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Tip of the day

Watch Those Banking Covenants

When you borrow money from a bank, the lender will impose conditions sometimes relating to financial performance of your business, sometimes relating to information that you are to provide them with. If you fail to comply with these covenants, you will be as much in default as if you miss …

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Claim VAT Back on Mileage Claims

One area often overlooked for VAT claims is mileage reimbursed by a company. The rates that you can use vary depending on the type of fuel and the engine size of the vehicle used. A typical rate will be the 15p avalable for a diesel car between 1.6 and 2l. …

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Accounts Software

The mantra with choosing your accounts software has to be "keep it simple". Then start thinking about what information you want from your software. Don't buy or create anything that you don't need. Sometimes, an Excel spreadsheet will be perfectly adequate.  Indeed, compared with the mental and monetary pain of …

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Limited Liability – the Next Step

Many are already well aware of the perils of trading. Few are prepared to risk their personal assets and most seek refuge in a limited company. Few, however, then give a second thought to how those same commercial risks can steal away the wealth created in their limited company. I …

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The Truth About Tax Relief on Pensions

Basic rate taxpayers and companies who pay tax at the small companies rate get tax relief on pension contributions at 20%.  You then pay tax on the pension you draw in retirement at 20%.  It is only the 25% tax-free lump sum that you really get tax relief for.  You should think of pensions as …

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Use Your Pension for Business Cash Flow

A small self administered scheme (SSAS) can lend up to 50% of its value to its sponsoring employer. The company will need to give security, but can use market value of assets so long as that is equal to the amount of the advance + interest costs over the loan term. So, if …

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Cash in Your Pension

Yesterday's tip was about how to find a pension that you like. Now, you can always transfer your pension that you don't like into the new one that you do like. Just as readily, you can 'cash in' the one that you don't like. All you need is an asset …

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DIY Pensions

Pensions are scary to some and a rip-off to others. They don't have to be either of these things. If you run your business through a limited company, you can set up and run your own pension scheme. It can cost nothing and you can control how your fund is invested. …

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Don’t Forget your Revenue Deadlines

Today is the last day for getting your tax credits annual declarations in and for being on-time with your second self assessment payment on account of 2011-12 tax. Avid readers (actually, I'm not sure I have any readers) of this secton will know my views on these two deadlines. Don't …

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The Deprecating Effects of Depreciation

Anything that drives down the profit of your business but affords no tax relief is at best a sad waste and at worst a pernicious evil. Accounting standards and company law dictate that you must depreciate assets, but don't tell you at what rate. As depreciation only does harm, make …

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One HMRC Deadline Not to Worry About

31st July payment on account. Miss it?  It'll cost you 3% interest.  No penalties, no surcharges, no tax-geared penalties.  Just 3% interest. Certainly not worth going to Wonga.com for!

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Tax Credits Deadline Cometh

HMRC say that they will stop tax credits if you don't get your annual declarations in by the 31st. If the Olympics is an opportunity to catch up with paperwork in front of evening TV, make your tax credits return the priority. Plenty of tax tips to come from me …

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Extending the Companies House Filing Deadline

Yesterday's tip concerned making the best of a situation where you have missed the filing deadline for your company accounts. Today, I want to look at how to avoid being late in the first place. Now, I regard myself as something of a pragmatist.  I am aware that business owners …

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Late Company Accounts

A little-known way around Companies House late filing penalties is not to file accounts. Unlike HMRC, Companies House will only give you a penalty when they get the accounts late. If they never get them, you never get a penalty. If you then send in the following period's accounts on-time, still …

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Know Your Accounting Standards

The Inspector of Taxes has given his word that he will accept any accounting treatment that agrees with Generally Accepted Accounting Principles. Principles that work in your favour are the matching of income with expenditure which allows you to push (at least part) sales back into next year if the service has not …

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Tax Relief on Interest Paid on Personal Loan Made to Business

If you are having to pump money into your business and you are borrowing in your own name, don't forget tax relief is available to you on the interest you pay personally when the loan advance is lent to a private trading company or invested in partnership capital. If you …

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Tax Relief When Buying a Business

When buying a business, the first negotiation is on price. When price is agreed, you will then negotiate on what exactly you are buying for that price, be it the shares of the company or a mixture of assets and goodwill. Best thing to buy for tax relief: the first …

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The Difference Between Creativity and Magic

Making things disappear is magic.  I'm rubbish at magic.  Never could master my son's junior magic set.  Can't make income disappear, can't pull expenditure out of a hat.  That's the sort of thing that sends you to jail in a puff of smoke. Luckily, I don't need magic.  I have imagination.  …

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T’s & C’s

If you don't know your customers, you can't trust them.  If you can't trust them, you need terms and conditions to bind them to in the event of a dispute. If you do know and trust your customers, you shouldn't be wanting to win any dispute, anyway. For trusted and …

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Management Accounts

Management accounts are your friend. If you are a company, your accounts will be prepared in a format that complies with company law. If you are self-employed or in a partnership, your accounts should be prepared with smooth transition to a tax return in mind. Your year-end accounts are unlikely …

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Self-employed motoring expenses

This one's for the eyes of the self-employed with turnover under the VAT threshold, only. You lot are a lucky lot.  There is much you can do that your higher turnover and limited company friends cannot. One such thing is to claim tax relief at a rate of 45p for …

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Avoiding Penalties

I swear it seems like the Treasury have decided that there is insufficient profit in the economy for a decent tax-take and that they are plugging that gap with penalties, instead. Over the last couple of years, penalties have become more severe for missing filing and payment deadlines.  It used to …

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P11D Deadline Is Upon Us

Horrible things, P11Ds. For many smaller businesses these are often a lot of paperwork trouble for the information that they report. If you find yourself with an obligation to return P11Ds purely because there are entries required for directors, why not re-route the benefits through the directors loan account?  It …

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Watch out for capital expenditure in these days post 1st April 2012.

We are now into £25,000 annual investment allowance territory. Whether intentional or not, the tax legislation is badly-written. The closer your financial year-end to 1st April, the more even that little £25,000 gets restricted. For example, if you have 31st May as a year-end, you can only claim 100% capital …

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