Key Tax Points You Need to Know
1 Employment Allowance
This is increasing to £3,000 from £2,000 from April 2016. However, sole director companies will no longer receive any of the allowance. Consideration should be given to appointing another director of a spouse/partner.
2 Savings Income
For basic rate tax payers, from April 2016 interest will be paid gross and the first £1,000 will be tax free. Dividends will no longer be paid with a tax credit and up to £5,000 will be tax free. So these two, together with the personal allowance of £11,000 will mean that is possible to earn £17,000 without paying any tax.
3 Self Employment
(i) Control – does the employer have significant control over you
(ii) Mutuality of obligations – Does the employer have to offer work and you are obligated to perform it
(iii) Substitution – who decided who can do the work if you are unable to do it?
(iv) Insurance – Do you pay public liability, professional indemnity and product liability insurance?
(v) Mistakes – Are you require to correct and rectify your work in your own time, for no further payment?
(vi) Does a proper self-employed contract exist?