Our New Business Kit

Are you a start-up or a growing business? If so our New Business Kit is for you!

It covers a full suite of processes and guides to help you run your business more effectively and efficiently. The kit contains valuable information covering the following topics:

 

  1. Selecting the right legal entity for your business
  2. Registering with the tax authorities
  3. Illustrative guides and practices for accounting & book-keeping
  4. Guides on various types of tax including, Value Added Tax, Payroll Taxes, Income Tax and Corporation Tax
  5. Help with cash planning and forecasting
  6. Obtaining credit and financing your business
  7. A guide to insurance
  8. Help with selecting professional advisers
  9. Computer accounting systems for first time users
  10. Useful names, addresses and telephone numbers

If you would like to make an appointment with one of our team to discuss how we could help you, then please get in touch by emailing us on tellmemore@clayshawthomas.com or ringing us on 01656 867167.

Are you on the right VAT scheme for your business?

There are several different ways you can account for VAT that could save you time and money and improve cash flow. Choosing the right scheme is dependent on your specific business and your needs. Most businesses will use the standard VAT scheme because it is the default scheme for any newly registered business. Using standard VAT accounting, you must complete VAT returns every three months. You pay VAT on your sales whether or not your customer has paid you but can reclaim any VAT on supplier invoices when received.  This scheme is ideal if you have low debtors e.g. most of your income is received at the time the supply is made.

 

Cash Accounting

Using cash accounting may help your cash flow, especially if your customers are slow payers. You do not need to pay VAT until you have received payment from your customers. If a customer never pays you, then you don’t have to pay VAT on that bad debt as long as you continue to use this scheme. You reclaim VAT on your purchases when you have paid your suppliers, which could be a disadvantage if you have high levels of creditors.   To qualify for this scheme the business’ VAT taxable turnover (basically sales) must not exceed £1.35m.

 

Monthly or Annual Accounting

It is possible to prepare and submit your VAT returns on an annual or monthly basis rather than every three months. If you are a business that regularly reclaims VAT from HMRC, then cash flow may be significantly improved if the refund payment arrives monthly rather than quarterly. For businesses of a certain size there is also the option of submitting VAT returns on an annual basis. Whilst this will reduce your paperwork, HMRC will want monthly payments on account, so any cash flow advantage may likely be minimal. Another disadvantage of using this scheme is that if your turnover decreases, your monthly payments may be higher than under the standard VAT accounting.

 

Flat Rate Scheme

If your VAT taxable turnover is less than £150,000, you could simplify your VAT accounting by using the Flat Rate Scheme. Using this scheme, you pay VAT as a fixed percentage of your gross sales i.e.  14% of VAT  inclusive sales. The actual percentage you use depends on your type of business. Although you cannot reclaim VAT on purchases (it is taken into account in calculating the flat rate percentage) the Flat Rate Scheme can reduce the time taken on accounting for and working out your VAT. You still need to show a VAT amount on each sales invoice, but you don’t need to record how much VAT you charge on every sale in your accounts. Nor do you need to record the VAT you pay on every purchase. It would need to be checked, but in addition to the administration benefit of not having to split the VAT element out of every expense, you  could also end up paying less VAT overall. This scheme is available to smaller businesses with VAT exclusive turnover less than £150k. Once in, you can stay in until your VAT exclusive turnover reaches £230k. However, this scheme may not be for you if you make a lot of zero or exempt sales.

 

In addition to the schemes explained here, there are special schemes for retailers and margin schemes for certain trades.

 

If you have any VAT queries or need help in determining which VAT scheme is right for you, contact a member of our team on 01656 867167 or by emailing us on tellmemore@clayshawthomas.com

July 2015 Budget Preview

George Osborne will deliver the second Budget of 2015 on Wednesday, July 8th, just two months – almost to the day – after the Conservatives secured an outright majority in the General Election.

With all the pundits predicting a hung parliament, the Conservatives secured an overall majority of 12; not huge but – in the short term at least – workable. And the Chancellor seems keen to press on with his economic reforms, perhaps before the inevitable storms over the in/out referendum on the EU blow the Government off course.

George Osborne announced the new Budget in mid-May, saying that he wanted to “deliver on the commitments we have made to working people.” There would, he said, “be a laser-like focus on raising productivity and living standards.”

I think we can expect ‘increases in UK productivity’ to be a theme running through Osborne’s pronouncements: he is well aware that the UK lags behind countries like Germany and the USA in this respect.

Writing in a UK newspaper, the Chancellor gave an early indication of his thinking, although he consistently refused to be drawn on where the much-discussed £12bn of welfare savings would come from. He would, he wrote, “make the welfare system fair for those who pay for it.”

There would also be more funding for the NHS, savings across Whitehall and a crackdown on tax avoidance and evasion. There was also a commitment to create three million more apprenticeships: the Budget would deliver stability and “move Britain towards full employment.”

As you might expect, the nation’s economic commentators weren’t quite as enthusiastic as the Chancellor and, far from ‘stability,’ the word ‘emergency’ was used in several articles. Labour broke off from finding a new leader to fire the predictable broadside and Nicola Sturgeon gave the ritual condemnation on behalf of the 56 newly-elected SNP MPs.

The Economic Background

A month on from the Chancellor’s announcement the rhetoric has settled down, there have been more policy announcements and we perhaps have a clearer idea of what we can expect on July 8th. First, though, let’s try and put the UK’s current economic situation into some sort of context: after all, as George Osborne has often admitted, the UK cannot be immune to what’s happening in the wider world.

The outlook for the UK economy is reasonably good. The CBI have downgraded their growth forecasts for the year slightly, but are still forecasting growth of 2.4% for this year and 2.5% for next year. Unemployment continues to fall and welfare spending is at a 25 year low. Inflation turned negative in April, but Bank of England Governor, Mark Carney, is not worried about deflation, expecting inflation to start moving towards the 2% target level by the end of the year.

In Europe, Greece continues to teeter on the brink. I started these notes on Friday June 12th, at which point negotiations with the IMF had broken down and EU officials were starting to plan for a Greek default. It appears that further talks on Sunday collapsed after less than an hour – but don’t bet against yet another last minute compromise. No matter what happens with Greece, though, there are still problems in many European economies and worrying signs that the German taxpayer may not pick up the bill indefinitely.

Further afield, the US economy added 280,000 jobs in May – well ahead of expectations – and whilst the Chinese economy shows worrying signs of a slowdown, the Government there seems ready to take whatever action is needed to continue stimulating the economy.

What can we expect from the Chancellor?

So much for the background: what is George Osborne likely to deliver on July 8th?

The headline announcement to date – which we are likely to see confirmed in the Budget speech – is what’s been dubbed the ‘Micawber rule.’ Annual income twenty pounds, wrote Charles Dickens, annual expenditure nineteen [pounds], nineteen [shillings] and six [pence], result happiness. The figures are slightly larger, but it seems the Chancellor is determined that neither he nor his successors will spend the equivalent of twenty pounds, ought and six and plunge the country into misery.

Where other Chancellors have had principles, guidelines and – in the last parliament – a ‘golden rule,’ George Osborne likes legislation. So the Micawber rule will become law, with a commitment that governments must operate a Budget surplus in ‘normal times,’ (with ‘normal times’ defined by the Office for Budget Responsibility.)

The Chancellor made this announcement in his annual Mansion House speech, when he also confirmed that the Government would sell its remaining stake in the Royal Bank of Scotland, possibly incurring a £7bn loss. In the Budget, we can expect the Chancellor to confirm that the Government will also raise £1.5bn by selling its remaining share of Royal Mail. There will also be a further £3bn of savings from another raid on Whitehall departments: the Budget speech should then see confirmation of where the Government will further cut welfare spending.

The Queen’s Speech has already seen a commitment from the Government to introduce a law preventing rises in tax, VAT and national insurance during the life of this parliament. The government is effectively betting on the tax take increasing by more people being in work: this – combined with the welfare cuts – is what the Chancellor expects to eventually wipe out the Budget deficit.

Apprenticeships are one key area that the Chancellor will target. As the election manifesto stated, ‘we have already delivered 2.2m new apprenticeships over the last five years. Over the next five we will deliver three million more and ensure they deliver the skills employers need.’ He is likely to confirm this commitment in the Budget speech, setting a target that commentators have described as “difficult but not impossible.”

We’re certain to see action on tax, with a commitment to continue raising the personal allowance – I’d also be surprised if we didn’t see a commitment to raise the starting point for 40% tax to £50,000.

The Chancellor might also give details of how he plans to raise the inheritance tax threshold on family homes to £1m. The commitment is to do this by 2017, so he doesn’t have long.

One thing we may see is action to close the ‘salary sacrifice loophole.’ This is where employers allow staff to take a supposed ‘pay cut,’ with the money instead being put towards pension contributions or other benefits like childcare. On the one hand, the Chancellor will want to be seen as pro-business: on the other, the Government is losing an estimated £5bn a year in National Insurance payments due to this practice. Salary sacrifice could easily go under a pledge to make the pensions and taxation system ‘simpler and fairer.’

Finally, expect to see a bold, confident Chancellor when he stands up to speak on July 8th. Many pundits give much of the credit for the Conservative victory to the Chancellor – and with David Cameron already stating that he won’t fight another General Election, George Osborne is very much a contender to take over. We’ll see the Chancellor setting ambitious targets on July 8th – and he’ll be going all out to deliver.

Click here to view the sources.

Our Small Business Solutions package

We hosted a ladies only afternoon tea event with HSBC and Berry Smith Solicitors last recently.

It was a huge success with over 35 ladies attending.

We had some great speakers, Kath Fisher from the Noah’s Ark children’s hospital charity, Helen Corsi and Kate Methuen-Ley from Tiger. Tracey Daniel from CST Wealth Management and I also presented some key principles from our roles in Clay Shaw Thomas.

 

Laura

-Our ‘Small Business Solutions’ package has the following benefits:

1.Your own client relationship manager (accountant)

2.Online accounting

3.Year end accounts and tax returns

4.Monthly management reports

5.End to end bookkeeping

6.Payroll services including auto enrolment

7.Access to a new market place

8.Full records for HMRC inspections

9.Access to funding

10.No hassle switching to us

 

Tracey

-Financial planning-life cycle

Key points in your 30s, 40s and 50s, mostly around protecting your wealth at different stages of your life.

 

If any of the above would be of interest to you then please contact me on lauras@clayshawthomas.com

 

Common mistakes to watch out for in the preparation of P11D forms

Here are a few common mistakes to watch out for in preparation of the P11D forms:

  • forms not prepared in accordance with an agreed HMRC P11D dispensation notice;
  • not ticking the ‘director’ box if the employee is a director;
  • leaving the ‘cash equivalent’ box empty where a figure has been entered in the corresponding ‘cost to you’ box;
  • submitting duplicated information: for example, where P11D information has already been filed online, the employer may submit the same information on paper to ensure ‘HMRC has received it’;
  • the rules relating to job related accommodation;
  • relocation payments treated incorrectly;
  • mileage allowance payments paid in excess of HMRC approved mileage allowance payments;
  • non reporting of assets transferred to employees;
  • calculation of employee beneficial loans;
  • incorrect list price and CO2 emissions data used to calculate company car/car fuel benefit;
  • not completing the fuel benefit where this is necessary;
  • completing the ‘from’ and ‘to’ dates incorrectly in the ‘dates car was available’ boxes by showing the whole tax year. For example, entering 06/04/2013 to 05/04/2014 to indicate the car was available throughout that year. However, if the car had been available in the previous tax year, the ‘from’ box should not be completed and; if the car is to be available in the next tax year, the ‘to’ box should not be completed;
  • private use of company vans;
  • VAT rules;
  • treatment of mobile telephones;
  • private use of company pool vehicles not reported;
  • incorrect treatment of entertaining expenditure.

If you require any assistance or have any queries then please get in touch – I can be contacted on saral@clayshawthomas.com or by ringing 01656 867167.

 

 

Advisory fuel rates for company car users

HM Revenue and Customs have issued revised fuel rates for those using company cars, effective as of 1 June 2015 as follows:

You can use the previous rates for up to 1 month from the date the new rates apply.

Engine size Petrol – amount per mile LPG – amount per mile
1400cc or less 12p 8p
1401cc to 2000cc 12p 9p
Over 2000cc 21p 14p