CHARTERED ACCOUNTANTS (ICAEW)

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A different method of paying tax

A different method of paying taxTax payments for the self-employed or those who declare their income under self-assessment are payable by 31 January and 31 July every year. Taxpayers who cannot pay by those dates have the opportunity to pay via HMRC's 'Time to Pay' scheme whereby HMRC agrees to a payment plan for unpaid tax spread over a longer period than would otherwise be available.Many taxpayers are unaware that there is another method of paying HMRC in instalments, the difference being that...

Class 2 National Insurance voluntary contributions are no more

Class 2 National Insurance voluntary contributions are no moreClass 2 NICs are flat-rate contributions payable by the self-employed, currently charged at a rate of £3.45 a week. Non-payment (or credit) could mean entitlement to the state retirement pension (and other contributory state benefits) will be affected unless the individual is also paying Class 1 NIC because they are employed.The majority of self-employed individuals liable to pay Class 2 NIC do so via the self-assessment regime at th...

Deferring capital gains tax on a business asset

Deferring capital gains tax on a business asset The potential to be charged capital gains tax (CGT) arises with the sale or gift of an asset.Deferral of the charge is possible with reference to business assets using 'hold-over' relief, thereby avoiding an immediate CGT charge for the donor. The donee takes over the donor’s CGT base cost, increasing any gain on the eventual sale. The relief is commonly used in the transfer of a business to a company because it allows the debtors and credit...

Preserving the personal allowance

Preserving the personal allowanceThe personal allowance is set at £12,570 for 2023/24. However, not everyone is able to benefit from the personal allowance.A taper applies which gradually reduces the personal allowance until it is lost. The taper applies when adjusted net income exceeds £100,000. It operates by reducing the personal allowance by £1 for every £2 by which adjusted net income exceeds £100,000.ExampleWilliam has an adjusted net income of £110,000 for 2023/24.As his adjusted ne...

Giving away money free of IHT

Giving away money free of IHTMost people do not want to give money to the taxman when they die. However, while it is said that inheritance tax (IHT) is a voluntary tax that can be avoided by giving away money during your lifetime, there is the practical issue that people need money to live on while they are alive. This is compounded by the fact that most people do not know when they are going to die, making planning with any certainty difficult.Despite these limitations, there are some simple st...

Beware the new VAT late submission penalties

Beware the new VAT late submission penaltiesA new penalty regime was introduced for VAT from 1 January 2023. The new regime comprises late submission penalties and late payment penalties. Here we look at the penalty regime for late returns.Late VAT returnsThe late submission penalty regime kicks in whenever a VAT return is filed late. It applies regardless of whether VAT is owed to HMRC or whether the business is reclaiming VAT back from HMRC. For repayment traders this is a new concept as they ...

Have you declared your dividends correctly?

Have you declared your dividends correctly?Dividends are a popular and tax-efficient way to extract profits from a personal or family company once a small salary has been paid. However, the rules surrounding dividends are strict and failure to comply may mean that HMRC will tax payments purporting to be dividends as employment income rather than as dividends. This will mean a higher tax bill, plus National Insurance.Paid from retained profitsDividends are a distribution of profits and can only b...

Utilise the deduction for paid and reimbursed expenses

Utilise the deduction for paid and reimbursed expensesEmployees often need to incur expenses when undertaking their jobs. The nature of the expense may vary depending on the job, but typical expenses include travel and subsistence expenses and fees and subscriptions.It will often be the case that the employee initially incurs the expense and then reclaims the cost from their employer via an expenses claim. The employer may also choose to pay expenses by making scale rate payments.Reimbursed expe...

Should you move your rental properties into a limited company?

Should you move your rental properties into a limited company?When you first start out building a property portfolio, you may decide to purchase each property in your own name. While this keeps things simple, there are some distinct advantages to creating a limited company to own and manage your properties.We’ve highlighted five reasons why you should consider setting up a limited company.5 reasons to run your properties through a limited companyCreating a limited company and becoming a compan...

10 steps to Business Continuity Planning

10 steps to Business Continuity Planning‘Business continuity’ is the process of planning out how your company can continue trading – when disaster hits. In essence, it’s your Plan B for how to set up a means of trading, when you don’t have access to your usual offices, workspaces or equipment.10 key elements to include for your ongoing business continuity planDigital communication and cloud technology have given us the ability to access company information, applications and communicati...

4 key areas to think about when purchasing a buy-to-let property

4 key areas to think about when purchasing a buy-to-let propertyPurchasing a buy-to-let property is an increasingly popular way to invest in your future and to give you and your dependents some financial security. But starting a property portfolio and becoming a landlord is something that requires plenty of thought before you dive in.We’ve highlighted five important areas to consider when purchasing a buy-to-let property1. What are the benefits of buying a rental property?With property seen as...

3 cloud accounting tips to save your business time and money

3 cloud accounting tips to save your business time and moneyKeeping on top of your accounts is a big part of running a successful and profitable business. But you don’t want to spend ALL your time dealing with accounting tasks, especially when that time could be spent building customer relationships, or developing new products etc.So, how do you keep your finances in check, while also spending less time on your accounts?1. Bringing your accounting into the digital ageSwitching to cloud account...

What is Making Tax Digital for Income Tax Self Assessment?

What is Making Tax Digital for Income Tax Self Assessment?Making Tax Digital is changing how we submit tax returns. And with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) coming into force from April 2026, it’s time to start planning how you’ll meet the compliance requirements for MTD for ITSA.We’ve highlighted the four main areas where you need to take action, to be ready for the deadline – so you maximise all the benefits of going digital.The basic requirements of MT...

What are the risks of taking out a personal guarantee on a loan?

What are the risks of taking out a personal guarantee on a loan?To fund the growth of your business, you’ll almost certainly need to take out a business loan at some point. But many lenders will ask you to provide a personal guarantee against this business loan – and there’s a risk element to consider when taking out finance.So, what does offering a personal guarantee on a secured loan actually entail? And what are the principal risks of becoming a guarantor?Understanding the key risks of ...

10 ways to improve business performance

10 ways to improve business performanceHere are ten ways to make sure that you continue to drive through each business quarter with purpose, vision and the courage to super-charge your business.1. Eliminate distractions: Time is the scarcest resource and biggest killer for most businesses. When we get busy we can also get distracted and focus too much time and energy on the wrong things. Be brave - slash standard meeting times, reduce unnecessary admin and delegate roles and responsibilitie...

Are you in control of your staff expenses?

Are you in control of your staff expenses?When your managers and employees have their own budgets to utilise and spend, it's important to keep in control of these staff expenses.It used to be standard practice to have a firm-wide company credit card that staff could use to make ad-hoc and recurring payments. But a company card can easily be misused and doesn't help you keep your spending in check.Today's expense management systems, like Soldo, Pleo or Weel, all give you far g...

Tax consequences of dissolving a partnership

Tax consequences of dissolving a partnershipThe difficulty in dealing with partnership taxation is that there are no separate rules and those present are not located in one place. What rules there are have not been updated for over 40 years, making it difficult to get an overview of the tax position.Partnerships are governed by the Partnership Act 1890, which defines a partnership as being 'the relation which subsists between persons carrying on a business in common with a view of profit', meani...

The taxation of cryptocurrency

The taxation of cryptocurrencyCryptocurrency is a complicated concept and the following text gives HMRC's view on the basic rules.Modern cryptocurrencies were first described in 1998 but the concept fully emerged in 2008 with the release of a white paper explaining their foundations. The first cryptocurrency was Bitcoin but since 2008 the market has expanded to include other transferable tokens, including Ether, Lite coin and Ripple. Given the trade volumes now seen in the UK, it is no wonder th...

Enquiry or discovery –What is the difference?

Enquiry or discovery – What is the difference?Most taxpayers know that they must adhere to a rigid timetable for the submission of tax returns and claims, otherwise either penalties are levied or the claim is refused. Taxpayers are also restricted as to the number of years they may go back to seek relief from an overpayment after making an error or mistake in a return. What is not so well known is that HMRC are also restricted as to the date by which they can open an enquiry into someone's tax...

Rebuild your pension pot with rental income

Rebuild your pension pot with rental incomeA self-invested personal pension (SIPP) can be an attractive option for saving for retirement and is one that is popular with company directors. Under a SIPP, you can choose and manage your investments yourself, or you appoint a financial adviser to manage a SIPP on your behalf. The range of investments that can be held in a SIPP is wide and includes commercial (but not residential) property.Financial advice should be sought before setting up a SIPP.SIP...

Make use of simplified expenses

Make use of simplified expensesIf you run your property business from home, you may wish to use simplified expenses to claim relief for associated household costs. You can also use simplified expenses to disallow the private element if you live in your business premises, as may be the case if you run a B&B.You can only use simplified expenses if you are a sole trader or run your property business as a partnership. If you operate your property business through a limited company, this option i...

Releasing equity from buy-to-let: Watchpoints

 Releasing equity from a buy-to-let: WatchpointsLandlords who have benefited from rising property prices in recent years may wish to consider releasing equity now in case prices drop. This may be to free up a deposit to expand the portfolio to take advantage of lower prices, to help children get on the property ladder or simply to release some cash to help with rising living costs. However, while extracting equity from your property portfolio may be an attractive proposition, there are some...

Beware of gift aid clawback

Beware of gift aid clawbackChanging personal circumstances may mean that individuals who were previously taxpayers find that they are now non-taxpayers. If they are in the habit of making charitable donations under gift aid, they need to tread carefully to avoid an unwanted bill from HMRC.Nature of gift aidDonations made by individuals to charities or to community amateur sports clubs qualify for tax relief. Where the donation is made under gift aid, the amount donated by the individual is treat...

Full expensing for companies

Full expensing for companiesThe super-deduction, which allowed companies to claim an immediate deduction of 130% of their qualifying expenditure, came to an end on 31 March 2023. It was replaced with full expensing. As with the super-deduction, unincorporated businesses cannot benefit from full expensing (although the Annual Investment Allowance (AIA) will secure a 100% deduction for qualifying expenditure up to the annual AIA limit of £1 million).Nature of full expensingFull expensing allows c...

Capital gains tax on separation and divorce

Capital gains tax on separation and divorceSpouses and civil partners enjoy certain tax breaks, including the ability to transfer assets between them at a value that gives rise to neither a gain nor a loss. Prior to 6 April 2023, a couple are only able to benefit from no gain/no loss transfers until the end of the tax year in which they separate. However, from 6 April 2023, the rules are relaxed in certain situations.New three-year ruleThe window during which separating and divorcing couples are...