CHARTERED ACCOUNTANTS (ICAEW)

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VAT –Exceeding threshold temporarily – What can be done?

VAT –Exceeding threshold temporarily –What can be done?Most business owners know that VAT registration is a legal requirement should total taxable turnover for the previous 12 months exceed £85,000 or turnover is expected to exceed £85,000 in the next 30 days.Once a business becomes liable, that liability ceases should HMRC be satisfied that the business is not expected to exceed the deregistration limit in the following 12 months. This limit is usually set at £2,000 below the registratio...

Is a derelict property still a residential property for SDLT purposes?

Is a derelict property still a residential property for SDLT purposes?The issue of whether a derelict a residential property and liable to stamp duty land tax (SDLT) at the residential rates was considered by the First-tier Tribunal.The appellants, Mr and Mrs Mudan, purchased a property in London for £1,755,000. As they already had another residential property, they paid SDLT at the residential rates inclusive of the 3% supplement. They subsequently filed an amended return on the basis that the...

Letting the FHL for longer periods during the off-season

Letting the FHL for longer periods during the off-seasonLetting holiday properties, particularly in coastal resorts, may have a strong seasonal bias, and when business is slow during the off-season, it can be tempting to let the property on a longer let. For example, a property could be let on short-term holiday lets over the summer months and on a six-month residential let during the winter. However, adopting this approach may have tax implications and prevent the property from accessing the ta...

Can I deduct the higher interest costs of my new fixed rate mortgage?

Can I deduct the higher interest costs of my new fixed rate mortgage?Landlords coming to the end of their fixed rate mortgage deal are likely to be paying considerably more in interest when they remortgage. The extent to which tax relief is available for interest payments depends on the type of let, the type of property and whether the business is an unincorporated property business or operated through a company.Scenario 1: unincorporated landlord and residential letsUnincorporated landlords let...

Relief for pre-trading expenses

Relief for pre-trading expensesIn setting up a trade it is inevitable that expenses will be incurred before the trade actually commences. Expenses may be incurred on acquiring premises and kitting them out, on buying stock, on office supplies, on professional advice, on marketing, on software, on setting up a website, on legal fees and suchlike. These can mount up, so it is important to secure tax relief where possible. Relief for pre-trading expenses is available to both unincorporated business...

Get your overlap relief figure

Get your overlap relief figureIf you have unrelieved overlap profits, you will not be able to claim relief for those profits after 2023/24. Overlap profits are profits that have been assessed twice – either in the early years of a business or on a change of accounting date.From 2024/25, unincorporated businesses will be taxed on the profits for the tax year regardless of the date to which they prepare their accounts. Where the accounting period does not correspond with the tax year, the profit...

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 ...