Ditch the gifts and do some good this Christmas…

gift aid christmas small business

At this time of the year many business owners and employees do tit-for-tat giving at Christmas – gifts to clients, gifts to contractors plus the office secret Santa, the result being, generally a whole lot unwanted tat. An alternative for individuals is to use the funds to make a gift to charity. UK taxpayers making charitable donations have the option to pay via Gift Aid. This allows charities to reclaim the tax from HMRC on donations, meaning any donation is increased.


The charity requires your name, address and a declaration that you’re a UK taxpayer and this can be done by telephone or in writing. Charities reclaim the tax at the basic 20% rate which, due to the way the numbers work, means they get 25% more than you donate (so if you give £10 the charity gets £12.50).

A higher-rate (40%) or additional-rate (45%) taxpayer is able to claim tax relief on the difference between the basic-rate and higher-rates (for example, 20% or 25%). For higher-rate taxpayers, on £10 that’s £2.50 and for additional-rate taxpayers, it’s a further £3.12. Higher and additional-rate taxpayers can claim the extra tax relief when filling out their tax self-assessment form; they could opt to donate this extra tax to charity.

A taxpayer may treat a Gift Aid donation before January 31 as being made in the previous tax year provided the total donations do not exceed the total chargeable income and gains. The claim must be made on or before the date the Tax Return for the previous year is submitted and no later than January 31 following the end of the tax year.

Also, everyone can donate to charity through their business. For a limited company, it’s the business that receives the tax benefit. For donations that count as “personal”, it’s the charity that can get the tax relief unless you’re a higher rate taxpayer, when you get a share too. It’s not just money that can be donated however each type of donations has its own specific rules and limitations.

So get inspired, choose your favourite charity or local sports club and you can support them through your business!

DNA Accountants

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Autumn Budget 2018 – how it affects your business…

autumn budget

This time last week we were absorbing the Chancellors Autumn Budget 2018 and overall it contained a lot of positives for small business owners. Here are the key points from the Chancellor’s speech and how they may affect you and your business…

  • Personal tax allowance will be raised to £12,500 for basic rate taxpayers, and £50,000 for higher rate taxpayers in 2019
  • £675 million will be put towards a Future High Streets Fund
  • Business rates bills for businesses with a rateable value of £51,000 or less will be cut by a third over two years
  • Annual investment allowance will be increased from £200,000 to £1 million for two years
  • Small businesses will now only have to contribute five per cent to the apprenticeship levy
  • New mandatory business rates relief for all toilets made available to the public, whether publicly or privately owned
  • A £30 billion package for England’s roads, including repairs to bridges and potholes
  • Fuel duty will be frozen for the ninth year in a row, saving car drivers around £1,000and van drivers around £2,500
  • Beer, cider and spirits duties will be frozen, though wine duty will rise with inflation and tobacco duty will continue to rise by inflation plus two per cent
  • The VAT threshold won’t change
  • The national living wage will increase to £8.21

Other main areas concerning small business are…

Personal tax allowance

The personal tax allowance is the amount you are allowed to take home without paying tax. Anything you earn above that is taxable at a varying rate dependant on your total income. The chancellor announced that personal tax allowance will be raising to £12,500 for basic rate taxpayers, and £50,000 for higher rate taxpayers in 2019.

Up to £8,000 of savings for independent businesses

The Chancellor also declared he will be cutting the business rates bill for the smallest of small businesses. Businesses with a rateable value of £51,000 and under will see their bill cut by a third over a two-year period.  According to the Budget announcement, this will lead to up to £8,000 worth of savings.

Green taxes on UK small businesses

While the Chancellor made mention of the environment in his Budget announcement, there was only one tax announced – companies manufacturing plastic that is less than 30% recycled material will face a levy.

He also said that he had considered a plastic cup tax, but decided that it wouldn’t make a substantial change. He will, however, continue to monitor progress, and may introduce another tax if things don’t improve.

If you need to speak to an accountant about any of these points and how they affect your company, get in touch – we’re always happy to talk business.

DNA Accountants

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Be Careful of This Phone Scam…

Phone Scam

In these days of hackers, cybercrime and phishing scams we are all very aware of the risks online from scam artists intent on getting their hands on our money. But are we as vigilant when it comes to telephone contact? Apparently not!!

Fraudsters pretending to be from HM Revenue & Customs (HMRC) are expanding their unscrupulous activities after years of sending out fake emails to now calling unsuspecting victims and some are duping their targets into paying them thousands of pounds.

There is currently a telephone scam where a recorded message is left, allegedly from HMRC, stating that HMRC are bringing a lawsuit against the individual and is going to sue them. The recipient is asked to phone 0161 8508494 and press “1” to speak to the officer dealing with the case. This scam is becoming widely reported and seems to be targeting older people. Please do not reply to the message – ever!!

HERE are some tips from HMRC on how to avoid being taken in by the fraudsters:

Recognise the signs – Genuine organisations like banks and HMRC will never contact you out of the blue to ask for your PIN, password or bank details.

Stay safe – Don’t give out private information, reply to text messages, download attachments or click on links in emails you weren’t expecting.

Take action – Forward suspicious emails claiming to be from HMRC to phishing@hmrc.gsi.gov.uk and texts to 60599, or contact Action Fraud on 0300 123 2040 to report any suspicious calls or use their online fraud reporting tool.

Check – If you think you have received an HMRC related phishing/bogus email or text message, you can check it against the examples shown in this guide.

Contact HMRC directly – You can find the list of genuine numbers to call HMRC here.

If you are uncertain of the caller, hang up and call HMRC directly to check – you cannot be too careful, or contact your accountant who will be more than happy to speak to HMRC on your behalf.

DNA Accountants

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Do you know your numbers?

know your numbers

As a freelancer, sole trader or small business owner, other than knowledge of your own trade the most important thing to keep on top of in your business are the numbers. Income, expenses, cashflow, projections, first-hand knowledge of these will prove to be the most important information you will have to hand and without them, you could easily jeopardise your business!

But with efficient bookkeeping and a good accountant, you will be on the right path and will have full control of the fundamental financial areas of your business, such as…

  • Cost Control
    By looking at up to date information you can identify overspending in a particular area and nip that spending in the bud before it goes out of control. If you are reviewing your accounts once a year as part of filing annual returns, that overspend will mount up month upon month so a monthly review is great for cost control as well as cash management.

 

  • Improved Business Decision Making
    By reviewing up to date management accounts you can see month on month how much profit you are making and assess whether you can truly afford to take on additional expenditure, rather than just adopting a qualitative view.

 

  • Productivity
    The ability to view your result each month allows you to compare your actual results to those that you forecasted as part of your business plan or annual financial forecast. You can analyse out where there are differences and learn more about how your business is performing and make changes where appropriate. Say, for example, sales are ahead of your original forecast you can analyse out where your actual sales are coming from and adapt your sales plan to focus more on this more fruitful area if you desire.

 

  • Tax Planning
    Some tax planning needs to be carried out and implemented before year end for example: making capital purchases to taken advantage of the Annual Investment Allowance. If you provide your accountant or tax advisor with up to date management accounts before your year-end passes they can review your most recent position and work with you to offer you the best advice possible.

So, why is all of this important? You won’t be able to run your business for very long without sound knowledge of your business finances, and working month to month rather than waiting till year end, will keep you one step ahead of the game. Being prepared allows you to think about what your next moves are, whether that’s expanding your business, taking on an employee or investing in a new property.

If you are still feeling a little nervous about your numbers, get in touch with us here at DNA Accountants, we’re not afraid of taxes!

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When is a cake, not a cake?

VAT registration

When it is a biscuit! True…


No VAT is charged on plain biscuits or cakes. But when a biscuit is covered in chocolate it becomes a luxury and standard rate VAT at 20% is added to the price. Mcvities, famous for their Jaffa Cakes, added chocolate to the cake and tangy orange base, so classifying them as cakes, not biscuits. Although the taxman challenged this, claiming chocolate biscuit status, the court ruled in favour of McVities and we don’t have to pay VAT on our Jaffa Cakes.
The bottom line being, VAT is complex and shouldn’t be dealt with lightly, so here we have compiled the facts about VAT that every small business owner should make themselves familiar with:

When to register your business for VAT
Your company should make a VAT registration if the value of your taxable supplies in the past 12 months or less has exceeded the current VAT threshold, or the value of your taxable supplies in the next 30 days alone is expected to exceed this threshold.


Registering for VAT may be beneficial
Even if your business turnover lies below the current threshold for VAT, you can still register for VAT, since there may be business benefits in doing so. It is worth checking this with your accountant or directly with HMRC.
Basically, a business will pay VAT on all purchases it makes (input tax) and then charge VAT on all sales it makes (output tax). If a VAT-registered business receives more output than input tax in a VAT period, it will pay the difference to HMRC, otherwise the HMRC will refund the difference if the business pays more VAT than it receives.


How to register for VAT
If you need to make a VAT registration with HMRC. You can submit a paper application form or you can apply online but HMRC do encourage businesses to register online. The information you need to provide depends on whether you are running your business as a sole trader, partnership or limited company.


Charging and reclaiming VAT
Once you are VAT registered, you will need to include your VAT number on all your invoices. As well as charging VAT to your customers, when you are a VAT-registered business you can usually claim back from HMRC the VAT that you have paid on your business expenditure. To reclaim VAT you must have a valid VAT invoice for the expense. The information that needs to be included on a valid VAT invoice includes;
– Supplier’s invoice number
– Supplier’s name and address
– Supplier’s VAT registration number
– Details of the product or service supplied
– Date
– Total cost excluding VAT
– Amount of VAT charged
To ensure that you can reclaim the VAT you have paid, you should check the supplier’s VAT registration number.


Submitting your VAT returns
To submit your VAT returns online, you will need to sign up for VAT online services. If you aren’t already using HMRC online services you will need to get a User ID and password, which is sent out by post, to use the service.
There you go we, have just made VAT a piece of cake!


If you are still feeling a little nervous about your VAT registration, get in touch with us here at 
DNA Accountants, we’re not afraid of taxes!

DNA Accountants

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Tax-Saving Tips for Small Business Owners

tax-saving

Anyone running and owning a small business will tell you this one thing “be careful with tax – it’s not straightforward!”, in fact, it can be a real minefield for the unprepared. However, taking time and working closely with a good accountant (DNA Accountants), will ensure you do not get yourself in trouble with HMRC and should result in some tax-saving.

The key to tax-saving is to stop and think, look at your business from every angle and to ask yourself are yourself “Am I doing everything I can do to save tax?”, these questions will help you along…

  • Are you really the best person to do your bookkeeping or VAT returns?

Your business will benefit from you spending time working on it, whilst letting the bookkeepers and accountants do what they do best. For what you may think you are saving in fees you are probably losing out by not claiming for everything you are entitled to.

  • How well do you know your VAT?

VAT is a common area where business owners are losing out. Are you paying the right amount? Have you looked at the Flat Rate Scheme? Many businesses are unaware of the Flat Rate VAT scheme, but for the right business, it can be an unexpected source of profit.

  • How closely do you work with your accountant?

Business owners often complain about their accountant and how they have too much tax to pay. The truth is that the business owners who regard their accountant as trusted advisors and someone who can help them save tax are often the ones who are paying as little tax as possible. If you don’t talk to your accountant; change accountant.

  • Are you claiming all the expenses you should?

HMRC allow generous tax savings for self-employed businesses that spend time working from home. Make sure you are aware of them. For businesses that use a dedicated room in the house for work, the ‘Use of Home’ claim can be very generous indeed.

  • Are you passing on tax-saving to your staff?

There are several tax-free benefits that can be paid to staff to save both you and them tax. For example, the “cycle to work scheme” has been in operation for several years and can save up to 25% of the cost of a new bike, as well as making a tax-saving. Also, tax-free childcare vouchers are also a great way to save tax, as well as being a tax-free benefit to staff.

  • Are you paying yourself efficiently

The amount you pay yourself from your business obviously has an impact on the amount of tax you pay. How you pay yourself can also have a significant impact – Salary, dividends, benefits in kind, all need consideration on an on-going basis. A common benefit in kind is the use of a company car. Each case needs to be considered on a case by case basis, but generally, business owners can save tax by having a company car. Also, dividends can be a great method of paying key people within the business, but care needs to be taken so not to fall foul of Company Law, and ultimately HMRC.

  • Are you organised?

A common reason for HMRC to disallow expense claims is a failure of the business to keep proper supporting records. Don’t fall into that trap.

  • Do you have the business support you need?

Even a sole trader can have a good team to call on. Make sure you have a trusting, approachable accountant.

If you are still feeling a little nervous about your business tax-saving, get in touch with us here at DNA Accountants, we’re not afraid of taxes!

DNA Accountants

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Which road should your business take?

business

Starting a business isn’t easy, your wish may be to create a lifestyle and have unlimited income opportunities, but let’s face it in order for that to happen you need focus and motivation, without these you just won’t know which road to take.

Success isn’t going to happen overnight and you will need to put in the work. You may find yourself sitting at your desk when everyone else is in bed, feeling despair when your bank balance is looking the worse for wear and worrying that new leads aren’t appearing as quickly as expected but having the momentum to get you over these initial hurdles, will take you a long way

If you lack motivation, you and your business will take the hit. Here are a few ways to stay motivated while you’re building your start-up from the ground-up:

  • Know Your “Why?”

What do you want to accomplish and how will your new business venture help you get there? How will your start-up help you make a difference to your life? Knowing your “why” will get you through the tough times and give you a more positive attitude on a daily basis.

  • Set Goals and Milestones

Write down what you want to achieve in your life and your career. Write down those goals and create a plan of how you’re going to get there. They will remind you of why you are doing what you are doing, especially when things get tough. Then, break your plan down into smaller sections and set realistic targets to work toward.

  • Celebrate Achievements

When you have hit a milestone, celebrate! This will keep you energized, give you confidence and keep you motivated to keep working towards the next phase in your business.

  • Network

As you build your business, it is important to socialize with not only prospective clients, but mentors and like-minded entrepreneurs. They know what you are going through. They will see situations from a different perspective, and you will be able to bounce ideas off someone. Additionally, like-minded entrepreneurs are just as ambitious as you so they can provide a form of accountability to help you reach your goals.

  • Stay Positive

This is one of the most important things you can do while building your business. Failure is inevitable, but how you deal with failure determines whether you will be successful. Getting stuck in a rut will hinder you from getting where you want to go.

  • Empower Yourself

Take online courses, read books, attend business conferences and go to learning sessions. Gaining knowledge stimulates the mind, improves memory, reduces stress, expands your vocabulary, and most importantly–teaches you new things. If you regularly expand your knowledge of things relevant to your life and business, you’ll be a better business owner while your motivation level increases dramatically.

Finally and maybe most importantly “Be Patient” it will be worth all the effort.

DNA Accountants

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Is it ever too early to submit your tax return?

tax return

Sole traders across the UK will notice letters from the taxman dropping through their letterboxes in the days ahead, reminding them that the tax year has ended and it’s now time to file their Self-Assessment Tax Return. Of course, the deadline for filing is 31st October for paper returns, or 31st January (2019!) when filing online. No sense doing today what you can put off until tomorrow, and tomorrow, and tomorrow…right?

Maybe. But maybe not.

Submitting your tax forms correctly and on time can be a confusing business. To take some of the strain out of filling out your returns we’ve put together this handy guide:

How do I know if I need to submit a tax return?

If you fall into one of the following categories, it is likely you will need to submit a tax return:

  • If you’re a director of a Limited company
  • If you’re self-employed or a sole trader
  • If you’re renting out a property
  • If you or your partner receive child benefit and your income is more than £50,000

What should I do before I submit my tax return?

Although the deadline is just around the corner, you still have time to complete your tax return. We have compiled a list with a few tips to try and help you do it more efficiently and quickly.

  • Understand your financial year – your tax return is in relation to income and gains for the financial year between 6th April 2016 and 5th April 2017
  • Prepare all the correct documents you need
  • Make sure you organise your paperwork
  • VAT – don’t forget to separate your VAT from your income
  • When collating information be as accurate as possible
  • Don’t miss the deadline if you want to avoid penalties

Can you help with my tax return?

Yes,  of course, we can! Here at DNA Accountants, we understand that filling in a tax return can be complicated and confusing. It is a time consuming process and difficult at times which is why we are on hand to help. But if you choose to go ahead and make the submission yourself, then “Don’t delay, submit today!”.

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Tax Deductions – Are you losing out?

tax deduction

When completing your tax return a good accountant will check that all of your tax deductions are included. Sadly, however, some are less pro-active and will simply process the details you give them, without looking for extra tax savings. So, to maximise your tax deductions, you need to make sure you let your accountant know about them and that nothing is forgotten.

Here are our top forgotten tax deductions:

  1. If you do any work from home, you can claim part of your household running costs, including heat and light, mortgage interest and council tax.
  2. If you ever use your car for business, you can claim part of your running costs. Even quite occasional use is worth a claim: does your accountant know about it?
  3. You can claim capital allowances on any asset you use in your business, including computers, furniture, equipment and your car. If you use something partly for business and partly personal, then a partial claim is possible.
  4. Did you pay your spouse, partner or children for some work in your business? Tell your accountant about it. If you didn’t pay them last year, ask if it’s something you should consider this year.
  5. Lost the paperwork or never had it? Don’t give up – tell your accountant about it. Just because you’re missing a receipt doesn’t mean the expense can’t be claimed. There are other ways to prove the expenditure took place and HMRC will not usually refuse reasonable claims.
  6. Professional subscriptions related to your business are deductible. This applies not only to sole traders and business partners but also to directors and other employees who pay their own subscriptions personally.
  7. Most pension contributions are made net of basic rate tax but you need to include them in your tax return to get any higher rate tax relief that’s due.
  8. If you’re a higher rate taxpayer, gift aid payments will save you tax, but your accountant won’t know about them unless you tell them. Don’t forget to include entry fees for museums, zoos, etc – these are often paid under gift aid.

Forgetting a valid tax deduction is a tragedy: don’t let it happen to you!

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Spring cleaning for the new tax year

spring cleaning for the new tax year

The new tax year will start on 6th April 2018. Tax years are normally referred to by the two years that they span over, so the new tax year will be “2017/18” and when you’re running your own business, the start of the new tax year can be a great time for some spring cleaning, here are our top tips on how to get your business ready for the new tax year…

Invoicing:

If you have yet to issue any invoices to customers, now is a great time to catch up. Unless you’re using the cash-based method for simplified accounting, you have to include your income in your accounts when you earn it, not when you invoice for it or are paid for it, so there’s no disadvantage from a tax point of view to issuing your invoices before the end of the tax year.

Expenses:

Make sure you’ve tracked down all those fiddly little receipts and included in your accounts as many of your out-of-pocket expenses as you can claim tax relief on. Don’t forget expenses for which you haven’t paid actual physical cash, such as mileage travelled in your own car, or business use of home. It’s worth tracking down even the smaller expenses (items less than £10) that many small business owners aren’t claiming them for tax relief.

Banking:

Now is a great time to check if what your books say is in your bank is the same as the balance on your bank statement. If not, then you should find the missing, wrong, or duplicate transactions and put it right. This is important because if you don’t have an accurate picture of what’s going in and out of your bank, you may find yourself running out of cash if you spend money you don’t have, or if you get a visit from a HMRC inspector then they may fine you for inadequate record-keeping!

You can also use the end of the financial year to save tax now! If you’re preparing your business’s accounts to 5th April, and you’re planning to buy a piece of equipment for your business soon, such as a new computer, then buying it before the end of your accounting year rather than after means you’ll get the capital allowances on that asset a whole year earlier. Also, don’t forget your personal tax. Have you used as much as you can of this year’s ISA allowance? What about pension investments or donations to charity? Remember to keep a note of all these points that could save you tax!

So start your spring cleaning for the new tax year now

DNA Accountants

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