Self Employed Income Support Scheme

The new ‘Self employed Income Support Scheme’ has been launched.

Today the Rishi Sunak, Chancellor of the Exchequer, has announced support for the self-employed. This covers 95% of people who receive the majority of their income from self-employment.

How much will I be entitled to?

A cash grant worth 80% of your average monthly trading profit over the last three years will payable around June.

The scheme will be open to those with a trading profit of less than £50,000 in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.

To qualify, more than half of your income in these periods must come from self-employment and you must have filed a tax return for 2018-19. 

If you haven’t yet filed this, you have four weeks to do so to qualify for the scheme.

How do I apply?

Self-employed people who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using a simple online form, with the cash being paid directly into people’s bank account. Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply, you do not need to do anything right now.

Which period will this cover?

The income support scheme will initially cover the three months to May. 

Grants will be paid in a single lump-sum installment covering all 3 months and will start to be paid at the beginning of June.

To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. 

I pay myself a salary through my limited company – am I eligible?

If you pay yourself a salary and dividends through your own company, then you are not covered by the Self Employed Income Support Scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if you are operating a PAYE scheme.

Does this scheme apply to partnerships?

Yes, this scheme also applies to members of partnerships.

My profit was in excess of £50,000 per year do I qualify?

No

I did not make a profit over the past 3 years so do I qualify?

We are awaiting further advice on this. We will update this page once we know.

Can I access any other help?

Before grant payments are made, the self-employed will still be able to access other available government support for those affected by coronavirus including more generous universal credit and business continuity loans where they have a business bank account. 

The loan is interest-free. You can also defer tax payments including VAT and the July self-assessment tax payment.

Please read our blog here on the other available help 

Does this scheme only apply if I am earning nothing currently?

No, if you are still able to trade then you can do so and still apply for help under this scheme.

 

We will continue to update you on any further developments.

Support for businesses during the Coronavirus Outbreak

The situation is changing daily, and we are receiving updates regularly. We have decided to share what we know are facts. If more help becomes available, we will update you.

If you own a business or you are self-employed, we know this is a worrying time for you. People are misinterpreting the help available. Much of the available help is for companies with employed staff and premises.

These options are available to everyone: 

Mortgage payments

Speak to your lender. Most are providing up to 3 months payment holiday. You will still have to make up the payments and do consider the interest implications we recommend you get advice from your lender.

Embargo on evictions                                

This will help people who rent their property. This will be hard for landlords. Talk to your landlord and negotiate.

Tax payment deferral 

By calling HMRC you may be able to negotiate payments for any impending taxes due (corporation tax, PAYE, VAT, income tax). They will want to know more about your circumstances, and this is decided on a case by case basis.

Valued Added Tax (VAT) payments can be deferred for 3 months. The deferral will apply to payments due between 20 March 2020 until 30 June 2020.

No applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Self-Assessment for income tax, payments due by the 31 July 2020 will be deferred until the 31 January 2021.

No penalties or interest for late payment will be charged in the deferral period for VAT or income tax.

Tax helpline number 0800 0159 559.

You will still have to pay any VAT or income tax you owe; you just can defer it with no late payment fees. 

Universal Credit 

If you are self-employed you may be entitled to Universal Credit – check here for more details

Council Tax reduction 

Check if you can claim a council tax reduction – apply to your local council. This is a standard benefit for people on a low income.

For companies with employees and/or premises

Statutory Sick Pay 

The government will refund Statutory Sick Pay which has a rate of £94.25 per week per person for two weeks from the start of sickness. Applies to businesses with up to 249 employees from 13 March 2020. The system to claim is not yet in place. It will probably be an enhanced credit through the PAYE system. Make sure your records are up to date. More details here We suggest you (or your payroll provider) keep manual records of dates of sick leave to enable the claim once a system is in place.

Business Loan Scheme (CBILS)

A maximum loan of £5m per business can be applied for which is interest-free for 12 months. This will be available to all businesses without adequate security to support the level of borrowing needed to keep their business trading. More details here

Small Business Grant Scheme 

This is to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. You are eligible if:

  • your business is based in England
  • you are a small business and already receive SBBR and/or RRR
  • you are a business that occupies a property

You will be contacted by your local authority if you are eligible.

Retail and Hospitality Grant Scheme

This is for businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000. You are eligible if:

  • your business is based in England
  • your business is in the retail, hospitality and/or leisure sector

and if you trade:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation

Coronavirus Job Retention Scheme

All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

How to access the scheme you will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. If we run your payroll we will be monitoring this and help you with your reimbursements.

Business Rates Holiday 

For retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year, there will be a business rate holiday. Types of businesses this will apply to are –

Shops, restaurants, cafes, drinking establishments, cinemas and live music venues. Any venue used for assembly and leisure which includes as hotels, guest & boarding premises and self-catering accommodation.

You will be contacted by your local authority.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

Other advice

  • Keep on top of your credit control
  • Think twice about business decisions in such a critical time
  • Be mindful of expenditure

Where else can you find information?

For more information visit the Coronavirus Government Website pages CLICK HERE

Telephone: 0300 456 3565

Monday to Friday from 9 am to 6 pm

 

Budget 2020 – The budget for business

Amidst all the concern surrounding the coronavirus, the government issued their budget on 11th March 2020. It was a budget for business with several measures being relevant to small business owners and the self-employed.

Chancellor Rishi Sunak announced a £7bn support package for small businesses including tax cuts, loans and grants for small businesses. He also included a coronavirus business interruption loan scheme offering loans of up to £2m to small businesses, unlocking up to £1bn of capital for SMEs.

We have summarised the main points here relevant to SME’s.

Statutory sick pay for SMEs

The Government will cover statutory sick pay to all those advised to self-isolate from the virus. They will refund the cost of statutory sick pay for up to 14 days to small- and medium-sized businesses at a cost potentially of up to £2bn. This will apply to businesses with up to 250 employees. Statutory sick pay will be offered from day one (as opposed from day four) for all those advised to self-isolate even if they haven’t shown symptoms. The government will also make it quicker to access benefits for the self-employed, enabling them to claim from day one instead of day eight, and temporarily removing the minimum income floor from Universal tax credit.

National Insurance Changes 

National insurance threshold to be raised to £9,500 from £8,632, providing a tax cut for 31m people. The National Living Wage is set to reach £10.50 an hour by 2024.

Currently, the Employment Allowance gives small employers £3,000 off their National Insurance payment. This will be increased to £4,000, meaning that small businesses can benefit as they will be able to employ four full-time employees without paying any employer National Insurance contributions which is good news for small businesses who want to employ staff.

Coronavirus Business Interruption Loan Scheme

This scheme will support up to a further £1bn lending to smaller businesses. The government will guarantee bank loans to small businesses on amounts of up to £1.2m. The government will cover bank losses of up to 80%.

Business rates changes 

Business rates will be abolished altogether for smaller firms in retail, leisure and hospitality – this is a tax cut worth up to £1bn. The scrappage will only apply to premises with a rateable value of up to £51,000 to help with losses potentially suffered from decreased demand until the end of 2020. Our view is that this will really help small high street businesses who are going to see a downturn in business during the coronavirus period.

Small businesses cash grant

Small businesses that pay no business rates will receive a £3,000 cash grant, worth a total of £3bn. It is unclear at this stage how businesses can access the cash. We will advise further on this.

Entrepreneurs’ Relief to be scaled back

Despite rumours that this would be abolished, the Chancellor opted for reform instead.

This means that enterprising small business owners will continue to benefit from this scheme. This scheme enables businesses owners to pay reduced capital gains tax of 10% instead of 20% up to a lifetime allowance of £10m. The limit will now be £1m of gains.

£130m of new funding to extend start-up loans

The start-up loan scheme will be extended. This will aim to support up to 10,000 more startups between 2021 and 2022. There was also news that £5 billion of new export loans would be available for businesses to enable them to build business overseas. In addition, £200m in new funding for British Business Bank to invest in scale-ups.

Businesses given HMRC tax payment extension

To help further with cash flow the Government’s ‘Time to Pay’ service is also being scaled up, allowing businesses and the self-employed to defer tax payments. HMRC will accept deferred corporation tax payments over pre-agreed periods of time.

Other changes worth noting 

  • VAT for digital publications from 1st December 2020 will be scrapped and this will include books and newspapers.
  • R&D tax credit to be increased from 12 per cent to 15 per cent
  • Employment allowance to be increased by one third – we already mentioned this?
  • IR35 planned changes are going ahead.

Our thoughts on the budget

Some good news for small businesses in terms of business rate relief. Not such good news regarding the reversal of the proposed cut in corporate tax to 17%. The change to entrepreneurs was not a surprise as we were expecting this. Our overall view is that this is a positive budget in very uncertain times.

The full budget summary can be found here

If you need any help or advice on how this relates to your business, please contact us.

The Top 12 Tax Deductible Expenses You Should Be Maximising

Are you a business that regularly pays more tax than you need to every year? Do you understand exactly what expenses you can legitimately claim for to reduce the tax you pay? This is where we aim to help you by outlining the top 12 things a business should be claiming as tax deductible expenses. This is not a complete list so do contact us for more help and advice.

What exactly is a business expense?

The first thing to consider is that a business expense is defined by HMRC as something that is ‘wholly, exclusively and necessarily incurred for business purposes’. So if the list of tax deductible expenses below resonates with you, make sure you apply this test first. If your expenses do not meet those requirements, you may still be able to demonstrate that they do so partially and claim the relevant proportion against your tax.

Keep accurate records

Record keeping is particularly important to ensure accurate expenses are itemised in your accounts. And you must retain those records for SIX years. You could receive a penalty from HMRC if you fail to keep your records in order.

Top 12 Tax deductibles

So what can you claim for? Follow our advice and you may save a lot of money in the next tax year.

  1. Capital Allowances

Taking advantage of capital allowances available for operating your business is an essential part of reducing your tax bill. Most businesses own some physical assets (this does not cover any items that are leased or hired). These could include computers, office furniture, specialist tools and equipment and vans. Also included are fixtures and what are known as integral features on your premises. These include: air conditioning systems, fire and burglar alarms, CCTV systems, fitted kitchens, electrical and lighting systems and so on. All items covered are subject to the Annual Investment Allowance (AIA) giving you the opportunity to offset 100% of the value of your purchased qualifying assets up to £1 million, so clearly an area you must leverage.

If you have bought any cars, have items you use in your business that you already owned or have spent more than £1 million on assets leaving a surplus that cannot be included in the AIA, these assets are subject to written down allowances.

Capital allowances can be a complex area, subject to numerous rules and rates, and one we would be very happy to help you with when completing your accounts.

  1. Travel Expenses

 The likelihood is that you use your car from time to time to travel to meetings, to pick up equipment or materials or for any number of other business related reasons. Remember that if you travel to your office or a specific place of work, those journeys cannot be included in your business mileage. It is important that you log all of your mileage, separating business from personal journeys. You can then claim the Government Approved Mileage Rate of 45p for every mile up to 10,000 and 25p for every mile thereafter.

There are also several other costs you can claim as long as your trip was purely for business purposes. These include:

  • Public transport costs
  • Taxis
  • Parking fees
  • Food and drink (HMRC states that these costs must be ‘reasonable’ but don’t define what that is. Be sensible and do not dine at Michelin starred restaurants and order vintage wines!).
  • Hotel accommodation
  • Congestion charges and tolls
  1. Motoring Expenses

 If you have purchased or leased cars or vans through your business, you can claim a number of expenses specific to the running of those vehicles. Motor insurance, road fund tax, breakdown cover, tyres, servicing and repairs are all examples of specific expenses against your company vehicles that you can claim for. Remember though, that if you use a car purchased through your company for personal use or you provide a company car to another employee, you or your employee will be liable to benefit-in-kind taxation for having a company car. You will also be liable for national insurance contributions as an employer.

  1. Professional Fees

 Most companies will at some point use the services of an accountant (or bookkeeper), a lawyer or another specialist consultant.  With the exception of using an accountant to assist in a HMRC enquiry, you can claim all of these expenses against your tax.

  1. Insurance Payments

 Many businesses have to hold multiple insurance policies in the running of their operations. Whether it be buildings and contents insurance for your office, professional indemnity, public liability or insurance for your tools, any insurance costs can be offset to reduce your tax bill.

  1. Salaries

 If you pay yourself or any employees a salary from your company, these costs are an allowable expense, as indeed are any National Insurance Contributions (NICs).

    7. Premises and Office Costs

If your company runs out of an office, shop, warehouse or factory, you will regularly incur costs that are tax deductible. These include rent, phone bills, stationery, utility bills and so on. If you pay for a hot desk membership, which is the trend these days, then you can claim for this cost against your business.

  1. Advertising and Marketing Costs

 Marketing your business is essential to maintaining and growing your brand awareness and customer base. The good news is that these costs, being completely incurred by your business, are allowable against tax. This includes networking events and networking group memberships.

  1. Workwear, Protective Clothing and Uniforms

 If you or your staff have any need to wear specific clothing or protective items in carrying out your company’s work, these costs are all tax deductible.

  1. Donations to Charity

 Everybody wants to feel that they are giving back as well as making money for their business. So take the opportunity to choose a charity or two for the year that you wish to support and any contributions you make can be deducted as long as you are in profit. You cannot claim for charity donations if they result in your business making a loss.

  1. Bad Debts

Hopefully you will suffer little in the way of bad debt in your business i.e. debt that is unsettled for at least six months. However, if you do, you can claim it as a deductible expense. Bear in mind that if some or all of that debt is paid at a later date, you must declare the income in your accounts.

  1. Membership Subscriptions

 If your company benefits from being part of a professional body such as The Law Society or the Royal Institute of British Architects listed as an approved professional organisation by HMRC, those membership fees can be offset against your profits. Please note that HMRC expects membership to be relevant to your business so signing up to the gym will not be allowed!

What other expenses are there?

Depending on your business there might be other tax deductibles which is why the services of an accountant is vitally important, so you do not miss out!

Our blog about your company Christmas Party is another good example of where a lot of confusion exists!

The most important thing is to meet with your accountant and take their advice to ensure you are maximising those tax-saving opportunities. We are always happy to help.

 

 

 

Use your ISA limit before 5th April 2020

2019-2020 ISA limits and unused allocations

Did you know that you can save up to £20,000 each year – tax free?

UK residents over the age of 16 have a tax-free personal savings allowance of £20,000 which they can invest across various ISA accounts each tax year. For Junior ISAs it’s £4,368. To qualify, you simply need to invest before midnight on 5th April 2020.

The interest earned on these savings won’t count towards your personal savings allowance and you don’t need to declare any ISA interest, income or capital gains if you complete a tax return.

Don’t panic if you miss the ISA deadline, it simply means that you didn’t utilise your tax-free allowance for this tax year. It won’t impact your allowance in future tax years, which reset with the start of the new tax year.

Types of ISAs

There are six types of ISAs:

  • Cash ISAs
  • Stocks and Shares ISAs
  • Lifetime ISAs
  • Innovative Finance ISAs.
  • Junior ISA
  • Help to Buy ISA

Note, ISAs can vary depending on type of account and provider.

Who can open an ISA?

To open an ISA account, you must be:

  • 16 or over for a cash ISA
  • 18 or over for a stocks and shares or innovative finance ISA
  • 18 or over but under 40 for a Lifetime ISA
  • resident in the UK.

 

How many ISAs can I have?

You’re free to split your tax-free allowance across a variety of ISAs, but you can only pay into one of each type of ISA each tax year. For example, you could pay £6,000 in a Cash ISA, £7,000 in a Lifetime ISA and the remaining £7,000 in a Stocks and Shares ISA.

Can I withdraw money from my ISA?

Yes, you can but it does depend on the type of ISA you have and there’s certain rules you need to follow to continue to benefit from your tax-free allowance.

Check the terms of your ISA to see if there are any rules or charges for making withdrawals.

With ‘ISA Flexibility’ you can withdraw and replace money without it counting towards your annual personal savings allowance. To benefit from this flexibility, you must put the money back in the same tax year. If you pay it back the following tax year it will count towards your new annual allowance.

What happens if I exceed my Isa allowance?

Because you have the freedom to open several ISAs with different providers, there’s a risk that you could accidently pay in too much during a single tax year. It’s always best to check.

HMRC will check your records and know if you’ve paid in too much. They may issue a warning if it’s the first time it’s happened. But they also have the power to instruct your ISA provider to remove over-payments and apply tax to any income or growth generated by that money.

It’s also important that you don’t try to fix your mistake by withdrawing the money.

Can I change ISA provider mid-year?

You can transfer your ISA from one provider to another at any time. You can also change the type of ISA account you have. If you’re changing provider/account during the current tax year you must transfer the full amount. If it’s money you’ve saved in previous years, you can transfer all or part.

To change providers, contact the new ISA provider and fill out an ISA transfer form. If you withdraw the money without completing a transfer form, you will not be able to reinvest that money as part of your tax-free allowance.

Is it time to switch your company cars to electric?

 

A recent Opinium poll stated that 63% of respondents said we are in the middle of a climate emergency. To address this, the Committee for Climate Change has set a target of Net Zero emissions in the UK by 2050 and is urging for zero car emissions by 2035.

Transport for London introduced its Ultra Low Emission Zone (ULEZ) in April 2019. This charges a daily rate for entering the zone for any vehicle that does not meet the latest emission standards. Further Clean Air Zones (CAZ) will be introduced in Birmingham, Leeds and Oxford later this year and over 50 authorities are now reviewing schemes across their towns and cities.

Electric vehicles are a key contributor in achieving net zero. New vehicle registrations were down 2.14% in 2019 but sales of electric vehicles increased by 144%.

However, there have been concerns for drivers considering a move to electric vehicles. Until recently, battery range has barely reached more than 100 miles. Charging points have not been widely available across the country. And costs have been high.

To incentivise company car drivers to go electric, the Government is offering extremely attractive benefit-in-kind (BIK) tax rates.

So is now time the time to switch? And do those concerns still apply? Let’s look at the facts:

What are the tax benefits of electric vehicles?

Company cars are taxed based on a percentage of their total P11d value. This percentage is based on the car’s published CO2 emissions to calculate how much tax you pay. This is also affected by whether you are a 20% or 40% tax payer. So what is changing in the new tax year?

  • The UK Government announced a major change to company car benefit-in-kind tax rules in July 2019. From April 6th 2020, all electric vehicles will enjoy a zero BIK tax rate, increasing to 1% in 2021 and 2% in 2022. The same rate will apply for any hybrid vehicle with net emissions of less than 50g/km2 and a battery range of at least 130 miles. For more details, click here.
  • Even plug-in hybrid vehicles (PHEV) are being incentivised. These cars have a battery that is charged externally with a current range of between 20-30 miles, as well as a petrol or diesel engine. PHEVs will be taxed at 12% in the new BIK scheme. Compared to a typical diesel company car with emissions between 110-114g/km2, taxed at 31%, the savings are considerable.

Electric vehicle running costs

  • Running costs are much lower than the traditional combustion engine cars. Electric vehicles cost between 2-3p per mile, a typical diesel company car 9-12p per mile, three to four times more. Servicing is much cheaper. With far fewer moving parts, servicing and repair is less than half of what you will spend on a petrol or diesel.
  • If you lease your cars, there are additional benefits. Whilst the purchase price of an electric vehicle is generally higher than standard vehicles, residual values (the projected value of the vehicle at the end of its contract) are increasing all the time. This makes leasing deals competitive against standard cars, made even more attractive by the fact you can offset 100% of your lease against taxable profits for an electric vehicle or qualifying hybrid.
  • Electric vehicles are not subject to the congestion charge in London, ULEZ or CAZ charges as described above.

What electric vehicle models are available?

The number of models in the electric market has been low with Nissan, Renault, BMW and Tesla the only manufacturers who have really embraced the sector. But 2020 is the year when electric vehicles become mainstream. Volkswagen are leading the way, launching the ID.3 model later this year. They have increased production from 25,000 EVs in 2018 to over 500,000 in 2020.

There are an ever-increasing number of very attractive electric vehicles available with ranges of 250 miles or more. Look at the Tesla Model 3, Jaguar I-Pace, Audi e-Tron, Mercedes EQC, BMW i3, Nissan Leaf, Renault Zoe or What Car’s ‘Car of the Year 2019’, the Kia e-Niro, to name a few.

What do I need to consider when buying an electric vehicle?

The Office of Low Emission Vehicles (OLEV) offers a £3500 grant to reduce the cost of electric vehicles. This narrows the gap compared to standard cars. For example the current VW e-Golf costs including grant £27,575 whilst a 1.5TSi GT equivalent costs £26,635.

Running out of battery charge used to be the biggest worry with electric vehicles. But ranges are extending as battery technology improves. Now, the bigger concern is where to charge. If you have the capacity to do so, it is worth installing chargers at your workplace. The OLEV Workplace Charging Scheme can subsidise the costs – see more.

You can also help employees install home charging points. Many businesses are offering interest free loans to their staff, whilst others pay the cost, again enjoying a grant of up to £500 for installation.

There is still concern about the number of charging points available when out and about. There has been rapid growth, with nearly 30,000 points available across the country. Coverage is strong in London, Scotland and the South West and is increasing elsewhere.

It is important to know that batteries are warrantied for eight years and 100,000 miles so unless you are driving huge distances or intend to keep your cars for longer than that, you have little to worry about.

 

By going electric, your company can shout loud your green credentials. Don’t underestimate how important this will be in years to come.

 Need more help?

We are here to help you. So if you think now is the time to consider an electric company car, let us do the maths to ensure it adds up financially. Of course you may think saving the planet is worth a few more pounds anyway!

Get your self-assessment tax return done now!

 

The Tax year ended on 5th April 2019 and if you are a business owner who is organised then your accounts will have been submitted to your accountant and in turn, they will have told you how much tax you need to pay. So, you do not need to read this blog any further! Plus, a big ‘WELL DONE ‘from us.

Procrastination is common!

Unfortunately, many business owners procrastinate over completing their tax return and if you are one of these then you are not alone.

Last year around 750,000 people filed their tax return on the last day of January and around 750,000 missed the cut off date! If you submit last you receive an automatic fine of £100. More than 3 months you will be charged a further penalty of £10 a day for a maximum of 90 days.

Our advice is do not leave things to the last minute! This is because you will then struggle to find all the information you need to get the submission ready.

Do you need to complete a tax return?

The first question to ask yourself is ‘Do I need to submit a tax return?

The answer is clear cut –

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

  • self-employed as a ‘sole trader’ and earned more than £1,000
  • a partner in a business partnership

What do you need to do now?

If you are using an accountant (and of course we would love to help you if you have not appointed one) you must send in all the documentation they need to compile the tax return for you.

Ideally, you will be using an online cloud-based accounting system such as Xero to record your income and expenditure. This makes tax returns much quicker and easier. Plus, you can keep track and your business progress and easily chase payments, keep an eye on expenses and even reconcile your bank statements.

The days of using manual ledgers are over and excel spreadsheets are becoming extinct.

If you are using an online cloud-based software send your accountant details of how to log in and they can use this data to compile the return.

If you are still on excel spread sheets, then email those across to your accountant.

You will also need details of:-

  • Pension income (if you are receiving this)
  • Details of pension contributions
  • Any interest on bank and building society accounts. You should be able to provide a statement or certificate detailing this.
  • Any income from property
  • Any other additional income – discuss with your accountant. Do not ignore as there are fines for under reporting your income and in some cases, you may face prosecution.
  • Details of expenses. Including any Gift Aid payments, car mileage information and wages. Discuss with your accountant all your expenses and they will be able to clarify what is classed as a business expense.

Make sure you keep records of receipts. This is really important and ideally, keep them in date order. You can also consider using receipt bank an App where you can scan receipts into your phone quickly and easily. This interacts with cloud-based systems such as Xero saving you time adding them later on.

If you do your tax return yourself be extra careful!

Making a mistake will cost you! You could be charged a penalty of anything from 15% to 30% of the additional tax owed if you are found to have underpaid your tax. You can also end up paying too much tax because you haven’t claimed for allowable items. If you have overpaid, you can claim back overpayments going back 4 years, but you need to write HMRC and prove the error to them. Using a good accountant will give you peace of mind and ensure your tax return is correct.

HMRC bogus scam emails and texts

Be careful when opening emails and texts if it says it is from HMRC about your tax affairs. HMRC will never send notifications by email about tax rebates or refunds.

Do not:

  • visit the website
  • open any attachments
  • disclose any personal or payment information

Fraudsters may spoof a genuine email address or change the ‘display name’ to make it appear genuine. If you are unsure, forward it to us and then delete it.

Visit the HMRC website here to find out more and if in doubt speak to your accountant or call HMRC to check.

Accountants do much more than tax returns!

Our job isn’t just about completing tax returns once a year. We fully understand and are up to date with all the tax regulations. We can ensure you pay the right amount of tax.

In addition to this, we love to work with our clients to ensure their business is making progress and help you to make the best decisions to grow your business.

We pride ourselves in giving you an honest review of your business and making suggestions about where you can improve. We also offer a business consultancy service so do contact us if you are interested in this. Find out more here .

Relax over Christmas and New Year and let us do the work!

Do not spend the festive season worrying about tax, spend it with your family and have fun at Christmas and not fear about HMRC!

The tax rules of Christmas gifts and celebrations

At the end of the year, it is great to be able to treat your clients and staff with some festive Christmas treats. But even though its Christmas HMRC still have rules which are applied to giving gifts.  Here we clarify the essential information on the tax rules of Christmas gifts and celebrations. We have detailed below how gifts can be given and the tax implications so you can remain compliant and not get a nasty surprise in your Christmas Stocking!

Christmas Cards

You can send Christmas Cards as a tax-deductible expense. Many companies do not send cards in favour of donating to a charity. Your limited company can pay less Corporation Tax when it gives money to a charity or community amateur sports club (CASC). Deduct the value of the donations from your total business profits before you pay tax. Find more information here on donating to charity.

A £50 gift to yourself and your staff!

If you are a Limited company, then you can give yourself a gift at Christmas as the company is giving the gift and not you! You can also give gifts to your employees. The limit is £50. This counts as a trivial benefit exemption so no Tax or NI is payable. But this does not apply to cash – so it must a gift. Non-cash vouchers up to £50 may be exempt under the trivial benefit rules. Where the voucher exceeds £50, you will need to report these on a P11D form to HMRC.  So, a couple of bottles of wine and some chocolates would count as a trivial benefit. Unfortunately, gifts to employees are not a tax-deductible expense for the business.

If you spend more than £50

Buying a gift that costs more than £50 (and this includes delivery charges) will count as a taxable perk for the employees that receive it. They will then have to pay tax and you as the employer will have to pay National Insurance. For example, if you were to give a £60 gift it will cost you a total of £85 because of the tax and NI due.

The gifts must carry a clear advertisement for the business (e.g. with branding or logo) which must be on the gift itself, not just the wrapping. They can’t be alcohol, food, drink, tobacco (unless they are your business) or vouchers. Non-promotional gifts and larger gifts are classed as entertaining and are not tax-deductible as an expense.

VAT and gifts

If you are not using the Flat Rate Scheme you are able to reclaim the VAT incurred on purchasing the gift.

But you may, however, have to account for VAT on the value of the gifts if the gifts received by the recipient are more than £50 in a year. If a gift is exempt or zero-rated (i.e. a book) you will not have to account for the VAT.

Gifts for your clients – direct tax deductions

The gifts must carry a clear advertisement for the business (e.g. with branding or logo) which must be on the gift itself, not just the wrapping. They can’t be alcohol, food, drink, tobacco (unless they are your business) or vouchers. Non-promotional gifts and larger gifts are classed as entertaining and are not tax-deductible as an expense.

Cash bonus

Any cash you give to employees as a Christmas bonus counts as earnings, so you’ll need to:

-Add the value to your employee’s other earnings

-Deduct and pay’ Pay As You Earn’ (PAYE) tax and Class 1 National Insurance through payroll

Christmas Party

To be exempt, the party or similar social function must meet the following criteria:

-£150 or less per head (this includes partners)

-Annual, such as a Christmas party or summer barbecue

-Open to all your employees

The costs can include food, drink, tickets to events, accommodation and taxi fare home.

If your business has different locations, then an annual event that’s open to all your staff still counts as exempt. You can also arrange Christmas events for different departments if all your employees can attend one of them. If you hold more than one annual event, so maybe a Summer event as well as Christmas, if the combined costs of the events are no more than £150 per head, they are still exempt.

The VAT is reclaimable, but only for the staff costs, not partners.

Salary sacrifice arrangements

You do have to report how much social functions and parties are worth to each employee if they are a part of a salary sacrifice arrangement.

But we have no employees just directors!

If your business does not have employees but just one of more directors, then the rules are different. The cost of providing entertainment only to directors or partners does not qualify for tax relief or VAT deduction

If the event takes place away from the usual place of work and as part of a business trip, for example, to see a client, then the meal would be eligible.

Any VAT suffered on the cost of travel, accommodation and meals can be reclaimed. The rules for tax relief would mirror this, and this also applies to employees, sole traders, partners, and subcontractors who are part of the team and treated as employees.

 Be less Scrooge at Christmas!

As an additional staff benefit which costs nothing and attracts no tax, why not allow an extra half a day’s holiday for Christmas Shopping?

-Consider extra time off to allow parents or grandparent to watch the school play.

-Maybe you could arrange a team- building day with a local charity to help at a Christmas event in your area.

-This all adds to building staff morale and shows you are a caring employer!

 

Needs more help and advice?

Call us to check if your circumstances do not fit what we have discussed in this blog. We are always happy to help.

There are some useful links to the HMRC website here –

Expenses and benefits: gifts to employees

Expenses and benefits: entertainment 

Specific deductions: entertainment: gifts: overview

 

Align your business with a charity

As a business, it’s very important to give back. There are many ways you can support charities and projects through your business which can be beneficial to your business as well as knowing you are helping others.

Who do you want to support?

Consider carefully the type of charity you want to support and the best way to get the most out of the relationship between you and the charity. What kind of charity would be best aligned with your business?

  • For example – an optician might support the RNIB
  • A wealth and retirement planning company might support AGE UK

If you are a UK wide company or a business serving customers internationally you will want to think carefully about a charity which has that coverage.

If you are based in a local geographical area, getting involved with a local charity or project gives you the opportunity to give something back into your local community. It also raises your profile in the area.

We have chosen a few local charities to support and these include – Level Trust, Keech Hospice Care, DLDD Trust ( Don’t Let Dunstable Die) and Mary Seacole Housing Association. We have organised quiz nights, bingo nights, cheese and wine evening, pancake races and coffee mornings. We also support events as much as possible by attending or sponsoring or both. Our staff are also encouraged to engage and support our chosen charities.

Building your business into the community

Community life as we used to know it is dwindling and businesses whatever their size can make a big difference to a charity or projects by getting involved.

Your business is part of the community and being part of a community is vital for any business. We live in a world which seems so materialistic at times. With so many small shops and business closing all the time it feels as if the community spirit has begun to close too. Through supporting local events, projects and charities, you will understand the needs of the community and be able to find ways to meet them.

It’s hard to buy that kind of market research anywhere, but almost impossible for many businesses. Customers are more likely to support businesses they feel are engaged and understand the needs of others.

It can be difficult to sustain a business but being involved with a charity is one way to ensure that your business thrives in your community as you are helping and doing something to build a community!

You could either give ad-hoc support to several or one charity or choose one charity per year and any fundraising or support goes to that charity and then change it annually.

The amount of time will depend on how much you have!

Being involved provides you with additional marketing opportunities.

Examples of how your business can support charities or local projects and how to maximise the publicity.

Take part or organise an event

For example – a race, abseil, skydive or organise a quiz, race night or party this will provide you with additional marketing and PR opportunities. Plus, brand awareness of your company.

Publicity for you and the charity

Include your charitable involvement in newsletters, brochures, signs, displays and adverts, press releases and inform local radio.

Mention it on your website, profile the charity and the reason for your support add their logo (you must get permission first) and a link to their website. Ask them to reciprocate.

Add to your social media sites and use this as a way of spreading the word about the cause.

Getting involved in high profile causes might attract additional media attention. You might want the charity to add your company name to a project you support or sponsor if the donation is significant.

Ask the charity to add your details in their literature. You can make offers to the charity staff and their users if this is applicable with your business.

Donate a percentage of sales or raffle prizes.

Donating a percentage of sales to a charity often works well – maybe certain months of the year. For example, if you are in health and beauty you might want to donate during Breast Cancer awareness month. Or if you have a business aimed at men you could choose Prostrate Cancer. Consider donating to charities that have an audience aligned with your business. Create a club of people who support the charity and your business. Donating raffle or auction prizes.

Organise an annual event.

Arrange an annual event promoting your company where all the profits from the event go to a local charity- could be a product or service launch or a company birthday or Christmas event.

Create seasonal offers

Create special packages at key times of the year Christmas, Easter that either you sell, or the charity sell on your behalf with profits all or part donated.

Work with charities to find out what support they need.

Charities want to grow their support as much as you do so brainstorm ways with them you can support each other. They expect to give support to businesses in return for their support.

 

Increase your profits by building your profile

As accountants, we are always suggesting ways in which you could improve your turnover and profits.

One of the major ways you can do this is by really building your business profile both locally and nationally. Even an online business can benefit from doing this. As a business, we have worked hard to elevate our business in our local area of Dunstable and Luton, throughout the county of Bedfordshire and nationally. Here are some ideas of some of the things you can do to make your business more prominent. We have shared some of the things we have implemented which have worked for us.

Networking

Being part of networking groups and attending events regularly has been beneficial. We have been able to build our brand in this area and we are a known face at events.

For the past 3 years, Suzanne Spicer has been part of the Women in Business (WIBN) Network. This is a networking group for women which meets for a monthly lunch and has one person per business type per group. The advantage is she is the only accountant in the room and has been able to gain referrals from other members for the practice. She is also a member of The Athena Network which works on the same principles.

Spicer and Co are also a member of the Bedfordshire Chamber Of Commerce. This helps support our business in the Bedfordshire area and we have made some meaningful connections through their events.

Our business development director Steve Spicer attends a wide range of events from local lunches to events in London.  Business development is his role. He loves to engage with new clients by building relationships. Attending events has helped to build our brand with the local community.

Where can you find networking events near you?

You can find out about events in your area by checking Google, Find Networking events, Meet Up or Eventbrite. There will be breakfast meetings, coffee morning events, lunch and evening events so decide the time that suits you best and your budget. Also, consider the amount of time you can commit.

Build relationships

Networking is about building relationships. You need to attend regularly to build your business name in your area. Arranging 121’s is really important as this is where you can learn so much about the other person and their business.

Being part of a networking group builds vital support around your business and means you have people to call on when you need help. Over a period of time people get to know you, they then might refer customers to you who need your business.

Start your own event

You might decide to start your own networking event or maybe a professional group that targets your client base or industry.

You will need to source a suitable venue and then market the event. There might be costs involved so consider partnering with other businesses in your area to reduce the costs and share the workload.

You might also decide to run some events to bring your clients together. We do this a few times each year. We find it’s a great way to catch up with clients and thank them for their business.

Speaking at Networking Events

Suzanne has spoken at an event organised by Metro Bank. These events provide you with an opportunity to share your knowledge and expertise. Talk to networking event organisers and try and secure a slot. This isn’t about promoting your business but demonstrating what you know about your industry.

Business Exhibitions

We love attending business exhibitions. This allows us to showcase our business and connect with new potential clients. We often see people we know as well and it’s a great chance to catch up. With a mix of networking, guest speakers and other exhibitors these events are a great way of meeting several new people in one place in one day! 

Check out The 3 Counties Expo which covers Herts, Beds and Bucks. Make a point of researching regional expos, industry-specific expos and London shows. Entry is usually free for visitors. Check them out and decide which ones will work best for your business.

Business Awards

This gives your business a chance to shine! There are local awards, industry awards and national awards. Over the past few years, we have entered them all and been a finalist and a winner!

Awards give your business credibility as they are independently judged. Most awards have a gala final which means you are creating more awareness and publicity about your business.

Suzanne was a finalist in The Best Businesswomen Awards 2019, a UK wide competition. We were also finalists in the FSB awards and SME Bedfordshire awards this year.

In 2018 we were a finalist in The British Accountancy Marketing Awards and The Accountancy Excellence Awards.  We also won SME Bedfordshire Awards – Dunstable Business of the Year 2018

We have also been a sponsor of local awards including the Pride of Houghton. 

Whether you are a finalist or a winner awards do help raise your profile. Awards give you lots of PR opportunities plus it is also great for staff morale!

 Join your industry or governing body

Suzanne Spicer is a member of the Practice Committee of The Institute of Chartered Accountants in England and Wales. Being part of your industry body gives you a voice. It is another way to raise your business profile.

 Take action!

Work through this list and add your ideas into your business plan. Just promoting your business on social media isn’t enough to increase your profits. It is important to get out there and build a network, meet people face to face and be part of the local community.