The flat rate scheme provides and alternative method of calculating VAT, whereas the annual accounting scheme provides a different way to report VAT. It is designed to help businesses reduce their admin by only filing one VAT return a year instead of four.
A lot of people hear VAT, think 20% and stop there. However, there is an alternative way for small businesses to work out how much VAT they need to pay HMRC, and this is called the VAT flat rate scheme, its often shortened to VAT FRS. It is designed to help small businesses reduce their admin related to VAT returns.
The pros of a garden office are pretty clear for a lot of home workers. Your own dedicated space to work and look out into the garden, less interruptions from family and a safe place to store all your work.
But it can be quite an investment, and for a lot of people the advice regarding the tax rules surrounding them can be quite confusing.
You may have opened your limited company for one of many reasons, but sometimes you may wish to stop operating under a limited company for a period of time. This can be for many reasons, maybe a return to PAYE work or a break from work all together. For whatever reason is it important to know how to make your company dormant properly.
We wrote a post previously regarding the benefit in kind (BIK) rules surrounding company cars, and thankfully the rules for company vans are much simpler! See the blog here.
There are still a few different factors to cover, but overall the tax rules surrounding vans are easier to understand.
For a number of reasons, you may reach the decision to shut down your limited company, you have decided to take a job elsewhere, your revenue has dramatically decreased, you want to convert back to a sole trader with the reduced paperwork and filing requirements.
One of the benefits of being a sole trader and working for yourself is you don’t have tax deducted from every payment you receive. Instead of having tax deducted via the PAYE system like usual workers you pay it via the self assessment system.
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.