Tax Advice

Feeling Satisfied That The Tax Return Is Completed | Help Completing Tax Return
Feeling satisfied that the tax return is completed 758 513 Stepping Stones Accountancy

Feeling satisfied that the tax return is completed

The thought of completing tax returns or doing bookkeeping can turn even the most productive of us into professional procrastinators. Anything that can help avoid the task can suddenly seem like the most essential thing on your to do list. Meaning that you can very easily fritter away the most important asset in your business – your time! As the business owner it is vital that you are efficient with your time to maximise the amount that you can achieve in your day.

So, how can you stop putting it off? Make it fun!

Ok, so maybe fun is pushing it but injecting a little bit of light-heartedness into the situation can help make the task seem not so daunting.  Here are some ideas to try, but feel free to create your own handy tips.

Firstly, get yourself ready:

  • Allocate yourself a specific cup that you love for that all important coffee. One that is fun and makes you smile is an added bonus.
  • Use that cup every time you sit down to do your bookkeeping or tax return and only then.
  • Have a special stationery box for the occasion. You can have a fun pen, highlighters, special post it notes and even your Peppa Pig ruler. No judgement, whatever makes it more enjoyable for you.

Begin:

  • Choose your favourite music to match the mood. Perhaps some classical to calm the mind or some techno to get the blood pumping and the mind working? Find the genre of music that makes you most productive and gives you a lift.
  • Think about what scents calm you. Perhaps a certain candle or air fresher can provide an aroma to provide a tranquil workspace?
  • Another trick that all great procrastinators have up their sleeve is the snack walk. The need to just get a quick snack before your settle down to the task. If you plan ahead and have your snacks to hand, there really is no need to go wandering. Even better, it could be a special treat that you only allow yourself when you do your accounts thus giving you something to look forward to.

In short attaching positive associations to a task that you are not looking forward to can make it seem much more attractive and more likely to get done. Freeing your time up to get on with running your business.

If you have any questions or need some help with your tax return, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk. You can also book a free 30 minute call with Yarka – https://calendly.com/yarka-ssa/30min

Corporation Tax Changes Ahead | What Are The New Corporation Tax Changes | Help with Corporation Tax
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Corporation tax changes ahead

The 1st of April 2023 will see a substantial increase to corporation tax for UK businesses. The current rate stands at 19% for all businesses no matter what their size, however this will be increasing to 25% for companies with profits above £50,000 from next year. All companies whose profits fall below this threshold will continue to pay the current rate of 19%.

There is however, some good news for those companies facing this huge increase, if their profits fall between £50,000 and £250,000 it may be possible to claim Marginal Small Companies Relief (MSCR), allowing for a tapering of the new rate. However, the formula used is complex and not necessarily beneficial. Thus, depending on the profit levels of the business, it may be of more benefit to plan ahead in order to reduce profit margins so that they fall below this marginal rate relief limit. Strategies such as pensions contributions and large equipment purchasing can be utilised to achieve this.

There are many things that must be considered when planning for this new rate, including when there are multiple companies, the impact on dividends and the situation for companies vs sole traders and partnerships.

For help and advice on understanding and planning ahead for the corporation tax increase, please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

Should Office Parties Get A Tax Break | Business Tax Advice | Tax Savings for Business
Should office parties get a tax break? 758 513 Stepping Stones Accountancy

Should office parties get a tax break?

As the festive season is fast approaching many companies have finalised their plans for a little fun and laughter choosing to bring back the traditional office party. The key question many are asking is, can they get a tax break?

It appears that the simple reason for asking is that companies want to further encourage staff members to return to the office and funding a Christmas party is seen as a positive step towards that. It will also further boost the hospitality sector, who have been one of the most heavily impacted industries by COVID-19.

Requests are being made of the Government to aid in this by relaxing some of the rules around Christmas parties (or similar events). It is also believed that there is a growing interest for the Government to increase the “tax-free” allowance per employee from £150 per person to £300 per person.

Key reasons for proposing the increase are:

  1. Companies can use this increase to offer thanks to their employees without having to worry about tax implications through the benefit-in-kind restrictions.
  2. Rather than a bonus scheme, a business can thank all its employees as a united team, rewarding everybody in the same way.
  3. As previously mentioned, it boosts the desire to encourage more people to start working back in the office which also results in more activity in town centres and urban areas.
  4. Finally, it gives confidence to people who might previously have been reluctant to get back to working in an office.

As a reminder, and as it currently stands, the tax-free allowance applies to any event in a calendar tax year. It is possible to hold more than 1 event but the total cost cannot be any more than £150 per head (with the hope of this increasing to £300 per head).

If you have any questions around tax and benefit-in-kind, please call us on 01173 700 079 or email hello@steppingstonesaccountancy.co.uk.

Why do we need quarterly updates with Making Tax Digital (MTD) | Tax Advice MTD | Advice on Making Tax Digital
Why do we need quarterly updates with Making Tax Digital (MTD)? 758 513 Stepping Stones Accountancy

Why do we need quarterly updates with Making Tax Digital (MTD)?

As the Making Tax Digital (MTD) scheme continues to gather momentum there are many business owners still unsure of their commitments. However, the requirements can be broken down into 4 key measures which determine why taxpayers (even those who may have a small turnover as little as £10k) are required to provide a breakdown of income and expenses. This needs to be done via an online accounting platform which is approved by MTD and submitted every quarter.

Keeping up to date

By submitting a quarterly return, a business is keeping up to date with their returns and complying with their commitments to MTD. The regulations state that a quarterly filing deadline needs to be submitted online.

More accurate provision for tax payments

Any profit which is reported within the quarterly updates will allow the HMRC to provide an estimate of the tax payments a business might have to make during the tax year. The clear benefit of this is that a business will know how much tax they need to pay and when they will need to pay it, thus allowing for accurate budgeting.

Vital business analysis

Whilst a small business might think their quarterly tax return is only important to them, it is also a very useful tool for the HMRC. Being able to evaluate the data received from tax returns enables them to provide some informed and critical business analysis in relation the state of the economy.

Penalties for late submissions

To ensure businesses recognise the importance of quarterly submissions, HMRC will be implementing penalties to anybody who fails to comply. Penalties will be based around a points system, where any late submission means points added to an account. When a designated number of points are accrued a fine will be issued. Points will stay on record for 24-months after which they will be wiped from the record. To find our more please follow this link – https://www.gov.uk/government/publications/penalties-for-late-submission/penalties-for-late-submission

If you have any questions in relation to Making Tax Digital our team would be happy to help. Please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

A Simplified Tax Reporting for Small Businesses | Making Tax Digital (MTD) | Simplifying Tax
A simplified tax reporting for small businesses 758 513 Stepping Stones Accountancy

A simplified tax reporting for small businesses

As part of the Government’s Making Tax Digital (MTD) plans to simplify the tax system and to speed up the time it takes for self-employed professionals and small business owners to complete their tax returns, the Government are proposing changes to the existing tax reporting rules.

The changes, planned by 2023, would mean that any business not incorporated would be taxed on profits arising in the tax year as opposed to profits on accounts ending in the tax year.

In short, the changes will see all businesses having to align their basis period with the 5/6th April tax year. Whilst the majority of businesses already do this, there are about 7% of sole traders who choose not to as it fits better with their business model.

For example, a business who runs their accounts to the 30th of June each year, their income tax for 2023/24 would currently be based on profits for the year ending 30th June 2023. Under the new rules the income tax for 2023/24 would be based on 3/12 of the income for the year ending 30th June 2023 in addition to 9/12 of the income for the year ending 30th June 2024.

The Government estimates that around 3% of sole traders and 15% of partners will face an increase in costs as a result of these proposed changes but believes that they will reduce errors and overpayments and bring tax returns in line with other assessments such as property income.

Whilst the changes are broadly welcomed and the consensus is that it will simplify life for business owners, the consultation period is due to conclude on 31st August. Some claim that this is too quick and businesses need more time to prepare and propose a delay of 12 months in order for business to provide proper feedback and ensure that the scheme works for everyone.

If you have any questions or would like to discuss this further please feel free to call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

Have Your Claimed Correctly For Your R&D Project | Tax Claim for R&D | R&D Tax Advice
Have you claimed correctly for your R&D project? 758 513 Stepping Stones Accountancy

Have you claimed correctly for your R&D project?

An R&D project basically encompasses the research and development activities that a company will undertake when developing new products and services or when improving products or services which already exist. The R&D phase is the first stage of the project that involves all of the research around market needs and then development of prototypes and products.

Of course, with any R&D project, there is uncertainty. It is not until you complete the process, that you know whether it will be successful or not. This issue is actually something that causes lots of uncertainty when a company is claiming for R&D tax relief. In fact, those companies that only focus on applying with successful R&D projects could be missing out.

If we look at the HMRC guidelines it clearly states that, “not all projects will succeed in their aims. What counts is whether there is an intention to achieve an advance in science or technology”. So, if we translate that it basically means that if the R&D project has met the correct criteria then you can apply for the relevant R&D tax relief.

Often, we are asked about the eligibility of an R&D project and if a claim can be made. In simple terms the following applies:

ELIGIBLE NOT ELIGIBLE
The project did benefit science and technology but was stopped due to commercial reasons The project did not benefit science and technology but was stopped due to commercial reasons
The project did benefit science and technology but was stopped due to commercial reasons The project did not benefit science and technology but was stopped due to technical reasons

Calculating the cost for any R&D tax credit, both successful and unsuccessful is the same. You simply total the time spent on the project, summarise the materials used and then add the 2 costs together. This then forms the eligible expenditure for the claim.

If you are looking for some help with your R&D tax credits claim, please feel free to call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

HMRC Explore Options for Changing Tax Payments | HMRC Tax Advice | Modern Tax Administration | HMRC Tax Help Bristol
HMRC exploring options of changing tax payments 758 513 Stepping Stones Accountancy

HMRC exploring options of changing tax payments

The Government have recently announced a 10-year strategy to build a modern tax administration systems and as part of this they have begun a consultation period which lasts until 13 July 2021. This will involve a “call for evidence” approach which focuses on the benefits and challenges of the current tax payment system with a view to reducing the gap between when income/profits increase and income tax or corporation tax is paid. 

As with any new scheme there will be some issues to overcome. For example, how do you consider payments that are made under the income self-assessment heading or corporation tax for small companies, as these do not fall under the quarterly tax instalments?

How it currently stands

As it currently stands any self-employed taxpayer who has just started trading will have up to 22 months to pay their first tax bill. For an established trader, payment will typically be made twice a year and a balancing payment on any outstanding liability.

If we look at corporation tax there is also a delay between making profit and when a corporation payment is due. Payment is due in 1 instalment no later than 9 months after a company’s accounting period.

The need for change

The current situation brings with it a range of issues, having a large liability to pay at a specific time of the year can cause problems, especially when a tax bill comes out higher than what was expected. Changing this to a more regular payment based on the end of year reports could provide more accurate figures and greater control.

The issue

The HMRC are focussed on trying to improve how they receive funds, especially considering that 34% of their outstanding debts are for income tax and corporation tax.

What are the plans?

Consideration is being given to whether payments should be on either a monthly or a quarterly basis. As it stands HMRC are exploring all options.

Tax payments could be calculated in the year, developed as a result of up-to-date information and with projections on annual liability. Alternatively, tax payments could be based around the previous year’s tax liabilities. Finally, it could be based on estimations of the taxpayer’s liability for the operating year.

Of course, all ideas are on the table at the moment. The focus is to develop ideas that can be given careful consideration before a framework for moving forward can be finalised. HMRC also recognises that plans might need to be different for specific industries or taxpayer types.

If you have any questions or would like to discuss your tax liabilities please call us on 01173 700 079 or e-mail hello@steppingstonesaccountancy.co.uk.

VAT Oddities | UK VAT Rules | VAT Advice Bristol
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VAT Oddities

VAT rules are known for their complexities and the headaches that they can cause businesses around the UK. But it’s the peculiarities of the system that can have people scratching their heads, particularly in the world of food!

Recently, the case of Nesquik flavoured milk has been highlighted. Bizarrely chocolate flavoured milk is already VAT exempt, however, strawberry and banana are classed as standard rated and so 20% VAT is applied. Nesquik tried, and lost, to argue that all three flavours should be exempt

Fancy a biscuit with your milkshake? Depending on whether or not it has chocolate on can make all the difference when it comes to VAT. A plain biscuit, traditionally a zero-rated product, when coated in chocolate, a standard rated item, suddenly becomes a luxury item and has 20% VAT added.

Sounds fairly straight forward? Think again. If the chocolate is included inside the biscuit, in the case of chocolate chip cookies, it is back to being zero rated. This is also the case where the chocolate is sandwiched between two biscuits.

Think that is peculiar? Spare a thought for the poor gingerbread man. If he just has two chocolate eyes there is no VAT charged, but as soon as he starts to put on any clothing made from chocolate, such as trousers or a nice smart bow tie, he suddenly has VAT added.

And don’t even mention Jaffa Cakes….. McVities have very cleverly argued that they are classed as a cake not a biscuit and so no VAT is not applied despite being coated in chocolate.

VAT rules – they really take the biscuit!

Changes to Tax Relief for Residential Landlords | Financial Advice for Property Investors
Changes to Tax Relief for Residential Landlords 758 513 Stepping Stones Accountancy

Changes to Tax Relief for Residential Landlords

For many years, investors have seen their buy-to-let properties as an excellent source of income. However, the Government has acknowledged the need to discourage savvy investors from procuring properties that would otherwise have been sorely welcomed by first time buyers.

As of 6th April 2017, a phased implementation began of new rules, designed to restrict the relief available for higher rate taxpayers. When calculating taxable profits, landlords will no longer be allowed to deduct the interest costs of their mortgage. In its place, tax relief on mortgage interest payments will be reduced incrementally until 2020, with tax calculated on the total rental income instead.

Despite the changes taking place gradually until 6th April 2020, the changes could have huge implications for individuals that are near the higher tax rate threshold. For those with high interest costs, the new rules could push them over the tax threshold without them being aware.

For detailed information on how these changes will impact investors go to the GOV.UK website where there are some clear examples on what this means in practice. Essentially though, the changes certainly mean larger tax bills for property investors and in turn lower profits.

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