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Taxcare Accountant https://taxcare.org.uk Hire a Professional Accountant from £19 per month. UK Certified Advisors Wed, 11 Dec 2019 21:05:41 +0000 en-US hourly 1 https://wordpress.org/?v=5.3.2 https://taxcare.org.uk/wp-content/uploads/2019/08/cropped-taxcare-accountants-logo-32x32.png Taxcare Accountant https://taxcare.org.uk 32 32 10 Tips to Prepare Your Business Taxes https://taxcare.org.uk/10-tips-to-prepare-your-companys-taxes/ https://taxcare.org.uk/10-tips-to-prepare-your-companys-taxes/#respond Fri, 06 Sep 2019 05:33:13 +0000 https://taxcare.org.uk/?p=797   The deadline to make your business taxes is approaching, but you still have time to take some measures to ensure a correct presentation. Here are 10 tips that will save you time and headaches when you decide it is time to pay your taxes this year. In addition, these simple actions can save you money and ensure you greater profitability. But the most important thing is that they will guarantee you that you comply with the regulations on the tax return in order to avoid any future complications or even an IRS audit. It is never too late to…

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10 Tips to prepare your company's taxes
10 Tips to prepare your company’s taxes

 

The deadline to make your business taxes is approaching, but you still have time to take some measures to ensure a correct presentation. Here are 10 tips that will save you time and headaches when you decide it is time to pay your taxes this year. In addition, these simple actions can save you money and ensure you greater profitability. But the most important thing is that they will guarantee you that you comply with the regulations on the tax return in order to avoid any future complications or even an IRS audit. It is never too late to learn how to save time, money and problems when preparing your company’s taxes!

10 Tips to Prepare Your Company’s Taxes

Tip 1. Save Your Receipts and Track Your Expenses or Use An Automated Bookkeeping Software. 
One of the biggest mistakes that small business owners make is not keeping up-to-date financial records, which also includes keeping all receipts related to your business expenses. Maintaining proper records and keeping track of your expenses are the first steps towards accurate tax filing.Does saving and filing your receipts seem like torture? Good news is that, you do not need to keep all the receipt physically. You can use an OCR software to snap or scan all of your receipt and keep them digitally. Tax Care offers a free OCR software to all the clients to keep track of your business expenses digitally.

As a business owner, you must be very diligent throughout the year when ordering, saving and classifying receipts for all types of transactions related to your company. Buying lunch for your employees, taxi rides, fuel for your commercial vehicles and even the purchase of printer ink cartridges are all expenses that must be accounted for correctly. These small expenses don’t seem like much, but they accumulate quickly: the average owner of a small business generates hundreds, if not thousands of pounds, in small expenses over the course of the year.

Having your receipts in order when the time comes to do the taxes will save you time and maybe a lot of money. Don’t worry:  Remember that the proper monitoring of your expenses also has other benefits: it will help you get to know your business better and can even help you decide if it is time to apply for a commercial loan.

Tip 2. Form a Limited Company or Trade as Sole Trader 
If you have not yet established the structure of your business or the legal entity under which you operate, do so as soon as possible. Maybe you are paying too much in taxes if you are considered a sole trader. The best solution is to establish your business entity. Doing so when the year begins is a sensible and economical strategy to save on taxes. You don’t know what is the best option for your business? Trade as sole trader or forming a limited company are the most common business structure in UK. Each of the business structure has their own tax benefits. However, you will pay lower tax by forming a limited company as currently the corporation tax is 19% and income tax is 20%.
Remember that legally structuring your company has other benefits: to apply for the majority of commercial loans you will be asked as one of the requirements to present the proof of registration of your company.

Tip 3. Claim All of Your Allowable Expenses and Tax Free Allowances

The bad news is that you have to pay taxes; The good news is that there are many tax deductions available for small business owners. You can significantly and legally reduce what you have to pay in taxes, but you should know these deductions and know how to use them to your advantage. This may be the key to a successful tax return.

You must ensure that all items that you declare as business expenses are in effect considered as HMRC allowable deductions. Some categories are clear: the office supplies, equipment, or software that you purchased during the tax year. They are deductions. A vehicle that you have bought for your family is clearly not. Other items are more complected such as company car benefits, charitable donation, entertainment etc.

Make sure you claim £2000 for your dividend allowance, £1000 for save income allowance, and £12500 for your personal allowance.

Tip 4. Separate Your Business Expenses From Your Personal Expenses
This is essential to keep an accurate record of the expenses that can be deducted from your taxes. The best way to keep your personal expenses and your company’s expenses divided is by opening separate bank accounts and using separate credit cards for everything. Use your common sense when using your pleasure”? It applies perfectly here: if you attend a seminar related to your industry, buy your plane ticket with your commercial credit card and use the receipt as a deduction on your taxes. But if you are going to have a beer with your seminar colleagues after the end of the course, simply pay with your personal credit card.

Once the time comes to file your taxes, be sure to separate your business expenses from your personal expenses. And remember that separating your business account from your personal account not only has advantages when filing your taxes: having a commercial bank account is one of the basic requirements to apply for a commercial loan, and it is also the first step in building your credit commercial and open your company to new opportunities.

Tip 5. Put Yourself on Your Company’s Payroll From the Beginning of The Tax Year. 

You do not need to pay tax if you put yourself on payroll and get paid less than £8,632 per year or £166 per week. If your yearly earning is less than £12500 you just need to pay National Insurance only.

Tip 6. Buy a Vehicle or Make the Best of Your Existing Vehicle

Many business owners already know that the mileage you cover for business purposes is tax-deductible. But you may not know this: if you use a VAN or commercial vehicle for your business, you can claim 100%  as in your business expenses under the rule of annual investment allowance.  If not then the deduction for depreciation can be great tax savings, of course, depending on the cost of the vehicle itself and the percentage of use that you use for commercial purposes.

Maybe the idea of purchasing a van is not suitable for your business. If you use your own car then you can claim HMRC authorised millage allowance. You can also avoid higher tax payment by purchasing a car under your limited company’s name. However, company car is subject to benefits in kind which is a complex area.  As always, keep all receipts related to your vehicle and use your commercial credit card for those expenses. Keep in mind that driving from home to work is not tax-deductible!

Tip 7. Defer Your Profit 

A lot of large scaled corporation save millions by moving their profit for the next accounting period. Corporation tax rate will be reduced by 1% from April 2020. Therefore, you can save 1% on your corporation tax bill by deferring your business income for the following accounting period (subject to the amount of profit). You can reduce your profit for the current year by delaying the completion the sales so it can fall onto the next accounting period. You can do opposite for all of your purchases.

Tip 8. Include Your Children and Spouse on Payroll
However, doing this is totally viable. Most small business owners do not realise that paying their children for the services provided in their company is a tax saving tool. For example, if your child is under 21 and you are a sole trader or have a limited company, you or  your company is not required to pay employer NI. In addition, your child’s wages expenses is the standard expense of your business.

You can also add your spouse on the payroll in the same way, but only do so if he or she is not working elsewhere and wants to contribute her personal allowance. However, if your children or spouse have a full-time job then putting them on payroll will not make any sense as they will be on basic rate (BR-20% TAX).

Tip 9. Treat Your Employees Right and Claim Expenses 

Most of the staff benefits are tax deductible for your business. Some of the benefits are tax free and beneficial for both employees and the employers.  Most common tax free benefits are below:

  • Christmas gift (less than £150)
  • Meals in a staff canteen
  • Hot drinks and water at work
  • A mobile phone
  • Workplace parking
  • Childcare voucher
  • Pension
  • Employer funded training
  • Discounted good (Not less than purchase price)
  • Bicycles and cycling safety equipment
  • Accommodation to perform the job (subject to a complex accommodation benefits rules)

Tip 10. Seek the advice of an accountant
If you still have questions about how to file your company’s taxes or do not feel safe preparing them yourself, simply choose to hire a certified accountant. This is also the best option for those business owners who not only wish to file taxes, but also require accounting services throughout the year. A professional accountant can help you not only with the tax questions you have, but also with your doubts about the structure of your company, as well as providing guidance for managing your business finances. It is also the most suitable option for companies with a more complex structure, or simply for those business owners who wish to save time.

Take advantage of these 10 tax tips and strategies to get the most out of the tax saving schemes. Do you really want to benefit your business? Then, transform these tips into constant habits. By keeping your records organised and being proactive in everything related to taxes, you will not only reduce the stress and anxiety related to the business tax. You can also learn more about how your own business works and grow your business

 

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How To Save Tax in UK | Tax saving tips, pay less save more https://taxcare.org.uk/how-to-save-tax/ https://taxcare.org.uk/how-to-save-tax/#respond Mon, 01 Jul 2019 13:02:37 +0000 https://taxcare.org.uk/?p=638     Do you know How To Save Tax or any Tax saving tips? Reducing” the amount of tax you pay is a tricky concept. Most responsible individuals and businesses want to pay the correct amount of tax that they owe – but equally, don’t want to pay more than they have to. Here are some common question related to tax saving people search on the internet:  1) How to save tax on salary in Uk 2) How to reduce income tax 3) How to save tax on a high salary Claim your expenses: The Corporation Tax rate for company…

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How to save tax on salary in Uk
How to save tax on salary in Uk

 

Do you know How To Save Tax or any Tax saving tips? Reducing” the amount of tax you pay is a tricky concept. Most responsible individuals and businesses want to pay the correct amount of tax that they owe – but equally, don’t want to pay more than they have to.

Here are some common question related to tax saving people search on the internet: 

1) How to save tax on salary in Uk

2) How to reduce income tax

3) How to save tax on a high salary

Claim your expenses:

The Corporation Tax rate for company profits for the 2018/19 tax year is 19% – a business with £100,000 in annual profit will pay £19,000 in Corporation Tax.

The key to making sure you pay no more Corporation Tax than you have to is to claim every allowable deduction and expense to give an accurate picture of your profits.

If you paid £5,000 for a new piece of equipment but forgot to claim the capital allowance you are entitled to, your profits may be overstated by £5,000 – so you’ll pay £1,000 extra in Corporation Tax. It literally pays you to stay on top of these things.
Every situation is different, and there may be allowances or deductions for your specific industry (as always, check with a tax expert if unsure), but there are a few basics every business owner should know to make sure they’re not paying more tax than they need to.

Now make sure you’re claiming everything. It may seem like a hassle to record every £3 bus ticket and £2 pad of paper, but over the course of a year those items add up.

You’ll have industry-specific items to claim too – there are no hard-and-fast rules on what you can’t claim. What might be a clearly-excessive luxury for one business could be a run-of-the-mill necessity for another. Just remember HMRC’s “wholly and exclusively” rule; anything you claim must be entirely for business use.

Some other expenses you may not have considered include pension contributions and professional insurance. Both of these can be paid through your company, rather than by you personally.

When running a limited company solo it can sometimes be easy to forget that your business is a separate legal entity – your business’ money isn’t yours! So, to get it into your pockets, you need to pay yourself a salary.

Salaries are business expenses, which reduce your profit and, in turn, your Corporation Tax. So before it’s time to pay tax on your profits, pay yourself!

A word of caution though. Many business owners pay themselves with a mixture of salary and dividends – dividends are drawn from profit, so you need to be able to show you have profits available before issuing dividends. Otherwise, HMRC will most likely reclassify your dividends as salary and you’ll need to pay Income Tax and National Insurance Contributions.

Capital allowances

Consideration should also be given to the timing of capital expenditure on which capital allowances are available to obtain the optimum reliefs.

Single companies irrespective of size are able to claim an annual investment allowance which provides 100% relief on expenditure on plant and machinery (excluding cars). The amount of AIA available for a particular accounting period varies depending on the accounting period.

 

Periods from: Annual limit
1 April 2012 £25,000
1 January 2013 £250,000
1 April 2014 £500,000
1 January 2016 £25,000

There are special rules where accounting periods straddle one of the above dates.

Groups of companies have to share the allowance. Expenditure on qualifying plant and machinery in excess of the AIA is eligible for writing down allowance (WDA) of 18%. Where the capital expenditure is incurred on integral features the WDA is 8%.
100% allowances on designated energy saving technologies continue to be available in addition to the annual investment allowance. Details can be found at www.etl.decc.gov.uk.
Limited allowances are also available for investments in certain types of building.

Trading losses

Companies incurring trading losses have three main options to consider in utilizing these losses:

  • they can be set against any other income (for example bank interest) or capital gains arising in the current year
  • they can be carried forward and set against trading profits arising in future years
  • they can be carried back for up to one year and set against total profits.

Extracting profits

Directors/shareholders of family companies may wish to consider extracting profits in the form of dividends rather than as increased salaries or bonus payments.
This can lead to substantial savings in national insurance contributions.
Note however that company profits extracted as a dividend remain chargeable to corporation tax at a minimum of 20%.

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Small Business Management and Essentials in the 21st century https://taxcare.org.uk/small-business-management-essentials-in-21st-century/ https://taxcare.org.uk/small-business-management-essentials-in-21st-century/#respond Mon, 01 Jul 2019 12:26:18 +0000 https://taxcare.org.uk/?p=627   One of the major challenges for small businesses in the 21st century is knowing how to use business resources wisely. Most of the SMEs have limited resources and low budget, hence, utilizing the existing resources with the help of sophisticated technology and support service can ensure the business has remained operational, sustainable and profitable for a long term. Know the best small business management and essentials tips in the 21st century. To reduce cost and to maximize profitability, businesses can use some of the most useful tools in 2019. Go Cloud-Based: Whether you work from home or rent a separate…

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Small Business Management and Essentials in the 21st century
Small Business Management and Essentials in the 21st century

 

One of the major challenges for small businesses in the 21st century is knowing how to use business resources wisely. Most of the SMEs have limited resources and low budget, hence, utilizing the existing resources with the help of sophisticated technology and support service can ensure the business has remained operational, sustainable and profitable for a long term.

Know the best small business management and essentials tips in the 21st century. To reduce cost and to maximize profitability, businesses can use some of the most useful tools in 2019.

  1. Go Cloud-Based:

Whether you work from home or rent a separate office, cloud computing software is a must-have tool for small businesses. Enabling you to work from any location, you can operate from anywhere and remain connected to your business at all times. For instance, you can use Google Cloud Solution for your business. (you will receive $300 for free). At Tax Care we will provide free cloud-based accounting and management software with our accounting package.

  1. Website and Web Design:

Every business should have a website regardless you sell product online or not. Obtaining expert help with your web design will enhance the user experience and help to convert visitors into sales. Contact Tax Care for free business advises today.

  1. Social Media: Small businesses have more opportunity to engage their new and existing customer on social media than large-scaled companies. As a small business owner, you need to develop a strategy for social media marketing.
  2. Google Listing and Local Listing: If you want your business to have minimum digital credibility, it is important to list your business onGoogle My Business for free. For instance, you own a Cafe in Birmingham and someone has just moved into Birmingham and searching for a cafe nearby from his phone. If your business is not listed on Google, he will not be able to find you quickly. For example, they can see the address, opening hours and a contact number straight away, as well as a summary of reviews. There are images, and a link to directions – handy if the searcher is a few minutes’ walks away looking for a coffee.
  3. CRM Software: Your customers are probably the center of your business activities. The more you know about your customer the better service you can provide to them. A CRM software can provide you a great quality of information about your customer and organize you to provide a great quality of service to them. A-CRM software not only improves the greater communication and enhanced customer service but also maximize the overall business efficiency by multiple times. CRM Software also helps businesses to automate daily tasks, marketing activities and customer requirements.
  4. Go Paperless: Every business should have a policy of becoming paperless as much as they can as the paperless office is cleaner, greener and more efficient. Your business will save processing time and money. Most popular affordable or free paperless tools are Docusign, dropbox, NitroPDF, EchoSign Online Contracts, Online T&C, etc.
  5. Online Order Management System:

Online Order management is used to organize customer orders, manage the warehouse, manage warehouse and delivery staff. You can also analyze customer purchasing patterns, purchasing history and customer analysis. The key benefits of using an online order management system are real-time stock control, automated invoicing to your customer, directly linked to your accounting and banking system.

  1. Marketing Automation

In order to save money and time of marketing, automation is becoming the lifeblood of modern business marketing. It improves the productivity of any business dramatically by reducing recurring tasks, provides automated customized emails and social media feeds.

  1. Use Free Screen-sharing Software:

Small businesses can profit from using virtual support services and remote workers. To facilitate these working relationships, it’s important to have the right software in place. A screen-sharing program will ensure that you can liaise with remote workers easily and demonstrate tasks when you need to.

  1. Google App for Business:

Google has designed some free apps for small businesses, which can be utilized to improve your overall business productivity. Use Google Business Solution to find out more about the apps that can be used for your business. Majority of the apps are for free.

By utilizing the above tools and concepts, a business can improve its productivity and gain more profitability. You can just use some of them based on your business requirements. If you are looking for business advice, please feel free to contact Tax Care, as we would love to help you.

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Self-Employed Expense or Sole-Trader Guide https://taxcare.org.uk/self-employed-expense-or-sole-trader-guide/ https://taxcare.org.uk/self-employed-expense-or-sole-trader-guide/#respond Mon, 01 Jul 2019 12:14:51 +0000 https://taxcare.org.uk/?p=622 Self-Employed Expense or Sole-Trader Guide   When it comes to self-assessment tax return it easy to assess your total income. However, it is not easy to claim most of your expenses. At Tax Care we offer a free initial consultation for self-employed people. We encourage you to prepare and submit your tax return and tell you how you are benefitted by  Self-Employed Expense or Sole-Trader Guide. However, you will receive more benefits than the actual cost you pay at Tax Care. Please note that we have drafted below just for demonstration purposes only. Please feel free to contact ‭0121 227…

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Self-Employed Expense or Sole-Trader GuideSelf-Employed Expense or Sole-Trader Guide

 

When it comes to self-assessment tax return it easy to assess your total income. However, it is not easy to claim most of your expenses. At Tax Care we offer a free initial consultation for self-employed people. We encourage you to prepare and submit your tax return and tell you how you are benefitted by  Self-Employed Expense or Sole-Trader Guide. However, you will receive more benefits than the actual cost you pay at Tax Care. Please note that we have drafted below just for demonstration purposes only. Please feel free to contact ‭0121 227 8564‬ for free consultation.

What will you know from this post of taxcare.org.uk?

  • What are the allowable expenses for Self-Employed Expense or Sole-Trader Guide in the UK?
  • Which self-employed expenses are allowable expenses?
  • What business expenses can I claim as a Sole Trader?

  • Accounting and Professional Fees for a Self-Employed or Sole-Trader

  • Advertising & marketing
  • Bank interest & overdraft charges
  • Broadband
  • Computer equipment and electronics For private and business use
  • Second-hand equipment brought into a business
  • Food and drink

And finally, you will know Why Tax Care Accountants for Self-Employed Expense?

Which self-employed expenses are allowable expenses?

When you’re completing your tax return, these are some of the costs that usually count as allowable business expenses.

What business expenses can I claim as a Sole Trader?

As a sole trader, your business will naturally incur running costs. The good news is that many of these running costs can be claimed as business expenses, meaning you’ll pay less tax and get to keep more of your hard-earned money.

Accounting and Professional Fees:

All legal and professional fees are allowable expenses and you are allowed to claim those Self-Employed expenses. However, you cannot claim for the expenses for a personal or family matters

Advertising & marketing

Any expenses incurred in your business advertising can be claim as an expense. Please note that, expense must be incurred for wholly exclusively business purposes.

Bank interest & overdraft charges

Bank interests and overdraft charges can be claimed depending on the type of account you have. If you have a personal account, you may claim partial amount of the bank charges. If you have a business account you can claim the full amount for tax relief. It is one of the best Self-Employed Expense or Sole-Trader Guide.

Broadband

If you are Self-Employed and want to know Expense or Sole-Trader Guide You can only claim if you are using for business purpose. If you are using from home you can claim proportionately.

Business use of home

You can use a simplified flat-rate allowance to claim or you can claim some of the expenses. Please contact your accountant if you are not sure which option is good for you.

Charitable donations

You can get tax relief on some charitable donations, but they aren’t included in your business accounts as a cost. Instead, the donations go in the main section of your tax return.

Childcare

Unfortunately, you cannot claim childcare expense as you have spent for personal perpose.

Clothing

Generally, claiming for any clothing that is (or could be) part of an “everyday wardrobe” is not allowable – so if you have to buy a suit for work but it could be worn elsewhere, you cannot claim for the cost of the suit.

Computer equipment and electronics

For private and business use

If you buy new computer equipment that you’re going to use partly for work and partly for personal use, you have to work out how much you’re going to use it for business, and then include only that proportion of the cost in your accounts.

Solely for business use

If you buy computer equipment that’s just going to be used for your business, you’ll be able to claim tax relief on the full cost of the equipment as a capital asset.

Private equipment brought into a business

If you already own a computer, office chair, etc and want to bring it into your business, you can claim tax relief for its market value at the point you brought it into the business.

Check eBay for similar items and then include that

cost.

Don’t forget that if you are going to carry on using the equipment privately too, you have to work out how much you’re going to use it for business, and then include only that proportion of the cost in your accounts.

Second-hand equipment brought into a business

If you buy a piece of equipment second-hand, you can still claim it as a capital asset at the cost you bought it for because the equipment is new to you. Don’t forget that unless you have a VAT receipt and are VAT registered, you can’t reclaim VAT on second-hand equipment. It is also a good Self-Employed Expense or Sole-Trader Guide.

Council Tax (home)

If you work from home, you can claim a proportion of your Council Tax cost.

Credit card charges

You cannot claim your personal credit card charges as a business expense.

(personal cards)

See: Bank interest and overdraft charges

Cycle travel

HMRC says that sole traders and partners can’t claim tax relief on business journeys undertaken by bicycle. If you employ anyone, then your employees can claim tax relief on business bicycle travel – but you can’t!

Dogs

Some dogs (and other animals) are classed as

“working animals”, for example, farm working dogs,

gamekeepers’ spaniels, police dogs, or army bomb

disposal dogs.

These working animals are treated in the business books as capital assets that qualify for capital allowances, and feeding and caring for them as tax-deductible expenses. So you could put food for these animals, veterinary fees and so forth into the company’s profit and loss account as business costs, and save tax.

Electricity

Home

If you work from home, you can claim tax relief on a percentage of your electricity costs, based on how much you use your home for business.

You can claim the full cost of heating and

lighting your business premises for tax relief.

Entertaining

Entertaining clients

Unfortunately, neither you nor your company can claim tax relief for entertaining clients. There is no tax relief available on the cost of entertaining anyone other than bona fide payroll employees.

Entertaining employees

When you’re entertaining your employees, this may be allowable for tax relief in your business’s accounts, but it could also be a benefit on which your employees have to pay some tax.

In order for a party to be what HMRC calls a “qualifying event“ and therefore not a taxable benefit for your staff, it must meet all of these three criteria:

  • It is an annual event (such as a Christmas party).
  • It is open to all staff.
  • It costs less than £150 per guest present.

If any of these three conditions aren’t met – for example, if the event is a one-off meal to celebrate a new contract, or if some employees are excluded, or if the cost per head is over £150 – then the whole cost of the event becomes a taxable benefit.

Flights

You can only claim the cost of flights in full if the primary purpose of your journey was for business. If it was mixed (i.e. both for business and private), then you can only claim any costs that you can clearly separate from the private part of your journey.

If you can’t separate the journey, you can’t claim any of the costs. For more details, visit our article about travel and accommodation.

Food and drink

At your home or an office

If you don’t have any employees, you can’t claim the cost of food and drink you buy to eat while you’re

working from home or in your usual office. If you have employees, you can provide basic food and drink (such as tea, coffee and biscuits) for them, along with free meals at a canteen, and claim tax relief for these costs – so long as the food and drink you provide is available to all of your staff.

While travelling

As a self-employed person, you are allowed to claim the cost of very little of the food and drink you buy when you’re out and about on business. HMRC takes the stern line that everyone must eat to live, and only has a few exceptions:

You can only claim tax relief on the cost of your food and drink when you’re making a journey that’s outside your normal working pattern, such as going to visit a client who you usually deal with online. However HMRC doesn’t define “normal working pattern” in any detail, so if you include a claim for the cost of food and drink on this basis, you should be prepared to justify it to a visiting inspector.

Gas

Home

If you work from home, you can claim tax relief on a percentage of your gas costs, based on how much you use your home for business.

Office

You can claim the full cost of heating and lighting your business premises for tax relief.

Gifts

Gifts to employees

As a self-employed employer, if you give a personal gift to one of your employees, for example a birthday or wedding gift, there’s no tax to pay on it and you don’t have to report it to HMRC. This is because HMRC treats it as a gift from you as a person, rather than from an employer.

There is no specific guidance from HMRC about whether you can claim tax relief on gifts to employees by putting them in your accounts as a cost. You should ask an accountant about your individual case.

Hotel accommodation

You can only claim tax relief for the full cost of hotel accommodation if the primary purpose of your stay was for business. If it was mixed (i.e. for both business and private purposes), then you can only claim tax relief for any costs that you can clearly separate from the private part of your stay. If you can’t separate the stay between business and private, you can’t claim tax relief for any of the costs.

Insurance

You can claim tax relief on the full cost of insurance for business, such as contents insurance for an office or a specialist home business policy. However, you can’t claim tax relief for any insurance that has a dual purpose, such as private medical insurance for the business owner.

Laptop

Medical treatment

You can almost never claim tax relief for the cost of medical treatment, even if it relates to an injury you sustained at work. The exception is for an actor or another performer who has cosmetic surgery that they can prove is purely for business. HMRC’s example is that of an experienced radio performer who has her teeth straightened to allow her to work on TV.

Mileage

If you’re self-employed and using your own car, the simplest way to claim tax relief for your running costs (including petrol or diesel) is to include your business mileage in your accounts at HMRC’s approved rates. Another option is to work out your car running costs and claim a percentage, which may save you tax if you have a car that’s comparatively expensive to run.

Mobile phone

Mortgage (home)

If you work from home and pay a mortgage, you may be able to claim tax relief for a proportion of the interest that you pay, but not the capital repayment.

Parking fines and speeding tickets

Sorry, you can’t claim tax relief on the cost of fines or speeding tickets, even if you incurred these while travelling on business, because you incurred the cost while breaking the law!

Pension contributions

Pension contributions to your own pension count as personal costs, so if you pay these from the business account, you can’t claim tax relief on them through your business accounts. Instead, you would claim tax relief on them by putting them into the ‘Tax Reliefs’ section of the main part of your tax return.

Professional subscriptions

You can claim tax relief on the cost of annual subscriptions paid to a professional institute or society, if members of that body give you the right to use a qualification and you use that qualification in your business. For example, a self-employed bookkeeper could claim the cost of their Institute of Bookkeepers subscription. You can also claim tax relief on the cost of subscriptions to trade associations such as your local Chamber of Commerce.

Property repairs (home)

If you work from home and have repaired your property, you may be able to claim tax relief on some costs. If a property repair relates solely to the part of your home that’s used for business, you would include this cost in your accounts in full, subject to the business use of that room. So for example, if a developer has a home with 10 rooms and the ceiling in her office/spare bedroom was repaired at a £200 cost, she would multiply the cost by 90% (because she uses that room for business 90% of the time), and would include £180 in her company accounts. If the repair is to the whole house, for example a repair to the roof, you can include that in the same proportion as you would the rent or council tax – so in the example of the developer’s 10-room house, she would claim 1/10 of the repair cost x 90%. If the repair is solely for a part of the house that’s not used for business – such as replastering a kitchen – then you can’t claim any part of that repair for tax relief.

Rent

Home

If you work from home and pay rent to a landlord, you may be able to claim a proportion of the rent for your business.

Office If you rent an office that you use just for business, you can claim tax relief on the full cost of that rent. The exception is a rent deposit, which goes on your balance sheet and isn’t available for tax relief

Stationery

If you buy stationery to use for the business, such as business cards or compliment slips, you can claim tax relief on the full amount of this cost.

Telephone

Home If you work from home and don’t have a separate phone line for business, you can claim the full cost of all the business use of your home phone line or personal mobile (using an itemized bill). You can also claim a percentage of the line rental, based on how much you use it for business purposes and how much is for personal use. Remember that if you are claiming the flat-rate allowance for business use of a home, this does not include business calls from your home phone line. Office If you have a separate phone line or mobile for business, you can claim tax relief on all the calls and line rental for this phone.

Tolls and car parking

You can claim tax relief for the full cost of tolls and car parking fees you pay while travelling on business. If you are claiming tax relief using the mileage method (see: Vehicle), you can claim tax relief on the costs of tolls and car parking in addition to the mileage. Remember, however, that you can’t claim tax relief on parking fines! See Parking fines and speeding tickets for more detail.

Train tickets

You can only claim tax relief for the full cost of train tickets if the primary

purpose of your journey was for business.

If it was mixed (i.e. for both business and private use), then you can only

claim tax relief for any costs that you can clearly separate from the private

part of your journey.

If you can’t separate the journey, you can’t claim tax relief

for any of the costs.

Travel

HMRC doesn’t give any explicit guidance about what counts as a claimable business journey for sole traders. It only says that if the travel is “regular and predictable”, or between home and a “base of operations” such as a co-working space where you spend most of your working days, then the costs couldn’t be claimed. We suggest speaking to an accountant about your specific circumstances.

Training and personal development

If you’re self-employed, HMRC says that you can only claim tax relief on training costs if the training updates expertise that you already have. For example, a web developer who attends a course to keep up with new developments in the industry can claim tax relief for that cost. Training that gives you new expertise, knowledge or skills, however, isn’t allowable for tax relief.

Vehicle

If you’re self-employed and using your own car, and your sales are under the VAT threshold (£85,000 a year at the time of publishing), the simplest way to claim tax relief for your running costs (including petrol) is to include your business mileage in your accounts at HMRC’s approved rates. You can only use this mileage method if you haven’t claimed capital allowances on that vehicle before. If you drive both a car and a van or lorry for business, then you only get one allowance for all the vehicles that you use. For more details, visit our article about travel and accommodation.

Water

Home If you use a lot of your home water supply for business – for example, if you run a car valeting service – then you would need to apply to the water company for the business use to be separately charged, and you could claim tax relief for the full cost. If your business use of water is only minor, you can’t claim tax relief for any of the business cost.

Office You can claim tax relief on the full cost of water at your business premises

Website hosting

You may be able to claim tax relief for the costs of hosting a website if you think that your website will earn you more money than the cost it takes to host it. HMRC uses the analogy of a website as a “shop window” to clarify when you can claim tax relief for the costs. There are no hard and fast rules here so we would recommend speaking to an accountant about these costs. Hope you Have read our Self-Employed Expense or Sole-Trader Guide and our services.

Why Tax Care Accountants for Self-Employed Expense?

Easy expense tracking

Attach scanned receipts to your expense entries. Upload from your

computer or directly from your mobile.

Track billable and unbillable time. Create your own timesheets or use our online timer.

Use our comprehensive list of expense categories. Or track your own custom

expense categories.

Once you’ve added an expense, watch your cash flow and tax forecast change in real-time.

What else can you do with FreeAgent?

Create and send estimates and invoices • Track all the time you spend on projects • Monitor your cash flow at a glance • Get a bird’s eye view of your projects • Fill and file your Self Assessment tax return • File VAT returns with a single click • Connect your bank accounts to automatically import transactions

If you want help from our expert on Self-Employed Expense or Sole-Trader Guide you can contact us.

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Benefits Of Outsourcing Payroll UK | Payroll outsourcing guide https://taxcare.org.uk/benefits-of-outsourcing-payroll-uk-payroll-outsourcing-guide/ https://taxcare.org.uk/benefits-of-outsourcing-payroll-uk-payroll-outsourcing-guide/#respond Mon, 01 Jul 2019 06:51:33 +0000 https://taxcare.org.uk/?p=617 Outsourcing payroll is a difficult task as you need to make sure the payroll outsourcing company is reliable and affordable for your business. This guide aims to explain how the payroll outsourcing works and key things you need to consider before outsourcing your payroll to a payroll service provider. In order to streamline your both HR and accounting function and save money outsourcing payroll would be an ideal option. This guide aims to explain an overview of the benefits of outsourcing payroll and key things you need to consider before outsourcing payroll. What is Payroll Outsourcing? Use a third-party service…

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Benefits Of Outsourcing Payroll UK | Payroll outsourcing guide
Benefits Of Outsourcing Payroll UK | Payroll outsourcing guide

Outsourcing payroll is a difficult task as you need to make sure the payroll outsourcing company is reliable and affordable for your business. This guide aims to explain how the payroll outsourcing works and key things you need to consider before outsourcing your payroll to a payroll service provider.

In order to streamline your both HR and accounting function and save money outsourcing payroll would be an ideal option. This guide aims to explain an overview of the benefits of outsourcing payroll and key things you need to consider before outsourcing payroll.

What is Payroll Outsourcing?

Use a third-party service provider to process payroll, prepare payslips and handles all of the administrative and compliance functions of paying your employees. It is your responsibility as an employer to ensure your employees are getting paid correctly, you are complying with HMRC requirements, Pension Regulator requirements or get someone else to do it for you. Outsourcing your payroll to a reliable payroll provider will reduce a huge burden off your shoulders and your business will have access to expertise payroll service and business advice. When to Outsource Payroll?

It depends on the size, the budget and other resources available for your business. As an employer you need to make the payment and deduction correctly to your employees otherwise they will backfire on you. Now the question is, should you recruit someone to do it in-house payroll or should you just outsource it to a payroll provider? If you own a small company then it is recommended to outsource your payroll function as you will get access to expertise. If you own a large company you can either do in-house or outsource it.

Payroll is a complicated, regular basis task. If you do not complete the tasks on time it will keep piling up which will delay the payroll process. As a result of delayed payroll processing, you might get a penalty or your employees might backfire at you for getting paid late.

Therefore, if you think you cannot manage to process your payroll by yourself then it is worth outsourcing your payroll to a payroll bereue as soon as possible.

What is Included in the Payroll Outsourcing Service?

The payroll functions typically outsourced to a third-party provider include:

  • Running payroll and making employee pay and withholding calculations
  • Depositing funds directly or issuing checks to employees
  • Calculating state and federal payroll taxes, and making tax withholding payments
  • Filing required government reports
  • Administering employee benefits
  • Withholding social security and pension contributions

Why Outsource Payroll?

Running an in-house payroll can be a challenge for smaller companies or business without HR and accounting professionals on staff. Outsourcing is one method to avoid hiring additional employees or contracting with specialists.

Companies choose to outsource payroll for several primary reasons:

  • Cost savings by avoiding the need to use in-house resources to comply with complex payroll requirements
  • Ease of ongoing administration of payroll through changes in personnel, reduction or increase in compensation structure and filing of reports to government authorities
  • Avoiding mistakes and tax compliance penalties
  • If using a GEO service in a foreign country, no need to establish a legal entity to run a compliant payroll

What Payroll Functions Can Be Outsourced?

Depending on their needs, a company may customize the payroll services that they outsource, while retaining control of other aspects. The payroll functions typically outsourced to a third-party provider include:

  • Running payroll and making employee pay and withholding calculations
  • Depositing funds directly or issuing checks to employees
  • Calculating state and federal payroll taxes, and making tax withholding payments
  • Filing required government reports
  • Administering employee benefits
  • Withholding social security and pension contributions

Benefits of Outsourcing Payroll

The advantages of outsourcing payroll for both small and large companies are numerous, and a large percentage of businesses use this type of service abroad. The benefits of cost and time savings, filing of reports and avoiding compliance issues make payroll outsourcing a popular service. Those advantages are multiplied in foreign markets where payroll rules and tax laws are unknown to a new business, and a local payroll provider can be a valuable partner.

Disadvantages of Outsourcing Payroll

Outsourcing payroll is a limited, administrative foreign employment solution, and does not guarantee compliance with taxation, immigration or labor laws in the host country. The payroll provider does not offer the foreign company a local employment entity, so incorporation is still required along with registration and other compliance measures.

Other practical disadvantages include losing control of compensation and employee data, security issues and lack of service quality or timely reporting. These can be offset by thorough research of the payroll providers in the country and selecting the best firm available.

What to Ask When Outsourcing Payroll

Outsourcing your payroll to a payroll service provider can be very risky as it involves a lot of information about your business. There are a few key questions to ask any payroll provider prior to outsourcing, to minimize any issues with service quality:

  • How much do you charge per payslip?
  • Are your service includes auto-enrolment and pension?
  • Are there any hidden costs?
  • Are you compliant with GDPR regulation?
  • How do you secure my employee’s confidential information?
  • Do you have experience in payroll outsourcing?
  • Is your firm regulated by any accounting body?

THINGS TO CONSIDER WHEN CHOOSING A PROVIDER

How flexible is their service?

Different businesses have different needs, so it is important that your payroll provider can offer a flexible service tailored to the specific needs of your business. Additionally, your needs may alter over time, especially when experiencing growth and change – you don’t want to have to look for a new payroll provider, you want to have the option to adjust your agreement and package when necessary. Are they willing to be flexible on time scale and deadlines? For example, if you provide the information later than normal, will they still manage to process the payroll on time?

Are they willing to fix their prices?

Ensure that the price is a reasonable and affordable solution, which fits within your budget. Find a service that is tailored to your needs. It is also important that you choose a payroll provider who sets a fixed price; to ensure that there are no hidden charges and that the final bill is as you expected.

How responsive are they?

It is crucial that you have a point of contact with the payroll provider who is easily accessible and responsive to your needs. Ideally, your payroll provider should be proactive and constantly looking for ways to manage your payroll matters more effectively.

What experience do they have?

As HMRC requirements are constantly changing with more obligations on the employer, it is crucial you use third party

providers who have specialists who are used to these obligations. It is their responsibility to make you aware of the ever-changing legislation so you can feel at ease knowing that your business is compliant with all new legislation, so having a wealth of experience is essential. Without experience, your provider could be prone to making mistakes, which can quickly become expensive. A consideration that you must take into account is who will be in charge of your account once you have agreed to outsource your payroll. It is a common criticism of payroll providers that they outsource or ‘pass down’ the payroll matters. Ideally, you should look for a provider where all staff dealing with payroll have years of experience.

Do they have the necessary expertise?

Given the increased compliance and burden of Real-Time Information (RTI) and Auto Enrolment, it is crucial that your payroll provider has the necessary expertise to ensure you comply with the new legislation. Why Would Choose Tax Care as your Payroll Outsourcing Provider?

1. COST

It can sometimes be difficult to calculate the cost of servicing payroll in-house, but when you consider wages for employees (full and part-time), software costs, training costs and printing, you may be surprised by how much you actually spend. If you take into account the penalties for mistakes and missed deadlines then in-house processing may become costly. Hawsons can offer a fixed-price service, which is tailored to the needs of your business. This makes outsourcing your payroll tonHawsons an affordable and quantifiable solution.

2. FLEXIBILITY

Different businesses have different needs, so it is important that your payroll provider can offer a flexible service tailored to the specific needs of your business.As your needs are likely to alter over time, especially when experiencing growth and change – you don’t want to have to look for a new payroll provider. Instead, you want to have the option to adjust your agreement and package when required. Additionally, if you provide the information later than normal, will your provider still manage to process the payroll on time? At Hawsons we pride ourselves on being flexible and able to adapt to our clients’ needs. We do not impose rigid deadlines or time slots, and if the information is provided by you later than usual we will work hard with you to ensure the payroll is still processed on time.

3. EXPERTISE

HMRC requirements are constantly changing with more obligations on the employer, with Real-Time Information (RTI) and Auto-Enrolment as recent examples. Small business owners simply cannot be expected to keep abreast of all of the changes. Instead, using a third party like Hawsons, who have experienced specialists which are used to these obligations and constant changes, can be extremely helpful. We stay well-informed of the changes and provide guidance to help your business comply with all new legislation. This will undoubtedly reduce the number of mistakes made during the payroll process and, as mistakes can quickly become expensive, it is crucial you eliminate these where possible. Real-Time Information (RTI) for PAYE RTI was introduced in April 2013. It meant that all employers must make an FPS (Full Payment Submission) to HMRC on or before each payday. An employer may also be required to submit an EPS (Employer Payment Summary) on a monthly basis to HMRC. An employer with a weekly and monthly payroll could be required to make as many as 76 online submissions to HMRC each tax year. If the submission is not made on or before the pay day then HMRC will issue penalties and charge interest on late payments. Why have the burden of meeting the deadlines yourself when Hawsons can deal with the submissions on your behalf. Hawsons have been ensuring that their clients comply with the new legislation since it began.

Auto Enrolment and the requirement for all employers to set up a workplace pension scheme has been phased in for large employers since October 2012 with all employers being required to comply with the legislation by February 2018. It means that from an employer’s staging date all employers must assess staff every pay period to determine whether they would be required to make compulsory pension deductions based on their age and earnings. Most employees between the age of 22 and 65 will be required to have deductions made against their pay. An employer will also be required to provide a file to the pension provider each pay period containing various details in a specified format. Hawsons can liaise directly with you and your pension provider to ensure the process runs as smoothly as possible. We already have a large number of clients who have been complying with the legislation and have had to write numerous bespoke reports for different pension providers. Auto Enrolment is a legal requirement so it is very important that your company complies with the legislation as the penalties can range up to £50,000 and employers can be prosecuted. Tax Care can assist you so that you have peace of mind.

4. TIME SAVINGS

Regardless of the size of your business, the payroll process demands a great deal of time and effort – time and effort that could be spent growing the business or relaxing with friends and family. Ready? Steady? GROW. Outsourcing your payroll will allow you to have the opportunity to spend your time more effectively; with more time to support your employees and work towards business objectives. Focusing all of your efforts on your core business is crucial as the more time spent on sales, the faster your business will grow. Work-Life-Balance Get your work-life-balance right for you. The payroll process is difficult to manage and can take over your evenings and weekends; time that should be spent relaxing or with family and friends.

5. STRESS RELIEF

As well as having impacts on cost and time, attending to the payroll process in-house can be a heavy burden to carry. Spending your evenings and weekends worrying about whether the details are right, your business is fully compliant or if you’re going to meet the strict deadlines can be extremely stressful. Outsourcing your payroll services to Hawsons can take away the headaches and stress of doing it in-house and give the owner peace of mind to carry on what they do best – running their business.

6. ACCURACY

It is extremely important that your payroll is processed accurately and free from mistakes. If you are not experienced with attending to your payroll matters, then it is easy to make mistakes, and these can quickly become expensive. Submissions to HMRC must be made on time and error-free in order to avoid monthly penalties and possible interest charges. The penalties HRMC impose can range from £100-£400 per month, depending on the size of your organization. Outsourcing your payroll services to Hawsons will take away this risk of financial penalties and ensure your payroll is submitted on time and error-free.

7. CONFIDENTIALITY

Companies sometimes want to process their payroll in-house because they are protective of wage information. However, from our experience, it is better if someone unconnected with the business is dealing with payroll information rather than an internal employee. Even with a trusted employee, there is always the risk of identity theft or tampering. Additionally, without the most up to-date software packages, there is always a risk that information is not completely safe and secure.

8. INFORMATION SECURITY AND DATA PROTECTION

Whilst payroll data has always been treated with the highest level of confidentiality, organizations should also be aware of the risk of significant fines which can be issued by the Information Commissioner’s Office. Failure to protect personal data as required by the GDPR can result in a fine of up to £500,000 for the employer. Payroll data including national insurance numbers, bank account details, names and addresses, dates of birth, etc. are some of the key ‘ingredients’ for identity theft; hence the stringent fines for failure to comply with the Act. You can’t outsource your data protection responsibilities When businesses outsource their payroll function they do not also outsource their Data Protection Act responsibilities. Employers have the responsibility to protect the personal data irrespective of who is processing the payroll. As a result, businesses need to choose their payroll provider carefully to ensure that data is secure at all times whether it is in storage or transmission.

Ensure your data is encrypted Employers need to select a payroll outsourcer who takes care of their data as if it were their own. As data is moved backward and forwards between the employer and the payroll processor it should be encrypted during transmission. Data should also be encrypted if it is stored or exchanged on the internet, for example: on an internet portal. Hawsons uses CESG certified encryption software Hawsons uses a market-leading encryption solution to safeguard client data. The solution is certified by CESG the information security arm of GCHQ. The solution is: Extremely easy to use Free for our clients Compliant – data is encrypted to the Fips 140-2 standard Secure – data is encrypted and can only be accessed by specified users Auditable – there is a full audit trail of all attempts to access the data, whether successful or not, including the date and time of the event and the IP address of the user. Flexible – access to the data can be set to read-only if required and can also be revoked at any time.

OUR EXPERIENCE

Why choose taxi Care? Tax Care is one of the oldest firms of independent chartered accountants in England. Formed in the early 1850s, Hawsons has recently celebrated 160 years of providing expert advice. The firm currently employs nearly 100 members of staff across three offices in Sheffield, Doncaster, and Northampton. Our clients include a broad range of businesses in terms of size, structure, and operations; and as a member of HLB International, a worldwide network of independent accounting firms and business advisers in 130 countries, we can provide you with strategic, business and taxation advice relevant to the countries in which you are operating.

Our payroll specialists Hawsons Payroll is a dedicated team of experienced Payroll specialists who provide an integrated and fully comprehensive range of services. The team is headed up by Partners Stephen Charles in Sheffield, Martin Wilmott in Doncaster and David Cairns in Northampton. They each have extensive experience in all aspects of payroll matters and have worked with a wide range of clients of all types and sizes.

OUR SERVICES

Tax Care payroll can take the ever-increasing burden of operating a payroll off your shoulders, allowing you and your work-force to concentrate on building a successful business. Hawsons payroll offers a fixed price service, tailored to your own needs. We are not a bureau or call center and aim to replicate the benefits of an in-house payroll function by being flexible and responsive. Our integrated and fully comprehensive service offers the following: Payslip preparation Customised management reporting on payroll information Year-end HM Revenue and Customs returns Maintaining statutory sick pay and statutory maternity pay records Dealing with HM Revenue and Customs and DWP on your behalf Payments of salaries and wages Compliance with existing and new legislation Sickness and absence recording Dealing with employer and employee queries Provide statutory forms to staff Give guidance on various payroll issues and legislation

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