TaxAngles- July 2022 Edition
TaxAngles- July 2022 Edition
TaxAngles- July 2022 Edition
Loans to Directors in Close Companies
In close companies, directors often have transactions with the company, such as loans or payments. Tax consequences arise if the director's loan account is overdrawn or if a loan remains unpaid at the corporation tax due date. The company must pay tax on the overdrawn balance if the director's account is not cleared, and the rate of Section 455 tax has increased from 32.5% to 33.75% from April 2022.
National Insurance Changes for Self-Employed
Self-employed individuals pay Class 2 and Class 4 National Insurance contributions. The lower profits limit for Class 4 contributions has increased to £242 per week from July 2022. The starting point for Class 2 contributions has also been raised to align it with Class 4 contributions, benefiting self-employed earners with profits between the thresholds.
Paying Mileage Allowances at Approved Rates
Employers can pay tax-free mileage allowances to employees at approved rates, but with rising fuel prices, it may no longer be a cost-effective option. The approved mileage rates have not been updated since 2012, while fuel prices have significantly risen. Employers can opt to reimburse actual costs but may face challenges in record-keeping.
