Claiming a grant through the coronavirus (COVID-19) self-employment income support scheme (SEIS) worth 80% of trading profit

You can use this scheme if you're self-employed or a member of a partnership and have lost income due to coronavirus.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months payable after HMRC checks your last 3 years tax returns filed. This may be extended by the government if needed.

Who can apply for this
You can apply if you’re self-employed (sole trader) or a member of a partnership and you:

• have submitted your Self Assessment income tax return for the tax year 2018-19
• have traded in the tax year 2019-20 - you have a limited time extension to back date and submit by 23/04/20 if this return was not done
• are trading when you apply, or would have been doing so except for COVID-19
• definitely intend to continue to trade in the tax year 2020-21
• and have lost trading/partnership trading profits due to COVID-19

Your self-employed profit before tax must also be less than £50,000 and more than half of your income must come from self-employment. This is determined by at least one of the following conditions:

• have trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
• have average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years you filed a Self-Assessment tax returns.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. We can help you do this and you need to get in touch today.

HMRC said they will use data on 2018-19 tax returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way. If you have tax to pay for your 2018-19 tax return then this will need to be up to date.

How much will you get from hmrc
You can get a taxable grant which will be 80% of the average profits from the tax years (if all 3 available):

• 2016 to 2017 ie 6.4.16 to 5.4.17
• 2017 to 2018 ie 6.4.17 to 5.4.18
• 2018 to 2019 ie 6.4.18 to 5.4.19

To work out the average HMRC will be adding together the total trading profit for the 3 tax years (if all 3 available) then divide by 3 and then further divide by 12 to calculate a monthly amount.

They say it will be up to a maximum of £2,500 per month for 3 months. And they will pay the grant directly into your bank account, in one instalment. The bank details on your 18-19 tax return will most likely used as it is already in their records.

How to apply for it
You cannot apply for this scheme yet yourself. HMRC say they will contact you if you are eligible for the scheme and invite you to apply online. This may take some time as staffing levels are affected by COVID-19.

Individuals are advised they do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

You will access this scheme only through GOV.UK. website so be careful of fraud - And if someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied for it
Once HMRC has received your claim and you are deemed eligible for the grant, they will contact you to tell you how much you will get and the payment details. Previously this was by letter to the tax payers home for income tax refunds - it may be by text or emails also if HMRC has these records for you.

Note: If you claim tax credits you’ll need to include the grant in your claim as income. This income is taxable.

Other help you can get as well
The government stated it is also providing the following additional help for the self-employed:

• deferral of Self Assessment income tax payments due by 31 July 2020 (19/20 payment on account) and VAT payments (VAT regsitered business) due from 20 March 2020 until 30 June 2020
• grants for businesses that pay little or no business rates - apply to local council
• increased amounts of Universal Credit to £94.25 per week - apply direct to that dept
• Business Interruption Loan Scheme - apply direct to bank

If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme (read her for more about this).

If you need help with your applications for government grants, loans and allowances as described above then as authorised HMRC agents and expert tax accountants Tax Affinity Accountants are available to support your business at this critical time. Urgently contact us by clicking here and we will use our expertise to support your business through this difficult time.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames and Epsom they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

The UK Government and the Chancellor have set out a package of temporary measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes actions to support businesses including:

• a Coronavirus Job Retention Scheme
• deferring VAT and Income Tax payments
• a Statutory Sick Pay relief package for SMEs
• a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
• small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
• grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
• the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
• a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
• the HMRC Time To Pay Scheme

If you need help with your applications for government grants, loans and allowances as described above then as authorised HMRC agents and expert tax accountants Tax Affinity Accountants are available to support your business at this critical time. Urgently contact us by clicking here and we will use our expertise to support your business through this difficult time.

Support for businesses through the Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers are able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Eligibility
All UK businesses are eligible.
How to access the scheme
You will need to:

• designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed (those on payroll but not working) workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Support for businesses through deferring VAT and Income Tax payments
Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
VATFor VAT, the deferral will apply from 20 March 2020 until 30 June 2020.
Eligibility
All UK businesses are eligible.
How to access the scheme
This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax
For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.
Eligibility
If you are self-employed you are eligible.
How to access the scheme
This is an automatic offer with no applications required.
No penalties or interest for late payment will be charged in the deferral period.
HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses who are paying sick pay to employees
Goverment will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

• this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
• employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
• employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
• employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
• eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
• the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Eligibility
You are eligible for the scheme if:

• your business is UK based
• your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020

How to access the scheme
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed. Government websites will contain more details.

Support for businesses that pay business ratesBusiness rates holiday for retail, hospitality and leisure businesses
Goverment will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.
Eligibility
You are eligible for the business rates holiday if:

• your business is based in England
• your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• for assembly and leisure
• as hotels, guest & boarding premises and self-catering accommodation

How to access the scheme
There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.
You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

Further guidance for local authorities is available in the expanded retail discount guidance.

Cash grants for retail, hospitality and leisure businessesThe Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.
Eligibility
You are eligible for the grant if:

• your business is based in England
• your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

• as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
• for assembly and leisure
• as hotels, guest and boarding premises and self-catering accommodation

How to access the scheme
You do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly.
Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
Find your local authority on Google.

Support for businesses that pay little or no business ratesThe government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered releif. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
Eligibility
You are eligible if:

• your business is based in England
• you are a small business and already receive SBBR and/or RRR
• you are a business that occupies property

How to access the schemeYou do not need to do anything. Your local authority will write to you if you are eligible for this grant.
Guidance for local authorities on the scheme will be provided shortly.
Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
Find your local authority on Google.

Support for businesses through the Coronavirus Business Interruption Loan SchemeA new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.
The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.
Businesses can access the first 12 months of that finance interest free, as government will cover the first 12 months of interest payments.
Eligibility
You are eligible for the scheme if:

• your business is UK based, with turnover of no more than £45 million per year
• your business meets the other British Business Bank eligibility criteria

How to access the schemeThe full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.
The scheme will be available from early next week commencing 23 March.

Support for larger firms through the COVID-19 Corporate Financing Facility
Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies.
This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities.
It will also support corporate finance markets overall and ease the supply of credit to all firms.
Eligibility
All UK businesses are eligible.
How to access the schemeThe scheme will be available early in week beginning 23 March 2020.
The Government will provide information on how to access the scheme soon - keep an eye on their website updates.

More information is available from the Bank of England website.

Support for businesses paying tax: Time to Pay serviceAll businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
Eligibility
You are eligible if your business:

• pays tax to the UK government
• has outstanding tax liabilities

How to access the schemeIf you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.
If you’re worried about a future payment, call HMRC nearer the time.

Insurance
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

If you need help with your applications for government grants, loans and allowances as described above then as authorised HMRC agents and expert tax accountants Tax Affinity Accountants are available to support your business at this critical time. Urgently contact us by clicking here and we will use our expertise to support your business through this difficult time.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames and Epsom they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

As the dust settles after Chancellors October Budget 2018. We felt nearly all of the news coverage by journalists had presented little or no perspective specifically for the self employed and small and medium sized businesses. So to help below is another one of our famous main points lists, because lifes to short to waffle :

1. Corporation tax will fall to 17% in 2020.
   
2. Personal tax free allowance will be £12,500 and the Higher rate tax band will rise to £50,000 from April 2019, one year earlier than planned. The threshold will remain at the same level in 2020-21 and then increase by CPI
3. New structures and buildings allowance and a temporary increase in the Annual Investment Allowance now up to £1 million.
4. New tax on plastic packaging which does not contain enough recycled content.
5. Introduced over 100 measures to crack down further on avoidance, evasion, aggressive tax planning and unfair outcomes
6. Off-payroll working in the private sector IR35 to be extended this change will not be introduced until April 2020. Small organisations will be exempt, minimising administrative burdens.
7. The government will not abolish Class 2 NICs as previous said.
8. Trusts consultation, the government will publish a consultation on taxation of trusts, to make the taxation of trusts simpler and more transparent.
9. Charity taxes - increasing upper limit for trading that charities can carry out without incurring a tax liability from £5,000 to £8,000 where turnover is under £20,000, and from £50,000 to £80,000 where turnover exceeds £200,000
10. Lifetime allowance for pensions – increase for 2019-20, rising to £1,055,000.
11. Adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000. The annual subscription limit for Junior ISAs for 2019-20 will be uprated in line with CPI to £4,368.
12. The annual subscription limit for Child Trust Funds for 2019-20 will be £4,368.
13. Structures and buildings allowance (SBA) – New non-residential structures and buildings will be eligible for a 2% capital allowance where all the contracts for the physical construction works are entered into on or after 29 October 2018.
14. The capital allowances special rate for qualifying plant and machinery assets will be reduced from 8% to 6%.
15. Entrepreneurs’ Relief: minimum qualifying period from 6 April 2019 the minimum period throughout which the qualifying conditions for relief must be met extended from 12 months to 24 months.
16. Directly taxing offshore entities that realise intangible property income in low-tax jurisdictions, rather than through applying a withholding tax
17. Royalties and income from the indirect exploitation of intangible property in the UK market through unrelated parties to be a target for investigation
18. Cutting bills for retail properties with a rateable value below £51,000
19. Business rates public lavatories 100% business rates relief for all public lavatories to help keep these important local amenities open
20. Business rates local newspaper discount – £1,500 business rates discount for office space occupied by local newspapers in 2019-20.
21. Stamp Duty Land Tax (SDLT) and first-time buyers relief – The government will extend first-time buyers relief in England and Northern Ireland so that all qualifying shared ownership property purchasers can benefit, whether or not the purchaser elects to pay SDLT on the market value of the property. This change will apply to relevant transactions with an effective date on or after 29 October 2018, and will also be backdated to 22 November 2017 so that those eligible who have not previously claimed first-time buyers relief will be able to amend their return to claim a refund.
22. Consultation on SDLT charge for non-residents - government will publish a consultation in January 2019 on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.
23. Capital gains tax - from April 2020 lettings relief only applies in circumstances where the owner of the property is in shared occupancy with the tenant. The final period exemption will also be reduced from 18 months to 9 months. The government will consult on these changes. There will be no changes to the 36 months final period exemption available to disabled people or those in a care home.
24. Vehicle Excise Duty (VED): Uprating – From 1 April 2019 VED rates for cars, vans and motorcycles will increase in line with RPI.
25. Company vehicles – From 6 April 2019 fuel benefit charges will increase in line with RPI and the van benefit charge will increase in line with CPI.
26. Air Passenger Duty (APD) – Short-haul APD rates for 2020-21 will not rise, Long-haul rates will increase in line with RPI. The rates for long-haul economy will increase by £2, and the rates for those travelling in premium economy, business and first class will increase by £4. Those travelling long-haul by private jets will see the rate increase by £13.
27. Tax on the production and import of plastic packaging from April 2022 and is subject to consultation.
28. Alcohol duty rates and bands – Duty rates on beer, most cider and spirits will be frozen. Duty on most wine and higher strength sparkling cider will rise by RPI inflation from 1 February 2019. The government will review the current Small Brewers Relief to ensure it is supporting growth in the sector. (12)
29. Vaping ie Tobacco for heating - government will legislate in Finance Bill 2018-19 for a new duty rate for tobacco for heating. In these products processed tobacco is heated (but not burned like conventional tobacco) to produce, or flavour, vapour. This will be set at the same level as hand rolling tobacco and take effect on 1 July 2019.
30. VAT threshold will be maintained at the current level of £85,000 for a further 2 years until April 2022. The government will look again at the possibility of introducing a smoothing mechanism once the terms of EU exit are clear.
31. VAT fraud in labour provision in the construction sector – government will introduce a VAT domestic reverse charge to prevent VAT losses through so-called ‘Missing Trader’ fraud. This occurs when traders collect VAT on their sales but go missing before passing that VAT on to HMRC. The new rules will have effect on and after 1 October 2019 and the government is publishing secondary legislation alongside the Budget to implement this change.
32. Alternative method of VAT collection: ‘split payment’ – To reduce online VAT fraud by third country sellers and improve how VAT is collected on cross-border e-commerce, the government is looking at a split payment model.
33. EU exit - Consequential minor amendments to tax legislation to reflect EU exit – The government is responsible for preparing for all possible outcomes to EU negotiations. This power will allow the government to make small, essential changes to UK tax law to maintain the effect of tax legislation if the UK leaves the EU without a deal. Changes made under this power will maintain current operation of the tax law in essential areas, including changes in line with no deal legislation in other parts of the law.
34. Tax avoidance and evasion, aggressive tax planning and non-compliance to continue.
35. Capital gains tax: tackling misuse of Entrepreneurs’ Relief – In addition to the current requirements on share capital and voting rights, from 29 October 2018 shareholders must also be entitled to at least 5% of the distributable profits and net assets of a company to claim the relief. This is to address an identified abuse of the current rules.
36. Profit fragmentation – As announced at Autumn Budget 2017, the government will legislate in Finance Bill 2018-19 to introduce targeted legislation that aims to prevent UK businesses from avoiding UK tax by arranging for their UK-taxable business profits to accrue to entities resident in territories where significantly lower tax is paid than in the UK. The taxable UK profits will be increased to the actual, commercial level.
37. Reforming Stamp taxes on shares consideration rules – From 29 October 2018, a targeted market value rule will be introduced for listed shares transferred to connected companies to prevent forestalling.
38. Preventing abuse of R&D tax relief for small and medium-sized enterprises (SMEs) – From 1 April 2020, the amount of payable R&D tax credit that a qualifying loss-making company can receive in any tax year will be restricted to three times the company’s total PAYE and NICs liability for that year. This will ensure the relief is robust against identified abuse, including fraud, following the prevention by HMRC of fraudulent claims worth £300 million.
39. Protecting your taxes in insolvency – From 6 April 2020, when a business enters insolvency, more of the taxes paid in good faith by its employees and customers, and temporarily held in trust by the business, will go to fund public services rather than being distributed to other creditors. This reform will only apply to taxes collected and held by businesses on behalf of other taxpayers (VAT, PAYE Income Tax, employee NICs, and Construction Industry Scheme deductions). The rules will remain unchanged for taxes owed by businesses themselves, such as Corporation Tax and employer NICs.
    
40. Tax abuse and insolvency – Following Royal Assent of Finance Bill 2019-20, directors and other persons involved in tax avoidance, evasion or phoenixism will be jointly and severally liable for company tax liabilities, where there is a risk that the company may deliberately enter insolvency.
41. National insurance threshold will rise - not mentioned in the Chancellor's speech but in the budget papers - where we got our info from. This rises from £8160 in 17/18 to £8424 in 18/19 and £8632 in 19/20.
42. Premuim bond minimum savings amount will drop - from £100 to £25.
43. National living wage rise from April 19 - for over-25s will rise to £8.21 per hour from £7.83 per hour.
44. Annual ISA allowance will remain at £20,000 in 2019/20 for adults – the annual allowance for Junior ISAs will rise in 2019/20 to £4,368
    

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

It's April and this means the end of the previous tax year and start of the next. HMRC's personal tax year runs from 6th April to 5th April each year.

The start of the new UK tax year from 6.4.18 means there are new opportunities and new rules and allowances that now apply. So, it is a good time to take a moment and work through what is best for you and your personal circumstances to make them more tax efficient and plan and budget for the coming year.

The UK government and HMRC are ramping up their collection system and enforcement to try to get as much money in to pay for Brexit and other services etc so it’s up to each individual to become more vigilant to how they may end up with less in their pocket than previously.

Checking your income tax code regularly is now a necessity. Call HMRC immediately if something looks incorrect or out of the norm. Tax codes can often be incorrectly produced if there is a slight mix up in info and recent news reports have highlighted more changed tax codes than usual.

Complete your personal tax return for 17/18 early. It’s not worth waiting till 31st January 2019 when its actually the payment deadline day to work out how much tax is due if your self-employed because if you are owed a tax refund this means waiting till Feb / March 2019. Also, if you do owe tax then you have 9 months to plan and budget to pay for the sooner you know how much is due.

The personal tax-free allowance goes up to £11,850 from £11,500 and dividend tax allowance falls to £2000 from £5000, similar movements with other allowances means it helps to plan ahead to decide which year to receive and declare income. A good tax accountant can help with this - note an average bean counter (accountant) does not normally keep up to date with rapidly changing tax rules and regulations so may not be able to help.

We always recommend you speak to an expert tax accountant - they should save you far more in tax than they ever charge plus their fees are tax deductible - so it’s a win, win situation if your serious about planning ahead and paying less tax the correct way.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. With branches in Surbiton , Worcester Park , Kingston upon Thames , Cheam and Epsom they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice and support.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

At Tax Affinity Accountants, we often get asked what are the differences and benefits of working through a limited company compared to an umbrella company. So we have decided to explain this in a quick easy way.

An umbrella company is like an agency with whom you are employed and therefore they are your employer and not the place where you work. They will issue you with payslips and P60, P11d and a P45 at the end of your employment. They should also pay you for any sick or maternity pay as may be required. Umbrella companies will charge you for using their services and will deduct their fees from your pay. They will also ask to be refunded their employer NIC contributions paid to HMRC on your behalf again deducting this from your pay. The income tax tends to be higher than being straight forward employed on PAYE. You do not need to worry about paperwork and record keeping as the umbrella company does all this like an employer would.

A limited company is a separate legal entity to you. That you may well own as a shareholder and run as a director. A limited company can be your employer and pay you wages via PAYE like a normal employer but be contracting out your services to the place you work. And if you are the shareholder it can pay you dividends (share of the profits) periodically or on a regular basis. A limited company pays corporation tax not income tax and the tax rate is much lower than normal PAYE or via an umbrella company. There is a certain amount of paperwork and record keeping which is required and normally you will require the services of a good accountant. It is also very difficult to try to pay yourself sick or maternity pay, which is why most people do not claim these. But the plus side is as your keeping more income then this should more than make up for any loss of benefit or time spent keeping records.

Tax wise it is usually much better option to be working though a limited company compared to an umbrella company as a good accountant, like Tax Affinity Accountants, should help you save much more in tax than fees they ever charge. Helping to ensure more of your hard earned income stays in your hands.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting contractors and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Thousands of reminder letters from HMRC have begun to drop on across door steps in the UK. The tax year ended 5/4/17 ie 2016 -2017 self assessment is now due to be completed and the sooner you do it the sooner you can get a refund of income tax or know how much you need to save and pay.

If you already have a personal UTR - unique tax number then the letter may have already arrived or will be on its way. If you do not then you may need to ensure you or your accountant has applied for one to allow for its submission.

Who needs to do a tax return?

You’ll need to have a personal tax return calculated and submitted if, in the last tax year:

• you were self-employed in a previous tax year, or had income in any capacity other than employed ie income from overseas, property, dividends, sale of investment property or assets etc
• you received more than £2,500 in untaxed income, for example from tips or renting your property etc - if you received less than £2,500 you may still have to complete a tax return
• you received income from your savings / investments which was £10,000 or more before tax
• your income from dividends from shares and investment portfolio's was £10,000 or more before tax
• you made profit(s) from selling things like shares, a second home or other assets and need to pay capital gains tax to HMRC
• you were the director of a limited company registered at Companies House - unless it was for a non-profit organisation (limited by guarantee or registered charity) and you have not been paid or received any benefits, like a company car, medical cover, gym, travel, company phone etc
• your income (or your partner’s) was over £50,000 and one of you claimed child benefit in the tax year 16/17
• you have had some income from abroad that you needed to pay tax on - the money need not be exchanged into Pound Sterling or come into the UK for it still to be taxable
• you lived abroad and had a UK income - which more than likely was declared as non-domiciled income and therefore not tax correctly eg rental property and overseas landlord
• your employed income was over £100,000 - eg higher earner with possibly a P11d also
• you were a trustee of a trust and/or registered pension scheme - and therefore like a company director are required to clarify your tax position each year
• you had a P800 form posted to you from HMRC saying you may not have paid enough tax last year - could be due to your tax code not deducting the correct amount of tax
• you fall into a certain category of worker eg religious minister or Lloyd’s underwriter etc
• if you’ve been told to submit a tax return by HMRC - even if it just an email not a letter

If your not sure contact an experienced quality accountant like Tax Affinity Accountants and they would be happy to advise.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting self employed people throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

HOW THE SPRING BUDGET 2017 AFFECTS THE SELF EMPLOYED & LIMITED BUSINESSES
 
The income tax personal allowance and the basic rate bands for this year’s tax return have already been announced. From 6th April 2017, personal allowance is set to increase by £500 to £11,500 and the basic rate band will rise to £33,500 from £32,000. This will result in a higher rate threshold of £45,000.
 
The Chancellor has proclaimed that the personal allowance will continue to rise to £12,500 and higher rate threshold to rise to £50,000 by the end of the Parliament. Also, the Capital Gains Tax annual exemption will increase by £200 in 2017/2018 from £11,100 to £11,300.
 
The rate of National Insurance Contributions for self-employed people will rise. Presently, self-employed individuals have to pay both Class 4 and Class 2 National Insurance Contributions (NICs):

• Class 4 NICs at 9% are paid only on profits made between £8,060 and £43,000 and 2% on profits above the £43,000 threshold.
• Class 2 NICs at £2.80 a week are paid only on profits above £5,965.

 
From April 2018, it has been announced Class 2 NICs will be abolished and Class 4 NICs will remain the same. As a result of this, the self-employed will save £145 annually. This will allow them to keep more of their money and be able to invest it back into their business.
 
Tax Free Dividend Allowance will be reduced from £5,000 to £2,000 from next year April 2018. This is because this will lessen the tax difference between the self-employed and employees. Those that will be affected, will be investors with stocks and shares worth over £50,000 outside an ISA.
 
£435 million will be given to support any business that have been affected by the business rates relief revaluation. Therefore, no small businesses will pay more than £600 coming out of the small business rates relief than they did in year 2016-17.
 
Financing local authorities will permit them to administer £300 million of discretionary relief to contribute in helping the businesses that are heavily affected by the revaluation.
 
Landlords and small businesses below the VAT threshold will be given an extra year to get ready for Making Tax Digital. Businesses that are owned privately (unincorporated businesses) that have a turnover under the VAT threshold will have until April 2019 to prepare for this before "Making Tax Digital" becomes mandatory. 
 
Making Tax Digital is where businesses will have to use a specific digital software to maintain their tax records and update HMRC quarterly (every 3 months).
 
The introduction of this complex digital scheme, which is involving commercial supplies or accounting software, runs smoothly, there is a likelihood that there will be substantial administrative trouble, especially for those businesses that presently do not use an accounting software.

By Gopal Nath at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Deadline: 31/10/16 for Paper Tax Returns

For everyone already registered with HMRC for the tax year 6/4/15 to 5/4/16 they are required to submit their paper tax return by the 31st October 2016. And then to pay all tax and National Insurance payments for that period by the 31/1/17.

So if you have to declare a tax return for 2015/16 year then we urgently recommend you contact a reputable and experienced tax accountant like Tax Affinity Accountants (one of the most highly recommend companies in the accounting industry) as soon as possible.

It is of course possible to submit a tax return yourself and HMRC will direct you to do this, but what they purposefully fail to clarify is what various expenses and industry specific allowances are allowed to be claimed as legitimate deductions to help decrease your tax bill.

And a good accountant, as any successful business person will tell you, is usually worth his/her weight in gold when it comes to getting your numbers right and paying the correct and least amount of tax.

At Tax Affinity Accountants our motto is that 'an accountant should legally save you far more in tax than they should ever be charging for their service' ensuring every client gets the very best service at a fair and reasonable cost. So our service more than pays for itself for all our clients.

So if you have to do a 2015/16 tax return (or any other year) and would like us to help you. Or are already one of our very satisfied customers then please get in touch with us as soon as possible and avoid the late rush and have the most time put into your accounts.

Sole Trader v Limited Company

A difficult question that the self-employed face is whether to trade as a sole trader/partnership or to trade as a limited company. However, the answer isn’t definitive and is dependent on many factors ranging from the type of business you are running to the type of person you are. Whichever one you choose has different implications for tax, legal and financial responsibilities. The aim of this article is to give you an insight to the advantages and disadvantages in terms of tax purposes of being a sole trader/in a partnership or forming your own limited company. Hopefully it will inform you on the structure most beneficial to you.  

Legality

As a sole trader, you are the business. You have full control and ownership of the business and are able to manage it in any way you like. On the contrary, a limited company is its own legal entity. Instead you serve the company as a director of the company and act as a shareholder. In most cases, you are considered as an employee but this status is not automatically granted in terms of Employment Law, the National Minimum Wage or for Tax Credits.

Tax – Sole Trader

You are subject to income tax on the taxable profits of your business. For the tax year 2013/14, you pay 20% tax on income between £0 - £31,785 and 40% tax on income between £31,786 - £150,000. Income above £150,000 is taxed at 45%. The personal allowance amount for persons aged under 65 is £10,600. You are also required to pay Class 2 & 4 National Insurance contributions (NIC). Class 2 NIC are at a flat rate of £2.80 per week. However, you may not need to pay Class 2 NIC if your earnings are below £5,725 for the whole year. Class 4 NIC is calculated based on your profits for the year. For 2013/14, you pay 9% on annual profits between £8,060 and £42,385 and then 2% on any amount over that.  Any trading losses you incur on your business can be offset against other your income to reduce your tax liabilities.

Tax – Limited Company

For a limited company, it pays corporation tax on its taxable profits. Company tax rates are lower than the higher rates of income tax. If you are employed under your company and taking a salary, your earnings from that employment are subject to income tax and Class 1 NIC due through PAYE (Pay As You Earn). The amount you pay is dependent on your earnings. Shareholders of the company who are on a higher tax bracket may have to pay higher a higher tax rate on any dividend income they receive.  Losses from the company can only be offset against its other income but not against your income as an individual.

What does it all mean?

Now for most people, the above two paragraphs may have confused you further. But here is a scenario that will make things easier to understand and hopefully give you enough information to aid you in that important decision.

You have a trading income of £30,000 pre tax and wish to extract all the profits for yourself. As a sole trader, you will be taxed at around 29% for any income and NI in excess of your personal allowances. The total tax liability including the Class 2 & 4 NIC amounts approximately to £6,000.20 (assuming normal personal allowance of £10,600). This leaves you with £23,999.80 in real terms after taxes.

The tax calculation for a limited company is slightly more complex as you have more flexibility in how you distribute the income. For simplicity sake, you take the minimum annual wage that is not liable for PAYE tax or NIC which is around £7,956.  Company profits under £300,000 are taxed at a rate of 20%.

Taxable profits are again at £30,000 which amounts to a corporation tax liability of £4,408.80 (after tax free wages). This leaves you with £25,591.20 in real terms taken as tax free dividends because it’s below the current earnings threshold of £31,785 (you only pay tax once under current rules).

So in this scenario, it is better to work as a Limited Company because you pay much less tax. However, calculations may differ depending on the trading income and how much salary you take. The general idea is that as your trading income increases, its becomes more and more beneficial to trade as a limited company than as a sole trader (40% income tax versus 20% corporation tax).

Just a Final Note

The Government has announced that the corporation tax rate will fall in 2017 to 19% and in 2020 to 18%. But in some cases you can be better off trading as a sole trader for tax purposes if your annual trading profits are not high or if you want to have losses brought forward from a previous year.

However, many businesses opt to form limited companies for reasons that extend past tax issues. A limited company status adds prestige and makes a trader appear more established and reliable.  Also should the business fail, you will not be personally liable for its debts if you were a limited company.

If you plan to sell the business after a few years then limited is again a better choice. Also if you plan to expand the business then getting finance for your business may be easier if you were a limited company. There are many varying circumstances that makes being one more appealing than the other but if you still appear unsure then feel free to contact us and we’ll be sure to offer you tailored expert advice.

By Andrew Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Surbiton they are considered in the Industry to be experts accountants for small businesses. Helping and supporting business throughout the UK, they regularly help new and established businesses to succeed.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.