wealth matters tax saving strategies

Crunching your tax!Darren Fell – co-Founder, MD Crunch.co.uk

21/07/2010 1Visit www.crunch.co.uk, the next generation of accountants

Key thoughts on the budget

• Labour Budget is still law

• NI is still rising 8 to 9% (think of both budgets together)

• NI increase 2011- still more tax efficient - Limited route

• Employers NI to be increased 1% to 13.8%. Even more

important to be tax efficient on payroll

21/07/2010 Visit www.crunch.co.uk, the next generation of accountants 2

Other key tax points…

• VAT changes 4th January – add to your software

• IR-35 – A possibility it could be worse - add NI to Ltd

dividends for small businesses?

• Annual investment allowance - buying equipment -

reducing first year allowance from £100k to £25k!


Back to basics

• Advantages of Flat rate VAT

• Many contractors still use Standard VAT

• Fall under £150k turnover? You can benefit…

• Make margin on every invoice, from HMRC!

• Still claim on capital expenditures over £2k (inc VAT)

• The mechanics behind flat rate….


Under the hood - the Flat Rate sectors…


Flat rate, it’s use…

• Example at £148k turnover:

• First year saving: £5,032

• Example at £68k turnover:

• First year saving: £1,513

• Metric’s across Crunch’s hundreds of contractors:• 66% are VAT registered

• 70% are Flat Rate VAT


Paying Yourself…

• Contractors are NOT paying themselves tax efficiently

• Been poorly advised to pay higher salaries;

• avoid glare of HMRC and a potential IR35 investigation

• Pay up to NI threshold, £5,715

• Many contractors sit on £22k salaries, extra tax?…next


The mechanics…a £3,457 tax saving!


Other useful info…

• Slides available tomorrow - twitter &crunch.co.uk

• Need a personal calculation? see feedback forms

• Wide ranging advice: www.freelanceadvisor.co.uk



Any Questions?

wealth matters tax saving strategies

Economy & Finance