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Latest News from Your Finance Team

We spend a lot of time offering our clients practical advice on how they can grow their businesses – please see some of our articles below and feel free to share.


Late Filing Penalties – A Move to Points System Proposed

A move from fines to points system A move to a points system rather than fines from 2019 is being proposed. This is in an attempt to focus Treasury attention on serious tax avoidance offences. Rather than on punishing small taxpayers who’ve made mistakes. The present system has been to impose a £100 fine on all self-assessment tax payers when they miss the 31 January deadline. This sum increases as further deadlines are passed without payment. The second deadline is the end of April. In the 2016/17 tax year 840,000 individuals failed to meet the deadline, many of whom appealed against the fine for reasons including illness and hardship. From 2019 The proposed new points system, which would come into effect in 2019, would have a sliding scale based on the number of times an individual or business needs to report to HMRC. For example, individuals paying annually via the self-assessment system would incur a fine after just two points. While those paying quarterly can accrue four points. A benefit of this system is that sustained compliance with the tax regime after a failure will return the points accumulated back to nil. So if you miss filing, but then comply with deadlines for the next annual filing period, your ‘earned’ points will be wiped off your record. For further information please contact us  at Your Finance... read more

Important Tax Deadlines for 2017/18

Important Tax Deadlines We have listed below the key tax deadlines for individuals, self-employed and businesses: The tax year runs from the 6th April – 5th April. Date Information Required 31 July 2018 The second payment on account must be paid to HMRC for tax year 2017/18 05 October 2018 The deadline to let HMRC know that you need to do a self-assessment tax return for tax year 2017/18 31st October 2018 The deadline for submitting paper copies of your tax return for 2017/18 to HMRC and also the deadline for submission if you want HMRC to calculate how much tax you owe 30 December 2018 The deadline for submitting a tax return if you want HMRC to adjust your 2018/19 PAYE code to recover any underpaid tax. The maximum you can repay via your PAYE code is £3000 31 January 2019 Deadline for on line self-assessment submissions. The balance of any outstanding tax and national insurance for 2017/18 must be paid to HMRC. The first on account payment for tax year 2018/19 must be made 5 April 2019 Last Day of Tax Year Limited Companies Taxable profits of up to £1.5 million You must pay your Corporation Tax 9 months and 1 day after the end of your accounting period. Your accounting period is usually your financial year, but you may have 2 accounting periods in the year you set up your company. Taxable profits of over £1.5 million If your taxable profits of more than £1.5 million, you must pay your Corporation Tax in installments. If you need help managing any of your tax deadlines please get in... read more

HMRC Cease to Accept Credit Cards

HMRC cease to accept payments via credit cards In a surprisingly timed announcement, HMRC said that they would cease to accept credit card payments for tax bills from 13 January 2018. Those who previously paid their self assessment by this means will now have to select an alternative means of payment. It’s a painful change which will most impact those who were hoping to reduce the suffering of their tax bill by paying by plastic. Self Assessment tax payments In 2016, more than 800,000 of us paid our self assessment bill by credit card. Allowing us to benefit from the period of extra grace this gave us to dig up the cash and for some, being able to spread the cost over several months by only paying off the minimum charge. Only personal credit cards are covered by the ban. Debit card payments are still possible, although they confer none of the benefits of credit cards. Those with corporate and business credit cards can also still pay. Why the change? It’s not entirely unexpected. New legislation around credit card surcharges which came into effect in the summer has caused the knock-on effect that’s led to this ban. Organisations can no longer charge a fee to those paying with credit cards, but they must still pay the processing fees for credit card payments. HMRC would have been in a difficult position of charging back the processing fees to the public purse. Alternative payment methods are: debit cards, direct debits, online (BACs) or telephone banking services provided by banks. It’s a double blow to the self-employed who used to pay via Transcash –... read more

Entrepreneur’s Relief – One of the Best Kept Secrets

Entrepreneur’s Relief Since April 2008, Entrepreneur’s Relief (ER) has been one of the best kept secrets of British business life. Perhaps the way that successive governments have handled Entrepreneur’s Relief explains why this excellent scheme is not as well recognised, or as used, as it should be by the business community. The Benefits of Entrepreneur’s Relief Qualifying businesses can save between 8% and 18% Capital Gains tax. Each individual’s qualifying amounts are subject to a lifetime limit which is related to business period. Businesses disposed of between: April 2008 to 5 April 2010 up to £1 million 6 April 2010 to 22 June 2010 up to 2 million 23 June 2010 to 5 April 2011 up to £5 million or after 6 April 2011 up to £10 million. Spouses or civil partners working in the same business are classed as separate individuals. Therefore claim individually. Because each person is entitled the full amount of Entrepreneurs’ Relief, this makes the benefit doubly attractive. Especially to family firms. It’s clearly an attractive benefit, so how do you ensure you qualify? Qualifying for Entrepreneur’s Relief Qualifying conditions for this benefit must be maintained throughout a 12 month qualifying period. This can be before the date of disposal or before the date the business ceased trading. Both individuals and some qualifying trustees of settlements can claim the relief. But, it’s not available to personal representatives of the deceased nor in relation to trusts where the entire trust is a discretionary settlement. The relief must be claimed, in writing, by the first anniversary of the 3rd January following the end of the tax year... read more

How to protect your business from currency fluctuations

Currency fluctuations The Brexit vote has left UK firms more exposed to currency fluctuations in an increasingly volatile and globalised market. Sterling’s devaluation against both the dollar and the Euro have improved competitiveness between firms inside the UK who are net exporters of products. This, however, causes major difficulties for businesses that are using sterling to buy imported products. They are exposed to currency movement and in some cases have seen 10-20% price increases on imports which have had a substantial effects on margins. Fluctuating exchange rates also make budgeting difficult creating uncertainty in cash and profit forecasting. Ways to manage currency fluctuations: Partner Agility Working with suppliers who operate within several regions offering different currencies, allows a business to request products that are sourced from financially advantageous locations. Changing location, however, can have its own inherent risks, including: variation in quality lack of transparency to the end consumer potential negative impacts in corporate social responsibility terms if a firm is seen to ‘go where the cheapest goods/services’ can be found. Another option is to pass the currency risk to customers or suppliers by demanding payments in domestic currency. Although this approach will be tempered by the level of buying and selling power you have in the market. Establishing a bank account in the foreign currency you trade in This is a simple and common strategy for SMEs particularly those that buy and sell in the same currency. The approach ensures you don’t need to change your revenue to sterling, which is usually the point in the process where most losses are incurred. Whilst this can be relatively easy... read more

Auto Enrolment – how to get ready and stay compliant

What is auto enrolment? Automatic enrolment requires virtually every UK small business to automatically enrol qualifying employees onto a suitable workplace pension scheme and make regular contributions to it on behalf of those employees.  What must UK businesses do for auto enrolment?  Know your staging date – businesses have been ‘staged’ into auto enrolment since 2012 and the process has now reached the micro-business level Create a plan – be sure your business is prepared – working with a specialist consultant, outsourcing your auto enrolment and/or using payroll software are all ways you can be auto enrolment compliant without headaches Remember to reassess – this has to be done every pay period. All your employees need to be assessed to ensure they qualify for the next period of auto enrolment: age, hours worked and payment received are all criteria that must be checked Inform all workers – this includes all new workers. Once you’ve entered the auto enrolment process you must remember to communicate with new employees and any who cease to be eligible Complete a declaration of compliance – records have to be maintained for six years and The Pension Regulator requires you to complete your declaration within five months of your staging date Maintain contributions to workers’ pensions – when the scheme began in 2012, contributions were 2% but phasing means they will reach 8% by October 2018. Which businesses must implement auto enrolment? At this point in the staging process it is SMEs who are being required to become auto enrolment compliant. So called ‘micro-businesses’ are dis-proportionally hard hit by auto enrolment because there is an... read more

Changes to Flat Rate VAT – What you need to know & do

Changes to Flat Rate VAT Scheme – just another headache for small business!! HMRC changed the Flat Rate VAT Scheme on 1st April 2017. The changes are already affecting small business owners and contractors who operate under the flat rate scheme (FRS). Many of those affected are doing their first VAT returns under the new regime. In several cases, those are just coming to terms with just how big an impact these changes are having on their bottom line. What is the Flat Rate VAT Scheme (FRS)? This scheme is designed to help eligible businesses to calculate their VAT liability, by applying a fixed percentage which is based on their trade or profession. The objective to simplify VAT accounting for small business owners and take away the admin burden of doing a full calculation of input and output VAT for each return.  What’s new from April 2017? Businesses with what is considered a ‘limited cost businesses’ will notice considerable changes to their VAT calculation. For companies that are classed as limited cost traders their FRS % will move to 16.5% from April 2017. This could mean that these companies pay hundreds, if not thousands more in VAT each year. A business will be considered a limited cost business if what they spend on relevant physical goods is: less than 2% of their VAT inclusive turnover in a prescribed accounting period. greater than 2% of their VAT inclusive turnover but less than £1000 per annum if the accounting period is one year. (If it is not one year, the figure is the relevant proportion of £1000, so a quarter would be £1000/4 = £250) Then there... read more

Go Cardless – How to get paid on time, every time!

How to get paid on time, every time Small businesses are open to a wide range of risks. One of the biggest is cashflow. Getting the money you’re owed when you need it can make or break an SME.  Which is why any solution that gives a business the chance to get paid faster has to be good news. Go Cardless – an online direct debit management system – gives a business owner more options, at less cost, than ever before. Before Go Cardless entered the market place setting up direct debit facilities for small businesses was time consuming and costly. Controlling cashflow – keeping your business on track So how does Go Cardless help? The first, and most crucial feature that benefits business owners is the ability to reduce bad debt. Getting paid on time, every time doesn’t just help with cashflow, it also assists the organisation in other ways too: Improved cashflow. Frees up your business to do what it was set up to do. No more credit control. No time spent chasing up bad debts or dealing with the endless excuses of those who don’t want to pay. Swift set up. Crucial to being able to run your business effectively is the ability to manage payments by importing your existing customers into the Go Cardless system. With its simply plug and play features, Go Cardless immediately allows you to start taking payments. Transparency. Go Cardless charges are very clear and minimal. You don’t get any nasty surprises, unlike traditional banks which can impose unexpected charges without warning. Speed of payment. Go Cardless doesn’t hang on to your money. With its... read more

Research & Development Tax Credits – Are you eligible?

Any new business needs all the tax relief it can get. Which is why it is all the more surprising that for many SMEs, the government’s Research & Development Tax Credits aren’t being more widely utilised.   What activities qualify for Research & Development Tax Credits? HMRC has clear guidelines about qualifying criteria and they are much broader than you might expect: Expenditure on staff (salaries, employer’s NIC and pension contributions all count). Expenditure on subcontractors (including freelancers). Spending on materials and consumables (including heat, light and power that are necessary to, or used up by, the R&D process). Even some types of software expenditure. It’s important to note that your project doesn’t need to succeed to qualify for tax savings. You can reduce your tax by applying for Research & Development tax credits even if you’re not certain if the project is possible, scientifically or technologically. Or if it’s theoretically possible but you’re not sure if you can put it into practice. HMRC calls this ‘resolving uncertainties’ and this qualifies for Research & Development tax credits. In fact, so does enhancing an existing product, process or service. As long as that enhancement requires an Research & Development spend. Another surprising aspect of the tax relief process is that an SME that is undertaking work for a client, for example a software developer creating a bespoke programme or application, can apply for the Research & Development tax credits. Even if they themselves won’t be the final beneficiary of the research process. Research & Development tax savings Research & Development tax credits can be worth as much as 33 pence in every £... read more

Top tips for selling your business

Someone told me never get into a business venture unless you know how you are going to get out of it! For most entrepreneurs defining their exit strategy early on, is a critical part of achieving business success. Strategies will differ, but for all there will come a point where they want to exit the company. This normally means passing the business on to a successor, winding it up or selling your business. For many business owners, real value is only achieved when they sell their business. For entrepreneurs, this is their reward for the hard work and dedication put in to building a successful business.  Selling your business – here are our tips on preparing: Timing of the sale Think about when you want to exit the business. You may plan to retire at, say, 60, so work backwards to set yourself a timeline from now to that exit point. Once you have a time line in mind consider carefully the industry you are in. Think about what trends will impact the industry both positively and negatively between now and your exit point. The big influences will be the financial climate and state of the overall economy. It is well known that mergers and acquisitions activity dips in times of recession. Also consider whether a potential buyer would want to keep you on as an employee or a consultant for a period of time. This is becoming more and more common as buyers know that by retaining you the odds of a successful integration are improved. Consider the timescales for the sale itself. Even with motivated buyers and sellers and good legal teams,... read more

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