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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Hi. I havent worked in the UK since 2003. I set up a business

Customer Question

Hi. I haven't worked in the UK since 2003. I set up a business abroad which didn't work out, came back, had 2 children and lived off my husband's savings. I have now started a business and registered a limited company with 2 partners and I will earn a salary from this month. Will my tax code be the same as when I left work in 2003?
Submitted: 4 years ago.
Category: Tax
Expert:  TonyTax replied 4 years ago.

Hi.

The basic tax code for an individual who is under 65 years of age and has one job or PAYE source of income for 2012/13 is £810L. The personal allowance for 2012/13 is 8,105.

If you haven't done so already, you should set up a PAYE scheme for your company which you can do online here. Strictly, until you receive tax codes yourself and your business partner, you should use an emergency tax code, 810L Week 1 or 810L Month 1. What that means is that you get 1/52nd or 1/12 of your personal allowance against each week or month's pay until you are each issued with regular 810L tax codes. The regular tax codes will give you the unused allowances from 6 April 2012 to the date they are first used so, depending on how much you are paying yourself, you may pay no tax for a while or get back some of the tax you overpaid while using a Week 1 or a Month tac code.

Given that you have been out of the UK, you may receive a letter from the tax office asking you what you have been doing work wise since 2003 which should not be a problem for you.

Let me know if you have any more questions or need clarification of any part of my answer.

Customer: replied 4 years ago.

Hi, Thank you for your answer. However, I did move back to the UK in 2010. As a small business, should I pay myself below my personal allowance to start with? My company is paying my childcare of £320 at the moment, should I include this in my pay or leave it as a separate allowance? Or do I just pay what is in our financial forecast, which is £1000 per month?


I hope I haven't asked too many questions!! :-)


 

Expert:  TonyTax replied 4 years ago.
Ask as many questions as you like.

The childcare costs should be taxed and subjected to NICs as additional salary. See here.

If you are a shareholder you could treat the "pay" as dividend (share of profit) until you get a PAYE scheme set up or take less than the personal allowance each month (£675) including the child care costs so as to have no tax liability. If you kept it below £632, you'd avoid NICs too. You don't have to stick rigidly to the forecast.

I'd recommend you buy some inexpensive payroll software to look after your PAYE procedures which are set to become more onerous from April 2013. I cannot directly recommend any product but Google "cheap PAYE software". You will be pleasantly surprised at what you can get for £100 or so.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15709
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 4 years ago.

Thank you so much for your advice.

Expert:  TonyTax replied 4 years ago.
Thanks for accepting my answer and good luck with your new business.

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