Deputies: manage a Court Funds Office account

Overview

You may need to manage a Court Funds Office account for someone if you’re their property and affairs deputy and you’re authorised by the Court of Protection to look after money on their behalf.

Check the court order that appointed you as deputy - it tells you what you’re authorised to do.

You’ll need to apply on behalf of the person you’re deputy for (someone) to:

manage an account that was opened for them (someone) by court order, for example for money they (someone) received from a court case

open an account for them (someone)

They (someone)’ll get a special account with the Court Funds Office (Court Funds Office).

Your responsibilities

The account (an account that was opened for them (someone) by court order) belongs to the person you’re deputy for (someone). You’re the only person who can manage it (an account that was opened for them (someone) by court order) on their (someone) behalf.

You must keep to your responsibilities as a deputy when you’re managing the account (an account that was opened for them (someone) by court order).

Check the court order that appointed you as deputy - it (the court order that appointed you as deputy) tells you the limits on what you can and cannot do with the account (an account that was opened for them (someone) by court order).

Apply

You need to apply to:

open an account for someone

manage an account for someone

You must be appointed by the Court of Protection as the person’s (someone) property and affairs deputy.

If your application is successful, you’ll be able to make withdrawals from the bank account that you run on behalf of the person whose affairs you manage (someone).

Check the details on the court order that appointed you as deputy - you’ll need the date of the order (the court order that appointed you as deputy) and the case number.

Fill in form CFO A to apply for authority to make withdrawals - give your bank account details and tick the ‘New details’ box.

Attach a copy of your bank statement (less than 3 months old) or a letter from your bank to confirm your bank account details.

Fill in form CFO L to pay money in to the account at the same time as applying - attach a cheque made payable to the ‘Accountant General of the Senior Courts’.

Send forms and attachments together with a copy of the original court order that appointed you as deputy (the court order that appointed you as deputy) - it (the court order that appointed you as deputy) must have a seal.  The address is on the forms.

You’ll get a letter from the Court Funds Office within 5 working days to confirm that you’re set up to manage the account (an account that was opened for them (someone) by court order).

Your form will be returned if your application cannot be processed - you’ll be told what you can do to fix this.

Manage an account

A Court Funds Office (the Court Funds Office) account is called a ‘special account’ if the account holder has a deputy.

Statements

As the deputy, you’ll get statements in April or May and in October or November each year.

You can also ask for a statement at any time by contacting the Court Funds Office.

Interest and tax

Special accounts currently pay 0.1% interest. The rate is not fixed - it is set by the Lord Chancellor.

Tax is not deducted from special accounts. The person you’re deputy for must pay income tax if the interest is more than their tax allowance.

You’ll also get tax vouchers (for tax returns) with your April statement.

Change of address

Write a letter to the Court Funds Office to tell them (the Court Funds Office) if your address changes so you can keep getting statements and tax vouchers.

Investments

You can invest in the stock market using money from the Court Funds Office (the Court Funds Office) account you manage if it:

holds £10,000 or more for the person you’re deputy for

is likely to hold the money (£10,000 or more) for 5 or more years

The Court Funds Office makes stock market investments in companies using the Equity Tracker Index Fund (ETIF).

Write to the Court Funds Office asking them (the Court Funds Office) to invest the sum you require in the ETIF (the Equity Tracker Index Fund (ETIF)).

Check the value of the ETIF (the Equity Tracker Index Fund (ETIF)) on the Financial Times website.

Tax

Tax is deducted from dividends on investments. However, if the person you’re deputy for has a high income, they (The person you’re deputy for) may need to pay more income tax on interest or dividends from the investments.

They (The person you’re deputy for) must also pay Capital Gains Tax if their (The person you’re deputy for) investments (the investments) are sold for a difference in value that’s more than their (The person you’re deputy for) allowance.

Deposits

You can pay money in to an account after you apply to manage the account.

Check the details on the court order that appointed you as deputy - you’ll need the date of the order and the case number.

Fill in form CFO L. You must physically sign the form - this is also known as a ‘wet signature’. Electronic signatures will not be accepted.

Write a cheque for the amount you’re paying in, payable to the ‘Accountant General of the Senior Courts’.

Attach a copy of the original court order that appointed you as deputy (the court order that appointed you as deputy) (it (the court order that appointed you as deputy) must have a seal) and send it (the court order that appointed you as deputy) with the form and cheque to the address on the form.

You’ll get a letter from the Court Funds Office within 5 working days to confirm that it (the Court Funds Office)’s processed your deposit.

Your form (the form) will be returned if your deposit cannot be processed - you’ll be told what you can do to fix this.

Withdrawals

You can set up one-off withdrawals or regular withdrawals into the bank account that you run on behalf of the person whose affairs you manage after you apply to manage the account (an account).

You can only make a payment to another bank account (for example to a solicitor’s account to pay fees) if you have a court order from the Court of Protection saying you can do this.

You can only make withdrawals within limits set by the Court of Protection - check the court order that appointed you as deputy.

Set up payments

Check the court order that appointed you as deputy - you’ll need the date of the order (the court order that appointed you as deputy) and the case number to fill in payment forms.

Fill in:

form CFO P to make a one-off payment to your bank account

form CFO R to set up or change a regular payment to your bank account

form CFO 205 to make a one-off payment to another bank account

You must also fill in form CFO A if your bank account details have changed – tick the ‘amending details’ box and attach either:

a copy of a bank statement (less than 3 months old)

letter from your bank confirming your new bank account details

Send forms by post. The address is on the forms. You’ll get a confirmation letter from the Court Funds Office within 5 working days.

One-off payment to your bank account

A cheque will be paid into your bank account within 5 days. The money will take 3 working days to clear.

If you’re withdrawing money for a gift or charitable donation, fill in form CFO PG and send it with form CFO P.

Regular payment to your bank account

Use form CFO R to set up, amend, renew or stop a regular payment - tick the box on the form that applies.

Specify the number of months you want a regular payment to continue (up to 23 months).

The Court Funds Office automatically renews regular payments that are set up to continue for 23 months - you’ll get a letter to remind you 1 month before renewal.

Payment to another bank account

Ask the person or company the payment (Payment to another bank account) is for to sign form CFO 205. You must get a copy of a a bank statement (less than 3 months old) if you’re paying a person rather than a company.

Send it (form CFO PG) with an original copy of the court order authorising the payment – it must have a seal.

Stop managing or close an account

A new deputy can take over management of the account (an account) if you stop being a deputy or die.

You cannot hand over management of the account (an account) - only the Court of Protection can appoint a new deputy. The new deputy will then need to apply to manage the account (an account).

You stop being a deputy

Tell the Court Funds Office in writing if you stop being a deputy - send a copy of the letter to the Office of the Public Guardian and Court of Protection.

Close an account

You cannot close a Court Funds Office yourself (for example by moving all the money into another account) unless you have a court order that authorises you to do this.

If the person you’re deputy for dies the person dealing with the estate can apply for the money in the account (an account) to be paid out. The account (an account) will be closed.

The person you're deputy for dies (the person you’re deputy for)

Write to the Court Funds Office to tell them (the Court Funds Office) if the person you’re deputy for has died. Send a certified copy of the death certificate if you can get one.

You’ll need to include certain information depending on

who’s dealing with the estate

whether there’s a will

If you’re dealing with the estate

Ask for a Certificate of Funds when you write to the Court Funds Office about the death. This shows how much money is in the account and investments.

You’ll need this information to deal with the person’s (the person you’re deputy for) tax and estate (their (the person you’re deputy for) money, property and possessions)

If you’re not dealing with the estate

Tell the Court Funds Office who is dealing with the estate (the personal representative) and provide their (the person dealing with the estate) contact details.

The Court Funds Office will provide the personal representative (the person dealing with the estate) with information and the forms required to close the account (an account).

If the person (the person you’re deputy for) did not leave a will

If the person (the person you’re deputy for) died without making a will and has no living relatives, the Court Funds Office will contact the Treasury Solicitor or Solicitor for the Duchy of Cornwall or Lancaster. They will deal with the person’s (the person you’re deputy for) money, property and possessions (their (the person you’re deputy for) money, property and possessions) as an unclaimed estate.

Payments for funeral expenses

The personal representative (the person dealing with the estate) or the person who arranged the funeral can apply for funeral expenses to be paid to the funeral provider out of the account.

Fill in form CFO FE1.

Send it (form CFO FE1) to the address on the form (form CFO FE1) with the funeral provider’s (the funeral provider) invoice and a certified copy of the death certificate.

Funeral expenses must be in keeping with the value of the person’s (the person you’re deputy for) estate - they cannot include payments for:

headstones

refreshments at the funeral service

Payments for inheritance tax

The personal representative (the person dealing with the estate) can apply for inheritance tax to be paid to HM Revenue & Customs (HMRC) out of the account.

Fill in form CFO IHT1.

Send it to the address on the form (form CFO FE1) with the completed form IHT423 and certified copies of the death certificate and any will.


Make, register or end a lasting power of attorney

Overview

A lasting power of attorney (LPA) is a legal document that lets you (the ‘donor’) appoint one or more people (known as ‘attorneys’) to help you make decisions or to make decisions on your behalf.

This (appoint) gives you more control over what happens to you if you have an accident or an illness and cannot make your own decisions (you ‘lack mental capacity’).

You must be 18 or over and have mental capacity (the ability to make your own decisions) when you make your LPA (A lasting power of attorney (LPA)).

You do not need to live in the UK or be a British citizen.

This guide is also available in Welsh (Cymraeg).

There are 2 types of LPA:

health and welfare

property and financial affairs

You can choose to make one type or both.

There’s a different process in Scotland and Northern Ireland.

How to make a lasting power of attorney

Choose your attorney (you can have more than one).

Fill in the forms to appoint them as an attorney.

Register your LPA with the Office of the Public Guardian (this can take up to 10 weeks).

It costs £82 to register an LPA unless you get a reduction or exemption.

You can cancel your LPA if you no longer need it (your LPA) or want to make a new one.

Health and welfare lasting power of attorney

Use this LPA (Health and welfare lasting power of attorney) to give an attorney the power to make decisions about things like:

your daily routine, for example washing, dressing, eating

medical care

moving into a care home

life-sustaining treatment

It (Health and welfare lasting power of attorney) can only be used when you’re unable to make your own decisions.

Property and financial affairs lasting power of attorney

Use this LPA (Property and financial affairs lasting power of attorney) to give an attorney the power to make decisions about money and property for you, for example:

managing a bank or building society account

paying bills

collecting benefits or a pension

selling your home

It (Property and financial affairs lasting power of attorney) can be used as soon as it (Property and financial affairs lasting power of attorney)’s registered, with your permission.

Help deciding if you should make a lasting power of attorney

Contact the Office of the Public Guardian if you need help.

Choose your attorney

You can choose one or more people to be your attorney. If you appoint more than one, you must decide whether they’ll make decisions separately or together.

Who can be your attorney

Your attorney needs to be 18 or over. They could be:

a relative

a friend

a professional, for example a solicitor

your husband, wife or partner

You must appoint someone who has the mental capacity to make their own decisions.

Your attorney does not need to live in the UK or be a British citizen.

When choosing an attorney, think about:

how well they (an attorney) look after their (an attorney) own affairs, for example their (an attorney) finances

how well you know them (an attorney)

if you trust them (an attorney) to make decisions in your best interests

how happy they (an attorney) will be to make decisions for you

Read about an attorney’s responsibilities to help you with your decision.

You cannot choose someone who is subject to a Debt Relief Order or is bankrupt if you’re making a lasting power of attorney (LPA) for property and financial affairs.

If there’s more than one attorney

If you’re appointing more than one person, you must decide if they (more than one attorney)’ll make decisions:

separately or together - sometimes called ‘jointly and severally’ - which means attorneys can make decisions on their own or with other attorneys

together - sometimes called ‘jointly’ - which means all the attorneys have to agree on the decision

You can also choose to let them (all the attorneys) make some decisions ‘jointly’, and others ‘jointly and severally’.

Attorneys who are appointed jointly must all agree or they cannot make the decision.

Replacement attorneys

When you make your LPA you can nominate other people to replace your attorney or attorneys if at some point they cannot act on your behalf anymore.

Make a lasting power of attorney

You can make a lasting power of attorney (LPA) (a lasting power of attorney) online or using paper forms.

Either way, you need to get other people to sign the forms (paper forms), including the attorneys and witnesses.

You can get someone else to use the online service or fill in the paper forms (paper forms) for you, for example a family member, friend or solicitor.

You must register your LPA (a lasting power of attorney) or your attorney will not be able to make decisions for you.

It might take longer to make and register an LPA because of coronavirus (COVID-19). It will be quicker if you make it (a lasting power of attorney) and pay online.

Make an LPA online

Create an account to start your LPA.

You can:

get help and guidance at each step

save your forms and complete them later

review your answers and fix any mistakes

You need to print out the forms (your forms) and sign them (your forms) when you’ve finished.

Sign in to your account

Sign in to continue making your LPA (a lasting power of attorney).

Use the paper forms (paper forms)

Download the forms (paper forms) and print them (paper forms) out.

Signing the forms (paper forms)

You need to sign the forms (paper forms) before you send them (paper forms) off. They (paper forms) also need to be signed by:

the attorneys

witnesses

a ‘certificate provider’, who confirms you’re making the LPA (a lasting power of attorney) by choice and you understand what you’re doing

Everyone must sign the same original document. They cannot sign copies or use digital signatures.

Who can be a witness or certificate provider

Witnesses and certificate providers must be 18 or over.

Attorneys can witness each other sign, but they cannot:

witness you sign

sign as the certificate provider

You cannot be a witness if you’re the person appointing an attorney.

Get help

Ask the Office of the Public Guardian about help you can get if you:

do not have a computer or printer

want to use the online service but need some help

Register a lasting power of attorney

When you’ve made your lasting power of attorney (LPA), you need to register it (a lasting power of attorney) with the Office of the Public Guardian (OPG) (the Office of the Public Guardian).

It takes up to 15 weeks to register an LPA if there are no mistakes in the application.

You can apply to register your LPA (a lasting power of attorney) yourself if you’re able to make your own decisions.

Your attorney can also register it (a lasting power of attorney) for you. You’ll be told if they do and you can object to the registration.

Notify people

Before you register, send a form to notify people (LP3) to all the ‘people to notify’ (also called ‘people to be told’) you listed in the LPA (a lasting power of attorney).

They (people)’ll have 3 weeks to raise any concerns with OPG (the Office of the Public Guardian).

If you’re using the online service to make an LPA, it (the online service) will create and fill in the LP3 forms for you.

How to register

Apply to register as soon as you’ve sent forms to notify people.

To register, you need to sign your completed LPA form and send it to OPG (the Office of the Public Guardian).

If you create your LPA form using the online service, you will need to print it out to do this.

The address is also on the form (your LPA form). Make sure you include the original LPA form and the fee.

You can send a certified copy if you do not have the original form (the original LPA form). Write a covering letter to explain why you do not have the original (the original LPA form).

If you made your LPA (an LPA) with an older paper form

You can register by filling in form LP2 if you made your LPA (an LPA):

on forms LPA114 or LPA117 before 1 January 2016

on forms LP PA or LP PW before 1 April 2011

Otherwise you’ll need to make a new LPA.

How much it costs

It costs £82 to register each LPA unless you get a reduction or exemption.

This (costs) means it (register) costs £164 to register both a property and financial affairs LPA and a health and welfare LPA.

You can pay by:

credit or debit card

cheque

Make your cheque payable to ‘Office of the Public Guardian’ (the Office of the Public Guardian) and write your name on the back. Send it to OPG (the Office of the Public Guardian) with your forms.

If you make a mistake on your form

Depending on the type of mistake, OPG (the Office of the Public Guardian) may let you correct it and apply again within 3 months for £41.

Get a reduction or exemption

You can apply for a reduction if you earn less than £12,000. You might also be able to apply for an exemption if you’re on certain benefits, such as Income Support.

Download and fill in the application form. The form has more information about eligibility.

Certify a copy of a lasting power of attorney

You can confirm that a copy of your lasting power of attorney (LPA) (a lasting power of attorney) is genuine by ‘certifying’ it (a copy of a lasting power of attorney) if you’re still able to make your own decisions.

You or your attorney can use a certified copy to register your LPA (a lasting power of attorney) if you do not have the original form.

Your attorney can also use the certified copy (a certified copy) to prove they have permission to make decisions on your behalf, for example to manage your bank account.

How to certify a copy

Write the following text on the bottom of every page of the copy (a copy):

“I certify this (a copy) is a true and complete copy of the corresponding page of the original lasting power of attorney (a lasting power of attorney).”

On the final page of the copy (a copy of a lasting power of attorney), you must also write:

“I certify this (a copy of a lasting power of attorney) is a true and complete copy of the lasting power of attorney (a lasting power of attorney).”

You need to sign and date every page.

Other ways to certify a copy

Copies of your LPA (a lasting power of attorney) can also be certified by:

a solicitor

a person authorised to carry out notarial activities

Change your lasting power of attorney

You can ask the Office of the Public Guardian (OPG) to change your lasting power of attorney (LPA) (a lasting power of attorney) if it (a lasting power of attorney)’s been registered and you still have mental capacity to make decisions.

If you want to remove one of your attorneys

You will need to send OPG (the Office of the Public Guardian (OPG)) a written statement called a ‘partial deed of revocation’.

If you want to add another attorney you need to end your LPA (a lasting power of attorney) and make a new one.

Use the following wording. Replace the words in the square brackets with the relevant details.

Partial deed of revocation

“This partial deed of revocation (Partial deed of revocation) is made by [donor’s name] of [donor’s address].

1: I granted a lasting power of attorney for property and financial affairs/health and welfare [delete as appropriate] on [date donor (donor’s) signed the lasting power of attorney] appointing [name of first attorney] of [address of first attorney] and [name of second attorney] of [address of second attorney] to act as my attorney(s).

2: I hereby revoke [attorney’s name that you are revoking] ONLY from the lasting power of attorney and the authority granted to him/her.

Signed and delivered as a deed [donor’s signature]
Date signed [date]
Witnessed by [signature of witness]
Full name of witness [name of witness]
Address of witness [address of witness]”

Where to send a partial deed of revocation

Send the partial deed of revocation (a partial deed of revocation) to the Office of the Public Guardian (OPG) with the original LPA document. You must also tell your attorney or attorneys that you’re ending your LPA.

If your attorney’s details change

You must write to OPG (the Office of the Public Guardian (OPG)) if one of your attorneys has changed their:

name - by marriage or deed poll

address

You need to provide supporting documents, such as the original marriage certificate, with their (one of your attorneys) new name and address.

Do not make changes to your LPA document itself (the original LPA document), as it (the original LPA document) might become invalid. You must contact OPG (the Office of the Public Guardian (OPG)) to make changes to your LPA (LPA).

If one of your attorneys dies

You must tell OPG (the Office of the Public Guardian (OPG)) and send them (one of your attorneys):

a copy of their (one of your attorneys) death certificate

the original LPA

all certified copies of the LPA (LPA)

a return address where your documents can be sent back to

End your lasting power of attorney

You can end your lasting power of attorney (LPA) (LPA) yourself - if you have mental capacity to make that decision.

You need to send the Office of the Public Guardian (OPG) both:

the original LPA (the original LPA document)

a written statement called a ‘deed of revocation’

Use the following wording for the deed of revocation (a partial deed of revocation). Replace the words in the square brackets with the relevant details.

Deed of revocation

“This deed of revocation (a partial deed of revocation) is made by  [your name]  of  [your address].

1: I granted a lasting power of attorney for property and financial affairs/health and welfare (delete as appropriate) on  [date you signed the lasting power of attorney] appointing  [name of first attorney]  of  [address of first attorney]  and  [name of second attorney]  of  [address of second attorney]  to act as my attorney(s).

2: I revoke the lasting power of attorney and the authority granted by it.

Signed and delivered as a deed  [your signature]
Date signed  [date]
Witnessed by  [signature of witness]
Full name of witness  [name of witness]
Address of witness  [address of witness]”

You must be able to make your own decisions when you end your LPA.

You can also complain if you have concerns about your attorney, for example if they’re not carrying out their responsibilities properly.

Other ways a lasting power of attorney can end

Your LPA may end if your attorney:

loses the ability to make decisions - ‘loses mental capacity’

divorces you or ends your civil partnership if they’re your husband, wife or partner

becomes bankrupt or they’re subject to a Debt Relief Order (DRO) - if they’re a property and financial affairs attorney

is removed by the Court of Protection

dies

If your only attorney dies

Your LPA will end if your attorney dies and you have no replacement attorneys. You must tell OPG and send them:

a copy of their death certificate

the original LPA

all certified copies of the LPA (your LPA)

a return address where your documents can be sent back to

Your LPA can continue if:

there are other attorneys who can act ‘jointly and severally’ - but not if they are only allowed to act ‘jointly’

there are replacement attorneys

If you die

Your LPA will end automatically when you die. Your affairs will be looked after by your executors or personal representatives from that point, not your attorney.


Get a divorce

Check you can get a divorce

You can get divorced in England or Wales if all of the following are true:

you’ve been married for over a year

your relationship has permanently broken down

your marriage is legally recognised in the UK (including same-sex marriage)

the UK is your permanent home, or the permanent home of your husband or wife

If you do not want a divorce, you can get a legal separation so you can live apart without ending the marriage (your marriage). You might also be able to annul the marriage (your marriage). You can apply for separation or annulment during your first year of marriage.

This guide is also available in Welsh (Cymraeg).

Getting a divorce is different in Scotland and Northern Ireland.

Grounds for divorce

When you apply for a divorce you’ll need to prove that your marriage has broken down and cannot be saved. You’ll need to give one or more of the following 5 reasons (also known as ‘facts’).

Adultery

Your husband or wife had sexual intercourse with someone else of the opposite sex (committed adultery).

You cannot give adultery as a reason if you lived together as a couple for more than 6 months after you found out about it.

Unreasonable behaviour

Your husband or wife has behaved in such a way that you cannot reasonably be expected to live with them.

This could include:

physical violence

verbal abuse, such as insults or threats

drunkenness or drug-taking

refusing to pay towards shared living expenses

Desertion

Your husband or wife has left you for at least 2 years before you apply for divorce.

You can still claim desertion if you have lived together for up to a total of 6 months in this period (at least 2 years), but that will not count towards the 2 years (at least 2 years).

You’ve been separated for at least 2 years

You can apply for a divorce if you’ve been separated for at least 2 years before applying for divorce and you both agree to it.

Your husband or wife must agree in writing.

It may be possible for you to show that you’ve been separated while living in the same home as your wife or husband as long as you’re not living together as a couple (for example you sleep and eat apart).

You’ve been separated for at least 5 years

You can apply for a divorce if you’ve been separated for at least 5 years before applying, even if your husband or wife disagrees.

Before you apply

Before you send in your application, you and your husband or wife can choose to work out:

arrangements for looking after any children

child maintenance payments for any children

You can also divide your money and property. There’s a deadline if you want to make this legally binding.

You can usually avoid going to court hearings if you (you and your husband or wife) agree about children, money and property and the reasons for ending your marriage.

Get help agreeing on issues

You can use a mediator. Check if you can get legal aid to help pay for mediation.

You can also get advice on making agreements from:

organisations near you

Citizens Advice

If you’re married to more than one person

Contact your regional divorce centre if you’re married to more than one person (polygamy).

How to apply

To apply for a divorce you’ll need:

your husband or wife’s full name and address

your original marriage certificate or a certified copy (and a certified translation if it’s not in English)

proof of your name change if you’ve changed it since you got married - for example your marriage certificate (your original marriage certificate) or a deed poll

You must try to find your husband or wife’s current address if you do not know it. The court will need it to send them (your husband or wife’s) a copy of the divorce petition.

If you name the person your husband or wife committed adultery with, they (The court)’ll get copies of the paperwork.

Fee

You must pay a £550 fee to apply for a divorce. The way you pay depends on how you apply. Your fee will not be refunded after you are sent the notice that your application has been issued.

You may be able to get help with fees if you get benefits or are on a low income.

Apply online

You can apply for a divorce online.

You’ll need a debit or credit card to apply online.

Apply by post or in Welsh

Fill in a divorce application form D8 (‘divorce petition’) to start a divorce.

You can get help filling in the form at a Citizens Advice office.

Send 3 copies of the form to your nearest divorce centre. They’ll send one copy to your husband or wife.

You need to send 4 copies if you named someone your husband or wife committed adultery with.

Keep your own copy of the forms.

How to pay

You can either pay by:

debit or credit card - the divorce centre will call you to take payment

cheque - made payable to ‘HM Courts and Tribunals Service’

What happens after you apply

Your application will be checked. If it’s correct, you’ll be sent:

a notice that your application has been issued (sent out)

a copy of your application stamped by the divorce centre

a case number

This may take up to 10 days if you applied online or 1 month if you applied by post.

The court will send your husband or wife the divorce application (Your application) and an ‘acknowledgement of service’ form. Your husband or wife will need to respond to your divorce application (Your application).

If you named someone your husband or wife committed adultery with, they (Your husband or wife)’ll also be sent a copy of the application (Your application) and be asked to respond.

Your husband or wife responds

The acknowledgement of service form (an ‘acknowledgement of service’ form) asks your husband or wife if they:

agree with the divorce

intend to try to prevent the divorce (defend it (the divorce))

object to paying the costs (if you’ve claimed them)

Your husband or wife must respond within 8 days.

If they (your husband or wife) agree with the divorce

You can continue with the divorce by applying for a decree nisi.

If they (your husband or wife) defend the divorce

Your husband or wife will have to complete an ‘answer to divorce’ form to say why they (your husband or wife) disagree with the divorce. They (your husband or wife) must do this within 28 days of getting the divorce application (Your application).

If they (your husband or wife) do not submit an ‘answer to divorce’ form, you can continue the divorce by applying for a decree nisi.

If they (your husband or wife) do submit an answer to divorce in time, you may have to go to court to discuss the case.

Apply for decree nisi

You can apply for a decree nisi if your husband or wife does not defend your divorce petition.

A decree nisi is a document that says that the court does not see any reason why you cannot divorce.

If your husband or wife does not agree to the divorce, you can still apply for a decree nisi. However, you’ll have to go to a court hearing to discuss the case, where a judge will decide whether to grant you a decree nisi.

If you already have a hearing date, the court (court) will contact you and tell you how the hearing will take place.

How to apply

To get a decree nisi, read the guidance and then fill in the application for a decree nisi.

You must also fill in a statement confirming that what you said in your divorce petition is true.

There are 5 statement forms - use the one that covers the reason you’ve given for your divorce:

adultery statement

unreasonable behaviour statement

desertion statement

2 years’ separation statement

5 years’ separation statement

Attach a copy of your husband’s or wife’s response to the divorce petition (your divorce petition).

Getting a decree nisi

If the judge agrees, the court (court) will send you and your husband or wife a certificate. This may take several weeks.

The certificate will tell you (you and your husband or wife) the time and date you (you and your husband or wife)’ll be granted a decree nisi.

You (you and your husband or wife)’ll still be married after the decree nisi (a decree nisi) has been granted. You’ll have to wait 43 days (6 weeks and 1 day) before you (you and your husband or wife) can apply for a ‘decree absolute’ to actually end the marriage.

Your application is rejected

You (you and your husband or wife) may be sent a ‘notice of refusal of judge’s certificate’ form, saying why you cannot divorce.

The form will tell you what to do next. The judge may want more information in writing, or you may have to go to a court hearing.

You can get legal advice if there’s going to be a court hearing.

Apply for a decree absolute

The decree absolute (a decree absolute) is the legal document that ends your marriage.

You need to wait at least 43 days (6 weeks and 1 day) after the date of the decree nisi (a decree nisi) before you can apply for a decree absolute.

Apply within 12 months of getting the decree nisi (a decree nisi) - otherwise you will have to explain the delay to the court (court).

How to apply

To apply for a decree absolute, fill in the notice of application for decree nisi (a decree nisi) to be made absolute form.

If you want a legally binding arrangement for dividing money and property you must apply to the court (court) for this before you apply for a decree absolute.

Getting the decree absolute (a decree absolute)

The court (court) will check that:

time limits have been met

there are no other reasons not to grant the divorce

The court (court) will then send you both a decree absolute.

You’ll get your decree absolute (a decree absolute) within:

24 hours (Monday to Friday) if you applied online

10 days if you applied by post

If a solicitor is acting for you, the decree absolute (a decree absolute) will be sent to them. You’ll need to ask them for a copy.

Once you get the decree absolute (a decree absolute), you are divorced, no longer married and free to marry again if you wish.

Keep the decree absolute (a decree absolute) safe - you will need to show it (a decree absolute) if you remarry or to prove your marital status.

If you lose your decree absolute (a decree absolute), you can apply to the court (court) for a copy.

If you do not apply for the decree absolute (a decree absolute)

Your husband or wife can apply for the decree absolute (a decree absolute) if you do not. They’ll have to wait an extra 3 months to do this, on top of the standard 43 days.

If your husband or wife lacks mental capacity

You can apply for a divorce if your husband or wife ‘lacks mental capacity’ and cannot agree to a divorce or take part in the divorce case.

Your husband or wife will need someone to make decisions for them during the divorce (a divorce). The person who acts on their behalf is called a ‘litigation friend’. It can be a family member, close friend or someone else who can represent them.

Your husband or wife does not have a litigation friend

If there’s no one suitable and willing to be their (Your husband or wife) litigation friend, you can apply to the court (court) to appoint a litigation friend.

The Official Solicitor may agree to act as your husband or wife’s (Your husband or wife) litigation friend when there’s no one else to do this (‘litigation friend of last resort’).

How to apply

Check there’s nobody else suitable or willing to act as your husband or wife’s (Your husband or wife) litigation friend.

Check that there’s money available for any costs the Official Solicitor has to pay. Your husband or wife may be able to get legal aid.

Give the details of your husband or wife’s (Your husband or wife) doctor or other medical professional to the court (court) so it (court) can ask for a certificate of capacity.

If the Official Solicitor agrees to act as litigation friend for your husband or wife, you’ll be able to file for divorce.

Contact the Official Solicitor’s (The Official Solicitor) staff

Email or call the private family law team if you have an enquiry about divorcing someone who lacks mental capacity. They cannot answer general questions about divorce.


Accounts and tax returns for private limited companies

Overview

After the end of its financial year, your private limited company must prepare:

full (‘statutory’) annual accounts

a Company Tax Return

You need your accounts and tax return to meet deadlines for filing with Companies House and HM Revenue and Customs (HMRC).

You can also use them to work out how much Corporation Tax to pay.

Action | Deadline

File first accounts with Companies House | 21 months after the date you registered with Companies House

File annual accounts with Companies House | 9 months after your company’s financial year ends

Pay Corporation Tax or tell HMRC (HM Revenue and Customs (HMRC)) that your limited company does not owe any | 9 months and 1 day after your ‘accounting period’ for Corporation Tax ends

File a Company Tax Return | 12 months after your accounting period for Corporation Tax ends

Your accounting period for Corporation Tax (your ‘accounting period’ for Corporation Tax) is the time covered by your Company Tax Return. It (your ‘accounting period’ for Corporation Tax)’s normally the same 12 months as the company financial year covered by your annual accounts.

Filing your accounts and tax return

You can file with Companies House and HMRC (HM Revenue and Customs (HMRC)) together or separately.

You must take additional steps:

at the end of your company’s first year

if you restart a dormant company

There are penalties for filing late with Companies House and HMRC (HM Revenue and Customs (HMRC)).

Filing accounts and tax returns

You file your accounts with Companies House and your Company Tax Return with HM Revenue and Customs (HMRC).

You may be able to file them (your accounts and tax return) together if you have a private limited company that does not need an auditor.

What you want to do | How you can do it

File accounts and tax return together | Use HMRC’s (HM Revenue and Customs (HMRC)) online service or accounting software

File accounts with Companies House separately | Send your accounts to Companies House online

File tax return with HMRC (HM Revenue and Customs (HMRC)) separately | Use HMRC’s (HM Revenue and Customs (HMRC)) online service or accounting software

You’ll need your:

HMRC (HM Revenue and Customs (HMRC)) online account details

company registration number

Companies House online account details

Corrections and amendments

Check what you must do to correct or amend your:

accounts

tax return

Using accountants or tax advisers to file for you

You can:

give your accountant or tax adviser your Companies House authentication code so they can file your accounts

appoint an agent to file your Company Tax Return

Apply to extend your accounts filing deadline

You can apply to extend your accounts filing deadline with Companies House if you cannot send your accounts because of an event outside your control - for example, if a fire destroyed company records before your filing deadline (your accounts filing deadline).

You must apply for the extension before your filing deadline (your accounts filing deadline).

Apply for an extension due to coronavirus (COVID-19)

You can apply for an immediate 3 month extension if your company is affected by coronavirus. You must apply before your filing deadline (your accounts filing deadline).

You may not be eligible if you’ve already extended your filing deadline (your accounts filing deadline), or shortened your accounting period.

How to apply

You can apply online or by post.

Apply online

To apply online you’ll need:

your company number

information about why you need more time

any documents you have that support your application

Apply by post

You can write to Companies House to apply for an extension. It is taking longer than usual to process applications because of coronavirus.

You should explain what’s happened and how much more time you’ll need to file your accounts.

You must apply to the correct office where your company is registered.


Cash basis

Overview

‘Cash basis’ is a way to work out your income and expenses for your Self Assessment tax return, if you’re a sole trader or partner.

Why use cash basis (‘Cash basis’)

If you run a small business, cash basis accounting (‘Cash basis’) may suit you better than traditional accounting.

This (suit) is because you only need to declare money when it comes in and out of your business. At the end of the tax year, you won’t have to pay Income Tax on money you didn’t receive in your accounting period.

When cash basis (‘Cash basis’) might not suit your business

Cash basis (‘Cash basis’) probably won’t suit you if you:

want to claim interest or bank charges of more than £500 as an expense

run a business that’s more complex, for example you have high levels of stock

need to get finance for your business - a bank could ask to see accounts drawn up using traditional accounting to see what you owe and are due before agreeing a loan

have losses that you want to offset against other taxable income (‘sideways loss relief’)

Talk to a tax professional (such as an accountant) or legal adviser if you need help.

Find out if you’re eligible to use cash basis (‘Cash basis’).

Who can use cash basis (‘Cash basis’)

You can use cash basis (‘Cash basis’) if you:

run a small self-employed business, for example sole trader or partnership

have a turnover of £150,000 or less a year

If you have more than one business, you must use cash basis (‘Cash basis’) for all your businesses. The combined turnover from your businesses must be less than £150,000.

If you use cash basis and your business grows during the tax year

You can stay in the scheme up to a total business turnover of £300,000 per year. Above that, you’ll need to use traditional accounting for your next tax return.

Who can’t use the scheme

Limited companies and limited liability partnerships can’t use cash basis.

There are also some specific types of businesses that can’t use the scheme:

Lloyd’s underwriters

farming businesses with a current herd basis election

farming and creative businesses with a section 221 ITTOIA profit averaging election

businesses that have claimed business premises renovation allowance

businesses that carry on a mineral extraction trade

businesses that have claimed research and development allowance

dealers in securities

relief for mineral royalties

lease premiums

ministers of religion

pool betting duty

intermediaries treated as making employment payments

managed service companies

waste disposal

cemeteries and crematoria

If you can’t use cash basis, you’ll need to use traditional accounting to work out your taxable profits.

Getting started

At the end of the tax year, work out your taxable profit from your cash basis income and expenses records.

Tick the cash basis box on the form when you send your return.

You can use cash basis for the 2013 to 2014 tax year onwards. If you’re sending a late tax return for tax years before this, you’ll need to use traditional accounting when working out your accounts.

Changing from traditional accounting to cash basis

Existing businesses using traditional accounting might have to make some adjustments when they switch to cash basis.

How to record income and expenses

You must keep records of all business income and expenses to work out your profit for your tax return.

Income

With cash basis, only record income you actually received in a tax year. Don’t count any money you’re owed but haven’t yet received.

You can choose how you record when money is received or paid (for example the date the money enters your account or the date a cheque is written) but you must use the same method each tax year.

All payments count - cash, card, cheque, payment in kind or any other method.

Expenses

Expenses are business costs you can deduct from your income to calculate your taxable profit.  In practice, this means your allowable expenses reduce your Income Tax.

Only count the expenses you’ve actually paid. Money you owe isn’t counted until you pay it.

Examples of allowable business expenses if you’re using cash basis are:

day to day running costs, such as electricity, fuel

admin costs, for example stationery

things you use in your business, such as machinery, computers, vans

interest and charges up to £500, for example interest on bank overdrafts

buying goods for resale

You can check what else counts as an allowable expense.

For the 2013 to 2014 tax year onwards you can also choose to use the simplified expenses scheme instead of calculating expenses for:

running a vehicle

working from home

making adjustments for living on your business premises

Cars and other equipment

If you buy a car for your business, you can claim the purchase as a capital allowance (but only if you’re not using simplified expenses to work out your business expenses for that vehicle).

Unlike traditional accounting, you claim other equipment you buy to keep and use in your business as a normal allowable business expense rather than as a capital allowance.

If you’re currently claiming capital allowances and want to switch to cash basis, HM Revenue and Customs (HMRC) have guidance on the changes you need to make.

Keep your records

You don’t need to send your records to HM Revenue and Customs (HMRC) when you send in your tax return but you need to keep them (your records) in case they (HM Revenue and Customs (HMRC)) ask to check them (your records).

VAT registered businesses

You can start to use cash basis if you’re VAT registered as long as your income is £150,000 or less during the tax year.

You can record your business income and expenses either excluding or including VAT. However, you must treat income and expenses the same way.

If you choose to include VAT, you have to record:

VAT payments you make to HM Revenue and Customs (HMRC)  as expenses

VAT repayments you receive from HMRC (HM Revenue and Customs (HMRC)) as income


Corporation Tax when you sell business assets

Overview

Your limited company usually pays Corporation Tax on the profit (‘chargeable gain’) from selling or disposing of an asset.

Company assets

Assets are things your company owns, such as:

land and property

equipment and machinery

shares

Who pays Corporation Tax

Corporation Tax on chargeable gains is paid by:

limited companies

most unincorporated associations, for example clubs and co-operatives

foreign companies with a UK branch or office

You pay Capital Gains Tax instead if you’re a self-employed sole trader or business partner.

Work out and report your gain

You’ll need to work out your gain to find out whether you need to pay tax.

Report your gains to HM Revenue and Customs (HMRC) when you file your Company Tax Return. How much tax you pay depends on any allowances and reliefs you claim.

There are different rules for intangible assets, for example intellectual property and business reputation (‘goodwill’).

Work out a chargeable gain

The gain (a chargeable gain) is usually the difference between what you paid for the asset (an asset) and what you sold it (an asset) for.

You’ll need to use the asset’s (an asset) market value if your business gave it (an asset) away, or sold it (an asset) for less than it was worth to help the buyer.

You can deduct any costs, for example solicitors’ fees or Stamp Duty.

Before you work out your gain you need to work out how much you would have paid for the asset (an asset) in today’s money using the HM Revenue and Customs (HMRC) Indexation Allowance.

This (paid) will make your gain smaller and mean you pay less tax.

How to work out the gain (your gain)

Work out the asset’s (an asset) value when it (an asset) was sold - this is usually the amount your company received.

Deduct the amount your company paid for the asset (an asset). If it (an asset) was not acquired in a normal commercial transaction you need to use the market value at the time.

Deduct any money your company spent buying, selling or improving the asset (an asset), for example solicitors’ fees and Stamp Duty. (You cannot deduct maintenance costs.)

If you had the asset (an asset) before December 2017, use HMRC’s (HM Revenue and Customs (HMRC)) Indexation Allowance December 2017 guide for the month when your company sold the asset (an asset). Then find the figure (‘inflation factor’) for the year and month when your company bought the asset (an asset). Multiply this by the amount you paid for the asset (an asset). Deduct the total from your profit.

If you made improvements to the asset (an asset), work out the effects of inflation in the same way. Deduct the total from your profit.

You now have your chargeable gain. You can ask HMRC (HM Revenue and Customs (HMRC)) to check your valuation by filling in a post-transaction valuation check form. Return it to the address on the form and allow at least 3 months for HMRC’s (HM Revenue and Customs (HMRC)) response.

If you make a loss when you sell an asset

You can reduce your total chargeable gains by deducting any capital losses.

You can only deduct capital losses from your chargeable gains - not from trading income or other profits.

The loss you can claim is reduced by any amount you’ve claimed as capital allowances.

Intangible assets

‘Intangible assets’ include intellectual property and business reputation (‘goodwill’).

How you’re taxed on gains from intangible assets depends on when your limited company first owned them.

After 31 March 2002

Include gains on intangible assets in your company’s business income (‘trading profits’) if your company acquired or created them after 31 March 2002. You pay Corporation Tax on trading profits.

Before 1 April 2002

Use the detailed guidance to work out gains on intangible assets or get help from a professional, like an accountant.

If your company’s intangible assets came from a change in business structure (for example from a business partnership or self-employed sole trader), use the date the assets were acquired or created before the structure change.


Pay Machine Games Duty

Overview

You must file your Machine Games Duty (MGD) return and make your payment within 30 days of the end of your accounting period. An accounting period is 3 months unless you’ve arranged with HM Revenue and Customs (HMRC) to use a different accounting period.

This guide is also available in Welsh (Cymraeg).

If the deadline falls on a weekend or bank holiday, make sure you file your return (your Machine Games Duty (MGD) return) and your payment reaches HMRC (HM Revenue and Customs (HMRC)) on the last working day before it (unless you’re paying by Faster Payments, debit card or credit card).

Pay now

Ways to pay

Make sure you pay HMRC (HM Revenue and Customs (HMRC)) by the deadline. You may have to pay a penalty and interest if you pay late.

The time you need to allow depends on how you pay.

You can no longer pay at the Post Office.

Same day or next day

online or telephone banking (Faster Payments)

By debit or corporate credit card online

CHAPS

At your bank or building society

3 working days

Bacs

By cheque through the post

Direct Debit - if you’re making a single payment and you’ve set up one for HMRC (HM Revenue and Customs (HMRC)) before

5 working days

Direct Debit - if you’re making a single payment and you have not set up one for HMRC (HM Revenue and Customs (HMRC)) before

10 working days before you file your first return

Direct Debit - if you’re setting up an automatic payment (known as a ‘variable payment plan’)

Penalties for late returns

You’ll get a penalty if you miss the deadline for filing returns.

When the penalty (a penalty) is applied | Penalty

1 day after deadline (the deadline) | Between £100 and £400, depending on how many late returns you’ve previously filed

6 months after deadline (the deadline) | £300 or 5% of the MGD due (whichever is higher)

12 months after deadline (the deadline) | £300 or 5% of the MGD due (whichever is higher)

If you disagree with a penalty

If you’ve been given a penalty and you think it’s wrong, you can appeal to HMRC (HM Revenue and Customs (HMRC)).

Bank details for online or telephone banking, CHAPS, Bacs

Make your payment to HM Revenue and Customs’ (HM Revenue and Customs (HMRC)) account.

Account name | Sort code | Account number

HMRC Shipley | 08 32 10 | 12001020

Use your reference number

Your payment reference is your 14-character Machine Games Duty (MGD) registration number.

You’ll find it (your reference number) on:

the MGD Registration Certificate HMRC (HM Revenue and Customs (HMRC)) sent you

How long it takes

Payments made by Faster Payments (online or telephone banking) will usually reach HMRC (HM Revenue and Customs (HMRC)) on the same or next day, including weekends and bank holidays.

CHAPS payments usually reach HMRC (HM Revenue and Customs (HMRC)) the same working day if you pay within your bank’s processing times.

Bacs payments usually take 3 working days.

Check your bank’s transaction limits and processing times before making a payment.

Overseas payments

Use these details to pay from an overseas account.

Account number (IBAN) | Bank identifier code (BIC) | Account name

GB03BARC20114783977692 | BARCGB22 | HMRC Shipley

HMRC’s banking address is:

Direct Debit

You can only pay by Direct Debit if you’ve registered for Machine Games Duty (MGD) online.

Use your HM Revenue and Customs (HMRC) online account (account) to set up a Direct Debit.

You can set up:

a single payment each time you file your return

automatic payment of the duty shown on your return (known as a ‘variable payment plan’)

Single payment

You can make a single one-off payment by Direct Debit online.

It takes 5 working days to process a Direct Debit payment the first time you set one up. It should take 3 working days next time if you’re using the same bank details.

Variable payment plan

You can set up regular automatic Direct Debit payments online only. Choose a ‘variable payment plan’ when setting up your Direct Debit.

It takes at least 10 working days to process a payment when you first set it up. Make sure your payment will reach HMRC before the deadline.

Your payment will then be taken automatically every time it (a payment)’s due.

You’ll need to cancel your Direct Debit if you want to change to a different payment method.

By debit or corporate credit card online

You can pay online.

There’s a fee if you pay by corporate credit card or corporate debit card. The fee is not refundable.

There’s no fee if you pay by personal debit card.

You cannot pay by personal credit card.

Use your 14-character Machine Games Duty (MGD) registration number as your ‘charge reference’.

You’ll find it on:

the MGD Registration Certificate HMRC sent you

HMRC will accept your payment on the date you make it (even on bank holidays and weekends) - not the date it reaches HMRC’s (HMRC) account.

If you’re unable to pay your Machine Games Duty bill in full by card, you should use another payment method like a bank transfer.

At your bank or building society

You can only pay Machine Games Duty (MGD) at your bank or building society if you file a paper MGD return.

Use the payslip HM Revenue and Customs (HMRC) (HMRC) sent you.

Make your cheque payable to ‘HM Revenue and Customs only’.

Write your MGD reference number on the back of your cheque. You’ll find the reference number on the payslip.

HMRC will accept your payment on the date you make it (if you pay it from Monday to Friday) and not the date it reaches HMRC’s (HMRC) account.

Pay online if you want to pay by debit or credit card.

By cheque through the post

You can send a cheque by post to HM Revenue and Customs (HMRC) (HMRC).

You do not need to include a street name, city name or PO box with this address.

Allow 3 working days for your payment to reach HMRC.

What to include

Write your Machine Games Duty (MGD) reference number on the back of the cheque (your cheque).

You’ll find your MGD reference number (your Machine Games Duty (MGD) reference number) on either:

the payslip HMRC sent you (the payslip) if you file a paper return

your HMRC online account if you file your return online

Your payment may be delayed if you do not fill in your cheque properly.

If you file a paper return, send your payslip (the payslip) with your cheque.

If you file online, send a letter including:

your name, address and telephone number

your MGD registration number

the amount you’re paying

Do not fold or staple your cheque.

Check your payment has been received

View your HMRC online account to see if your payment has been received - it (your HMRC online account) should update within 6 working days.

Tell HMRC no duty is due

You must still file your return even if you calculate that you do not owe any Machine Games Duty (MGD). You may have to pay a penalty if you do not.

If you owe a negative amount (you’ve paid out more in winnings than you’ve taken in playing charges), it (your return)’ll be carried over to your next return and subtracted from the amount of MGD due.


Reclaiming VAT

What you can and cannot reclaim

You can usually reclaim the VAT paid on goods and services purchased for use in your business.

If a purchase is also for personal or private use, you can only reclaim the business proportion of the VAT.

You must keep records to support your claim and show how you arrived at the business proportion for a purchase. You must also have valid VAT invoices.

From 1 April 2019, most businesses will need to keep digital VAT records and use software to submit VAT Returns.

What you cannot reclaim

You cannot reclaim VAT for:

anything that’s only for private use

goods and services your business uses to make VAT-exempt supplies

business entertainment costs

goods sold to you under one of the VAT second-hand margin schemes

business assets that are transferred to you as a going concern

Purchases before registration

You may be able to reclaim VAT paid on goods or services bought before you registered for VAT if the purchases were made within certain time limits.

Partly exempt businesses

You need to make separate calculations for purchases that relate to both VAT-exempt and taxable supplies, such as phone bills or accountancy fees.

Business assets of £50,000 and more

There are special rules for reclaiming VAT for:

individual computers and single pieces of computer equipment costing £50,000 or more before VAT

aircraft, ships and boats costing £50,000 or more before VAT

land and buildings costing £250,000 or more before VAT

You may need to adjust the amount of VAT you reclaim over several years using the Capital Goods Scheme.

How your VAT refund is repaid

Claim your refund (your VAT refund) by submitting a VAT Return.

You need to give your account details to HM Revenue and Customs (HMRC) - even if you’ve already set up a Direct Debit for VAT Returns. Add or change them by going to the registration details in your VAT online account.

You can also use your online account (your VAT online account) to view any refund you’re owed, unless you’ve signed up for ‘Making Tax Digital for VAT’.

You will usually get your refund (your VAT refund) within 10 days of HMRC (HM Revenue and Customs (HMRC)) receiving your return but it (your VAT refund) may take longer. Only contact HMRC (HM Revenue and Customs (HMRC)) if you have not heard anything after 30 days.

Vehicles and fuel costs

Buying a new car

You may be able to reclaim all the VAT on a new car if you use it only for business.

The car (a new car) must not be available for private use, and you must be able to show that it (a new car) is not, for example it’s specified in your employee’s contract.

‘Private use’ includes travelling between home and work, unless it (a new car)’s a temporary place of work.

You may also be able to claim all the VAT on a new car if it (a new car)’s mainly used:

as a taxi

for driving instruction

for self-drive hire

Leasing a car

If you lease a car, you can usually claim 50% of the VAT. You may be able to reclaim all the VAT if the car is used only for business and is not available for private use, or is mainly used:

as a taxi

for driving instruction

Self-drive hire cars

If you hire a car to replace a company car that’s off the road, you can usually claim 50% of the VAT on the hire charge.

If you hire a car for another reason (for example you do not have a company car), you can reclaim all the VAT if all the following apply:

you hire it (a car) for no more than 10 days

it (a car)’s used only for business

it (a car)’s not available for private use

Commercial vehicles

You can usually reclaim the VAT for buying a commercial vehicle (like a van, lorry or tractor) if you only use it for business.

If they’re used only for business, you can also reclaim VAT on:

motorcycles

motorhomes and motor caravans

vans with rear seats (combi vans)

car-derived vans

Fuel costs

There are different ways of reclaiming VAT on fuel, if you do not pay a fixed rate under the Flat Rate Scheme.

You can reclaim all the VAT on fuel if your vehicle is used only for business. There are 3 ways of handling VAT if you use the vehicle for both business and private purposes. You can:

reclaim all the VAT and pay the right fuel scale charge for your vehicle

only reclaim the VAT on fuel you use for business trips - you’ll have to keep detailed mileage records

choose not to reclaim any VAT, eg if your business mileage is so low that the fuel scale charge would be higher than the VAT you can reclaim

If you choose not to reclaim VAT on fuel for one vehicle you cannot reclaim VAT on any fuel for vehicles used by your business.

Additional costs

You can usually reclaim the VAT for:

all business-related running and maintenance costs, such as repairs or off-street parking

any accessories you’ve fitted for business use

You can do this (reclaim) even if you cannot reclaim VAT on the vehicle itself.

Used vehicles

The sales invoice for your used vehicle must show the VAT. You cannot reclaim if it does not, for example if the seller uses the VAT margin scheme.

Staff travel

You can reclaim VAT on employee travel expenses for business trips, including meals and accommodation that you pay for.

You cannot reclaim VAT if you pay your employees a flat rate for expenses.

There are special rules for motoring expenses.

You cannot reclaim VAT on entertainment costs.

Who counts as an employee

The following people count as employees for VAT reclaims:

someone directly employed by you (not through an agency)

directors, partners, any other managers

self-employed people who are treated as employees (you cannot reclaim on travel expenses for this group)

helpers or stewards who help run events

The following people do not count as employees for VAT reclaims:

shareholders who are not employed by the business

pensioners and former employees

someone applying for a job, for example interviewees


VAT Returns

Overview

You usually submit a VAT Return to HM Revenue and Customs (HMRC) every 3 months. This period of time is known as your ‘accounting period.’

This guide is also available in Welsh (Cymraeg).

The VAT Return (a VAT Return) records things for the accounting period (This period of time) like:

your total sales and purchases

the amount of VAT you owe

the amount of VAT you can reclaim

what your VAT refund from HMRC (HM Revenue and Customs (HMRC)) is

You must submit a VAT Return even if you have no VAT to pay or reclaim.

Final VAT Returns

You have to submit a final VAT Return when you cancel your VAT registration.

HMRC (HM Revenue and Customs (HMRC)) will send you a paper version to complete if your registration (your VAT registration) is cancelled because you’re insolvent.

Fill in your return

Complete and send your VAT Return (a final VAT Return) online.

You cannot use your online account to send your VAT Return (a final VAT Return) if you’ve signed up for ‘Making Tax Digital for VAT’. Use compatible accounting software instead.

If you need help there’s guidance on:

what to put in each box

filling in your return if you’re on the Flat Rate Scheme

If you are registered for VAT in Northern Ireland, you must include EU sales on your VAT Return and complete an EC Sales List.

Working out what you can claim

If your business is a charity, you pay VAT at a reduced rate on some goods and services.

VAT-registered businesses can usually reclaim the VAT they’ve paid on business purchases and expenses. The claim must be for a business activity (you have to work out the business element if it also had a personal use).

You must keep records to support your claim and show the VAT (the VAT they’ve paid on business purchases and expenses) was paid.

Exceptions

You cannot reclaim the VAT (the VAT they’ve paid on business purchases and expenses) on:

entertainment expenses

purchases if you use the VAT Flat Rate Scheme (the Flat Rate Scheme) (except some capital assets worth more than £2,000)

There are special rules for working out how to reclaim VAT for:

cars, for example buying, repairing, fuel costs

staff travel expenses, for example accommodation and transport expenses

businesses that are partly exempt from VAT

Estimated figures

Ask HM Revenue and Customs (HMRC) for permission to use estimated figures. You’ll need a good reason why you cannot give accurate figures on your VAT Return.

If you’re allowed, you will not be charged a penalty unless you miss the deadline or make a careless or deliberate error. You’ll normally have to give the correct figures in your next VAT Return.

Bad debts

You can reclaim the VAT you’ve paid HMRC (HM Revenue and Customs (HMRC)) but not received from a customer if it (a business activity)’s a ‘bad debt’ (one you’ve written off). To qualify for the relief:

the debt must be between 6 months old and 4 years and 6 months old

you must not have sold the debt on

you must not have charged more than the normal price for the item

You should reclaim them (the item) via your VAT Return (add them (the item) to your Box 4 figure) and keep records about the debt.

If the debt is paid, you must pay the relief back via your VAT Return by adding the amount to your ‘Box 1’ figure.

How to submit your return

You must submit your return (your VAT Return) online unless:

your business is subject to an insolvency procedure - if you have a Company Voluntary Arrangement or an Individual Voluntary Arrangement you can submit your return (your VAT Return) online if you want to

you object to using computers on religious grounds

you cannot because of your age, a disability or because of where you live, for example you do not have internet access

Contact HM Revenue and Customs (HMRC) to find out how to submit your return, for example paper filing, if you cannot submit online.

Submit your VAT Return (your return) online

You need a VAT number and a VAT online account. You can then submit your VAT Return (your return) using HMRC’s (HM Revenue and Customs (HMRC)) free online service or commercial accounting software.

You cannot use your online account to send your VAT Return (your return) if you’ve signed up for ‘Making Tax Digital for VAT’. Use compatible accounting software instead.

Getting online

If you need:

a VAT number and online account - register for VAT

an online account - sign up for an online account and select ‘VAT submit returns’

a VAT number - log in to your online account and apply for a VAT number

HMRC’s (HM Revenue and Customs (HMRC)) free online service

Sign in to your VAT online account and complete your VAT Return (your return).

Using accounting software

Most accounting software lets you submit your VAT Return (your return) to HMRC (HM Revenue and Customs (HMRC)) directly. This means you will not have to enter your figures separately in HMRC’s (HM Revenue and Customs (HMRC)) online service (HMRC’s (HM Revenue and Customs (HMRC)) free online service).

HMRC (HM Revenue and Customs (HMRC)) has a list of software you can use to submit your VAT Return (your return).

Keep any reference number you receive as proof you’ve sent your return.

Using accountants or agents

You’ll need to authorise them (accountants or agents) before they (accountants or agents) can submit your VAT Return (your return). You can do this (lets) through your VAT online account.

Find an accountant or a solicitor to help you with your VAT return or tax.

Get help

You can get help with your VAT return or if you do not understand something about your tax.

Help with online services

Contact the VAT Online Services Helpdesk if you need any help using VAT online services.

Deadlines

Check your VAT Return and payment deadlines in your VAT online account.

Your VAT online account tells you:

when your VAT Returns are due

when the payment must clear HM Revenue and Customs’ (HMRC) (HM Revenue and Customs (HMRC)) account

The deadline for submitting the return (your return) online and paying HMRC (HM Revenue and Customs (HMRC)) are usually the same - 1 calendar month and 7 days after the end of an accounting period. You need to allow time for the payment to reach HMRC’s (HM Revenue and Customs (HMRC)) account (HM Revenue and Customs’ (HMRC) (HM Revenue and Customs (HMRC)) account).

Exceptions

The deadlines (The deadline for submitting the return (your return) online and paying HMRC (HM Revenue and Customs (HMRC))) are different if, for example, you use the VAT Annual Accounting Scheme.

Pay your VAT bill

You must pay VAT to HMRC (HM Revenue and Customs (HMRC)) electronically, for example through direct debit or internet banking. Most businesses are not allowed to pay by cheque.

Contact HMRC (HM Revenue and Customs (HMRC)) if you cannot pay your VAT bill.

Surcharges and penalties

HM Revenue and Customs (HMRC) record a ‘default’ if:

they (HM Revenue and Customs (HMRC)) do not receive your VAT return by the deadline

full payment for the VAT due on your return (your VAT return) has not reached their (HM Revenue and Customs (HMRC)) account by the deadline

Surcharges

You may enter a 12-month ‘surcharge period’ if you default. If you default again during this time:

the surcharge period (a 12-month ‘surcharge period’) is extended for a further 12 months

you may have to pay an extra amount (a ‘surcharge’) on top of the VAT you owe

If you submit a late return, you will not have to pay a surcharge if you:

pay your VAT in full by the deadline

have no tax to pay

are due a VAT repayment

HMRC (HM Revenue and Customs (HMRC)) will write to you explaining any surcharges you owe and what happens if you default again.

How much you pay

Your surcharge is a percentage of the VAT outstanding on the due date for the accounting period that is in default. The surcharge rate increases every time you default again in a surcharge period.

This table shows how much you’ll be charged if you default within a surcharge period.

You do not pay a surcharge for your first default.

Defaults within 12 months | Surcharge if annual turnover is less than £150,000 | Surcharge if annual turnover is £150,000 or more

2nd | No surcharge | 2% (no surcharge if this is less than £400)

3rd | 2% (no surcharge if this is less than £400) | 5% (no surcharge if this is less than £400)

4th | 5% (no surcharge if this is less than £400) | 10% or £30 (whichever is more)

5th | 10% or £30 (whichever is more) | 15% or £30 (whichever is more)

6 or more | 15% or £30 (whichever is more) | 15% or £30 (whichever is more)

Penalties

HMRC (HM Revenue and Customs (HMRC)) can charge you a penalty of up to:

100% of any tax under-stated or over-claimed if you send a return that contains a careless or deliberate inaccuracy

30% of an assessment if HMRC (HM Revenue and Customs (HMRC)) sends you one that’s too low and you do not tell them (HM Revenue and Customs (HMRC)) it’s wrong within 30 days

£400 if you submit a paper VAT return, unless HMRC (HM Revenue and Customs (HMRC)) has told you you’re exempt from submitting your return using your VAT online account or Making Tax Digital compatible software

Assessments

If you do not send your VAT Return and pay any VAT due on time, you will get a ‘VAT notice of assessment of tax’ from HM Revenue and Customs (HMRC), telling you how much VAT they (HM Revenue and Customs (HMRC)) think you owe.

What you need to do

Send your VAT Return and any payment due immediately.

If the assessed amount of VAT is too low you must tell HMRC (HM Revenue and Customs (HMRC)) within 30 days. Do this by sending a correct VAT Return and VAT payment or contacting them (HM Revenue and Customs (HMRC)). You may be charged a penalty if you do not.

If the assessment is too high, you cannot appeal it. You must send a correct VAT Return and VAT payment.

Contact HMRC (HM Revenue and Customs (HMRC)) if you cannot pay your tax bill and contact the VAT helpline if you cannot send the return (your VAT Return).

Interest on underpaid or overpaid VAT

HM Revenue and Customs (HMRC) may charge you interest if you do not report and pay the right amount of VAT. If you pay too much VAT because HMRC (HM Revenue and Customs (HMRC)) make a mistake, you can claim interest.

When interest is charged

Interest may be charged if you:

report less VAT than you charge, or reclaim more than you pay

pay an assessment that HMRC (HM Revenue and Customs (HMRC)) later find was too low

let HMRC (HM Revenue and Customs (HMRC)) know you owe them (HM Revenue and Customs (HMRC)) VAT because of a mistake on your VAT Return

How much interest is charged

You’ll be charged 2.6% interest.

There’s a different interest rate for tax that was underpaid before 21 November 2017.

Use your VAT online account to check the amount you owe.

HMRC (HM Revenue and Customs (HMRC)) will also send you a notice telling you how much you owe and how it’s worked out.

If you do not pay within 30 days, further interest is charged on the VAT due from the date of the notice. You’ll be charged interest for as long as you do not pay, up to a maximum of 2 years.

You cannot deduct the interest HMRC (HM Revenue and Customs (HMRC)) charges you when working out your taxable profits.

Claiming interest

You may be able to claim interest if HMRC’s (HM Revenue and Customs (HMRC)) mistake means:

you pay too much VAT

you reclaim too little VAT

a payment to you from HMRC (HM Revenue and Customs (HMRC)) was delayed

Normally HMRC (HM Revenue and Customs (HMRC)) will not repay interest if you’ve paid too much VAT because of a mistake you made.

How much interest can you claim

You can claim 0.5% interest. This is normally paid for the whole period from when the VAT was overpaid or reclaimed until the date repayment is authorised.

There’s a different interest rate for tax that was overpaid before 29 September 2009.

If you caused a delay to any payments (for example by not claiming straight away) HMRC (HM Revenue and Customs (HMRC)) might leave this time out.

You have to claim the interest separately from the repayment itself.

Write to HMRC (HM Revenue and Customs (HMRC)) with details of the repayment (the repayment itself), explaining why you’re owed interest. You must do this within 4 years of the repayment’s (the repayment itself) authorisation date. Use the postal address on the VAT correspondence you have from HMRC (HM Revenue and Customs (HMRC)).

Any interest you get from HMRC (HM Revenue and Customs (HMRC)) counts as taxable income.

Paying interest to your customers

You must pay any of the interest you get (as well as the VAT) to your customers if HMRC’s (HM Revenue and Customs (HMRC)) mistake means they (your customers) paid too much VAT.

Contact the person at HMRC who dealt with your claim if you need to find out how the interest was calculated. This can help you work out how much you need to repay each customer. You must give the money back to HMRC (HM Revenue and Customs (HMRC)) within 14 days if you cannot get in touch with a customer to repay them (your customers).

Interest rates

HMRC (HM Revenue and Customs (HMRC)) only charge or pay simple interest (interest on the original amount, not interest on interest).

Challenging an HMRC (HM Revenue and Customs (HMRC)) decision

You cannot appeal the decision to charge you interest but you can challenge the actual amount.


Work out your capital allowances

Writing down allowances

When you buy business assets you can usually deduct the full value from your profits before tax using annual investment allowance (AIA).

Use writing down allowances instead if:

the item (items worth a total of more than the AIA amount) doesn’t qualify for AIA (for example, cars, gifts or things you owned before you used them in your business)

Writing down allowances is when you deduct a percentage of the value of an item from your profits each year.

The percentage you deduct (a percentage of the value of an item) depends on the item (an item). For business cars the rate depends on their CO2 emissions.

Work out the value of your item

In most cases, the value (the value of your item) is what you paid for the item (an item). Use the market value (the amount you’d expect to sell it (an item) for) instead if:

you owned it (an item) before you started using it (an item) in your business

it (an item) was a gift

How to claim

Group the things you’ve bought into ‘pools’ based on the percentage rate they qualify for.

When you know the rate for your items, work out how much you can claim and deduct it from your profits before tax on your tax return.

The amount left in each pool becomes the starting balance for the next accounting period.

Rates and pools

If you’re claiming writing down allowances, group items into pools depending on which rate they qualify for.

The 3 types of pool are the:

main pool with a rate of 18%

special rate pool with a rate of 6%

single asset pools with a rate of 18% or 6% depending on the item

Main rate pool

Add the value of all ‘plant and machinery’  you’ve bought to the main rate pool (Main rate pool), unless they’re in:

the special rate pool

a single asset pool (for example, because you have chosen to treat them as ‘short life’ assets or you’ve used them outside your business)

Special rate pool (special rate pool with a rate of 6%)

You have to claim a lower rate of 6% on:

parts of a building considered integral - known as ‘integral features’

items with a long life

thermal insulation of buildings

cars with CO2 emissions over a certain threshold - check the threshold for your car, which depends on the car and when you bought it

You can claim AIA on these items apart from cars. Only claim writing down allowances at 6% if you’ve already claimed AIA on items worth a total of more than the AIA amount.

Integral features

Integral features are:

lifts, escalators and moving walkways

space and water heating systems

air-conditioning and air cooling systems

hot and cold water systems (but not toilet and kitchen facilities)

electrical systems, including lighting systems

external solar shading

Buildings themselves don’t qualify for capital allowances.

Items with a long life

These (Items with a long life) are items with a useful life of at least 25 years from when they (Items with a long life) were new.

Put them (Items with a long life) in the special rate pool if the value of all the long-life items you buy in a single accounting period (the tax year if you’re a sole trader or partner) adds up to £100,000. Put them (Items with a long life) in the main rate pool if their (Items with a long life) total value is less than £100,000.

This £100,000 limit is adjusted if your accounting period is more or less than 12 months.

Single asset pools

You might need to create one or more separate pools for single assets that:

have a short life (for assets you aren’t going to keep for a long time)

you use outside your business if you’re a sole trader or a partner

Short life assets

It’s up to you to decide whether you want to treat something as a short life asset. You can’t include:

cars

items you also use outside your business

special rate items

Large numbers of very similar items can be pooled together (for example, crockery in a restaurant).

The pool ends when you sell the asset. This means you can claim the capital allowances over a shorter period.

Move the balance into your main pool (the main rate pool) in your next accounting period or tax year if you’re still using the item (the asset) after 8 years.

Let HMRC know

Let HM Revenue and Customs (HMRC) (HMRC) know on your tax return if you’re a limited company and you decide to create a short life asset pool. You must do this within 2 years of the end of the tax year when you bought the item.

Let HMRC know in writing if you’re a sole trader or partner - include how much the item cost and when you acquired it (the item). The deadline is the online filing deadline (31 January) for the tax year after the one you bought the item in (the tax year when you bought the item).

Things you also use outside your business

If you use an item outside your business and you’re a sole trader or partner, put it in a separate pool.

Work out your capital allowances at the main rate (18%) or the special rate (6%) depending on what the item (an item) is.

Reduce the amount of capital allowances you can claim by the amount you use the asset (an item) outside your business.

If your accounting period is more or less than 12 months

You need to adjust the amount of writing down allowances you can claim if your accounting period is more or less than 12 months.

Items you’ve claimed AIA or first year allowances on

Record any items you’ve claimed annual investment allowance (AIA) or first year allowances on in the pool they qualify for. If you claim the full cost of an item you’ll need to write down their value as zero. This will help you to work out whether you owe tax if you sell them.

Items not claimed

Add costs you haven’t claimed first year allowances or annual investment allowance (AIA) on to the pool in the following year.

What to do next

When you know the rate for your items, work out how much you can claim.

Work out what you can claim

You can claim the full cost of the item if you’re claiming:

annual investment allowance (AIA) (annual investment allowance (AIA)

first year allowances

You claim based on the rate for items that don’t qualify for AIA or first year allowances.

Work out your allowance

Work out what you can claim separately for each pool.

Take your closing balance from your last accounting period.

Add the value of anything you’ve bought or been given in the current period that qualifies for this pool. Only include VAT if you’re not VAT registered.

Deduct the value of anything you sold or ‘disposed of’ that originally qualified for this pool.

Work out how much you can claim using the correct rate.

Deduct the amount you can claim from the pool (this pool) to get the closing balance. This is known as the ‘tax written down value’.

Items you use outside your business

For items that are in a single asset pool because you’ve used them outside your business, reduce the amount you can claim by the amount you use them (an item) privately.

You still deduct the full amount from your pool to get the closing balance.

Items you use privately that aren’t in a single asset pool

If you start using something outside your business that you’ve already claimed capital allowances on:

add the market value of the item (the amount you’d expect to sell it for) to a single asset pool

deduct the same amount from the pool it (the item) was in

If the amount you deduct is more than the balance in the pool (a single asset pool), the difference is a ‘balancing charge’ - you must put it on your tax return.

Claiming less than you’re entitled to

You don’t have to claim the full amount you’re entitled to. If you only claim part, the rest stays in your closing balance.

If you have £1,000 or less in your pool

You can claim the full amount if the balance in your main or special rate pool is £1,000 or less before you work out your allowance.

This is called a small pools allowance. It doesn’t apply to single asset pools. You can either claim a small pools allowance or writing down allowances - you can’t claim both.

This amount is adjusted if your accounting period is more or less than 12 months.

How to claim

Claim on your tax return.


Director's loans

Overview

A director’s loan is when you (or other close family members) get money from your company that is not:

a salary, dividend or expense repayment

money you’ve previously paid into or loaned the company

Records you must keep

You must keep a record of any money you borrow from or pay into the company (your company) - this record is usually known as a ‘director’s loan account’.

At the end of your company’s (your company) financial year

Include any money you owe the company (your company) or the company (your company) owes you on the ‘balance sheet’ in your annual accounts.

Tax on loans

You may have to pay tax on director’s loans. Your company may also have to pay tax if you’re a shareholder (sometimes called a ‘participator’) as well as a director.

Your personal and company tax responsibilities depend on whether the director’s loan account is:

overdrawn - you owe the company (your company)

in credit - the company (your company) owes you

If you owe your company money

You or your company may have to pay tax if you take a director’s loan.

Your personal and company tax responsibilities depend on how the loan (a director’s loan) is settled. You also need to check if you have extra tax responsibilities if:

the loan was more than £10,000 (£5,000 in 2013-14)

you paid your company interest on the loan below the official rate

| Your company’s responsibilities if you’re a shareholder and director | Your personal responsibilities when you get a director’s loan

You repay the loan (a director’s loan) within 9 months of the end of your Corporation Tax accounting period | Use form CT600A when you prepare your Company Tax Return to show the amount owed at the end of the accounting period.If the loan (a director’s loan) was more than £5,000 (and you took another loan of £5,000 or more up to 30 days before or after you repaid it) pay Corporation Tax at 32.5% of the original loan (a director’s loan), or 25% if the loan (a director’s loan) was made before 6 April 2016. After you permanently repay the original loan (a director’s loan), you can reclaim the Corporation Tax - but not interest.If the loan (a director’s loan) was more than £15,000 (and you arranged another loan when you repaid it (a director’s loan)) pay Corporation Tax at 32.5% of the original loan (a director’s loan), or 25% if the loan was made before 6 April 2016. After you permanently repay the original loan (a director’s loan), you can reclaim the Corporation Tax - but not interest. | No responsibilities

You do not repay the loan (a director’s loan) within 9 months of the end of your Corporation Tax accounting period | Use form CT600A when you prepare your Company Tax Return to show the amount owed at the end of the accounting period.   Pay Corporation Tax at 32.5% of the outstanding amount, or 25% if the loan (a director’s loan) was made before 6 April 2016.   Interest on this Corporation Tax will be added until the Corporation Tax is paid or the loan (a director’s loan) is repaid.  You can reclaim the Corporation Tax - but not interest. | No responsibilities

The loan (a director’s loan) is ‘written off’ or ‘released’ (not repaid) | Deduct Class 1 National Insurance through the company’s payroll. | Pay Income Tax on the loan (a director’s loan) through a Self Assessment tax return

If the loan (a director’s loan) was more than £10,000 (£5,000 in 2013-14)

If you’re a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 (2013-14) to 2014) at any time in the year, your company must:

treat the loan (a director’s loan) as a ‘benefit in kind’

deduct Class 1 National Insurance

You must report the loan (a director’s loan) on a personal Self Assessment tax return. You may have to pay tax on the loan (a director’s loan) at the official rate of interest.

If you paid interest below the official rate (the official rate of interest)

If you’re a shareholder and director, your company must:

record interest you pay below the official rate (the official rate of interest) as company income

treat the discounted interest as a ‘benefit in kind’

You must report the interest (the discounted interest) on a personal Self Assessment tax return. You may have to pay tax on the difference between the official rate (the official rate of interest) and the rate you paid.

Reclaim Corporation Tax

Your company can reclaim the Corporation Tax it pays on a director’s loan that’s been repaid, written off or released. You cannot reclaim any interest paid on the Corporation Tax (Corporation Tax).

Claim after the relief is due - this is 9 months and 1 day after the end of the Corporation Tax accounting period when the loan (a director’s loan) was repaid, written off or released. You will not be repaid before this.

You must claim within 4 years (or 6 years if the loan (a director’s loan) was repaid on or before 31 March 2010).

Reclaiming within 2 years

If you’re reclaiming within 2 years of the end of the accounting period when the loan (a director’s loan) was taken out, use form CT600A to claim when you prepare a Company Tax Return for that accounting period or amend it online.

Use form L2P with your Company Tax Return instead if either:

your tax return is for a different accounting period than the one when the loan (a director’s loan) was taken out

you’re amending your tax return in writing

Tell HMRC how you want the repayment in your Company Tax Return.

Reclaiming after 2 years

If you’re reclaiming 2 years or more after the end of the accounting period when the loan was taken out, fill in form L2P and either include it with your latest Company Tax Return or post it separately.

HMRC will repay your company by either:

using the details you gave in your latest Company Tax Return (your Company Tax Return)

sending a cheque to your company’s (your company) registered office address

If you lend your company money

Your company does not pay Corporation Tax on money you lend it (your company).

If you charge interest

Interest you charge your company on a loan counts as both:

a business expense for your company

personal income for you

You must report the income on a personal Self Assessment tax return.

Your company must:

pay you the interest less Income Tax at the basic rate of 20%

report and pay the Income Tax every quarter using form CT61

You can request form CT61 online or call HM Revenue  and Customs.


Strike off your limited company from the Companies Register

Overview

You can close down your limited company by getting it ‘struck off’ the Companies Register, but only if it:

hasn’t traded or sold off any stock in the last 3 months

hasn’t changed names in the last 3 months

isn’t threatened with liquidation

has no agreements with creditors, eg a Company Voluntary Arrangement (CVA)

If your company (your limited company) doesn’t meet these conditions, you’ll have to voluntarily liquidate your company (your limited company) instead.

When you apply to ‘strike off’ your company, you have certain responsibilities to close down your business properly.

Close down your company

Before applying to strike off your limited company, you must close it (your company) down legally. This involves:

announcing your plans to interested parties and HM Revenue and Customs (HMRC)

making sure your employees are treated according to the rules

dealing with your business assets and accounts

Who you must tell

Fill in an application to strike off and send a copy within 7 days to anyone who could be affected. This includes:

members (usually the shareholders)

creditors

employees

managers or trustees of any employee pension fund

any directors who didn’t sign the application form

If you don’t follow the rules on who you must tell, you can face a fine and possible prosecution.

Employees

If your company employs staff, you must:

follow the rules if you make staff redundant

pay their (staff) final wages or salary

PAYE and National Insurance (NI)

You’ll need to tell HMRC (HM Revenue and Customs (HMRC)) that your company has stopped employing people.

Business assets

You should make sure that any business assets are shared among the shareholders before the company (your limited company) is struck off.

Anything that’s left will go to the Crown - you’ll have to restore the company (your limited company) to get anything back.

Final accounts

You must send final statutory accounts and a Company Tax Return to HMRC (HM Revenue and Customs (HMRC)).

You don’t have to file final accounts with Companies House.

Prepare your final accounts and company tax return.

File your accounts and company tax return (final statutory accounts and a Company Tax Return), stating that these (final statutory accounts and a Company Tax Return) are the final trading accounts and that the company (your limited company) will soon be dissolved.

Pay all Corporation Tax and any other outstanding tax liabilities.

If you’ve made a loss in your final year of trading, you might be able to offset the tax (all Corporation Tax) against profits from previous years - this is known as ‘terminal loss relief’. You can claim this on your final tax return.

Capital Gains Tax on personal profits

If you take assets out of the company before it’s struck off, you might have to pay Capital Gains Tax on the amount.

You might be able to get tax relief on this (the amount) through Entrepreneurs’ Relief.

You will work this out on your personal Self Assessment tax return.

If the amount is worth more than £25,000, it (the amount) will be treated as income and you’ll have to pay Income Tax on it.

Keeping records

You must keep business documents for 7 years after the company is struck off, eg bank statements, invoices and receipts.

If the company employed people, you must keep copies of its (the company) employers’ liability insurance policy and schedule for 40 years from the date the company was dissolved.

Apply to strike (struck) off

To apply to strike off your limited company, you must send Companies House form DS01.

The form (Companies House form DS01) must be signed by a majority of the company’s (the company) directors.

You should deal with any of the assets of the company before applying, eg close any bank accounts and transfer any domain names.

When your company (the company) is dissolved, all the remaining assets will pass to the Crown (including any bank balances).

It costs £10 to strike off a company. You can’t pay using a cheque from an account that belongs to the company you’re striking off (the company).

It is an offence to make a dishonest application - you can face a fine and possible prosecution.

What happens next

You’ll get a letter from Companies House to let you know if you’ve filled in the form (Companies House form DS01) correctly. If you have, your request for the company to be struck off will be published as a notice in your local Gazette.

If nobody objects, the company will be struck off the register once the 2 months mentioned in the notice has passed.

A second notice will be published in the Gazette (your local Gazette) - this will mean the company won’t legally exist anymore (it (the company) will have been ‘dissolved’).

More information

Read more guidance on striking off your company.

Withdraw your application

You must withdraw your application if your company is no longer eligible to be struck off, eg it is trading or has become insolvent.

You can withdraw your application if you change your mind. You can only do this if your company is still on the Companies Register (the register).

Only one director needs to sign the withdrawal form (withdraw).

Apply online

You can withdraw your application using the Companies House online service.

Apply by post

Fill in form DS02 and send it to the address on the form.