CHARTERED ACCOUNTANTS (ICAEW)

Back to Blog

Spreading your tax costs with Time To Pay

Spreading your tax costs with Time To PayHM Revenue & Customs (HMRC) expects you to pay your taxes on time. But if you’re finding it difficult to pay in full, HMRC can be approached to allow a Time to Pay arrangement.A Time to Pay arrangement will allow you to pay your debt off in pre-agreed installments, reducing the impact of a large tax bill – and helping you manage your debt and cashflow.How does Time to Pay work?If you need to request a Time to Pay arrangement for self-ass...

5 questions to ask when you are buying a business

5 questions to ask when you are buying a businessPurchasing an existing company is a great way to expand your business empire. You can buy out a close competitor, or dip a toe into a new industry and expand your reach as a business group. But whatever the reason for the acquisition, you need to ensure you’re not buying a lemon!Doing your research is a crucial part of the purchase process. As is asking some probing and insightful questions to help you determine if this acquisition is a good (or...

Tax implications of termination payments

Tax implications of termination paymentsThe number of businesses closing down is steadily increasing. Many of those businesses will have staff, therefore the legal and tax position of any termination payment must be considered.Many assume that any amount up to £30,000 is tax free. However, this may not apply to all redundancy payments not least because termination payments will often comprise several elements. For example, any employee with more than two years’ service will be entitled to sta...

Would an LLP be better for your business? Advantages & disadvantages compared with companies

Would an LLP be better for your business? Advantages & disadvantages compared with companiesWhen setting up in business, most people weigh up the pros and cons of operating as an unincorporated business or a limited company. However, there is another option where more than two persons are involved – to operate as a limited liability partnership (LLP). One of the main reasons for the government creating the LLP format was that many partnerships, particularly those in the professional s...

Are you ready for the change? Self-employed – Basis period reform

Are you ready for the change? Self-employed – Basis period reformAs part of HMRC's Making Tax Digital initiative, the existing method of calculating profits on an accounting year basis is to be abolished for the self-employed and partnerships. From April 2024, all such businesses will be taxed on profits for the tax year. To facilitate this move, the current 2023/24 tax year is deemed a transitional year such that some adjustments may be needed when declaring the assessable profit figure on th...

Mixed-use properties and SDLT

Mixed-use properties and SDLTFor stamp duty land tax (SDLT) purposes, a property may be a residential property, a non-residential property or a mixed-use property. The classification is important as it determines the rates at which SDLT is charged.Recently, there has been a slew of cases concerning mixed-use properties. A mixed-use property is one comprising both residential and non-residential use. Having an element of non-residential use alongside a residential property can be beneficial from ...

CGT advantages of furnished holiday lettings

CGT advantages of furnished holiday lettingsFurnished holiday lettings (FHLs) have a number of tax advantages over residential lets. These advantages include the opportunity to benefit from a number of capital gains tax reliefs.The capital gains tax legislation treats the commercial letting of furnished holiday letting as a trade. This allows the FHL business access to certain reliefs which are available to traders.FHLsThe business must qualify as an FHL to benefit from the reliefs. To do this, ...

Selling the garden for development

Selling the garden for developmentIf you own a large plot of land that you no longer require but you don’t want to move home, you may consider selling some of it for development. However, from a tax perspective, there are considerations that you need to be aware of up front.Selling the garden v developing the gardenThere is a difference from a tax perspective betweenselling some of your garden to a developer and developing the land and then selling the property or properties that you have buil...

Are you entitled to small business rate relief?

Are you entitled to small business rate relief?Business rates are charged on non-domestic properties like shops, offices, warehouses, factories and holiday rentals or guest houses. However, if your property’s rateable value is less than £15,000 and your business only uses one property, you may be entitled to small business rate relief.Nature of the reliefThe amount of relief to which you are entitled depends on the rateable value of your business property. If this is £12,000 or less and you ...

Do you need to complete a tax return?

Do you need to complete a tax return?Even if you pay all your tax through PAYE, you may still need to complete a Self-Assessment tax return if you are a high earner. For 2022/23 and earlier tax years, this is the case if your income is more than £100,000. However, for 2023/24 onwards, the trigger threshold is increased to £150,000.Unless you have to complete a self-assessment tax return for another reason, if you are taxed under PAYE and your income is between £100,000 and £150,000, you will...

Mobile phones – a worthwhile benefit

Mobile phones – a worthwhile benefitThe tax system contains a number of exemptions, some of which are more useful than others. One of the more valuable exemptions is that for mobile telephones. As long as the associated conditions are met, an employee can use an employer-provided mobile phone for private use without being taxed on the associated benefit. However, there are some pitfalls to avoid.Provision of the phoneThe exemption applies where an employee is provided with a mobile phone ‘wi...

NIC advantages of part-time workers

NIC advantages of part-time workersEmployers looking to take on new staff may wish to consider employing two or more part-time workers rather than one full-time worker. This can save them National Insurance.Employers are liable to pay secondary (employer’s) Class 1 National Insurance contributions on an employee’s earnings to the extent that they exceed the relevant secondary threshold. For 2023/24, the secondary threshold is set at £175 per week, £758 per month and £9,100 per year. Highe...

Tax and tips

Tax and tipsThe Employment (Allocation of Tips) Act2023 sets out a new legal framework for the fair allocation of tips. A new Code of Practice is to be introduced and employers will have a legal obligation to adhere to the Code. It will set out the principles of fairness and transparency and will reflect the different ways in which tips are reasonably collected by employers and distributed to workers.Tips, gratuities and service chargesA customer may pay extra as a tip, a service charge or a gra...

Your Q3 2023 deadlines for the diary

Your Q3 2023 deadlines for the diaryWe’re always here to keep you up to date with the latest accounting, tax and compliance deadlines. Here are the forthcoming deadlines and cut-off points for Q3 of 2023 to add to your diary.Affected CompaniesTasksDeadlineExampleCompanies formed between 1 October 2021 and 31 December 2021File your first year accounts with Companies House.No later than 1 year and 9 months (to the specific day) after company's incorporation date. Date of incorporation 15/10/2021...

What's the difference between statutory and management accounts?

What's the difference between statutory and management accounts?As a business owner, you know you need to produce accounts – that’s a given. But do you know the difference between statutory accounts and management accounts?Your statutory and management accounts have two very separate purposes, and producing both kinds is good practice for any business that wants a handle on its numbers.Let’s take a look at the key differences and why you need these specific kinds of accounting.1. What are ...

5 challenges for small business - and how to beat them!

5 challenges for small business - and how to beat them!Founding, building and growing your own small business is a hugely rewarding experience for many entrepreneurs. But the road ahead isn't always smooth.There are common challenges that crop up and ongoing issues that need to be factored into your business plan, your strategy and your own personal thinking.So, what can you do to beat these challenges and make the journey as frictionless as possible?5 proactive ways to overcome your business ch...

Keeping your business cash liquid – the difference between cashflow and profit

Keeping your business cash liquid – the difference between cashflow and profitThe foundational goal of any business is to make a profit. As a business owner, that’s one of your key financial aims – to make enough sales, at a big enough margin, to generate profit from your enterprise. But how does profit differ from cashflow? And why is cash king?How do profit and cashflow differ?To really understand the difference between generating profit and managing cashflow, we need to look at what bot...

HMRC’s VAT registration helpline closed

HMRC’s VAT registration helpline closedWe were dismayed to see that HM Revenue & Customs (HMRC) shut down their VAT Registration Hotline as of 22 May 2023. This leaves businesses that have a VAT registration query without a direct HMRC team to communicate with.Don’t worry, though, there are ways for you to get your VAT queries to HMRC, as we’ll see.Why close the VAT Registration Helpline?HMRC has a severe backlog of work at present. Applications are taking a long time to process, queri...

When should I register my company for VAT?

When should I register my company for VAT?Sorting out your tax registrations is one of the first things to tick off your to-do list as a new business owner. But knowing when (and how) to register for things like value-added tax (VAT) can be a confusing process for new entrepreneurs.Here’s a straightforward breakdown of the VAT registration process.Why does my business need to collect and pay VAT?Value-added tax (VAT) is a consumption tax. It’s imposed on the value added at each stage of prod...

Back to Tax Basics: What taxes will I need to pay as a director?

Back to Tax Basics: What taxes will I need to pay as a director?When you set up a new company, there are certain business taxes you’ll be liable for as a business. But have you also planned for the personal taxes you must pay as a director?As a company director, it’s not just the company’s corporation tax that you have to pay. You also need to pay the requisite taxes on your own income. This might be dividends payments from the company’s year-end profits, or even the income you receive f...

What business taxes will your company need to pay?

What business taxes will your company need to pay?Once you’ve registered your business as a limited company, you become liable for paying taxes on the profits you make. But what business taxes are there? And how do you know which of these taxes to pay?To answer this, we’ve created a short ‘Back to Tax Basics’ email series, to give you the full lowdown on your tax responsibilities as a company director.Understanding the main business taxesDespite HMRC’s motto of ‘tax doesn’t have to...

Do you need to improve the cash flow position for your business?

Do you need to improve the cash flow position for your business?Keeping on top of the financial management of your business can be hard work. It's possible to have a profitable business that is struggling to find the cash flow to pay expenses and fund growth. Likewise, you could have positive cash flow but are not turning a profit, particularly if you are scaling.Turning a profit is at the heart of running any successful company But without an even and predictable flow of cash into the company, ...

Enjoy £7,500 of tax-free income under the rent-a-room scheme

Enjoy £7,500 of tax-free income under the rent-a-room schemeIf you have a spare room in your home, you may consider letting it out to raise some much-needed cash to help meet rising living costs. If you do decide to do this, the rent-a-room scheme means that you may be able to enjoy the associated rental income tax-free. The scheme applies where you let out furnished accommodation in your own home.Automatic exemptionIf you earn less than £7,500 from renting out one or more furnished rooms in y...

Business use of home – beware the lower CGT annual exempt amount

Business use of home – Beware the lower CGT annual exempt amountThe main residence exemption applies for capital gains tax purposes to the extent that a property is used as the taxpayer’s only or main residence. Where a property is used partly for business and partly as a residence, the relief only applies to that part which is used as a residence. The gain relating to the business part is liable to capital gains tax.Often, in the past, this was not an issue as the annual exempt amount was s...

Tax relief for unpaid rent

Tax relief for unpaid rentAs the cost-of-living crisis bites, landlords may find that tenants struggle to pay their rent. Where this is the case, the relief that is available and the way that it is given depends on how the landlord prepares his or her accounts. We explain the rules.Cash basisThe cash basis is the default basis of accounts preparation for most landlords with rental receipts of £150,000 a year or less. The cash basis is a simple basis of accounts preparation, which works on a mon...