CHARTERED ACCOUNTANTS (ICAEW)

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Dealing with gift hold-over relief ‘nudge’ letters

Dealing with gift hold-over relief ‘nudge’ lettersHMRC are sending one-to-many ‘nudge’ letters to taxpayers who included an invalid claim for gift hold-over relief in their 2021/22 tax return. This may be because a separate claim form was not included with the return, or the claim form was included but not signed. If you receive such a letter, it is important that you do not ignore it – without a valid claim, HMRC will require any capital gains tax due to be paid now rather than deferr...

Common NMW errors to avoid

Common NMW errors to avoidWorkers are entitled to be paid the National Living Wage (NLW) or Minimum Wage (NMW) for their age. Employers who fail to do this run the risk of financial penalties and of being ‘named and shamed’. To help employers avoid mistakes, HMRC have produced a checklist of 18 common errors. These are listed below.Common error 1Making deductions or taking payments from workers for items or expenses connected with their job which reduce the worker’s pay below the statutory...

Separating couples – Importance of checking your child benefit claim

Separating couples – Importance of checking your child benefit claimThe High-Income Child Benefit Charge (HICBC) is a tax charge that claws back child benefit where the claimant or his or her partner have adjusted net income of at least £50,000. Where both parties have income in excess of this, the charge is levied on the partner with the highest income.The charge is equal to 1% of the child benefit paid for the tax year for every £100 by which adjusted net income exceeds £50,000. Once adju...

Interest rates are high – Benefit from short-term loans from your company

Interest rates are high – Benefit from short-term loans from your companyThe Bank of England has warned businesses and households that the cost of borrowing will remain high for at least the next two years and although taking out a bank loan is cheaper than a credit card, the interest rate on unsecured loans is at an all-time high of 5.7%. However, there is a source of finance from which a director or participator of a private limited company can borrow at 0% interest and that is from their co...

Voluntary disclosure

Voluntary disclosureVoluntary disclosure involves individuals or businesses coming forward to inform HMRC of any errors or omissions in their tax returns, unpaid taxes or any other irregularities, before HMRC discovers them through its own investigations. In recent years HMRC has used a series of campaigns and settlement/disclosure opportunities aimed at particular sections of the taxpaying public to encourage taxpayers to come forward and declare any missing information by offering favourable p...

Capital allowances on leased assets – Options for tax relief

Capital allowances on leased assets – Options for tax reliefThe decision to acquire a business asset, be it a van or any other type of machine, will generally depend on how it is intended to finance the purchase. If the business has a healthy bank account, the purchase may be outright but, if not, other methods may be considered including hire purchase or leasing contract. Different tax implications depend on the type of asset, the type of contract entered into and whether the profits are calc...

Extracting profits from a property company

Extracting profits from a property companyRecent tax changes, in particular the interest restriction for unincorporated property businesses with residential lets, have resulted in more landlords operating via a property company. Running a property business through a company has a number of advantages – the rate of corporation tax paid on the profits will usually be less than the rate of income tax that would be paid by an unincorporated landlord and interest and finance costs in relation to re...

Check your business rates are not too high

Check your business rates are not too highBusiness rates, rather than council tax, are charged on most non-domestic properties, such as shops, offices, warehouses, pubs, factories, guest houses and holiday lets. Business rates are based on the rateable value of the property. There are various reliefs that may be available to reduce the bill.The properties are revalued regularly to reflect changes in the property market. The most recent revaluation came into effect this year, taking effect from 1...

Paper version of capital gains tax on UK property return

Paper version of capital gains tax on UK property returnWhere an individual realises a chargeable gain on the disposal of a UK residential property, they must report the gain to HMRC within 60 days of completion and make a payment of the capital gains tax due within the same window.In most cases, the gain will be reported online – taxpayers will need to create a Capital Gains Tax on UK Property Account if they do not already have one.However, in response to feedback received, HMRC made a paper...

Tax and influencers

Tax and influencersEarlier this year, HMRC sent ‘nudge’ letters to social influencers who they suspect may not have declared the tax that they owe. They have also cracked down on gifts provided to influencers in return for promoting brands.Social media influencers and content creators, including those running blogs, may receive payments in cash. This may be in the form of sponsorship. They may also receive gifts in return for promoting a band. Many are unaware that this counts as income on w...

Beware of diverting dividends to minor children to fund education

Beware of diverting dividends to minor children to fund educationOwners of personal and family companies frequently pay themselves a small salary and extract further profits as dividends. To utilise the unused personal and dividend allowances of other family members, an alphabet share structure (whereby each shareholder has their own class of shares, e.g. A ordinary shares, B ordinary shares, etc.) provides the flexibility to tailor dividend payments to the circumstances of the shareholder.Minor...

Relief for post-cessation expenses

Relief for post-cessation expensesThe end of a business will not necessarily mean that no further expenses are incurred. Where expenses are incurred after the business has ceased, tax relief may be available.Allowable post-cessation expensesAn expense will be an allowable post-cessation expense if:·         the business has ceased; and·         the expense would have been deductible in calculating the trading profi...

Telling HMRC that you have no corporation tax to pay

Telling HMRC that you have no corporation tax to payIf you have a company that is dormant and you have filed your company tax return showing that no tax is due, you may think that there is nothing further you need to do as regards the lack of corporation tax due. Afterall, you have filed a return which shows that you have nothing to pay.However, that may not be the end of the story. You may receive a letter from HMRC reminding you when the corporation tax for the period is due. The letter will a...

Key person insurance – When can you claim a deduction?

Key person insurance – When can you claim a deduction?The profitability or earning capacity of a business may depend on one person or on a small number of people. Where this is the case, the business may be seriously compromised if that person, or one of those persons, falls seriously ill or has an accident. To protect against financial loss should such a situation arise, it is possible to take out a policy insuring against the loss of profits arising from the death, critical illness, sickness...

Should you buy a building for your business?

Should you buy a building for your business?Tired of paying rent for your commercial premises and considering buying a premises for your business?Owning a building works best if your business is well-established, you have money to invest, and you’re taking a long-term approach – it can take many years for this decision to pay for itself.The advantages of owning a commercial propertyYou no longer need to worry about dealing with a landlord. You’re the landlord now, so your lease won’t end...

Are you ready for an enterprise resource planning solution?

Are you ready for an enterprise resource planning solution?As your business scales, the complexity of your systems, data and management information will grow at a similar pace. And if you're using software, apps and systems that are aimed squarely at the small business market, these platforms may begin to creak at the seams a little.This is when moving to an enterprise resource planning (ERP) solution makes a lot of sense.But what is an ERP solution? And how does upgrading to one of the current ...

How can small businesses compete with the big chains?

How can small businesses compete with the big chains?In tough economic times, small businesses can struggle. Big multinational chains often have the scale to undercut local competitors and survive even when times get tough.What can small businesses do to retain and attract customers in a competitive market?Identify your business’s advantagesThink about what your business can offer that a multinational operator cannot. For example, you might have the edge on:Local knowledgeClose relationships w...

Flat Rate vs Hourly for Trade Professionals?

Flat Rate vs Hourly for Trade Professionals?Attention all trade professionals! Do you have your skills & services down pat, but pricing is giving you a headache?Hourly rates might secure every minute worked, but flat rates offer predictability—just watch for undercharging pitfalls. The hybrid method, a dynamic fusion, caters to diverse jobs. However, each has nuances, like client concerns or the pressure of fixed rates.Tailored for your trade, discover which pricing strategy suits your bus...

How to grow your Trade Business

How to grow your Trade BusinessReady to scale your trade business? Imagine it as climbing a challenging peak – your venture starts at the base, and ascending to the summit demands smart strategies. This summary is your roadmap, leading you step by step towards success.Let’s talk about staff. Hiring matters – from apprentices to subcontractors and full-timers, each has perks. Financials are crucial. Understand your cash flow and set optimal rates for sustainable growth.Streamline admin. We ...

5 ways to overcome economic uncertainty

5 ways to overcome economic uncertaintyEconomic uncertainty is an ongoing worry for any business owner.You can control your own financial management, but you don’t have any direct control over the wider macro-economy. And in the first few years of the 2020s, there have certainly been plenty of tricky ups and downs for your business to navigate.Current economic uncertainty stems from a number of factors, including:Fluctuating marketsGeopolitical tensionsPandemic recoveryThe impact of climate ch...

Plain English guide to depreciation

Plain English guide to depreciationGetting to grips with the basics of accounting, financial management and business strategy can be a challenge. To make things easier, we've created a plan-english guide to depreciation and the impact this accounting term can have on your assets, tax, cashflow and company accounts.What is depreciation?Depreciation is an accounting term that you’ll hear us talking about when we run your accounts.In basic terms, depreciation is about allocating the cost of a tan...

What’s an Employee Ownership Trust?

What’s an Employee Ownership Trust?As a business owner, you probably want to leave a lasting legacy behind when you finally get to the end of the journey and decide to exit the business. One way to achieve this is by disposing of all, or part, of the company to an Employee Ownership Trust (EOT).This EOT structure is available to trading companies, or the holding company of a trading group.Apart from ensuring the continuity of your ‘business baby’, there are also some tax advantages of...

What makes you a good entrepreneur?

What makes you a good entrepreneur?Do you dream about starting our own business? And, can anyone become an entrepreneur?When you look at the research, there are certain aptitudes, personality traits and business skills that tend to make you a more successful entrepreneur. But can you learn these skills? Or are these innate abilities that some entrepreneurial people are just born with?Let's take a look at what makes a good entrepreneur.What drives someone to become an entrepreneur?There are upwar...

Back to Tax Basics: How capital allowances reduce your tax bill

Back to Tax Basics: How capital allowances reduce your tax billGenerally speaking, the business expenses you incur are allowable against your profits. But when it comes to fixed asset purchases (things like machinery, equipment or vehicles), these purchases are treated slightly differently.To reduce your tax bill when purchasing fixed assets, it’s important to know what capital allowances are available and how you can use them to enhance your tax planning.In the next part of our Back to Tax Ba...

Plain English guide to cashflow

Plain English guide to cashflowWhy is cashflow so central to good financial management? Here's our plain english guide.What is cashflow?Cashflow refers to the movement of money into and out of your business over a specific period.In the most basic terms, cashflow is the process of cash moving out of the business (cash outflows), and cash coming into the business (cash inflows). The ideal scenario is to be in a ‘positive cashflow position’. This means that your inflows outweigh your outflows ...