Calling all Accountants!! Self Assessment (Directorship/Self Employment questions)

[smithinoz]

Hi all,

 

I know we have a lot of accountants frequenting this forum, and I was hoping that someone could answer a question I have regarding my self assessment pleeeeeaaaassseeee....:biggrin:

 

I have 1 employment in this period - have the paperwork so no issues.

 

I have 2 Directorships in this period (both still current) - this is the area I have questions on.

 

Company A - I paid myself a small salary due to an established customer base, so have a P60 - no issues.

 

Comany B - was a completely new start up company with no customer base. Didn't want to commit to a salary in the first year so have taken dividends only.

 

My question - for company B - I have to put it down as a Directorship on the self assessment form with zero in the PAYE section right?

Should I put a note in the other info part to show the dividends paid under this Directorship. I am aware that there is a dividends section on the form, but this doesn't link it to a particular company, and I want to be able to link the divi payments to company B in case my CO asks for additional info.

 

Or could I also put company B down as a self employment?

Hopefully that makes sense - hope someone can help! :wubclub: Thanks x

[Si T]

You are unable to class Company B as self employment as it is a Ltd Company and even though a director you are still in effect an employee. You will have already used your personal allowance in your other jobs and so a dividend from the third company is probably the most tax efficient (I am an accountant but have tried to shy away from traditional issues such as tax so I would discuss this with a tax adviser to clarify anything I may say). One thing to note is that you say that you have a P60 for the first two jobs. Did you take a personal allowance for the first company you are a director at? If you did then you may have incorrectly taken it if the other employment you had already done so. In terms of NI you get an allowance for each position that you hold but in terms of PAYE it is a one off allowance to be allocated to the sum of your employment income.

 

In terms of your tax return you normally get a section for each of your employments. This should mean that you have to enter an employment section for each of the three jobs and each one will ask whether you were a director. For the ones that you were you can then enter any earning against the relevant headings of salary or dividends. Its not often that I complete tax returns due to the nature of the accountancy work that I do but hopefully what I have written will at least give you an idea of the right questions to ask a tax adviser. There is also a company in South Wales called Mazuma Accounting (or something similar) who will sort all this for you for a monthly fee. It is owned by a qualified accountant and they send you a series of purple envelopes which you simply put your monthly paperwork in and they take care of the rest. I have never used them myself but there are a few people I know who have used them and have good things to say. feel free to PM me if you need anything else and I will try to help.

 

Si

[Alan Collett]

Yes - on your UK tax return prepare a separate Employment supplement for each company, including the one with nil salary.

 

Presumably you have lodged a nil P35 for the nil salary company too?

 

Dividends go in the main tax return, as noted.

 

For visa purposes if you are asked to validate your skilled work I'd be obtaining documentation verifying the work done by you through your companies (eg instructions to act from clients, copy invoices, remittance advices). Then validate that "you are the company" (if you know what I mean) by providing details from Companies House to show you are the sole shareholder and director.

 

If possible it will probably also be good for a third party accountant to prepare a supporting statement.

 

Best regards.

[smithinoz]

Thank you :biggrin: