by Steve Wiltshire

This week, HMRC will begin to contact people who may be eligible for the Self-Employment Income Support Scheme (‘SEISS’).

The scheme, which will provide a taxable grant worth 80 per cent of a self-employed individual’s average trading profits up to a maximum of £7,500, will be paid in a lump sum by the start of June.

 Eligibility

HMRC has developed an online tool that allows the self-employed and their accountants, to assess whether they are eligible for the funding.  You can access the tool here.

 Making a claim

The claims portal will open on 13 May 2020.  It’s important to note that it will be down to each individual to make their own claim – agents cannot do this on their behalf.  HMRC has reassured taxpayers that the process will be simple and that eligible individuals will receive the grant in their bank account by 25 May, or within six working days of completing a claim whichever is later.

 Any questions?

If you need help checking whether you are eligible, or with calculating your average trading profits and income for the purposes of a claim, please get in touch – we’ll be happy to help.

 

Photo by Matthew Waring on Unsplash

by Emma Hooper

The Coronavirus Job Retention Scheme went live yesterday, with over 140,000 businesses applying for the support within 24 hours.

The scheme is available for businesses that, as a result of Covid-19, cannot maintain their current workforce and would be forced to make employees redundant as a result. These employees need to be furloughed by written communication to be eligible.

The Government will be providing 80% of the employee’s usual monthly wage up to £2,500 a month. Employer National Insurance contributions and employer pension contributions (at the minimum percentage required) will also be reimbursed to the business. Once a claim has been submitted, HMRC plan to pay the amounts directly to the business bank account within 6 working days.

At Frost Wiltshire we want to make this as smooth as possible for our clients. We have a template furlough letter that can be issued to your employees if needed and will be making claims on behalf of all our payroll clients to help ease the financial pressures during this difficult time.

If you have any questions regarding the scheme please contact our team who will be more than happy to help by emailing payroll@frostwiltshire.co.uk.

 

image by Finn Hackshaw on Unsplash

by Lydia Westmore

The outbreak of Coronavirus will inevitably impact all of our businesses.  In the short term, the current situation is likely to have a significant impact on cash flow, with loss of revenues and productivity.  Government support for impacted businesses is coming, but careful management of your short-term cash flow is essential for decision making such as prioritising payments, taking on new debt and negotiating payment plans with creditors.

An industry standard is to use a rolling 13-week cash flow forecast, which enables you to continually track your current cash position and estimate your future inflows and outflows, as well as run various ‘what if’ scenarios to prepare for these uncertain times.

A fully populated and working cash flow forecast demonstrates your active cash management approach and could be shared with your bank, HMRC or other stakeholders.

We have developed such a forecast model, which we can help you to implement quickly and easily, helping you to gain some welcome clarity in these very challenging circumstances.

If you would like to find out more, please get in touch with Lydia by email at lydia@frostwiltshire.co.uk or on 01454 529 529.

 

image: fabian blank

by Steve Wiltshire

Starting your own business can be an exciting – but daunting – time. One of the first and most important decisions to make is how are you going to structure your business? The reason this decision is so important is that it has a variety of consequences – not only related to tax, but also from a legal and administrative perspective, and how your business will be perceived.

The main options to consider are whether to set up as a sole trader, a limited company, or a partnership. Each has benefits and drawbacks.  As a sole trader, there is significantly less of an administrative burden than setting up as a company.  However, as a sole trader you are taxed on profits as they arise through income tax (at 20%, 40% and 45% depending on your level of earnings).  You also have a class 2 and 4 National Insurance burden.

On the other hand, setting up as a company gives more flexibility over your personal taxation position, as you are personally liable to income tax on income from the company when it is extracted from the company, rather than as profits are earned by the company. There also tends to be more flexibility, and therefore potential available tax planning opportunities, when structured as a company, although these have been mitigated with the recent changes to dividend taxation rules.  The company will be liable to corporation tax as soon as profit is earned, but this is at a lower rate of 19%.

Legally, owning a company offers more protection over personal assets than setting up as a sole trader, as the company is a separate legal entity from the shareholder.

However, there is additional administrative cost and procedures to follow as a company, and any tax saving may not be sufficient to compensate for this additional burden. Also, changes to taxation over dividends from April 2016 reduces the taxation efficiencies of setting up as a company, which makes this a less attractive proposition than previously.

In addition, anti-avoidance legislation (IR35) means that under certain circumstances, profits made through a company will be targeted as ‘earned income’, which means any tax saving will potentially be lost. This is a particularly important area to assess thoroughly before deciding on the right structure for your business.

A third alternative is to set up as a partnership. More and more businesses are setting up as a Limited Liability Partnerships.  With this structure, profits earned are subject to income tax as they arise, but the liability of the individual partners is limited to the capital which they have put into the business (rather than their personal assets), in much the same way as for a company.

When choosing which type of business structure to use, another consideration might be the availability of loss relief. If it is anticipated that the business might be loss making in its early years, this could impact the selection decision.

Capital gains arising on any sale of the business in the future may also be taxed, depending on which structure is chosen.

Overall, this decision is complex, and each individual’s preferences, priorities and circumstances will impact the final outcome. Here at Frost Wiltshire, we can set out the options available to you and give you the information and advice which you need to make an informed decision on what suits you and your business best.

 

Photo by Nathan Dumlao on Unsplash

by Steve Wiltshire

Starting your own business can be an exciting – but daunting – time. One of the first and most important decisions to make is how are you going to structure your business? The reason this decision is so important is that it has a variety of consequences – not only related to tax, but also from a legal and administrative perspective, and how your business will be perceived.

The main options to consider are whether to set up as a sole trader, a limited company, or a partnership. Each has benefits and drawbacks.  As a sole trader, there is significantly less of an administrative burden than setting up as a company.  However, as a sole trader you are taxed on profits as they arise through income tax (at 20%, 40% and 45% depending on your level of earnings).  You also have a class 2 and 4 National Insurance burden.

On the other hand, setting up as a company gives more flexibility over your personal taxation position, as you are personally liable to income tax on income from the company when it is extracted from the company, rather than as profits are earned by the company. There also tends to be more flexibility, and therefore potential available tax planning opportunities, when structured as a company, although these have been mitigated with the recent changes to dividend taxation rules.  The company will be liable to corporation tax as soon as profit is earned, but this is at a lower rate of 19% (and this is set to fall to 17% in 2020).

Legally, owning a company offers more protection over personal assets than setting up as a sole trader, as the company is a separate legal entity from the shareholder.

However, there is additional administrative cost and procedures to follow as a company, and any tax saving may not be sufficient to compensate for this additional burden. Also, changes to taxation over dividends from April 2016 reduces the taxation efficiencies of setting up as a company, which makes this a less attractive proposition than previously.

In addition, anti-avoidance legislation (IR35) means that under certain circumstances, profits made through a company will be targeted as ‘earned income’, which means any tax saving will potentially be lost. This is a particularly important area to assess thoroughly before deciding on the right structure for your business.

A third alternative is to set up as a partnership. More and more businesses are setting up as a Limited Liability Partnerships.  With this structure, profits earned are subject to income tax as they arise, but the liability of the individual partners is limited to the capital which they have put into the business (rather than their personal assets), in much the same way as for a company.

When choosing which type of business structure to use, another consideration might be the availability of loss relief. If it is anticipated that the business might be loss making in its early years, this could impact the selection decision.

Capital gains arising on any sale of the business in the future may also be taxed, depending on which structure is chosen.

Overall, this decision is complex, and each individual’s preferences, priorities and circumstances will impact the final outcome. Here at Frost Wiltshire, we can set out the options available to you and give you the information and advice which you need to make an informed decision on what suits you and your business best.

Have you come across Research and Development relief (R&D) before? If you own or run a company, this relief could be hugely advantageous to you.

HMRC are really keen right now to help companies in developing new and exciting products; these range from anything to developing mobile phone apps to creating a new part for a bike; if the product is new and innovative, it could be eligible for this relief.

If eligible, the company can get an additional deduction on the qualifying expenditure of 130% of that expense – that means that for every £100 spent on R&D, the company saves £24.70.

In addition, if the company makes a loss, which is common in the early developmental stages of a product, the company can turn a loss into an almost immediate cash repayment. of up to 14.5% of the R&D deduction.

Here at Frost Wiltshire, we have considerable experience in preparing and submitting R&D claims and have 100% success rate in doing so.

If this is of interest to you, give us a call and speak to our tax director, Mel Hackney, who will be able to provide more guidance as to whether the expenditure is likely to be classified as R&D.

We’re hiring! Do you know someone ambitious at an early stage in their accountancy career, who’d like to join a small friendly team in a relaxed environment? Tell us, we’d love to talk to them!

by Steve Wiltshire

Starting your own business can be an exciting – but daunting – time. One of the first and most important decisions to make is how are you going to structure your business? The reason this decision is so important is that it has a variety of consequences – not only related to tax, but also from a legal and administrative perspective, and how your business will be perceived.

The main options to consider are whether to set up as a sole trader, a limited company, or a partnership. Each has benefits and drawbacks.  As a sole trader, there is significantly less of an administrative burden than setting up as a company.  However, as a sole trader you are taxed on profits as they arise through income tax (at 20%, 40% and 45% depending on your level of earnings).  You also have a class 2 and 4 National Insurance burden.

On the other hand, setting up as a company gives more flexibility over your personal taxation position, as you are personally liable to income tax on income from the company when it is extracted from the company, rather than as profits are earned by the company. There also tends to be more flexibility, and therefore potential available tax planning opportunities, when structured as a company, although these have been mitigated with the recent changes to dividend taxation rules.  The company will be liable to corporation tax as soon as profit is earned, but this is at a lower rate of 19% (and this is set to fall to 17% in 2020).

Legally, owning a company offers more protection over personal assets than setting up as a sole trader, as the company is a separate legal entity from the shareholder.

However, there is additional administrative cost and procedures to follow as a company, and any tax saving may not be sufficient to compensate for this additional burden. Also, changes to taxation over dividends from April 2016 reduces the taxation efficiencies of setting up as a company, which makes this a less attractive proposition than previously.

In addition, anti-avoidance legislation (IR35) means that under certain circumstances, profits made through a company will be targeted as ‘earned income’, which means any tax saving will potentially be lost. This is a particularly important area to assess thoroughly before deciding on the right structure for your business.

A third alternative is to set up as a partnership. More and more businesses are setting up as a Limited Liability Partnerships.  With this structure, profits earned are subject to income tax as they arise, but the liability of the individual partners is limited to the capital which they have put into the business (rather than their personal assets), in much the same way as for a company.

When choosing which type of business structure to use, another consideration might be the availability of loss relief. If it is anticipated that the business might be loss making in its early years, this could impact the selection decision.

Capital gains arising on any sale of the business in the future may also be taxed, depending on which structure is chosen.

Overall, this decision is complex, and each individual’s preferences, priorities and circumstances will impact the final outcome. Here at Frost Wiltshire, we can set out the options available to you and give you the information and advice which you need to make an informed decision on what suits you and your business best.

by Mel Hackney.

The prospect of Making Tax Digital (MTD) for businesses can be a scary one. There is much in the news about the administrative burden that this could become on sole traders, companies and landlords alike.

So what exactly is MTD for businesses, and where are we with progress?

To put it simply, MTD for businesses is a project which HMRC are undertaking to ensure that (eventually) all businesses keep digital records rather than paper.

At this stage of the process HMRC are focusing on VAT registered business.  From April 2019 all VAT registered businesses with turnover above the VAT threshold will be required to maintain digital accounting records. Maintaining paper records will no longer meet the legal requirements in tax legislation

Businesses and organisations will be required to use a functional compatible software product to submit their returns to HMRC. The software will use HMRC’s API (Application Program Interfaces) platform to submit information to HMRC. The current HMRC online tax return services will be withdrawn for those within the scope of the MTD rules.

Here at Frost Wiltshire we have ensured that those of our clients to whom this is relevant are keeping records which will comply with this new legislation. This has been done largely ‘behind the scenes’, so for the vast majority of our clients the only impact that they have seen has been to receive an email from us letting them know everything is in hand.

If you know you aren’t yet compliant and would like some help, or are concerned about the changes and would just like more information, please get in touch.

by Mel Hackney.

There are many ways to reward employees in a tax efficient way, and even though some of these can be complex, such as share option schemes, there are other ways of providing tax efficient or tax-free benefits which are very simple and often overlooked.

From 6 April 2016, there is a statutory exemption in place for trivial benefits, which is particularly topical this time of year. There are various conditions in place which need to be met for these to be non-taxable; one of which is that the gift must be less than £50 and not cash or vouchers. HMRC gives some examples on their website of items such as gifts of chocolates and wine at Christmas. You can even gift your employees with a Christmas turkey, so long as it’s under £50!

Something for both employers and employees to watch out for are the tax rules that surround items such as the Christmas party. No benefit arises on this so long as the cost per head does not exceed £150, but if this is exceeded (and other staff functions also need to be considered when determining this), a taxable benefit and reporting requirements could arise.

There are many other ways of rewarding your employees in a tax efficient way, and we can provide guidance to you of how you can achieve this, tailoring this advice to the nature and size of your organisation.

For more details please contact Mel Hackney.