Home / Tax Tips & Tools 2023/24 Popular Tools
A model to compare the NI payable for an employee and employer, for the self-employed paying Class 4 NI, and tax on dividends following the introduction of the Social and Health Care levy from April 2022. This will quickly illustrate the effect of the levy when clients (and their employees!) query the increased deductions.
This has long been a firm favourite of tax professionals. The tax savings from incorporation have gradually diminished in recent years. We are now at the stage where in certain circumstances, where profits are high and extraction of the funds is also high, the incorporation route is actually more expensive. This tool highlights the “headline” tax savings/costs of adopting an incorporation strategy. This model becomes even more valuable in 2023/24 where the dividend v salary extraction becomes even more complex!
It is well known that the optimal strategy for extracting company funds is using a low salary and taking the remaining as dividends. However, what constitutes a “low” salary, and in what circumstances might it be beneficial to pay at the rate of £12,570 p.a. instead of £9,100 p.a? And what are the potential savings? This tool will help answer those questions.
Allied to the above models the bonus v dividend model illustrates the effects of additional take home pay and the cost implications.
It can be beneficial to pay interest on director’s loan accounts when they are in credit. With the first £1,000 or £500 of interest tax free, and the possibility of utilising the £5,000 savings allowance, this is a good “planning point” and results in corporation tax savings, and often personal tax repayments for the director. This model calculates the credit interest. A further tool also included is the ‘Interest on overdrawn loan accounts’, which calculates interest due on Directors loan accounts.
Calculating the IHT is not as simple as listing the assets and applying a 40% tax rate! The IHT calculator takes into account lifetime gifts, succession relief and various other quirks in the IHT regime.
There are several payroll models which can be used to calculate pay or assist in the audit process when checking calculations. There are also tools to convert Net pay to Gross and some have Scottish income tax rates built in.
This can be used for any asset, but is particularly effective when dealing with properties, which may have complications such as periods of occupancy, periods of letting, etc. This model takes into account all these peculiarities.
For smaller clients, the VAT flat rate can have a significant effect on the overall VAT paid and substantial savings can be made. These tools help compare the standard rate versus flat rate to both prove and quantify the benefits of electing one way or the other.
The VAT Scale Charge on fuel changes every year, and the amount varies during the year based on the co2 emissions of a vehicle. When clients change their vehicle, the scale rate is likely to change. This is an area that clients either totally overlook or use the same figures as the previous year. This tool identifies the correct rate to ensure they pay the appropriate amount of tax.
Advising clients on income tax payable/repayable can involve the creation of tables or extensive use Word documents, and possibly needs manipulation each year. This Excel based tool avoids those issues, is a “professional looking” document, and incorporates a payslip for use of paying by cheque.
Which option is best – in terms of practicalities, efficiency, tax and cashflow? Use this tool to test the various scenarios.