Why use automated bank feeds?
Published: 04/10/2018 By Mike Wright
What are the benefits?
- Save hours of tedious data entry.
- Eliminate any potential imputing errors.
- Improve visibility of your cash flow.
- Live access to how your business is performing.
Common Payroll Pitfalls
Published: 26/09/2018 By Mital Patel
For example do you know the different allowances for full and part time employees? Or employees working irregular hours?
Not forgetting expectant mothers are entitled to Statutory Maternity Pay (SMP) but did you know fathers or partners also have an entitlement to Statutory Paternity Pay (SPP)?
A mother and her partner are both eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (SHPP).
Please contact our payroll team if you would like to know more about holiday entitlement and statutory pay for your staff.
Do you need a Polish speaking accountant? Look no further
Published: 20/09/2018 By Magdakeba Kaczynska
Jeśli mieszkasz i pracujesz tutaj, jesteś zobowiązany rozliczyć się z podatków w UK i my możemy Ci w tym pomóc. Między innymi:
· musisz zarejestrować się i rozliczać z VAT, jeśli Twoje dochody lub dochody Twojej firmy przekraczają £85,000
· musisz płacić Corporation Tax jeśli posiadasz spółkę kapitałową
· musisz rozliczyć się z podatku dochodowego jeśli jesteś samozatrudniony
My w TBA jesteśmy ekspertami w naszej dziedzinie i specjalizujemy się w prowadzeniu i rozliczaniu firm, rachunkowości i podatkach. Współpracujemy również ze specjalistami z zakresu doradztwa biznesowego i likwidacji przedsiebiorstw.
Jako osoba, której ojczystym jezykiem jest polski, doskonale rozumiem, jak trudne może być czasem zrozumienie specyficznego jezyka biznesowego, nawet jeśli Twój angielski jest na doskonałym poziomie. Skontaktuj się ze mną, a ja pomogę Ci wyjaśnić wszystko, czego nie jesteś pewien po Polsku.
E-mail: magdalena.kaczynska@turpinba.co.uk
Tel: 0208 6617878
Translation
My name is Magda. I am a Polish speaking accountant who lives in London and works at the firm of turpin barker armstrong in Sutton where we look after many owner manged businesses, self-employed people and sole traders.
If you live and work here then you are going to pay UK tax and we can help with that. This could include:
· Need to pay VAT if you own a business and your turnover is over £85k
· Corporation tax if you own a company
· Personal taxes if you are self employed
We are experts in our field and specialise in providing accountancy, bookkeeping, taxation and business support. We also work with specialist financial planners and insolvency practitioners.
As a native polish speaker I understand how difficult it can be to understand specific business language, even though your English is excellent. Keep in touch with me and I can help explain everything you are not sure about in Polish.
Why you should keep proper business records
Published: 13/09/2018 By Kashif Azhar
In order to achieve this the following steps need to be taken:
Always make sure you pay your personal expenses from your personal bank account and not from your business bank account. If they are accidentally treated as a business expense the profit will not be correct.
If you do pay business expenses personally, keep the receipts in an envelope and make a note on it e.g. ‘Business expenses paid personally for the quarter ended 31.8.18’. Make sure you include these expenses in the profit and loss account otherwise the profit and tax liability will be overstated.
If your personal car is used for business, mileage logs should be kept and business mileage calculated. 45p can be claimed for the first 10,000 miles and 25p after that for one accounting year.
Reconciling the bank regularly is advised as it is will be difficult to find mistakes if you leave this for a long time.
Records should be kept in a folder in date order and not just in a bag because as a business owner it is your responsibility to keep proper records. By keeping good records if there is an investigation by HM Revenue and Customs you will easily be able to find invoices which have been requested.
Don’t use bookkeeping software? No problem we can do it for you. You’ll have online access to view the latest reports e.g. profit and loss account therefore giving you more time to work on the growth of your business.
Please give us a call on 020 8661 7878 to discuss the bookkeeping services we offer
Clues as to how MTD will work for Income Tax
Published: 06/09/2018 By Robert Coyle
MTD starts in April next year for VAT registered businesses – with the aim that other taxes (income/corporation tax, inheritance etc) get added in some unspecified order at a future date.
Sadly the government has so far been very vague as to what MTD will mean in practice but clues are emerging – the latest being a 4 June update buried on the UK Government website
THIS MAKES CLEAR THE SCALE OF CHANGE COMING
According to the government website you will need to:
- Use one of a number of software options to keep your business records
- Use this software to keep records of income & expenses & in particular ensure that your software can send updates to HMRC
- EVERY THREE MONTHS –send a summary of income & expense to HMRC
- Send a final report of income & expenses at the end of your accounting year – at this point you will claim allowances & reliefs
The government talk about the option of paying your tax bill as you go – we wonder why this will be an option? If you are going to have to give quarterly estimates of profits, surely it will be a very short step to the government demanding quarterly payments on account (but that’s just our opinion).
The key point is that this will be a huge amount more reporting required more quickly.
We will be issuing further updates on our approach to handling this requirement. We have designed a solution & we are currently deep in systems testing. Keep an eye out for our further updates.
5 Things to think of when it comes to your tax return
Published: 06/09/2018 By Irtiffa Azed
Making Tax Digital - Place your bets now!
Published: 29/08/2018 By Robert Coyle
Well what is it?
Making Tax Digital is a fundamental change in the way the UK Government administers YOUR tax. The Scary bit is it starts in April next year – which if you allow for time off for Christmas is only really seven working months away.
Ultimately for every tax payer (be that a corporate or an individual) you are going to end up with your own digital tax account & to be reporting information (& paying tax) much more promptly than the current system. While all the detail isn’t yet clear , quarterly tax payments (& thus quarterly accounts for businesses/sole traders) could be on the cards.
MTD will start for VAT registered businesses for their first VAT return period starting after 1 April 2019. Further taxes (income tax, CGT, inheritance tax & the like) will be added thereafter. For VAT registered businesses you will also need to keep digital records & to record far more detail – the old hand written note book will not suffice!
WHAT THIS MEANS – the only practical way forward for smaller businesses (that don’t want to maintain their own IT) is to use Cloud based accounting software for record keeping & now is the time to decide which system to use.
As a practice we’ve decided to use QuickBooks as our main solution as we feel this is the best fit for our clients.
For further updates on MTD & the QuickBooks software we will be using check our website, look out for our mailings (ask to be added to our mailing list) & also keep an eye out for our autumn seminar.
The key message however is that this is coming & you need to be deciding now how you intend to respond – if in doubt give us a call on 020 8661 7878 to discuss.
It’s time to place your MTD bet & select a solution to keep yourself compliant!
The decline of the cheque - other ways to pay
Published: 15/08/2018 By Laura Lanaway
The way we pay for goods and services has changed beyond recognition even in the last ten years, let alone the last century. The preference for paying for goods and services by standing order, bacs transfer or by credit/debit card is growing year on year as cheque usage declines year on year.
They are all quicker, more reliable ways to make your payments without any hassle of having to find the time to get to a post box to get your cheque delivered to us. Let alone the added worry of your cheque going missing when it’s in the post system.
With standing orders your payment will come out on a set date meaning there is no longer a need to worry as to when your cheque will clear and whether there be enough money in the account at that time.
Here at tba we can set up a weekly or monthly standing order for you so that your payments can be spread throughout the year. You can also set us up as a payee on your online banking app so that you can pay us via bacs transfer if you prefer. This comes straight out of your account, sometimes within just two hours depending on your bank.
As well as this we can also accept payments over the telephone using a debit or credit card without you incurring any extra charges.
The added bonus is that this will also help us along with our move to ‘go paperless’ as an office.
Get in touch and let us advise you on how to make a more efficient, reliable payment.
Cash is King!
Published: 20/07/2018 By Dean Clark
Manage your cash flow to grow your business
Cash is king when it comes to the financial management of a growing company. The delay between the time you need to pay your suppliers and employees and the time you collect from your customers is often a problem. The solution is cash flow management. This means delaying outlays of cash while encouraging anyone who owes you money to pay it as fast as possible. Our most profitable business owners prepare cash flow projections for the next year and often monthly. This allows them to see trouble spots before they happen and plan accordingly.
Improving cash receivable
Here are a few ideas to help you speed up cash collection:
ÞOffer discounts to customers who pay their bills quickly;
ÞAsk customers to make deposit payments at the time orders are taken;
ÞRequire credit checks on all new noncash customers; and
ÞIssue invoices promptly and follow up immediately if payments are slow in coming
Managing your expenses
Here are a few ideas to help you manage your expenses:
ÞTake full advantage of creditor payment terms. If a payment is due in 30 days, don't pay it in 15 days;
ÞUse your Bank funds transfer to make payments on the last day they are due;
ÞConsider suppliers' offers of discounts for earlier payments; and
ÞDon't always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a cheaper price!
How do you prepare a cash flow forecast?
This is best done on a spread- sheet but you can do one on a blank piece of paper! Start by taking your bank balance at the beginning of a month and add projections of cash to be received from customers and other sources such as bank interest. Then deduct a projection of upcoming cash outlays. Have a line on your projection for every significant business expense. Look closely at the closing balance you are predicting. Repeat this forward. Ask yourself “What’s the trend is it positive or do we need to start examining how we can increase cash collected and reduce cash expenditure?”
We have helped many businesses prepare a cash flow forecast, financial budget, business plan etc and can offer sensible and realistic advice on managing your cash and/or business.
Talk to us about how we can help, call us on 020 8661 7878—the first meeting is always free
Making Tax Digital - Update
Published: 16/07/2018 By Robert Coyle
Making Tax Digital – or MTD - if you are in business then over the coming months you are going to hear lots about this because like it or not it is going to affect you and the way you run your business.
The good news is that if you get this right it will actually free you up to spend less time on non-productive form filling and more time on adding value to what you do. The bad news is you are going to have to make some changes – but we can help you!
So what is MTD?
- MTD is intended to fundamentally change the way taxpayers and HMRC operate. In particular you will need to keep records electronically and communicate with HMRC via an Application Programme Interface (API).
- MTD will start with VAT for all VAT registered businesses and traders, (other taxes will get added later).
- MTD currently requires any business which is both VAT registered and has turnover in excess of the registration threshold (currently £85,000) to be compliant for all VAT periods starting on or after 1 April 2019.
- There will be no free of charge HMRC software solution, and taxpayers will be responsible for sourcing and operating ‘Functional Compatible Software’ to meet their obligations.
- Using the likes of simple spreadsheets to keep records will no longer be enough!
For ALL businesses you are going to need to use accounting software. This must be able to:
- Keep required records in a digital format;
- Preserve those records in digital form for up to 6 years;
- Create a VAT return from the digital records;
- Keep data around sales and purchases in potentially far greater detail than currently required;
- Receive information from HMRC about the business’ compliance record via the API.
What you should be doing now:
Larger businesses with their own internal IT teams should be liaising with the head of the Finance and Tax Departments to ensure that they are aware of the coming changes and that systems are being developed to cope with these changes
Smaller businesses should contact their accounting software provider to establish what offering they have and how their package will change to meet the requirement of ‘functional compatible software’.
How we can help
- For VAT registered businesses where we already do your bookkeeping and VAT we will be writing to you separately to explain the impact of MTD on our service.
- If you maintain your own books: We can takeover – we use cloud accounting (QuickBooks) plus a range of supporting applications to efficiently and accurately process your data, or
- We can work with you to help you select, test and implement a compliant solution or otherwise advise what changes are required.
What happens next?
We will be issuing a series of updates – keep an eye out for these. Otherwise please arrange to come in and have a no obligation chat to review your options
New VAT rules for building trade in 2019
Published: 16/07/2018 By Bradley Suckling
The measure is designed to combat VAT fraud in the construction sector labour supply chain which HMRC argue presents a significant tax loss. HMRC has now published draft legislation to introduce the Reverse Charge for Construction Services.
Under the proposed new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain will not be invoiced in the normal way. Under the reverse charge a main contractor would account for the VAT on the services of any sub-contractor and the supplier does not invoice for VAT. The customer (main contractor) would then account for VAT on the net value of the supplier’s invoice and at the same time deducts that VAT - leaving a nil net tax position. This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors.
CONSTRUCTION WORK AFFECTED
The reverse charge will apply to a wide range of services in the building trade, including construction, alteration, repairs, demolition, installation of heat, light, water and power systems, drainage, painting and decorating, erection of scaffolding, civil engineering works and associated site clearance, excavation, and foundation works. The definitions have been lifted directly from the CIS legislation.
EXCLUDED WORKS
Professional services of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape are not covered by the new rules. The draft legislation sets out other work to which the reverse charge does not apply. It is hoped that the legislation and guidance will be finalized by October 2018 to allow businesses at least 12 months in which to make the necessary changes to systems.
WHAT ARE THE IMPLICATIONS OF THE NEW RULES?
This will be a significant new burden in addition to the commencement of Making Tax Digital in April 2019 and HMRC are encouraging businesses to prepare early for these changes.
Failure to comply with the new VAT rules may lead to penalties and any output VAT wrongly applied to an invoice will be chargeable by HMRC but not necessarily recoverable.
Please contact us if you are likely to be affected by these changes and we can work with you to ensure you are ready for the new system.
Tax Efficient Extraction of Profit from Companies for 2018/19
Published: 11/07/2018 By David Payne
For many years accountants and tax advisors have suggested that director/shareholders should extract profit by paying themselves a low salary with the remainder of their income being extracted in the form of dividends.
Although dividends are not deductible in arriving at the company’s taxable profits, they do not normally attract National Insurance Contributions (NICs). The starting point of NICs rose to £162 a week from 6 April 2018. This is now significantly lower than the £11,850 personal income tax allowance. A salary just below £162 a week, £8,424 a year would mean no NIC would be due but would be sufficient to count as a qualifying year for State Pension purposes (if above £6,032 lower earnings limit).
Remember that employers other than those where the director is the only employee are entitled to a £3,000 employment allowance that can be set against employer’s NICs. If this has not been utilised against NICs on staff wages then consider increasing the directors’ salaries up to £11,850, as the additional salary would save corporation tax at 19% on the £3,426 extra salary which equals £651, whereas the employees NIC would be £411.
As far as the level of dividends is concerned, the rate of tax changes from 7.5% to 32.5% at £46,350 so ideally the dividends should not exceed £34,500 if a salary of £11,850 is paid. The first £2,000 would be taxed at 0% with £32,500 being taxed at 7.5%. Don’t forget that this tax will then be due on 31 January 2020, or under the “payments on account” regime.
Contact us to discuss the optimum way in which you can extract profits from your family company tax efficiently.
Spotlight on Inheritance Tax
Published: 10/07/2018 By Robert Coyle
IHT is currently charged at 40% on the proportion of the individual’s estate that exceeds the nil-rate band. Both the value of chargeable assets held at death and the value of chargeable lifetime gifts made within seven years of death are included within the estate.
The Residence Nil-Rate Band (RNRB)
On 6 April 2017, the RNRB came into effect, permitting some individuals to escape the IHT net.
The RNRB applies where a residence is passed on death to a direct descendant, such as a child or a grandchild. For 2018/19, the RNRB is set at £125,000 and is set to rise annually thereafter, reaching £175,000 in 2020/21.
The RNRB is in addition to an individual’s nil-rate band, and can only be used in regard to one residential property which has been, at some time, a residence of the deceased. The RNRB is ta pered at a withdrawal rate of £1 for every £2 for estates with a net value of more than £2 million.
Making the most of IHT reliefs
It’s well worth planning and done carefully there are some great opportunities to better manage your liability to IHT. Examples include:
· Transfers between spouses – are IHT exempt - and can be used in conjunction with other allowances – such as exempted gifts (see below).
· Smaller gifts can fall immediately outside of your estate. Larger gifts can be exempt if survived for seven years. There is taper relief on gifts made between 3 and 7 years before death.
· Some assets can fall outside the scope of IHT – such as AIM shares or agricultural land.
· Trusts are a potentially excellent planning tool – but are complex and need careful use.
A Pitfall
Avoid “gifts with reservation” – for a gift to work it must truly be a gift (although there are ways to carefully structure these).
Live in the South East?
If yes and you own your own home— your estate could easily be caught by IHT. Early advice is essential to best manage this tax.
So you want to start a business but what type?
Published: 09/07/2018 By Robert Coyle
You have a choice you can set up as a sole trader or you can use a Limited Liability Company to conduct your trade – which is right for you?
Well there is no right or wrong answer – you need to consider the facts & either could be right for you.
What is a sole trader & what are some advantages?
A sole trader is someone who works for themselves – there is no difference between calling yourself a sole trader or self employed. Either way you carry on a trade, supply services, have customers etc...
Being a sole trader is the simplest way of starting a business, but even here there are things you must do such as register with the tax man & pay self employed national insurance ( at least Class II NIC possibly more).
In any event you need to…….
· Register as self-employed with HMRC
· Obtain any permits and planning permission that you may need from your local
· If you are going to have premises (say a restaurant or shop) find out from your local authority if you need to pay business rates
· Have public liability insurance
· Sort your financial admin – do you need to register for VAT, how will you keep records & get paid, what will you do for banking etc.
· But being a sole trader can be the simplest & cheapest way for many businesses to operate & is often appropriate.
So should I use a Limited Company instead?
If you are a sole trader the businesses liabilities are yours – if something goes wrong you can be personally liable. Using a Company can LIMIT your liability (hence the use of the word Limited).
Also frankly there can be a perception issue – over a certain size of contract customers generally expect to deal with a “proper” company.
BUT – using a company increases your legal, possibly financial & admin obligations – so there is a cost involved.
There can also be other considerations – if you have other income (say from property) for tax that gets added to your income as self employed – so it needs a careful look.
So what do I do?
We help businesses start all the time – come in & have a chat or talk to another advisor such as a solicitor or your local Chamber of Commerce.
How to find a good property accountant?
Published: 25/06/2018
If you are involved in buying property to let – accountants can assist you with tax-related work and make sure you pay the least amount of tax possible on buy-to-let or holiday homes. A good accountant will also help you consider your overall approach to wealth management, estate and income planning, to maximise your overall position from owning property and other assets.
So you do need a good accountant – some questions to ask in finding one:
· How long have you been practising?
· Are you a property specialist/have you got experience in this area?
· Can you please give me a written quote with a full cost breakdown?
· What cloud software do you use (for property accounts) and how do I upload data to you?
· Do you bill for phone calls and e-mails or are they included in the service?
· Are you willing to set a job rate as opposed to an hourly rate?
Typically we advise on the following:
· Recent changes to mortgage interest relief and stamp duty
· Restructuring arrangements
· Capital Gains Tax planning/ER relief/roll over
· S24 and spousal tax planning
· SDLT
· Incorporation and/or use of trusts
· Dealing with HMRC property tax enquiries and investigations
· Considering longer term inheritance tax planning
· Dealing with all compliance issues
· Tax planning and support for families involved in buy to let businesses
· SPV’s/JV’s
· Non resident landlords
· Tax on Airbnb (rent a room exemptions)
· Furnished holiday let’s
As you can see – it is quite a bit and can be quite complex – hence you need an expert.
If preparing property accounts we use QuickBooks & can work with you to make data upload simple and effortless (no more bags of receipts or losing things).
Give our property team a call on 020 8661 7878 or come in for a property related chat
Benefits in kind reporting deadline fast approaching
Published: 01/06/2018 By Drupen Patel
What needs to be reported?
Common benefits include company cars, private health insurance and interest free loans. It is not possible to provide a comprehensive list and statutory exemptions allow you to exclude certain benefits and expenses so it’s important you check if unsure.
When?
P11D forms must be submitted to HMRC along with form P11D(b) by 6th July 2018 with all relevant employees provided with a copy on this day. Class 1A National Insurance at 13.8% must be paid by 19th July 2018 (or 22 July 2018 if paying electronically).
What goes wrong?
We often find employers completing P11D’s incorrectly by miscalculating the taxable value
or omitting information such as the fuel benefit where this applies. If you are late or wrong, penalties can be applied as follows:
Overdue:
If you are late there is an automatic penalty of £100 for every month for every 50 employees
Incorrect:
If a P11D and P11D(b) return is incorrect the penalty if based on the percentage of lost revenue and judged according to the taxpayers behaviour.
30% for carless action
70% for deliberate but not concealed
100% for deliberate and concealed
What next?
The complex nature of the rules governing taxable benefits along with the risk of being penalised for late submissions, errors, and omissions mean it is worth taking professional advice to make sure you are fully compliant with your tax obligations.
Another attack on Buy to Let returns - the abolition of wear and tear allowance
Published: 25/05/2018 By Robert Coyle
For a variety of reasons the government has decided to make buy to let investing much less attractive to individual investors. For instance the ability to get tax relief on interest payments is being withdrawn in stages.
Wear & tear allowance
For furnished lets a landlord USED to be able to deduct 10% of rents received as an allowance against the cost of wear & tear on fixtures & fittings – items like furniture, kitchen appliances & goods. This allowance has now been abolished.
Replacement allowance
Instead, now if you replace an item you can deduct the cost of the replacement in that year’s tax return, but note:
· It is only the cost of replacing – so if you are spending for the first time – say to furnish a new buy to let, the costs are NOT deductible,
· Only replacement costs are allowed – if you are improving (so not replacing on a like for like basis) – then the element of costs that relates to improvement as opposed to replacement is not allowed
Are there any upsides to this? Hmmm – well:
· Replacement costs do apply to unfurnished or partially furnished rents (so say you provide just a fridge & a cooker but not other items)
· You can plan replacements to occur in a year of likely maximum tax on other items – say you know you will get a big bonus one year but not another, but
· Effectively this is designed to reduce the tax allowances on letting
So what can you do? Well once again with property it isn’t straight forward:
· The basic angle is that the government is trying to reduce the attractiveness of buy to let as an investment
· If you have only a couple of properties it probably isn’t worth looking at mitigation strategies – so should you review whether you stay in buy to let at all (but this can be a complex decision)
· If you do want to stay as an investor really pay attention to your record keeping – there remain lots of allowable expenses – but we often see clients fail to keep enough records to enable them to claim what they remain entitled to
· If you are a serial buy to let investor a corporate structure may be a better way to hold your properties – but that needs careful consideration & planning
So the advice remains – now is a good time to review your buy to let investments – but it can be a complex decision – talk to our experts to explore your options.
Why use automated bank feeds?
Published: 04/10/2018
By Mike Wright
Accounting is an essential part of all businesses, it’s not always the simplest and can be very time-consuming. To help smooth your accounting processes you can now seamlessly integrate your business bank account with your accounting software.
What are the benefits?
. . .
What are the benefits?
- Save hours of tedious data entry.
- Eliminate any potential imputing errors.
- Improve visibility of your cash flow.
- Live access to how your business is performing.
Common Payroll Pitfalls
Published: 26/09/2018
By Mital Patel
Do you know how many holidays your employees are entitled to?
For example do you know the different allowances for full and part time employees? Or employees working irregular hours?
Not forgetting expectant mothers are entitled to Statutory Maternity Pay (SMP) but did you know fathers or partners also have an entitlement to Statutory Paternity Pay (SPP)?
A mother and her partner are both eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (SHPP).
Please contact our payroll team if you would like to know more about holiday entitlement and statutory pay for your staff.
. . .
For example do you know the different allowances for full and part time employees? Or employees working irregular hours?
Not forgetting expectant mothers are entitled to Statutory Maternity Pay (SMP) but did you know fathers or partners also have an entitlement to Statutory Paternity Pay (SPP)?
A mother and her partner are both eligible for Shared Parental Leave (SPL) and Statutory Shared Parental Pay (SHPP).
Please contact our payroll team if you would like to know more about holiday entitlement and statutory pay for your staff.
Do you need a Polish speaking accountant? Look no further
Published: 20/09/2018
By Magdakeba Kaczynska
Mam na imię Magda, jestem polskojęzyczną ksiegową, mieszkam w Londynie i pracuję w firmie Turpin Barker Armstrong w Sutton, gdzie pomagamy wielu właścicielom małych i średnich firm oraz osobom samozatrudnionym.
Jeśli mieszkasz i pracujesz tutaj, jesteś zobowiązany rozliczyć się z podatków w UK i my możemy Ci w tym pomóc. Między innymi:
My w TBA jesteśmy ekspertami w naszej dziedzinie i specjalizujemy się w prowadzeniu i rozliczaniu firm, rachunkowości i podatkach. Współpracujemy również ze specjalistami z zakresu doradztwa biznesowego i likwidacji przedsiebiorstw.
Jako osoba, której ojczystym jezykiem jest polski, doskonale rozumiem, jak trudne może być czasem zrozumienie specyficznego jezyka biznesowego, nawet jeśli Twój angielski jest na doskonałym poziomie. Skontaktuj się ze mną, a ja pomogę Ci wyjaśnić wszystko, czego nie jesteś pewien po Polsku.
E-mail: magdalena.kaczynska@turpinba.co.uk
Tel: 0208 6617878
Translation
My name is Magda. I am a Polish speaking accountant who lives in London and works at the firm of turpin barker armstrong in Sutton where we look after many owner manged businesses, self-employed people and sole traders.
If you live and work here then you are going to pay UK tax and we can help with that. This could include:
We are experts in our field and specialise in providing accountancy, bookkeeping, taxation and business support. We also work with specialist financial planners and insolvency practitioners.
As a native polish speaker I understand how difficult it can be to understand specific business language, even though your English is excellent. Keep in touch with me and I can help explain everything you are not sure about in Polish.
. . .
Jeśli mieszkasz i pracujesz tutaj, jesteś zobowiązany rozliczyć się z podatków w UK i my możemy Ci w tym pomóc. Między innymi:
· musisz zarejestrować się i rozliczać z VAT, jeśli Twoje dochody lub dochody Twojej firmy przekraczają £85,000
· musisz płacić Corporation Tax jeśli posiadasz spółkę kapitałową
· musisz rozliczyć się z podatku dochodowego jeśli jesteś samozatrudniony
My w TBA jesteśmy ekspertami w naszej dziedzinie i specjalizujemy się w prowadzeniu i rozliczaniu firm, rachunkowości i podatkach. Współpracujemy również ze specjalistami z zakresu doradztwa biznesowego i likwidacji przedsiebiorstw.
Jako osoba, której ojczystym jezykiem jest polski, doskonale rozumiem, jak trudne może być czasem zrozumienie specyficznego jezyka biznesowego, nawet jeśli Twój angielski jest na doskonałym poziomie. Skontaktuj się ze mną, a ja pomogę Ci wyjaśnić wszystko, czego nie jesteś pewien po Polsku.
E-mail: magdalena.kaczynska@turpinba.co.uk
Tel: 0208 6617878
Translation
My name is Magda. I am a Polish speaking accountant who lives in London and works at the firm of turpin barker armstrong in Sutton where we look after many owner manged businesses, self-employed people and sole traders.
If you live and work here then you are going to pay UK tax and we can help with that. This could include:
· Need to pay VAT if you own a business and your turnover is over £85k
· Corporation tax if you own a company
· Personal taxes if you are self employed
We are experts in our field and specialise in providing accountancy, bookkeeping, taxation and business support. We also work with specialist financial planners and insolvency practitioners.
As a native polish speaker I understand how difficult it can be to understand specific business language, even though your English is excellent. Keep in touch with me and I can help explain everything you are not sure about in Polish.
Why you should keep proper business records
Published: 13/09/2018
By Kashif Azhar
Running a business as a sole trader, partnership or a limited company requires a good bookkeeping system so that it gives you an accurate idea of how well your business is performing.
In order to achieve this the following steps need to be taken:
Don’t use bookkeeping software? No problem we can do it for you. You’ll have online access to view the latest reports e.g. profit and loss account therefore giving you more time to work on the growth of your business.
Please give us a call on 020 8661 7878 to discuss the bookkeeping services we offer
. . .
In order to achieve this the following steps need to be taken:
Always make sure you pay your personal expenses from your personal bank account and not from your business bank account. If they are accidentally treated as a business expense the profit will not be correct.
If you do pay business expenses personally, keep the receipts in an envelope and make a note on it e.g. ‘Business expenses paid personally for the quarter ended 31.8.18’. Make sure you include these expenses in the profit and loss account otherwise the profit and tax liability will be overstated.
If your personal car is used for business, mileage logs should be kept and business mileage calculated. 45p can be claimed for the first 10,000 miles and 25p after that for one accounting year.
Reconciling the bank regularly is advised as it is will be difficult to find mistakes if you leave this for a long time.
Records should be kept in a folder in date order and not just in a bag because as a business owner it is your responsibility to keep proper records. By keeping good records if there is an investigation by HM Revenue and Customs you will easily be able to find invoices which have been requested.
Don’t use bookkeeping software? No problem we can do it for you. You’ll have online access to view the latest reports e.g. profit and loss account therefore giving you more time to work on the growth of your business.
Please give us a call on 020 8661 7878 to discuss the bookkeeping services we offer
Clues as to how MTD will work for Income Tax
Published: 06/09/2018
By Robert Coyle
Making Tax Digital is coming – as we’ve written before this will be a fundamental reform of how the government administers the UK tax system.
MTD starts in April next year for VAT registered businesses – with the aim that other taxes (income/corporation tax, inheritance etc) get added in some unspecified order at a future date.
Sadly the government has so far been very vague as to what MTD will mean in practice but clues are emerging – the latest being a 4 June update buried on the UK Government website
THIS MAKES CLEAR THE SCALE OF CHANGE COMING
According to the government website you will need to:
The government talk about the option of paying your tax bill as you go – we wonder why this will be an option? If you are going to have to give quarterly estimates of profits, surely it will be a very short step to the government demanding quarterly payments on account (but that’s just our opinion).
The key point is that this will be a huge amount more reporting required more quickly.
We will be issuing further updates on our approach to handling this requirement. We have designed a solution & we are currently deep in systems testing. Keep an eye out for our further updates.
. . .
MTD starts in April next year for VAT registered businesses – with the aim that other taxes (income/corporation tax, inheritance etc) get added in some unspecified order at a future date.
Sadly the government has so far been very vague as to what MTD will mean in practice but clues are emerging – the latest being a 4 June update buried on the UK Government website
THIS MAKES CLEAR THE SCALE OF CHANGE COMING
According to the government website you will need to:
- Use one of a number of software options to keep your business records
- Use this software to keep records of income & expenses & in particular ensure that your software can send updates to HMRC
- EVERY THREE MONTHS –send a summary of income & expense to HMRC
- Send a final report of income & expenses at the end of your accounting year – at this point you will claim allowances & reliefs
The government talk about the option of paying your tax bill as you go – we wonder why this will be an option? If you are going to have to give quarterly estimates of profits, surely it will be a very short step to the government demanding quarterly payments on account (but that’s just our opinion).
The key point is that this will be a huge amount more reporting required more quickly.
We will be issuing further updates on our approach to handling this requirement. We have designed a solution & we are currently deep in systems testing. Keep an eye out for our further updates.
5 Things to think of when it comes to your tax return
Published: 06/09/2018
By Irtiffa Azed
Making Tax Digital - Place your bets now!
Published: 29/08/2018
By Robert Coyle
MTD (or Making Tax Digital) could well be the biggest thing you haven’t heard of.
Well what is it?
Making Tax Digital is a fundamental change in the way the UK Government administers YOUR tax. The Scary bit is it starts in April next year – which if you allow for time off for Christmas is only really seven working months away.
Ultimately for every tax payer (be that a corporate or an individual) you are going to end up with your own digital tax account & to be reporting information (& paying tax) much more promptly than the current system. While all the detail isn’t yet clear , quarterly tax payments (& thus quarterly accounts for businesses/sole traders) could be on the cards.
MTD will start for VAT registered businesses for their first VAT return period starting after 1 April 2019. Further taxes (income tax, CGT, inheritance tax & the like) will be added thereafter. For VAT registered businesses you will also need to keep digital records & to record far more detail – the old hand written note book will not suffice!
WHAT THIS MEANS – the only practical way forward for smaller businesses (that don’t want to maintain their own IT) is to use Cloud based accounting software for record keeping & now is the time to decide which system to use.
As a practice we’ve decided to use QuickBooks as our main solution as we feel this is the best fit for our clients.
For further updates on MTD & the QuickBooks software we will be using check our website, look out for our mailings (ask to be added to our mailing list) & also keep an eye out for our autumn seminar.
The key message however is that this is coming & you need to be deciding now how you intend to respond – if in doubt give us a call on 020 8661 7878 to discuss.
It’s time to place your MTD bet & select a solution to keep yourself compliant!
. . .
Well what is it?
Making Tax Digital is a fundamental change in the way the UK Government administers YOUR tax. The Scary bit is it starts in April next year – which if you allow for time off for Christmas is only really seven working months away.
Ultimately for every tax payer (be that a corporate or an individual) you are going to end up with your own digital tax account & to be reporting information (& paying tax) much more promptly than the current system. While all the detail isn’t yet clear , quarterly tax payments (& thus quarterly accounts for businesses/sole traders) could be on the cards.
MTD will start for VAT registered businesses for their first VAT return period starting after 1 April 2019. Further taxes (income tax, CGT, inheritance tax & the like) will be added thereafter. For VAT registered businesses you will also need to keep digital records & to record far more detail – the old hand written note book will not suffice!
WHAT THIS MEANS – the only practical way forward for smaller businesses (that don’t want to maintain their own IT) is to use Cloud based accounting software for record keeping & now is the time to decide which system to use.
As a practice we’ve decided to use QuickBooks as our main solution as we feel this is the best fit for our clients.
For further updates on MTD & the QuickBooks software we will be using check our website, look out for our mailings (ask to be added to our mailing list) & also keep an eye out for our autumn seminar.
The key message however is that this is coming & you need to be deciding now how you intend to respond – if in doubt give us a call on 020 8661 7878 to discuss.
It’s time to place your MTD bet & select a solution to keep yourself compliant!
The decline of the cheque - other ways to pay
Published: 15/08/2018
By Laura Lanaway
Cheque usage dates back to at least the days of the Knights Templar in the 12th Century. So, we think it’s time for an update!
The way we pay for goods and services has changed beyond recognition even in the last ten years, let alone the last century. The preference for paying for goods and services by standing order, bacs transfer or by credit/debit card is growing year on year as cheque usage declines year on year.
They are all quicker, more reliable ways to make your payments without any hassle of having to find the time to get to a post box to get your cheque delivered to us. Let alone the added worry of your cheque going missing when it’s in the post system.
With standing orders your payment will come out on a set date meaning there is no longer a need to worry as to when your cheque will clear and whether there be enough money in the account at that time.
Here at tba we can set up a weekly or monthly standing order for you so that your payments can be spread throughout the year. You can also set us up as a payee on your online banking app so that you can pay us via bacs transfer if you prefer. This comes straight out of your account, sometimes within just two hours depending on your bank.
As well as this we can also accept payments over the telephone using a debit or credit card without you incurring any extra charges.
The added bonus is that this will also help us along with our move to ‘go paperless’ as an office.
Get in touch and let us advise you on how to make a more efficient, reliable payment.
. . .
The way we pay for goods and services has changed beyond recognition even in the last ten years, let alone the last century. The preference for paying for goods and services by standing order, bacs transfer or by credit/debit card is growing year on year as cheque usage declines year on year.
They are all quicker, more reliable ways to make your payments without any hassle of having to find the time to get to a post box to get your cheque delivered to us. Let alone the added worry of your cheque going missing when it’s in the post system.
With standing orders your payment will come out on a set date meaning there is no longer a need to worry as to when your cheque will clear and whether there be enough money in the account at that time.
Here at tba we can set up a weekly or monthly standing order for you so that your payments can be spread throughout the year. You can also set us up as a payee on your online banking app so that you can pay us via bacs transfer if you prefer. This comes straight out of your account, sometimes within just two hours depending on your bank.
As well as this we can also accept payments over the telephone using a debit or credit card without you incurring any extra charges.
The added bonus is that this will also help us along with our move to ‘go paperless’ as an office.
Get in touch and let us advise you on how to make a more efficient, reliable payment.
Cash is King!
Published: 20/07/2018
By Dean Clark
Manage your cash flow to grow your business
Cash is king when it comes to the financial management of a growing company. The delay between the time you need to pay your suppliers and employees and the time you collect from your customers is often a problem. The solution is cash flow management. This means delaying outlays of cash while encouraging anyone who owes you money to pay it as fast as possible. Our most profitable business owners prepare cash flow projections for the next year and often monthly. This allows them to see trouble spots before they happen and plan accordingly.
Improving cash receivable
Here are a few ideas to help you speed up cash collection:
ÞOffer discounts to customers who pay their bills quickly;
ÞAsk customers to make deposit payments at the time orders are taken;
ÞRequire credit checks on all new noncash customers; and
ÞIssue invoices promptly and follow up immediately if payments are slow in coming
Managing your expenses
Here are a few ideas to help you manage your expenses:
ÞTake full advantage of creditor payment terms. If a payment is due in 30 days, don't pay it in 15 days;
ÞUse your Bank funds transfer to make payments on the last day they are due;
ÞConsider suppliers' offers of discounts for earlier payments; and
ÞDon't always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a cheaper price!
How do you prepare a cash flow forecast?
This is best done on a spread- sheet but you can do one on a blank piece of paper! Start by taking your bank balance at the beginning of a month and add projections of cash to be received from customers and other sources such as bank interest. Then deduct a projection of upcoming cash outlays. Have a line on your projection for every significant business expense. Look closely at the closing balance you are predicting. Repeat this forward. Ask yourself “What’s the trend is it positive or do we need to start examining how we can increase cash collected and reduce cash expenditure?”
We have helped many businesses prepare a cash flow forecast, financial budget, business plan etc and can offer sensible and realistic advice on managing your cash and/or business.
Talk to us about how we can help, call us on 020 8661 7878—the first meeting is always free
Making Tax Digital - Update
Published: 16/07/2018
By Robert Coyle
Making Tax Digital (MTD) - Update
Making Tax Digital – or MTD - if you are in business then over the coming months you are going to hear lots about this because like it or not it is going to affect you and the way you run your business.
The good news is that if you get this right it will actually free you up to spend less time on non-productive form filling and more time on adding value to what you do. The bad news is you are going to have to make some changes – but we can help you!
So what is MTD?
For ALL businesses you are going to need to use accounting software. This must be able to:
What you should be doing now:
Larger businesses with their own internal IT teams should be liaising with the head of the Finance and Tax Departments to ensure that they are aware of the coming changes and that systems are being developed to cope with these changes
Smaller businesses should contact their accounting software provider to establish what offering they have and how their package will change to meet the requirement of ‘functional compatible software’.
How we can help
What happens next?
We will be issuing a series of updates – keep an eye out for these. Otherwise please arrange to come in and have a no obligation chat to review your options
. . .
Making Tax Digital – or MTD - if you are in business then over the coming months you are going to hear lots about this because like it or not it is going to affect you and the way you run your business.
The good news is that if you get this right it will actually free you up to spend less time on non-productive form filling and more time on adding value to what you do. The bad news is you are going to have to make some changes – but we can help you!
So what is MTD?
- MTD is intended to fundamentally change the way taxpayers and HMRC operate. In particular you will need to keep records electronically and communicate with HMRC via an Application Programme Interface (API).
- MTD will start with VAT for all VAT registered businesses and traders, (other taxes will get added later).
- MTD currently requires any business which is both VAT registered and has turnover in excess of the registration threshold (currently £85,000) to be compliant for all VAT periods starting on or after 1 April 2019.
- There will be no free of charge HMRC software solution, and taxpayers will be responsible for sourcing and operating ‘Functional Compatible Software’ to meet their obligations.
- Using the likes of simple spreadsheets to keep records will no longer be enough!
For ALL businesses you are going to need to use accounting software. This must be able to:
- Keep required records in a digital format;
- Preserve those records in digital form for up to 6 years;
- Create a VAT return from the digital records;
- Keep data around sales and purchases in potentially far greater detail than currently required;
- Receive information from HMRC about the business’ compliance record via the API.
What you should be doing now:
Larger businesses with their own internal IT teams should be liaising with the head of the Finance and Tax Departments to ensure that they are aware of the coming changes and that systems are being developed to cope with these changes
Smaller businesses should contact their accounting software provider to establish what offering they have and how their package will change to meet the requirement of ‘functional compatible software’.
How we can help
- For VAT registered businesses where we already do your bookkeeping and VAT we will be writing to you separately to explain the impact of MTD on our service.
- If you maintain your own books: We can takeover – we use cloud accounting (QuickBooks) plus a range of supporting applications to efficiently and accurately process your data, or
- We can work with you to help you select, test and implement a compliant solution or otherwise advise what changes are required.
What happens next?
We will be issuing a series of updates – keep an eye out for these. Otherwise please arrange to come in and have a no obligation chat to review your options
New VAT rules for building trade in 2019
Published: 16/07/2018
By Bradley Suckling
Under new rules due to come in on 1 October 2019 builders, sub- contractors and other trades associated with the construction industry will have to start using a new method of accounting for VAT.
The measure is designed to combat VAT fraud in the construction sector labour supply chain which HMRC argue presents a significant tax loss. HMRC has now published draft legislation to introduce the Reverse Charge for Construction Services.
Under the proposed new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain will not be invoiced in the normal way. Under the reverse charge a main contractor would account for the VAT on the services of any sub-contractor and the supplier does not invoice for VAT. The customer (main contractor) would then account for VAT on the net value of the supplier’s invoice and at the same time deducts that VAT - leaving a nil net tax position. This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors.
CONSTRUCTION WORK AFFECTED
The reverse charge will apply to a wide range of services in the building trade, including construction, alteration, repairs, demolition, installation of heat, light, water and power systems, drainage, painting and decorating, erection of scaffolding, civil engineering works and associated site clearance, excavation, and foundation works. The definitions have been lifted directly from the CIS legislation.
EXCLUDED WORKS
Professional services of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape are not covered by the new rules. The draft legislation sets out other work to which the reverse charge does not apply. It is hoped that the legislation and guidance will be finalized by October 2018 to allow businesses at least 12 months in which to make the necessary changes to systems.
WHAT ARE THE IMPLICATIONS OF THE NEW RULES?
This will be a significant new burden in addition to the commencement of Making Tax Digital in April 2019 and HMRC are encouraging businesses to prepare early for these changes.
Failure to comply with the new VAT rules may lead to penalties and any output VAT wrongly applied to an invoice will be chargeable by HMRC but not necessarily recoverable.
Please contact us if you are likely to be affected by these changes and we can work with you to ensure you are ready for the new system.
. . .
The measure is designed to combat VAT fraud in the construction sector labour supply chain which HMRC argue presents a significant tax loss. HMRC has now published draft legislation to introduce the Reverse Charge for Construction Services.
Under the proposed new rules, supplies of standard or reduced-rated building services between VAT-registered businesses in the supply chain will not be invoiced in the normal way. Under the reverse charge a main contractor would account for the VAT on the services of any sub-contractor and the supplier does not invoice for VAT. The customer (main contractor) would then account for VAT on the net value of the supplier’s invoice and at the same time deducts that VAT - leaving a nil net tax position. This is intended to ensure that VAT is correctly accounted for on supplies by sub-contractors.
CONSTRUCTION WORK AFFECTED
The reverse charge will apply to a wide range of services in the building trade, including construction, alteration, repairs, demolition, installation of heat, light, water and power systems, drainage, painting and decorating, erection of scaffolding, civil engineering works and associated site clearance, excavation, and foundation works. The definitions have been lifted directly from the CIS legislation.
EXCLUDED WORKS
Professional services of architects or surveyors, or of consultants in building, engineering, interior or exterior decoration or in the laying-out of landscape are not covered by the new rules. The draft legislation sets out other work to which the reverse charge does not apply. It is hoped that the legislation and guidance will be finalized by October 2018 to allow businesses at least 12 months in which to make the necessary changes to systems.
WHAT ARE THE IMPLICATIONS OF THE NEW RULES?
This will be a significant new burden in addition to the commencement of Making Tax Digital in April 2019 and HMRC are encouraging businesses to prepare early for these changes.
Failure to comply with the new VAT rules may lead to penalties and any output VAT wrongly applied to an invoice will be chargeable by HMRC but not necessarily recoverable.
Please contact us if you are likely to be affected by these changes and we can work with you to ensure you are ready for the new system.
Tax Efficient Extraction of Profit from Companies for 2018/19
Published: 11/07/2018
By David Payne
The 2018/19 tax year saw changes to the personal allowance and dividend allowance, meaning that many directors of family companies will again be considering the most tax efficient method of paying themselves.
For many years accountants and tax advisors have suggested that director/shareholders should extract profit by paying themselves a low salary with the remainder of their income being extracted in the form of dividends.
Although dividends are not deductible in arriving at the company’s taxable profits, they do not normally attract National Insurance Contributions (NICs). The starting point of NICs rose to £162 a week from 6 April 2018. This is now significantly lower than the £11,850 personal income tax allowance. A salary just below £162 a week, £8,424 a year would mean no NIC would be due but would be sufficient to count as a qualifying year for State Pension purposes (if above £6,032 lower earnings limit).
Remember that employers other than those where the director is the only employee are entitled to a £3,000 employment allowance that can be set against employer’s NICs. If this has not been utilised against NICs on staff wages then consider increasing the directors’ salaries up to £11,850, as the additional salary would save corporation tax at 19% on the £3,426 extra salary which equals £651, whereas the employees NIC would be £411.
As far as the level of dividends is concerned, the rate of tax changes from 7.5% to 32.5% at £46,350 so ideally the dividends should not exceed £34,500 if a salary of £11,850 is paid. The first £2,000 would be taxed at 0% with £32,500 being taxed at 7.5%. Don’t forget that this tax will then be due on 31 January 2020, or under the “payments on account” regime.
Contact us to discuss the optimum way in which you can extract profits from your family company tax efficiently.
. . .
For many years accountants and tax advisors have suggested that director/shareholders should extract profit by paying themselves a low salary with the remainder of their income being extracted in the form of dividends.
Although dividends are not deductible in arriving at the company’s taxable profits, they do not normally attract National Insurance Contributions (NICs). The starting point of NICs rose to £162 a week from 6 April 2018. This is now significantly lower than the £11,850 personal income tax allowance. A salary just below £162 a week, £8,424 a year would mean no NIC would be due but would be sufficient to count as a qualifying year for State Pension purposes (if above £6,032 lower earnings limit).
Remember that employers other than those where the director is the only employee are entitled to a £3,000 employment allowance that can be set against employer’s NICs. If this has not been utilised against NICs on staff wages then consider increasing the directors’ salaries up to £11,850, as the additional salary would save corporation tax at 19% on the £3,426 extra salary which equals £651, whereas the employees NIC would be £411.
As far as the level of dividends is concerned, the rate of tax changes from 7.5% to 32.5% at £46,350 so ideally the dividends should not exceed £34,500 if a salary of £11,850 is paid. The first £2,000 would be taxed at 0% with £32,500 being taxed at 7.5%. Don’t forget that this tax will then be due on 31 January 2020, or under the “payments on account” regime.
Contact us to discuss the optimum way in which you can extract profits from your family company tax efficiently.
Spotlight on Inheritance Tax
Published: 10/07/2018
By Robert Coyle
Inheritance tax (IHT) is the tax payable on a deceased individual’s estate: in 2018/19, IHT is payable where a person’s wealth is in excess of £325,000 - otherwise known as the ‘nil-rate band’.
IHT is currently charged at 40% on the proportion of the individual’s estate that exceeds the nil-rate band. Both the value of chargeable assets held at death and the value of chargeable lifetime gifts made within seven years of death are included within the estate.
The Residence Nil-Rate Band (RNRB)
On 6 April 2017, the RNRB came into effect, permitting some individuals to escape the IHT net.
The RNRB applies where a residence is passed on death to a direct descendant, such as a child or a grandchild. For 2018/19, the RNRB is set at £125,000 and is set to rise annually thereafter, reaching £175,000 in 2020/21.
The RNRB is in addition to an individual’s nil-rate band, and can only be used in regard to one residential property which has been, at some time, a residence of the deceased. The RNRB is ta pered at a withdrawal rate of £1 for every £2 for estates with a net value of more than £2 million.
Making the most of IHT reliefs
It’s well worth planning and done carefully there are some great opportunities to better manage your liability to IHT. Examples include:
· Transfers between spouses – are IHT exempt - and can be used in conjunction with other allowances – such as exempted gifts (see below).
· Smaller gifts can fall immediately outside of your estate. Larger gifts can be exempt if survived for seven years. There is taper relief on gifts made between 3 and 7 years before death.
· Some assets can fall outside the scope of IHT – such as AIM shares or agricultural land.
· Trusts are a potentially excellent planning tool – but are complex and need careful use.
A Pitfall
Avoid “gifts with reservation” – for a gift to work it must truly be a gift (although there are ways to carefully structure these).
Live in the South East?
If yes and you own your own home— your estate could easily be caught by IHT. Early advice is essential to best manage this tax.
. . .
IHT is currently charged at 40% on the proportion of the individual’s estate that exceeds the nil-rate band. Both the value of chargeable assets held at death and the value of chargeable lifetime gifts made within seven years of death are included within the estate.
The Residence Nil-Rate Band (RNRB)
On 6 April 2017, the RNRB came into effect, permitting some individuals to escape the IHT net.
The RNRB applies where a residence is passed on death to a direct descendant, such as a child or a grandchild. For 2018/19, the RNRB is set at £125,000 and is set to rise annually thereafter, reaching £175,000 in 2020/21.
The RNRB is in addition to an individual’s nil-rate band, and can only be used in regard to one residential property which has been, at some time, a residence of the deceased. The RNRB is ta pered at a withdrawal rate of £1 for every £2 for estates with a net value of more than £2 million.
Making the most of IHT reliefs
It’s well worth planning and done carefully there are some great opportunities to better manage your liability to IHT. Examples include:
· Transfers between spouses – are IHT exempt - and can be used in conjunction with other allowances – such as exempted gifts (see below).
· Smaller gifts can fall immediately outside of your estate. Larger gifts can be exempt if survived for seven years. There is taper relief on gifts made between 3 and 7 years before death.
· Some assets can fall outside the scope of IHT – such as AIM shares or agricultural land.
· Trusts are a potentially excellent planning tool – but are complex and need careful use.
A Pitfall
Avoid “gifts with reservation” – for a gift to work it must truly be a gift (although there are ways to carefully structure these).
Live in the South East?
If yes and you own your own home— your estate could easily be caught by IHT. Early advice is essential to best manage this tax.
So you want to start a business but what type?
Published: 09/07/2018
By Robert Coyle
So you want to start your own business – what type should it be?
You have a choice you can set up as a sole trader or you can use a Limited Liability Company to conduct your trade – which is right for you?
Well there is no right or wrong answer – you need to consider the facts & either could be right for you.
What is a sole trader & what are some advantages?
A sole trader is someone who works for themselves – there is no difference between calling yourself a sole trader or self employed. Either way you carry on a trade, supply services, have customers etc...
Being a sole trader is the simplest way of starting a business, but even here there are things you must do such as register with the tax man & pay self employed national insurance ( at least Class II NIC possibly more).
In any event you need to…….
· Register as self-employed with HMRC
· Obtain any permits and planning permission that you may need from your local
· If you are going to have premises (say a restaurant or shop) find out from your local authority if you need to pay business rates
· Have public liability insurance
· Sort your financial admin – do you need to register for VAT, how will you keep records & get paid, what will you do for banking etc.
· But being a sole trader can be the simplest & cheapest way for many businesses to operate & is often appropriate.
So should I use a Limited Company instead?
If you are a sole trader the businesses liabilities are yours – if something goes wrong you can be personally liable. Using a Company can LIMIT your liability (hence the use of the word Limited).
Also frankly there can be a perception issue – over a certain size of contract customers generally expect to deal with a “proper” company.
BUT – using a company increases your legal, possibly financial & admin obligations – so there is a cost involved.
There can also be other considerations – if you have other income (say from property) for tax that gets added to your income as self employed – so it needs a careful look.
So what do I do?
We help businesses start all the time – come in & have a chat or talk to another advisor such as a solicitor or your local Chamber of Commerce.
. . .
You have a choice you can set up as a sole trader or you can use a Limited Liability Company to conduct your trade – which is right for you?
Well there is no right or wrong answer – you need to consider the facts & either could be right for you.
What is a sole trader & what are some advantages?
A sole trader is someone who works for themselves – there is no difference between calling yourself a sole trader or self employed. Either way you carry on a trade, supply services, have customers etc...
Being a sole trader is the simplest way of starting a business, but even here there are things you must do such as register with the tax man & pay self employed national insurance ( at least Class II NIC possibly more).
In any event you need to…….
· Register as self-employed with HMRC
· Obtain any permits and planning permission that you may need from your local
· If you are going to have premises (say a restaurant or shop) find out from your local authority if you need to pay business rates
· Have public liability insurance
· Sort your financial admin – do you need to register for VAT, how will you keep records & get paid, what will you do for banking etc.
· But being a sole trader can be the simplest & cheapest way for many businesses to operate & is often appropriate.
So should I use a Limited Company instead?
If you are a sole trader the businesses liabilities are yours – if something goes wrong you can be personally liable. Using a Company can LIMIT your liability (hence the use of the word Limited).
Also frankly there can be a perception issue – over a certain size of contract customers generally expect to deal with a “proper” company.
BUT – using a company increases your legal, possibly financial & admin obligations – so there is a cost involved.
There can also be other considerations – if you have other income (say from property) for tax that gets added to your income as self employed – so it needs a careful look.
So what do I do?
We help businesses start all the time – come in & have a chat or talk to another advisor such as a solicitor or your local Chamber of Commerce.
How to find a good property accountant?
Published: 25/06/2018
It may not be the first profession that springs to mind thinking about property professionals, but an accountant can be mightily handy!
If you are involved in buying property to let – accountants can assist you with tax-related work and make sure you pay the least amount of tax possible on buy-to-let or holiday homes. A good accountant will also help you consider your overall approach to wealth management, estate and income planning, to maximise your overall position from owning property and other assets.
So you do need a good accountant – some questions to ask in finding one:
· How long have you been practising?
· Are you a property specialist/have you got experience in this area?
· Can you please give me a written quote with a full cost breakdown?
· What cloud software do you use (for property accounts) and how do I upload data to you?
· Do you bill for phone calls and e-mails or are they included in the service?
· Are you willing to set a job rate as opposed to an hourly rate?
Typically we advise on the following:
· Recent changes to mortgage interest relief and stamp duty
· Restructuring arrangements
· Capital Gains Tax planning/ER relief/roll over
· S24 and spousal tax planning
· SDLT
· Incorporation and/or use of trusts
· Dealing with HMRC property tax enquiries and investigations
· Considering longer term inheritance tax planning
· Dealing with all compliance issues
· Tax planning and support for families involved in buy to let businesses
· SPV’s/JV’s
· Non resident landlords
· Tax on Airbnb (rent a room exemptions)
· Furnished holiday let’s
As you can see – it is quite a bit and can be quite complex – hence you need an expert.
If preparing property accounts we use QuickBooks & can work with you to make data upload simple and effortless (no more bags of receipts or losing things).
Give our property team a call on 020 8661 7878 or come in for a property related chat
. . .
If you are involved in buying property to let – accountants can assist you with tax-related work and make sure you pay the least amount of tax possible on buy-to-let or holiday homes. A good accountant will also help you consider your overall approach to wealth management, estate and income planning, to maximise your overall position from owning property and other assets.
So you do need a good accountant – some questions to ask in finding one:
· How long have you been practising?
· Are you a property specialist/have you got experience in this area?
· Can you please give me a written quote with a full cost breakdown?
· What cloud software do you use (for property accounts) and how do I upload data to you?
· Do you bill for phone calls and e-mails or are they included in the service?
· Are you willing to set a job rate as opposed to an hourly rate?
Typically we advise on the following:
· Recent changes to mortgage interest relief and stamp duty
· Restructuring arrangements
· Capital Gains Tax planning/ER relief/roll over
· S24 and spousal tax planning
· SDLT
· Incorporation and/or use of trusts
· Dealing with HMRC property tax enquiries and investigations
· Considering longer term inheritance tax planning
· Dealing with all compliance issues
· Tax planning and support for families involved in buy to let businesses
· SPV’s/JV’s
· Non resident landlords
· Tax on Airbnb (rent a room exemptions)
· Furnished holiday let’s
As you can see – it is quite a bit and can be quite complex – hence you need an expert.
If preparing property accounts we use QuickBooks & can work with you to make data upload simple and effortless (no more bags of receipts or losing things).
Give our property team a call on 020 8661 7878 or come in for a property related chat
Benefits in kind reporting deadline fast approaching
Published: 01/06/2018
By Drupen Patel
6 July 2018 is a key reporting deadline for employers who provided employees with taxable benefits in kind during the 2017-18 tax year or reimbursed employees’ business expenses.
What needs to be reported?
Common benefits include company cars, private health insurance and interest free loans. It is not possible to provide a comprehensive list and statutory exemptions allow you to exclude certain benefits and expenses so it’s important you check if unsure.
When?
P11D forms must be submitted to HMRC along with form P11D(b) by 6th July 2018 with all relevant employees provided with a copy on this day. Class 1A National Insurance at 13.8% must be paid by 19th July 2018 (or 22 July 2018 if paying electronically).
What goes wrong?
We often find employers completing P11D’s incorrectly by miscalculating the taxable value
or omitting information such as the fuel benefit where this applies. If you are late or wrong, penalties can be applied as follows:
Overdue:
If you are late there is an automatic penalty of £100 for every month for every 50 employees
Incorrect:
If a P11D and P11D(b) return is incorrect the penalty if based on the percentage of lost revenue and judged according to the taxpayers behaviour.
30% for carless action
70% for deliberate but not concealed
100% for deliberate and concealed
What next?
The complex nature of the rules governing taxable benefits along with the risk of being penalised for late submissions, errors, and omissions mean it is worth taking professional advice to make sure you are fully compliant with your tax obligations.
. . .
What needs to be reported?
Common benefits include company cars, private health insurance and interest free loans. It is not possible to provide a comprehensive list and statutory exemptions allow you to exclude certain benefits and expenses so it’s important you check if unsure.
When?
P11D forms must be submitted to HMRC along with form P11D(b) by 6th July 2018 with all relevant employees provided with a copy on this day. Class 1A National Insurance at 13.8% must be paid by 19th July 2018 (or 22 July 2018 if paying electronically).
What goes wrong?
We often find employers completing P11D’s incorrectly by miscalculating the taxable value
or omitting information such as the fuel benefit where this applies. If you are late or wrong, penalties can be applied as follows:
Overdue:
If you are late there is an automatic penalty of £100 for every month for every 50 employees
Incorrect:
If a P11D and P11D(b) return is incorrect the penalty if based on the percentage of lost revenue and judged according to the taxpayers behaviour.
30% for carless action
70% for deliberate but not concealed
100% for deliberate and concealed
What next?
The complex nature of the rules governing taxable benefits along with the risk of being penalised for late submissions, errors, and omissions mean it is worth taking professional advice to make sure you are fully compliant with your tax obligations.
Another attack on Buy to Let returns - the abolition of wear and tear allowance
Published: 25/05/2018
By Robert Coyle
What has happened?
For a variety of reasons the government has decided to make buy to let investing much less attractive to individual investors. For instance the ability to get tax relief on interest payments is being withdrawn in stages.
Wear & tear allowance
For furnished lets a landlord USED to be able to deduct 10% of rents received as an allowance against the cost of wear & tear on fixtures & fittings – items like furniture, kitchen appliances & goods. This allowance has now been abolished.
Replacement allowance
Instead, now if you replace an item you can deduct the cost of the replacement in that year’s tax return, but note:
· It is only the cost of replacing – so if you are spending for the first time – say to furnish a new buy to let, the costs are NOT deductible,
· Only replacement costs are allowed – if you are improving (so not replacing on a like for like basis) – then the element of costs that relates to improvement as opposed to replacement is not allowed
Are there any upsides to this? Hmmm – well:
· Replacement costs do apply to unfurnished or partially furnished rents (so say you provide just a fridge & a cooker but not other items)
· You can plan replacements to occur in a year of likely maximum tax on other items – say you know you will get a big bonus one year but not another, but
· Effectively this is designed to reduce the tax allowances on letting
So what can you do? Well once again with property it isn’t straight forward:
· The basic angle is that the government is trying to reduce the attractiveness of buy to let as an investment
· If you have only a couple of properties it probably isn’t worth looking at mitigation strategies – so should you review whether you stay in buy to let at all (but this can be a complex decision)
· If you do want to stay as an investor really pay attention to your record keeping – there remain lots of allowable expenses – but we often see clients fail to keep enough records to enable them to claim what they remain entitled to
· If you are a serial buy to let investor a corporate structure may be a better way to hold your properties – but that needs careful consideration & planning
So the advice remains – now is a good time to review your buy to let investments – but it can be a complex decision – talk to our experts to explore your options.
. . .
For a variety of reasons the government has decided to make buy to let investing much less attractive to individual investors. For instance the ability to get tax relief on interest payments is being withdrawn in stages.
Wear & tear allowance
For furnished lets a landlord USED to be able to deduct 10% of rents received as an allowance against the cost of wear & tear on fixtures & fittings – items like furniture, kitchen appliances & goods. This allowance has now been abolished.
Replacement allowance
Instead, now if you replace an item you can deduct the cost of the replacement in that year’s tax return, but note:
· It is only the cost of replacing – so if you are spending for the first time – say to furnish a new buy to let, the costs are NOT deductible,
· Only replacement costs are allowed – if you are improving (so not replacing on a like for like basis) – then the element of costs that relates to improvement as opposed to replacement is not allowed
Are there any upsides to this? Hmmm – well:
· Replacement costs do apply to unfurnished or partially furnished rents (so say you provide just a fridge & a cooker but not other items)
· You can plan replacements to occur in a year of likely maximum tax on other items – say you know you will get a big bonus one year but not another, but
· Effectively this is designed to reduce the tax allowances on letting
So what can you do? Well once again with property it isn’t straight forward:
· The basic angle is that the government is trying to reduce the attractiveness of buy to let as an investment
· If you have only a couple of properties it probably isn’t worth looking at mitigation strategies – so should you review whether you stay in buy to let at all (but this can be a complex decision)
· If you do want to stay as an investor really pay attention to your record keeping – there remain lots of allowable expenses – but we often see clients fail to keep enough records to enable them to claim what they remain entitled to
· If you are a serial buy to let investor a corporate structure may be a better way to hold your properties – but that needs careful consideration & planning
So the advice remains – now is a good time to review your buy to let investments – but it can be a complex decision – talk to our experts to explore your options.