P11D Question

[Haydn1971]

Hi there

I've worked as a "freelancer" for several years, setting up a Ltd company with myself as "Director" last April in response to the changes in tax laws for contractors working through "umbrella companies".

My own records show that I've only ever submitted a P11D once in 2004/5, indicating an expense claim for just £212, but reading through the notes on the P11D_Guide, I'm getting the feeling that I need to be filling in a P11D this year because I'm now classed as a "director", or have I got the wrong end of the stick ?

For the record, I've had about £2028 in expenses this year, covering IT hardware, software, stationary, books, maps and stamps - plus about £3400 in mileage

Cheers in advance

Haydn

 

[amco]

Hi Haydn
Yes you should do a P11d filling in the items you listed however you can also list these items when doing your tax return under the employment section.If you need any help message me.
Graeme

 

[elaine@cheapaccounting]

Have a read of this for what is allowable etc:

http://www.hmrc.gov.uk/guidance/p11dguide.pdf

and this should help:

http://www.hmrc.gov.uk/guidance/480.htm

 

[yorkshirejames]

last April in response to the changes in tax laws for contractors working through "umbrella companies".

I think you're a little confused here, the changes were not to umbrella companies (which remain, in my view, the recommendation for people in your type of situation) - they were to managed service companies, which generally means the sort of company set up for you by the likes of First Contact et al.

Others on here will disagree, but your own limited company is potentially a riskier option than being an employee of one of the reputable umbrellas (who have a properly drafted HMRC dispensation).

In respect of your present query, I second what Elaine and Amco have said.

 

[Kent Accountant]

If you follow Elaine's link, you will see that it is unnecessary to include mileage payments on a P11D provided they are paid only for business purposes within the approved mileage rates of 40p per mile for the first 10,000 miles and 25p per mile thereafter

 

[Haydn1971]

Yes you should do a P11d filling in the items you listed

Cheers for that

 

[Haydn1971]

Have a read of this for what is allowable etc: http://www.hmrc.gov.uk/guidance/p11dguide.pdf

I'm a technical chap who works with government statutory instruments, dft guidence and volumes of highways agency design and specification manuals that are all written in double dutch - I can take these in my stride

I've got the above doc, but my eyes just seem to glaze over at the terms and language - perhaps it's becuase all these sort of documents assume a slither of knowledge to begin with - I'm sure the documents I use to design highways and make legal orders would have the same effect on accountants ;¬)

 

[Haydn1971]

I think you're a little confused here, the changes were not to umbrella companies (which remain, in my view, the recommendation for people in your type of situation) - they were to managed service companies, which generally means the sort of company set up for you by the likes of First Contact et al.

To be fair, for the "contractor" managed service companies and umbrella companies are essentially the same thing from a contractor point of view - the advice wafting around in April 2007, generally pushed many like myself into setting up limited companies and using the former MSC as a outsourced means of invoicing etc...

I started down the route of going Ltd using the aid of a MSC, but fell foul of getting caught up with 1000's of other contractors under that firm doing the same thing, thus I set up independantly and learnt a lot from it - advice still seems clouldy, but being Ltd has focused my mind more on creating clients not pseudo employers, I now provide regular techical services for two clients with ongoing packages of work, I've a third who I complete tasks for on a ad-hoc basis, I've picked up several bits of work through third party clients - builders/developers/induviduals - I don't think I'd have put so much effort in had I still been under a MSC/UC

Others on here will disagree, but your own limited company is potentially a riskier option than being an employee of one of the reputable umbrellas (who have a properly drafted HMRC dispensation).

Perhaps this is still the case for contractors with single clients... my mind is focusing now on a business idea to streamline the consultation process that much of my work involves - I hope it will push me further away from being a pseudo employee and towards being a completely independant business working in my own office, employing my own staff and selling services to many different clients including the ones I have now

 

[elaine@cheapaccounting]

I'm a technical chap who works with government statutory instruments, dft guidence and volumes of highways agency design and specification manuals that are all written in double dutch - I can take these in my stride

I've got the above doc, but my eyes just seem to glaze over at the terms and language - perhaps it's becuase all these sort of documents assume a slither of knowledge to begin with - I'm sure the documents I use to design highways and make legal orders would have the same effect on accountants ;¬)

And that is why you do what you do and I do what I do

 

[Haydn1971]

http://www.hmrc.gov.uk/guidance/480.htm

Reading through this guidence suggests to me that I don't need to supply a P11D - All the expences incurred where assets bought for the company use and all the mileage was incurred in the course of travelling to sites and temporary locations for the business.

Also, I pay myself interim dividends each week, i.e. Pay myself min wage, take off IT & NI, then add my business expences claimed, then take out about 60% of what is left as a dividend leaving enough to cover VAT and Corp Tax - should the dividend be on the P11D or is that dealt with differently - for the record, I've had about £22k in dividends for 2007/8

Any thoughts ?

 

[Jenni384]

Dividends don't go on P11D.

 

[Kent Accountant]

Dividends don't go on P11D.

But I don't know that I would pay them weekly.

I have no "professional" reason for saying that except that if the Revenue were to challenge low salary and regular dividends, I think that they may start on someone paying weekly dividends.

Do you prepare weekly minutes and dividend vouchers :|

 

[Haydn1971]

But I don't know that I would pay them weekly.

It how I've been paid for the last 6-7 years, it's also how all the people in my situation are paying themselves too... My accountant didn't see a provblem with it when I started the business up - should I be referring to them as dividends ?

Do you prepare weekly minutes and dividend vouchers :|

No to weekly minutes, but the dividend vouchers is an interesting thought - how should this work in your mind ?

 

[elaine@cheapaccounting]

See the sticky on this forum - for a link on dividends

 

[yorkshirejames]

Perhaps this is still the case for contractors with single clients... my mind is focusing now on a business idea to streamline the consultation process that much of my work involves - I hope it will push me further away from being a pseudo employee and towards being a completely independant business working in my own office, employing my own staff and selling services to many different clients including the ones I have now

Absolutely, you are clearly doing the right things.