Blog
VAT - Entertaining Expenses
VAT cannot be recovered on business entertainment expenditure. This includes the gratuitous provision to customers or clients of hotel accommodation, food and drink or tickets to events.
Are workers employees?
It is important to know whether a worker is employed or self-employed as there are many differences in the way in which they will be taxed.
Recording directors’ expenses correctly
It is only permissible for a company to deduct expenditure in computing its taxable profits if incurred wholly and exclusively for the purposes of the trade. Since a company is a separate legal entity that stands apart from its directors and shareholders, it will not incur personal expenses.
VAT for Beginners
Most purchases carry a VAT charge. Value Added Tax (VAT) is levied on most business transactions and on many goods and some services.
Corporation Tax Self-Assessment
The corporation tax self-assessment return (CTSA) must be submitted to HMRC along with the accounts and tax computations, although it is possible to file all this information online through the HMRC website.
Taxation of Buy to Let Properties
The income is treated as the profits of a Property Income Business. If the owner of the property is an individual or a trust the profits are charged to income tax for the tax year to 5th April. If the owner is a company the profits are charged to corporation tax for the accounting period of the company.
VAT - Motor Expenses
The treatment of car motor expenses for VAT purposes can be quite complex.
VAT Cash Accounting
Under the cash accounting scheme you account for VAT on the basis of payments you receive and make, rather than on invoices you issue and receive. The main benefit of this scheme is that you don't have to pay VAT on invoices you have issued until your customers pay you, although it also means you can't reclaim VAT on purchases until you pay your suppliers. You get automatic bad debt relief because, if no payment is received, no output tax is due.
VAT Annual Accounting
With the Annual Accounting Scheme you complete one VAT return per year instead of each quarter. The advantages of using the scheme are that...
Only one VAT return is required per year and you have two months in which to complete it.
Cash flow is helped by regular monthly payments.
You can choose the VAT return year that you want.
Directors’ loans – Beware of ‘bed and breakfasting’
It can make sense financially for directors of personal and family companies to borrow money from the company rather than from a commercial lender. Depending on when in the financial year the loan is taken out, it is possible to borrow up to £10,000 for up to 21 months without any tax consequences. However, if the loan remains outstanding beyond a certain point, tax charges will apply.
Buying a property to let – the importance of keeping records from day one
For tax purposes, good record keeping is essential. Without complete and accurate records, it will not be possible to provide correct details of taxable income or to benefit from allowable deductions. Aside from the risk of paying more tax than is necessary, landlords who fail to take their record keeping obligations seriously may also find that they are on the receiving end of a penalty from HMRC.
Preparing For Your Year End Accounts
This helpsheet provides you with an overview of the information to provide to us to enable completion of your end of year accounts.
Curtailment of letting relief
Landlords have been hit with a number of tax hikes in recent years, and this trend shows no signs of abating. From 6 April 2020, lettings relief – a valuable capital gains tax relief which is available where a property which has at some point been the owner’s only or main residence is let out – is seriously curtailed.
Getting ready for off-payroll working changes
From 6 April 2020 the off-payroll working rules that have applied since 6 April 2017 where the end client is a public sector body are to be extended to large and medium private sector organisations who engage workers providing their services through an intermediary, such as a personal service company.
Should I incorporate my business?
The question of whether to incorporate commonly arises as a business expands - the limited liability status that company formation provides is often needed to start winning contracts with bigger companies.
Should I register for VAT?
In broad terms, and subject to certain exceptions, a business will be required to register to charge and pay VAT once annual sales reach a pre-set annual threshold, which is currently £85,000.
Tax-free Christmas parties
Whilst the tax legislation does not include a specific allowance for an employer providing a Christmas party for employees, HMRC do allow limited tax relief against the cost of holding a social function for employees, providing certain conditions are met.
Using company vans for tax-free home to work travel
As a general rule, travel between home and work is regarded as private travel and if the employer meets the cost of that travel, a benefit-in-kind tax charge will be triggered.
Losses in the first years of trade
If a new business makes losses in its first few years of trading, there may be scope to carry back those losses and set them off against other income received in the years prior to commencement of the trade. This is commonly referred to as 'early trade losses relief' and it applies to losses sustained in the tax year in which a trade is first carried on, or in any of the next three years.
What is an EORI number and who needs one?
An economic operator registration and identification (EORI) number will be needed for UK businesses to be able to continue to trade with the EU after the UK leaves the EU.