Companies House has announced it will make all of its digital data available free of charge. This will make the UK the first country to establish a truly open register of business information.
In January 2014 R3 released a business distress index which has highlighted positive figures in UK business growth for 2014. It states that 63% of UK businesses are showing at least one key indicator of growth which suggests that the recovery is bedding in and gaining ground.
There are 5 key indicators of business growth
– Investment in equipment
– Increased sales volume
– Business expansion
– Increased profits
– Growing market shares
By businesses showing positive signs on the above list, it should be the beginning of businesses increasing in confidence which will hopefully aid in their longevity
It needs to be noted however that 37% of businesses are still showing signs of distress. While this means a third of businesses may still be struggling, it is not something to panic over. Carefully and proactively looking after these businesses is the best way to proceed. Keeping a close eye on their management accounts, cash flow forecast and balance sheet is something that bookkeepers, accountants and directors themselves should be concentrating on while signs of distress are still visible.
Some key indicators to look out for within distressed businesses are:
– Creditors being more confident in pursuing their debts
– Under Investment during recession may cause for concern.
– Increase demand on products and goods can put pressure on a company’s cash flow, supply chains and business models
If businesses are prepared to fight through their struggles then their professional advisors should be prepared to support and encourage them with useful information and help along the way.
The flat rate VAT scheme for small businesses is designed to reduce administration hassle for the businesses that use it, not to reduce the amount of VAT the business pays over to HMRC, but that is often a side effect of using the scheme.
You can use the flat rate VAT scheme if you have an annual turnover up to £150,000 (net of VAT). Once registered to use the scheme, you must apply VAT to your sales at the rates required for the particular product or service (20%, 5% or zero). However, when completing the quarterly VAT returns you ignore any VAT paid on purchases, apart from large assets costing over £2000. You calculate the VAT to be paid over to HMRC as a flat percentage of your gross sales, with the percentage used determined by the trade sector which most of your sales fall into.
For example a hairdresser which is registered for the flat rate scheme must use a flat rate of 13%. On sales of £3,000 in the quarter she charges VAT at 20%: £600. She will pay VAT to HMRC of: 13% x £3,600 = £468.
You must choose to register for the flat rate VAT scheme, it will not be offered to you, even if you would be better off using the scheme. When you register you must choose which of 55 trade categories best fits the majority of sales made by your business. This is important as the flat rate percentages vary from 4% to 14.5% for different trade sectors, so an incorrect choice of trade sector can be very expensive.
You can change the trade sector you opt to use, but HMRC generally only permit a change to be made from the beginning of the current VAT quarter. You must also review the trade sector chosen on the anniversary of starting to use the flat rate VAT scheme. If your sales mix has altered so most of the sales are in a different trade sector, you must switch to using the flat rate percentage relevant to the majority of your sales.
If a company is making a profit it can make charitable donations and get relief against corporation tax. It should claim the total donations made in the accounting period on the corporation tax return for that period. However, the deduction of donations cannot change a taxable profit into a loss, or increase a taxable loss. In those cases there is no tax relief for the donations. Although, if the company is part of a group of companies, the relief for the excess donations may be passed to another member of the group.
The recipient charity cannot claim gift aid relief on the company’s donation
As a director and shareholder of your own company you can decide how much salary to pay yourself each month in order to use your tax-free personal allowance in the most tax efficient way. Any further funds you need can be extracted as a dividend if the company is making a profit.
If you are a director of your company and you don’t have a contract that sets out terms of employment with the company, you don’t have to pay yourself the national minimum wage. So how much should you pay yourself?
For 2014/15 if you were born after 5 April 1948 you have a tax free personal allowance of £833 per month (£10,000 per year). You could take a salary at that level and pay no income tax, assuming you have no other taxable benefits from the company such as a car.
However, you will pay national insurance (NICs) on that salary as the NICs threshold is only £663 per month. From a gross salary of £833 the company must deduct NI of £20.40 and set-aside employer’s NI of £23.46 on top. The company will have an employment allowance of £2,000 for the year to set against its employer’s NI due on all its employees, so it won’t have to pay over employer’s NI until that £2000 is used up.
If you take a salary of just above the NI lower earnings threshold of £481 per month, you will get an NI credit towards your state pension, but you don’t pay any tax or NI. However, at that annual salary level (£5,772) you will be “wasting” £4,228 of your tax free personal allowance, unless you have other income to cover it.
You can calculate their business-related motoring costs by either:
a) Take the proportion of business miles to total mileage driven in their vehicle in the year and apply that proportion to their total motoring costs for the year; or
b) Use the fixed expense of 45p per business mile for the first 10,000 miles driven in the year and 25p per mile for additional business miles in the year.
If your client uses method a) they can also claim capital allowances on the cost of your vehicle, restricted for the private use of that vehicle. However, if they use method b) they can’t claim capital allowances for their vehicle but they can claim the interest amount of any finance lease used to purchase the vehicle.
In the tax year beginning April 6th 2014. HMRC are giving UK employers a help. This is in the form of an Employers NI. In that tax year the first £2000 of Employers NI will be waived.
For those of you that use Sturgess and Co for payroll this will be automatically calculated and reflected in the quarterly P30.
Do bear in mind that employees NI is not waived, so before you get carried away and put a higher amount through PAYE!
However you should be paying employees the minumum wage which equates roughly to £13,500 a year. On this example a saving of £765.12 Employers NI will be made each employee. Total tax and NI due £1363.28 per employee if standard tax code.
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HMRC beat its target for tax investigation work by £2 billion in the past year, bringing the total revenue it raised through compliance work to an all-time high, according to new research.
Analysis by UHY Hacker Young shows a record £20.7billion in additional revenue was collected by HMRC through compliance work focused on tax avoidance and evasion in 2012/13 – up 11% from the £18.6billion taken in the previous year.
Roy Maugham, tax partner at the firm, said: “HMRC’s target for the amount of extra revenue it wants to claw back from compliance investigations has become massively ambitious. But it has managed to smash through that target.
“Not all of the extra tax take is from clear cut tax evasion – it is often from HMRC imposing its view of how the tax system works on SMEs and individual taxpayers through the use of an army of tax inspectors and lawyers. Businesses and taxpayers that can’t afford professional advice to deal with a HMRC investigation don’t stand a very good chance. Many feel they have no choice but to just pay up otherwise they risk being dragged into expensive litigation.”
There are a number of capital allowance claims firms targeting businesses which have recently bought or sold commercial property. These ‘experts’ suggest the business needs to pay for a special survey to claim all the capital allowances they are entitled to, and this must be done quickly in order to claim all the allowances due.
In most cases a special survey is not needed. However, it is true that for commercial building sales made since 1 April 2012 the vendor and purchaser must take formal steps (usually an election) to agree the value of fixtures included in that building. This value must be agreed within two years of the transfer of ownership. If agreement cannot be reached the two parties can go to the tax tribunal where the judge will make a decision.
The agreed value for fixtures is brought into the capital allowance pool as the disposal value for the vendor and is added to the capital allowance pool for the purchaser.
There is another change on its way for transfers of commercial buildings from April 2014. The value of fixtures and fittings must be claimed as part of a capital allowances pool by the vendor in an accounting period prior to the sale of the building. If the vendor does not make this claim, the purchaser is barred from claiming any capital allowances for the fixtures it acquires.