September 30, 2019 By Katie Business Advice • Startups 0 Comments

How to raise your prices without losing customers

How can you raise prices without losing customers? The cost of running a business goes up every year, but when was the last time you increased your prices?

Many business owners and managers worry that if they were to increase prices, they would lose customers.

However, a customer will often be willing to pay a higher price if they feel they are getting value for their money.

A good way to increase your prices can be to bundle products or services together and offer the combined bundle at a price that offers value to the customer. For example, a phone contract might have a higher price but it may include a bundle such as unlimited calls and 20GB of data per month. The key is providing value to the customer.

Find a way to differentiate your offering. Perhaps you could offer new online services to your customers such as an online portal or an app. Maybe you could create faster, more efficient processes so that your customers get a faster, more efficient product or service from your firm, compared to the competition. If you offer something that is seen to be the best in its class, that offers a benefit to your customers, you may be able to increase your prices.

You can test a higher pricing strategy on new customers. Your existing customers might be resistant to a price increase but new clients will be unfamiliar with your pricing so they may accept the higher price if they feel that you offer more value to them than your competitors.

If you do increase prices for your existing customers, you need to communicate well and explain clearly why you had to make the decision to increase your prices. Do your market research to make sure that your pricing isn’t completely out of line with competitors. If your business is not significantly different to the nearest competition, you may run the risk of losing clients.

Large sudden jumps in your prices will not go down well. Instead, introduce gradual increases such as 5% or 10% per year, depending on the type of business that you run. Everyone knows that the cost of doing business goes up each year. If you communicate with your customers, they may be more receptive to small increases.

Need more information?

We love nothing more than learning about new start-ups and helping you get off on the right foot! We offer a wide range of services which are unique to businesses who are just getting going! As start-up accountants we have a wealth of experience in all sectors between our team. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

September 24, 2019 By Katie Business Advice • Wealth Planning 0 Comments

University Tax Planning Guide For Parents

It is that time of year again when parents are sending their children off to university. There’s a lot to consider and parents may of course wish to support their children financially, where possible.

Parents who run their own companies may consider making grown up children shareholders in order to take advantage of the £2,000 dividend allowance and their children’s lower rate tax bands. The dividend allowance reduced to £2,000 from £5,000 from April 2018.

Many university students like to preserve a bedroom at home. From 6 April 2016 rent-a-room relief is £7,500 per annum.

For example:

Peter is 18 and starting university in September. He will have to pay tuition fees of £9,000 per year, his rent at halls of residence is £8,000 per year and he is budgeting for food and other bills of £100 per week.

If his parents decide to fully support his rent and other bills (leaving him with a student loan to cover his tuition fees), their son could cost them £13,200 per year.

Peter’s parents own their own company.

They re-arrange their share capital.
They gift Peter shares in the company, up to the value of their CGT annual exemption, they could alternatively claim hold-over relief.
The parents also make an agreement to charge Peter rent for her room at home of £7,500 per year.
The board of director’s declares annual dividends to Peter of £20,700 in order to cover his university costs and home rent.

The arrangement means that Peter will pay tax at 7.5% on her dividends in excess of his £2,000 dividend allowance (or £5,000 allowance prior to April 2018) and any available personal allowance.

This arrangement potentially saves a higher tax-rate-paying shareholding parent £8,170 in tax per annum (based on 2019/20 figures). Their rental income from their son is effectively tax-free drawings from their company. The alternative is not to rent a room to Peter and to sub-let his room in term time.

Children under 18

This arrangement will not work with minor children as the settlement anti-avoidance provisions apply where parents gift shares to minor children.

Need more information?

We offer a wide range of services which are unique to any business. We have a wealth of experience in all sectors between our team, from restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant. The team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some advice from a trusted accountant don’t hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

September 20, 2019 By Katie Business Advice • Startups 0 Comments

Tax relief on creating an office at home

Many company owners work from home, this note looks at how you may obtain tax relief on the cost of converting the spare room or building a deluxe summerhouse to serve as an office in the garden.

• A director can reclaim any expenses incurred when working from home from their company.
• Alternatively, you can charge the company rent if you are required to work from home, or where the business is based at home provided that there is a licence agreement in place.

Claiming back the costs of converting part of a home into an office throws up several different tax concerns for a director.

If the director incurs the cost themselves, they need to consider:

• Capital Gains Tax (CGT) treatment of capital costs
• VAT
• Stamp Duty Land Tax
• Capital allowances on fixtures and plant and machinery
• Treatment of repairs and renewals

If his company incurs the cost (or reimburses his costs) they need to consider:

• PAYE and NICs including the benefits code
• VAT
• Capital allowances
• Treatment of repairs and renewals

Overview and FAQ

Modification and conversion work

These types of costs will generally be treated as capital expenditure, whoever incurs them.

Building an office or workshop

These costs will be treated as capital expenditure, whoever incurs them.

Repairs and renewals

Modification or conversion may include some expenditure which can be treated as repairs and renewals such as redecorating, replacement of old floors or windows, or floor coverings.

Tax consequences if the director incurs the costs

Capital costs and Capital Gains Tax (CGT)

• A private residence is exempt from CGT if it qualifies as a main Private Residence (Private Residence Relief – PRR applies); however the exemption is restricted where part of a home is used for business.• When part of a home is converted that part of the house should still qualify for PRR for the 18 months after conversion.
• The same will apply if part of the garden or grounds is moved into business use.
• If the grounds exceed .5 hectare it is likely that PRR may be restricted in any case.
• If PRR relief is restricted any gain on the disposal of a business asset (as apportioned) should qualify for CGT Entrepreneurs’ Relief if this is in connection with a sale of the business or retirement, however this will not be available if the property has been let to the director’s company.
• In general, a director will be at a CGT disadvantage in claiming the capital costs of creating a home office unless property prices are falling in that case a capital loss could be created when the property is sold.

VAT

• In most cases directors are not VAT registered in their individual capacity.
• If the director has constructed an outbuilding to rent out to their company, he could consider registering for VAT and opting to tax the building.
• Opting to tax would allow him as an individual to reclaim VAT.

Stamp Duty Land Tax (SDLT)

• SDLT is paid by the buyer.
• SDLT will be charged at residential rates when the director sells his private residence providing that the home is suitable for use as a dwelling.
• “Suitable for use”, is something that must be judged at the time of the transaction, so past use or intended use are not considered.
• Where a house is used as a B & B or guest house HMRC recommends that each case should be taken on its merits: if all the bedrooms have separate facilities and are available for letting all the year round it will be treated as non-residential.
• If part of the property is not suitable for residential use the mixed-use SDLT provisions will apply. These broadly apportion the consideration on a just and reasonable basis.
• HMRC considers that “outhouses” will be treated as residential property unless they have a specific non-residential purpose.

Capital allowances

• A director will be able to claim capital allowances on the cost of any fixtures or plant and machinery which he purchases to convert or create a home office; however, there is a restriction when a residential property is used for letting, and the director is also unlikely to be able to reclaim the VAT. There are also PAYE and NICs concerns in respect of fixtures (see below). To this end it might be sensible for the company to incur the cost of purchasing any moveable plant and machinery instead.
• The position with fixtures is not straightforward because it is thought unlikely that HMRC will allow the company to claim back VAT on the cost of something that is fixed to the director’s personal property. It may also be difficult to prove that there is no private use of a fixture which means that this could trigger a PAYE and NICs charge for use of the asset as well.
• When the property is sold and capital allowances have been claimed on fixtures an election covering fixtures may be a consideration.

Repairs and renewals

• A director will be able to claim the cost of repairs and renewals as a deduction against any rental income received if he has a licence in place with his company and the expenditure is incurred:
o Wholly and necessarily for the purposes of letting, or a proportion of the cost is attributable to business use.
• Any reasonable basis can be used to apportion business use, commonly this is done on the basis of:
o The number of rooms in the house
o Floor space, or area
o Time in use

Alternatively, the director can recharge the cost of repairs and renewals to the company as part of a home working expense claim. However, you should not reclaim any expense that has been incurred for mixed business and private use without weighing up the PAYE consequences.
If the company incurs the cost (or reimburses the director’s costs)
• PAYE and NICS and benefits
• VAT
• Capital allowances on fixtures and plant and machinery
• Treatment of repairs and renewals

PAYE and NIC aspects

It is strongly advised to ensure that there is paperwork to explain who is doing what and who is paying for what during a building process.

Company pays director’s personal bills

• If the company pays any bills which are the director’s personal liability the cost is immediately subject Class 1 NICs as earnings. However, for income tax purposes this is a benefit in kind to be included on box B of form P11D, unless the director “makes good” the cost (see below).
• This type of expense can simply be payrolled.
• Or if the director has a credit balance on his loan account, the cost can be offset against the loan. It is advised to agree this before the expense is incurred.
• When income tax applies, this is a one-off tax charge; tax is charged in the year in which the company incurs the cost. For example, where the company pays for the director’s light and heat at home.

Company asset made available to an employee

• If the company constructs, manufactures or purchases an asset which is then made available to a director for private use there will be an ongoing annual taxable benefit in kind for each year in which the asset is made available.
• The benefit will be calculated under s205 ITEPA 2003, at 20% of the higher of:
o The cost, unless the asset is land/buildings, in which case the annual rental value is used, and
o Actual annual costs incurred by the employer.
For example, if the company rents a satellite dish which it attaches to the director’s home and he and his family benefit from it. The benefit will be the higher of 20% of cost or the annual rental cost paid by the employer.

Company construction of assets on a director’s land

If the company creates an asset which is fixed to the director’s private land, such as building for personal use the taxable value of the benefit will be its cost less any amounts by the director.
• This is a one-off tax charge per s204 ITEPA 2003, made in the year in which the benefit is provided.
• If the building is then also used privately there is no additional charge but there will be an ongoing benefit in respect of expenses if the company is providing services such as light and heat in addition to the use of the building.
Note that where the employer is a builder, the costs of construction will be the higher of salaries of the workers used or the costs of contractors engaged to fulfil the workers’ normal duties while they worked on this project.

Transfer of asset to director

Where assets are depreciating assets, this would include temporary structures, such as caravans or static caravans, perhaps wooden cabins which have a short life: s206 provides that an asset which has been used or depreciated and then transferred to an employee will be taxed at the higher amount of:
• the market value of the asset at the date of transfer or
• the market value of the asset when first made available for the private use of a director less the aggregate of the amount of the cost of the benefit during the period when it was provided as a benefit (calculated according to s205) less
• any sum paid by the individual receiving the asset to the person transferring it.

VAT and capital costs

HMRC will disallow any claim to input tax if the expenditure is incurred for the private benefit of a director.
• A company can reclaim the VAT on the purchase of business assets, so it can still reclaim the cost of VAT on any plant and machinery used by the director in the home office.
• It may be possible for the company to reclaim part of the input tax on any conversion costs incurred when converting an outbuilding or completing internal modifications to create an office or workshop, provided that there is a licence in place and any private benefit received by the director is minor.

Capital allowances

• A company will be able to claim capital allowances on the cost of plant and machinery purchased to convert or create a home office.
• It may be possible to claim capital allowances on the cost of fixtures however, fixtures are immoveable, and so the ownership of the fixtures passes to the director. It will then be difficult to try and argue that the cost was incurred for the purposes of the company’s trade. The director may, as an employee claim capital allowances on plant which he provides for the company.

Repairs

• A company can claim the cost of repairs and renewals and associated VAT in respect of any building that it occupies.
• A claim may be disallowed if the expense also benefits the director as it will not be wholly and necessarily incurred for the purposes of the business.

Need more information?

Our fantastic team at A&C Chartered Accountants are here to help.

September 11, 2019 By Katie Business Advice 0 Comments

Tax Implications of Divorce

Whilst divorce can be very unpleasant, it is important to seek specialist advice to ensure you understand your tax position, have no hidden surprises and do not miss the opportunity to save tax. It can also be difficult with HMRC. We have outlined some implications to consider when going through with a divorce.

Capital Gains Tax (“CGT”) & Divorce

Transfers of assets between spouses are normally made on a ‘no gain-no loss’ basis for CGT purposes, which means no CGT is due. However, if spouses have permanently separated, the no gain-no loss treatment for CGT only applies until the end of the tax year of separation. After the tax year of separation, transfers between spouses, either as gifts from one to the other, or by court order, may result in a CGT liability for the transferring spouse as (subject to any reliefs or exemptions) the transfers are deemed to take place at market value.

The legalities and personal issues of finalising a divorce can result in this process taking a significant amount of time.

Transfer of the family home after a divorce

Sometimes following separation, one spouse will leave the matrimonial home and agree to transfer their share to the other spouse who remains. Principal private residence (“PPR”) relief provides an important exemption from CGT here.

Where the asset being sold or transferred is or was an individual’s primary residence, PPR relieves from CGT a proportionate period that the property was occupied as such. In addition to this, the final 18 months of ownership are always covered by the exemption even if the individual has moved out, although this will fall to 9 months from 6 April 2020.

If spouses have only one primary residence between them, it is common for the leaving spouse to elect another property as their primary residence for PPR purposes once they leave. However, problems can occur due to the availability of PPR on any subsequent transfer of the marital home.

If a spouse transfers their share in the property to their ex-partner within the tax year of separation, it will be on a ‘no gain, no loss basis’ as described above. This means that the spouse making the transfer will avoid CGT at that time and will be free to claim for PPR on another property.

If the transfer takes place after the tax year of separation, the spouse who has moved out may still claim full PPR relief if the transfer takes place within 18 months (or 9 months if after April 2020) of moving out even if they have bought a new house. If it is any longer than this, there could be a liability to CGT for the transferor.

Rental property & divorce

If a rental property has at some stage been the primary residence of the owner(s), then an element of CGT relief will be available proportionate to the amount of time the property was used as such. If this is not the case, then the entire gain would be subject to CGT.

Business assets & divorce

In the tax year following the separation, business assets would be subject to CGT if transferred between spouses. Such assets may be eligible for a CGT relief known as ‘holdover relief’. This will only take place assuming the receiving spouse agrees with the transferring spouse that they will receive the assets at the original cost to the transferor.

Inheritance Tax (“IHT”) & Divorce

Transfers between spouses who are both UK domiciled, and both non-UK domiciled, are exempt from IHT until the date of the finalised divorce. If a transfer is made after this date it may come within an exception for transfers made under a court order. It is important to remember that if the transfer is not covered by the exception, it may be considered a ‘potentially exempt transfer’.

Pensions & Divorce

Due to the automatic enrolment of many employees into workplace pensions, accrued pension benefits may be a major asset considered within the divorce negotiations. If either or both of the parties to the marriage or partnership have accrued pension rights, then these are viewed by the court as part of the former spouse’s assets for disposition on divorce.

Need more information?

A&C Chartered Accountants work with leading advisers in this field when this does occur for our clients. The dedicated tax accountants ensure they create smart and effective tax-efficient solutions for you and your business.

If you need further guidance please do not hesitate to contact Paul, our experienced chartered Accountant who has helped clients with divorce implications.

You can contact Paul on 0161 962 1855 or email him at paul@ac-accounts.co.uk for more information on how we can help.

September 5, 2019 By Katie Business Advice • Business News 0 Comments

When is a van not a van?

HMRC are being urged to provide clarity and consistency on the tax treatment of commercial vehicles such as VW Kombi Vans marketed as goods vehicles. The need for clarity follows the ruling in an important tax tribunal case involving “vans” provided to employees of Coca Cola.

The court has upheld the HMRC view that certain vehicles are not goods vehicles but motor cars for benefit in kind purposes. Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

Certain vans are exempt from income tax

There is no benefit in kind where the van is only used for business journeys or the private use of the vehicle is insignificant. Examples would include making a slight detour to pick up a newspaper on the way to work or taking an old mattress or other rubbish to the tip once or twice a year.

Income tax definition of “goods vehicle”

The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

Although the VW Kombi vans failed this test the Tribunal held that Vauxhall Vivaro vans provided by Coca Cola did fall within the definition of goods vehicles!

It is understood that this case is due to be heard at the Court of Appeal which will provide legal precedent over the tax treatment. Until then it gives employers a dilemma as to how to report such vehicles on employees’ form P11d and also whether the position in earlier years should be rectified. The tribunal had to seek evidence from automotive industry experts so how are employers expected to interpret the rules!

What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for capital allowances and VAT.

Capital allowances definition of “motor car”

The definition of a “motor car” for plant and machinery allowances purposes is a mechanically propelled vehicle except a vehicle:

constructed in such a way that it is primarily suited for transporting goods of any sort, or
of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle.

VAT definition of “motor car”

For VAT purposes the definition of a motor car has been amended several times over the years. The current definition states: “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

a) is constructed or adapted solely or mainly for the carriage of passengers; or
b) has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

There are several exceptions to this rule notably vehicles constructed to carry a payload of one tonne or more. A common example would be a “double cab” pick-up such as a Mitsubishi L200 or Toyota Hilux.

Need more information?

A&C Chartered Accountants offer a wide range of services which are unique to your business needs. As chartered accountants we have a wealth of experience in all sectors and business vehicles. The team work hard to ensure they create smart and effective tax-efficient solutions for your business to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

August 30, 2019 By Katie Business News • Startups 0 Comments

Limited Company Or Self-Employed: Which Is Right For My Business?

As you start on your own there are many things to consider. One of the important questions to really think through is whether you will operate as a self-employed sole trader or set your business up as a limited company.

Below we will highlight some of the differences between each. If you need any more guidance your accountant can guide you further.

Self-employed

Setting up as self-employed is the quickest option as it requires minimal effort as opposed to setting up as a limited company. You can do this all online and all you need to do is register for Self-Assessment (speak to our self-assessment specialists for help). Therefore, it is the most popular option amongst new business owners in the UK. Day-to-day it is important to get into the habit of keeping accurate records of your invoices, receipts and expenses.

The advantage of being self-employed is that you can take as much money as you want from the business. However, the downfall of this is when you are self-employed you as an individual are a business. This means if the business has any debts or for any reason fails, you are personally liable.

If you are self-employed, you have until the 5 October of the following tax year to tell HMRC that you are trading. This means that if you began trading in June 2018, you have until 5 October 2019 to tell HMRC, should you want to. You will complete your self-assessment tax return and tell HMRC what profit you have made during that tax year and then you pay tax on this profit. You will need to submit a self-assessment tax return by the 31 January after the end of the tax year.

Limited company

If you decide to trade through a Limited Company, you will need to create the Limited Company before you are able to do anything. Setting up as a Limited Company is not as straightforward as registering as self-employed. Your Limited Company will need to submit its own company tax return and accounts to HMRC as well as a shorter set of accounts to Companies House within nine months of its year-end. As a Director, if your own income will give rise to a tax liability, you will need to complete a self-assessment tax return as well.

When you trade through a Limited Company, you should not mix personal expenditure with that of the company. This is because the Limited Company is a separate legal entity to yourself. As your Limited Company will have to complete its own company tax return, it should come as no surprise that it will also have its own tax liability. The Limited Company will pay corporation tax, and this will be due nine months after its financial year-end. An advantage of setting up this way, however, is that you could pay considerably less tax than you would if you were self-employed.

A Limited Company doesn’t have a personal allowance, however, so it will begin to pay tax from the moment it makes £1 in profit. But then there is your personal income that you will extract from the Limited Company in the form of a salary and dividends.

A limited company is classed as a separate legal entity to its shareholders and directors. This is the biggest difference between the two ways to set up your business and is an important note to consider. Unless any fraudulent activity takes place, you as a director will not be held personally accountable for any financial difficulties the company finds itself in. Many businesses favour this as it helps to reduce the financial risk to those individuals involved with the company.

Need more information?

We have helped many businesses with setting up as self-employed or a limited company. We offer a wide range of services which are unique to your business and advice on the best way to set up.

As chartered accountants, we have a wealth of experience in all sectors. From restaurants, fashion brands, fitness centres and many creatives start their business correctly and ensure they are staying tax compliant.

Our team work hard to ensure they create smart and effective tax-efficient solutions for your company to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant don’t hesitate to contact us.

For more information please contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

August 28, 2019 By Katie Making Tax Digital • Startups 0 Comments

The UK VAT rate explained

Firstly, what is VAT?

VAT, or Value Added Tax, is levied on the sale of goods and services in the UK. It is a type of ‘consumption tax’ because it is charged on items that people buy. It is also known as an ‘indirect tax’ because it is collected by businesses on behalf of the Government. However, it is important to remember that it is not charged on products of services. Duty-free goods are exempt, and this explains why it can be known as a destination-based tax, meaning the tax rate is normally based on the location of the consumer and the sales price. In the UK, the tax plays a huge role in generating the third largest revenue for the government behind Income Tax and National Insurance.

Does your business need to register for VAT?

Business owners need to be fully aware of the value-added tax (VAT) and all other things related to it no matter what. The value-added registration threshold in the UK starts from £85,000. Therefore, when your turnover is more than this amount you need to make sure you are VAT registered. You can also register your business on a voluntary basis. It is important to remember as a business owner, that this figure is more than likely to change every so often. Businesses need to consider the great benefits that come with registering even if your VAT return is way below the threshold.

Responsibilities for VAT-registered businesses

You must charge VAT on your goods or services.
Likewise you may reclaim any VAT they’ve paid on business-related goods or services.
You must report to HM Revenue and Customs (HMRC) the amount you have charged and paid.

It is important to note that if you have charged more than you have paid; you must pay the difference to HMRC. Alternatively, if you have paid more than you have charged, you are eligible to reclaim the difference back from HMRC.

The UK VAT rates for 2019

The Standard Rate is 20% and it applies to most goods and services that are taxable in the UK
The Reduced Rate is 5% and this applies to some goods and services such as children’s car seats and home energy.
The Zero Rate currently stands at 0%. Zero-rated goods and services include children’s clothes and most food items. Despite their being no charges on zero rates, the sale of goods and services under this category should always be recorded by businesses.

Deadlines for VAT

It is vital that you do not miss the deadline. Your accountant will ensure this does not happen. For submission, the deadline is due on the first calendar month including the seven days duration following your VAT end period. Every business is different, and your period end can be monthly, quarterly, twice a year or annually.

Making Tax Digital for VAT

From April 2019, all VAT-registered businesses with a taxable turnover above the threshold (£85,000) are now required to keep digital VAT business records. Every business with a turnover exceeding the current threshold will have to now ensure that their records are kept digitally. Businesses with a taxable turnover below the threshold are welcome to sign up on a voluntary basis for MTD.

Our team at A&C have helped many existing and new clients prepare for MTD. Ann, our dedicated client manager uses the latest Making Tax Digital compatible software to ensure you are effectively prepared for MTD.

We offer a wide range of VAT services, including in-house training, tax returns and compliance, and investigation support.

August 23, 2019 By Katie Business News • Startups 0 Comments

How can an accountant help a start-up business?

When you first think of an accountant you think of them being very different to you and your business. Well that is not entirely true. Many accountants have either been a start-up themselves or have a wealth of experience helping business start-up. Accountants no longer just sit behind a desk all day; they are genuinely interested in what you do and are just as passionate about helping you succeed.

Getting you off on the right foot from the start is crucial. Hiring an accountant to make sure you are tax compliant and have a healthy cash flow will allow you to be able to put more energy into what you do best.

Financial forecast and control

As a business starting up you are about to embark on an incredible journey of doing something you love. However, to keep the business alive you need to ensure you have a healthy cash flow. A financial forecast produced by your accountant will help safeguard your finances and plan a prosperous future.

It is vital to be as realistic as possible and this is where your accountant comes in. You do not want to underestimate or overestimate the revenue your business will generate. Your accountant will work with you to create an accurate financial forecast to set your business up the right way. As a start-up it is useful to use cloud based accounting software like Xero, who can be as adaptive as you are. Having everything online so you keep all your invoices and expense claims up to date is crucial from the start. Xero also allows you to see your bank account in real time.

Make sure you are tax compliant

Accountants are always one step ahead of changing tax legislation’s and start-up businesses can often benefit from these. Thinking about tax is not what you want to be doing when starting up. Let your accountant take care of all your tax needs to ensure you are tax-compliant. An accountant will minimise any penalties that could arise. You will never need to be concerned about submitting a tax return before the deadline!

Construct a business plan together

If you do not already have a business plan or need further guidance your accountant can help you. For investment, a strategic though out business plan is crucial.

Your favourite agony aunt

Starting up can be lonely, but it does not have to be. Alongside networking events an accountant is a great person to talk to. It is fantastic when a client can ring up and to just simply get things off their chest. Consider your accountant as your agony aunt!

Need more information?

Our fantastic team at A&C Chartered Accountants are here to help.

August 16, 2019 By Katie Business News 0 Comments

Construction and building companies: get ready for the VAT domestic reverse charge

What does the VAT reverse charge mean for building & construction companies?

From 1st October 2019, VAT-registered firms who are reporting under the Construction Industry Scheme (CIS) will see a major change to the way VAT is collected. The customer recieving the service will now have to pay the VAT due to HMRC instead of paying the supplier.

What you need to do to be ready for 1st October :

make sure your accounting systems and software are updated to deal with the reverse charge
check whether the reverse charge affects either your sales, purchases or both
consider whether the change will have an impact on your cashflow

Are you a contractor?

Contractors need to review all contracts with sub-contractors, to decide if the reverse charge will apply to the services you receive under your contracts. You’ll need to notify your suppliers if it will.

Are you a sub-contractor?

If you’re a sub-contractor you’ll also need to contact your customers to get confirmation from them if the reverse charge will apply, including confirming if the customer is an end user or intermediary supplier.

How will the domestic reverse charge will affect you?

HMRC have made it clear that for the first 6 months it will apply a light touch when dealing with any errors that may occur. Therefore, penalties will only be considered if it can be seen that you are take advantage of the new measure deliberately by not accounting for it correctly.

Services affected by the domestic reverse charge

The reverse charge does not apply if the service is zero rated for VAT or if the customer is not registered for VAT in the UK.

It also does not apply to some services. Services that it does apply to are:

constructing, altering, repairing, extending, demolishing or dismantling buildings or structures.
constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours.
painting or decorating the inside or the external surfaces of any building or structure.
installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure.
internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration.

To see a full list of services that are included and excluded from the domestic reverse charge, please visit the gov.uk website here. You will also find more in-depth information on the website. If you need to speak to your accountant please do not hesitate to get in touch with us.

Need more information?

Our fantastic team at A&C Chartered Accountants are here to help. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Contact us below

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October 3, 2016 By Katie Business News 0 Comments

PAYING 20% INSTEAD OF 28% ON THE SALE OF PROPERTY

The latest Finance Act has retained the 28% CGT rate for sales of residential property, whereas the general rate was reduced to 20% for higher rate taxpayers.

It has been suggested that it is possible to reduce the rate from 28% to 20% by deferring the gain temporarily into qualifying EIS company shares.

The tax planning opportunity arises because reinvesting the property gain in Enterprise Investment Scheme (EIS) company shares defers the gain until the shares are sold when the gain comes back into charge at the general rate of CGT, currently 20% for a higher rate taxpayer.

There is no minimum holding period for EIS deferral relief, however where the investor is seeking income tax relief and CGT exemption on the sale of the shares they need to be an unconnected investor and retain the EIS shares for at least 3 years.

The reinvestment in EIS shares must take place during the period of 12 months before to 36 months after the date of disposal of the property.

Shares in EIS qualifying companies are risky investments and specialist investment advice should be taken. There is also a chance that HMRC may block this tax planning strategy in the future.

March 3, 2016 By Katie Business News 0 Comments

DON’T LOSE YOUR PERSONAL ALLOWANCE

For every £2 that your adjusted net income exceeds £100,000, the £10,600 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%.

January 18, 2016 By Katie Insights 0 Comments

Contractor? No More Umbrella Benefits…

A&C Chartered Accountants is helping hundreds of contractors, just like you, to optimise your accounting, business and earnings during the government changes clamping down on the use of umbrella companies.

Let A&C Chartered Accountants – the full-service accountancy firm assist you move your contractor business to the cloud with greater, streamlined financial control. There is no need to panic when moving away from an umbrella setup any longer.

Join over 100,000 contractor-based businesses worldwide already using Xero and cloud accounting to help them grow.

Leave frustrating, complex, expensive, pre-internet accounting software behind.

Our experienced team of chartered accountants is dedicated to managing your accounts, minimising your tax AND providing expert business advice. Contact us for complete umbrella company migration support today.

Where many contractors go into business and set up a traditional ltd company, there has been a considerable rise over previous years of contractors opting to work through an umbrella company in their business affairs to match their goals and expectations from business.

What has previously been a massive challenge to the one-man contractor business, even with a good and reliable accountant, is the daunting prospect of handling paperwork, tax, national insurance contributions and PAYE. While those excuses are redundant with a true online accounting solution such as A&C Chartered Accountants who specialise in contractor accounting specifically, many contractors instead opt to use an Umbrella Company. Some benefits of an umbrella company could be to save start-up and set-up fees, as well as fees to shut down a limited company should that situation arise. That can of course be a benefit if you’re planning to run as a contractor for a short period, or, you’re trialling work/life as a contractor for the first time.

IR35 – the facts and what you need to know about legislation changes

Intermediaries legislation (known as IR35) is the tax and National Insurance contributions legislation that may apply if you’re working for a client through an intermediary.

If IR35 applies, all payments to the intermediary are treated as your employment income and the intermediary must pay any tax and National Insurance contributions due. It ensures that you pay roughly the same amount of tax and National Insurance contributions as if you’d been directly employed by the client.

The intermediary is always responsible for ensuring compliance with the IR35 legislation when it applies. As a director of your limited company or a member of your partnership, you must ensure compliance with all relevant legislation, and take responsibility for determining whether IR35 applies for each of your engagements or not.

There can be significant consequences of ignoring IR35 legislation. Interest and penalties may be charged on any additional tax and National Insurance contributions due as a result of an HM Revenue and Customs (HMRC) enquiry into your situation.

For these very reasons, many contractors have opted to work through an umbrella company specifically to disguise their tax and NI obligations.

If you feel your current umbrella set-up will no longer be optimal for your business, or, you’re simply unsure about the upcoming changes – then feel free to contact one of our specialist accountants.

April 2016 Onwards – The Death Of Umbrella Companies For Contractors?

With the latest government tax rule updates and changes, it is becoming less and less beneficial to work as a contractor through an umbrella company. Post 2016, new services offered by Umbrella Companies will be a much less secure arrangement, involving zero-hour contracts and even NO contracts at all…

Original Umbrella company tactics were to ensure maximum tax relief on travel costs and subsistence costs. HMRC is poised to change all of this in 2016. With the T & S Legislation going through as proposed (due to apply from April 2016, the restriction will net £635m over four years), it is becoming obvious more and more that the government are taking those small steps closer and closer to the goal of making expense claims for contractors via umbrella companies harder to put through, and much more uncomfortable.

In short, tax relief on your expenses as an umbrella contractor will no longer be given at source; it will soon have to be claimed at the end of the tax year in a self-assessment tax return.

Found at section 289A of the Finance Act, the clause will be in force for the 2016-17 tax year. It effectively states that for reimbursed expenses which are allowable expenses, no tax liability arises as long as the reimbursement is NOT made by virtue of a salary-sacrifice arrangement and that the tests imposed by Section 336 ITEPA 2003 have been undertaken by the payer or employer.

But an amendment to Section 289E of the Act, on salary sacrifice arrangements which also applies to the 2016-17 tax year, states: “In this section ‘arrangements’ includes any scheme, transaction or series of transactions, agreement or understanding, whether or not legally enforceable.” – source ContractorUK

Is It Time To Speak To A Qualified Accountant?

If you are a contractor, and you have been accustomed to working via and through an umbrella company to date and are seeking advice on how to proceed into 2016 with your business and tax affairs contact us now.

Here at A&C Chartered Accountants, we can offer a risk-free, cost-effective accounting solution, that will take the flexibility and streamlined approach of an umbrella company, by using specialised cloud-based real-time accounting software via our team of specialised accountants to service your needs and business.

Get in touch now

CALL NOW 0161 962 1855

May 23, 2015 By Katie Insights 0 Comments

Family companies and auto-enrolment

You might be the only director of your company or perhaps your spouse and other family members help control it. Whatever the situation you need to consider if auto-enrolment applies. What’s the position for your family company?

Not optional

Where auto-enrolment applies, it’s not optional. An employer must enrol all eligible employees into its workplace pension. The only exception is where employees voluntarily opt out. Employers, including small family companies, must assess if each of its employees is eligible, or could become eligible, for auto-enrolment. This can be an arduous task especially as this has to be regularly reviewed. However, there are exceptions.

One-man bands

If you’re the sole director of a company and you don’t have other employees, auto-enrolment doesn’t apply to your business.

Tip. If yours is a one-man company and The Pensions Regulator (TPR) contacts you about your auto-enrolment obligations, complete an online form to notify it that your company is outside the regime

Husband and wife companies

The position for husband and wife companies can be slightly more complicated:

o if you’re both directors and don’t have contracts of employment in place, auto-enrolment doesn’t apply. The position is the same if you’re both directors and only one of you has a contract

o if one of you is a director and the other an employee auto-enrolment applies in respect of the employee only

o if the director also has a contract of employment, auto-enrolment applies in respect of both the employee and the director.

Where auto-enrolment applies, check what initial steps you need to take by referring to The Pension Regulators online guidance.

What about larger family companies?

The position here is similar to that for husband and wife companies. Your company might consist solely of family members who are:

o all directors; or

o a mix of directors and employees.

Alternatively, while controlled by your family it might have some non-family directors. The key to deciding whether auto-enrolment needs to be considered is whether or not employment contracts exist. If they do then auto-enrolment applies.

All companies

As a general rule if a company has only one director with an employment contract, sometimes called a service contract, auto-enrolment doesn’t apply. Conversely, where two or more directors have contracts, auto-enrolment applies and you must decide if those directors with contracts are eligible to be included in your workplace pension.

Note. If your company has employees who are not directors auto-enrolment will always apply regardless of whether or not they have contracts.

Please give us a call, or drop us an email, at A&C Chartered Accountants if you want to discuss further using our Contact details.

May 21, 2015 By Katie Insights 0 Comments

Buy-to-let: the basics

Buy-to-let: the basics Why become a landlord?

You may become a landlord accidentally by inheriting a house, or by retaining a former home when you move house. There is an attractive tax incentive for letting a former home (see Former home). Alternatively, you may buy property with the specific intention of letting it.

An investment in let property can create a second income stream for you or your spouse, if he or she also holds an interest in the property (see Joint owners). Some people hold property to provide an alternative fund for retirement and let it in the meantime.

In this brief guide we look at the pros and cons of letting out residential property in the UK, including furnished holiday accommodation. We do not cover the letting of commercial properties in this guide but we are happy to advise on that area of investment on an individual basis.

Download the full PDF guide now

What are you taxed on?

The tax you pay depends on how you hold the let property – as an individual, jointly, or through a company (see How to hold your property).

As an individual landlord you must pay income tax on your ‘property income’. This is the sum of the rents you receive less the tax deductible costs (see Tax allowable expenditure). Property income does not include the profit you make when selling the property, and it does not take into account the costs of buying, selling or improving the property.

All of the income you receive from letting property in the UK, both residential and commercial, is combined and taxed as one property investment business.
A loss on one property can be relieved against profits made from another in the same tax year or later years. Overseas property, and furnished holiday lets are treated as separate businesses.

Deposits collected from tenants are not part of your property income unless they become non-returnable under the tenancy agreement. You should only include the retained deposit in your property business accounts when the funds are used to cover the costs the deposit was designed to pay for, such as renewal of furniture, repairs or legal fees.

Start

Your property letting business commences when you have acquired your first property and it is available for letting. This means the property is in a condition where it can be let, subject to cleaning, furnishing and drawing up letting agreements. If the property is in such a poor state that it cannot be let, it cannot be treated as part of your property letting business. The expenses connected with renovating a property to bring it into a habitable condition are not immediately deductible (see Capital costs).

Expenses incurred before you start the lettings business, such as advertising or minor repairs, can be deducted from the rents you receive in the first tax year if two conditions are met:

• the expenses are classified as revenue costs rather than capital
• the costs are incurred within seven years of the date on which you first let the property

Buy To Let Guide

2015/16

Once your property letting business is up and running, any later expenditure leading up to the letting of the second and subsequent properties is part of your lettings business and can be deducted, as long as it qualifies as tax deductible.

End

Your property letting business finishes when you no longer have any properties available for rent, and you are not looking for tenants. This may be because you have decided to occupy the last property yourself, or you are keeping the property empty prior to sale.

You can’t deduct any revenue expenses which are incurred after the last property has been withdrawn from the lettings market. Thus the costs of sprucing-up the property post-letting but pre-sale won’t be tax deductible.

How to hold your property

Single IndividualIf you hold the let properties in your own name, you will be taxed on the income and gains arising from those properties. You can’t transfer the income before tax to another person without first transferring an interest in the property.

You should declare all of the income and expenses from those properties on the property income pages of your personal self-assessment tax return. Even if you don’t make a profit from the letting, you need to declare the loss you make so it can be deducted from profits made from lettings in a later period.

Overseas Properties

If you let properties which are situated overseas, the income and expenses from those properties must be shown on the foreign income pages of your tax return. Profits or losses from overseas properties need to be calculated separately from those arising from UK properties.

Joint Owners

Where a let property is held in the joint names of a married couple or civil partners it can provide a useful income stream for the spouse/civil partner who has little or no other income.

In England and Wales you can own a property as joint tenants; where both owners hold an equal interest in the whole property; or as tenants in common where each owner holds
a separate and identifiable share, say 10% and 90% of the property. There are different rules for properties located in other countries, including Scotland.

When a legally joined couple (married or civil partners), own property; as joint tenants, any income from that property must be split equally between them for tax purposes and declared as such on each person’s tax return.

If the same couple hold the property as tenants-in-common in unequal shares, they can make a declaration on HMRC’s Form 17 to have the property income taxed in the proportion that reflects each partner’s beneficial interest in the property. Without the Form 17 declaration the couple will each be
taxed on an equal share of the income from the property. The Form 17 election is not reversible, so once you have elected
to be taxed on your actual share that’s it, unless your actual ownership in the property changes.

Where the joint owners of a property are not married or in a civil partnership, they can agree to share the income from the property in whatever ratio they choose, although this profit- sharing ratio would normally reflect the underlying beneficial ownership of the property.

If you want to split the property income in unequal shares instruct your solicitor to acquire the property as tenants-in- common in the ratio of ownership desired. Where you already own the property as joint tenants it is quite simple to change to

tenants-in-common, but there can be a Stamp Duty Land Tax (SDLT – LBTT in Scotland) charge where the property
is mortgaged.

When the property is sold, any capital gain arising must be split according to the beneficial ownership of each owner.

Limited Company

There can be tax advantages to running a let property business through a limited company, as the company pays tax at 20% on income and capital gains. In comparison, an individual pays income tax at 20%, 40%, or 45% and Capital Gains Tax (CGT) on gains at 18% or 28%. However, the company’s taxable capital gains are calculated differently to those of an individual, so the tax rates are not directly comparable. Also, there may be further tax and National Insurance charges when you extract funds from your company.

The company may also be subject to a 15% rate of (SDLT) when it buys residential property worth over £500,000. The Annual Charge on Enveloped Dwellings (ATED) can also apply to company-owned properties worth over £1m. Relief from both of these tax charges can be claimed if the property is commercially let to an unconnected tenant.

If you already own a company which holds funds not needed for its trade, investing in buy-to-let property can make commercial sense, provided the company can secure a mortgage for the balance of the purchase price. However, where the trade may become overshadowed by the value of the properties it holds it may no longer be classified as a ‘trading’ company, which means it is no longer eligible for
a number of tax reliefs, including entrepreneurs’ relief.

Tax Allowable Expenditure

Not all expenses associated with letting a property are deductible from the rental income for tax purposes, so you need to sort your expenses into categories. Start by dividing them into the ‘capital’ costs connected with buying, selling or improving your properties, and other costs which reoccur as the tenants change – known as revenue expenses.

Allowable revenue expenses can generally be deducted from the rents received for the period (normally the tax year), in which the cost was incurred. But if you have an obligation
to pay a sum in the future (e.g. for a specific repair) you can deduct that future cost in the current period if you are certain of the amount you will have to pay.

Allowable revenue expenses can include:

accountancy fees for drawing up the property
business accounts
advertising for tenantsgardening, cleaning, and security services
where relevantground rent and service charges for
leased property
heating and lighting costs
insurance for the buildings and contents
interest paid (see below)legal fees for drawing up tenancy agreementsor collecting debts, but not those connected
with acquiring properties
letting or managing agents’ fees
maintenance and repairsmotor expenses for travelling to
the property
water rates and council taxwear and tear allowance (see below)

This is not a complete list – ask us about any other costs you have incurred that don’t fall under one of those headings, as they may be deductible. If your tenant is responsible for paying some expenses – such as the water, energy and council tax bills – you can’t also claim a deduction for those items.

Interest Paid

You can currently deduct all the interest paid on all loans used to finance your property letting business (see below for changes from 2017). It doesn’t matter whether the money borrowed was used to purchase the property, improve it, or pay for a repair
– the interest is deductible, as is any loan arrangement fee, or similar finance charges.

If you extend the mortgage on your own home to release funds to help to finance your let property business, you can set off the interest on the extended portion of the mortgage against the rents received from the let property. However, to show HMRC where the capital has come from you need to include
a balance sheet for your property-letting business with your tax return. We can help you with that.

2017 Onwards

The interest and finance charges paid by individual landlords will be restricted as follows:

Up to 20% of the disallowed interest will be deducted from the tax due on the rental income. Where this interest deduction exceeds the tax charge for the year, the excess amount will be carried forward to be relieved against tax payable on the profits from the let property business in a future tax year.

This change effectively gives you tax relief for the interest at 20%, equivalent to the basic rate of income tax. Corporate landlords are not affected as they already pay tax at a maximum rate of 20%.

Where you have significant loans connected to your let property business, we can help you calculate whether that level of borrowing will be sustainable after 6 April 2017.

Repairs

The cost of repairs is always deductible from rental income, but the cost of improving a property is a capital cost which is not immediately deductible (see below). The difference between
a repair and an improvement is: a repair restores what was originally there without adding new functionality – everything else is a capital improvement.

You can’t apportion the cost of a project between improvement and repairs. If the work done will fall into both headings, ask the builder to quote and bill for each piece of work separately.

Example

Fred has a new bathroom fitted where one didn’t exist before, and at the same time redecorates the adjoining bedroom. The new bathroom is an improvement as it has added
a new feature to the house. The redecoration is a repair. Fred asks his builder to give him separate bills for the bathroom and bedroom. He claims the cost of decorating the bedroom against rental income, and treats the bathroom cost as a capital improvement.

Capital Costs

Any capital costs, such as improvements, can only be deducted from the sale proceeds of the property. You need to keep track of which capital expenses relate to which let property and keep hold of all the relevant receipts and contracts.

Wear and Tear

If you let your residential property fully furnished (not partly furnished or unfurnished), you can deduct a wear-and-tear allowance of 10% of the rents every year. In HMRC’s view, a furnished let property is one ‘let with sufficient furniture, furnishings and equipment for normal residential use’.

The wear and tear allowance is supposed to cover the cost of replacing movable items supplied in the property, such as furniture, carpets, curtains, electrical goods and kitchenware. The cost of replacing items that are fixed to the property will normally be claimed as repairs (see above). Currently, the wear and tear allowance can be deducted even if you don’t replace any items in the tax year.

However, from 6 April 2016 the wear and tear allowance will be abolished. Instead, all landlords will be able to deduct the actual costs of replacing furnishings in the property. This is good news for landlords who let partly furnished properties as they will be able to get a tax deduction for the cost of replacing carpets, curtains and free-standing white goods, although not for the initial cost of those items.

Record Keeping

Landlords, just like other business owners, must keep adequate records to enable them to calculate their profits or losses accurately, without recourse to estimates. You should retain
a record of every relevant expense, the original documents are ideal, but a scanned copy is acceptable. Deposits will relate to individual tenancies, so details of the start and finish dates of each tenancy should be recorded.

Note down details of any personal assets you use for the letting business, such as the date and distance of car journeys, or time spent on administration at your own home.

All the records relating to your property business must be kept for at least six years after the end of the tax year in which the property is let or sold, in case the tax inspector asks about the figures shown on your tax return. So documents relating to the tax year to 5 April 2015 should be retained until
6 April 2021.

Tax year	Amount of interest deductible
2017/18	75%
2018/19	50%
2019/20	25%
2020/21 and later	Nil

Example

Refurbishing a kitchen will count as a repair if the new kitchen is of a similar standard as the one it replaces. HMRC will accept the following as repairs: rewiring, plastering, tiling and replacement of fixed fittings such as sink and cooker. If the kitchen is substantially upgraded by, say, increasing the size or by using higher quality materials, the whole project cost should be treated as a capital improvement.

Holiday Lettings

If you can let your furnished property for short term lets (each less than a month) it can qualify as a furnished holiday letting (FHL). This has a number of tax advantages.

Conditions

The property doesn’t have to be in a recognised holiday centre; it can be situated in any part of the UK or even in another European country. However, it must be let to the general public (not just to family and friends), on a commercial basis for short lets totalling 105 days or more in the year, and be available for short-term lets for at least 210 days in the year. For the remaining seven months of the year it can be let for longer periods. The 105 day total can be averaged over a number of properties and skipped for a year or two, if the other conditions apply.

Tax Effects

The profits and losses for an FHL business are calculated in
the same way as for an ordinary lettings business, but your total costs may be higher as the turnover of tenants is more frequent. You may also have to register for VAT as holiday lettings are subject to standard rate VAT, whereas normal residential letting is exempt from VAT.

On the plus side, you can claim capital allowances on equipment used in and around the property, instead of the wear and tear allowance. Your profits are treated as earnings for pension contributions, but losses can only be set against other FHL profits.

When you sell the property any CGT due on gains can be deferred by buying another business asset. Entrepreneurs’ relief can also reduce the CGT to 10% when you close your FHL business.

Selling the Property

Capital Gains

When you sell your let property you would expect to make
a profit after deducting allowable costs (see below). If all the capital profits you make in the year (not just from property disposals) exceed your annual capital gains exemption (£11,100 for 2015/16), you must declare the profits on the capital gains pages of your tax return.

Gains in excess of the exemption are subject to CGT at either 18% or 28%, depending on the level of your net taxable income for the tax year. The CGT is payable by 31 January following the end of the tax year in which the property was sold or disposed of.

When you give away the property to someone other than your spouse/ civil partner, or sell it to someone connected to you at a discount, that disposal is treated as a sale at market value for tax purposes.

Former Homes

When you live in a property the gains made relevant to your period of occupation are exempt from CGT on disposal of the property. Other periods you spend away from the property may qualify as deemed periods of occupation if you return to live there at a later date.

If you live in more than one home concurrently you can nominate which property is to be treated as your tax-exempt ‘main home’ and change that nomination at will. You must make the first nomination within two years of the date on which you started to use the second property as your home. A husband and wife, or civil partners, can only have one tax-free main home between them.

The nomination of a property as your main home can save you CGT in the long term. If you move out before the property is sold, the gain relating to the last 18 months of your ownership is also exempt from CGT. This can include a period when the property was let or unoccupied.

Lettings Relief

If a property, or part of the property, was treated as your main home either before, during, or after the time it was let out, you can get a deduction for lettings relief on the proceeds of the sale. Lettings relief is restricted to the lower of three amounts: • the part of the gain exempt because it was used as your

main home
the gain attributed to the let period £40,000 per ownerLettings relief cannot apply to a buy-to-let property that you have never lived in yourself. We can help you claim all the reliefs due on the sale of your property.Inheritance TaxThe value of all your possessions, including the home you live in and your buy-to-let properties, are all potentially subject to Inheritance Tax (IHT) on your death. There are exemptions for gifts made more than seven years before you die, amounts left to your spouse/civil partner or to charities, and the value of your estate falling in the nil rate band.This nil rate band is frozen at £325,000 until 6 April 2021, but any unused nil rate band may be passed on to your spouse/ civil partner. From April 2017 there will also be a property- related nil rate band of £100,000 per person that can be set against a property that has been your home. It’s essential
to have a well drafted Will to take full advantage of the IHT exemptions available on death.Non-resident landlordsIf you live outside the UK and let property located in the UK your letting agent (or tenant where there is no agent) should deduct 20% tax from the rents before paying you. However, where you gain approval from HMRC under the non-resident landlord scheme to receive gross rents, that tax is not deducted. You have to promise to declare the income from your let properties on a UK tax return, and pay tax due on the profits.

Capital Gains

Any gains arising from 6 April 2015 on disposals of UK residential property are subject to CGT in the UK, even where the landlord lives in another country. Such gains made by non- resident owners must be declared to HMRC within 30 days of completing the sale. Gains made by purchasing ‘off-plan’ and selling before the property is finished are also taxable. The gain made on disposal must be divided between the exempt period before 6 April 2015 and the taxable period from that date. We can help you with the calculations.

This report is written for the benefit of our clients.
Further advice should be obtained before any action is taken.

Allowable costs

The following costs may reduce the taxable gain on the disposal of a property:

solicitors’ and estate agents’ fees paid on the
sale and purchase
SDLT, or LBTT (in Scotland) paid on purchase
cost of improvementscapital losses made in the same or earlier
tax yearexemption as a main home
(see Former homes)lettings relief
(see Former homes)

GET IN TOUCH

If you are in the decision making process of potentially investing in a Buy To Let property contact us to see how we can make the running of your business easier and simpler with the power of cloud accounting, integrated lettings apps and professional tax strategy & accounting advice – get in touch today.

March 13, 2015 By Katie Insights 0 Comments

XERO partners with Shopify strengthening the relationship of 150,000+ merchants

Xero (@Xero) announced today that it is partnering with Shopify (@Shopify), an industry leading commerce platform that allows anyone to easily sell online, at their retail location, and everywhere in between. The exciting new dual platform integration is expected to go live later on this year (2015).

With more and more businesses turning to Shopify as a true, powerful and robust, yet intuitive and simple e-commerce platform it’s perfect timing for XERO to announce their seamless cloud accounting integration.

If you’re not familiar with Shopify (helped massively by US entrepreneur Tim Ferriss of 4 Hour Work Week fame) it is a platform that allows any one to sell online regardless of technical skill. Shopify provides everything you made need to sell online anywhere and trusted by over 150,000 business owners. Shopify offers a professional online storefront, a payment solution to accept credit cards, a point of sale system to power retail sales and a card reader to process credit card transactions through a mobile phone.

“The Start-up’s Secret Weapon: Contests” or “How to Turn $100K into $12,000,000”

– Tim Ferriss,

Read here on the 4 Hour Work Week blog the background about Shopify and it’s inception, and how it’s helped so many entrepreneurs succeed across the globe.

The partnership between the two technological giants now allows Shopify merchants to seamlessly track the impact of sales on their business financials, frees up time spent on manual data entry, and minimises the frustrations created by working with two separate systems.

Here at A&C Chartered Accountants we believe the future of accounting truly lies in cloud accounting. Not only that, we are very excited to see so many technologically advanced small to medium sized businesses starting out, making use of both our cloud accounting services, but also of so many fantastic services such as Spotify. 5 years or so ago, when such services didn’t exist, people’s life choices to go into business for themselves were restricted by cost and know how.

To learn more about our ethos and motivation to create something new and exciting with A&C Chartered Accountants, have a look at our article: Take A Walk In The Cloud

March 6, 2015 By Katie Insights 0 Comments

Migrating from Sage 50 to XERO – let us help

Making the switch from Sage to Xero – we’re here to help

XERO conversion & set-up

Whether you’re starting a new business or moving from an existing system such as Sage50 we can help you business move to the cloud.

Here at A&C Chartered Accountants we’re a certified XERO Gold Partner – with literally decades of experience in accounting, taxation, banking and consulting. Our dedicated team will work with you to ensure your XERO cloud accounting system is set up properly and your existing processes and data migrated accordingly. On time, and online.

You will LOVE working in the cloud … A&C Chartered Accountants – Anytime.

Sage 50 to XERO

Our XERO Gold Partner accredited team are able to migrate your current business from using offline accountancy packages such as Sage 50, to the cloud using XERO. XERO is feature rich cloud based accounting platform that is comparable in functionality to Sage 50, making it the ideal choice for businesses of all sizes, and simply far superior to the over simplified Sage One cloud package.

Our team will migrate the Sage database and ensure all records are correct in the conversion and migration process. We’re here every step of the way to integrate XERO into your business processes, which also means, full support and training following the migration, as well as taking a holistic view into any other integrated systems you may have in place.

Take a look at our cloud accounting apps and partners whom we are accustomed to integrating as full bespoke solution. We also have web development and IT partners on stand by who can assist with any customised solution you have in place already with Sage.

Foreign Currency Transactions? – No Problem

We even migrate your business foreign currency conversion, which is a particular difficult task for any business during migration. The massive benefit to foreign currency transaction using XERO in the cloud, is real time, live XE.com currency conversion, so your business is always presenting accurate data at the time of transaction.

Using something else?

Not using Sage 50 or Sage One? No problem. Our team of technical gurus can review your current system, and develop a migration plan that’s efficient, accurate, and affordable.

New Business Start Up

Are you a new business and investigating the benefits of XERO over Sage? If you’re looking for an accounting system that can keep up with you offering affordability, flexibility, efficiency and that will save you both time and money, then XERO is for you. Why XERO? XERO will give you true power over your business.

Xero launched in the UK in 2008 after seeing huge success in its native New Zealand. Its usage has grown exponentially and is now the go-to choice for cloud accounting. At its core Xero is about freedom, it offers an unmatched level of accounting flexibility, powerful automation and collaboration whilst placing you firmly in control of your financial data.

However in addition to its feature-rich functionality, Xero really comes into its own through integrations with third-party apps. Whether you run a plumbing firm, hairdressers or e-commerce business the chances are you’ll be able to directly integrate with Xero to streamline your workflow. Or leverage a specific app that’s been designed to do exactly what you need and make your life that little bit easier.

Our dedicated XERO team can recommend how best to set Xero up for your specific business needs. We can also make recommendations for any Xero Add-on’s, as well as other cloud apps, that could help you get even more out of your investment. If you want to stretch the limits of Xero’s functionality A&C Chartered Accountants can design your custom reports, and any other specific configuration requirements you may have. The opportunities and insights are limitless.

If you’re interested in XERO over Sage, or, are currently using a Sage accounting package and want to migrate over to XERO – Contact Us now and we’ll be able to assist.

March 2, 2015 By Katie Insights 0 Comments

Take a walk in the cloud…

Why should accounting and tax professionals take a walk in the cloud

Most of us generally make use of ‘the cloud’ in our daily personal lives. From streaming music or movies, or accessing emails or sharing photo’s we’re very much deeply engaged in accessing and using cloud technology each and every day. Most of us don’t think twice about using a mobile device (phone or tablet) for many completing so many tasks – even online shopping. It is this introduction of cloud computing technology that has totally shifted the global consumer market in both behaviour and expectations.

Cloud Accounting

According to a 2014 survey by Network Management Group Inc. and Insight Research Group, 41 percent of professional accounting firms reported that they were not currently using any services or applications that could be defined as cloud computing, with 31.7 percent saying they are likely to implement a Web-hosted or cloud-based version of one or more of their firm’s tax and accounting applications over the next two years. But is that enough? Is the sector of accounting seriously falling behind while the world moves on and demands true cloud accounting power? We believe so…

What accounting firms need to understand, is quite simply, the demand is already here and the consumer is often more clued up than the service provider. It is this demand for cloud accounting that has put XERO on the world growth map as one of the leading and fastest growing SME accountancy software firms rapidly swallowing up more and more market share.

When we look at overall consumer behaviour, like a recent study by Internet World Stats and Pew Research Center, Internet penetration is at 87 percent for adults, with 18-29 year olds at 97 percent. Given the connectivity of clients and prospects, it’s unquestionably time for accounting firms to understand what the cloud is all about and take full advantage of its benefits.

So, what is the “cloud” and the future of “cloud accounting”?

Cloud computing technology has soared in popularity over the past 5 years in particular. Just what is the ‘cloud’ and how can it benefit us when it comes to accounting in the cloud – both for the accountant service provider, as well as the SME business owner?

The ‘cloud’ actually refers to an entire network of computers, servers and data storage that allows a user to access information via the internet from anywhere in the world with internet connection at any time of day. The flexibility is hard to describe without experiencing it. Cloud technology really does mean that so long as you have an internet enabled device (smartphone, tablet, computer etc) you can access files, information, data and so on literally at any time and from any location. Cloud service providers maintain the hardware necessary for digitally storing software and data, allowing users to upload, download and access files 24/7 without limits.

For the tax and accounting profession, cloud services can mean securely storing accounting, billing and time management software online, and using the cloud to store client data and information safely. But in the accounting world, does the cloud really have advantages over traditional methods? Yes, and there are several reasons why…

Efficiency, Convenience & Flexibility
With information able to be accessed anywhere, from any location literally around the world, from any device, there is no better way to share accounting information between client and accountant. Both the SME business owner enjoys a resulting bonus of greater efficiency due to total flexibility, and so is the accounting practice afforded the same boost – being able to share information between departments and offices with greater speed and flexibility. As a SME business owner having the convenience to log in and see that business data and insights instantly from anywhere is practically imperative to any business success these days.

Cost Saving
Moving to the cloud can save considerable headaches for both the SME business owner, as well as the accounting firm – allowing for streamlining on IT technology costs and training, as well as gross offline software fees being eradicated. Annual maintenance fees can be dispensed with in favour of more affordable monthly pay-as-you go models for cloud applications. Cloud services can also reduce the need for in-house IT staff, as cloud vendors handle server and software maintenance, as well as tech support. Vendors also typically handle system upgrades, which happen automatically, giving you immediate access to updated software.

Time Saving
Cloud accounting can seriously reduce time invested by both parties. The SME business owner can eradicate so many lengthy and time consuming tasks, with even the simplest of things such as taking a photograph of receipts using the XERO app to record expenses, all the way up to the software calculating VAT returns, and daily bank reconciliation to keep on top of debtors and so forth. The time saving benefits of cloud accounting are too immense to discuss here, and we will dedicate an entire article to this benefit. Needless to say, the ‘cost’ saving from great efficiency of time investment is critical to the business owner of today.

Reliability & Safety
With the rapid adoption of cloud services and cloud apps in so many industries and sectors has given rise to an explosion of increased focus on data security. Cloud data is typically far more secure these days than data held on your local device such as laptop as it has been by so many people for so many years. Security breaches like those experienced by major retailers, while widely publicised, do not reflect the low possibility that a reputable cloud vendor would be hacked. However, it is important to choose a reputable vendor that has been in the business for at least three to five years. Because it’s a nascent industry, vendors do tend to come and go.

Cloud vendors not only store data in a centralised offsite location, but they often keep copies of your information in one or two other locations for additional backup. The systems are typically self-healing, meaning that if there is a failure at one site you can immediately access the same data via another location.

Expectations
The widespread use of cloud technology in the consumer space is driving its transition across numerous industries—and that includes tax and accounting for cloud accounting service providers. Because consumers, as well as internal staff, are expecting cloud apps and cloud services to be the norm, we feel it is crucial to be at the forefront of leading the cloud accounting revolution in the UK.

If you are a SME business owner looking to boost your productivity, efficiency, competitiveness and save money – you should consider our cloud accounting technology and bookkeeping services.

February 23, 2015 By Katie Insights 0 Comments

Unleashed Certified Consultant

Now you can let your XERO account become UNLEASHED!

We’re proud to announce that here at A&C Chartered Accountants we are officially an Unleashed Certified Consultant.

What is Unleashed Software and how can it benefit your business?

Unleashed offers Powerful Inventory Management which means you can accurately manage your inventory online in real time for your business. And what’s even better, is we can make your Unleashed setup integrate and “talk” in real time to your XERO accounting software. This means now you can manage your business 24/7 in the cloud and see a true and accurate position of your stock and inventory movements alongside your financial position.

The power of Unleashed combined with XERO means that you can now have a direct communication between all elements of stock control, inventory management, your Point of Sale and your e-Commerce platform.

Unleashed Reviewed

Before we began working with Unleashed, we had already been hearing about the merits and benefits from the many reviews and testimonials online. Unleashed is an online inventory management software. It makes it easy to get accurate costs, margins and stock control. There is a true wealth of positive Unleashed reviews that piqued our interest in the product. When we learned of the power of truly integrating Unleashed and XERO together that was the deal done. We had to become a certified Unleashed consultant and we’re very glad that we have done so.

With a growing number of clients in our portfolio looking for cloud based solutions in the e-commerce field, we highly recommend the power of integrated Unleashed with Xero. Here are just a few platforms that Unleashed integrates alongside:

Magento

XERO

OneSaas

Zeald

Neto

StarshipIt

QuickBooks

Vend

GeoOp

With Unleashed you can gain powerful and accurate insights into your business performance and analysis of stock data. You can store an unlimited number of stock SKUs in any number of multiple warehouse locations. And you can synchronise inventory across multiple sales channels (website, amazon, ebay, third tier).

This includes raising supplier purchase orders, as well as sales, all beautifully imported real time into your XERO control panel. This means you don’t have to re-enter supplier and customer invoices in Xero or work through the accompanying inventory and cost of goods sold changes. Pilot customers have reported significant savings of time using both Unleashed and Xero together.

Unleashed Integrated with XERO accounting

Unleashed provides online inventory software for Xero, allowing accurate costs, margins and stock control. The two systems integrate so that all information is shared across into your accounting system in real-time. There are over 70 Unleashed Reviews in the XERO Community alone that have awarded Unleashed a 4+ star rating consistently with positive feedback when combined with the power of XERO.

You can read more about UNLEASHED SOFTWARE here, as well as contacting a member of our team at A&C Chartered Accountants to discuss how we can hook up your business with cloud based solutions. We’re here to take the sting out of traditional accounting, while streamlining your processes to help you grow more efficiently and faster.

February 9, 2015 By Katie Business News 0 Comments

End of Year PAYE Return

Prior to the introduction of RTI, employers were required to complete an end-of-year checklist and declaration on form P35 and submit to HM Revenue and Customs. Under RTI this was replaced by the final full payment RTI submission which included a similar checklist and declaration.

HM Revenue and Customs have recently announced that from 6 March 2015, the requirement for employers to complete the end-of-year checklist when making their final full payment submission under the real time information regime will be removed, for the current tax year 2014/15 and subsequent years.

November 12, 2014 By Katie Business News 0 Comments

NIC On Sales Commission

Unlike income tax under PAYE, Class 1 National Insurance Contributions (NICs) are not normally calculated on an employee’s cumulative earnings but on the earnings for that week or month in isolation. Employees pay Class 1 contributions at the rate of 12% on earnings between £663 a month and £3,488 a month. Above the upper earnings limit, a rate of 2% applies.

There have always been special rules for directors where an annual earnings period applies, but these do not generally apply to employees. HMRC are understood to be increasing the application of an annual earnings period for other employees in cases where they suspect Class 1 NIC is being avoided.

Take for example a car salesperson with a regular salary of £24,000 a year. Their normal gross pay would be £2,000 a month, but they receive a commission twice a year based on car sales. If they receive £5,000 commission in October due to car sales in the period to September, £3,512 of that commission would only attract 2% Class I NICs (£70.24), as the £3,488 limit applies on a non-cumulative basis. Applying an annual basis would have resulted in a further £351.20 being deducted (£421.44 less £70.24). Note that employers NIC would be unaffected.

Do you need help with National Insurance Contributions and PAYE codes?

Our team provides payroll advice for companies across all sectors, from charities to construction firms.

If you want to learn more about how the team can help, or simply want some start-up advice from a trusted accountant, don’t hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

October 2, 2014 By Katie Insights 0 Comments

Tax relief for donating your old suit to charity

HMRC has amended its guidance for charities that claim Gift Aid on the sale of donated goods. Gift Aid normally only applies to gifts of money by an individual. However, in certain situations, Gift Aid can be claimed by charities or community amateur sports clubs on the income from the sale of supporters’ goods on their behalf.

The charity can offer to act as an agent for private individuals and sell goods on their behalf, so that at the point of sale the funds actually belong to the individual. If the owner agrees to donate the sales proceeds to the charity, Gift Aid can be claimed by the charity on the net sales proceeds, subject to all other Gift Aid conditions being satisfied. The charity is then able to reclaim tax at the basic rate. A number of charities, such as Oxfam, operate such schemes. The charity provides the donor with details of the value of goods sold in order for the donor to claim tax relief on their self-assessment tax return.

Remember that the Gift Aid payments, grossed up for basic rate tax, are an effective way of reducing income where an individual’s personal allowance is restricted by income in excess of £100,000 a year.

Higher rate taxpayers also benefit from additional tax relief. For example, if a suit is sold for £40, the charity is able to reclaim £10 basic rate tax from HMRC (£50 gross) and a higher rate taxpayer obtains a further £10 tax relief – win win!

July 31, 2014 By Katie Business News 0 Comments

Xero – Breath of fresh air in accounting

Small business accounting with Xero

Xero is online accounting software created especially to suit the needs of small businesses. It’s easy to use and will save you incredible amounts of time.

Some Benifits of Xero

Cash-flow in real time just login
Automatic Bank feeds that mean you don’t have to spend time entering all those bank transactions.
Access the system anywhere in the world.
Invoice on the go and also be able to see whats outstanding at a click of a button.

You want Xero? We’ve got Xero!

All clients of A&C Chartered Accountants get the Xero software complimentary so you don’t have to worry about the cost and we even provide monthly training webinars at no cost, if you do want some 1 to 1 training then its only £200 for half a day and unlimited telephone support for 12 months.

https://www.xero.com/uk/?type=partner&pid=WCCPXN

May 28, 2014 By Katie Business News 0 Comments

CGT Entrepreneurs Relief Applies Up TO 3 Years Following Cessation

Capital gains tax entrepreneurs’ relief provides for a 10% rate on the disposal of a business, including a sole trade or shares in a trading company. The relief extends to the disposals within 36 months of cessation of trading, provided the business qualified for entrepreneurs’ relief for the 12 months up to the cessation date.

A recent case before the Tax Tribunal reminds us of the importance of timing in tax planning. A Mr Rice owned a car dealership in Peterborough which ceased trading in May 2005, but the premises from which the business traded were not sold until April 2008 – just within the 36 month period so the relief was available!

May 27, 2014 By Katie Business News 0 Comments

15% Stamp Duty Land Tax For Certain Purchases

Finance Act 2012 introduced a 15 per cent rate of SDLT on the acquisition by certain non-natural persons (broadly companies) of dwellings costing more than £2 million. Finance Bill 2014 reduced this threshold to £500,000. The previous £2 million threshold will continue to apply, subject to exceptions, where contracts were entered into before 20 March 2014.

Acquisitions by trustees or for the purposes of letting, trading or redevelopment, trades involving making a dwelling available to the public, providing dwellings for occupation by certain employees or use as a farmhouse are excluded from the higher rate charge.

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What does the VAT reverse charge mean for building & construction companies?

What you need to do to be ready for 1st October :

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IR35 – the facts and what you need to know about legislation changes

April 2016 Onwards – The Death Of Umbrella Companies For Contractors?

Is It Time To Speak To A Qualified Accountant?

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Buy-to-let: the basics Why become a landlord?

What are you taxed on?

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Buy To Let Guide

How to hold your property

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“The Start-up’s Secret Weapon: Contests” or “How to Turn $100K into $12,000,000”

Making the switch from Sage to Xero – we’re here to help

XERO conversion & set-up

Sage 50 to XERO

Foreign Currency Transactions? – No Problem

Using something else?

New Business Start Up

Why should accounting and tax professionals take a walk in the cloud

Cloud Accounting

So, what is the “cloud” and the future of “cloud accounting”?

Now you can let your XERO account become UNLEASHED!

Unleashed Reviewed

Unleashed Integrated with XERO accounting

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