PERSONAL ALLOWANCE: April 2020/21 = Basic allowance £12,500, income above this amount taxed at basic rate tax, 20%.
Higher rate tax income above £50,001 to £150,000 taxed at 40%
Upper rate if income exceeds £150,000 taxed at 45%
National Insurance: April 2020/21 = Pay 12% employee national insurance above annual salary of £9500.00
SELF EMPLOYED: Pay class 2 NIC at £3.05 per week.
If profits are over the small profit threshold, of £6,475
Also pay class 4 NIC if profit exceed £9,501 at lower profit limit at 9%,
Upper limit if profits over £50,000 at 2%.
ISA limit: £20,000 annual savings, tax free.
DIVIDEND INCOME: an allowance of £2000, excess over annual allowance taxed at 7.5%, for basic tax payer.
SAVINGS:£1,000 of interest on savings earned will be tax free for a basic rate taxpayer and £500
For higher taxpayer.
CORPORATION TAX:Profits of limited companies taxed at 19% as from 01st April 2018.
Employer pays 13.8%, National Insurance for employees over 21.
The Employment Allowance increases to £4000, this is a claim against the secondary Class I national Insurance contributions liability for Employers.
BUSINESS RATE:100% relief for a business that occupies a property with a value of £12,000 or less.
TERMINATION PAY: Payments up to £30,000 is tax free and no NI liability.
You may be able to delay paying Capital Gains Tax if you transfer your business to a company in return for shares.
Incorporation Relief means you won’t pay any tax until you sell (or ‘dispose of’) the shares.
VAT REGISTRATION: Vat registration limit if turnover exceeds £85,000.
From May 2019 most vat registered business, with a turnover of £85,000 must use recognised software to file vat return to HMRC. This is likely to change in April 2022 to include all vat registered businesses.
KNOW THE LAW:
UNFAIR DISMISSAL: You must have a good reason to dismiss someone and show that you have been fair in the way you have acted. This means:
· Informing the employees of the problem you have with their conduct or performance
· Holding a meeting to discuss the problem
· Allowing the employee to be accompanied
· Deciding on appropriate action
· Providing employees with an opportunity to appeal
NOTICE: an individual is entitled to one week’s notice if you wish to dismiss them. This notice rises to two weeks after two full years and continues to increase by one week per year up to a maximum of 12 weeks. Notice period can be extended by agreement.
HOLIDAY ENTITLEMENT: employees are entitled to holiday leave from their first day of employment.
Maternity leave: an employee has the right to 52 weeks maternity leave regardless of their length of service.
AGENCY WORKERS:are entitled to the same basic conditions of employment – notably pay & holidays – as comparable to permanent employees after a 12 week qualifying period.
WORK PLACE PENSION:
Every employer must set up & contribute to a workplace pension for every eligible job holder. To be eligible a job holder must be age 22 or earn an excess of £10,000. Employer will contribute a 3% and employees 5%.
The Check Employment Status Tax tool (CEST) is already available for organisations and contractors to consider the appropriate employment status for tax for contracts running beyond 6 April 2021. HMRC will stand by the results given by the CEST tool, provided it is used in accordance with their guidance and the information entered is accurate, and remains accurate. This is regardless of when the tool is used ahead of April 2021, this means you can already use the tool for engagements that start in April 2021 onwards.