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Limited Company Contractors FAQ - November 2021

Limited Company

Here are the most frequently asked questions we've received from Limited company contractors in November 2021, with answers from the experts at Orange Genie Accountancy:

Guide to opening and running your limited company: click here to download>>

What is the annual party allowance?

You can hold an annual party such as a Christmas party or summer BBQ and claim the amount through your Limited Company as a tax deductible expense. To qualify as being allowable, it would need to be open to all employees and the total amount cannot exceed £150 per person, this also applies to online or virtual parties. The annual party allowance can be split across multiple annual events as long as the combined total does not exceed the £150 per head.

Should I be withdrawing more dividends before the tax increase in 2022/2023?

If your company has sufficient reserves available to withdraw as dividends and you are expecting to be a higher rate earner in 2022/2023, you may want to consider withdrawing more dividends before the 5th April 2022. Higher rate dividends would be taxed at 32.5% (2021/2022) as opposed to 33.75% (2022/2023). By bringing the dividends into an earlier tax year (2021/22) you would be paying the lower amount of tax on these earlier (31/01/2023) than you would if you took them after the 6th April 2023 at the increased rate of 33.75% (31/01/2024). Speak to your accountant to decide if this is right for you.

Are open bank feeds in FreeAgent secure?

Yes - The open bank feed APIs connecting your bank to FreeAgent have been built by the banks themselves and went live after extensive testing in January 2018. The APIs provide a secure way to transfer data within the bank’s secure technology platforms to your FreeAgent portal. For a third party to access open banking APIs they would have needed an independent audit proving that their systems and security controls were up to the FCA's standards. One key benefit of open banking APIs is that you can authorise third-party access without having to reveal your login details to anyone other than your bank.

 

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