Q1. The payroll for my business has increased during 2022/23, so the employer’s NIC bill topped £100,000 for the first time. Does this mean I can’t claim the Employer’s Allowance for 2023/24? Is there anything I can net off against the NIC liability to bring it down below the £100,000 threshold?
A: You are correct that you will not be able to claim the Employer’s Allowance of £5,000 for 2023/24 as your employer’s NIC liability for the previous tax year (2022/23) has equalled or exceeded £100,000. There is no mechanism for setting off any other liability to reduce the total of the Employer’s NIC for this calculation. However, you shouldn’t include any employer’s NIC on “deemed payments” to contractors caught by the off-payroll working rule.
Q2. Can I invest £100,000 on behalf of my company in a new savings account designed for individuals, to take advantage of a higher interest rate? I plan to return the capital plus all interest directly to the company’s account.
A: You can do this, but you need to be honest with the bank that the company is the ultimate owner of the funds, and you are acting as a nominee for the company for that account. Transfer the money directly from the company’s account into the new savings account and do not mix it with any private savings.
The company’s board of directors should document what is happening to the funds and approve the transfer. This needs to be made clear that the transfer is not a loan to yourself as an individual. Taking a loan from your company that remains outstanding for more than 9 months after the company’s year-end will trigger a Section 455 tax corporation charge, and a beneficial loan charge for you personally.
Q3. My father died suddenly so his sole-trader business ceased at that point. I am the executor of his Will and I appointed a solicitor to collect the debts due on his outstanding sales invoices after his death. The business was taxed on a cash basis. How should I account for the sales income and expenses received after the business ceased?
A: As your late father used the cash basis all the business expenditures paid out and sales income received before his death should be reported on his personal tax return drawn up to the date of death.
The cash received for the business after the date of death should be reported by you as executor of the estate on a tax return for the estate. The costs of collecting those sales debts are deductible against that sales income.
