Government Support Update

Three major changes to support due to the Corona Virus pandemic have been announced today, 29th May 2020 by the Chancellor Rishi Sunak.

Employers to start paying share of furlough scheme

Furloughed workers will continue to receive 80% of their pay, but from August it will include a growing employer contribution. It will start with employers paying NI and pensions in August, plus 10% of pay in September, rising to 20% in October.

During August the government will pay 80% of wages up to a cap of £2,500. Employers will have to pay NI and pension contributions. For the average claim, that’s 5% of the gross employment costs the employer would have incurred had the employee had not been furloughed.

In September, the government will cut its grants to 70% of wages up to a cap of £2,190. Employers will pay NI and pension contributions and 10% of wages to make up the 80% total up to a cap of £2,500. That works out at 14% of the average gross employment costs the employer would have incurred.

In October the government grant will be cut to 60% of wages up to a cap of £1,875. Employers will pay NI and pension contributions and 20% of wages to make up the 80% total up to a cap of £2,500. That’s 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.Fl

Flexible Furlough Scheme Announced

From 1 July 2020 businesses will be allowed to bring furloughed employees back part-time, a month earlier than previously announced. The move is aimed to help support people back to work.

It will be down to individual firms to decide what part-time means. They will be able to set the hours and shift patterns staff will work when they return, but companies will have to pay 100 per cent of wages while they’re in work. The rest of their salary can be claimed via the furlough scheme up to the allowance as per the details above.

The Self Employed Income Support Scheme Extended

Those eligible for the Self-Employment Income Support Scheme (SEISS) will be able to claim the additional grant in August, which will be worth 70% of their average monthly trading profits, capped at £6,570 overall. The money will again be paid out in a single installment covering June, July and August.
Applications for the second grant will open in August.

Posted in Website Blog | Tagged furloughscheme, seiss, self employed help corona virus

New updates for businesses during Coronavirus

There are 3 major updates this week concerning the support available for businesses during the Coronavirus outbreak.

Please find details below with relevant links.

The Bounce Back Loan Scheme (BBLS)

Open from 4th May 2020

This has been has been set up  to support small businesses who are struggling to get funding through the main Coronavirus Business Interruption Loan Scheme (CBILS).

To qualify -The scheme is open to businesses, including sole traders and partnerships, that were trading on 1 March 2020.

To apply – Complete a two-page application form and self-certify your details. This means lenders do not have to verify the information. Most applicants should receive loans within a few days after being approved.

You can’t apply if you’ve already got a CBILS loan but you can transfer a CBILS loan of up to £50,000 to BBLS before 4 November 2020.

Following the launch of BBLS, the minimum loan for CBILS has been increased to £50,001.

 Bounce Back Loan Scheme features

Up to £50,000 loan: Available loans are from £2,000 up to 25% of a business’ annual turnover or £50,000, whichever is lower. Turnover is based on a full calendar year so if your business was established after 1 January 2019, you should apply the 25% limit to your estimated annual turnover from the date you started.

  • 100% guarantee: Lenders have a 100% government guarantee. The borrower always remains 100% liable for the debt.
  • Interest free for 12 months: The government will cover the first 12 months of interest.
  • Interest rate:The interest rate after the 12 months interest free period is set at 2.5% per year.
  • No repayments for 12 months: Borrowers will not have to begin principal repayments for the first 12 months.
  • No guarantee fee: Businesses and lenders do not have to pay a fee to access the scheme.
  • Finance terms: The length of the loan is for six years but early repayment is permitted without early repayment fees.
  • No personal guarantees: No personal guarantees are required and no recovery action can be taken over a principal private residence or principal private vehicle.

Bounce Back Loan Scheme eligibility criteria

  • Businesses from all sectors can apply. The exceptions are Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), public sector bodies, insurance companies and state-funded primary or secondary schools – all of these sectors are not eligible to apply.

The business must self-certify the following:

  • Confirm it is UK-based in its business activity and established by 1 March 2020
  • Confirm it has been adversely impacted by coronavirus
  • Confirm it is not currently using a government-backed coronavirus loan scheme (unless using BBLS to refinance a whole facility)
  • Confirm it was not a ‘business in difficulty’ at 31 December 2019 (if it was, then the borrower must confirm it complies with additional state aid restrictions under de minimis state aid rules)
  • Confirm it is not in bankruptcy, liquidation or undergoing debt restructuring
  • Confirm that 50% of the income of the business is derived from its trading activity (this confirmation is not required if the borrower is a charity or a further education college)

 How to apply for a Bounce Back Loan

Accredited lenders are listed on the British Business Bank website.

If you experience problems accessing the British Business Bank website the current list of accredited lenders is as follows:

  • Barclays
  • Clydesdale Yorkshire Bank
  • Danske Bank
  • NatWest
  • Santander
  • RBS
  • Ulster Bank
  • Lloyds Bank
  • HSBC
  • Bank of Scotland

Most lenders are currently only accepting applications from existing customers, but it has been reported that HSBC is taking applications from non-customers if you set up a ‘feeder account’.

Lenders do not need to carry out any credit checks or verify the long term viability of firms.

More information here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/

 

Top-up to local business grant funds scheme

 New funding is being made available to co-working space tenants, market traders and other businesses in England who aren’t being given funding through the coronavirus business rates relief grant scheme. 

The fund is aimed at small businesses with ongoing fixed property-related costs. Local authorities have been asked to prioritise businesses in shared spaces, regular market traders and small charity properties that would meet the criteria for Small Business Rates Relief. It also covers bed and breakfasts that pay council tax rather than business rates.

Local authorities may choose to make payments to other businesses “based on local economic need”.

To qualify

– Businesses must have under 50 employees and be able to demonstrate that they have seen a significant drop of income due to coronavirus restriction measures.

Grants of £10,000 and £25,000 will be available and local authorities can choose to make payments of any other amount under £10,000.

More guidance and amounts being provided to each council will be released shortly.

For more details visit this link

https://www.gov.uk/government/news/top-up-to-local-business-grant-funds-scheme

 

Self Employed Income Support Scheme – portal opens today!

Self-employed are now invited to get ready to make their claims for coronavirus (COVID-19) support. For more details on the scheme visit our blog by clicking here. 

From today (Monday 4 May), HM Revenue and Customs (HMRC) those who are eligible for the Self Employed Income Support Scheme (SEISS) will be able to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500 (equivalent to three months’ profits), paid in a single installment.

HMRC has opened the portal so you can go online and check your eligibility for SEISS.

In order to receive quick confirmation from the eligibility checker, make sure you have –
Your Unique Taxpayer Reference (UTR) and National Insurance Number to hand and make sure your details are up-to-date in their Government Gateway account.

Once the online check is complete, eligible customers will be given a date when they can submit their claim.
For more details here and the link to the portal click here. 

 

For other help available during the Coronavirus outbreak check out our blog – click here. 

 

If you are business in need of help and support and would like to talk to us about our accounting services please call or email us.

Posted in Website Blog | Tagged business coronavirus, business loans, business update, businessgrants, seiss

Business Survival Tips

 

Business Survival Tips

Over the last few weeks much of the measures you will have been putting in place will be emergency plans. Now is the time to review your business plan for the next 3 months. You need to come up with a new strategy and probably revise your business plan for the next 6 months at least.

We would also recommend you consider the following.

Check your costs

Do a detailed audit of ALL your outgoings. We often have subscriptions or small costs for memberships coming out of our business bank account which normally we hardly notice. But this is the time to do a detailed audit of every expense and analyse if it can be suspended or cancelled. You will then have a clear picture of your financial liabilities.

Check your contracts

You will have contracts in place with staff and customers. If you have not checked this recently now is the time to do this. If you think you may have to may have to make staff redundant at the end of this, then you need to take advice now. Not all businesses will bounce back, and many may recede before they grow back to pre-corona status. So therefore, you need to know where you stand and your liabilities. Speak to an HR expert. You may need to consider various options to keep your business running and it might be feasible to avoid redundancy with staff pay cuts or reducing hours.

Chase money owed to you

This should be a matter of urgency. Many businesses will not survive so you need to deal with any outstanding debts quickly and try and recover money owed. Managing relationships sensitively with customers is of course important. Seek advice if you are not sure the best methods of collecting unpaid invoices.

Map out the risks

Understand the worse case scenarios. Plan for a later lock down than you think, consider how long it may take for your business to recover. Talk to customers if possible and find out how they are feeling and what their plans are. If you are a business aimed at consumers this might be more difficult. Each business will have its own unique set of circumstances so its important to consider your position and what the main issues and threats to you are.

Can you pivot your business model?

Is there any opportunity for you to trade in another way? Make sure you have explored all the options open to you. Can you trade online, run courses online, sell goods or services?

Do not stop marketing

Even if you are just keeping social media channels going and sending emails to customers – do you best to keep in touch. Communicating with your audience is important.

You can run some competitions on social media and offer prizes people can use when you start trading again. Do some videos and keep customers entertained? How about raising money for a charity?

 Work on your business

Make use the time to update your website, refresh your social media or plan some new ideas for goods and services for when this is over.

 

Now it may seem like this will go on forever. It wont and its important to try and stay as positive as possible. Ensure you have accessed all the financial help that is available to you. The most important message is to plan and prepare as those businesses with a strategy will emerge stronger.

 

Posted in Website Blog | Tagged business, business coronavirus, business problems, business survival, cash flow

Be tax return ready!

With the current climate its never been more important to get your 2019/20 tax return completed and filed.

Many self-employed business owners now find they have more time on their hands so use this time to get your tax return done. If there are any announcements on additional benefits dependant on your earnings during 2019/20 you may need this to be ready to apply.

So what do you need to do?

If you have never filed a return before then, of course, this may seem daunting. You must have registered to file a self-assessment tax return with HMRC and you will need your UTR and Government Gateway login. This comes in the post so make sure you apply if you haven’t done this already.

If you do this annually and are used to it then don’t leave it to the last minute this year and get this done as soon as possible. If you are due a refund, then the sooner you complete your return, the sooner you get the refund!

Get your paperwork straight!

Are your receipts in a box or carrier bag waiting to be sorted!

Gather all the information you need to submit your return. This will be much easier for you if you have been using an online accounting system such as Xero. All the information will be there and all you need to do is ensure it is up to date.

If you have been using excel spreadsheets you will need to ensure you have entered all your income and expenditure.

Make sure you have paid close attention to your record keeping. Check your bank records against your income and expenses and that you have all relevant receipts. Reconcile your bank statement to ensure your figures are correct.

Frequently asked questions

I haven’t made a profit do I still need to do a tax return?

HMRC says that you need to send a tax return and pay your tax bill through Self Assessment if, in the last tax year, you were:

· a self-employed sole trader earning more than £1,000

HMRC have a useful tool which you can use to check if you need to a tax return – click here 

Is there any other income or expenses I must include? 

Here is a list of additional incomes you may have, and you must include 

  • Property rental income – find out more info here
  • Any savings interest or dividends
  • Payments from tips/commission
  • Income from overseas 
  • Pension contributions
  • Benefits including State Pension, Child Benefit and Blind Person’s Allowance

What are the allowable expenses for small businesses?

There are several costs that you incur when running your business that you can claim back against your Self-Assessment tax bill.

Here is a list of the main items small businesses can claim:

  • Office rent & utilities including business rates 
  • Insurance 
  • Marketing costs including advertising, networking, website and IT 
  • Stationery
  • Phone Bills
  • Uniforms
  • Staff salaries or freelancer/subcontractors
  • Anything you need to buy to sell on -e.g. stock or raw materials
  • Bank charges 
  • If you are working from home, you can claim a percentage of business premises costs. This would include utilities, council tax, mortgage interest or rent, telephone and internet. You must find a ‘reasonable method’ of dividing the costs between personal and business use. They suggest using the number of rooms used for business purposes, or the time spent working from home.

Read our blog on tax deductibles here.

Every person/business has a unique set of circumstances and having an accountant who understands the tax system will benefit you by removing any worry or concerns you have. Filing a tax return incorrectly could result in a fine or a repayment later. You want to ensure you are paying the right amount of tax. 

If you decide to file this without speaking to an accountant just check, check and check again!!

We are of course happy to help you and advise you! Just call us.

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.

Posted in Website Blog | Tagged Coronavirus, self employed help corona virus, Self Employed Income Support Scheme

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

 

Posted in Website Blog | Tagged Coronavirus, Coronavirus Outbreak

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.

Posted in Website Blog | Tagged 11th March 2020 budget, 2020 budget, budget, budget 2020, budget for businesses

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.

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.

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

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.

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.

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.

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).

 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.

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.

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.

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.

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.

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.

 

 

 

Posted in Website Blog | Tagged tax, Tax Deductible Expenses

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.

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!

Posted in Website Blog | Tagged income tax, self assessment, tax return deadline, tax returns