As is so often the case with accounting and tax issues it depends, however with changes to the tax relief available on finance costs on buy to let properties (see our previous blog post on buy to let property expenses for details) it is a question more landlords are considering. The best option for you depends on a number of factors such as annual income and long term intentions for the property.
Renting out properties and being sure of what you can and can’t claim as tax deductible expenses can be very tricky. In the past few years HMRC have changed the rules on relief for mortgage interest, and have removed the 10% wear and tear allowance.
Whether you are employed or self-employed makes a difference to how you pay income tax and national insurance and how much you have to pay. It is important to understand your employment status so that you can ensure you are meeting your tax obligations.
A common source income that needs to be declared on your self-assessment tax return is income from renting property out. This can come from various sources and is dealt with in a number of ways.
The deadline for registering for self-assessment is 5th October each year. There’s a number of reasons that you might need to register for self-assessment which we are going to cover in this post.
If one of these has applied to you for the first time between 6th April and the following 5th April you have until the 5th October to let HMRC know.
For example if you became self-employed on 31st June 2018 you must register for self-assessment by 5th April 2019.
A key part of Making Tax Digital (MTD) is the need to move to an HMRC approved accounting software as all VAT returns must be filled electronically. If making the move from spreadsheets to software 2 Sisters Accounting recommends going for a cloud based accounting software like Xero or Quickbooks.
We are certified with both of these software providers and offer an hour free training to any of our clients using them to help make the transition to cloud based accounting be as easy as possible for you.
There are a number of employee benefits you can offer as an employer. Some of these will be taxable benefits, which are also known as Benefits in Kind (BIK).
These benefits are things like company cars, health insurance and gym memberships.
When you purchase large equipment or vehicles for your business you are not able to take the full cost of these in the first year and this means you are not able to reduce your taxable profit for the cost of the asset. However, HMRC has mechanisms available to claim a tax deduction for these items. See our previous blog post of Fixed Assets to see the accounting treatment for these items.
You will most likely hear your accountant mention “directors loan accounts” (DLA) frequently if you are a limited company. But what on earth are these and how do they work?!
You may have heard your accountant talk about accruals in the past, or even just seen them in your financial statements and have no idea what these things might be. Accruals are a vital accounting concept that ensure costs are recognised in the period that they occur, this may not line up with when they are actually paid.
The main consideration when looking at company cars is Benefit in Kind (BIK). This is the tax that HMRC places on company cars, to ensure that tax is paid towards the perks of having a company car.
There are a number of statutory payments that your employees may be entitled to. These can be due if someone’s become a parent, are off work sick or are laid off.
We are going to cover statutory payments for parents and for sick pay. To qualify for statutory payments, the individual must be an employed earner, ie someone working for an employer who is liable to pay secondary Class 1 National Insurance contributions on their wages.
There are two different ways that student loans repayments are calculated. The two schemes are called Plan 1 and Plan 2. The differences between the schemes can be confusing for some employees so understanding how they work is vital for payroll.
When starting your own business you have to make a choice about how you would like your business set up. The main choice is between a sole trader or setting up a limited company. There are advantages and disadvantages of both and what is right for one person may not be right for you.
A Financial Controller is a key part of the finance function of your business, they ensure the accounting department is following the correct procedures and accounting standards, produce month end reports and help the directors of the business make key business decisions. Outsourcing this function has a number of potential benefits for a business which will be covered below, and while it may not be right for all companies it is worth considering as you develop and grow.
One of the first questions we hear from new small businesses is “can I buy this through the business.”
The fear of falling foul of HMRCs rules on what is allowable and what isn’t is something that we can hopefully clear up pretty easily.
You will often hear about the rate of inflation when listening to the news but what actually is in inflation and more importantly what does it mean for your business?
Auto Enrolment is the governments plan to get the majority of staff in the UK into a workplace pension scheme, with both employers and employees contributing towards it.
The financial statements give a lot of key information about a business and can be used to make strategic decisions about the direction of the business. Knowing what the statements show you and how to interpret them can be very helpful in understanding the health of your business.
As you start running your business you may hear the term ‘Fixed Assets’ or ‘Capital Assets’ thrown around without really understanding what they are or how they are accounted for. It will greatly improve your understanding of your accounts and your businesses performance if you understand how Fixed Assets and Depreciation works.