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Spring Budget 2023 – the key points for business owners

Spring Budget 2023 – the key points for business ownersThe Chancellor, Jeremy Hunt, delivered his first Spring Budget on 15 March 2023. Unlike the September 2022 ‘mini budget’, this budget won’t cause many ripples in the worlds of business and finance. In fact, it was a relatively dull affair, with few headline announcements for the average business owner.However, there were some incentives regarding capital allowances on equipment and investment in research and development (R&D), to...

Your Q2 2022 deadlines for the diary

Your Q2 2022 deadlines for the diaryAs ever we want to keep you on the ball with the latest dates and deadlines for your business diary. Get your online calendar fired up and highlight some of the upcoming dead lines and cut-off points for Q2 of 2023Affected companiesTaskDeadlineExampleCompanies formed between 1July 2021 and 30 September 2021File your first year accounts with Companies House.No later than 1 year and 9 months(to the specific day) after your company's incorporation date.• &...

Companies House changes – A reason for disincorporation?

Companies House changes –A reason for disincorporation?In March last year, the government published a White Paper setting out its final position on reforming Companies House ahead of introducing legislation. The big headline from the reforms is that micro and small companies will have to report profit and loss statements i.e. the option to file ‘filleted’ accounts is to be removed. Some smaller ‘one-man band’ companies may not be happy to see their profit figures displayed on the Compa...

Overpayment relief claim – How long do you have?

Overpayment relief claim – How long do you have?Tax repayment claims are usually made via the submission of a tax return. The time limit for amending a return (whether individual or company) is usually one year from the deadline for submitting the tax return. If that date has passed, a claim can only be made via an overpayment relief claim. Under this relief, the general rule is that a refund or repayment cannot be claimed more than four years after the end of the tax year to which the claim r...

When should a business leave a VAT scheme?

When should a business leave a VAT scheme?Post-pandemic, many businesses are finding that their trading circumstances have changed such that the non-standard VAT scheme under which the business is registered is no longer appropriate. The turnover may have increased so they are no longer eligible.VAT schemes are designed to simplify how some VAT-registered businesses calculate and account for VAT and are voluntary to join. By choosing the most suitable VAT scheme a business can have better contro...

Which is more important? Cashflow or profit?

Which is more important? Cashflow or profit? Cashflow and profit are two of the most important financial metrics for any business. But while they’re both related to the financial performance of a company, they measure different things.Knowing the difference – and how cash and profit contribute to your success story – is a vital skill if you want your business to have the best possible financial health.The difference between cashflow and profitUnderstanding the technicalities of financial r...

How to apply for a business loan

How to apply for a business loanNeed some extra cash to take your business to the next level, but daunted by the loan process? You're not alone. There's a lot of paperwork and number-crunching involved.Before you get started, remember that banks wants your application to succeed as the interest you pay is a vital revenue stream. So it’s up to you to make their job easy by turning up with a good business case.Connect the dots for them. While banks are experts in money, they’re not necessarily...

7 ways to get more from your personal finances

7  Ways to get more from your personal financesThere’s plenty of advice available to help you manage your business finances. But what about the tips and hacks you need to get fully in control of your personal finances?Managing your personal finances can be challenging, especially when it comes to making sound and sensible financial decisions. But with the right tips and strategies, you can make smart investments, grow your wealth and secure your financial future.We’ve outlined seven ess...

Understanding Your Breakeven Point

Understanding Your Breakeven PointYour breakeven point is the income, or sales, needed to cover all of your business costs. Any earnings above this point generate profit. So, in a nutshell, your breakeven point tells you the minimum sales needed to keep your business profitable and viable.Combining your understanding of the breakeven point with detailed financial reporting from your accounting software is invaluable. You’ll get valuable data to analyse your fixed and variable costs. You can al...

What's the difference between financial accounting and management accounting?

What's the difference between financial accounting and management accounting? You’re running a business, so you know the legal requirements around producing accounts and submitting tax returns. But do you truly know WHY you’ve engaged an accountant? And do you understand the value that a good accountant and business adviser can add to your company?As a business owner, managing director or CEO, there are three main areas of the accounting proposition that you’re probably most interested in:...

Keeping your cashflow strong in tough times

Keeping your cashflow strong in tough timesSmall businesses are particularly vulnerable in tough economic times.When sales are slow, there are still overheads and salaries that need to be sorted. Pre-planning and being proactive can help you weather tighter economic periods and allow you to continue to thrive.Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for.If there’s even a possibility that there could be a shortfall, it’s...

What is Section 455 Tax?

What is Section 455 Tax?If you have share capital or voting rights in a company, you can be classed as a ‘participator’. And where a participator (or an associate of a participator) owes money to a close company, the company may be charged Section 455 tax, along with corporation tax (if any) on the company's profits.Confused? Let’s look a little closer at what a participator is, what a close company is, and how Section 455 Tax can impact your tax liabilities.What does it mean to be a parti...

Change of Tax Basis Period for unincorporated businesses: are you ready?

Change of Tax Basis Period for unincorporated businesses: are you ready?Are you self-employed? Or are you a partner in a trading partnership? If you are, you should be aware of the proposed changes to the tax basis period for unincorporated businesses.HM Revenue & Customs (HMRC) is proposing to change the way that unincorporated businesses are taxed, moving from a ‘current year’ basis to a ‘tax year’ basis. For affected businesses (those that don’t have a year-end between 31 March ...

Business plant and equipment: Buy or lease?

Business plant and equipment: Buy or lease?When your business needs new plant or equipment, what’s the best choice – buy or lease? The answer will depend on your specific circumstances, but there are some basic considerations that can help you weigh up the options.The advantages of buyingBuying gives you certainty and ownership, at a higher upfront price, but a lower total price. Owning an item of plant or equipment gives you unrestricted use for the lifetime of the item. You can alter it to...

What's the Employment Allowance? And is your organisation eligible?

What's the Employment Allowance? And is your organisation eligible?If you’re an employer, your payroll costs make up a big chunk of your operational expenses. Helping to reduce those labour costs is good news for your cashflow. So, now may be the ideal time to explore the Employment Allowance and find out if you can claim this useful allowance.We’ll explain the details of the allowance, who’s eligible and how you make a claim.Employment Allowance: a great way to reduce your payroll costsEm...

VAT penalties – New rules

VAT penalties – New rulesThe VAT default surcharge is being replaced with a new VAT penalty and interest regime. The new rules apply to VAT accounting periods beginning on or after 1 January 2023.Late filing penaltiesThe new penalty regime operates on a points-based system. Each VAT return received late, including nil and repayment returns, will receive one late submission penalty point. A penalty will be charged when the points reach a certain threshold. The penalty trigger depends on the fre...

Mileage allowance payments – The maximum tax-free amount

Mileage allowance payments – the maximum tax-free amountTo save work, employers can pay employees a mileage allowance if they use their own car for business journeys. The Government have recently cleared up confusion as to what can be paid tax-free, confirming the maximum tax-free amount.Mileage allowance paymentsThe approved mileage allowance payments system is a simplified system that allows employers to pay tax-free mileage allowance payments to employees who use their cars for business tra...

VAT bad debt relief

VAT bad debt reliefIf you are a VAT-registered business you must charge VAT when you make taxable supplies. You must also pay over the difference between VAT you have charged and the VAT that you have suffered to HMRC (or, where a scheme such as the flat rate scheme is used, the amount due to HMRC under the scheme rules). Assuming your customers pay their bills, it is the customer who provides the funds for the output tax which must be passed on to HMRC and from which you can recover any input t...

Five ways to save inheritance tax

Five ways to save inheritance taxInheritance tax is often described as a voluntary tax. While most of us do not know in advance when we are going to die, there are steps that you can take to reduce the amount of inheritance tax on your estate. Here are five suggestions.1.    Leave everything to your spouse or civil partnerThe inter-spouse exemption means that there is no inheritance tax to pay on anything that you leave to your spouse or civil partner. On their death, their estate...

New corporation tax regime

New corporation tax regimeChanges to the corporation tax regime come into effect from 1 April 2023 – the start of the financial year (FY) 2023. From that date there will no longer be a single rate of corporation tax; rather, the rate at which a company pays tax on its profits will depend on the level of those profits.Small profits rateCompanies whose taxable profits are below the lower limit continue to pay tax on those profits at the rate of 19%.The lower limit is set at £50,000 for a stand-...

NIC landscape for 2023/24

NIC landscape for 2023/24As far as National Insurance was concerned, the 2022/23 tax year was a tricky one featuring in-year changes to the primary threshold and in-year changes to the Class 1, 1A, 1B and 4 rates. This resulted in some strange numbers, with average rates applying for the purposes of Class 1A, Class 1B and Class 4 contributions. Average rates are also applied for Class 1 purposes to company directors who have annual earnings periods.Hopefully, 2023/24 will be more straightforward...

Claim the Employment Allowance for 2023/24

Claim the Employment Allowance for 2023/24The Employment Allowance is an allowance that eligible employers can claim to set against their secondary (employer’s) Class 1 National Insurance liability. The employment allowance is set at £5,000 for 2023/24, capped at the employer’s secondary Class 1 National Insurance for the year where this is less. It is not given automatically and must be claimed.Eligible employersThe National Insurance Employment Allowance is only available to eligible empl...

Taxation of company vans in 2023/24

Taxation of company vans in 2023/24A tax charge may arise under the benefit in kind legislation where a company van is available for an employee’s private use. If fuel is also provided for private journeys, a separate fuel benefit tax charge arises. The van and fuel benefit charges for 2023/24 have now been announced.Van benefit chargeThe van benefit charge only arises if the company van is not an electric van and private use of the van is not limited to home-to-work travel. The amount is set ...

Pension payments – What tax relief is available?

Pension payments – What tax relief is available?To encourage pension savings, tax relief is available on contributions made to registered pension schemes. However, there are limits on the contributions that can qualify for relief, and punishing tax charges can apply if these limits are exceeded.Limit 1 – 100% of relevant earningsTax relief on private pension contributions is capped at 100% of your relevant earnings or, if lower, £3,600. Relevant earnings include earnings from an employment ...

Repaying directors’ loans – Does the order matter?

Repaying directors’ loans – Does the order matter?Directors’ loans can be tricky from a tax perspective. Specific tax charges apply where loans to director shareholders of close companies (broadly those under the control of five or fewer shareholders) are not repaid by the corporation tax due date. This is nine months and one day from the end of the accounting period.Where this is the case, the company is taxed on the outstanding loan balance at that date. The tax rate is the same as the d...