Tag Archive for Accounts & tax

Hot Business News Today

Am I eligible for capital allowance?

by Toby Cotton • September 1, 2021 • 0 Comments

By Toby Cotton on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Capital allowances are available on qualifying capital expenditure incurred on the provision of certain assets used in a company or individual’s trade. Not all assets qualify for a capital allowance and the rate of relief will vary. The allowances are deducted from trading profits effectively reducing the tax payable. This would be the income tax for a sole trader or partnership and corporation tax for a company.
In most cases, items purchased which are allocated as “plant and machinery” would achieve 100 per cent relief via the Annual Investment Allowance (AIA). The current AIA limit is £1,000,000 to the 31 December 2021 and then £200,000 from the 1 January 2022.
HMRC is generous in what it considers qualifying expenditure and includes:

Computer equipment and servers
Tractors, lorries, vans
Ladders, drills, cranes
Office chairs and desks
Electric vehicle charge points
Refrigeration units
Compressors

However, certain items, such as cars, and items owned before you started a business and items given to you or your business are ineligible for this AIA claim. You would only be able to claim writing down allowances via the main pool and special rate pool with a lower percentage claimed. The main

Hot Business News Today

Working from home tax breaks

by Timothy Adler • September 1, 2021 • 0 Comments

By Timothy Adler on Small Business – Advice and Ideas for UK Small Businesses and SMEs

How much are working from home tax breaks worth?

You can claim the full year’s entitlement of £125 in working from home tax breaks if your employer told you to work from home — even if it was only for one day.

It doesn’t matter if you have returned to the office since early April — you can still get the full amount for the 2021/22 tax year. Working from home for just some of the week still qualifies.

However, you cannot claim tax relief if you choose to work from home. Nor can you claim tax relief if your employer covered your expenses or paid you an allowance.

If you complete an annual tax return, you will be able to apply for the tax relief via your Self Assessment.

How to apply for working from home tax breaks

You can use the HMRC working from home tax relief portal, where you will be asked a series of questions to check if you are eligible or not. To progress with your claim, you will need a Government Gateway user ID and password, which you can create if you don’t already have

Hot Business News Today

Raising finance to buy out a director

by Toby Cotton • September 1, 2021 • 0 Comments

By Toby Cotton on Small Business – Advice and Ideas for UK Small Businesses and SMEs
There may be instances where a shareholder might want to exit the company. This could be due to losing interest or retiring and would need the other shareholder to buy out their shares and take full control.
The first consideration if you want to buy out a fellow shareholder is to check the articles of association and shareholder agreement to make sure that both parties understand the process and any pre-existing terms for such shareholder exits or prohibitive clauses for share buybacks. You would need to place a reasonable value on the departing shareholder’s shares, and it is often advisable to ask your accountant to provide an independent valuation.
For ease in this article, we will use a simple trading company with 50:50 shares between two shareholders. The 50 shares are valued at £500,000 so the total value of the company is £1m.
>See also: Paying dividends to directors
There are a number of options available, each with different implications and tax consequences:
Company buyback of shares
In this case the company would pay the departing shareholder £500,000 to buy back their 50 shares, which would leave the remaining shareholder with

Hot Business News Today

Raising finance to buy out a director

by Toby Cotton • August 31, 2021 • 0 Comments

Hot Business News Today

Paying dividends to directors

by Toby Cotton • August 28, 2021 • 0 Comments

By Toby Cotton on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Dividends are a great way to extract profits from a company to pay shareholders, including directors, and there can be many tax advantageous points to it. But with any extraction, proper procedures need to be in place to ensure they are legal and fair.
Many small company director/shareholders decide to take a mixture of salary and dividends making use of the basic rate band in order to reduce tax. This is usually done by taking salary up to the minimum before you pay National Insurance or PAYE, and then top up with dividends as the current rate is 7.5 per cent on dividends up to the basic rate band. Helpfully, the first £2,000 of dividends extracted individually is covered by the dividend allowance with no tax to pay.
>See also: Forming a company: Choose your trading type
Before any dividends are to be declared, they must be checked to the articles of association to ensure that the internal rules of the company are kept in terms of who can approve these dividends and their proportions. Dividends will be approved via a board meeting.
There are two different types of

Hot Business News Today

Paying dividends to directors

by Toby Cotton • August 28, 2021 • 0 Comments

Hot Business News Today

Cash in on tax credits – how to claim for R&D

by Martin Sharkey • August 9, 2021 • 0 Comments

By Martin Sharkey on Small Business – Advice and Ideas for UK Small Businesses and SMEs

What is an R&D credit?

Research and development (R&D) tax credits are a government incentive designed to reward UK companies for investing in innovation. They are a valuable source of cash for business to invest in accelerating their R&D, hiring new talent, and ultimately transform your business. The government benefits from increased productivity which impacts the economy and can effect positive change on a global scale. The businesses over the last 20 years have claimed approximately £33bn.

Businesses that spend money developing new products, processes, or services, or enhancing existing processes are eligible for R&D tax relief. If you are spending money on innovation, you can make an R&D tax credit claim to receive either a cash payment or corporation tax reduction. The scope of qualifying R&D is huge – in fact, it exists in every single sector. If you are making a claim for the first time, you can claim R&D tax relief for your previous two completed accounting periods.

What qualifies for R&D tax credits?

From agriculture to construction to fintech, all sectors that have the scope for research and development are eligible to claim tax credits.

Hot Business News Today

Quickbooks review and pricing: is it worth the cost?

by Alice Feilden • August 9, 2021 • 0 Comments

By Alice Feilden on Small Business – Advice and Ideas for UK Small Businesses and SMEs
QuickBooks – best for fast-growing businesses

Parent company Intuit was founded in 1983 and the QuickBooks brand was introduced in 2002, with QuickBooks Online following two years later. Today, QuickBooks has 2.2 million users across 225 countries.
Getting your head around small business accounting software can be tricky. Many small business owners fret about whether they will understand the software, whether it is worth the cost and if they really need the added security. This handy guide will explain some of the reasons QuickBooks is worth its salt for multi-tasking entrepreneurs.
What is QuickBooks and what is it used for?
QuickBooks is an accounting software designed to be used by small businesses. It is one of the most popular software of its kind. Businesses often use it to keep track of their finances and manage income and expenses. It can also be used to invoice customers, pay bills, generate reports, prepare taxes and track cash flows. QuickBooks accounts tend to either be managed in-house by business owners themselves, while others outsource to a bookkeeper. Whatever your choice, QuickBooks offers a number of products to suit any business, from one-man-band

Hot Business News Today

New EU VAT regulation – how accounting software can help

by Alice Feilden • July 20, 2021 • 0 Comments

By Alice Feilden on Small Business – Advice and Ideas for UK Small Businesses and SMEs

In the age of the pandemic, online shopping significantly increased. Businesses small and established alike took to e-commerce and shipping overseas, with the advent of social distancing and the closure of non-essential shops. But, the new EU VAT regulation could cause challenges for these businesses.

On 1st July, the European Union made changes to the way VAT is reported and paid. While the UK is no longer a member of the EU, the changes could impact businesses selling products and services online to customers.

The change to EU VAT reporting, which is designed to simplify tax reporting, increase online cross-border transactions and promote e-commerce, should help small businesses new and old operate in a post-Brexit, post-pandemic world.

What changes have been implemented?

Since 2015, the EU has been working to simplify VAT obligations for goods and service providers. In short, the EU made to ensure each country was benefitting from the correct taxes on goods arriving from elsewhere. The changes have been implemented in stages, with the 1st July introduction concluding the process.

One of the main changes to take note of is that for sales to consumers, VAT is