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

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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

Read more...

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

Read more...

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

Read more...

By Jamie Wooldridge on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Question:
I am in business as a sole trader and need to purchase a new vehicle. Although I have the funds to purchase one outright, I want to buy the vehicle in the most tax efficient way. Please can you advise what would be the best option. In particular, if I choose to get a vehicle using a PCP, can I treat the entire monthly payment as an expense to reduce profit and hence tax?
Answer:
As a sole trader you have two different options for how you treat any car used in the business. You can either claim ‘simplified mileage expenses’ or claim the actual costs of business usage of the vehicle.
Simplified mileage expenses
As the name suggests this is a straightforward method of claiming for the cost of usage of the vehicle. You can claim 45p per mile of business usage for the first 10,000 miles in any year, and 25p per mile thereafter. It’s worth noting that business mileage excludes travel from home to your usual place of work. Records should be kept documenting the amount of mileage being claimed.
The 45p per mile rate is intended

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By Jamie Wooldridge on Small Business – Advice and Ideas for UK Small Businesses and SMEs
Question:
I am in business as a sole trader and need to purchase a new vehicle. Although I have the funds to purchase one outright, I want to buy the vehicle in the most tax efficient way. Please can you advise what would be the best option. In particular, if I choose to get a vehicle using a PCP, can I treat the entire monthly payment as an expense to reduce profit and hence tax?
Answer:
As a sole trader you have two different options for how you treat any car used in the business. You can either claim ‘simplified mileage expenses’ or claim the actual costs of business usage of the vehicle.
Simplified mileage expenses
As the name suggests this is a straightforward method of claiming for the cost of usage of the vehicle. You can claim 45p per mile of business usage for the first 10,000 miles in any year, and 25p per mile thereafter. It’s worth noting that business mileage excludes travel from home to your usual place of work. Records should be kept documenting the amount of mileage being claimed.
The 45p per mile rate is intended

Read more...

Originally written by John Miller on Small Business
This is not a simple topic and is dependent on a number of factors, such as the type of vehicle you wish to buy.
As a sole trader, I would recommend buying the car yourself. The benefits of buying a car through your business are limited.
If your company buys a car, and a loan is taken out to purchase the vehicle or if it’s on Hire Purchase, only the interest payments are an allowable company expense.
If you buy a van, buy it through your company. Vans are classified as plant and machinery for tax purposes. As such, they qualify for 100 per allowances under the Annual Investment Allowance regime. This means you get a deduction for 100 per cent of the cost to reduce your company’s taxable profits.
>See also: 8 business van financing tips for your SME
Quirky as it might sound, motorbikes are also not a car, so get the same regime as vans.
Either way, if you’re going to buy, consider buying electric.
With cars and vans, you can charge your company a reimbursement expense of 45p a mile for the first 10,000 business miles that you travel in each tax year and 25p per

Read more...

Originally written by John Miller on Small Business
This is not a simple topic and is dependent on a number of factors, such as the type of vehicle you wish to buy.
As a sole trader, I would recommend buying the car yourself. The benefits of buying a car through your business are limited.
If your company buys a car, and a loan is taken out to purchase the vehicle or if it’s on Hire Purchase, only the interest payments are an allowable company expense.
If you buy a van, buy it through your company. Vans are classified as plant and machinery for tax purposes. As such, they qualify for 100 per allowances under the Annual Investment Allowance regime. This means you get a deduction for 100 per cent of the cost to reduce your company’s taxable profits.
>See also: 8 business van financing tips for your SME
Quirky as it might sound, motorbikes are also not a car, so get the same regime as vans.
Either way, if you’re going to buy, consider buying electric.
With cars and vans, you can charge your company a reimbursement expense of 45p a mile for the first 10,000 business miles that you travel in each tax year and 25p per

Read more...