Onboarding FAQs - CIGMA Accounting

faq For individuals

FAQ

This FAQ will often refer to a “tax year”. A tax year is the period relating to tax, which works on a different timescale to the calendar year. Each tax year begins on the 6th of April, and ends on the 5th of April the following year. Understanding this term is vital to comprehending the rest of the document.

When can I start preparing my self-assessment?

You can start preparing your self-assessment for each tax year after the end of said tax year.

When do I need to submit my self-assessment by?

A self-assessment must be submitted online to HMRC by the 31st of January the year after the relevant tax year, however we recommend preparing the relevant documents and information well in advance to avoid any unexpected delays, and thus prevent late submissions and late filing penalties.

What do I need to provide to CIGMA Accounting?

Essentially, we require evidence of all of your income and expenses. While each case is specific to the client, here are some common documents we require:

If you work as PAYE, you will need to provide your P60 and March payslip, alongside your P11D, which is provided by your employer if you receive certain company benefits. Speak to your employer if you are missing any of these documents.
If you are self-employed, or receive rental income, you need to provide us with your bookkeeping showing all of the income and expenses that has gone through your business. If you have not prepared your bookkeeping, we can provide you with a bookkeeping spreadsheet on Microsoft Excel to fill in.

Additionally, we have provided a general guide as to the documents and information we require (attached separately). If you are unsure of anything, please do not hesitate to contact us.

I left a job part-way through the tax year. Do I need to provide any additional documents?

Yes, you will need to provide a P45 from each employer you left during the relevant tax year, which you should have received from your employer when leaving the workplace.

I’ve received my bookkeeping spreadsheet, what do I need to do?

The purpose of your bookkeeping spreadsheet is to make the type of transactions going in and out of the business bank account clear. Whenever money goes out of the company to pay for a business expense, the expense should be given a category (such as equipment, office CIGMA Accounting Ltd supplies, bank charges etc.), and the date, supplier name, and price of the expense should be entered in the spreadsheet. Income must also be included in the spreadsheet.

My business is VAT registered, do I need to do any extra bookkeeping?

If your business is VAT registered, we will send a bookkeeping spreadsheet that contains extra columns for the income/expense amount excluding VAT and the VAT amount, as you will need to declare this on your quarterly VAT return.

What expenses can I claim to reduce the amount that I will be taxed on?

Any expense that is primarily for the purpose of the business can be claimed, for example, the purchase of office supplies. You can find out more about expenses your company can claim through the following link: https://cigmaaccounting.co.uk/what-is-an-allowable-expense/

Do I need to keep receipts for my bookkeeping?

Yes. Receipts must be kept for 6 years in case of an audit from HMRC.

faq For limited companies

Who owns a limited company?

A limited company is owned by its shareholders who own the shares of the company. Directors are responsible for running the company. It is possible for a director to also be a shareholder.

How is my payslip calculated?

The amount of salary we provide directors is dependent on the threshold for National Insurance contributions. Currently, £11,908 is the maximum income a company employee can receive in a year before the employee starts paying National insurance contributions. However, the employer (in this case the limited company) is required to pay National insurance contributions. An employee of one (1) director company can earn up to £8784 per year before the employer needs to start making National insurance contributions. However, for two (2) director companies, if both directors earn at least £11,908 per annum, the first £5,000 of Employer National insurance contributions is covered by a National insurance allowance and thus the directors do not need to pay National insurance on that amount. Please make sure to check your payslip each month to confirm whether you need to pay Employers National insurance.

I left a job part-way through the tax year (6th APR-5th APR). Will this affect my salary as a director?

If you earned under £40,000 during your previous employment, we would provide you with a salary of £732 per month. However, please note that if you received anything above £12,570 from your previous employment, you have exceeded your personal allowance and will need to pay 20% on any amount received above the threshold. For example, if you received £35,000 from April to August from your previous employment, we would provide you with a salary of £732 per month starting from September until the end of the tax year (£40,124 for the year). However, 20% of the £27,554 over the £12,570 threshold will be deducted as income tax.

How much dividends can I take out of the company?

You can take up as many dividends as are available in the company, however, we recommend taking out £38,092 in a single tax year. This is because receiving a total income of above £50,000 (if your yearly salary is £11,908) will result in any income received above the £50,000 threshold being taxed at a higher rate and thus will not be tax efficient.

I’ve received my bookkeeping spreadsheet, what do I need to do?

The purpose of your bookkeeping spreadsheet is to make the type of transactions going in and out of the business bank account clear. Whenever money goes out of the company to pay for a business expense, the expense should be given a category (such as equipment, office supplies, bank charges etc.), and the date, supplier name, and price of the expense should be entered in the spreadsheet. Income must also be included in the spreadsheet.

My company is VAT registered, do I need to do any extra bookkeeping?

If your company is VAT registered, we will send a bookkeeping spreadsheet that contains extra columns for the income/expense amount excluding VAT and the VAT amount, as this will be required for your quarterly VAT return.