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Category: Business Matters

Rumours circulate over HMRC crackdown on eBay and Etsy sales

Rumours circulate over HMRC crackdown on eBay and Etsy sales

Rumours have been circulating online that HMRC is set to crack down on tax avoidance on sales of goods on the likes of eBay and Etsy, but the basic rules haven’t changed, and anyone who was trading on one of these sites should always have been declaring their earnings to the taxman.

What has changed is that from January 1, 2024, these sites are obliged to provide information to HMRC on sellers operating through the site before January 2025. So, if you have been using these sites to sell items and generating income that should have been taxed, you should get in touch with your accountant to find out what you need to do as soon as possible.

Confusion arises because many people will sell items they no longer want or need on eBay, for example, and in most of these cases there is no tax to be paid. But if you buy goods with the intention of selling them, or you make a capital gain on what you’re selling, then there could be tax to pay.

When would you need to pay tax?

In a useful update, HMRC has outlined the various scenarios that you may find yourself in if you are selling items on one of these sites, and when you would be most likely to need to pay tax. For example, if you are selling items that you own – perhaps because you are clearing out a shed or an attic – then this is likely to be a one-off activity, and you will most probably sell the items for the same or less than you bought them for. In this case, you wouldn’t need to pay tax.

However, let’s say you sold some unwanted clothes or other items you had in the house online to either raise money or simply reduce clutter in your home. You find that you are quite good at getting a good price for these items and decide to start buying items at car boot sales or elsewhere, and then sell them online for a profit. The original sale wouldn’t be considered trading, but the later sales would as you’re deliberately buying goods to sell. In this case, you could be liable to pay tax.

You would also be considered trading if you buy and then sell model cars – another HMRC example – or other items, or you import goods to sell online for a profit. You would even be trading if you make homemade gift cards that you sell online regularly with the intention of making a profit from them.

What other ways might you be liable to tax online?

There are other ways you might be selling that could leave you open to a tax charge. One would be if you are selling online services, such as teaching a language over Zoom or Teams, for instance, or if you generate revenue by offering other services online, such as proofreading. This may not be a service you offer through the likes of eBay or Etsy, but you would be liable to pay tax on income you generate from it just the same.

In fact, any online marketplace – which includes a website or a mobile phone app – would be considered as such by HMRC if any kind of transactional trading takes place on it. These online marketplaces will soon be generating copies of your transaction history that you can get hold of to check your liabilities yourself, but that will also be sent to HMRC directly under a wide-ranging set of internationally agreed guidelines. So, make sure you know if you are expected to pay tax on these transactions, and prepare for it accordingly so you don’t have any nasty surprises.

Are there any allowances?

One thing to consider is that there are certain allowances you might be able to benefit from if you are selling goods online. For example, if your total income from selling goods or services online was less than £1,000 before you take off any costs or expenses, then you wouldn’t need to tell HMRC about it or pay any tax on this.

This is because that amount comes under the Trading and Miscellaneous Income Allowance – which also gives you a £1,000 allowance for any property income under the same legislation. But if the amount you generate is above this, then you would need to inform HMRC and pay any tax due.

Remember though, you also have the Personal Allowance, which for the 2023/24 tax year is £12,570 per year. If you don’t have a full-time job, or you earn less than this across all the ways you generate income each year, then you would still have no tax to pay. But you must still register with HMRC and file a self-assessment return each year.

If you don’t know how to do this, or need to register and file a self-assessment return, you can find more information on Gov.uk

Contact us

If you are unsure whether any of your activities could generate a tax liability, then please get in touch with us and we would be delighted to help you understand your tax position.

February 5, 2024

Chancellor announces tax cuts and business boosts

Chancellor announces tax cuts and business boosts

Chancellor Jeremy Hunt announced several tax breaks for individuals and businesses in this year’s Autumn Statement ahead of the General Election next year. While they will help to put a little more money back into our pockets, other decisions made over many years on areas such as the freezing of tax thresholds make them less favourable than they first appear, according to many commentators.

Cuts in National Insurance Contributions (NICs) and major changes for pensions were just some of the big announcements, in the Autumn Statement on November 22, and there is also a freeze on alcohol duty until August next year, which is good news for those who have a favourite tipple.

What were the big announcements?

The NICs cuts were some of the most significant changes – with Class 2 NICs being abolished completely for the self-employed, and Class 4 NICs to fall from 9% to 8% in the next tax year. For employees, Class 1 NICs will also fall from 12% to 10%.

Pension changes are also in the offing too, with the biggest change set to be allowing everyone to have a single pension that they choose for themselves, and they keep for their lifetime, with each employer paying into that pension pot no matter how often they change employers. The real benefit of this is there would be less chance of it getting lost or forgotten about over time.

The State Pension will also rise by more than many commentators had expected, as the Chancellor confirmed the triple lock will remain in place. So, the State Pension will rise by 8.5% – the amount wages rose by in September.

For businesses, the biggest announcement was that full capital expensing which was a measure introduced in the Budget in March and was originally intended to last three years, will now become permanent.

This is just a very small number of the 110 measures the Chancellor announced on November 22. If you want to find out more details about what Jeremy Hunt had to say, you can read his Autumn Statement online, and you can find other supporting documents – which is where the finer details are outlined – at Gov.uk.

ISAs get much needed flexibility

Individual Savings Accounts (ISAs) were given a welcome boost from next April, as the rules will become more flexible, allowing multiple ISAs of the same type to be opened in a single tax year. It will also be possible to make partial transfers of ISAs opened in the current tax year, which gives far greater flexibility to ISA savers than they have previously enjoyed.

One of the main benefits of this change is that savers in Cash ISAs will have the option to benefit more easily from better savings rates as they appear throughout the tax year. Although you can transfer your ISA currently, it is much more restricted, and you would need to move all the money in one go.

It will also be possible to invest in ‘fractional shares’ – where you invest in part of a share in a business, rather than owning a whole share – something that to this point has not been available through an ISA.

However, the ISA limits remain the same – at £20,000 for adult ISAs and £9,000 for Junior ISAs – something many commentators are unhappy about.

IR35 and National Minimum Wage updates

IR35 has been one of the most hotly contested pieces of legislation HMRC has produced, and many people have ended up with huge tax bills after it was applied retrospectively. IR35 is used to determine whether a worker should be considered an employee and therefore under the PAYE tax regime, or whether they can be considered self-employed.

Most often, this question relates to contractors who may be working under their own limited company structure, but if they are working more for one employer than any other, then HMRC believes they should be an employee of that company instead. It has resulted in many high-profile court cases, including for Eamonn Holmes and Gary Lineker.

While the contentious legislation will remain in place, one major change that will be legislated for in the Finance Bill 2023 is to allow organisations who have incorrectly categorised off-payroll workers under IR35 rules, to reduce their additional PAYE liability. This will be done by offsetting Income Tax and Corporation Tax already paid by the worker or their intermediary, where they have been found to not comply with the IR35 rules. These changes will come into effect on April 6, 2024, and typically apply to higher earners.

However, those earning at the other end of the scale got benefits too in the Autumn Statement. Anyone being paid the National Minimum and Living Wage will see their pay increase by 9.88% to £11.44 across the UK for those aged 21 and over, from April 1, 2024. Young people and apprentices will see their wages rise to £6.40 per hour.

Contact us

If you need to find out more about IR35, ISA changes, or any of the other parts of the Autumn Statement that might affect you, please get in touch with us and we would be delighted to help you make sure you are benefiting as much as possible from the changes.

December 18, 2023

Advance Valuation Rulings on imported goods

Advance Valuation Rulings on imported goods

Importers of goods to the UK from overseas no longer need a business tax account to get an Advance Valuation Ruling for their goods. The rulings, which last for up to three years, mean traders and agents can act with legal certainty on the value of the goods they are importing for customs calculations.

By getting the valuation of the goods you are importing in advance, you can also be sure you’re using the correct method to work out the customs value. So, when you bring them into the UK, your customs declaration is correct.

It also helps you to have a legally backed decision for your valuation method, because if it is scrutinised at a later date, you know there should be no problem.

Who can apply for the valuation?

Traders using their own EORI number, starting with the letters ‘GB’ or an agent acting on their behalf can use the new service. But if you want an agent to apply for you, you must add them to your business tax account, or give them a ‘Letter of Authority’ to act on your behalf.

You must make the application before your customs procedures have been completed, because no valuations will be made retrospectively. You need your Government Gateway ID, and you must have identified the method of valuation you think works best for your goods. You can find out more information about the options you have here.

HMRC can refuse an application if you:

  • Are not planning to import the goods.
  • Are unable to supply all the necessary information about your goods.
  • Have already cleared your goods through Customs Import Procedures.

Source: HMRC

You will also need supporting documents relevant to the goods you are importing, which could include commercial invoices from your overseas suppliers, copies of previous import entries, and any commercial agreement you have with suppliers. Any commercially sensitive information included as part of the application must be marked as such before you upload any of these documents.

Let us help you

If you need help to import your goods in the most tax-efficient way while also complying with all relevant laws, then please get in touch and we will be happy to offer you the help and guidance you need.

November 13, 2023

Redundancies expected to rise this year – what you need to know

Redundancies expected to rise this year – what you need to know

The latest official figures show that redundancies are on the rise this year. Expected redundancies are up from 22,525 in June to 23,975 in July, based on the number of HR1 forms filed to HMRC. While this data lags behind real-world figures because of the way it is collated, many big companies have already announced redundancies.

The biggest so far includes Wilko. Its collapse has put around 12,500 jobs at risk. But it is far from alone in making layoffs. Deloitte is expected to lose around 800 of its UK staff, while even behemoths like Google, Amazon, Yahoo and Meta have made redundancies this year. As early as February, the Retail Gazette highlighted that 15,000 jobs in retail had been cut by the time this story was published.

Employees can do little to avoid the cull, but the least you can do is understand what you can expect from your employer. If you’re an employer, then you also need to understand your legal obligations.

Responsibilities of an employer

Let’s start with the employer’s responsibilities. To make a person or people redundant, their job or jobs must no longer exist. If this isn’t the case, it won’t be considered a genuine redundancy. Then you must choose who to make redundant.

This must be carefully considered, especially if you are making compulsory redundancies, as the people you choose must be chosen fairly. For example, under the Government’s fair selection criteria, you can consider:

  • skills, qualifications and aptitude,
  • standard of work and/or performance,
  • attendance,
  • disciplinary record.

Source: Gov.uk

You can use the ‘last in, first out’ approach legally too, providing it doesn’t unfairly impact one group over another. However, you cannot choose people based on:

  • pregnancy, including all reasons relating to maternity,
  • family, including parental leave, paternity leave (birth and adoption), adoption leave or time off for dependants,
  • acting as an employee representative,
  • acting as a trade union representative,
  • joining or not joining a trade union,
  • being a part-time or fixed-term employee,
  • age, disability, gender reassignment, marriage and civil partnership, race, religion or belief, sex and sexual orientation,
  • pay and working hours, including the Working Time Regulations, annual leave and the National Minimum Wage.

Source: Gov.uk

For voluntary redundancies, you must be clear about how you are going to choose people, and ensure they understand you may not give them redundancy just because they applied for it. Another way to reduce staff numbers voluntarily is to offer people incentives to take early retirement. This must be offered across the entire workforce to comply with legislation. But you can’t force someone to retire early.

At all times, good communication between employers and employees is paramount, so everyone knows where they stand, and trust is maintained.

What employees need to know

Employees want to know they are being treated properly, and there are different rules employers must follow depending on how many redundancies they’re making. If it is less than 20, there are no hard and fast rules, but you should still be fully consulted on plans and kept informed of what is about to happen.

If more than 20 people will be made redundant within the same ‘establishment’ as the Government puts it, within a 90-day period, then the company must go through a ‘collective consultation’. Staff or union representatives should be informed initially if they are in your workplace, or the company must speak directly to the staff.

The consultation period must last for at least 30 days if 20-99 people are being made redundant, or 45 days if it is 100 or more. Once this is done, then you will be given notice of your redundancy. At the very least this should include:

  • the reasons for redundancies,
  • the numbers and categories of employees involved,
  • the numbers of employees in each category,
  • how you plan to select employees for redundancy,
  • how you’ll carry out redundancies,
  • how you’ll work out redundancy payments.

Source: Gov.uk

How is redundancy pay worked out?

How much redundancy pay you will get depends on a variety of factors, but there are rules around the minimum statutory redundancy pay that should be offered. For example, anyone not under an employment contract, those with the company less than two years, and those who have taken early retirement won’t get statutory redundancy pay. Your employer may still pay you, but it is not compulsory.

Any employee receiving redundancy pay should be told exactly how it has been worked out in a written statement. The statutory redundancy pay rules allow for amounts equivalent to:

  • 5 weeks’ pay for each full year of employment after your 41st birthday,
  • one weeks’ pay for each full year of employment after your 22nd birthday,
  • half a weeks’ pay for each full year of your employment up to your 22nd

Source: Gov.uk

The length of service is capped at 20 years under these rules, and the amount you will receive is based on the average of the amount you earned in the previous 12 weeks prior to you being made redundant. Even so, weekly pay is capped at £643 per week, and the total statutory redundancy payout is capped at £19,290. But remember, your employer can decide to pay you more, or you may be able to negotiate more.

This payment should be made when you are made redundant, but if not, or your employer doesn’t agree with the amount, you have up to three months to claim the payment due from an employment tribunal. So, even though this might be an emotional time, keep your eye on the calendar to make sure you don’t miss out. The good news is that even if you miss this deadline, the tribunal would have up to six months to decide whether you should receive the money.

We can help you

If your business needs to make redundancies, or you’re an employee about to be made redundant, please get in touch with us and we will help to either make sure you are complying with all of the relevant regulations, or receiving what you expect.

October 23, 2023

New UK Internal Market Scheme launches

New UK Internal Market Scheme launches

A new UK Internal Market Scheme (UKIMS) has been launched to replace the old UK Trader Scheme, which will enable any registered traders to move ‘not at risk’ of entering the EU goods into Northern Ireland. The legislation, which came into force on September 30, is needed following the UK’s exit from the European Union.

The good news is that from October 2024, these ‘not at risk’ items will also be free to move without any unnecessary paperwork, checks or duties, only the existing commercial information will be needed from then onwards.

What are the changes and what do they mean?

There are three main changes under the UKIMS rules compared with the old scheme. The first is that all companies established in the UK will be able to use the scheme, instead of only those companies with a physical premises in Northern Ireland.

The second is that the turnover threshold below which companies involved in processing can move goods has risen from £500,000 up to £2m, making the scheme more widely available. The third is that even if a business is above this £2m threshold, they will still be eligible to move goods under the scheme if they are for use in healthcare, construction, animal feed or not-for-profit sectors.

All traders operating under the old scheme should have received information on how to become authorised for the new scheme. There are some additional pieces of information that need to be supplied for HMRC to complete the enrolment of these traders into the new scheme. You can get more information and guidance on what these are by clicking here.

Let us help you

If you need or want to move goods into Northern Ireland, then please get in touch with us and we will work with you to ensure you have all the relevant permissions under the new scheme.

October 16, 2023

Back to work means it’s time for business development

Back to work means it’s time for business development

For most people the summer holidays will be firmly in the rearview mirror by now and they will be starting to focus on the year ahead. One way to make sure next year will be one to remember is by putting some effort into business development now, so you can start 2024 in good shape.

The EY Item Club said earlier this summer that it expects the UK economy to grow by just 0.8% in 2024, so the sooner you start working on how you can connect more effectively with your customers, whether your business is B2B or B2C, the more chance you have of boosting your profits.

Autumn is a great time for business development, as the months ahead of Christmas are key for many businesses because they plan their budgets and allocate finances to projects the following year. Getting in front of the right people now could give you a better chance of securing a piece of the pie.

Where’s the best place to start?

Most businesses will be doing some form of business development on a regular basis – and if yours isn’t, then this is something to address. Becoming complacent and relying on your current client base to keep your business afloat is a risky strategy.

If you’re new to this, then one of the best places to start is by identifying what your customer looks like. Literally. This may sound extreme, but considering who your customer is, what they are interested in and what they are going to want to spend their money on is the ideal way to target the people or businesses you want to work with.

For example, is your business selling primarily to people or other businesses locally? Could you expand your reach online? Are your customers UK-based, or can you sell your products or services globally? Once you know the answers to these initial questions, you can begin to establish who your customers are.

Where do I find them?

The next step is talking to them. This could be through advertising locally, or perhaps you could harness the power of social media to spread the word about your business. For example, LinkedIn is a great place to do some networking whether your business is B2B or B2C, or both.

Other social media sites, such as X, formerly known as Twitter, Instagram, Facebook, TikTok, Threads and so on, can be just as useful. But you will need to create regular content for them to be effective. This can take time, although there are now some useful AI tools that can do some of the heavy lifting for you. For image creation, you could check out Midjourney, or if you already use Hootsuite to manage your social media channels, then check out its AI content creator OwlyWriter AI.

AI tools aren’t perfect, but they can help take away some of the difficulties that come from starting with a blank page and give you some content to work with. You can even use AI tools to run ads for you now, just be sure you keep a keen eye on how well they are working. This is your brand we are talking about here.

I don’t like social media, what else can I do?

If you’re not a fan of social media, there are plenty of other ways to meet and greet potential new partners and customers. Check out any local trade fairs that are happening and see what it costs to go as a delegate or to exhibit. The latter will usually cost more, so do your research carefully to see who will be there so you know your efforts and money won’t be wasted.

Other business development can be done through business associations, such as the local Chamber of Commerce, or through networking at more social events, such as during a round of golf or at a tennis club.

Once you get into the swing of your business development, use a customer relationship management (CRM) system to keep on top of those conversations and important contacts. This will help you track and action anything you need to so those opportunities don’t get left to wither on the vine. Different CRMs have various pros and cons, so again do your research carefully.

Contact us

If you are considering spending money on your business development, then get in touch with us first and we will help to make sure you are getting the right tools for the job.

October 9, 2023

ECL now open online for registrations and returns

ECL now open online for registrations and returns

Any regulated businesses that need to sign up for the Economic Crime (Anti-Money Laundering) Levy (ECL) can now both register and make returns via the online service. Registrations and returns cannot be made by tax agents, so every affected business must sign up and make their returns directly.

To file a return online, businesses must have registered with the ECL and have requested their access code. Once they have both they can file their returns.

The ECL online service is accessible via GOV.UK and if your business needs to register, you will need:

  • information about its UK revenue for the last financial year;
  • the date when the organisation started anti-money laundering regulated activities;
  • the contact details of a responsible person in their organisation, including all the following:
    • name;
    • role;
    • email address;
    • telephone number;
    • the business sector the organisation operates in.

Source: Gov.uk.

How often you file and pay depends on your collection authority

Depending on who your relevant collection authority is, you may need to file a return and pay a fee every year. It will be one of the Financial Conduct Authority, the Gambling Commission, or HMRC. You can find out background information on ECL at GOV.UK.

If your collection authority is HMRC, for example, then affected customer will only register for the ECL once but must submit a return and pay the ECL every year your UK revenue exceeds the threshold. This must be done by September 30 each year, so the payment for April 1, 2022, to March 31, 2023, is due on September 30, 2023.

Let us help you

If you think you may need to sign up to the ECL or have already signed up and need help with filing your returns, please get in touch and we will help guide you through the process.

September 18, 2023

Alcohol duty changes – what it means for pubs, stores and small brewers

Alcohol duty changes – what it means for pubs, stores and small brewers

Up to 38,000 pubs and bars which have seen cuts in the tax they pay on the draught products they serve will be better off thanks to changes to the way that Alcohol Duty is calculated from August 1, 2023.

The cuts will make pints and other products sold on tap 11p cheaper than supermarket equivalents, in a bid to help the hospitality industry. It means they can finally compete on a level playing field with supermarkets and continue to be a key part of their local communities, according to the Government.

What are the new duty rates?

The changes are designed to modernise and simplify the Alcohol Duty system which has been in place for the last 140 years – changes the Government claims are only possible to make now the UK has left the EU.

The key changes are:

  • all products taxed in line with alcohol by volume (ABV) strength, rather than different duty structures for different drinks;
  • fewer main duty rates, from fifteen to six, to make it easier for businesses to grow and operate;
  • there will be lower taxes on lower alcohol products – those below 3.5% alcohol by volume (ABV) in strength – a huge growth area in the drinks industry;
  • all drinks above 8.5% ABV will pay the same rate regardless of product type.

Source: Gov.uk

This means Irish cream will fall by 3p, cans of 5% ABV ready-to-drink spirit mixers will be 6p cheaper, Prosecco will fall by 61p and 500ml of 3.4% pale ale will cost 20p less per bottle, according to Government data.

However, it also means other drinks with more than 8.5% ABV will become more expensive. For example, those partial to a port or sherry will see their favourite tipple rise by £1.30 and 97p per 75cl bottle respectively, according to the Wine and Spirits Trade Association (WSTA). Vodka will also go up 76p per 70cl bottle, and a typical 12% ABV bottle of red wine will go up by 44p.

New tax relief for small drinks producers to increase innovation

There is also new relief for small producers to help them increase innovation and add to the growth in the UK alcoholic drinks market, which is up 6% year-on-year and is now worth just under £50 billion. Booze sales are forecast to reach £60.9 billion in 2026.

So, the Small Producer Relief extends the Small Brewers Relief scheme and now allows businesses producing alcoholic products with an ABV lower than 8.5% to benefit from reduced rates of alcohol duty on qualifying products. This should help them experiment and innovate in new types of drink production, and also benefit from the increased trend towards lower alcohol drinks.

Barry Watts, Head of Policy and Public Affairs, Society of Independent Brewers, said: “[This] is the culmination of five years of consultation on the future of Small Breweries’ Relief – a scheme that has made the huge growth of craft breweries possible over the past twenty years. These changes will finally address the ‘cliff edge’ which was a barrier to small breweries growing and build on the scheme’s success by applying it to other alcoholic products below 8.5%.”

The Brexit Pubs Guarantee

Along with these changes to alcohol duty, the Government has also promised that the price of alcohol in pubs will always be less than retailers – something known as the Brexit Pubs Guarantee.

Prime Minister Rishi Sunak said: “I want to support the drinks and hospitality industries that are helping to grow the economy, and the consumers who enjoy the end result.

“Not only will today’s changes mean that that the price of your pint in the pub is protected, but it will also benefit thousands of businesses across the country.

“We have taken advantage of Brexit to simplify the duty system, to reduce the price of a pint, and to back British pubs.”

We can help you

If you need help with calculating the duty you need to pay for your business, please get in touch with us and we will help you understand what you need to do.

September 11, 2023

What employee perks will the taxman help you fund?

What employee perks will the taxman help you fund?

We all love a perk of the job, and a major industry has built up around the types of employee perks companies are able to offer. The best news of all is that most of these will be tax deductible, which means the taxman will fund at least part of them.

Everything from free snacks to mental wellbeing support are now a regular part of the employment landscape, among other employee benefits, as companies push to make themselves the best choice for the top employees, especially in specialist sectors where there is a labour shortage.

What perks and benefits should my company offer?

Choosing the right perks to keep your existing employees happy and to attract high-quality new staff is the Holy Grail, and a lot will depend on the industry your business is in, the age group of your workforce and any specific requirements your staff have. One of the best ways to choose the right perks is to canvas your existing employees and ask them, that way you are going to be more likely to give them what they really want and value.

Alternatively, you could ask one of the employee benefit specialist companies to do the work for you, and give you access to the kind of benefits your staff are asking for. There is a cost involved in this, so make sure you are happy to pay the fee and that you will get the benefit of providing the perks.

What are some of the most common benefits?

There are some pretty standard benefits on offer, including private healthcare, dental care and even optician services. But there are some other benefits that may be less usual that could be good for your business. These could include unlimited and unmonitored flexitime, paying a joining bonus for new staff and/or an annual bonus, or negotiating discounts for staff at local pubs, clubs or gyms.

This last suggestion is one you may be able to deal with yourself, especially if your company employees a relatively high number of staff within the local area. There are lots of other businesses that will see the benefit of encouraging your staff to use their services, so it is always worth asking.

We can help you meet your obligations

If you are unsure about what kind of perks your business should offer, then please get in touch with us and we will help you choose the best options and route to delivery for you.

August 22, 2023

Why you must keep Companies House data up-to-date

Why you must keep Companies House data up-to-date

When your business was registered at Companies House, you would have provided lots of detail about the business and the people who run it – including who are your directors, company secretary, the breakdown of share capital, and the type of business your company does. But failing to keep this information up-to-date could land you in hot water with the authorities.

Each year, you are required to file your Confirmation Statement to inform Companies House about any changes that have been made to your company in the previous year. Failing to do this within the allotted time will lead to sanctions, which could include your company being struck off the register if you continually fail to comply.

You must tell companies house about any changes, such as the adding or removal of directors of the business, a change of business or personal address, and any changes to the business sectors your business operates in.

Articles of Association and Memorandum of Association

You also need to sign up to an ‘Articles of Association’ and ‘Memorandum of Association’ when your business is formed, which you can choose to write yourself or you can use the model version from Companies House.

The Articles of Association is a longer document which sets out your company’s constitution, so even if you do use a model version of these, you need to check it carefully to ensure it meets the needs of your business, especially if this changes over time. You can amend these to keep them current.

The Memorandum of Association is a single page document which outlines each person who is going to be a part of the company at the start. This cannot be changed even if the people within the business come and go. It is a historical record of how your company was formed at the time, and by whom.

Even if you think everything has been correctly filed at Companies House, it is always worth checking periodically to make sure, as you might be surprised what may have been done incorrectly without your knowledge.

Let us help you

If you think you may need to amend any details held by Companies House about your business, then please get in touch and discuss this and we will do what we can to help you.

August 16, 2023

Reduce your company tax bill by doing a good turn

Reduce your company tax bill by doing a good turn

Charitable giving is something many organisations might not be considering in the current climate, especially as everyone is struggling to pay their bills. But if you have money to spare within your business, then charitable giving is a great way to reduce your tax bill on company profits while simultaneously helping a good cause.

The rules around charitable giving for companies are similar to those for Gift Aid for individuals. For companies, the maximum amount of Gift Aid that can be claimed is equivalent to the amount of tax you would have had to pay on the profits made by your business in a single tax year. There are special rules for companies that are wholly owned by charities which your accountant can help you with if you are in this position. But this article is focusing on general companies looking to make charitable donations in a tax-efficient way.

How does a charitable donation reduce Corporation Tax?

If your company has a particular affinity with a specific charity, then not only will your chosen charity benefit from your largesse by making a donation, it can reduce the amount of Corporation Tax you pay too. Gift Aid relief is applied to what the Government terms “qualifying donations” which need to meet certain conditions.

A payment is not a qualifying donation, according to Gov.uk, if:

  • It’s a dividend or distribution of profits.
  • It is made subject to a condition as to repayment.
  • The company or a connected person receives a benefit which exceeds the ‘relevant value’in relation to the payment.
  • It’s made by a charity or community amateur sports clubs.
  • It’s conditional on the charity acquiring property that has not been gifted to them.
  • It’s part of an arrangement whereby the charity acquires property that has not been gifted to them.

There are various ways that you can make your donation, but in each case, you must keep proper records of what was donated and when.

What ways can my business make a donation?

There are a number of different ways that your company can make a donation to a charity. The most obvious is by giving money directly to the charity of your choice. But you can also donate equipment or trading stock, land, property or shares in a company that isn’t your own – your own company’s shares don’t qualify – provide employees on secondment to the charity, and through sponsorship payments.

To claim the relief, you would need to ask your accountant to make sure the donation is listed in the company tax return for the relevant period that the donation was made.

How do I make the claim?

The way you make the claim depends on how you have made your donation. For example, if you have donated money or given or sold land, property or shares to the charity, then you would enter the total value of your donations into the ‘Qualifying donations’ box on the ‘Deductions and Reliefs’ section of your Corporation Tax return.

If you have seconded employees to work with the charity or sponsored the charity, then these would be deducted from your company profits as a business expense.

In both cases, the charitable donation would be paid out of your gross profits, so there is no need for any Gift Aid to be reclaimed by the charity. Remember, you cannot donate more than the profits generated in a single accounting period. The most your profits can be reduced to is ‘nil’, you cannot donate to make your company make a loss for tax purposes.

If you have given or sold land, property or shares to a charity, then there are special rules which apply to how you calculate their value. Your accountant is best placed to help you with this.

We can help you

If you need help to decide whether you should make charity donations from your business, and if so, how much they should be, then please get in touch with us and we will help you understand what you need to do.

August 7, 2023

BoE base rate rises – has your business account kept up?

BoE base rate rises – has your business account kept up?

The Bank of England (BoE) has raised rates 13 times in a row to June this year, with the base rate reaching 5% – a level not seen since 2008 at the height of the financial crisis. Mortgage rates and loan rates have risen alongside the base rate, but savings rates have tended to lag behind.

The base rate rises are designed to rein in inflation, which was still stubbornly high at 7.9% in June, significantly higher than the 2% target for the BoE. Experts at Schroders predict even more rate rises, with the base rate potentially reaching as high as 6.5% by the end of the year, which is bad news for borrowers, but good news for savers.

Easy access business account rates

While personal savings accounts have seen rate rises, the same applies for business account savings rates. So, if your business has excess cash sitting in a business bank account earning little or no interest, then consider opening a separate savings account and allowing that money to work for you.

The rate you can get for your business savings varies depending on how quickly you want to access that money. If you want to be able to make unlimited withdrawals at any time, then you would need an easy access, also known as an instant access, account. But you are likely to get slightly less in interest than you could get if you can give some notice before making a withdrawal.

At the moment, one of the best rates you can get for an easy access account is around 4.65% Annual Equivalent Rate (AER) – this is the actual amount you would receive in interest depending on how often the rate is calculated and then compounded over an entire year. For example, the monthly gross interest rate on this account is 4.65%. But if there is a compounding effect – where interest is calculated and applied more often than annually, meaning the next amount of interest paid is based on the original deposit plus the previous interest added – it could take the overall interest paid in a year to a higher rate.

Usually there will be a minimum deposit amount to open the account, so check any terms and conditions you need to comply with to get the advertised rate. You also should check whether the interest is a fixed or variable rate. If the former, you know what you will receive for the period the rate is fixed for. If that latter, the rate can change at any time, so keep an eye on it and be prepared to move to a better paying account if the rate drops.

Business notice account

If you can keep some money in an account where you give notice before making a withdrawal, it will boost the amount of interest you can earn. The current leading rates for notice accounts are paying around 5.35% AER if you are prepared to tie your money up for three months before making a withdrawal.

Again, watch for any terms and conditions and minimum deposits you might need to make. As you have to give notice before you make a withdrawal, you may face a penalty if you access the account before the notice period has been completed. This is often a reduction in interest, but check the terms to be sure you are able to comply with them before signing up.

Fixed term bonds

If you can afford to tie some of your company’s money up for longer, then you might want to consider a fixed rate bond. These will be offered over various periods, usually one year or more, and again you will not be able to access the money for the agreed term without a penalty.

The benefit for this is a higher rate of interest paid on your deposit. For example, one of the top rates for a one-year fixed rate bond for business customers is currently paying 6.13% AER. But you may find you need to put more money into the bond than some of the other accounts, which could be prohibitive for smaller businesses.

However, if you can keep some money in a product for a longer period of time, this might be worth considering.

Contact us

Using business savings accounts, particularly when interest rates are rising, is a good way of making your money work harder for you. If you need help in finding out the right account for you, then please get in touch and we will be happy to assist you.

July 31, 2023

P11D and P11D(b) forms must be filed online by July 6

P11D and P11D(b) forms must be filed online by July 6

P11D and P11D(b) forms from April 6, 2023, now need to be filed online by July 6 following a rule change from HMRC. If employers need to make amendments to any returns that have already been filed, these should also be made online through a new form via the expenses and benefits for employers page.

If any employer now files their P11D and P11D(b) returns on paper, they will be rejected as not having been submitted correctly. This notification will include details about how to file the forms correctly going forwards. This can take time and cause delays for a business, so it is better to use the correct method in the first place.

If you fail to file the P11D or P11D(b) return by the July 6 deadline, you could face a penalty.

File Class 1A National Insurance Contributions info by July 6 too

Any Class 1A National Insurance Contributions (NICs) will also need to be flagged by employers to HMRC by July 6, and any payments due must reach the tax office on or before July 22 this year.

So your payment is correctly allocated, HMRC advises companies to use their 13-character accounts office reference number without spaces, followed by 2313.

HMRC stated: “Adding 2313 is important because 23 tells us the payment is for the tax year ended 5 April 2023, and 13 lets us know the payment is for Class 1A National Insurance contributions.”

You can find more information about how to pay employers’ Class 1A National Insurance at Gov.uk.

How you submit your P11D and P11D(b) electronically

To file either of these returns online, you can use commercial payroll software or HMRC’s PAYE Online service. You must submit all your P11D and P11D(b) forms online at the same time in a single submission. You can find more information online at Gov.uk relating to expenses and benefits for employers.

Employers must submit a P11D for every employee who gets any benefits or non-tax-exempt expenses, unless the employer registered that they would be taxed on these benefits through payroll before April 6, 2022. Any benefits not dealt with through the payroll for any reason need to be included on a P11D.

Any employer who wants to avoid dealing with P11Ds can register for all benefits to be payrolled for the 2024/2025 tax year.

We can help you meet your obligations

If you are unsure whether dealing with all benefits-in-kind through your payroll or through the filing of P11D and P11D(b) forms is best for your business and your employees, then please get in touch with us and we will advise you on the best course of action.

July 3, 2023

Can hybrid working boost your business?

Can hybrid working boost your business?

The pandemic brought a lot of changes to our businesses, some good and some bad. One that has continued to be a topic of conversation is the desire for more people to be able to work some, or all, of the time from home.

If your business requires people to be onsite – such as a coffee shop, a factory, or a dental practice, for instance – your staff would have little choice about where they are working. But for administrative roles, or those that could be done from anywhere in the world with a phone, a computer and an internet connection, the argument for getting people to come into the office is a harder one to win.

Employers reluctant to allow workers free rein

Some employers are reluctant to allow their employees to work from home, perhaps because they fear they will get less done there than they would in the office. But various pieces of research show that allowing employees more freedom about where and when they work increases productivity rather than decreasing it.

There are fewer distractions when employees work from home compared to the office, and the ability to work as and when it suits them often results in people being more productive than when they are being forced to work specific hours.

A recent report from the ACCA – UK Talent Trends in Finance 2023 – found that the UK is leading the way when it comes to hybrid and remote working.

Jamie Lyon, head of Skills, Sectors and Technology at ACCA, said: “Only one-fifth of respondents in the UK identified as fully office based, with the remaining 80% either adopting a hybrid approach to work or being fully remote. However, globally, the picture is notably different, with over half of respondents being fully office based. And 77% of respondents in the UK feel they are more productive when working remotely.”

Could hybrid working be good for your employees?

Many companies are already allowing some staff to work from home at least part of the time. But if your business isn’t one of them, you may want to consider adding this as an option.

It can provide various benefits, including:

  • Being more inclusive for employees who find it difficult to juggle their home and work life around specific office hours.
  • Greater productivity.
  • Improved employee wellbeing because they have more control over their working and home life.
  • Greater flexibility in allowing employees to change their approach based on what the business needs at a particular time.

However, not every employee is keen to work from home. Some people prefer to be in the office full time as they thrive in this more social environment. So, bear this in mind when you are creating hybrid working policies.

Are there other benefits to your business?

One other major benefit to the business could be the reduced amount of office space needed. If your company owns its office building, you may be able to let out part of that building to another business to benefit from additional income. Alternatively, if you use rented office space such as WeWork, you may be able to reduce the size of the office you need there and cut your monthly outgoings.

You may also consider offering employees a one-off payment to set up their home office to ensure they don’t end up with work-related injuries, such as repetitive strain injury (RSI) from having a poor posture at work because they are using the wrong type of chair or desk and so on. Any saving you can make on office space could be used to offset this payment, and remember it would also be tax deductible.

We can help you

If you are considering hybrid working as part of your business strategy, then please get in touch with us and we can help you understand the benefits and costs that could be involved.

June 19, 2023

How you can benefit from salary sacrifice

How you can benefit from salary sacrifice

Salary sacrifice is something you may have come across before but not fully understood. After all, why would anyone want to voluntarily give up some of their salary? The reality is that, in some instances, using salary sacrifice to get alternative benefits can reduce your tax bill considerably and make buying the things you would buy anyway much cheaper.

Employers have the ability to arrange large discounts if they know a number of employees will take up a specific benefit, because the provider will be able to sell a larger number in one go if the product or service is being paid for through a company payroll.

What can it be used for?

There are many things employers can offer to their employees through a salary sacrifice scheme. Bicycles, bus passes or other transport payments, gym membership and even car parking or laptops can all be offered via salary sacrifice. People can also make pension payments this way.

The main benefit is that by purchasing goods and services through the payroll, the payment is taken from your salary at source which means you don’t pay tax or National Insurance on the amount of money used to pay for these items. For example, a higher-rate taxpayer would save 40% and 2% NI on the amount of money they sacrifice to make the purchase, while a basic rate taxpayer would save 20% and 12% on NI.

If you are keen to get an electric vehicle, using salary sacrifice can be one of the most cost-effective ways to achieve this. Although this is seen as a ‘benefit in kind’, the value applied to electric cars is just 2%, while for petrol and diesel cars it can be as much as 37%.

As the salary isn’t being ‘paid’ to the employee, employers will be able to reduce their NI contributions too, making it a win-win for all.

We can help you meet your obligations

If you are interested in offering salary sacrifice for your employees, or approaching your employer to see if it will offer you a salary sacrifice scheme, then please discuss this with us and we will advise you on how to do this.

June 12, 2023

Base rate rises again – what it means for business

Base rate rises again – what it means for business

The cost-of-living crisis is taking its toll across all areas of our lives now. While inflation has fallen very slightly this month to 8.7%, food prices remain stubbornly high, and the Bank of England (BoE) is expected to continue with its base rate rises until later this year.

The last rate rise in early May took the base rate to 4.5%, but analysts predict that the BoE could still push forwards with additional rate rises in the coming months and expect the base rate to hit 5% by the end of the year.

What is happening to business borrowing?

Rising base rates impact all types of borrowing – with mortgage borrowers on variable or tracker rate mortgages hit first as lenders are quick to pass these rises on. But businesses are affected too in a variety of ways, because it is also more expensive for them to buy goods and services to keep the business going. Many of these costs would ordinarily need to be passed onto consumers. But as they are already struggling with rising energy bills and mortgages, among other things, the amount that can be passed on without losing customers altogether is minimal.

So, businesses are being squeezed in the middle of these rising costs and many are taking out business loans to cover their outgoings in the short, and sometimes even longer term. The latest official figures from the BoE show that net business borrowing by UK non-financial businesses in March was £2.5 billion in bank and building society loans, including overdrafts.

Large non-financial businesses borrowed £3.2 billion net in March, while small and medium non-financial businesses actually repaid a net of £0.7 billion in March.

This compares with £4.5 billion, £3.7 billion and £0.6 billion of net repayments respectively in February. Borrowing by large businesses rose from 3.1% in February to 3.3% in March, while it fell by 4% in March for SMEs.

Interest rates on business loans have fallen back very slightly, but they are still much higher than they were in December 2021 when the BoE rate rises began. The average cost of new borrowing from banks for non-financial businesses was 5.76% in March, well above the 2.03% average back in December 2021.

For SMEs specifically, the average rate was even higher at 6.36% in March, when in December 2021 it was just 2.51%. But remember, the BoE base rate has risen twice since these figures were collated, so the likelihood is these loans will be even more expensive now.

Reassessing your business needs

These increases in borrowing and the reduction in spending by consumers will put additional pressure on many businesses, prompting them to run leaner and cut costs wherever possible and sensible to do so.

For example, if you hold a lot of stock within your business, you may want to free up some of your cash by either sending that stock back, if it is on sale or return, or putting it into a sale. Your profit margins on that stock may be reduced, but that freed-up cash can be used to plug potential holes elsewhere in the balance sheet.

You may also need to consider reducing staff numbers if you are not as busy as usual. But be careful about doing this because if your service standards reduce, it could drive customers away. Customers are the lifeblood of any business, so prioritise them no matter what is going on in the background.

Get advice on business borrowing

However, if you have cut your costs to the bone and made as many changes to your business as you dare, you may still need to raise funds to get you through a rough patch. You can do this in a variety of ways:

  • Borrowing directly from your bank
  • Raising money through a fundraiser from investors
  • Remortgaging a property you own

The way you choose could depend on how quickly you need the money and what options are available to you. Borrowing directly from your bank would be the simplest and fastest option if your bank is prepared to lend to you. Speak to your accountant to find out what amount you would realistically need to get you through your difficulties based on your income and outgoings.

You don’t want to ask for too little because you will need to raise money again too soon. But you also don’t want too much because you will be paying interest on money you don’t really need.

Raising money from investors can be a good way to get additional investment but will involve parting with a proportion of your business in most cases. This is something to think about carefully, especially if it would involve losing the controlling stake in your business.

Remortgaging a property you own should be a last resort, especially if it is your home. The danger is that if your business ultimately goes under, you could lose your livelihood and your home at the same time. The ultimate double whammy. If things are so bad that the company might fail without remortgaging your home, then think seriously about whether letting the business fail is the best option, no matter how hard that decision might be.

Contact us

There are many ways to reduce the overheads in your business or to increase the amount of money you have available to boost cashflow, buy machinery or stock, or to hire new employees. If you need to achieve any of these things or want to find out if there is a better way to manage the cashflow in your business, we are here to help. Please just get in touch with us and we will support you.

May 31, 2023

Budget round-up – what’s changed and how it might affect you

Budget round-up – what’s changed and how it might affect you

The latest Budget on March 15 was a mix of wins and losses for people and companies around the country, with some considerable changes for pensions and the highest rate taxpayers thrown in.

The personal allowances for the 2023/24 tax year were largely frozen once again, which creates what is known as ‘fiscal drag’ where more people are brought into higher tax brackets as a result when they receive pay rises. The one exception was the very highest rate of income tax at 45%, where the amount earned before hitting this level was reduced from £150,000 to £125,140 from April 6.

Help with energy bills extended

The Chancellor extended the Energy Price Guarantee to help keep households sheltered from some of the worst of the energy price rises we have seen in recent months. The guarantee has been kept at £2,500 and extended through April, May and June – taking us to the warmer summer months.

Despite energy prices being around 50% of the level forecast back in October, this measure is still worth around £160 to the typical household. The £2,500 cap is not the maximum an energy bill will hit, but it does cap the amount a typical energy bill will reach.

Prime Minister Rishi Sunak said: “We know people are worried about their bills rising in April, so to give people some peace of mind, we’re keeping the Energy Price Guarantee at its current level until the summer when gas prices are expected to fall.

“Continuing to hold down energy bills is part of our plan to help hardworking families with the cost of living and halve inflation this year.”

As Rishi Sunak said, the move has the double benefit of helping to drive down inflation, which was still in double figures in the 12 months to February at 10.4%, slightly up on the 10.1% we saw over the equivalent period in January. Economists had expected inflation to fall in February, so it came as something of a shock.

ISA Allowance frozen for 2023/24 but SEIS investment access rises

The annual Individual Savings Account (ISA) allowance was also frozen again for the 2023/24 tax year, leaving it at £20,000 for each person.

However, the amount that companies can access, and use, of the Seed Enterprise Investment Scheme (SEIS) is rising. The company investment limit will go from £150,000 to £250,000, while the limit at the date of share issue on a company’s gross assets will rise from £200,000 to £350,000. In addition, the limit of a company’s ‘new qualifying trade’ will go from two to three years for the 2023/24 tax year.

For investors, the annual limits on how much individuals can claim Capital Gains Tax and Income Tax re-investment reliefs will rise from £100,000 to £200,000.

There are also changes to Real Estate Investment Trusts (REITs), which are designed to make them more competitive. For example, REITs have needed to hold at least three properties, but where one commercial property is worth more than £20m within the REIT, this requirement is removed from April. There is also a rule change for properties within REITs that are sold within three years of significant development. These properties have been seen as outside of the property rental business, but this rule is being amended, as are the rules for deducting tax from income distributions generated by a REIT property when they are paid to partnerships.

If you want to find out more about what other measures were introduced, removed or changed in the Budget, you can see details on the Gov.uk website.

Contact us

There are numerous changes that may affect you and your business in the Budget, so if you want to be sure you are maximising the benefits and minimising the losses, then please get in touch with us and we will help you make the right financial decisions.

April 3, 2023

Common e-commerce mistakes and how to avoid them

Common e-commerce mistakes and how to avoid them

Running an e-commerce business is easier now than ever before. There are a number of ways you can create an online shop without needing to understand coding, whether you want something off-the-shelf or something developed specifically for you. But getting the shop live is just the beginning of your e-commerce journey, and making sure you are managing your accounts and other aspects of your business well will be the key to success.

There are so many things to think about that it is easy to make mistakes when you are a newbie, so here we go through some of the common mistakes that e-commerce business owners make and how to avoid them.

Dealing with online payments

Getting paid is the ultimate goal in business, no matter what you are selling. When you take payments online, the number of choices you have to facilitate those payments is wider than you might imagine. Companies like Stripe, PayPal and Square, to name but a few, can all deal with the payments side for you, but the cost of doing so will vary between each. So, choose carefully because this will immediately impact your profit margin. But there is no point in using a payment partner that is cheap but will not allow you to take all forms of payment you need to.

You also need to think about two-factor authentication and PCI DSS 4.0 which came into effect last year. All of this can be dealt with by your payment services provider, or can be dealt with by you directly. But for most people, taking on this level of complexity in payments is something they would not want to consider. Without being aware of this and understanding how it affects your business, you could be setting yourself up for some serious trouble if you are not compliant.

Reconcile your accounts and identify which regions you are selling to

Depending on how much you are selling, you may need to reconcile your sales each day. This allows you to keep a close eye not just on your successful sales, but also sales that may have failed or were not completed at some point in the process. If appropriate, these can be followed up with marketing emails to get feedback and, perhaps, revive that sale.

By monitoring your sales, you can see which of your products are selling well, which are not, and where geographically your business is most successful. This is a key benefit of an e-commerce business – you can sell worldwide as long as you can deliver the products to customers in various countries. This insight can help you use your marketing spend most effectively too by targeting advertising to the areas where it is likely to have the most impact.

If you hold stock, that is inventory added to your balance sheet, but holding too much will reduce the amount of money you have to run other parts of the business. If you are just starting out, then holding excess stock can be a drain on resources, so keeping tight control of what is selling and what is not, and incentivising purchases for products that are not performing as well with discounts, for example, is very important.

Know your profit margins

Selling online reduces your costs significantly compared to having your own shop. But it can be easy to be so busy selling and marketing your business to get more sales that you forget to work out what your margins are.

Some of your costs will be fluid – for example if you sell more of a particular product, then ordering in bulk may reduce the amount you have to pay to source each item which increases your margin. But some will be fixed, such as design costs to produce clothing items.

By calculating the cost of producing every item – including the design, manufacturing, delivery and any other costs involved in getting the product to you – you will be able to tell which of your products make the most money for you. This means you can focus on promoting the highest-margin products to help boost your business, which is essential especially when you are first starting out.

We can help you

If you would like to know more about how to make the most of your e-commerce business, no matter what stage of the journey you are on, then please get in touch with us and we will be happy to help you get the most out of your business.

March 27, 2023

New VAT penalty regime – the changes explained

New VAT penalty regime – the changes explained

A new VAT penalties regime was brought in this month, and any firms or individuals missing their filing deadline from January 2023 onwards will receive penalty points even if there is no VAT due to be paid.

While this may sound more benign than getting a fine, persistent late filing could lead to more costs as the points add up. You will get one penalty point for each late VAT filing, and these points accrue for every late filing within a specific period. Once you or your business reaches the threshold of points for each time period, which varies depending on how regularly you have to file your VAT returns, you will then face a fine of £200.

How the points system works

The points threshold also varies depending on the frequency you file VAT returns, and how often within that period you file late. For example, if you file your VAT returns annually, the threshold before you get a penalty is just two points. So, filing late two years in a row would mean you hit your threshold and would face a fine.

If you file quarterly, you have a four-point threshold, and monthly you have a five-point threshold. You get a penalty point for each time you file a VAT return late, so if you file quarterly and have previously filed three returns late, then a £200 penalty would be applied if one more return is filed late giving you a fourth point and hitting the threshold.

Removing penalty points

If you do not reach the threshold for your penalty points, then your points will expire automatically and when this happens depends entirely on when your return deadline was. If your filing deadline is a date before the end of the relevant month, your penalty point for that period will expire at the end of that month 24 months later. If your deadline was the end of the month, then any points imposed for late filing will expire 25 months after that date, again providing you have not hit the threshold.

If you have hit the threshold, then you need to keep submitting returns on time for a set period to remove those points and prevent further financial penalties being applied.

How long do I need to comply with the VAT return deadlines to have my points removed?

The companies and individuals who have reached the threshold for points and been hit with a penalty need to file on time for a specific period to clear the points from their record. This is known as ‘the period of compliance’ and how long you need to comply will again depend on how often you file your returns.

For example, those filing annual returns will need to file two returns on time, so it will take 24 months, to clear their points. If you file quarterly, you will need to file four returns on time over 12 months to clear the points, and if you file monthly, then you need to file six returns on time over six months to return to zero points. In addition, you will also need to submit all outstanding returns for the previous 24 months.

However, there is also a new interest penalty imposed for unpaid VAT which will apply for accounting periods starting on or after January 1, 2023. The first penalty would apply if you have not paid the outstanding tax due within 15 days of the date it should have been paid. This would be 2% of the outstanding amount after this period, and if it remained unpaid for 30 days, then the penalty would be “calculated as 2% of the tax outstanding after day 15 plus 2% of the tax outstanding at day 30” according to HMRC. This typically will be a 4% charge at 30 days after the original tax due date.

If the tax is still not paid, then from day 31, a daily accruing penalty at 4% a year will begin to be added to the amount and will only stop when the tax is paid. HMRC will allow taxpayers to request a Time-to-Pay arrangement which will stop the clock on these penalties accruing by agreeing a schedule of payments to deal with the tax due.

You can find out more information about the points regime and any fines that could be imposed, along with how you deal with this points regime if you have a non-standard accounting period, at Gov.uk and about the interest penalties also at Gov.uk.

We can help you

If you have concerns about your compliance with the VAT filing regime, then speak to us and we will work with you to ensure you do not fall foul of the new rules.

February 27, 2023

MTD for ITSA delayed to April 2026 – what does this mean for you?

MTD for ITSA delayed to April 2026 – what does this mean for you?

Making Tax Digital (MTD) has been on the cards for years now, with businesses already pushed towards dealing with their VAT this way. But plans to extend this for Income Tax Self-Assessment (ITSA) have been put on hold once again until April 6, 2026, eight years later than the original planned launch in 2018.

However, even when 2026 comes, the MTD for ITSA will be phased in rather than applying to everyone at once.

Who will have to go digital first?

The first people doing self-assessment who will need to go digital are landlords and the self-employed who are earning more than £50,000 a year. HMRC estimates that this will mean around 700,000 people are brought into the MTD regime at this point.

The next phase will kick in from April 2027, when landlords and self-employed people earning more than £30,000 a year will be expected to go digital – bringing another 900,000 people into the MTD regime according to HMRC.

What’s the plan?

Victoria Atkins, financial secretary to the Treasury, announced the delay in the House of Commons just before Christmas.

She said: “The government understands businesses and self-employed individuals are currently facing a challenging economic environment, and that the transition to MTD for ITSA represents a significant change for taxpayers, their agents, and for HMRC.

“That means it is right to take the time needed to work together to maximise those benefits of MTD for small business by implementing gradually.

“The government is therefore announcing more time to prepare, so that all businesses, self-employed individuals, and landlords within scope of MTD for Income Tax, but particularly those with the smallest incomes, can adapt to the new ways of working.”

The needs of smaller businesses are going to be put under review to see how they can be helped to “fulfil their income tax obligations” Ms Atkins said in her statement. Once this review is complete and the various stakeholders – businesses, taxpayers, and their agents among others – have been consulted, the Government will outline further plans for MTD for ITSA, said Ms Atkins.

General partnerships will not be expected to go digital in 2025 now as previously expected, but they will see these changes brought in at a later date. But anyone who wants to sign up for MTD voluntarily before they are required to, has that option.

Contact us

There may be some benefits to using MTD earlier than you need to, but there could also be drawbacks for some people and businesses. If you want to find out more about the right decision for you, then please contact us and we will give you all the help, support, and information you need.

February 20, 2023

Rateable property values change from April 2023 – find out what this means for you

Rateable property values change from April 2023 – find out what this means for you

Working out rateable property values may feel like something of a dark art to those not in the know, and the news that these values are set to change again from April 1 next year could strike fear into the hearts of some.

The Valuation Office Agency (VOA), which is part of HMRC, is making the changes and you will need to check on the VOA website to find out if and how the rateable value of your property is changing. Remember this does not apply to residential properties, only commercial properties.

What can I expect?

It will be a case of checking your property on the site individually to see what the new valuation will be, but the rateable values from April 1, 2017 to March 31, 2023 are based on the market rental value of the property in 2015. But from April 1, 2023, the rateable value will be based on the market rental value from 2021.

Changes to self-catering holiday lets

Self-catering holiday lets which are assessed for non-domestic rates – any properties considered domestic are subject to council tax – currently only need to be available for short-term lets for 140 days a year, and there is no minimum number of days the property needs to be let to qualify as a commercial holiday let.

However, from April 1, 2023, the criteria will change and to be defined as a commercial holiday let it will need to have been let for 140 days or more in the previous year and let commercially for 70 days or more in the last 12 months, if the property is in England.

If the property is in Wales, then it will need to have been available to let commercially for short lets for 252 days in the previous and current year, and actually let for 182 days or more in the previous or current 12 months, according to Gov.uk.

Remember, if you are a small business, then you may qualify for the Small Business Rates Relief Scheme or perhaps one of the other rates relief schemes. This is definitely worth checking as it could significantly reduce your bill, or you may not have to pay anything at all.

We can help you meet your obligations

Speak to your accountant now and ask him or her to help you get the right information so you understand how your rates may change and whether you need to make a change to the status of your self-catering holiday let from April 2023.

January 23, 2023

New Extended Producer Responsibility rules come into effect on January 1, 2023 – is your business ready?

New Extended Producer Responsibility rules come into effect on January 1, 2023 – is your business ready?

New Extended Producer Responsibility (EPR) come into effect at the very start of 2023, and companies need to be aware of their responsibilities when it comes to every type of packaging from wood, plastic, paper, glass and ‘other’ as determined by the new rules.

Businesses selling, importing or handling packaged goods will need to comply with the new regulations, which mean data will have to be collected from the beginning of January by those businesses affected.

Who do the new rules apply to?

The EPR rules will apply to a wider number of companies than the Plastic Packaging Tax did, and some expect the cost to be much higher than the Plastic Packaging Tax has been. The wider ranging rules will hit companies, according to Gov.uk, who:

  • Are an individual business, subsidiary or group – but not a charity.
  • Have an annual turnover of more than £1m, based on the most recent annual accounts.
  • Are responsible for over 25 tonnes of packaging in a calendar year – running from January to December.
  • You carry out any of the packaging activities.

These packaging activities, again according to Gov.uk, include doing any of the following items:

  • Supply packaged goods to the UK market under your own brand.
  • Place goods into packaging that’s unbranded when it’s supplied.
  • Use ‘transit packaging’ to protect goods during transport so they can be sold to UK consumers.
  • Import products in packaging.
  • Own an online marketplace.
  • Hire or loan out reusable packaging.
  • Supply empty packaging.

What data will your business need to collect?

The data your business needs to collect will depend on whether you are defined as a small or large business under the rules. Small businesses are considered to be those with a turnover between £1m to £2m a year and that supply more than 25 tonnes of packaging or packaged goods in the UK market, says Gov.uk, or turnover £1m a year and supply between 25 tonnes and 50 tonnes of the above per year.

A large business is considered to be one with a turnover of more than £2m a year and handles or supplies more than 50 tonnes of packaging or packaged goods in the UK.

Both large and small businesses must start collating data about how much packaging weight they deal with each year from January 1, 2023. Small businesses will need to create an account and file returns annually from January 2024, while large businesses need to register by July 2023 and file returns every six months.

There is more detail involved in complying with these new rules than it is possible to relay in this article, so if you need more information go to Gov.uk or speak to your accountant to make sure you address what you need to do in time.

Let us help you

If you think you will be negatively affected by this change, or you simply want to know if it affects your business or not, then please get in touch with us and we can go through the various options you have.

January 9, 2023

Should your business declare the cost of the Christmas party?

Should your business declare the cost of the Christmas party?

Christmas parties or even regular summer BBQs, or annual team building events may need to be declared to HMRC for the current 2022/23 tax year if they do not meet certain rules, so you need to be sure you meet all the relevant rules for the exemption.

The key conditions are that the party should be exclusively for business purposes, be open to all employees and cost less than £150 a head to qualify. You can offer more than one regular event to employees over the year, but the combined cost of each must be no more than £150 per person, otherwise the employer may have a National Insurance liability. One-off events do not qualify.

Events costing more than £150 per head across the year

However, if you hold several regular events in a year and the total combined cost of these is more than £150 per person, then you would need to report it as a benefit-in-kind and a tax and National Insurance charge may apply.

For example, if your company has a Christmas party at £100 per head and then a summer party which is £80 per head, these combined breach the £150 limit. So, you would have to choose which you want to be exempt. It makes more sense to exempt the Christmas party which had the higher per head value.

If an event exceeds this £150 limit, then the tax and NI charge applies to the entire amount of the benefit provided, not just the excess. You can include close family members as guests in the party, but the cost of their food, drink, accommodation and so on as part of the party must still not exceed £150, the same as any of the employees.

Events not open to all employees

If there is a specific regular event that is only open to a smaller number of staff, such as directors of the company only, then this would not be exempt under this legislation, and the cost of this would need to be declared to HMRC as a benefit and the relevant tax and NI paid.

Do the same rules apply to virtual functions?

If your staff are in a variety of locations, or primarily work from home, then some employers might have decided to provide a virtual Christmas party. This is fine, and it would in theory work in the same way and with the same caveats as an in-person Christmas party.

You would still not be able to exceed a total cost of £150 for each employee attending, and you would also need to ensure that all staff have been offered access to the party, virtual or otherwise. If this is the case, then you should be able to provide the party without any additional tax or NI liabilities.

The complication here is how to ensure your employees are provided with, say, food and drink for the virtual party without the employer simply giving money to the employee. It could be difficult to prove to HMRC that this money was solely used for the party if an audit was undertaken. So, instead the employer should consider providing the food and drink in a specific way to all employees attending, which would allow the cost to be identified centrally.

This could be done by, for example, sending a food and drink parcel or hamper to every employee in advance of the event to be consumed while everyone is at the online party.

You can find out more about what needs declaring on Gov.uk.

We can help you

If you have concerns about whether your annual Christmas party or summer BBQ needs to be declared to HMRC, then speak to us and we will work with you to ensure you do not fall foul of the rules.

January 3, 2023

The Plastic Packaging Tax – what you need to know

The Plastic Packaging Tax – what you need to know

The Plastic Packaging Tax came into effect in April this year, and if your business deals with any kind of plastic packaging in relation to your products, you may need to be registered for this.

Anyone importing or manufacturing more than 10 tonnes of plastic packaging each year to the UK will be subject to this tax. Those businesses below this threshold are exempt, but if you breach this threshold, there are a number of things you need to know. For example, if the plastic you manufacture or import has at least 30% of recycled plastic by weight, you will also be exempt from this tax. The tax is designed to encourage manufacturers both here and abroad to use more recycled plastic in their processes.

When do I need to notify HMRC?

If your business has imported or produced more than 10 tonnes of plastic since April 1 this year, you need to register within 30 days of breaching this limit. If you have already missed this deadline, then get in touch with your accountant or HMRC as soon as possible. Around 20,000 businesses are estimated to be affected by this, with an additional £400,000 as an annual cost burden on these businesses, mostly for the additional administrative requirements of this tax.

The fee charged is £200 per metric tonne used or manufactured, but what is considered ‘plastic’ is a moot point and there is more information in the HMRC guidance. There are other things to consider too, such as the plastics that qualify are those which are considered single use by the end consumer, or those used in the supply chain. For example, if plastic punnets of strawberries are imported, then the punnets themselves may be subject to this tax.

This is a complex area, so get some help

However, it is a very complex tax, and you will need specialist guidance to navigate it. You can find out more information on Gov.uk, or by speaking to your accountant who can help you.

If you need to register, you can do this online with some exceptions – or again, speak to your accountant and ask him or her to deal with this for you.

We can help you meet your obligations

If you think you need to register for the Plastic Packaging Tax, please get in touch with us and we can help you navigate this incredibly complex area.

November 21, 2022

How to protect your business in a recession

How to protect your business in a recession

The UK’s GDP fell by 0.3% in August according to official figures, and if GDP falls for two quarters in a row, that is the definition of a recession. Experts at the EY ITEM Club predict the UK will be in recession for three quarters, which would take us up to the middle of 2023, so businesses need to start thinking about how they can protect themselves before the downturn comes.

Your accountant is the best source of information for you in relation to your business specifically, but here we go through a number of things you can consider doing to protect your business in preparation for the expected recession.

Get your cashflow sorted and deal with any debt

Cashflow is the lifeblood of any business and when there is not enough money coming in on a regular basis, there is no chance of the business surviving in even the most beneficial conditions. But if a recession on the horizon, then focusing on cashflow is essential.

By keeping on top of invoices, chasing payments that are slow to be paid or even using invoice factoring if you need to – where you sell your invoice to a company that will pay you, say, 80-90% of the value of that invoice and they will then chase the debtor for the full payment themselves – you will make sure the business has enough money flowing to pay all necessary overheads.

Where possible, you should also look to reduce the amount of debt you have in the business. Paying interest on loans during a downturn is not a good idea if you can avoid it, as that is a cost that could be removed in advance if conditions are right. Also, if your business has reduced its debts, then when the recession ends and you come out of the other side, your business would be in a better position to access additional borrowing if you need it.

Insulate your business by cutting costs where you can

Preparing for a recession is never going to be easy, but one thing is for sure – your business needs to start looking at where costs can be cut before profits start being hit. This could mean, for example, reducing production costs, limiting overtime payments, or reducing the number of hours staff work. One of the biggest expenses for many businesses are employees and it may be necessary to reduce your overall headcount for the business to survive. This is never an easy decision, especially during a cost-of-living crisis when people are relying on their incomes more than ever. But it should be considered as a last resort, if necessary, especially if you know you have areas within your business that could be leaner.

Laying people off is never comfortable, and it may not be necessary for your business specifically. But if you do need to do this, make the move sooner rather than later. You must ensure you are working within all employment rules and giving people the requisite amount of notice and redundancy payments. If you are not sure how to do this, then speak to a human resources specialist and get advice to make sure you do not fall foul of any rules.

Let us help you

If you need to consider ways to prepare your business for an upcoming recession, please get in touch with us and we can go through the various options with you.

November 14, 2022

What does the market volatility mean for you?

What does the market volatility mean for you?

The market volatility resulting from the ill-fated mini-Budget on September 23 has created real concern for investors. Most of the measures announced that day were reversed just weeks later, but the fallout has left markets in a state of turmoil.

The FTSE 100 was at 7,237.6 on September 21, two days before the mini-Budget. Soon after on September 29, it had dropped to 6,881.6 but it had recovered to more than 7,000 at the time of writing.

This level of volatility within such a short period of time is concerning for anyone, but there are things that can be done if you want to insulate yourself from the ups and downs of the markets.

Drip-feed investments

One of the best ways to even out the peaks and troughs of volatile markets is to invest any money you want to put into the markets over time. Making regular monthly contributions as opposed to a one-off investment allows you to make the most of the dips when the market falls.

Putting money in at different times allows you to spread the risk of your investment because you are not making a single investment when the market may be at its peak. Instead, you are buying no matter what the value of the market is, meaning you get more when it is in a dip, and slightly less for your investment when it is at a peak. When your investments rise in value, the units will rise accordingly, and the relative difference in price will be smoothed out.

Diversify your portfolio

It is also important to diversify your investments to cope with any downturn. Diversification can be done in a variety of ways – by sector such as energy, healthcare and so on; by geographical location as in the UK, US, and Asia; or by theme such as environmental, social and governance (ESG) investing. Or a combination of all of these.

Making sure your portfolio is balanced and diversified is not easy to do alone unless you are an expert, so you would be wise to get professional help to achieve this. It must also be done within your own risk profile, and in a way that meets your short-term and long-term investment goals.

You need to monitor your portfolio’s performance and balance over time. When different areas of your portfolio rise and fall, the balance of that portfolio can become skewed. It should be revisited at least once a year, and more often if there is a change in your circumstances or a major change in an area you are investing in. Remember, this applies to your pension funds too, not just your investment portfolio. You need to consider everything together.

Above all, don’t panic when the markets fall

The worst thing you can do if you see markets fall is panic. Any knee-jerk reactions you make to market falls are likely to result in bad decisions being made. Besides, the very worst thing you can do is sell assets when they have fallen in value. It is far better to stay invested and wait for the recovery to come. The key thing to remember is that while seeing your portfolio value fall on a screen, unless you crystallise that loss by selling, it is merely a paper loss. Bide your time and the markets should recover.

This is where a good accountant can help you. Whether you are investing for your business or personally, the same rule would apply. It can be worrying when you see markets falling, or your investments worth less than they were. But if you have concerns, contact your accountant. He or she will be able to advise you on the best course of action, which in many cases is to do nothing at all.

We can help you

If you have concerns about your portfolio or your current investment mix, speak to us and we will work with you to make any necessary changes to help rebalance your portfolio.

November 7, 2022

Changes made to Corporation Tax filing in September – what you need to know

Changes made to Corporation Tax filing in September – what you need to know

HMRC made some changes to the way Corporation Tax needs to be filed online in September, and companies need to be aware of what they are now expected to do and where there could be difficulties with filing online for certain items.

One change which has been announced in The Growth Plan 2022 is that the £1m Annual Investment Allowance which was due to expire in April 2023 will now be made permanent. The previous temporary extension to April 2023 has already been reflected in the online filing service.

Also, the rate of tax charged for Loans to participators under section 455 was changed from 32.5% to 33.75% from April 2022, and this has been amended in the online filing service.

Companies claiming non-trading losses in respect of intangible fixed assets

HMRC has said it is aware of an issue with the online filing service for this instance, and you will be affected if you are “claiming brought forward non-trading losses on intangible fixed assets (NTLIFAs) as well as losses arising in the current period in box 265”, and “if the figure in box 265 exceeds the entry in box 830”. An example of an NTLIFA would be the value of goodwill in a business or a leasehold for the company, as this is not a ‘tangible’, as in physical, asset.

HMRC adds: “The guidance for the completion of these boxes is correct but will result in error 9172 — Box 265 must be less than or equal to Box 830.”

How do you file in this instance now?

HMRC said this service will be updated in April 2023 to remove this error, but if you are filing online before this date, then you need to enter the same amount in box 830 as in box 265 and “include an explanation of the correct figure in box 830 in the computation”.

You must also make sure that the computation included for the purpose of box 265 records the actual non-trading loss arising in the current accounting period.

There are other considerations that may affect you in relation to filing your Corporation Tax return online, and these can be found on Gov.uk.

We can help you meet your obligations

Corporation Tax can be complicated, so please get in touch with us if you think you may have difficulties with your online filing, or you simply want to be sure you are making the most of all your business tax allowances.

October 17, 2022

Business insolvencies up in August – is your business vulnerable?

Business insolvencies up in August – is your business vulnerable?

Registered company insolvencies in England and Wales rose by 43% in August this year compared to the same period in 2021, and they were 42% higher than in August 2019, the comparable period before the pandemic.

In August this year, there were 1,662 Creditors’ Voluntary Liquidations, 33% more than in August 2021, and 73% higher than in August 2019, according to official figures from the ONS. There were also more than four times as many compulsory liquidations in August 2022 as there were the previous year, with the number of administrations twice as high as a year ago.

Why are these businesses failing?

Trading conditions have become more difficult for many businesses, but the statistics give little indication as to what exactly has caused such a significant rise. What we do know is that as inflation rises, the cost of goods and services is going up, meaning not only is it harder for consumers to buy the goods they were buying previously because wage growth is not keeping pace with inflation, but that companies have higher costs themselves, through increases in energy bills and paying more for services, plus additional taxes that apply for dealing with many EU countries now. The significantly weaker pound will create more pressure for those buying goods or raw materials overseas.

The picture in Scotland and Northern Ireland

While the data is slightly different for Scotland and Northern Ireland, the overall picture is largely the same. For example, in Scotland, company insolvencies were 18% higher in August 2022 than the same month the previous year, and 33% higher than in August 2019.

For Northern Ireland, while there was a 56% rise in the number of company insolvencies in August 2022 compared with the same month the previous year, the number compared to August 2019 was 36% lower.

Let us help you

If you are concerned about the financial pressures on your business, then it is best to get help and guidance sooner rather than later as there is a chance you may be able to fend off an insolvency – or even just more severe money worries – by tackling the problem early. We can help you get the advice you need to ensure your business is on track.

October 10, 2022

Mini-Budget wreaks havoc on markets and the pound – but will you benefit?

Mini-Budget wreaks havoc on markets and the pound – but will you benefit?

New chancellor Kwasi Kwarteng delivered his first mini-Budget, officially labelled ‘The Growth Plan 2022’, on September 23, and while it largely consisted of tax giveaways, it was not well received by markets.

The FTSE 100 fell sharply on the day from 7,221 on September 22 to 6,986 on September 23, breaching the psychologically important 7,000 barrier before recovering some ground in the following days. The pound reached a record low against the US dollar briefly on September 26 at US$1.0327, as the biggest programme of tax cuts for 50 years was digested by economists and investors.

The market shocks have prompted the Bank of England to state it would not hesitate to raise rates if needed to help bolster the UK markets, and there are already rumours that the BoE base rate – which is currently 2.25% – could rise as high as 6% next year. Some mortgage lenders have temporarily pulled products from their offering as a result.

What are the tax cuts?

Despite the poor reaction to the mini-Budget, the Chancellor’s tax cuts will mean we all have a little more money in our pockets. The highest rate of tax – the 45% band for those earning more than £150,000 per year – is set to be scrapped completely from April 2023. In addition, the current 20% starting rate of income tax will fall to 19% from April 2023 rather than the previous planned introduction date of April 2024.

There have also been changes to National Insurance, with the 1.25% Health and Social Care Levy which was introduced in July being scrapped from November 6 this year, and the plan for this to come into force as a separate tax from April 2023 is also scrapped. The statement on the reversal of the Health and Social Care Levy stated: “This tax cut reduces over 920,000 businesses’ tax liabilities by £9,600 on average in 2023-24…It means 28 million people across the UK will keep an extra £330 a year on average in 2023-24.”

Stamp Duty Land Tax Changes

Stamp Duty Land Tax – the tax you pay when you buy a property in England and Wales – also changed with immediate effect on September 23, with the threshold at which you start to pay SDLT doubling from £125,000 to £250,000. This means no SDLT is payable on any property worth less than £250,000. The Government stated that this measure should save homebuyers an average of £2,500 in SDLT.

For first-time buyers, the threshold at which SDLT is charged rose from £300,000 to £425,000 on the same day. This now applies to properties worth up to £625,000 rather than the previous £500,000 limit. The Government stated this should save first-time buyers an average of £8,750 in SDLT.

Planned rise in Corporation Tax cancelled

The current rate of Corporation Tax was also due to rise in April 2023 from its current level of 19% to 25% for companies making more than £250,000 in profit. But this move has been cancelled by the Chancellor in his statement.

Companies that were making profits of between £50,000 and £250,000 were also expecting to see an incremental increase in the amount of Corporation Tax they would pay from April next year, but this has also been cancelled. So, all companies will pay 19% Corporation Tax on profits no matter how much profit they make in a single year.

Why have markets reacted so badly to the mini-Budget?

There has been widespread alarm about the changes made and planned for the tax system, as the tax cuts are seen as a way primarily to help the wealthier members of society, while giving less assistance to those who may need it more. For example, top earners will see a 5% reduction in their highest marginal tax rate, while the lower paid will see just a 1% reduction.

The theory behind this is something called ‘Trickle-down economics’ where cutting the tax burden of the highest earners should encourage them to spend more and those further down the economic chain should see the benefit of this as more money goes into their own pockets. But this is a theory that is yet to work in practice.

The other reason for the poor market reaction is because these tax cuts are going to be paid for by increasing Government borrowing. Borrowing more money to fund these cuts – especially when we are in an economic environment where interest rates are rising – is not considered by many to be a good plan.

However, we will have to wait and see what the result of all these changes are to discover whether it will benefit the UK.

Contact us

To find out how you can benefit from the measures announced in The Growth Plan 2022, please get in touch with us and we can give you any assistance and support you need.

October 3, 2022

Business borrowing – how to access money if you are not eligible for grants

Business borrowing – how to access money if you are not eligible for grants

If your business does not qualify for a grant but you still need to get some capital to boost your business, then you may want to consider a business loan. There are many ways to access loan funding and your business bank is likely to be your first port of call.

However, there are alternatives, like getting investors to buy into your company in return for equity, plus crowdfunding propositions such as those offered by CrowdfunderKickstarter and Funding Circle. Whether or not these are the right choice for your business depends very much on what type of funding you need, what your business does and what you may have to offer someone who donates to your campaign. But let’s take these in order.

Traditional business loans

The traditional way for a business to access loan funding is through a business bank. Often your own bank will be best placed to help you with a loan, but it may result in you paying more than necessary in interest. So, as always, shopping around is a good idea.

There are numerous sites that can provide business loan comparisons, which allow you to see just what might be available to you. Some can give you a loan within as little as a few days, and you can choose the length of time you want to pay the loan back. You can simply search on the internet for ‘business loan comparison’ to get an idea of how much these loans would cost you. Remember though, your own bank could still be the cheapest, so check there too.

The downside of the loan is that you will pay interest on the amount you borrow, and you also have to pay the capital back over time. It can help you in the short-term to get over a cashflow issue if that is the problem, however, you do not want to put your business in a hole, so make sure you can pay the loan back if you get one.

Getting investment

Investors can boost a business’s ability to grow not just by providing a much-needed cash injection, but with the right partner you may benefit from business expertise too. How much of your business you would need to give away to make an investor interested will depend on what you are offering and how big a risk they are taking. One thing is for sure – the more you are asking for, the less of your company you will own once a deal is done.

Getting investment into a business can be game-changing, and it could provide the accelerated growth your company needs. You must make sure the terms of any investment deal are right, so speak to your accountant and make sure he or she is closely involved in any discussions before you sign any paperwork. They will also help you to offer the right amount of equity in the business at the right price.

Crowdfunding is another option

If you prefer not to have to pay back the money you have been given, then you also have the option of crowdfunding. How and what you offer to those people prepared to buy into your business in return for their cash will depend on what your business does and how it works.

For example, if you are a designer or a small marketing agency, you may want to offer an exclusive design or a day’s marketing support in return. With crowdfunding you can be very creative in the way you raise funds. But you need to work within the rules of the platform you choose, so make sure you are clear about what you can and cannot do before you sign up.

We can help you

If you are unsure about the best way to get new funding for your business, then speak to us and we will help you through the process, so you get the funding that is right for you.

August 22, 2022

How your business can fight inflation

How your business can fight inflation

Inflation is a word on many of our lips at the moment as the cost-of-living crisis continues unabated. While the headline rate of inflation – which hit 9.4% in June this year – relates to the average inflation rate suffered by individuals living in the UK, the actual rate of inflation different people feel in their pocket could be higher. Businesses are affected by rocketing prices too, so now is the time to think about what you can do to reduce any costs your business incurs to improve your bottom line.

If your business was one of those badly hit by the pandemic, then you could be facing a double whammy now inflation has reached levels not seen in more than 40 years. Restaurants, hotels and other leisure businesses are often seen as luxuries when people are tightening their belts, and the knock-on effect could be severe.

However, every business should look at how it can reduce its outgoings at times like this, and there are many ways to do this.

Cut your energy costs

If you own your office or your building, then you will have had to choose which energy company you get your light and heat from. So, it might be worth shopping around for an alternative to see if you can get a cheaper deal – after all, things are likely to get worse rather than better in the winter.

For those companies working from leased offices, changing your supplier may not be an option. So, instead you need to think about how to be more cost-efficient in your use of energy. For example, you could install motion-sensor lighting into your washrooms, so the lights are only burning when someone is in there. You could also encourage staff to turn off their computers and any other energy-guzzling appliances when they are not in the office. It all adds up.

Not only will this mean they are doing their bit to help the business cut costs, they will also be helping the environment, something that most people would agree is necessary.

Work from home

Many of your employees may be working from home more often now than they were before, and if it suits your business then it might be time to consider increasing the number of staff that are offered hybrid or fully remote working.

Not only does this help to reduce your office overheads, for many people it improves their work-life balance. It has been shown to increase productivity too – the opposite of what some bosses may think if people have the choice to work flexibly most or all of the time.

The other benefit for your employees is that they will spend less on fuel or trains if they are commuting into work, giving them more money in their own pockets to help with the cost-of-living crisis without the need for a pay rise.

Make sure your employees know what they can claim

Anyone who incurs work-related costs that are not reimbursed directly by the company is entitled to claim these from HMRC. So, if you go down this route, make sure your employees are getting any tax deductions they are entitled to. It all helps to deal with the current high prices in the UK.

If you are unsure how this works, then your accountant will be able to help you, and may also help your employees with their tax returns too.

Let us help you

Helping your business and your employees to deal with the cost-of-living crisis in one hit can never be a bad idea. If you want to know more about how to make this work, and what other measures you may want to consider to boost your bottom line while giving your employees more available cash, then please get in touch and we can explain more about what measures you can take.

August 15, 2022

Payroll a pain heading into summer? Here’s what to do

Payroll a pain heading into summer? Here’s what to do

We have all been there. The rising number of employees off over the summer months – especially now the kids have finished school until September – means some departments will be lacking in numbers and some work could get left behind.

One area you cannot afford to let this happen in is the back office, and especially payroll. Employees will forgive a lot of things, but not having their wage hit their accounts at the right time is not one of them. Not only would it mean many people missing mortgage or rent payments for that month, it would also create a mistrust between employees and management. Once trust is lost, it is not easy to get back.

Ensuring you have enough staff to cover all areas is difficult during these months, and with sick leave and particularly Covid continuing to be an issue with staff needing to take time off, you really need a back-up plan.

Emergency cover

While you may never need to use it, you should ensure you have some emergency cover in place just in case you are facing a crisis at short notice. You can do this by training staff to do a different job within the office so they can step in if needed, or you can speak to your accountant and find out if they could give you the assistance you need for the short term if things went wrong.

Never underestimate the importance of admin staff

There is no getting away from the fact that your back-office and admin staff are key to running your business efficiently. Without them, all sorts of problems would arise that could create some costly errors for the company as a whole.


So, make sure they have all the back-up they need as you come into a period where many staff are off on their holidays and the workload becomes a bigger burden for those left behind.

We can help you meet your obligations

If you think you may have difficulties covering all of your admin and back-office roles over the summer, then please get in touch and we can help to suggest solutions for you.

August 8, 2022

Business grants – do you know what your business is entitled to?

Business grants – do you know what your business is entitled to?

Many businesses benefited from grants during the pandemic, but how many realise there are other grants they may be able to access at any time to help their business grow and thrive?

In fact, there are a large number of grants available across the UK to help businesses with everything from reducing carbon emissions right the way through to developing space-based services.

Finding a grant

Finding a grant for your business could be easier than you think, especially as many of them are listed on the gov.uk website. You can go to this site and choose ‘grants’ as the option, and it will provide you with a list of funds that could be available for your business.

Some will be area specific and only available to businesses in certain places, such as Derbyshire, the South West or Leeds, for instance. But there are also grants open for businesses that will increase their workforce and create new jobs in the local area.

What does it mean if I get a grant?

The difference between a grant and a loan or an investor taking an equity stake is that the grant will not need to be paid back. A loan would be paid back with interest, while an equity stake would mean an investor owning part of your business in return for their investment and expecting a return on their money along with the original capital back at a future date.

So, if you are able to benefit from a grant, it is well worth considering it as the money will be yours to use to improve your business and also to expand your reach and potentially workforce.

What’s the catch?

However, depending on the reason for the grant being made, there may be conditions attached to how you are able to use that money. For example, if the grant is specifically to help you buy some plant or machinery, you would not be able to use it to fund wages. You may think no-one will check, and you may be right. But it is not worth taking the chance.

You should always check the fine print of any grant your business is applying for to make sure you can fulfil any conditions or rules that apply, otherwise you could find yourself failing to secure the grant or, which could be worse, possibly having to return the money after you have spent it.

Check locally and elsewhere too

While there are a number of national grant schemes, it is also worth checking locally with your council, any business support organisations – chambers of commerce of business hubs – and associations that are relevant to your business. It may be that you run a company dealing with the arts or is looking to increase the benefits to the local economy. All these aspects could open up a range of funding that you had not previously considered.

Contact us

If you have a business that would benefit from grant funding, then contact us and we will give you all the help, support and information you need.

August 1, 2022

Are you claiming everything you are entitled to from the taxman?

Are you claiming everything you are entitled to from the taxman?

Tax is something that is a certainty in life, as former US President Benjamin Franklin said, but there are lots of ways you can reduce the amount of tax you have to pay by claiming for expenses you may not realise you could.

Those of us who are self-employed or own businesses are more likely to claim the majority of costs and expenses against tax that we can. But what many PAYE employees do not realise is that they can also claim certain expenses if they are not covered by their employer, and they are specifically relevant to their work.

What can be claimed?

For example, let’s say you are a nurse, an engineer, a psychologist or simply an employee who happens to use their car for work purposes sometimes. In each of these cases, there are likely to be things that you are paying for that you could claim if your employer is not repaying you for them.

It could be fees you pay to be a part of a professional institution, or professional indemnity insurance, or uniforms that you need to buy yourself, shoes, books you need to study for your work, toys that you may need to use to encourage children to talk to you in the case of a child psychologist, for instance. The list would include anything and everything that you need to buy yourself that solely relates to your work.

While many of these may be relatively small amounts individually, they will soon add up, and if you consider how much they add up to over a long period of time, there is every reason to reclaim that money.

How do you claim them?

Understandably, many people are nervous about dealing with the taxman because they think automatically that it is going to end up costing them money. But that is not always the case. Reclaiming these amounts that are legitimate allowances could put a significant amount of money back into your pocket.

To claim these, you would need to do a self-assessment form. This is something many people who pay tax through PAYE would not be familiar with. You can speak to your accountant for more information if you need it, or you can ask HMRC directly about how you claim for these costs on your self-assessment.

Don’t be nervous, and go back as many years as you can

You do not need to be nervous when dealing with the tax office as you are not doing anything wrong. This is money you are owed, and you would be doing yourself a disservice by not getting this money back into your own pocket.

If you have not been claiming this money back before, then you can go back up to four previous tax years. This means you can reclaim overpaid tax from 2018/19 if you make the claim before April 5, 2023. If you had an average of £1,000 that you could have reclaimed for each of these years, then you would get a £4,000 rebate from the taxman by making the claim.

In the current economic climate, even relatively small amounts that you can reclaim will make a difference. But remember, you must have proof of the purchases you made. Usually these would need to be receipts, but if you do not have these, then you can prove any payments made using bank statements if you need to. If you bought anything online, you may have records there in your email or, say, an Amazon account.

We can help you

If you are unsure about whether you can claim some of the expenses for your work or want to know you have claimed everything that it is possible to claim, then please get in touch with us and we will help you through the process.

July 25, 2022

Can your business claim a super deduction?

Can your business claim a super deduction?

If your business has spent money on plant and machinery and it is subject to corporation tax, then it may qualify for a super deduction which is a temporary allowance you do not want to miss.

Qualifying purchases will need to have been made between April 1, 2021, and April 1, 2023, and will be valid as long as you did not buy the plant or machinery due to a contract you entered into before March 3, 2021.

It is also possible to claim a special rate first year capital allowance – which is another temporary allowance – if you have bought qualifying or plant machinery as above.

Qualifying plant and machinery

There are a few rules, as you might expect, that your business needs to comply with to ensure your plant or machinery qualifies for these allowances. One of the key rules is that the machinery must be new, not used or second-hand.

It also cannot be given to you as a gift, it cannot be a car as these will not qualify for this allowance, and it cannot be bought to be leased to someone else. The exception to this final rule is if it is background plant or machinery within a building. It also cannot be purchased during the period in which the business ceases activity.

What can I claim a super deduction for?

A super deduction can be claimed on a variety of work tools, including:

  • Machines such as computers, printers, lathes and planers.
  • Office equipment such as desks and chairs
  • Vehicles such as vans, lorries and tractors – but not cars.
  • Warehouse equipment such as forklift or pallet trucks and stackers.
  • Tools such as ladders or drills.
  • Construction equipment, such as excavators, compactors and bulldozers.
  • Some fixtures, including kitchen and bathroom fittings and fire alarm systems.

Source: Gov.uk

There are some other rules to be aware of, which is why it is best to speak to your accountant to help you make the most of this super deduction, rather than trying to go it alone.

To see how much a business can claim, let’s look at an example which is on Gov.uk. A company called Alpha Ltd bought a lathe for £10,000 on December 1, 2021. It has a calendar year end accounting period.

In the accounting period ending December 31, 2021, Alpha Ltd can claim a super deduction of 130% for this expenditure, giving them a claim of £13,000.

What about the special rate first year allowance?

If a company buys a qualifying item in its first year, then it can claim the special rate first year allowance. Again, there is an example of how much this is worth on Gov.uk. A company called Bravo Ltd buys a solar panel for £10,000 on December 1, 2021, which is for installation at its business premises and will be used in its business.

In the calendar year ending December 31, 2021, Bravo Ltd can claim the 50% special first year allowance, which gives a rebate of £5,000 for this expenditure. The remaining balance can be added to the special rate pool in the following accounting period and writing down allowances can also be claimed, according to the Gov.uk information.

Again, there are specific rules about what items qualify for the special rate first year allowance, so it is best to work with an accountant to ensure you only claim what you are allowed to.

Let us help you

Both allowances can be complex to navigate, especially as there are a number of specific rules surrounding what type of plant and machinery you can claim for. So, let us do the hard work for you and get in touch. We will make sure you are getting everything you are entitled to, so you can legitimately reduce your tax bill.

July 18, 2022

Last chance to make sure your business is ready for MTD

Last chance to make sure your business is ready for MTD

Companies and sole traders who have not yet finalised their plans to comply with Making Tax Digital are in the last chance saloon this month, and the very latest date you have to comply with MTD for paying VAT is August 7.

That is the latest date on which you will need to make your first – if you are not already doing this – MTD VAT return. So, if you have not already done so, you have very little time left to make sure you comply with this legislation.

Your responsibilities

Whether you are required to pay VAT – because your business turnover is above the £85,000 threshold at which you are required to register – or because you have voluntarily registered, you now must keep your records and file your returns electronically.

How do I file?

From April 1, you will need to have filed any VAT due through MTD-compatible software, which includes the likes of QuickBooks and Xero, among others. If you are not able to file your return this way, then HMRC can currently issue a £400 fine. But from January next year, HMRC is due to bring in a points system, which means you accrue points each time you miss a deadline. Once you hit a certain number of points, you will face a £200.

So, the best thing you can do is prepare yourself properly. If you have not sorted this out already, you really are running out of time.

We can help you meet your obligations

If you are not yet registered to deal with MTD through relevant accounting software, then we can help you. But there is no time to lose. Please get in touch with us as soon as you can, and we will do everything in our power to help you meet your filing deadlines.

July 11, 2022

Where is the best place to hold your tax money?

Where is the best place to hold your tax money?

Putting aside the tax money due each time you have an invoice paid is sensible planning, but is that money working as hard for you as it could be?

Many current accounts are paying no interest whatsoever, and when it comes to savings accounts, you would still be struggling to get anything meaty when it comes to interest payments. Businesses, in particular, will often leave this money sitting in an account that is paying nothing or next to nothing on the money building up.

However, when these amounts run into tens of thousands of pounds – if not hundreds of thousands of pounds depending on your personal or business status – not having this money work for you is a big opportunity to miss.

So, if you are currently using a separate current account paying no interest, or worse leaving the money in your existing business account without separating it out, then it would be sensible to look at what you can do to boost your returns.

Business easy access accounts

Let’s say you have around £250,000 sitting in your tax account waiting to be paid to the taxman. If you were to put it into an easy access account for businesses, you could currently get 1% interest on this, according to financial statisticians Moneyfacts at the time of writing. Over the year, that would give you £2,500 extra to play with for no effort on your part.

Business notice accounts

However, if you are prepared to give some notice before you make a withdrawal – which would mean not being able to access it whenever you wanted – you would be able to get more in interest. For example, by agreeing to give 95 days’ notice, you could get 1.3% at the time of writing. So, you would increase the amount you could earn from that same £250,000 to £3,250.

Remember, this is money you do nothing to get other than spend a bit of time on paperwork to open the account. For the time that takes, it is a return worth having.

Business concierge

There are even companies that provide services for businesses to help them boost the returns on their business income by finding the best accounts for their funds. In short, a specialist will manage these accounts for you, to maximise the returns you can make.

One firm that offers this type of service highlighted that if a company failed to move £903,000 in cash accounts to the best-paying accounts over five years, this could result in a loss of income of as much as £41,538 over that period. This would be enough to hire an additional part-time member of staff for most businesses.

These companies should never hold your money in their own accounts, they should simply be working under your direction to move funds to the best-paying bank accounts and you pay a fee for this service. This ensures you are still covered by the Financial Services Compensation Scheme (FSCS).

We can help you

As your accountant, we are likely to have services that will help you to increase the returns you can make on the money you hold in your business accounts. So, please contact us for details on how we can help you make your money work harder for your business.

June 27, 2022

Currency exchange – why it can pay to not rely on your bank

Currency exchange – why it can pay to not rely on your bank

International trading is something many businesses are involved in, whether it’s because you are selling your good or services abroad or buying raw materials in from overseas to help with manufacturing.

Either way, exposing yourself and your business to currency risk is a reality for many businesses, and how you reduce that risk as much as possible is something to think seriously about. For most businesses, the default option is to simply transfer money from your business bank account to the account of the company you are working with abroad. It’s easy, yes, but you could be paying more than you need to and cutting your profit margins as a result.

How much do you transfer abroad each year?

The best way for you to make your international money transfers depends very much on how much, and how often, you transfer overseas. If you make a one-off payment each year, then you will most likely need to take a different approach to a company making regular payments abroad every month.

So, the first thing to do is look at how and when your company is transferring money overseas. By checking through your bank statements, assuming you are using your business bank to make the transfers currently as many businesses do, you should also be able to get a sense of what the exchange rates you have been getting are, and how much you are paying in fees per transaction.

How much does it cost to send money internationally?

The problem you have is that when it comes to sending money internationally, pinning down the costs involved is not easy. This is because different companies will charge different amounts and will give you different exchange rates depending not just on how much you are transferring at a time, but also, they will each take a ‘margin’ on the exchange rate. This is a way of increasing the amount of money they can make on the international transfer.

For example, let’s say you want to transfer £100,000 to a company in Germany. Your transfer will go from sterling to euros and your bank may charge you, say, £25 to make that payment if you use telephone banking to make the transfer. It could be lower, say, £15 if you make the transaction online.

The company receiving the money may also be charged by their bank, which could add another, say, £6 to the cost of the transaction. So, without taking any currency exchange values into account, you and your receiving party could already be paying up to £31 just to move money overseas.

Exchange rates and other products

Then, you need to take into account the exchange rates you are going to pay. These can vary considerably from company to company. Banks will typically offer worse rates than international money transfer specialists, who do nothing other than currency transfers day in, day out.

Let’s say you are moving money from sterling to euros. If you want to send £100,000 then the Barclays rate at the time of writing was €1.1234. This would give you €112,340 in euros. Remember, you would need to pay the additional fees on top of this.

Compare that with a money transfer specialist such as OFX, and you would receive €1.1778 for the same transaction at the time of writing. This would give you €117,780 – an extra €5,440. Plus, you would not need to pay the extra fees charged by most banks.

The foreign exchange specialists also have a variety of products that will help you save more money, especially if you make regular payments overseas. There is something called a ‘forward contract’ that allows you to fix the exchange rate you will get for a period of time, taking the guesswork out of exchange rates and can help businesses set their budgets more effectively.

There are other products that can help you mitigate risks and boost the chances of getting a better exchange rate for the transfers your business needs to make. Remember, these products are also available to individuals if you need to make regular transfers to deal with bills associated with an overseas property, for example.

Let us help you

If you want to learn more about how you can reduce the risk you take when making currency transfers, then please contact us for more details.

June 20, 2022

End of bulk appeals for tax fines in May

End of bulk appeals for tax fines in May

If you are unlucky enough to be fined for a late filing, then the way in which any appeal can be made changed as of May 7.

Prior to this, HMRC had temporarily reintroduced the ability to bulk appeal late filing penalties for income tax in 2020 and 2021. But from now onwards, all such appeals need to be made individually.

To be fair, if you keep in close contact with your accountant and give sufficient time for all of the paperwork to be done, then you should not be in a position where you are facing a late filing penalty. But if you have either filed paperwork late yourself or had a late filing penalty for some other reason, then each appeal now must be made individually.

Your responsibilities

Even though you use an accountant to deal with your tax liabilities, you are still ultimately legally responsible for the correct and timely filing of your returns. There are several different penalties that could apply too.

Types of penalties

For example, there is an ‘inaccuracy penalty’ which can be applied across specific taxes, including income tax, PAYE, capital gains tax, inheritance tax and corporation tax. This penalty could be anything from 0% to 30% of the extra tax due if the error occurred due to a ‘lack of reasonable care’.

If the error is considered deliberate, this rises to between 20% and 70% of the extra tax due, and if it is both deliberate and concealed, it could rise to between 30% and 100% of the extra tax due.

You could also face a penalty for a failure to notify HMRC of a change in your liability to tax. This could be, for example, if your company makes a profit and becomes liable to corporation tax. Or it could be because your business has reached the turnover for the VAT threshold (£85,000) and you have not registered for VAT.

Other penalties could include ‘Offshore penalties’ and ‘VAT and Excise wrongdoing penalties’ – so it is important if any of these could potentially apply to you, that you speak to your accountant immediately. You can find more information on the types of penalties that could apply on the GOV.UK website.

We can help you meet your obligations

If you think there is a chance that you could fall foul of any of these rules and face a penalty, or that there is any other issue you need advice on to make sure you comply with all your HMRC requirements, please contact us as soon as possible. We will help you navigate any problems that arise.

June 6, 2022

Get a business health check at the start of the tax year

Get a business health check at the start of the tax year

Using up personal allowances is not the only reason you should see your accountant at the start of the tax year, it is also the best time to get a health and wealth check for your business too.

The end of the tax year is the busiest time for your business and your accountant, meaning devoting time and effort to checking whether your business is on track is sadly lacking.

Take the time while you have the time

However, the complete opposite is the case at the start of the tax year, so now is the time to make the most of the chance to review your business strategy, cashflow and plans for the coming year to ensure your company has the best chance of success.

What can your accountant help you with?

Your accountant is perfectly placed to help you put an effective plan in place to give your business the boost it needs at the start of the tax year. He or she can help you with everything from saving tax and paying the right amount of tax, right the way through to helping you comply with relevant regulations and improving your cashflow.

Accessing funding

A good accountant can also help you access relevant funding – whether that is a grant that your business would qualify for or an investor that would help your business to grow.

Setting out an effective business plan at the beginning of your financial year is like creating a road map for the coming months, allowing you to follow that map to achieve your goals.

We can help your business run smoothly

When things get tough, your accountant is there to help you with everything from advice to reality checks so your business can continue to run smoothly.

If you want help to set your business on the right path for this tax year, then please get in touch and find out how we can help you.

May 9, 2022