September 26, 2017

Have you got 31st July in your diary?

tax, self-assessment, HMRC, 31st July, accountant, herefordshire, monmouthshire, gloucestershire

Have you got 31st July in your diary?

 

We may all have put this matter to one side, filing the reminder letter in the unshrinking in-tray, but staying on top of our taxes is vitally important to all small businesses and those who are self employed.

The key is to not fear them or forget them!

 

I know you are busy, time so often our enemy and much better spent delivering our goods and services, but time has to be taken to keep our business affairs in order and avoid any nasty penalties. And if you don’t have the time, engage with someone who has both the time and the expertise.

Diary dates.

So, let’s start by reminding ourselves of the key dates for your diaries regarding taxes:

  • 5th October – registration date for individuals who are self-employed
  • 31st October –paper tax returns completed submission deadline
  • 31st January – online tax returns submission deadline
  • 31st January – deadline to pay taxes you owe
  • AND if you paid more than £1,000 tax on 31st January 2017, you may have more to pay by 31st July 2017.

How do you know if the July 31st deadline is applicable to you?

HMRC state this: ‘If you are self employed and earn enough to pay over £1,000 in tax and you have not already settled all tax due for the year to 5th April 2017, you will need to make a payment by 31st July this year.’

Also, if you have rental income or large amounts of investment income such as dividends, you may also be affected.

There is further information on the gov.juk website, or if you are unsure talk to your/an accountant.

You still have time.

If you haven’t already completed your tax returns, don’t panic! You can still avoid HMRC’s late filing penalties just start taking action now.

  • Gather together all your receipts, bills, bank statements, mileage logs, sales invoices and takings summaries
  • If you have already entered these into a spreadsheet or accounts software, such as QuickBooks Online, well done. It will make your life easier, and you will have a better handle on how the business is doing.
  • Gather other details of income such as bank interest, rental income (and related expenses), P60s and P45s and P11ds from any employment or pension you have. Also pension payments if you can deduct those from your tax bill
  • If you are married, discuss with your spouse whether there is benefit in reallocating some of the personal allowance to the other spouse (10% can be moved although some rules apply)

Decide if you are going to feel brave and prepare your own tax return. If so

And if you would rather have help making sure you are declaring everything and claiming all you can, call me and we can get things sorted.

Penny Lowe, Wellington Consulting

Visit my website to find out more about how I can help you and your business >

Are you worried about RTI? Do you know what it is?

As from 6th April 2013 all employers will need to tell HMRC every time they pay someone. This is known as Real Time Information (RTI). Whether it is the usual staff getting their monthly pay, or a casual member of staff getting cash for helping you out for a couple of days, the taxman needs to know.

If you run your own payroll, the chances are you are using software to do the calculations. It is likely that it will also file the necessary forms on line for you but it is worth checking.

The logic behind this change is that HMRC will be able to link multiple employments together as they are happening and make sure the correct tax code is being used. This should stop so many employees getting bills sometime 3 years after the tax year in question. The other benefit to the taxman is they know how much you should be sending them each month so, if you don’t pay, they know how much to chase you for!

The emphasis will again be put on the employer to ensure that the employee is entitled to work in the UK. For new employees, HMRC suggest seeing a copy of the passport to confirm name, date of birth and help towards a right to work in the UK. If a potential member of staff does not have a passport, HMRC suggest a birth certificate as an alternative. That is all very well unless the female in question has got married. How do you then match the name to the individual without marriage certificates etc? There are alternative documents that can be produced, but does someone turning up for a day’s work carry these papers about as well as their National Insurance number – they may need to in future.

Once the individual is set up within a payroll system, the operation should be straightforward. It’s a bit like sending HMRC a copy of the payslip each time you work out pay as well as giving one to the employee. If it is a casual worker who gets paid cash at the end of the day, it is up to you to work out the correct figure to pay. In a very few cases such as this one, you can send the copy of the payment details through to HMRC within 7 days of making the payment. Most other cases you need to tell them on or before the date the payment is made.

What are you planning for next year ?

Many people start a year with New Year’s resolutions, but they often do not achieve them. Are you going to be one of those?

I would suggest the main reason for failing to achieve is that you can see the goal you want to achieve, but don’t plan a route to get there. If you want to travel to any destination, you wouldn’t just expect to arrive without the journey. How you choose to travel is a matter of for you. The decision will be based on research, preferences and practicality – and possibly budget.

One question I have long asked myself is why do many business owners put more effort into choosing a car than the decisions that affect their business? So, my simple request to you is decide where you want your business to be this time next year and then put the effort in to planning the route including check points to ensure you are on track. If you do this you will get there.

Happy Christmas and a Successful 2013

Are you charging enough ?

 

What is enough for you? This leads from the question ‘why are you in business?’ This week I had a client who greeted me with the comment: “Every year when I drive over with my books, I tell myself I really ought to put my prices up”.

She provides her services mainly to the elderly in care homes with limited incomes. Her children have both left home and the second one is now going through university. Her main reason for working was to pay for their education, but she also enjoys her work. Do you think she should put her prices up?

Pricing is not all about making the greatest profit you can, it is about understanding the figures so you can decide what is appropriate. Do you want to price yourself out of the market, or just appeal to a small niche? Someone I worked with a couple of weeks ago had just taken an order for a dining table at £35,000. That is not a typo. I can confirm that I will not be placing a similar order.

In order to ensure you make a profit, you do need to understand what costs are involved, both in the delivery of that particular sales and in the running of the business. If you don’t have precise figures available, just jot down what your overheads are in a year divide, by twelve and realise how much you need to make in a month before you even consider the costs involved in a sale. This is why you cannot afford to work for free. By all means give a sample or taster away, but make sure your customer knows this is not the norm.

If you feel that you need to talk through your pricing structure please get in touch

Have you completed your Tax Return ?

You may see advertising regarding submission of your tax return by 31st October. This only applies if you (or your accountant) are doing it on paper. If you submit via HMRC web site you have until 31st January 2013 but I wouldn’t recommend you leave it that long.

I am a great believer in keeping on top of the figures. One figure is how much tax you owe. If you know in advance you can make sure you plan to have sufficient funds available so the earlier you can complete your return, the more time you have to plan.

Tax return sooner rather than later If you don’t currently need to submit a self assessment return, you can choose to optionally submit one. The benefit is that you declare each year what income you have and any claims such as pension contributions that can reduce your tax bill and you then pay the correct tax each year. Last week I had one client who had been sent a tax return this year for two years ago and ended up with a tax bill of £3,500. He had changed employments during the year and the tax codes had not been updated. With company cars, medical insurance and other factors affecting your tax bill. This could happen to you.

 

Earlier this year I acted for a client who had been self employed for many years and submitted his own tax return. When we reviewed what he had done/hadn’t done the tax bill should have been more. We were able to declare his errors before penalties were applied, and he was given time to pay. Claiming your loan repayments for your holiday home as an expense against business profits is not correct. If you are not sure about something, find someone to ask. Although HM Revenue and Customs offer advice, you need to ask the right question to get the right answer – and then they have been known to change their mind. You never know, it may be a repayment you can claim before Christmas rather than a tax bill to pay in January.

Would you like a no-obligation chat about your tax obligations and returns ? Contact me and lets simplify your tax affairs

How much do you put away for tax?

They say the two certainties in life are death and taxes. The big difference is that you know when taxes are due, the same thing can’t usually be said about death.

I have today been to a client who has, for as long as I have known her, religiously put money away each month so that when her VAT bill or tax bill arrives, the money is always there to pay it. When she changed her trading status from sole trader to limited company we sat down and did the figures to make sure she knew approximately how much she would need to have saved and by when. What she now does is put a larger amount aside every month and then pays a dividend to cover her holidays and Christmas. She also pays a monthly salary and has this, and its PAYE, set up on standing order.

work out your tax and put it awayAlthough she would rather not pay tax, she knows the more she pays, the better she is doing. By reviewing her transfers to the company’s second account regularly, she just sighs with a smile when I tell her how much VAT to pay or what her corporation tax bill is. This is different from the reaction of some of my other clients who know when the tax is due, but always think it will be nil. At least that is one excuse as to why they haven’t put money aside.

If you are not sure how much to put aside, speak to your accountant and they should be able to help. Remember it is always better to put too much away and have a nice surprise rather than a nasty shock.

Could your business benefit from this proactive planning ? Contact me and I will be happy to help.

Are you paying your Staff enough ?

Are you paying your staff enough?

How much do you pay your staff? As from 1st October the national minimum wage changes for those aged 21 and over to £6.19 and the apprentice rate rises to £2.65. Rates for younger staff remains unchanged.

Did you know that agricultural workers will get a different minimum wage, depending on what they are being asked to do, and are entitled to a higher rate for overtime? If you are in this sector, you probably know all this but I have had clients who have been caught out and ignorance is no excuse.

When did you last pay your part time workers holiday pay? The common reason that staff are underpaid is when they work on a zero hours contract and therefore don’t book their holiday, they are just not available to be put on the rota. Where the hours vary from one week to another, the calculation for holiday is then based on 12.07% of time worked. When looking at the cost of employing staff, this should be taken into account – and the employer’s national insurance.

Lastly, the most important member of staff is you. Without you the business could not function. How many hours do you do, how much do you get paid per hour? When did you last take a holiday?

 

Do you need help with ensuring that you are the right side of the law ? Contact Penny for more advice