Tag Archive for Tax

Hot Business News Today

What is the VAT threshold?

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

The VAT threshold is the volume of annual turnover at which businesses are required to register for value-added tax (VAT).

Since April 2024, the UK VAT registration threshold has been £90,000.

VAT thresholds for previous years are as follows:

 

2014–2015 – £81,000

2015–2016 – £82,000

2016–2018 – £83,000

2019-2024 – £85,000

Since 1 April 2024 – £90,000

Once your business’s turnover reaches the VAT threshold, you have 30 days to register for VAT with HMRC. When this process is complete, your business has extra responsibilities including:

 

Charging VAT on your products or services

Paying VAT on the goods or services supplied by your vendors

Submitting your VAT return to HMRC every quarter (unless you opt into the Annual Accounting Scheme*) and maintaining a VAT account and records using Making Tax Digital (MTD)-compatible software

*Most VAT-registered businesses file quarterly VAT Returns (some monthly). If you opt into the Annual Accounting Scheme, you file one return per year with instalments. All VAT-registered businesses must keep digital records and file via MTD-compatible software

VAT registration

Registering for VAT is a legal requirement for businesses that exceed this threshold, and the threshold is reviewed regularly by HMRC.

You need to register for VAT

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5 things you need to know about MTD for Income Tax

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By Chris Downing on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Making Tax Digital (MTD) for Income Tax will change how eligible sole traders and landlords handle their income tax from April 2026, adding in some new legal requirements.

It’s one of the biggest shake-ups in personal tax for a generation.

Here are five things you need to know to kick-start your own MTD for Income Tax preparations.

1. Making Tax Digital for Income Tax starts in April 2026 or April 2027 – or possibly April 2028

If you have gross income over £50,000, you’ll have to start following the MTD for Income Tax rules from April 2026.

If have gross income above £30,000, you’ll have to follow the new rules a year later, in April 2027.

And in April 2028, if your gross income is over £20,000, you’ll have to comply with the new rules.

The government has hinted that MTD for Income Tax will apply to incomes lower than this but hasn’t yet made any announcements.

2. Here’s the basic MTD for Income Tax requirements

Here’s a short summary of what Making Tax Digital for Income Tax means for you:

Using compatible software, such as Sage Accounting, you’ll need to send HMRC quarterly reports for

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Hot Business News Today

Where to start with Making Tax Digital for Income Tax

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By Chris Downing on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

Making Tax Digital (MTD) is the UK government’s flagship programme to make it easier for businesses and individuals to get their tax right. As you might guess from the name, it does this by legislating the digitalisation of tax data and its submission to HMRC. MTD for VAT is already in place, but Making Tax Digital for Income Tax is coming in from April 2026.

In this article, I answer questions that you may have around this, and what it means for your business finances.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is new legislation that changes how income tax is administered.

It affects self-employed individuals and landlords with gross income over certain levels as of the following dates:

April 2026: If you have gross income over £50,000 in the 2024/25 tax year and subsequent threshold dates.

April 2027: If you have gross income over £30,000 in the 2025/26 tax year and subsequent threshold dates.

April 2028: if you have gross income over £20,000 in the 2026 to 2027 tax year and subsequent threshold dates.

Am I affected by MTD for Income Tax?

If you run your

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How to spend less time on accounting and payroll

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By Ryan Grundy on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

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As a business owners, having autonomy over your time and lifestyle is one of the most attractive benefits of working for yourself. However, there are some aspects of running a business that compromise your ability to take full advantage of that benefit, the most prevalent (and unavoidable) being finances. 

Not everyone is a finance and accounting wiz by nature, so processing tax returns, keeping track of incomings and outgoings, payroll and saving cash where possible can become a lengthy and sometimes complicated process. 

Fortunately, it doesn’t always have to be this way, as some helpful accountancy and payroll software and practices can make the process less complicated and less time-consuming, leaving you more time to focus on growing your business or enjoying your free time. 

In this article, we’ll highlight:

How to keep your records clean

How to develop a seamless payment process

How reports could help you

Software that could save you time and energy

Keep your records clean

The first step towards simplifying your payroll and accounting process is to streamline your bookkeeping.

Not only will this help save

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Make December 31 end of tax year, says small business

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

Small business owners are overwhelmingly in favour of changing the tax year to the end of December to simplify the system.

In a survey of 500 small and medium-sized businesses, 91 per cent supported moving the date for filing tax affairs, according to accountancy firm BDO.

Companies said that the transition would have to be planned carefully, with longer deadlines to accommodate the change, but they supported the inevitable short-term disruption as it would make the UK tax system fit for the 21st century.

>See also: Nearly 300,000 sole traders face increased tax bills

The British Chambers of Commerce (BCC) told the Financial Times that moving the small business tax year could simplify the accounting process, but cautioned that care should be taken to ensure the adjustment did not encumber companies with extra bureaucracy.

Paul Falvey, a tax partner at BDO, told the Times: “Businesses are hoping that a rethink of the tax system can help them to flourish following the challenges of Brexit and Covid-19. Changing the tax year to December 31 is supported by businesses of all sizes and will be particularly helpful for those with international connections.”

The

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Hot Business News Today

Make December 31 end of tax year, says small business

by  •  • 0 Comments

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

Small business owners are overwhelmingly in favour of changing the tax year to the end of December to simplify the system.

In a survey of 500 small and medium-sized businesses, 91 per cent supported moving the date for filing tax affairs, according to accountancy firm BDO.

Companies said that the transition would have to be planned carefully, with longer deadlines to accommodate the change, but they supported the inevitable short-term disruption as it would make the UK tax system fit for the 21st century.

>See also: Nearly 300,000 sole traders face increased tax bills

The British Chambers of Commerce (BCC) told the Financial Times that moving the small business tax year could simplify the accounting process, but cautioned that care should be taken to ensure the adjustment did not encumber companies with extra bureaucracy.

Paul Falvey, a tax partner at BDO, told the Times: “Businesses are hoping that a rethink of the tax system can help them to flourish following the challenges of Brexit and Covid-19. Changing the tax year to December 31 is supported by businesses of all sizes and will be particularly helpful for those with international connections.”

The

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HMRC to go easy on small business strangled with Covid debt

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Originally written by Timothy Adler on Small Business
Small businesses struggling with Covid debt will not be forced to pay overdue tax to HMRC immediately, says business secretary Kwasi Kwarteng.
HMRC had manoeuvred itself to be first in line to be payed-out should a small business go bust post-Covid. Being pressured into payment by tax collectors can be an extremely unpleasant experience for owner-directors of small businesses.
But Mr Kwarteng has told the Institute of Directors and business group R3, which represents insolvency and restructuring practitioners, that HMRC will go easy on small businesses unable to pay tax because of Covid-19 debt.
>See also: Small business owners who duck out of repaying Covid debt face ban
The government wants to avoid a tsunami of insolvencies this summer.
The news will come as a relief to small business owners, who already have enough to worry about with a stop-start reopening post-lockdown just as Covid-19 financial support such as Bounce Back Loans start having to be repaid.
Insolvency practitioners have warned that many small businesses will struggle to stay afloat from July when emergency Covid-19 financial support measures begin to be wound down.
In a letter, obtained by the Financial Times, Mr Kwarteng wrote that HMRC would be updating its

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Hot Business News Today

HMRC to go easy on small business strangled with Covid debt

by  •  • 0 Comments

Originally written by Timothy Adler on Small Business
Small businesses struggling with Covid debt will not be forced to pay overdue tax to HMRC immediately, says business secretary Kwasi Kwarteng.
HMRC had manoeuvred itself to be first in line to be payed-out should a small business go bust post-Covid. Being pressured into payment by tax collectors can be an extremely unpleasant experience for owner-directors of small businesses.
But Mr Kwarteng has told the Institute of Directors and business group R3, which represents insolvency and restructuring practitioners, that HMRC will go easy on small businesses unable to pay tax because of Covid-19 debt.
>See also: Small business owners who duck out of repaying Covid debt face ban
The government wants to avoid a tsunami of insolvencies this summer.
The news will come as a relief to small business owners, who already have enough to worry about with a stop-start reopening post-lockdown just as Covid-19 financial support such as Bounce Back Loans start having to be repaid.
Insolvency practitioners have warned that many small businesses will struggle to stay afloat from July when emergency Covid-19 financial support measures begin to be wound down.
In a letter, obtained by the Financial Times, Mr Kwarteng wrote that HMRC would be updating its

Read more...

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Mileage allowance in the UK – what is it and how does it work?

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Originally written by Katerina Nicolova on Small Business
Providing mileage allowance for employees who drive for work has become more popular in recent years. But with HMRC’s many rules, it can be confusing for employers and employees alike how this process works. This article will guide you through the main rules you should be aware of as an employer paying out mileage allowance, as an employee receiving the payments, and as self-employed – claiming deductions.
Mileage allowance for employees
My employees use their private vehicles for travelling for business. Do I have to provide them with mileage allowance payments?
As an employer, you are not obliged to pay a mileage allowance to your employees. However, many choose to reimburse their employees for business mileage, as anything paid under or at the same level of the approved mileage rates from HMRC is not reported to the authority.
Your company can choose to pay the exact amount of mileage allowance as stated by HMRC, less or more than it.
If you pay more per mile than the approved rate, the excess sum will be considered as personal benefits for your employee and they’ll have to pay tax on that amount.
To pay out MAPs (mileage allowance payments), your employees

Read more...

Hot Business News Today

Mileage allowance in the UK – what is it and how does it work?

by  •  • 0 Comments

Originally written by Katerina Nicolova on Small Business
Providing mileage allowance for employees who drive for work has become more popular in recent years. But with HMRC’s many rules, it can be confusing for employers and employees alike how this process works. This article will guide you through the main rules you should be aware of as an employer paying out mileage allowance, as an employee receiving the payments, and as self-employed – claiming deductions.
Mileage allowance for employees
My employees use their private vehicles for travelling for business. Do I have to provide them with mileage allowance payments?
As an employer, you are not obliged to pay a mileage allowance to your employees. However, many choose to reimburse their employees for business mileage, as anything paid under or at the same level of the approved mileage rates from HMRC is not reported to the authority.
Your company can choose to pay the exact amount of mileage allowance as stated by HMRC, less or more than it.
If you pay more per mile than the approved rate, the excess sum will be considered as personal benefits for your employee and they’ll have to pay tax on that amount.
To pay out MAPs (mileage allowance payments), your employees

Read more...