Tip of the day
Inheritance Tax
A funny old tax, this one. More about how your wealth is held than how much of it you have. Do these circumstances apply to you or anyone you know? Retired person, living off interest on cash deposits cannot easily gift cash away to avoid inheritance tax (IHT). If gifted out of estate, must be […]
Read moreProperties Into a Company
Tax-efficiency of holding property personally vs in a company is a tricky decision which can only be got right with the use of a crystal ball. Basic rules are if holding for long-term rental yield and income will be taxed at higher rate, then put into a company. If looking to make capital gain, hold […]
Read moreTribunal Rules HMRC Penalties Unfair
This particular ruling relates to CIS late filing penalties, but the principle would apply to any. This is not good news for public services, but it is good news for individuals who are being mugged by HMRC in their quest to replace lost income-related tax-take with penalties. In the case just ruled upon, HMRC initially […]
Read moreBeware Sponsorship Deals
It is not unheard of for an owner-managed business to boost a sports club that the owner has an affiity for by way of a sponsorship deal for the benefit of both the club and his business. Most would assume tax relief would be granted. There is a high-profile case going through the tax courts […]
Read morePut Your Companies Into a Group to Offset Losses
I’m a big fan of limited liability companies. For the same reasons as why you should limit your liability with your first company, I’m also a big fan of creating separate companies to limit the impact of one business area on another. If you are looking at multiple companies, please consider loss relief when deciding […]
Read moreQuickbooks Sale 25th October 2012
Sorry if you’re reading this any time other than the 25th October 2012 or if you bought at full price on 24th October 2012. Available on Amazon and in PC World and Staples, Quickbooks Pro 2013 is available for just £119.99. It so normally between £250 and £300, and the equivalent Sage will cost you […]
Read moreNational Insurance Exemption for New Businesses
Everyone is different, but no-one likes paying tax. Employer’s national insurance is a particularly evil tax to have to pay. Bad enough that you have to employ people. Then to have to pay 13.8% of your payroll to the taxman as some sort of levy is (just as David Cameron once said) a tax on jobs. Only way to avoid it is […]
Read moreCompany Cars
For a long time, it has been accepted that the taxation of company cars proved too expensive, and it is better to for an owner-manager to hold the car personally outside of the company and charge the company for business miles travelled. This largely remains best practice. The only scenario in which you might consider […]
Read moreTell The Taxman to Clear Off
Actually, we’d all like to and sometimes we’d like to use a stronger word than ‘clear’. One time you can get him off your back is when his charmers at ‘Debt Management’ start chasing you for PAYE that you don’t owe. If you visit http://www.hmrc.gov.uk/payinghmrc/paye-nil.htm, you can tell him that there is nothing to pay […]
Read moreYou Can Pay Your PAYE Quarterly
If your monthly PAYE bill averages less than £1,500, you can pay quarterly instead. The cash flow advantage is nice, but the real bonus comes from avoiding the worst excesses of HMRC’s new late payment penalty regime. This will be felt particularly hard from next tax year when HMRC will be able to see exactly how […]
Read moreNational Insurance Can Cost More on Weekly Wages
Yesterday’s tip encouraged the use of flexible hours for employees. If your workers are paid weekly, national insurance is payable on everything over £144 a week, irrespective of the past pattern of earnings. Income tax is more forgiving. Cumulative, income tax will not take its share from one week if the week before saw low […]
Read moreThe Right Sort of Flexible Working for Your Employees
No reason why a contract of employment has to guarantee an employee a stated number of hours. The current recession has seen a trend of requiring staff to work as and when required by the employer. When it gets quiet, no need to require them to work = no need to be required to pay […]
Read moreEasy is Not Good, Less Tax is Good
Just read this on HMRC website: “You are entitled to change to a different (accounts) date if you want to. However, whatever date you choose, you will find your tax is easier to work out if you keep to it each year. And if you have just started in business, you may find 5 April is […]
Read moreCompanies acquiring a new trade
You have a company to limit your liability. If you get an opportunity to move into a different field of trade, you would be wise to limit the effect of the new trade on your existing company. If anything went wrong with your new venture, you will want to prevent it from bringing down your […]
Read moreNational Minimum Wage Goes Up Today
Glad someone’s winning. As of today, the National minimum Wage is £6.19 for employees aged 21 and over. Looking at cheaper human resources, 18-20 are £4.98, and (if you dare) 16-17 year-olds are £3.68.
Read moreFollow Procedures
The current government may be trying to soften the effects of damaging employment legislation, but it’s still dangerous out there if you want to hurt the feelings of a victim employee. It is possible to tell them what you think of them and to relieve them of their duties, but you have to do it […]
Read moreCost NEST in to your business model
In the coming years, employing people is going to get more expensive with the onset of auto-enrolment into the National Employment Savings Trust (NEST). NEST is going to compel employers to contribute 3% of gross salary in excess of £5,500 to workers’ pensions. If you thought national insurance had crept up over the years to 13.8%, […]
Read moreAll employees need a contract. Well, almost all…
Even if you only employ one person, you must provide them with a written contract within 8 weeks of them starting work for you. If anything goes wrong with the employee, it will help your case if you have one. However, don’t go thinking that means that you should have one for yourself if you […]
Read moreNational Minimum Wage Increase is Coming
Going to try and be topical, going to try and be seasonal. Going to try a week’s worth of tips related to employing people. First tip is … don’t. Employing people is horrible. National minimum wage + employers national insurance + the looming compulsory pension enrolment + the ever-rising cost of compliance with employment law […]
Read moreYou Can Volunteer to Register and You Can Ask to Leave
Yesterday, I introduced the notion of actually volunteering to register for VAT. Yes, it was good shit! So, I guess I’d better now tell you how to get out of it once you’ve sobered up and realised what you’ve done. If you have registered on a whim in order to claim the VAT back on something […]
Read moreVAT Claims at First Registration
One of the more generous concessions by HMRC is that new registrants for VAT can go back 6 months prior to registration and claim input VAT relief on services consumed and a full 4 years on goods or assets that are still in possession at the point of registration. If you are not obliged to […]
Read moreCompany Credit Card
If £5,000 or £10,000 of bank overdraft is going to make a difference, then get yourself a company credit card off your bank with such a limit. When you then get in need of an overdraft and the bank just laugh in your face, you can start using your credit card as a pseudo-overdraft. These […]
Read moreVAT Cash Accounting
Turnover below £1.35m? Debtors more than your creditors? You need VAT cash accounting. Only pay VAT across when your customers have paid you. I’m on cash accounting. So, yes, my turnover is under £1.35m and no, it doesn’t mean you can pay me late because I don’t have to pay the VAT across until you […]
Read moreChange of Financial Year-end
Companies can shorten their year-end as many times as they like. They can extend only once in any five-year period. The self-employed and partnerships have the exact same restrictions on a move either forwards or back. Why would you want to? If you don’t like the first answer that comes from your traditional 12 months […]
Read moreShort-Life Asset Elections
We are just about coming to the end of our fun and games with the annual investment allowance, now that a £100k capital expenditure allowance is fading away to be replaced by a rather stingy £25,000. Still stuff that can be done with splitting expenditure > £25k over different accounting periods, but we are looking […]
Read moreStock Provisions
Everyone’s year-end favourite. More stock = more profit. So begins the quest for a lower valuation of closing stock. It is legitimate to devalue stock if you consider you will achieve less than cost price when sold. This is possible when you have damaged, obsolete or just plain old and dusty stock that was a […]
Read moreFirst Insight Into the Psychology of the Business Owner
Business owners almost always understate the quality of their ability to generate sales and conversely almost always think an external salesperson will be better at it. They are almost always wrong. Best salesperson any business can ever have is the owner.
Read moreProperty Income – Put Into a Company?
You need to plan for the taxation of income from an asset when you first acquire it. Do you buy it in personal name(s) or create a company to buy it in? General rule to remember is that property should only go into a company when you are a higher rate taxpayer and there is […]
Read moreCapital Gains Tax Gains and Losses
Always worth remembering that you can only carry capital losses forward, never back. If you have something to sell that stands you a taxable profit and something that you have made a loss on, you must get the selling order right if you want to use the loss to offset the gain. Dispose of both in the […]
Read moreCaveat Contractor
Be wary of taking on workers who are ‘self-employed’ if they function for you just as an employee would. It is easy to think you are okay if the ‘worker’ says they are self-employed and give you an invoice. Not so. If they look to you like an employee, the taxman will take great delight […]
Read moreWatch 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 a repayment. Banks are behaving […]
Read moreClaim 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. The 15p is what HMRC […]
Read moreAccounts 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 learning how to use your […]
Read moreLimited 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 recommend a 2-tier system. One […]
Read moreThe 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 attracting tax relief at 5%. […]
Read moreUse 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 you need to borrow for […]
Read moreCash 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 that a pension can invest […]
Read moreDIY 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. What you need is a […]
Read moreDon’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 bust a gut to get […]
Read moreThe 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 sure that you take steps […]
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