f17e6c97

What is the Start Up Loans scheme?

Fri, 09 Jun 2023 09:00:00 GMT

What is the Start Up Loans scheme and how does it work?

The Start Up Loans Programme was launched in 2012 by the Start Up Loans Company, with the aim of promoting entrepreneurship in the UK and making it easier for new businesses to access financing. This government-backed personal loan is available to individuals who are eligible and allows for borrowing up to £25,000. The scheme includes a repayment plan set at a fixed interest rate of 6% per annum over a period of 1-5 years. Successful applicants benefit from 12 months of free business mentoring through the programme's network of Delivery Partners and access to Open University business courses.

What are the requirements to be eligible for the loan?

Applicants must be at least 18 years old, a resident of the UK with the right to work, and have a business based in the UK that has been trading for less than 2 years.

Additionally, applicants must demonstrate that they are unable to obtain financing from other sources and have passed a credit check, indicating their ability to repay the loan.

Also, for a business to be eligible for the loan scheme, its business activity must not be related to any of the following categories:

Weapons
Chemical manufacture
Drugs
Illegal activities
Banking & money transfer services.
Private investigators
Gambling and betting
Property investment
Charities

What are the benefits of the Start Up Loans scheme?

Opting for a government-backed loan to finance a business has numerous benefits. One of the major advantages is that the loans are "unsecured". This means it does not require any collateral or personal guarantee. Therefore, the risks associated are low.

Moreover, the interest rate and overall repayment terms are comparatively more favourable than other types of business loans. This scheme is very useful for individuals, especially directors of new limited companies to fund and help their company grow.

If you have any questions regarding this please do not hesitate to contact us.

At your service!

About Us

At 1st Class Accounts, we are a fully experienced team of accountants providing a full range of services for businesses of all sizes. We serve contractors, sole traders and limited companies nationwide. No matter what your accounting needs may be, we are ready to help. We strongly believe that our success is based on your success and we can genuinely say that we are committed to your financial well-being.

What is the difference between accounting and auditing?

Thu, 08 Jun 2023 12:00:00 GMT

Time to read: 3 minutes

What is accounting?

Accounting can be defined as the process of capturing, classifying, summarising, analysing, and presenting financial information of an entity.

Accountants are tasked with the preparation of the financial statements of an entity and their responsibility generally ends when this is completed and presented to the management of the entity. The accountants can suggest areas of improvement relating to the accounting process and related activities.

What is auditing?

Auditing is defined as the critical examination of the financial records or statements of an entity.

Auditors use the prepared financial statements to complete the auditors’ report that is presented to the shareholders. Unlike accountants, auditors do not make suggestions for improvements except for specific requirements such as internal control. Auditors are usually external and independent of the company to provide credibility of the financial statements.

What are the similarities between accounting and auditing?

Accounting and auditing have basic processes that are very similar. ACCA requires both accountants and auditors to have a thorough knowledge of accounting basics, standards and principles . Both accounting and auditing use vital procedures and techniques of book-keeping, computation, and analysis. The main purpose of both is to ensure that the financial statements show a true and fair reflection of the actual financial position of an entity to its stakeholders.

What are the differences between accounting and auditing?

The focus of accounting is to accurately record and present the financial information of an entity in the form of financial statements. However, the focus of auditing is to substantiate the accuracy and reliability of the information provided in the financial statements. This is to form an opinion of whether financial statements show a true and fair view of the financial position of the entity to the shareholders.

The accounting process of an entity is always ongoing with the daily recording of financial transactions. It is very detailed as it captures the current financial transactions and activities of an entity. During the accounting process, the financial records are checked and verified for accuracy and completeness. This is different from the audit process, which is annually and at the end of the financial year end when the financial statements are completed. This is because auditing concentrates more on past events rather than current events. The auditing of the financial statements is carried out through the process of test or sample checking which determines if the financial statements reflect a true and fair view of the entity.

To conclude

The objective of accounting is to determine the financial position, profitability, and performance of an entity. However, the objective of auditing is to add credibility to the financial statements and reports of the entity. However, both the accounting and audit processes are required by stakeholders to make informed decisions based on the financial statements.

If you need more support with business bank accounts, please do not hesitate to contact us.

At your service!

For more information visit:

https://keydifferences.com/difference-between-accounting-and-auditing.html

About Us

When to complete a W8-BEN-E form

Fri, 05 May 2023 12:00:06 GMT

Time to read: 1 minute

When a UK company provides services for a US based company, they are required to provide a completed W8-BEN-E form to the US based company. It is very important that the application is completed so that the UK company can be exempt from paying tax on income received in the US under the US:UK tax treaty.

What is a W8-BEN-E form?

A W8-BEN-E form provides the US based company with the relevant information required, such as the name of the company and their foreign unique identification number.

Is the W8-BEN-E form the same as the W8-BEN form?

No, the forms are not the same. The W8-BEN-E form is completed on behalf of a foreign company and the W8-BEN is completed on behalf of a foreign individual.

Does completing a W8-BEN-E form exempt the company from withholding tax?

W8-BEN-E form does automatically exempt a company from withholding tax being deducted from their income. If the work is being completed in the US, then the company may be subject to withholding tax (federal and state tax). However, the company is required to complete the W8-BEN-E form regardless of whether they are subjected to withholding tax.

If you have any questions regarding this or need help completing the form, please do not hesitate to contact us.

At your service!

About Us

Why is it important to open a business bank account?

Fri, 05 May 2023 07:30:00 GMT

Time to read: 2 minutes

There are many reasons why opening a business bank account is essential. Here are 3 of the most important reasons:

1. Accounting / Bookkeeping

It is important and useful to have all your business transactions in one place. It makes it much easier to track income and expenses, therefore providing a clear picture of how the company is doing financially. Businesses can then also benefit from using accounting softwares such as Xero to track all transactions coming in and out of your business bank account.

2. It creates a good impression

Having a business bank account looks professional and will build credibility with customers. From a customer’s perspective, seeing a business name rather than the person’s name appear on an invoice will automatically make a better impression.

3. It provides protection

One of the most important reasons to open a business bank account is to protect your personal assets. Should the business fail for any reason, since the business is a separate entity, your personal assets can be protected. Also, in case of any HMRC investigations, paying for expenses via a business bank account is stronger proof that the expense is business related, compared to paying for a business expense via a personal bank account.

If you need more support with business bank accounts, please do not hesitate to contact us.

At your service!

About Us

Declaring rental income and expenses on a self-assessment

Wed, 12 Apr 2023 11:00:01 GMT

Time to read: 3 minutes

When owning a rental property, it's essential for individuals to declare the rental income and expenses accurately on their self-assessment tax return. The income and expenses incurred must relate to the self-assessment tax period which is from the 06 ^th of April to the 05 ^th of April the following year.

Rental Income

As for the rental income, the total income received from renting out a property to tenants must be reported. This is regardless of the number of properties owned and the percentage of ownership for each property, as it is compulsory for all income and expenses to be included in the tax return. For example, if an individual has 50% ownership on a rental property, they are required to declare their share of income received and expenses incurred every tax year.

Rental Expenses

Similarly, expenses incurred in relation to the rental property can be claimed as deductible expenses. The allowable expenses which can be put through are:

repairs and maintenance costs
insurance
professional, legal and management fees
any other costs directly related to the property

It is important to note that there are some expenses which are not allowable to claim. These include:

the full amount of mortgage payment – only a percentage of the full interest element of the mortgage payment can be offset as a finance relief
personal expenses cannot be claimed that were not incurred solely for the property rental business e.g. personal utility bills

Self-Assessment Tax Liability

For individuals, it is useful to keep accurate records of all expense’s either via receipts, invoices, or bank statements. This is to benefit from claiming all the necessary expenses to ensure the tax liability is reduced.

The tax to be paid is on any profits made from renting out property. How much an individual pays depends on how much profit is made and their personal circumstances. Aside from rental income and expenses, on the self-assessment tax return there are several other income and expenses declared also, such as PAYE, self-employment, disguised remuneration, company dividends, etc. All of these factors and more are taken into consideration when calculating an individual’s self-assessment tax liability.

If you need help completing your self-assessment tax return, please do not hesitate to contact us.

At your service!

About Us

What are the advantages of accounting software?

Wed, 12 Apr 2023 08:15:00 GMT

Time to read: 2 minutes

From Xero to QuickBooks to Sage, accounting softwares are used by accounting professionals to process financial transactions, payroll, cash flow analysis and invoices to name a few. The popularity of accounting software is at an all-time high, being used by businesses both large and small but are they as good as they seem to be?

Advantages of Accounting Software

Automation

The automation of reports and analysis such as forecasting and providing live snap shots of the business is a great benefit as creating these manually can be a lengthy process. Once staff are comfortable with the accounting software, the increases in efficiency, speed, and a reduction in human error which will produce a more consistent and tranquil workflow.

Integration

Accounting software can be integrated with other systems such as banking and e-filing. Bank feeds from online banking accounts can be directly linked to the software, streamlining the process at which transactions can be reconciled meaning there is no need to manually send bank statements. As the accounts are now digital, services like ‘Making Tax Digital for VAT’ can make submitting VAT returns easier as they would be submitted directly via the software.

Efficiency

Using accounting software can help you save time and money, offering you a valuable insight into your business. If you choose the package carefully, investing in a computerised accounting system can be one of the best decisions you can make for your business.

If you would like more information on which accounting software to use, please do not hesitate to contact us.

At your service!

About Us

Voluntary National Insurance contributions

Mon, 13 Mar 2023 08:30:01 GMT

What is National Insurance?

National Insurance contributions count towards a person’s state pension and benefits. There are three classes and each one has different benefits. Please see the table below for a breakdown:

Voluntary National Insurance contributions

People who may benefit from making voluntary National Insurance contributions are those who are:

Employed but receive low income.
Unemployed and have not claimed benefits.
Self-employed and received low profits.
Living or working outside the UK.

The people listed above would not have enough years of contributions to receive the full state pension or qualify for the same benefits as those making National Insurance contributions. Therefore, if they want to receive the full state pension and benefits, they will have to make voluntary contributions.

Eligibility

Here is a breakdown of the criteria one must meet in order to qualify for voluntary National Insurance contributions:

Employed but receives income of under £123.00 a week (Class 2).
Self-employed and receives income of £1,000.00 or less (Class 2 or Class 3).
Self-employed with income of over £1,000.00 but with profits less than £6,725.00 (Class 2 or Class 3).
Living or working abroad (Class 2) – Must have previously lived in the UK for 3 consecutive years or paid at least 3 years of contributions.
Self-employed in the following professions (Class 2 or Class 3):

Examiner
Minister of religion
Investment or land and property business

Living abroad but not working (Class 3).
Unemployed but not claiming benefits (Class 3).
Married woman or widow who stopped paying reduced rates (Class 3).
Reached state pension age and want to fill in gaps in the National Insurance record.

How much will I have to pay?

For the 2022-23 tax year, the amounts payable are:

£3.15 a week for Class 2 contributions
£15.85 a week for Class 3 contributions

The deadline to make voluntary contributions is the 05th of April each year and contributions can go back a maximum of 6 years.

The best way to check if you are eligible to make National Insurance contributions is to check on the HMRC website .

If you have any questions regarding National Insurance, please do not hesitate to contact us.

At your service!

The importance of receipts and invoices

Mon, 06 Mar 2023 10:06:23 GMT

What are receipts?

A receipt is a document which confirms a specific transaction has taken place. Receipts can be printed or be in digital form. Receipts are written proof that a purchase has been made in exchange for a good or service that has been provided to the buyer. Such receipts ensure that both the buyer and seller have evidence regarding a specific transaction, to keep as some sort of protection. Usually, a receipt contains a breakdown of the prices, product or service name, discounts, VAT amount, total amount due and the total amount paid.

Why are receipts important?

Maintaining a record of receipts for any business-related expenses that may have incurred can be critical for a company. When completing corporation tax returns, accountants or bookkeepers may require such receipts to ensure all transactions have been accounted for accurately. For any payments made via the business bank account, providing receipts can help accountants identify the sort of transaction incurred, to ensure the transactions have been correctly categorised as a business expense. This can help reduce the corporation tax liability as it will provide the ability to make the most of the expenses to claim. Similarly, receipts can prove to be pivotal especially for any business-related expenses that may have been incurred personally, which can be included in the accounts.

Moreover, receipts can come in handy when completing self-assessment tax returns, as it will help provide clear evidence of the expenses incurred, for example when declaring any rental expenses or any self-employment expenses. This will ensure individuals benefit from any additional expenses they can claim which will help result in a lower tax liability for the tax year. Additionally, receipts can be useful in circumstances whereby HMRC choose to investigate any accounts. They provide legal protection and clear evidence of all the expenses that have been claimed.

What are invoices?

Invoices are commercial documents which record a transaction incurred between a buyer and seller. There may be different forms of invoices such as a paper receipt, a bill of sale, or a sale invoice. Normally, invoices include the date of the transaction, the total amount due, the due date to make this payment, the type of payment method details, a description of goods and services provided, a breakdown of unit costs and the VAT element if the individual or company is VAT registered.

Why are invoices important?

Invoices are crucial in the business world as well as accounting. By keeping a record of all invoices, firms can benefit from legal protection in case the accounts are investigated by HMRC. For example, invoices form an essential foundation of all the sales incurred to help provide a better understanding of the goods and services provided. Invoices are also crucial when completing any corporation tax returns and VAT returns. Accountants will require such invoices as proof of income to ensure the right amount is accounted for and declared, e.g. the VAT element. Invoices can also help business owners to keep track of their debtors or any amounts owed to businesses or individuals, to enable them to run their company efficiently.

If you have any questions regarding this, please do not hesitate to contact us.

At your service!

What is a DS01?

Wed, 15 Feb 2023 09:00:00 GMT

Time to read: 2 minutes

DS01 is a voluntary way to dissolve a limited company, this is sent to Companies House and once submitted can be struck off from the Register of Companies.

For this application to be accepted the company must have met a certain criterion: up to or more than three months there should no trading, selling of property, changing the company name, or clearing all debts.

How to file a DS01

Two of the most common ways an individual can file a DS01 is by completing a paper form or a form online .

Filing a DS01 using a paper form

A paper form can be found online. An individual would need to search for DS01 and click the hyperlink “Strike off a company from the register”. The relevant page will now show you information about a DS01. An individual can print off the form on this website and fill out the necessary information, such as the company's full name, directors’ signatures, and the company number. After the individual will carefully seal it in an envelope and send this off to HMRC.

Once this has been accepted, the individual will receive confirmation of the DS01’s submission.

Filing a DS01 using an online form

An online form can easily be accessed the same way as a paper form. The individual will search for DS01 online and go onto “Strike off a company from the register”. On the page, scroll down to ‘close a company online’. This will take the individual to a starting page. The individual will put the relevant information such as the company’s registration number, and the companies' house authentication code. This is for HMRC to find the correct company to dissolve. It will then ask to confirm the director's name and if they wish to submit this form.

At your service!

What does my tax code mean?

Wed, 08 Feb 2023 09:00:02 GMT

Time to read: 3 minutes

Tax codes are used by employers and pension providers to calculate how much income tax to deduct from a person’s pay or pension.

When would tax codes change?

Tax codes may change if a person:

receives additional income
starts or stops receiving certain benefits from their employment
starts to receive taxable state benefits
claims the marriage allowance
claims expenses they receive tax relief on

What does my tax code mean?

In the 2022-23 tax year, 1257L is the most common tax code. This is for people who have one job and one pension.

The numbers in the tax code refers to availability of tax-free income in the tax year. For example, 1257L tax code means that their personal allowance for the tax year is £12,570.00.

The letter(s) in the tax code mean different things. To find out what the different letters mean, please click here .

Emergency tax codes

When HMRC does not receive a person’s income details in time after a change, such as a new job, working for an employer after being self-employed or receiving company benefits or State Pension, can trigger an emergency tax code.

Some examples of emergency tax codes are:

1257W1
1257M1
1257 X

These codes mean that the person will have to pay all on all income above the basic personal allowance. These codes are only temporary and HMRC will update the tax code after receiving the correct information from the person’s employer or pension provider.

Changes in employment

It is important to ensure that HMRC are aware of any changes to employment. HMRC will receive this information from a person’s employer and automatically update their tax code when their income changes.

If you have any questions regarding this, please do not hesitate to contact us.

At your service!

What does each box mean on your VAT return?

Sun, 15 Jan 2023 10:00:00 GMT

Time to read: 2 minutes

A VAT return is used to calculate how much Value Added Tax a company should pay or be reimbursed by HM Revenue and Customs (HMRC). Most times, this is to be completed 4 times a year. The VAT return is made up of nine boxes which each represent different aspects of a company’s activity. In this post, we will outline the fundamentals of each VAT box and how it contributes to the VAT return.

VAT Boxes

Box 1 - This box shows the total VAT received on income.

Box 2 – This figure shows the VAT due on acquisition of goods for the period being reported. However, this box only applied to those in Northern Ireland importing goods from EU member states. The change to only allow goods from the EU was made from 01st January 2021 onwards.

Box 3 – This figure is calculated by adding boxes 1 and 2 together.

Box 4 - This figure shows the total VAT paid on expenses.

Box 5 – This figure shows the net VAT to pay to HMRC or reclaim. This is calculated by subtracting box 4 from box 3. If the net figure is positive, this is the amount owed to HMRC. However, if it is negative, HMRC will credit your account and repay the balance.

Box 6 - This figure shows the value of sales and all other outputs excluding any VAT, for the period being reported.

Box 7 – This figure shows the total value of purchases and all other inputs excluding any VAT, for the period being reported.

Box 8 – This figure shows the total value of all supplies of goods and related costs, excluding VAT, from Northern Ireland to EU member states (from January 2021).

Box 9 – This figure shows the total value of all acquisitions of goods and related costs, excluding any VAT, from EU member states.

If you have any questions about filing a VAT return, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.gov.uk/guidance/how-to-fill-in-and-submit-your-vat-return-vat-notice-70012#section3

https://athenahallbookkeeping.com/blog/vat-boxes-explained/

https://www.cowgills.co.uk/news/back-to-basics-vat-returns/

https://sumup.co.uk/invoices/dictionary/vat-return/

How can Xero transform your business?

Mon, 09 Jan 2023 10:00:04 GMT

Time to read: 4 minutes

Directors of a limited company need a way to keep on top of their finances. They need to track how much profit they are making, how much they are spending on expenses, whether they have the capacity to grow and to make new changes. This can all become time consuming and confusing which is why Xero is a great platform to help them with this process.

Xero is an accounting software that streamlines all accounting processes. There are many benefits for a business to join Xero.

Time saving

Xero can provide any information you need quickly. This is everything from viewing your transactions to viewing financial reports. Instead of having to create these reports yourself, Xero does this automatically.

Automation

Not only can Xero automatically provide you with the above information, Xero can also analyse your data. Your invoices and bills can be set up and Xero will automatically pull all the information needed as well as set up repeating invoices.

Reduce room for error

Being on Xero significantly decreases room for human errors. Xero can help detect errors and reduce any duplications from occurring. A pop up would also appear if it notices an error and will not allow another user to proceed unless it is fixed.

Liaise with advisors

If an accountant is completing the accounts for the limited company, the users can have direct access to the platform and Xero enables everyone to post comments and raise any questions on Xero

Xero can help transform small businesses and can help avoid any financial confusion and complications businesses may have faced in the past. Get in touch with us if you want to know more about this and we will be more than happy to help your business grow.

At your service!

Changes to VAT surcharges, interest, and penalties from January 2023

Thu, 15 Dec 2022 15:19:12 GMT

Time to read: 4 minutes

For all VAT returns starting on or after 01st January 2023, the VAT surcharge system will be replaced by a new system including penalties, penalty points and interest. This will be applied to all VAT returns either submitted late or paid late to HMRC, including nil submissions and VAT refunds.

If you submit your VAT return late

Each time a VAT return is submitted late, a late submission penalty point will be issued.

When a penalty threshold has been reached, a £200.00 penalty is issued. All subsequent VAT returns that are submitted late will also be subject to a further £200.00 penalty. The points can be brought back down to zero if all VAT returns are submitted on time before the period of compliance (shown in the table above) as well as submitting all outstanding returns for the last 24 months.

If you pay your VAT liability late

Up to 15 days overdue – there will be no penalties if the VAT is paid in full or a payment plan is arranged.

Between 16 and 30 days overdue – the penalty charged is calculated at 2% of the VAT liability that is owed at day 15.

More than 31 days overdue - the penalty charged is calculated at 2% of the VAT liability that is owed at day 15 and a further 2% on the VAT that is owed on day 30. A second penalty will also be issued and calculated at a daily rate of 4% per year up until the whole outstanding balance has been paid.

As these are new changes, HMRC will not charge a first late payment penalty from 01st January 2023 to 31st December 2023, if you pay in full within 30 days.

If you have any questions regarding this new change, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.gov.uk/guidance/prepare-for-upcoming-changes-to-vat-penalties-and-vat-interest-charges

Cash vs Accrual Accounting

Wed, 07 Dec 2022 11:00:04 GMT

Time to read: 2 minutes

What is cash basis accounting?

Businesses that use cash basis accounting record income and expenses only when money related to those transactions is received or dispensed. They do not count sent invoices as income, or bills as expenses until they have been settled.

Despite the name, cash basis accounting has nothing to do with the form of payment you receive. You can be paid electronically and still be using cash accounting. You can use cash basis if you:

run a small self-employed business, for example sole trader or partnership
have a turnover of £150,000 or less a year

If you have more than one business, you can use the cash basis for all your businesses. The combined turnover from your businesses must be less than £150,000.

What is accrual basis accounting?

Businesses that use accrual accounting record income as soon as they raise an invoice for a customer. Revenue is accounted for when it is earned, and an expense is recognised when a bill is received. It is recognised as an expense even if the payment will not be made for another 30 days.

You have a much more accurate picture of business performance and finances
You can make financial decisions with far more confidence
It can sometimes be easier to pitch for long-term finance

Which one should I use?

The accrual method is the more commonly used method. One reason for the accrual method's popularity is that it smooths out earnings over time since it accounts for all income and expenses as they are generated. The cash basis method records these only when cash changes hands and can present more frequently changing views of profitability.

If you would like more information regarding this, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.xero.com/uk/guides/cash-vs-accrual-accounting/#:~:text=The%20difference%20between%20cash%20basis,invoice%2C%20it's%20accrual%20basis%20accounting

https://www.gov.uk/simpler-income-tax-cash-basis/who-can-use-cash-basis

How to refresh and reconnect Xero bank feeds

Thu, 17 Nov 2022 13:00:05 GMT

Time to read: 2 minutes

Once a company and live bank feed has been set up on Xero, the bank feeds are automatic. This makes it easy to reconcile the accounts and keep track of income and expenses. You can also track if the payment for an invoice has been received from a customer/client or whether there are any outstanding bills to be paid.

However, you will be required from time to time to refresh your bank feeds on a quarterly basis to reconnect the bank feed on Xero.

The process of refreshing and reconnecting the bank feed on Xero is different. To refresh the bank feed, you will not be required to log into your online business bank account. However, you will be required to log in to your online business bank account to reconnect the bank feeds.

How to refresh a Xero bank feed

To refresh a bank feed on Xero accounts, log in to Xero, on the dashboard, click the bank feed that you would like to refresh and use the following steps:

Click on the three dots located near the name of the bank.
When the tab is opened, under ‘bank feeds’ click on ‘refresh bank feed’.
A message will then appear under the bank’s name that says ‘refresh request has been sent.
Repeat the steps above for each bank account.

How to reconnect a Xero bank feed

To reconnect a bank feed on Xero, log in to Xero, on the dashboard, click the bank feed that you would like to reconnect and use the following steps:

Please select ‘get bank feed’.
Click ‘login & connect accounts’.
You will be taken to your bank to log in. Enter your online banking credentials and any multi-factor authentication required.
Select the accounts you want to share with Xero and complete the sharing steps before you're redirected back to Xero.
Repeat the steps above for each bank account.

Xero is currently working hard to eliminate the process of having to reconnect the bank feeds on a quarterly basis.

Some bank accounts, for example Starling bank accounts, may require assistance to connect the bank feeds. 1st Class Accounts is always happy to assist with reconnecting and refreshing these bank feeds.

If you have any questions, please do not hesitate to contact us.

At your service!

Incorporating a Limited Company in the UK

Tue, 08 Nov 2022 09:18:19 GMT

Time to read: 2 minutes

Companies House

Companies House is the UK’s registrar of companies. An individual cannot have an operating limited company until Companies House has incorporated under the Companies Act 2006.

By establishing a company, an individual has a duty and is required to file specific documents each year such as annual accounts and a confirmation statement.

If any information requires an update, Companies House must be informed. Some examples of updates are changing a registered office address, appointing a new director, or resigning a director.

How to incorporate a company

One of the many ways to incorporate a company is online. Alternatively, a paper form can be used which can be found on the Companies House website.

The first step is picking a name for the company. The company's name must be unique and not already taken by another. The availability of the name can be checked online. If it is not available, they will recommend alternative names close to the original. One thing to note is that a name cannot be reserved, so if it is available, it is best to submit this as soon as possible. Do not worry, if a company would like to change their company name later, they can complete this by logging in on the Companies House website.

Once the name has been selected, the remainder of the form will need to be filled which Companies House require. Information such as the directors and shareholders name, home address, date of birth, the number and value of shares to be issued, SIC code (a code that registers the activity of the limited company), the registered office address for the company, and security questions.

Lastly, once all the information has been checked, the form can be submitted, and an email will be sent from Companies House as a confirmation. The email confirmation can take up to two days. Once this has been confirmed, the Incorporation Certificate and Shareholder Certificate will be in their possession.

1st Class Accounts is delighted to help an individual if they cannot find this form or need help with this process.

At your service!

Mini Budget Summary

Mon, 24 Oct 2022 14:00:00 GMT

Time to read: 2 minutes

The chancellor has delivered a mini budget to tackle soaring energy costs and inflation. The points below summarise the key points mentioned.

Basic rate income tax

The basic rate of income tax is currently 20%. From April 2023 this will remain at 20%. The plans have been scrapped to reduce this down to 19%.

National insurance

From July 2022, national insurance increased by 1.25%. From the 06th November 2022, this increase of 1.25% will be reversed.

Corporation tax

The tax in which UK companies pay is set to increase to 25% in April 2023 from 19%.

IR35

The rules will no longer be simplified for IR35 (the rules that govern off-payroll working). The current rules will continue into the next tax year.

Dividends

From the 06th April 2022, all dividend tax rates increased by 1.25%. This tax rise will remain as it stands.

Stamp duty

In the current system there is no stamp duty to pay on the first £125,000.00. This will be doubled to £250,000.00. For first time home buyers, this will be increased from £300,000.00 to £425,000.00.

If you are unsure of how the mini budget will affect you and how you can prepare for any changes in advance, please do not hesitate to contact us.

At your service!

What is the VAT Flat Rate Scheme (FRS)?

Tue, 11 Oct 2022 10:29:54 GMT

Time to read: 3 minutes

The Flat Rate Scheme is a VAT scheme companies and individuals can apply for.

Conditions

To be eligible for the VAT Flat Rate Scheme, the entity must be VAT-registered. In addition, the business VAT turnover must be £150,000.00 or less (excluding VAT) in the next 12 months.

How to apply

Applications can be made via VAT600FRS form to join the flat rate VAT scheme. Once submitted HMRC will issue a letter of approval to use the scheme.

How the scheme works

Under the scheme, entities pay VAT at a fixed percentage of the gross income, inclusive of VAT, to HMRC.

The percentage applied depends on the industry the entity operates within. A full list of industries and percentages can be found via the following link: https://www.gov.uk/vat-flat-rate-scheme/how-much-you-pay

Benefits and differences

One benefit under this scheme is entities can charge 20% VAT to their customers and only pay HMRC VAT at their industry percentage. The difference between what is charged to customers and paid to HMRC is recognised as additional revenue for the entity.

Another benefit is during the first year under this scheme, entities will receive a further 1% discount until the first anniversary that the entity registered for the VAT Flat Rate Scheme.

One thing that differentiates this scheme from the VAT Standard Scheme is that entities are unable to reclaim the VAT on their purchases - except for capital goods over £2,000.00.

Example of capital goods

A computer package (computer, printer, camera, scanner, speakers) are bought under a single purchase. The cost of the package costs £2,500.00. This is higher than the £2,000.00 limit mentioned above, therefore can be recognised as a capital good. The VAT paid on this purchase can be claimed and offset against the VAT liability calculated.

If you have any questions about the VAT Flat Rate Scheme, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses#reclaim-of-vat-on-capital-expenditure-goods

https://www.gov.uk/vat-flat-rate-scheme

https://www.gov.uk/government/publications/standard-industrial-classification-of-economic-activities-sic

What is Anti-Money Laundering?

Wed, 14 Sep 2022 12:45:00 GMT

Time to read: 2 minutes

What is Anti-Money Laundering?

Anti-Money Laundering (AML) is a regulation to deter criminals from obtaining illegal funds and redistributing it as a legitimate source of money. An example of money laundering is when a property is bought with illegal money, sold at a higher price, and the profits have entered the criminal’s bank account.

The objective of AML checks are to discourage and prevent these type of illegal actions from happening.

AML check

To protect a company, there are checks that can be done and are a requirement by law to complete. This is so a company can be protected from directly or indirectly being caught in criminal activity.

If a business fails to undertake this check, they are more likely to obtain a fine as well as detrimental consequences, for the business and its owner.

The general purpose of the check is to verify a person’s authenticity and ensuring there will be no risk doing business with them.

The information required for an AML check is the following:

Full name
Date of birth
Photo of the individual from an official document e.g. a driving licence or passport
Official documents such as a HMRC letter or utility bill with a person’s current residential address
A further check may be required such as the details of the individual’s business, employment, and the source and/or origin of funds going through the business.

If you have any questions regarding anti money laundering and the checks required to be completed, please do not hesitate to contact us.

At your service!

What is Straight-Line and Reducing Balance Depreciation?

Mon, 05 Sep 2022 10:09:56 GMT

Time to read: 3 minutes

What is depreciation?

Depreciation is the term used for when an asset loses its value over time. The value of an asset decreases due to routine use, wear and tear, or obsolescence.

What is an asset?

An asset is any resource that has an economic value owned by an individual or company with the expectation of providing a future benefit. Some examples of assets depreciated by companies include:

Office furniture
Computers
Vehicles
Equipment

Straight line depreciation

Straight line calculates the asset’s value that’s lost in each financial period. With straight-line depreciation, an asset’s cost is depreciated the same amount each year. It is calculated by multiplying the cost of the asset by the percentage depreciation.

Reducing balance depreciation

The reducing balance method is used to calculate the depreciation of an asset when expensed at a percentage. This is calculated by subtracting the accumulated depreciation from the cost of the asset. The remaining value is then multiplied by the percentage depreciation.

Depreciation on tax returns

Depreciation can be classified as a business expense and will appear on the profit and loss statement, reducing the tax liability.

The assets that the company have will be evident on the balance sheet and will show the net book value of the assets at the end of the accounting period. The company accounts will also show how much value the assets have lost from the time of purchase.

Choosing the right method of depreciation

Most companies use the straight-line method due to its simplicity. However, the reducing balance may be a better option for some assets. This is because some assets lose value faster in the first few years after purchase. The method of depreciation that should be used highly depends on the type of asset the company has.

If you require any further advice regarding assets and depreciation, please do not hesitate to contact us.

At your service!

What is Marriage Allowance?

Fri, 19 Aug 2022 12:15:00 GMT

Time to read: 2 minutes

Marriage allowance is a benefit that allows an individual to transfer £1,260.00 of their unused personal allowance to their partner. This option is only eligible for those who are married or in a civil partnership which is registered in the UK. This would help reduce their partners tax liability by up to £252.00 (£1,260.00 x 20%).

For a couple to benefit from the marriage allowance, an individual must have an income that is below their personal allowance of £12,570.00 in order to transfer a maximum of 10% of their personal allowance. The higher-earning partners income must also be at the basic rate threshold, which means that their income must be in between £12,571.00 and £50,270.00 in the UK. For those who reside in Scotland, the partner must pay the starter, basic, or intermediate rate where the income must be between £12,571.00 and £43,662.00.

Additionally, an individual can backdate their claim to consider the period after 05th April 2018 for which they were eligible for the marriage allowance. In order to claim this, the lower earning individual would need to apply to HMRC to request for any unused personal allowance to be transferred to their spouse. Marriage allowance cannot be claimed by those who live together but are not married or in a civil partnership.

Furthermore, if there are changes in circumstances e.g. the relationship ends due to a divorce, changes in income, or the individual no longer wants to claim, the individual must contact HMRC to cancel the marriage allowance.

If you have any questions regarding the marriage allowance or would like to know if it is applicable to you, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.gov.uk/marriage-allowance

VAT Domestic Reverse Charge for the Construction Industry Scheme (CIS)

Wed, 10 Aug 2022 10:30:00 GMT

Time to read: 3 minutes

The VAT reverse charge was introduced by the UK government on the 01st March 2021. The purpose of this new regulation was to help reduce ‘missing trader’ fraud, whereby a company sets up a business in the construction industry, charges VAT to its customers and simply disappears (ceases trade) before paying the tax due to HMRC.

What is the VAT domestic reverse charge?

The VAT domestic reverse charge is a major change to the way VAT is collected in the construction industry and affects both suppliers and customers that are both VAT and CIS registered.

The new legislation only applies to UK VAT-registered businesses who are supplying or receiving standard or reduced rated VAT services that operate within the Construction Industry Scheme (CIS).

HMRC have a list of when you must use and not use the VAT domestic reverse charge: https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services

The flowchart below can be used as a guide to help you understand whether you should apply the standard VAT rules or the VAT domestic reverse charge:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/878594/20.01.15_annexe_2_customer_flowchart.pdf

Guidance on invoicing for CIS where the VAT domestic reverse charge applies

When generating an invoice, it is important to ensure that the invoice includes the following:

No VAT
A note that states ‘the VAT domestic reverse charge applies, customer to pay VAT to HMRC’
Details on how much VAT is due next to the note that states the VAT domestic reverse charge applies

If you require any further advice regarding the VAT domestic reverse charge, please do not hesitate to contact us.

At your service!

What Are Dividends? Dividends Vs. Director's Loans

Wed, 20 Jul 2022 15:30:01 GMT

What are dividends?

Dividends can be defined as the distributions of profit or retained earnings by a company to its shareholders. Individuals in the UK have a tax-free dividends allowance that they can take without any tax implications in a tax year. However, once an individual has exceeded the tax-free dividend threshold, there will be tax implications.

What happens when the dividends are withdrawn from a company?

The dividends withdrawn from a company are disclosed in a self-assessment tax return.

Below is a breakdown of the tax implications on dividends withdrawn from a limited company in the 2022-23 tax year.

Dividend withdrawals up to £2,000.00 in the 2022-23 tax year, are tax-free.
When the total personal income for the tax year is under £50,270.00 including dividends, the dividend tax payable will be 8.75% .
When the total personal income for the tax year is between £50,271.00 to £150,000.00 including dividends, the dividend tax payable will be 33.75% .
When the total personal income for the tax year is above £150,001.00 including dividends, the dividend tax payable will be 39.35% .

What is a director’s loan?

A director’s loan can be defined as a loan taken by a director (or a close family member) from a company. The loan taken is not a dividend withdrawn, expenses reimbursed or salary paid to the director or shareholder. If the director(s) takes a loan of £10,000.00 or more, a general rule is that it must be approved by the shareholders.

If the company director is also a controlling shareholder, the loan approval is more of a formality rather than a legal requirement.

What are is the tax implications?

When the director’s loan taken is more than £10,000.00 it will give rise to a benefit in kind, on the interest repayable at the official rate.

According to section 455 Corporation Tax Act 2010 (S455 CTA 2010), the director’s loan is subject to a tax charge at 33.75% (additional rate) on the outstanding loan at the financial year end or, nine months after the accounting period.

This tax charge is payable to HMRC regardless of whether the company makes a profit or loss. The tax charge paid under section 455 is a temporary tax.

Once the loan has been repaid by the director (or a close family member), HMRC will refund the company the tax charge nine months after the loan has been repaid.

If you have any questions regarding dividends and director’s loans, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.accaglobal.com/uk/en/technical-activities/uk-tech/in-practice/2021/may/10-things-directors-loan-account.html

https://www.gov.uk/tax-on-dividends

https://www.gov.uk/directors-loans/you-owe-your-company-money

Statutory Maternity Pay

Tue, 19 Jul 2022 13:47:56 GMT

When having a baby, an individual is entitled to Statutory Maternity Leave where they will receive Statutory Maternity Pay (SMP).

SMP is paid for up to 39 weeks, where in the first six weeks an individual will receive 90% of their average weekly earnings (AWE) before tax. For the remaining 33 weeks, the individual will receive £156.66 per week or 90% of their AWE (whichever is lower). SMP is paid in the same way as an individual’s wages where tax and national insurance need to be deducted.

Am I eligible for Statutory Maternity Pay?

To qualify for SMP the individual must earn on average at least £123.00 a week (gross). The correct notice and proof must be provided to the employer of their pregnancy via a MAT1B form. They must have worked for their employer continuously for at least 26 weeks continuing into the 'qualifying week', which is the 15 ^th week before the expected week of childbirth.

What can I get if I am not eligible for Statutory Maternity Pay?

If an individual does not qualify for SMP, they can receive the Maternity Allowance which is a weekly payment from the government which is available to some individuals who are pregnant or have just given birth. They can receive £27.00 a week for up to 14 weeks if they complete unpaid work for their spouse or civil partner's business.

What is advanced Maternity Pay?

Small businesses often have to make payments to employees to cover statutory maternity and paternity pay. If your business cannot afford to make such payments, you can ask HMRC to provide an advance payment of up to 103% of your employee's statutory maternity, paternity, adoption, and shared parental pay to help your cash flow.

What other benefits can I claim while receiving Statutory Maternity Pay?

An individual can claim Universal Credit at the same time as both SMP and the Maternity Allowance, however, this will reduce the amount of Universal credit they are entitled to. Universal Credit is the main benefit available for people on low income who are not already on other means-tested benefits or tax credits.

Is my partner eligible for paternity leave?

To be eligible for paternity leave (including through surrogacy), they must be legally classed as an employee and have worked for the same employer for at least 26 weeks ending with the 15 ^th week before the baby is due.

If you have any further questions regarding any of the above, please do not hesitate to contact us.

At your service!

For more information visit:

https://www.gov.uk/maternity-pay-leave/pay

What is a Confirmation Statement and Why Do I Need to File One?

Wed, 13 Jul 2022 15:15:00 GMT

Time to read: 2 minutes

A confirmation statement is an annual filing requirement requested by Companies House. The confirmation statement is filed to ensure the company details are up-to-date.

What company details can be changed via a confirmation statement?

Below are examples of some company details that can only be changed through filing a confirmation statement.

Shareholders details – Any individuals/organisations which hold company shares.
Share capital – the number of shares each shareholder holds within the company.
Standard Industrial Classification (SIC) codes – These codes are used to describe the nature of the business and the type of work the business completes. Up to four SIC codes can be registered under a company.

Other details such as the registered office address and director details do not need need to be changed via a confirmation statement. Instead, these changes can be made by logging into the Companies House WebFiling portal.

How can I file a confirmation statement?

Filing a confirmation statement is relatively simple. This service costs £13.00 to file independently and takes approximately five minutes to complete.

To file a confirmation statement via the Companies House Web Filing portal, the following information will be needed:

Company Registration Number
Company Web Filing Authentication Code

What happens if I fail to complete a confirmation statement?

A confirmation statement is arguably one of the more simple filings a company is required to submit however, it is just as important just like the filing of any other tax return.

Failure to file the confirmation statement will result in a proposal of forced company closure.

If you would like further information regarding confirmation statements, please contact us for further assistance.

At your service!

How To Register For Self-Assessment

Thu, 07 Jul 2022 14:45:00 GMT

Time to read: 2 minutes

Registering for taxes – self-assessment

What are taxes? One of the biggest questions you can ask yourself! The comprehensive definition is the following – ‘a compulsory contribution to the government, collected through an employer’s income or additional costs from goods you can buy’.

Taxes are a part of everyday life, whether someone has a limited company or they are a sole trader, everyone will contribute naturally in one way or another.

There are various taxes a person can contribute towards; one example is a self-assessment tax return.

The next step to understanding taxes would be how can I register for them?

How to register for self-assessment

Firstly, what is self-assessment? A self-assessment tax return is a personal tax return.

To file a self-assessment tax return, an individual will need to register and obtain their self-assessment UTR (unique taxpayer reference) which is a 10-digit number unique to an individual, very similar to the national insurance number.

Registering for self-assessment requires an individual’s personal details such as their national insurance number, home address, phone number, date of birth, and the date of when they wish to start the registration. The form can be found online and this can be filled out with the personal details as requested.

Click here for the registration form.

Once this has been submitted, the individual is now registered for self-assessment. It can take up to 2 weeks for the self-assessment UTR to arrive. Once this has been obtained, the self-assessment tax return can now be filed.

If you require assistance in registering for self-assessment or completing your self-assessment tax return, please do not hesitate to contact us.

At your service!

Construction Industry Scheme (CIS) payments and deductions

Tue, 21 Jun 2022 11:30:01 GMT

Time to read: 4 minutes

In the Construction industry, there are contractors and subcontractors. Contractors hire subcontractors in order to carry out construction related work (e.g. painting, repairs or dismantling) on their behalf. In this post, we're exploring Construction Industry Scheme (CIS) payments and reductions.

Before making payments to subcontractors, it is important for contractors to check the payment status of their subcontractors. The current payment statuses are 30%, 20% and 0% (gross).

The subcontractor’s payment status will determine the percentage of deductions made by a contractor.

Contractors will be able to verify with HMRC the payment status of a subcontractor using their unique taxpayer reference (UTR). So, if a subcontractor is on the 30% payment status, the contractor will deduct 30% from the invoiced amount received. For example, if a painter is subcontracted and bills £1,000.00 for their services, the contractor will deduct 30% (£300.00). The contractor will therefore only pay out £700.00 to the painter. The £300.00 is then paid directly to HMRC.

However, before any deductions are made, contractors should not make any deductions for certain amounts such as:

VAT
Materials used
Equipment which is now unusable
Fuel used (except for travelling)
Equipment hired for this job – e.g. ‘plant hire’
Manufacturing or prefabricating materials

If for example, a tiling subcontractor charges £100.00 for labour, £50.00 for materials and £20.00 for mobile phone costs; CIS deductions will only be made on labour and mobile phone cost charges. £50.00 for materials will not be subject to CIS deductions.

Contractors are responsible for paying all CIS deductions to HMRC. Subcontractors will then be able to apply for a refund from HMRC to recover any CIS deductions made.

Subcontractors should receive monthly CIS payment and deduction statements which will detail the gross payment and total CIS deductions. These statements will help subcontractors to gather the total amount they are able to reclaim from HMRC.

Contractors are required to provide subcontractors with the monthly CIS payment and deduction statements by the 19th of a following tax month. Tax months run from the 06th of one month to the 05th of the following month, e.g. from 06th April 2022 to 05th May 2022 – here a payment and deduction statement will be due from a contractor by 19th May 2022.

Subcontractors will not suffer CIS deductions when they complete work for individuals and companies who are out of the CIS scope. These individuals or companies will be making full payments towards invoices they receive from painters they contract with, for example.

In order to reclaim CIS deductions from HMRC, sole traders will need to do so via their self-assessment tax return whereas companies will do so via their payroll scheme.

If you have any further questions regarding CIS payments and deductions, please do not hesitate to contact us. You can book your consultation using the form below.

At your service!

https://www.gov.uk/government/publications/construction-industry-scheme-cis-340/construction-industry-scheme-a-guide-for-contractors-and-subcontractors-cis-340#app

https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor/pay-tax-and-claim-back-deductions

How to extend your basic rate tax bracket

Wed, 15 Jun 2022 11:21:21 GMT

Time to read: 2 minutes

Some popular questions we get asked are ‘how do I reduce my income tax?’ and ‘how do I avoid being taxed at 40%?’. In this post, we're explaining two ways to extend your basic rate tax bracket - via gift aid and pensions contributions.

When donating to UK registered charities and contributing to a private pension scheme, an individual can gain tax relief. This will help increase an individual’s basic rate tax bracket so that more of the income is taxed at 20% before moving to the higher rate tax bracket of 40%. This tax relief can be applied when completing the annual self-assessment tax return.

Donating to UK registered charities via gift aid and contributing to private pension schemes must be completed in an individual’s personal capacity to gain this tax relief.

Important note: this tax relief cannot be claimed when donating to UK charities via gift aid and pensions via a limited company. When donating to UK charities and contributing to pensions via a limited company, these transactions are classed as business expenses instead.

Gift aid

Donating via gift aid means charities can claim an extra 25p for every £1.00 an individual donates. To obtain this claim, the individual needs to make a gift aid declaration by filling in a form which should be available from the charity.

HMRC example - if a higher rate taxpayer (an individual who pays 40% income tax) donates £100.00 to charity, they can claim gift aid to make their donation £125.00. The taxpayer can then claim back £25.00 (£125.00 x 20%).

Private pension contributions

The annual allowance an individual can contribute to their pension is £40,000.00 gross however, some people have a lower annual allowance. Contributions made by the individual must be equal to or less than your total earnings for the tax year in which they are made.

For example, if an individual earns £30,000.00 but puts £35,000.00 into their pension pot, they will only be entitled to tax relief on the £30,000.00 – equal to their annual earnings.
If an individual earns £65,000.00 and would like to put this amount into their pension in a single tax year, they will only be entitled to tax relief on the £40,000.00 – the annual allowance.

If you have any further questions on gift aid, pension contributions, or any other tax reliefs that may be available to you, please do not hesitate to contact us. Book your consultation using the form below.

At your service!

For more information visit:

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

https://www.gov.uk/donating-to-charity/gift-aid#:~:text=Example%20You%20donate%20%C2%A3100,of%20tax%20on%20your%20donation

Working From Home Tax Relief 2022

Mon, 16 May 2022 13:15:31 GMT

Time to read: 3 minutes

Are you still working from home? HMRC has provided guidance and allowances to cover some expenses whilst working from home, for both self-employed individuals and those working through a limited company. In this blog post, we're exploring working from home tax relief 2022.

Limited companies

The use of home allowance is an allowance granted by HMRC to allow limited companies to claim job expenses whilst working from home.
Limited companies can claim tax relief of £6.00 per week which equates to £312.00 for the financial year. HMRC states that a limited company is able to claim tax relief for job expenses if they are operating from home on a regular basis. This was introduced to allow people who work from home to claim some of their household expenses. HMRC does not allow for the full cost of personal expenses, such as home bills, to be recognised as a business expense.
The benefit of this tax relief is that it will be classified as a business expense which will ultimately help reduce the corporation tax bill.

Self-employed

Those who are self-employed and working from home can claim a proportion of their costs such as rent, electricity, and internet bills.
This is calculated by dividing the costs by the number of rooms which are used at home for business or, the amount of time an individual spends working from home.
To calculate this, please see the example below from HMRC:

You have four rooms in your home, one of which you use solely as an office.

Your electricity bill for the year is £400.00. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100.00 as allowable expenses (£400.00 divided by 4).

If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100.00 divided by 7).

Alternatively, this can be calculated through a flat rate system based on the hours worked at home, however, an individual will need to have worked more than 25 hours at home per month in order to use this.
The flat rate per month is as follows:

Working from home between 25 – 50 hours per month - a flat rate of £10.00 per month

Working from home between 51 – 100 hours per month - a flat rate of £18.00 per month

Working from home above 101 hours per month - a flat rate of £26.00 per month

To give an example, if an individual works from home for 75 hours per month for 6 months, the claimable expense would be £108.00 (£18.00 x 6 months).
The use of home allowance is a benefit as the expenses can be used to offset against income which will help reduce the self-assessment tax liability.

There are also other allowances and expenses you can make use of. Please contact us for further information.

At your service!

For more information:

https://www.gov.uk/expenses-if-youre-self-employed

https://www.gov.uk/simpler-income-tax-simplified-expenses

1st Class Accounts Wins Best Business Award

Wed, 27 Apr 2022 14:00:05 GMT

Time to read: 2 minutes

March 2022

1st Class Accounts has just been announced as winner of the Best Small-Medium sized business category at the 2022 Best Business Awards.

1st Class Accounts, a London-based accounting firm, was recognised for providing outstanding customer service to their clients in 2022. Founded in 2014 to help small businesses improve their accounting, the company has now grown to a team of 15 who support clients across 6 divisions: SMEs, Contractors, Individuals, Sports and Entertainment, Construction Industry and Property & Real Estate. 1st Class Accounts is not just an accountant; they pride themselves on getting to know all of their clients personally and going above and beyond to provide tailored advice on how clients can grow their businesses.

The Best Business Awards pride themselves on having a large panel of independent expert judges who select winners according to strict criteria for each category and sector.

Commenting on 1st Class Accounts, the winner in the Best Small-Medium sized business category, the chairman of the judges said: “Congratulations to 1st Class Accounts for achieving exceptional growth because of its strong customer focus. When customers join the company, they undergo a ‘tax medical’ to enabled the company’s staff to understand their business and goals so they can align its accountancy products to their objectives. Amazingly, because of its first-class service, 99% of business is generated through referrals. Started by Yemi Ajala in 2014, 1st Class Accounts is on track to have a staff of 20 and strong growth in turnover.”

Upon receiving the Award, Yemi Ajala (Business Development Director) said: “It’s great to get the recognition our team deserves after working so hard since our inception in 2014.”

The Best Business Awards are one of the UK’s highest profile awards and winning this accolade speaks volumes about 1st Class Accounts. Due to its high profile, the Awards attract a wide range of entries from across all sectors from large international PLCs and public sector organisations to dynamic and innovative SMEs. The winners all have one thing in common – they are truly outstanding at what they do.

What is a student loan?

Tue, 26 Apr 2022 13:24:02 GMT

Time to read: 3 minutes

What is a student loan?

A student loan is a type of loan to help students pay for post-secondary education, for example, tuition fees for college and universities.

Repayment plans and thresholds

Student loan repayments begin when a graduate’s annual income is above the threshold for their relevant repayment plan.
The earliest an individual will start paying is the first April after they finish their course. If the course is more than four years in length, they will start repaying in April, four years after the course started.
There are three cases where a graduate will stop repaying their student loan; if they stop working, the annual income is below the threshold, or if the outstanding student loan has been fully repaid.

There are three repayment plans in England – plan 1, plan 2, and postgraduate loan

Plan 1 – if a student started an undergraduate course anywhere in the UK before the 01st September 2012, they are on plan 1. On this plan, student loan will be repaid when the annual income is over £20,195.00 in the 2022-23 tax year. A graduate is required to pay 9% of their income over this threshold.

Plan 2 – if a student started an undergraduate course anywhere in the UK on or after the 01st September 2012, they are on plan 2. On this plan, student loan will be repaid when the annual income is over £27,295.00 in the 2022-23 tax year. A graduate is required to pay 9% of their income over this threshold.

Postgraduate loan – if a student who took out a postgraduate master’s loan on or after 1 August 2016 or if it is a postgraduate doctoral loan on or after 1 August 2018. On this plan, student loan will be repaid when the annual income is over £21,000.00 in the 2022-23 tax year. A graduate is required to pay 6% of their income over this threshold.

How to repay the student loan?

If a graduate is working for an employer, the employer will deduct the student loan amount from the payslip each month.

If a graduate is self-employed, they will be required to pay back the outstanding student loan via a self-assessment tax return which is completed once a year.

New changes to student loans

According to the Institute for Fiscal Studies (IFS), from September 2022, interest rates on student loans will increase up to 12%. This up from 4.5%. This is the highest rate seen since tuition fees for university students in England were raised to £9,000.00 in 2012.

The increase is mainly due to the rising retail process index (RPI). The interest rate on the loan for those currently at university in England is calculated by adding 3% to the retail price index (RPI) measure of inflation which is currently 9%.

The IFS analysis has found that higher-earning graduates would be most directly affected by the increase, since they were more likely to repay their entire loan within 30 years of graduation. Other graduates would see any outstanding balance wiped after 30 years.

Please contact us for any further information.

At your service!

For more information:

https://www.theguardian.com/education/2022/apr/13/graduates-to-be-hit-with-brutal-student-loan-interest-rates-of-up-to-12

https://www.moneysavingexpert.com/news/2022/04/student-loan-interest-rates-to-rise-in-september/

https://www.bbc.co.uk/news/education-61088025

https://www.gov.uk/repaying-your-student-loan

https://www.gov.uk/government/publications/student-loans-a-guide-to-terms-and-conditions/student-loans-a-guide-to-terms-and-conditions-2022-to-2023

Key tax changes for 2022-2023

Thu, 21 Apr 2022 09:27:07 GMT

Time to read: 3 minutes

The 2022-23 tax year runs from the 06th April 2022 to 05th April 2023. Here we highlight the key changes to look out for in this new tax year.

The personal allowance is how much personal income an individual earns before paying income tax.

Personal income could be from employment income, self-employment activities, rental income, dividends etc, or a combination.

In the 2022-23 tax year, the personal allowance will be £12,570.00. This is the same amount as the last tax year (2021-22).

Important note: For every £2.00 an individual earns above £100,000.00, the personal allowance reduces by £1.00. Therefore, when the total personal income exceeds £125,140.00, an individual is no longer entitled to a personal allowance of £12,570.00.

In the 2022-23 tax year, the income tax rates will remain the same – 20%, 40%, and 45%.

Income between £12,571.00 to £50,270.00 will be taxed at 20%.
Income between £50,271.00 to £150,000.00 will be taxed at 40%.
Income above £150,001.00 will be taxed at 45%.

Dividends are amounts withdrawn from a limited company via shareholders. Dividends are subject to dividend tax.

The tax rates for dividends have increased by 1.25% for each dividend tax bracket to help support the NHS, health and social care services in the UK. Please see the following rates below.

Withdrawals up to £2,000.00 dividends in the 2022-23 tax year, are tax-free.
When the total personal income for the tax year is under £50,270.00 including dividends, the dividend tax payable will be 8.75%.
When the total personal income for the tax year is between £50,271.00 to £150,000.00 including dividends, the dividend tax payable will be 33.75%.
When the total personal income for the tax year is above £150,001.00 including dividends, the dividend tax payable will be 39.35%.

Dividends must be declared via a self-assessment tax return at the end of each tax year where an individual will be required to pay the necessary dividend taxes.

The combination of salary and dividends from a limited company is the most tax efficient way to extract money.

There are two suggested salary options available below:

a) The personal allowance is £12,570.00 per annum which is £1,047.50 per month. This is good to keep a company’s overall corporation tax bill down and there is no personal tax at this salary level. The annual individual employee national insurance contributions will be £89.25.

b) Alternatively, some do not wish to make any national insurance contributions as well as not paying any personal taxes. If this is the case opting for a salary up to the secondary threshold of £9,100.00 per annum - £758.33 per month, is recommended.

Lastly, if an individual already has another job outside of the limited company, it is advisable not to receive any salary, for personal tax purposes.

National insurance has increased by 1.25% for employees, employers and for those who are self-employed.

Employees are required to pay national insurance on earnings above £9,100.00 per year.
Those who are self-employed are required to pay national insurance on earnings above £6,725.00 per year.
Individuals will not be required to pay national insurance on earnings under £12,570.00 from July 2022.
The employment allowance has increased to £5,000.00. This allowance allows employers to reduce their national insurance liability by up to the annual allowance amount.

If you have any questions regarding the above topics, further changes in the tax year, or any other topics, please do not hesitate to contact us.

At your service!

What can an accountant do for your business?

Wed, 23 Mar 2022 11:37:02 GMT

We offer a range of accountancy services across various industries and sectors. The divisions below will highlight some services we offer.

Contractors

1st Class Accounts offer personalised services to freelancers and contractors . Further to the completion of tax returns and advisory, we offer expert guidance on IR35, a complex legislation passed by HMRC affecting contractors working via their limited companies, also referred to as ‘off payroll working’.

We understand that no two clients are the same, each case is unique. We provide flexible accounting solutions including a bespoke payment advice service called Pay Calcs, advising on tax provisions and the ways to extract money from your limited company in the most tax efficient manner.

Individuals

Our individuals client portfolio is assigned a dedicated team, to assist with the completion of self-assessment tax returns and general accountancy advice. At 1st Class Accounts, we assess each individual to ascertain the best steps in ensuring they remain as tax efficient as possible. We are on hand to assist with achieving your goals, whether you are self-employed, employed, or a landlord.

Properties

Our properties division are well versed in property and real estate investment via limited companies also known as special purpose vehicles (SPVs). With the introduction of Section 24 of the Finance Act 2015 in April 2017, we have witnessed an influx of property investors creating limited companies to take advantage of being able to deduct their mortgage interest and other finance costs from their rental income before calculating their tax liability.

Other than the mandatory completion of the limited company annual Companies House confirmation statement and HMRC’s annual corporation tax return, 1st Class Accounts are on hand to assist with investment and acquisition strategies such as purchasing via auctions and releasing equity from properties. We boast of a network of property specialists who can offer bespoke guidance and support.

Construction Industry

Our construction industry team are a group of experienced advisers to those working in the construction industry, both limited companies and self-employed individual, ranging from builders, plumbers, electricians and engineers.

Whether you run a limited company or you are a subcontractor, we can help with all of your finances and tax returns, including CIS returns or the payment of subcontractors via payroll. We believe that good accountancy services are more than just numbers. We can help grow your business financially, offering bespoke tax planning tailored to your needs and goals.

Sports & Entertainment

Our sports & entertainment group, initiated by Yemi Ajala, are leading advisers to the creative industries sector. Our enthusiastic and trusted professionals offer a full range of advisory services to both corporate clients and individuals, spanning the fields of film and television, sport, music, video games, theatre, fashion, photography, advertising, marketing, and PR.

Guiding our clients through a complex range of accounting, financial and regulatory issues is just the start of what we do. We are able to provide far more than just accounting and tax advice and work closely with clients to help them take full advantage of market opportunities through close involvement with their planning and business structuring needs.

SMEs

At 1st Class Accounts, we offer accounting and tax services for SMEs - companies and start-ups all over the UK. We offer everything you need take care of your small business accounting — compliance, advisory, tax and much more. We believe it’s not just about the numbers but about bringing order and clarity to your business. This will help to minimise your stress, get back your time, achieve your goals and grow your business while having fun, whilst we take care of the rest.

To find out how we can support you and your business, book your consultation today using the form below.

How to prepare your finances for the end of the tax year

Wed, 16 Mar 2022 11:44:04 GMT

When the tax year, company financial year or VAT returns are due for preparation, it is important to understand what information will be required to complete these tax returns.

Self-assessment

The tax year runs from the 06th April of one year to the 05th April in the following year.
Self-assessment tax returns are due submission and payment by the 31st January every year. For example, for the 2022-23 tax year (06th April 2022 to 05th April 2023, self-assessment tax returns are due for submission and payment by 31st January 2024.
When it is time to complete the self-assessment tax return, we will email you a self-assessment questionnaire to understand your eligibility to complete a self-assessment return, whether you have dividends to declare, rental income, etc.
During the tax year, it is imperative to keep a record of all supporting documentation so it is ready at the end of the tax year when it is time to complete the self-assessment tax return.

VAT

Most companies and individuals need to file VAT returns quarterly.
Quarterly VAT returns are due one month and seven days after the quarter end date. For example, a VAT return for the period 01st January to 31st March will be due on the 07th May.
If you are registered on the VAT Flat Rate scheme, we will need your business bank statements, invoices and remittances for the period.
If you are registered on the VAT Standard scheme, we will need your business bank statements, invoices, remittances and receipts.
We offer a free Xero subscription to receive an automatic bank feed, making life easier for you as you will no longer need to send us your business bank statements.

Corporation tax

Each limited company has its own twelve-month accounting period.
When the accounting period concludes, both HMRC and Companies grant nine months to calculate, submit and pay your corporation tax.
We will need your business bank statements, invoices, remittances and receipts.
We offer a free Xero subscription to receive an automatic bank feed, making life easier for you as you will no longer need to send us your business bank statements.
A month before your accounting period concludes, we will contact you for a complimentary account review to ensure you are utilising your limited company in the most tax efficient way.

If you are unsure of which tax returns you need to file, when they are due or what information you need to keep a record of, please contact us and we will be happy to help.

At your service!

How to operate a tax-efficient business

Tue, 15 Feb 2022 08:40:09 GMT

There are many ways to operate as a tax efficient business, which we're sharing in this blog post. The points below will highlight some ways you can operate as a tax efficient business.

Find out which taxes are applicable to the nature of your business, for example, PAYE and VAT.

Keep up to date with the tax rates for each tax year. This will help with setting money aside for your taxes so that you will have enough money to pay your taxes when the time comes. For example, corporation tax is charged at 19% of a company’s net profit in the 2022-23 tax year.

We have a great system called ‘Pay Calcs’ where we calculate your income received against any expenses incurred each week or month. Based on this information we can advise you on the amounts to reserve towards tax liabilities, alongside how much to pay yourself.

Understanding ways to reduce tax e.g. claimable expenses for a corporation tax return.

Finding any tax reliefs available to you, such as working from home allowances and staff entertainment allowances.

Checking to see when your tax returns are due for submission and payment to avoid penalties from HMRC and Companies House.

If you are registered for VAT, understanding whether you are on the best VAT scheme for your business – Standard VAT scheme or the Flat Rate VAT scheme.

Using an accounting software to help streamline your business processes. We have great links with Xero and can help set this up for you, at no additional cost to you!

Understanding the most tax efficient way to withdraw from your business bank account – whether salaries and/or dividends.

Please contact us at 1st Class Accounts regarding the points above or anything else and we will be happy to help! You can get in touch using the form below.

What is capital gains tax?

Tue, 15 Feb 2022 08:08:08 GMT

One of the questions we get asked most often is: what is capital gains tax? In this post, we're sharing the main points you need to understand about capital gains.

To summarise:

A capital gain is the profit you make when selling an asset.
Some examples of assets where you may pay capital gains tax on are properties (not your main home), shares (apart from shares in an ISA), cryptocurrencies and business and some personal assets.

Capital gains tax

If the ‘gain’ you make is less than £12,300.00, you do not need to pay capital gains tax. This is due to the capital gains allowance of £12,300.00.
Any gains made above £12,300.00 will be charged at either 10% or 20% capital gains tax, depending on which tax bracket your income lies in.
Properties have different tax rates - 18% or 28%. These tax rates also depend on the tax bracket your income lies in.
If you have made a loss on an asset in a previous year, the losses can be brought forward against gains made, however, this can depend on the type of asset.

Other tax reliefs

There is also a capital gains allowance for trusts up to £6,150.00.
If you gift an asset to your civil partner, you do not need to pay capital gains tax on the asset received unless you separated/did not live together in that specific tax year (a tax year runs from the 06th April of one year to the 05th April in the following year), or the asset was given for the purpose to sell off for business use.
You do not need to pay capital gains tax on assets that you give to charity. However, if you sell the asset for less than the market value or more than you paid for it, you may need to pay tax.

How to declare capital gains/losses

Capital gains/losses can be declared via a self-assessment tax return.
You will need to keep records of the assets such as the date you made the purchase alongside the amount, any costs associated with the asset (professional fees, stamp duty, improvement costs, etc.), and the date the asset was sold alongside the amount.

Further information

For any further information regarding capital gains, tax reliefs/allowances, or anything else, please contact us at 1st Class Accounts using the form below and we will be happy to help!

Reference: https://www.gov.uk/capital-gains-tax/what-you-pay-it-on

1st Class Accounts Wins Global Business Excellence Awards

Thu, 27 Jan 2022 20:32:09 GMT

December 2021

1st Class Accounts has just been announced as winner of the Outstanding Customer Service Team category at the 2021 Global Business Excellence Awards.

1st Class Accounts, a London-based accounting firm, was recognized for providing outstanding customer service to their clients in 2021. Founded in 2014 to help small businesses improve their accounting, the company has now grown to a team of 15 who support clients across 6 divisions: SMEs, Contractors, Individuals, Sports and Entertainment, Construction Industry and Property & Real Estate. 1st Class Accounts is not just an accountant; they pride themselves on getting to know all of their clients personally and going above and beyond to provide tailored advice on how clients can grow their businesses.

The Global Business Excellence Awards pride themselves on having a large panel of independent expert judges who select winners according to strict criteria for each category and sector, focusing on financial results, innovation, customer, employee, investor and community benefits.

Commenting on 1st Class Accounts, the winner in the Outstanding Customer Service Team category, the chairman of the judges said: “By focusing on going above and beyond for its customers, 1st Class Accounts has seen incredible growth since its inception in 2014. On joining the company, clients undergo a ‘tax medical’, which helps the customer service team learn everything about their business. What is outstanding about 1st Class Accounts is that it aligns its clients’ tax strategy to its clients’ corporate goals enabling them to grow. Being customer focused has paid off because 1st Class Accounts’ customer service team has received brilliant feedback from its loyal customer base.”

Upon receiving the Award, Yemi Ajala (Business Development Director) said: “It’s great to get the recognition our team deserves after working so hard since our inception in 2014.”

The Global Business Excellence Awards are one of the world’s highest profile awards and winning this accolade speaks volumes about 1st Class Accounts. Due to their high profile, the Awards attract a wide range of entries from across the world, from large international PLCs and public sector organisations to dynamic and innovative SMEs. The winners all have one thing in common – they are truly outstanding at what they do.

Self-assessment - Payment on account

Thu, 13 Jan 2022 10:26:45 GMT

What is a payment on account? Why has my tax liability doubled?

These are the most popular questions we get asked when completing self-assessment tax returns.

So what is a payment on account?

HMRC assume an individual will earn more income in the following year, compared to the previous year. Due to this, they take an advance tax payment towards next year’s self-assessment tax bill.

Payment on accounts are applicable when your current year’s tax liability is in excess of £1,000.00. The way this gets calculated is the current year’s self-assessment tax liability almost doubles. 75% of the total figure will be due for payment by the 31 ^st January (the same deadline in which the tax return gets submitted), and the remaining 25% will be due in the same year by the 31 ^st July.

Another reason why HMRC do this is so it spreads the cost of the upcoming year’s tax which may help taxpayers to pay this off rather than in one go.

If you make a payment on account and your income or business profits are lower than expected, HMRC will refund you.

Can the payment on account be reduced?

The payment on account can be reduced if you believe you may not earn as much income or business profits are lower in the following year. However, if you reduce the payment on account and you do earn more income than the previous year, HMRC may charge you interest and may ask you to pay the full payment on account that should have been paid.

If you pay the payment on account in full and you do not earn as much income, HMRC will refund the extra tax paid or, the extra payment will be offset against next year’s self-assessment tax liability.

How do I pay the payment on account?

You can login to your HMRC tax account which will show if any payments are due to be made. Alternatively, you can contact us at 1st Class Accounts and we can advise accordingly.

You will be able to make the payment online or via bank transfer. If you're making a bank transfer, please use your self-assessment UTR (10-digit reference number) followed by the letter ‘K’ as the reference for the payment.

If you need to file a self-assessment tax return and want some more advice, please contact us and we will be happy to help! You can book a consultation using the form below.

When should I use an accountant?

Thu, 23 Dec 2021 15:37:39 GMT

Many may wonder what the role of an accountant is and why an accountant may be beneficial to your business. The points below will cover three of our most frequently asked questions: when to use an accountant, why an accountant is important, and what information an accountant may need to file your tax return .

When to use an accountant

As your business grows or you get busier, an accountant will be beneficial as we can help manage your business information and complete your taxes, whether you are a sole trader or have a limited company structure. This will allow you to focus on the running of your business whilst leaving the rest to us. Whether the task is as small as creating invoices on your behalf to filing tax returns, we will be happy to help!

Even if you do not have a business, we can offer you financial advice or help you start up your new business in the right way.

Why is an accountant important?

An accountant is important to ensure your tax returns are completed correctly in accordance to regulations and, you are receiving the correct advice from a qualified individual for financial advice or assistance in any important financial decision making. We will be aware of any key tax dates for your business, filing your tax returns in plentiful time to avoid any penalties.

Whether you are thinking of shifting from self-employed to a limited company structure or finding ways to save in tax, we will be able to guide you in the best way, giving you tailored advice depending on you as an individual and your business e.g. finding tax reliefs available to you or understanding the importance of expenses to reduce tax.

What an accountant needs for a tax return

The main documents we would mainly require are your bank statements, invoices, remittances, payslips or receipts to complete any tax return. This list is not limited and will vary on a case by case basis as every client is different.

The format in which you can send this information can be physical copies, PDF’s or Microsoft CSV – whatever it easiest for you! If you are unsure of what to send and how to obtain the information we may need, please contact us and we will be happy to help.

Other clients may use an accounting software (e.g. Xero) to record their income and expenses. This is great as we can link our account with yours, depending on which software you are using. In this way, we can simply take the information we need for the completion of your tax return, saving you time gathering all of the information manually.

There are so many ways and aspects in which we can support you and help you grow your business.

UK Accounting Calendar 2023

Wed, 01 Dec 2021 14:19:07 GMT

Self-assessment deadlines | Corporation tax deadlines | VAT | PAYE

The new year is approaching! The list below shows important dates for 2023 to help you stay on top of your business finances.

Self-assessment

31st January 2023 - The 2021-22 self-assessment tax return is due for payment and online submission.

05th April 2023 – This is the last day of the 2022-23 tax year.

06th April 2023 – This is the first day of the 2023-24 tax year.

06th April 2023 – The 45% additional rate of tax threshold will be reduced from £150,000 to £125,140.

06th April 2023 – The tax-free dividend allowance will decrease to £1,000 per annum.

06th April 2023 – The tax-free allowance for capital gains will reduce from £12,300 to £6,000 per annum.

31st July 2023 – The second payment on account is due for the 2021-22 self-assessment tax return.

31st October 2023 – Deadline to file the 2022-23 self-assessment tax return by paper.

Book your consultation today

Corporation tax

31st December 2022 – The corporation tax return is due for payment and submission for accounts with the period end 31st March 2022.

31st January 2023 – The corporation tax return is due for payment for accounts with the period end 30th April 2022.

28th February 2023 – The corporation tax return is due for payment for accounts with the period end 31st May 2022.

31st March 2023 – The corporation tax return is due for payment for accounts with the period end 30th June 2022.

01st April 2023 – The corporation tax rate will increase from 19% to 25% for companies profiting more than £250,000 per annum. Companies with profits of £50,000 or less will continue to pay corporation tax at 19%

30th April 2023 – The corporation tax return is due for payment for accounts with the period end 31st July 2022.

31st May 2023 – The corporation tax return is due for payment for accounts with the period end 31st August 2022.

30th June 2023 – The corporation tax return is due for payment for accounts with the period end 30th September 2022.

31st July 2023 – The corporation tax return is due for payment for accounts with the period end 31st October 2022.

31st August 2023 – The corporation tax return is due for payment and submission for accounts with the period end 30th November 2022.

30th September 2023 – The corporation tax return is due for payment and submission for accounts with the period end 31st December 2022.

31st October 2023 – The corporation tax return is due for payment and submission for accounts with the period end 31st January 2023.

30th November 2023 – The corporation tax return is due for payment and submission for accounts with the period end 28th February 2023.

31st December 2023 – The corporation tax return is due for payment and submission for accounts with the period end 31st March 2023.

Book your consultation today

VAT

07th December 2022 – The VAT return for QE 31-10-2022 is due for manual payment and submission.

10th – 12th December 2022 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-10-2022.

07th January 2023 – The VAT return for QE 30-11-2022 is due for manual payment and submission.

10th – 12th January 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 30-11-2022.

07th February 2023 – The VAT return for QE 31-12-2022 is due for manual payment and submission.

10th – 12th February 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-12-2022.

07th March 2023 – The VAT return for QE 31-01-2023 is due for manual payment and submission.

10th – 12th March 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-01-2023.

07th April 2023 – The VAT return for QE 28-02-2023 is due for manual payment and submission.

10th – 12th April 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 28-02-2023.

07th May 2023 – The VAT return for QE 31-03-2023 is due for manual payment and submission.

10th – 12th May 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-03-2023.

07th June 2023 – The VAT return for QE 30-04-2023 is due for manual payment and submission.

10th – 12th June 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 30-04-2023.

07th July 2023 – The VAT return for QE 31-05-2023 is due for manual payment and submission.

10th – 12th July 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-05-2023.

07th August 2023 – The VAT return for QE 30-06-2023 is due for manual payment and submission.

10th – 12th August 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 30-06-2023.

07th September 2023 – The VAT return for QE 31-07-2023 is due for manual payment and submission.

10th – 12th September 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-07-2023.

07th October 2023 – The VAT return for QE 31-08-2023 is due for manual payment and submission.

10th – 12th October 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-08-2023.

07th November 2023 – The VAT return for QE 30-09-2023 is due for manual payment and submission.

10th – 12th November 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 30-09-2023.

07th December 2023 – The VAT return for QE 31-10-2023 is due for manual payment and submission.

10th – 12th December 2023 – If you have a direct debit set up for your VAT tax payments to be taken, it will be taken between these dates for QE 31-10-2023.

Book your consultation today

PAYE

22nd December 2022 - PAYE tax is due for month 8 (November 2022).

22nd January 2023 - PAYE tax is due for month 9 (December 2022).

22nd January 2023 - PAYE tax is due for Q3 (October 2022 - December 2022).

22nd February 2023 - PAYE tax is due for month 10 (January 2023).

22nd March 2023 - PAYE tax is due for month 11 (February 2023).

22nd April 2023 - PAYE tax is due for month 12 (March 2023).

22nd April 2023 - PAYE tax is due for Q4 (January 2023 – March 2023).

22nd May 2023 - PAYE tax is due for month 1 (April 2023).

31st May 2023 – Your employer is required to give you your P60 for the 2022-23 tax year by this date.

22nd June 2023 - PAYE tax is due for month 2 (May 2023).

06th July 2023 – The deadline for filing the 2022-23 P11D.

22nd July 2023 - PAYE tax is due for month 3 (June 2023).

22nd July 2023 - PAYE tax is due for Q1 (April 2023 - June 2023).

22nd August 2023 - PAYE tax is due for month 4 (July 2023).

22nd September 2023 - PAYE tax is due for month 5 (August 2023).

22nd October 2023 - PAYE tax is due for month 6 (September 2023).

22nd October 2023 - PAYE tax is due for Q2 (July 2023 - September 2023).

22nd November 2023 - PAYE tax is due for month 7 (October 2023).

22nd December 2023 - PAYE tax is due for month 8 (November 2023).

Book your consultation today

If you need any support with your accounting in 2023, we have a team of experienced and friendly chartered accountants who will be able to help you and your business. But don't just take it from us: this is what some of our clients are saying:

"Fantastic service. 5 stars ." - Matthew, Feefo

"All my accounts are submitted on time. Good record keeping and professional approach ." - Dr. Athina, Feefo

"They always go above and beyond ." - T'Nia, Feefo

If you're ready to experience an accounting service that goes above and beyond, take the first step right now. Contact us today using the form below to arrange a consultation with our team.

At your service!

Three things you need to know about self-assessment returns

Fri, 19 Nov 2021 16:06:01 GMT

What is a self-assessment tax return?

A self-assessment tax return is a tax return that needs to be filed every year by many individuals to declare UK income. Some individuals may be unsure of whether they need to file this. Here are 3 questions we often get asked.

Who needs to file a self-assessment return?

An individual who is in receipt of UK income of more than £1,000.00 will need to file a self-assessment tax return every year.

The most common reasons you may need to file a self-assessment return are listed below:

If you are self-employed, you will need to declare your income and expenses

If you are a landlord receiving money from renting out a property, you will need to declare your rental income and expenses

If you are in receipt of dividend payments from a limited company

If you or your partner receive child tax benefits

If you are in receipt of overseas income

If you have sold any assets

If you are receiving more than £100,000.00 employment income before tax. If an individual earns more than £100,000.00 per year, their personal allowance of £12,570.00 reduces. The personal allowance is the amount of income an individual can receive in the UK without paying any income tax

There are many other reasons why you may need to file a self-assessment tax return. Please contact HMRC or an accountant to find out whether you need to file a self-assessment tax return.

How do I file a self-assessment tax return?

You will need to register yourself as self-employed with HMRC. You will find an application for this on the HMRC website.

You will also need to keep a record of all self-employment activity that you need to submit to HMRC. For example, if you are self-employed, you may need copies of your invoices, remittances, or bank statements as proof of income. For expenses you may need bank statements, receipts or invoices.

You will then be able to file your tax return online or via a paper form.

Alternatively, you can send all of your information to an accountant who will file your tax return directly with HMRC.

When do I need to file my self-assessment tax return?

A self-assessment tax return is due on the 31st of January every year.

The tax return covers the period 6th April of one year to the 5th April in the following year. For example, filing a self-assessment tax return for the 2020-21 tax year will cover the period 06th April 2020 to the 5th April 2021. This will be due in the following year by the 31st January 2022.

If you are unsure of how to file a self-assessment tax return, please seek advice from an accountant to ensure it is filed with HMRC correctly and you are paying the correct taxes. An accountant may also inform of you of any tax reliefs that may be available to you to help lower your taxes.

Please ensure to file your self-assessment tax returns by the deadline to avoid being charged any interest or penalties for late submissions or late payments of tax.

For more information about self-assessment tax returns, visit the government website:

https://www.gov.uk/self-assessment-tax-returns

If you need any support with your self-assessment tax return, we have a team of experienced and friendly chartered accountants who will be able to help you and your business.

Research & Development Tax Relief

Mon, 01 Nov 2021 11:44:20 GMT

Research & Development Tax Relief

INTRODUCTION

UK companies spent over £25 billion on Research and Development (R&D) during 2018, and HMRC's statistics show that the volume of R&D relief claimed by small and medium sized companies (SMEs) is increasing.

However, many eligible SMEs are still not claiming the relief. This is often due to a lack of awareness, or a misunderstanding of the requirements for relief. There have also been warnings that that genuine R&D businesses could be impacted by government proposals to combat tax relief abuse.

Here, we explore how you can make the most of any R&D tax reliefs available to you. There are some common misunderstandings around R&D relief for SMEs. The definition of R&D for tax purposes is quite wide – not everything has to be created in a laboratory. This means that some activities may be classed as R&D that might not qualify at first glance.

R&D TAX RELIEFS: THE BENEFITS

The government actively encourages companies to carry out R&D in order to promote growth and increase profitability. A wide range of tax incentives exist, which are designed to encourage investment in R&D. Different types of incentives are available, depending on the size of the company. These include an increased deduction for R&D spending, alongside a payable R&D tax credit for those companies not yet in profit.

The government has stated that it is 'committed to improving access to R&D' for SMEs.

CLAIMING R&D TAX RELIEFS

SMEs are permitted to claim R&D tax relief if they have fewer than 500 members of staff and a turnover of under €100 million, or a balance sheet total of less than €86 million. The relief permits SMEs to deduct an additional 130% of qualifying costs from their yearly profit. This is in addition to the normal 100% deduction, giving a total deduction of 230%.

In order to make the most of R&D tax relief, a company must have incurred expenditure on qualifying R&D projects that are related to its trade. Projects must be innovative and should assess and attempt to resolve scientific or technological issues.

Qualifying expenditure falls into different categories. These include staffing costs; software costs; expenditure on consumables or transformable materials; costs of work done by subcontractors; and costs of clinical trial volunteers.

R&D TAX CREDIT CAP

Government concern about abuse of SME R&D tax relief means that there is a cap on the amount of payable SME tax credit which can be claimed in any period.

This will be £20,000 plus three times the total PAYE and national insurance contribution (NIC) liability for the period. The PAYE/NICs bill to look at is not just the bill for those involved in the R&D work: it applies to the company's entire PAYE and NICs spend, as well as the PAYE and NICs of connected persons carrying out subcontract R&D for the company or supplying workers to the company.

There have been warnings that genuine businesses will be impacted, but the measure is not intended to penalise bona fide claimants.

Companies claiming a payable credit less than £20,000 will not be affected. If the company meets two tests, a claim of any size will not be capped. The conditions are that its employees are creating, preparing to create, or managing intellectual property; and that less than 15% of its R&D qualifying expenditure is spent with connected persons.

If you need any support with claiming tax relief for your Research & Development activity, we have a team of experienced and friendly chartered accountants who will be able to help you and your business.

f17e6c97

What is the Start Up Loans scheme?

What is the Start Up Loans scheme and how does it work?

What are the requirements to be eligible for the loan?

What are the benefits of the Start Up Loans scheme?

About Us

What is the difference between accounting and auditing?

What is accounting?

What is auditing?

What are the similarities between accounting and auditing?

What are the differences between accounting and auditing?

To conclude

About Us

When to complete a W8-BEN-E form

What is a W8-BEN-E form?

Is the W8-BEN-E form the same as the W8-BEN form?

Does completing a W8-BEN-E form exempt the company from withholding tax?

About Us

Why is it important to open a business bank account?

1. Accounting / Bookkeeping

2. It creates a good impression

3. It provides protection

About Us

Declaring rental income and expenses on a self-assessment

Rental Income

Rental Expenses

Self-Assessment Tax Liability

About Us

What are the advantages of accounting software?

Advantages of Accounting Software

Automation

Integration

Efficiency

About Us

Voluntary National Insurance contributions

What is National Insurance?

﻿ Voluntary National Insurance contributions

Eligibility

How much will I have to pay?

The importance of receipts and invoices

What are receipts?

Why are receipts important?

What are invoices?

Why are invoices important?

What is a DS01?

How to file a DS01

Filing a DS01 using a paper form

Filing a DS01 using an online form

What does my tax code mean?

When would tax codes change?

What does my tax code mean?

Emergency tax codes

Changes in employment

What does each box mean on your VAT return?

VAT Boxes

How can Xero transform your business?

Time saving

Automation

Reduce room for error

Liaise with advisors

Changes to VAT surcharges, interest, and penalties from January 2023

If you submit your VAT return late

If you pay your VAT liability late

Cash vs Accrual Accounting

What is cash basis accounting?

What is accrual basis accounting?

Which one should I use?

How to refresh and reconnect Xero bank feeds

How to refresh a Xero bank feed

How to reconnect a Xero bank feed

Incorporating a Limited Company in the UK

Companies House

How to incorporate a company

Mini Budget Summary

Basic rate income tax

National insurance

Corporation tax

IR35

Dividends

Stamp duty

Voluntary National Insurance contributions