Author Archive

Can I employ my child in my business?

Wednesday, June 8th, 2022

Getting your children to help in your business is a useful way of getting an extra pair of hands for you and can earn them some extra pocket money. The money that you pay them will also be a tax-deductible expense in the business.

There are strict rules you must adhere to when employing your children (someone below the age of 18).

A permit is usually required from the local council’s education department before you can employ someone below the age of 16.

Age limits:

How much can you pay?

Employing your children can provide a financial benefit for both your business and your children. Please get in touch with us today if you would like any guidance on this subject.

 

 

 

 

 

 

 

 

 

 

 

A guide to Research and Development (R & D)

Tuesday, May 3rd, 2022

R & D is a Corporation Tax (CT) tax relief that may reduce your company’s tax bill, or, in some circumstances, you may receive a payable tax credit.

It applies to small and medium-sized companies (SME). To qualify as an SME the following conditions must apply:

 

What is R & D Relief:

For tax purposes, R & D takes place when a project seeks to achieve an advance in overall knowledge or capability in a field of science or technology.

There are two schemes available:

 

What qualifies as R & D

Work that advances overall knowledge or capability in a field of science or technology, and projects and activities that help resolve scientific or technological uncertainties, may qualify for R &D relief.

This can include creating new processes, products or services, making appreciable improvements to existing ones, and even using science and technology to duplicate existing processes, products and services in a new way. But pure product development in itself does not qualify.

Examples include software development, engineering design, new construction techniques, bio-energy, cleantech, agri-food and life and health sciences.

 

What costs qualify

What costs do not qualify

 

How to claim R & D tax relief

R & D relief is claimed via the Company Tax Return Form, CT600.

 

More detailed guidance can be found on the HMRC website here:

http://www.hmrc.gov.uk/gds/cird/attachments/rdsimpleguide.pdf

If you need any advice or you feel that you may be eligible for R & D relief then please get in touch and we can help you with your claim.

How to extract profits from your Limited Company

Tuesday, April 12th, 2022

This information is aimed at small business owners who are both shareholders and directors of the Limited Company, whose main income is from the Limited Company.

 

You pay corporation tax on the profits made by your Limited Company at a current rate of 19%. Any profits made after this tax are generally available for you to take from the company.

Any money you take from the company then has tax implications on you personally.

 

There are three main ways to take money from your Limited Company – Salary, Dividend & Pension Contributions:

 

 

Please get in touch with us and we will be happy to advise you on how to take your profits from your company in the most tax-efficient manner.

 

Construction Industry Scheme

Thursday, March 3rd, 2022

Are you missing out on help towards your childcare costs? – A guide to Tax-Free Childcare

Thursday, February 3rd, 2022

Tax-Free Childcare is a government scheme that pays 20% of childcare costs up to a maximum of £2,000 each year. Tax-Free Childcare is a UK-wide scheme covering England, Scotland, Wales and Northern Ireland.

 

For every £8 paid into an online account, the government adds an extra £2, up to £2,000 per child per year (£4,000 for disabled children). It is available for children under the age of 12 (under the age of 17 if the child is disabled).

 

To be eligible you, and your partner, must be over 16 and each expect to earn at least £142 per week on average. The scheme is not available if you, or your partner, expects to individually earn £100,000 or more.

Please be aware this limit is based on individual earnings and not your combined income.

 

This scheme can be used in conjunction with both the 15 and 30 hours free childcare.

However, you will not be eligible for the scheme if you are receiving universal credits or tax credits or if you are part of the childcare voucher scheme.

You can use Tax-Free Childcare all year round to spend on regulated childcare, such as:

 

You can apply for the scheme on the following link:

https://www.gov.uk/apply-for-tax-free-childcare

 

 

 

 

Sole Trader vs Limited Company

Thursday, February 3rd, 2022

Sole Trader:

What is a Sole Trader?

 

Advantages of being a sole trader:

Disadvantages of being a sole trader:

 

Limited Company:

What is a Limit Company?

Advantages of a Limited Company:

 

Disadvantages of a Limited Company:

 

There is no definitive answer as to whether you should be a Sole Trader or a Limited Company as each person’s needs are different. If, having weighed up the pro’s and cons of each, you are still unsure which option is right for you then please get in touch with us and we can help you make the right decision for you and your business.

What items can I reclaim VAT on?

Thursday, January 13th, 2022

You can usually reclaim the VAT paid on goods and services purchased for use in your business.

If a purchase is also for personal or private use, you can only reclaim the business proportion of the VAT.

You must have a copy of the VAT receipt to reclaim the VAT.

There are some typical business costs that are either VAT exempt or zero-rated. This means you will not have been charged VAT, and therefore you cannot claim it back. These should be included in your net purchases figure on your VAT return.

Typical examples of this include:

There are also some business costs that are ‘outside the scope of VAT’. This means that VAT doesn’t apply to them at all. These costs should not be included on your VAT return.

Examples of these include:

Certain business costs have specific rules in regard to VAT:

If you need any advice or would like our help in completing your VAT returns, please get in touch.

 

 

 

 

 

 

 

 

 

 

How can businesses reduce their Carbon Footprint?

Wednesday, December 8th, 2021

With climate change at the forefront of people’s minds, many businesses want to do everything they can to reduce their carbon footprint.

Here are some of the ways in which a business can reduce its carbon emissions:

 

 

A guide to Christmas gifts and parties for your employee

Wednesday, November 10th, 2021

With the festive season fast approaching, we thought a quick reminder of the tax implications of Christmas gifts and staff parties would be beneficial.

When employers provide additional benefits to their employees then they may be liable to additional tax and National Insurance on a benefit in kind.

Benefits in Kind are reportable on a P11d and an employer will pay Class1A National Insurance, while an employee will pay additional tax on the benefit.

There are certain exemptions regarding staff parties and gifts that mean there will be no benefit in kind implications.

Staff Parties

There is a tax exemption on employee entertaining if the following conditions are met:

The cost of the party includes all costs associated with the event including food, drink, taxi’s home etc. and should be divided by the total number of guests at the party.

If the cost exceeds £150 per head, then the total cost is taxable not just the excess.

Staff Gifts

 A trivial benefits exemption means you don’t have to pay tax on a benefit to your employees if all of the following conditions are met:

If you are a director of a close company you cannot receive trivial benefits totalling more than £300 in a year

 

Cash, cash vouchers and Christmas bonuses

These are all classed as additional earnings and must be reported as such through payroll and PAYE and National Insurance will be payable.

 

Budget October 2021

Thursday, October 28th, 2021

On 27th October 2021 Chancellor Rishi Sunak delivered the Autumn 2021 budget. Whilst this budget was more focussed on spending, there are a few key points from this budget and previously announced tax rises.

 

The Health and Social Care Levy:

 

Personal tax rates on dividends:

 

Business rates:

 

National living wage:

 

Reporting of Capital Gains on residential property: