Please find below all the articles that have been categorised as 'Uncategorised'.
Making Tax Digital – should your business change its year-end now?
Making Tax Digital for Income Tax (MTD ITSA) is due to start on 6 April 2024 with the first year being 2024/25. In preparation, the rules that determine which profits of a non-company business are charged to tax for a particular tax year are also being reformed.
Which businesses will be affected?
It is important to note that not all unincorporated businesses will be affected. Basis period reform…
Read MoreMost businesses know that once the tax turnover for a business exceeds the VAT registration threshold (currently £85,000 a year), or it is expected to do so within the next 30 days, VAT registration is compulsory. Some businesses are not required to register (e.g. those offering education and training and some medical treatments) but if registration is required there are several schemes to choose from – which you choose will depend on the type of business and how the business is run.
The different schemes
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Whatever the reason for becoming a landlord, expenses will be incurred relating to that property at some time or another. Unfortunately, just because a payment has been made does not necessarily mean it is allowable for tax. Even if the payment is allowable, when tax relief can be claimed depends on the nature of the expense and the method by which the accounts are prepared.
The default basis for preparing letting accounts is the ‘cash basis’ where income is recognized when received and expenses when…
Read MoreClaims for repayment of tax are usually made via submission of a tax return, e.g. a self-assessment repayment claim is by completion of the section on page TR7. Whether as an individual or a company the time limit for amending a tax return is usually one year from the deadline for submitting the return.
The amendment may result in a repayment of tax but if the time limit for amending a return has passed then the only way a taxpayer can claim is via an…
Read MoreNIC changes
The rates of class 1 NIC are reversed back to the levels in place on 5 April 2022 but the rates imposed from 6 July 2022 to 6 November 2022 remain. Therefore for all employees (except directors paying NIC cumulatively) the tax year will effectively be split into two – the first period for the first seven months of the tax year (6 April to 5 November 2022) and a second for the remaining five months (6 November 2022 to 5 April 2023)….
Read MoreCovid -19 had a devastating impact on many businesses with significant numbers closing for good. However, many workers who were made redundant or furloughed took the opportunity to set up their own businesses. According to the Government’s December 2021 report ‘Business Statistics’ an estimated 810,316 new businesses were launched in the financial year ending in 2021 — the highest number on record. The report also noted that there had been a distinct fall in the number of employees and said that it was believed that the decline was…
Read MoreAnyone who invests in a company is taking a chance, hoping that the money will not be wasted, and that the directors, as representatives of the company, will use the money in such a way that the company’s profit increases. In return for taking this chance, a shareholder receives ‘payback’ usually in the form of a share in the distribution of profits via a dividend. The payment is not an absolute right and unfortunately some directors/shareholders of family owned companies believe that as long as there is cash…
Read MoreAlthough dividends are generally the most tax-efficient method by which money can be extracted from a company, renting a property you own to your company can be more or as tax efficient depending on your marginal tax rate. Whether charging rent is tax-efficient needs to be looked at overall by not only taking into account the director’s immediate income tax position and the company’s tax situation, but also the future capital gains tax (CGT) position when the property or the company itself is eventually sold.
Benefit to the company
The…
Read MoreMaking Tax Digital – a new penalty regime for all
The current penalty system for late payment and/or late submission of tax returns differs depending on which tax is levied. For some time HMRC has wanted a consistent approach across all taxes and the opportunity to make it so has come with the implementation of Making Tax Digital (MTD) starting with Making Tax Digital for VAT (MTD for VAT).
As the first stage of HMRC’s ‘roll out’ of the MTD initiative, all VAT-registered businesses must keep records in a digital…
Read MoreA chargeable gain may arise on the sale, disposal or transfer of a residential property if that property has not been the seller’s only or main home throughout the period of ownership. Here we are looking at investment property, such as a buy-to-let, a holiday let, or a second home. Any UK resident, trust or estate who sells or gifts UK residential property at a gain is required to calculate, report and pay any capital gains tax (CGT) due within 60 days of completion of the sale. Companies…
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