM YOUR HOME AS AN OFFICE – a guide for limited companies’ directors

Many small companies perform lots of work from home. One of the most frequently asked questions by directors is what expenses can they legitimately claim back against their company?
HMRC’s rules for claiming business expenses for use of home as an office or renting part of your home to your company are strict and complex. We have broken down these rules to make it easy to understand the expenses you can and cannot include in your company’s accounts.

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How to buy your family presents worth £300 through your limited company TAX FREE?

A trivial benefits exemption came into effect in April 2016. The main advantage is that an employer can provide trivial benefits such taking employees on a meal out to celebrate a birthday, buying a bunch of flowers to congratulate on a birth of baby or buying Christmas presents for the staff without any tax or national insurance for either employer or employee. The employer will also be entitled to claim income tax or corporation tax relief on the cost. This benefit even further extends to close companies, where director can receive up to £300 worth of benefits in the tax year. With this Tax Free benefit it is easier to be a lovely boss than ever before.

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