A business is either registered for VAT or not registered for VAT. A business cannot have some activities registered and some not. Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold. However it can be possible for two people […]
HMRC are warning that a large scale scam email is at large: “Customers are strongly advised to lookout for a new phishing scam. If you get an email with the subject, “Your 2016 Tax Report”, with an attachment, do not open it. Please forward it to phishing@hmrc.gsi.gov.uk and then delete it. For more advice, please […]
The Charities Commission have publicised an inquiry they are holding into a charity that has repeatedly missed accounts filing deadlines. The failure to file accounts on time is cited as evidence of mismanagement and misconduct; and reason to examine all financial and governance aspects of the charity. Whether “naming and shaming” is really the most […]
Currently in the UK most physical books are sold with 0% VAT and most e-books are sold with 20% VAT. Until Brexit has actually completed, the UK remains part of the EU wide VAT system. It is therefore of interest that MEPs are to vote on a EU Commission proposal to reduce the rate of […]
HMRC have lost a recent tax penalties case heard by the First Tier Tribunal (FTT) on 24 April 2017. HMRC had applied daily penalties of £10 per day for late filing of a personal tax return. HMRC could not provide evidence that the tax payer had been properly warned of such penalties. As with all […]
If any of your company’s income is caught by the Intermediaries Legislation (known as IR35) you will need to make a “deemed salary” calculation. Also if any of your company’s workers regularly work under the control of one of your customers then this has to be reported to HMRC under the Employment Intermediaries legislation. There […]
For owner managers of dividend paying companies there is a marginal tax saving of 1% by making a company (employer) pension contribution compared to a personal pension contribution. For example if your company could pay £12500 into a pension scheme there is no tax charge on you. There is simply £12500 going into your pension […]
All National Minimum Wage / National Living Wage rates revised from 1 April 2017. This is in addition to the rise on 1 October 2016. The new rates from 1 April 2017 will be: Year 25 and over £7.50 0 21 to 24 £7.05 18 to 20 £5.60 Under 18 £4.05 Apprentice £3.50 Some tips […]
Public sector bodies paying limited companies for workers now have to assess whether IR35 rules apply to that company. If so then payments made on or after 6 April 2017 (regardless of invoice date) will have PAYE and NI deducted by the public sector body (or by the agency if they use one). The payment […]
Philip Hammond has announced that the planned national insurance rise for the self employed has been scrapped at least for the current parliament. He has said he will announce how extra funds will be raised in the autumn statement. Meanwhile Theresa May has said the government await the Taylor report on the future of employment. […]
The VAT registration limit increases by £2,000 to £85,000 from 1 April 2017. At the same time the de-registration limit increases to £83,000.
There has been much lobbying from the small business sector to reduce business rates. The Chancellor stated that 600,000 small businesses currently benefit from small business rates relief. He announced that no small business that is coming out of small business rates relief will pay more than £600 more in business rates this year than […]
The chancellor also announced that the new tax-free childcare scheme is due to start in 2017. The scheme will provide up to £2,000 a year in childcare support for each child under 12 where the parents save in a special account. If they save £8,000 the government will top up the account with 20% to […]
The Chancellor announced that the Government is committed to continue to have the lowest corporate tax rate of the G20 major trading nations. As already announced the corporation tax rate reduces to 19% from 1 April 2017 and then to 17% from 1 April 2020. The Government is also keen to continue to encourage […]
The Government is committed to the “Making Tax Digital” (MTD) project which is scheduled to start in April 2018 with the first quarterly updates being submitted by the self-employed and property landlords in July 2018. However, the Chancellor has now announced that there will be a one year deferral in the start date to 2019 […]
The Chancellor has announced measures to limit the rise in tax-driven incorporation. The £5,000 tax free dividend allowance will be reduced to just £2,000 from 6 April 2018. Mr Currently, once the dividend allowance has been used the remaining dividends are taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into […]
In his first Budget on 8th March the new Chancellor Phillip Hammond announced that he would level the playing field between employees and the self-employed by increasing Class 4 National Insurance Contributions (NICs) from 9% to 10% from 6 April 2018 and then to 11% from 6 April 2019. His justification is that the self-employed […]
The main national insurance rates for small business for the current tax year (up to 5 April 2017) are summarised as follows: A sole trader pays 9% national insurance on profits above £8,060 (reducing to 2% on profits above £43,000) Partners in any partnership, including limited liability partnerships (LLP) also 9% national insurance on profits […]
Salary sacrifice arrangements are where employees give up some part of their salary in return for an employer provided benefit. These are often tax efficient as the benefit chosen is often a no or low tax benefit in kind. We posted more details on salary sacrifice as a FAQ here. Changes announced in 2016 Budget […]
These are the suggested reimbursement rates for employees’ private mileage using their company car from 1 December 2016. Where there has been a change the previous rate is shown in brackets. Engine Size Petrol Diesel LPG 1400cc or less 11p 7p 1600cc or less 9p 1401cc to 2000cc 14p (13p) 9p […]
New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed by legal disputes with organisations involved in administering the existing scheme, but the new accounts will at last be introduced on a trial basis in early 2017. The new scheme will then be rolled out across […]
From 6 April 2016 Rent A Relief has increased from £4,250 to £7,500. This is an annual allowance which can be deducted from rent received from lodgers where you rent out part of your main residence. Where income from lodgers exceeds £7,500 a year only the excess is taxable or this can to calculated on […]
In addition to the current £5,000 tax free dividend allowance and the personal savings allowance of up to £1,000 there will be two further tax free allowances starting from 6 April 2017. These will be a new £1,000 tax free allowance for self-employed income and a £1,000 rental income allowance. These new allowances mean that […]
Generally speaking VAT registered business have to charge 20% VAT on all supplies (sales) that they make. For certain categories of supplies (e.g. energy saving for residential property) the reduced rate of 5% applies. For yet other goods (e.g. most uncooked food) the zero rate applies. When supplying another VAT registered business, the VAT charged […]
The governement have reannounced the £1,000 tax allowance that starts from 6 April 2017. This was first announced in spring 2016 (see our blog 17 March 2016). The Autumn statement tweaks the allowance to include income generated from sharing goods and services along with trading income. The effect of the new allowance is that from […]
It was announced in the Autumn Statement that from 1st April 2017, “businesses with limited costs, such as many labour-only businesses” will have their VAT flat rate percentage increased to 16.5%. HMRC refers to such businesses as “a limited cost traders”. For such businesses this will remove the benefit of being on the Flat Rate […]
Paying for directors and staff entertainment generally creates a taxable benefit on the individual. However annual parties can be paid for tax free. The criteria includes there being a cap on costs of £150 per head. This can include food, drink, travel and accommodation. The total cost of the party including VAT, is divided by […]
Where additional tax is payable as the result of an HMRC enquiry and it is shown that the additional tax is due to poor accounting records, the maximum penalty that can be imposed is 30% of the additional tax for failure to take reasonable care. Where the error is deliberate, the penalty will be between […]
Finance Act 2016 brought in new rules to ensure that overseas property traders and developers are subject to UK income tax or corporation tax when they dispose of UK properties from 5 July 2016. However the way in which the legislation is drafted may catch some buy-to-let landlords. The new rules treat UK property sales/development […]
Key performance indicators (KPIs) are the statistics you track to determine how well your business is doing. If you’ve been running your business for a long time, you will probably have developed your own KPIs, even if only on an informal basis. We think there’s merit in formalising your KPIs and setting up a system […]
The £85,000 limit was in effect for almost five years until 3 July 2015. The limit was then reduced to the current limit of £75,000. Under the proposals depositors will be protected up to £85,000 as of 30 January 2017. We recommend as a risk reduction exercise businesses including companies should open a second bank […]
Once you have a business plan, move on to setting targets for the short and medium term. Do this together with your team, making sure everyone understands them and how they will be achieved. Then make sure everyone agrees that they are achievable. If your team isn’t willing to agree on this, go back to […]
New rules are soon to come in to effect for all registered qualified accountants and tax advisers to reduce aggressive tax avoidance. The rules are summarised as: “Members must not create, encourage or promote tax planning arrangements or structures that i) set out to achieve results that are contrary to the clear intention of Parliament […]
A recent case reminds us of the need to have a complete national insurance record in order to claim full state pension. For self employed this has meant a record of class 2 national insurance. The case concerned Richard Thomas, drummer with the Birmingham group Breakthru in the 1960s, then in the band Jonesy and […]
If any of your customers are non-business and based outside of the UK then you have to charge their countries VAT on any electronically supplied services. This can include anything you provide which they access from the internet (information etc). This means that you will be responsible for accounting for VAT in each EU customer’s […]
The current UK Living Wage is £8.45 an hour The current London Living Wage is £9.75 an hour These are voluntary rates – more information at http://www.livingwage.org.uk/ The current National Living Wage (legal minimum for most workers) is £7.20 per hour. All current legal minimum wage rates are here.
The Charity Commission and others have established the Charity Sector Counter Fraud Group (CSCFG) to help improve the charity sector’s resilience to fraud. As part of this project they have set up a new website http://charitiesagainstfraud.org.uk/ Trustees should report any fraud in their charity to the police immediately, and also to the Charity Commission, under […]
The crux of the recently highly publicised Uber case is the question of who is supplying the end client. Uber argued it was the drivers supplying the end client: Client buys service (transport) from driver; driver buys service from Uber (logistics). (Uber just an agent) The Employment Tribunal found that it was Uber supplying the […]
Tax relief for businesses on cars is restricted. Cars purchased are generally excluded from the 100% annual investment allowance enjoyed on most equipment purchases. Cars leased often have an element of the lease cost disallowed for tax purposes restricting the tax relief. Rules for special relief for less polluting cars have been revised and extended. […]
In a recent case, the First Teir Tribunal ordered that a tax payers penalty be suspended despite HMRC arguing the penalty was payable. HMRC often draw unwarranted restrictions on which types of penalties can be suspended. If you have a tax penalty for a “careless error”, but can take a clear action to ensure the […]
If you supply goods or services to businesses outside of the UK you need to consider carefully your UK VAT position. We have a factsheet VAT on International Transactions and would be happy to have a further discussion on this (contact us here). But having sorted out the UK situation, that is not the end […]
Ever since 6 April 2015 employment agencies and other intermediaries have been required to make quarterly reports of payments made directly to workers or via partnerships, LLPs and companies where no tax has been deducted from the payments. These requirements apply if you supply a person rather than supply a service. If your client needs […]
Where an individual is resident in the UK, he or she is generally taxable on worldwide income and gains whether or not it is brought back into the UK. There can be significant interest and penalties on top of the unpaid tax if HMRC find out. HMRC now exchange information involving savings and investments overseas […]
Where credit card sales have been omitted from business takings, HMRC are encouraging taxpayers to come forward and make a disclosure of the income that has been omitted to avoid incurring interest and penalties on top of the unpaid tax. As you may be aware HMRC now receive information from third parties such as banks […]
Employers can now give employees small gifts costing up to £50 without fear of a tax bill. This could be for an anniversary, a birthday or because the sun is shining – anything as long as it is not a reward for services. We originally blogged back in December 2015. The main rules for gifts […]
There is a general rule barring VAT claims for input tax relating to cars. However two recent cases have highlighted that a company can in certain circumstances claim back VAT input tax on cars bought and used solely in the business. This will be unusual and will be very much the exception to the rule. […]
Where a married couple hold savings accounts and other investments in joint names, the income from those investments is split 50:50 for tax purposes, unless there is an election to allocate the income in accordance with their beneficial interests. This is particularly important where the couples’ marginal tax rates are different now that there are […]
HMRC have updated guidance on how charities can claim Gift Aid on donations received. It is important that the individual who is donating the money actually makes the gift aid statement. Donors should be made aware they they should not tick a Gift Aid statement if the donation is not from them individually, or if […]
A story about clients that who wait until the last minute to provide tax records: “Most tax practices have clients who delay supplying tax compliance information until a few days before the deadline. There are several reasons for this, including reluctance to engage with taxpayer responsibilities, lack of organisational skills, unavailability of ready funds, fear […]
TaxAid is a charity that helps people who perhaps can’t afford accountants, to sort out their tax affairs. A recent article in Taxation magazine highlighted some stories of people TaxAid has helped, here is one of the stories: “Take Greg, who one morning found a bankruptcy notice on his doormat. His mental capacity had been […]
Default surcharges are penalties raised by HMRC mainly in relation to late VAT returns and payments. These are raised by computer automatically based on facts. When a real life HMRC officer gets involved and hears a traders case, more than half surcharges reviewed are cancelled. If you receive any penalty, or indeed any letters from […]
Despite fuel duty increases, the real cost of motoring fell by 14% from 1980 to 2010. During the same period rail and bus travel increased in price by 60%! Private car use is a major source of carbon pollution, causing climate change and health problems. An increase in fuel duty by 20p per litre would […]
Here at Green Accountancy we always want to check income against actual bank statements. This applies to companies, sole traders, landlords letting income, personal tax, VAT returns, pretty much all work we do. A recent tax case highlighted the benefit of checking income to bank statements. HMRC found there was income on bank statements not […]
Planning is a key element to running a successful business. To get where you want to go, you’ll need a business plan. Most businesses don’t have any kind of plan. So, start with a simple plan that pinpoints what you want to achieve. A business plan is used to get backing. This can be as […]
A recent tax case highlighted one of the benefits of online submissions. The taxpayer submitted two forms to HMRC by post, but HMRC never received them. HMRC imposed penalties of £1280 for late filing of the forms (which incidentally had no tax due on them). The taxpayer appealed on the grounds that the forms had […]
The default position when charging rent (supply of land or space) is that the supply is VAT exempt, even if your business is VAT registered. If you are not VAT registered then exempt supplies do not count towards the VAT threshold. Any VAT registered business can charge VAT on their rent supplies by “opting to […]
Where employers reimburse their employees 45p per mile for using their own cars they are able to reclaim input VAT based on the advisory fuel rates. In the case of a 1600cc diesel car that would be 1.5 pence per mile. (9p x 20/120). Such a claim needs to be supported by a receipt from […]
Before you design your logo or write a clever slogan, you need to identify your USP. This is what gives you an advantage over your competitors as it differentiates you from them. So what constitutes an effective USP? A winning USP: Makes a proposition to the customer that you will provide a specific benefit to […]
The level of State Pension can depend on how many years you have made contributions. This can be checked here: https://www.gov.uk/check-national-insurance-record If you have gaps in your national insurance record you can make additional voluntary contributions. Details are here: https://www.gov.uk/voluntary-national-insurance-contributions You can make additional contributions to increase your state pension further. Details are […]
The latest Finance Act has retained the 28% CGT rate for sales of residential property, whereas the general rate was reduced to 20% for higher rate taxpayers for all other assets. It is possible to reduce the rate from 28% to 20% by deferring the gain temporarily into qualifying EIS company shares. The tax planning […]
You may have seen the new Lifetime ISAs when they were announced in the March 2016 budget. We commented on this back on 17 March 2016. For every £40 you put in, the government will put in another £10. The account then attracts tax free interest on top of the £50. There is also no […]
It is going to become a requirement to have access to your Personal Tax Account – an online account maintained by HMRC. At some point in the next few years Personal tax accounts will replace the requirement for annual self assessment returns. In the meantime there is a host of useful information and services available […]
Since 6 April 2016 every individual has a new “personal savings allowance”. This allows interest to be received tax free up to set amounts. The allowance is £1,000 for basic rate tax payers and £500 for higher and zero for additional rate tax payers. Also since 6 April 2016 interest has been paid by banks […]
The Porter Generic Strategy Model suggests that businesses are most successful when they target one area of the market only. Rolls Royce, for example, goes after a niche market with a high degree of differentiation. Asda, on the other hand, goes after a total market using a low price strategy. Where is your business on […]
A recent tax case (Longridge on Thames v CRC) concluded that a charity providing training services for a fee was trading for VAT purposes. The Court of Appeal said that the charge made by the charity for the training “was more than nominal in amount and was directly relate to the cost of the activity […]
The new Chencellor of the Exchequer will present his first autumn statement on 23 November 2016. If you have ideas for him to take on board, you can add them here Friday 7 October 2016.
Carbon Credits are part of the transferable permits system aimed at reducing greenhouse gas emissions. These add to the cost of polluters, along with environmental taxes. Unfortunately the prices are so low as to be ineffective. The OECD (Organisation for Economic Co-operation and Development) report that the cost of polluting with 1 Tonne of CO2 […]
Many small businesses and organisations are using Receipt Bank to simplify their bookkeeping process. The cost starts from £10 per month. For this you get an app for your smart phone that can be used to record expenditure. Any receipt, however paid for, can be photographed from within the app, some basic details added, and […]
A recent tax case reminds us of the need to keep good company records. In this case the taxpayer had not got good documentation regarding a share issue. The lack of evidence of new shares being issued proved very costly for the taxpayer in terms of later tax relief being denied by HMRC. The most […]
The most profitable small businesses all have one thing in common: The owners’ personal objectives are congruent with their business strategies. Our third tip in our Grow Your Business series is to look at what really matters to you. You can then keep these priorities in mind as you plan your business. As a prompt […]
The new National Minimum Wage rates apply from 1 October 2016. Details of new NMW rates on Gov.UK. The new rates from 1 October 2016 are: 21 – 24 year olds – NMW will increase from £6.70 to £6.95 per hour 18 – 20 year olds – NMW will increase from £5.30 to £5.55 per […]
HMRC are currently consulting on Making Tax Digital (we blogged a summary of this here earlier). If you would like to hear from the HMRC mouth directly go along (or connect to) one of HMRC’s events on MTD.
Some more high profile tax avoidance cases (including “Icebreaker 2”) have been won by HMRC. For many years aggressive tax avoidance split opinion in of tax advisers. Some, including myself, viewed such schemes highly risky and at times frankly ludicrous; others saw “avoid tax at all costs” as a necessity of being an accountant. Those […]
HMRC are publicising the worldwide disclosure facility asking UK taxpayers to take this final chance to declare previously hidden overseas income, assets and gains. Making such a declaration could reduce the level of penalties charged on any associated tax bill. Taxpayers have until 30 September 2018 to make use of the facility. More details on […]
HMRC never email tax payers about refunds, penalties or to ask for bank details. Always be on guard against email scams. It is wise to hover on links to see the website the link points to before clicking. Please spend a few minutes having a look through the following web pages from HMRC. Published 30.8.16: […]
HMRC are opening a new childcare scheme from April 2017. For many people it will be better to stay on the existing childcare scheme. However self employed (sole traders and partners) are ineligible for the exiting scheme but will be able to join the new childcare scheme. Families with the youngest children will be able […]
HMRC now collect Class 2 NI contributions (£2.80 per week) from sole traders when their self-assessment tax return is submitted. In some cases it can be better to pay Class 2 NI even if earnings are below the threshold. There is no requirements to make Class 2 NI contributions if you are below the small […]
If Part 1 of this new series was the all time most obvious business growth tips, part 2 is one of the oldest. A worthwhile thought process nonetheless. DO A SWOT ANALYSIS As part of your business planning process, conduct a SWOT analysis to help you identify your company’s: Strengths Weaknesses Opportunities Threats Use this […]
The VAT flat rate rate scheme asks traders to pick a category that matches their trade from a list provided by HMRC. If you do not match one of the trades listed, then you can choose “Any other activity that is not listed elsewhere 12%” Many trades have a higher percentage, including management consultancy at […]
A recent tax case highlighted the need to send all copies of all HMRC letters to your accountant! The case was unusually simple for the tribunal to decide. A taxpayer appealed against penalties for non-submission of a tax return on the grounds no tax return was needed. HMRC had written asking for a tax return […]
HMRC have pronounced some of their thoughts on what to avoid in tax planning. Things to avoid include: a scheme or suggestion that seems too good to be true pay in the form of a loan tax savings out of proportion with the cost or amounts of money involved situations money just goes around in […]
Charities can use the Gift Aid Small Donations Scheme to claim back tax on donations up to £8,000 (was £5,000 up to 5 April 2016). See HMRC updated spreadsheets used for making such claims. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. […]
PAYE and NI deducted from salaries has to be paid by the employer to HMRC. This is the normal system of payroll, payslips, net pay, tax deductions, and the money ending up in the hands of HMRC. What happens if the employer can’t pay the PAYE? For example if the company ceases trading or is […]
HMRC have implemented an online personal account that is available to everyone with a National Insurance Number even if you do not submit a personal tax return. This account enables you to check details on the following areas: Check your Income Tax estimate and tax code Fill in, send and view a personal tax return […]
Making Tax Digital (MTD) is HMRC’s strategy to modernise tax administration for taxpayers. Some highlights from their latest published MTD time-line include: 2016 test digital reporting of accounts by some small businesses testing using the RTI (payroll real time information) system to report back to tax payers how their personal allowances are used 2017 test […]
Sole trader and partnerships with turnover up the the VAT threshold are allowed to prepare their income and expenditure account for tax purposes on the cash basis. Cash basis excludes from accounts events and transactions that haven’t yet resulted in a money being received or paid. Cash accounting is anathema to accountants. Accountants have built […]
This being the first in the series of “grow your business” ideas – we’ll start with the most obvious business development tip of all time: To increase your sales figure you can: Increase the number of customers Increase the number of times each one does business with you Increase the average value of each transaction […]
Pension contributions made by an employer are tax free (within limits). Contrast that with medical insurance paid by the employer which is almost certainly taxable on the employee or director as a benefit in kind. Historically most life assurance that pays out to an employees family (not the employer) has been seen as a taxable […]
HMRC have updated their really good factsheet on penalties. This six page PDF gives a good overview and useful amount of detail relating to penalties for all taxes. The factsheet is available here. If you would like detailed specific advice on penalties please contact us.
You may have heard about new accounting rules which are being introduced as a result of the EU Accounting Directive, under the documents FRS102 and FRS105. Under these new accounting rules companies qualify for exemptions as follows: Small Entities are those with less than £10.2M turnover, less than £5.1m total assets, less than 50 employees. […]
Two more tax tribunal cases against penalties have gone in favour of the taxpayer this week. In Eastman (TC5276) HMRC had refused to suspend a penalty in apparently one off event. Suspending a penalty requires the taxpayer to put in place processes that would prevent the error reoccurring, which HMRC said was not possible for […]
Capital gains tax rates on sale of shares in unlisted trading companies are currently 10% for basic rate tax payers and 20% for higher rate and additional rate tax payers. If the gain is covered by Entrepreneurs Relief (ER) then the rate is 10% even for higher rate and additional tax payers. Broadly, the main […]
A telephone scam has been reported this week. It involves leaving a recorded message, purportedly from HMRC, stating that the department is bringing a lawsuit against the individual and is going to sue them. The recipient is asked to call a number and press ‘1’ to speak to the officer dealing with the case. HMRC […]
If you did not need to complete a 2015 tax return, but do need to complete one for 2016 (tax year ended 5 April 2016), now is the time to tell HMRC. Individuals are required to notify HMRC by 5 October 2016 if they are not already within Self-Assessment and receive income or gains on […]
New tax rules may result in final distribution of funds on closure of a company being taxed as dividends instead of capital gains. A capital gain is usually preferable to dividend treatment. This is because capital gains are generally taxed at a lower rate than income, possibly as low as 10% where entrepreneurs relief is […]
The Enterprise Investment Scheme (EIS) and the recently introduced Seed EIS provide generous tax breaks for investors who subscribe for shares in qualifying companies provided the correct procedures, and in particular the correct forms, are used to claim tax relief. Seed EIS provides income tax relief of 50% of the amount invested and EIS 30% […]
Furnished Holiday Lets – tax advantages There are various tax advantages to a letting being a Furnished Holiday Let (FHL) compared to any other let. A furnished holiday let is treated by HMRC as a business whereas any other let is seen as an investment. Furnished holiday lettings businesses qualify for capital allowances when equipment […]
Until 5 April 2016 landlords who were letting residential property fully furnished could claim a 10% of rents as an additional cost called “wear and tear allowance”. Wear and tear allowance can be claimed for the last time on 2016 tax returns. For the current tax year (2016/17) and onwards landlords can instead claim a […]
Two recent cases, one for VAT and one for Capital Gains Tax have highlighted the point that tribunals can sometimes allow appeals by taxpayers to be heard after the deadline for appeals. Of course this is the exception rather than the rule. However if you do have assessments for any kind of taxes from HMRC […]
Child Benefit stops on 31 August on or after your child’s 16th birthday. Full details from HMRC are here.