Rustrick Accountants - Useful Accounting Information

Electric Vehicle Tax Rules

Tue, 28 Apr 2026 08:00:18 GMT

Electric vehicles used to come with significant tax perks; no road tax, very low company car charges and generous reliefs for businesses. While they are still tax-efficient in many cases, those advantages are gradually being reduced.

From April 2025, EVs are no longer exempt from Vehicle Excise Duty. Most new electric cars now pay the standard annual rate (currently £190), and vehicles with a list price over £40,000 also face the £410 “expensive car” supplement for five years. That increases annual ownership costs, although EVs can still be cheaper to run overall, particularly with access to low-cost charging.

There is still government support through the Electric Car Grant, which offers up to £3,750 off eligible new vehicles. However, not all models qualify, so it is important to check eligibility before buying.

For company car users, EVs are still good. The Benefit-in-Kind rate is rising gradually from 2% to 5% by 2028/29, but that is still significantly lower than most petrol or diesel alternatives. Electric vans also retain a 0% BIK rate until at least April 2028.

Businesses can continue to claim 100% capital allowances on new electric cars (if purchased outright) and on charging points, making them tax-efficient investments.

Basically, EVs are still a sensible option from a tax perspective, just not quite the bargain they once were. Running the numbers before making a purchase is now more important than ever; give us a call on 01622 738165 and we can help you with that!

Tax Free Workplace Benefits

Tue, 21 Apr 2026 08:00:09 GMT

The 2025 Budget wasn’t exactly packed with giveaways, but hidden among the tax hikes was a small (and very welcome) perk for employers and employees.

Right now, there’s a tax exemption if you provide things like eye tests or homeworking equipment to employees. But if an employee buys it themselves and you reimburse them? That reimbursement is taxable.

But, from 6 April 2026, reimbursements for certain everyday work-related expenses will be exempt from both income tax and National Insurance.

This includes:

Eye tests
Flu vaccines (will be tax-free when provided directly)
Homeworking equipment
Accommodation, supplies or services needed to do the job

So whether you provide the benefit directly or simply repay your employee for it, the tax treatment will be the same. So, from April 2026, reimbursing employees for small, work-related costs will be simpler and tax-free. Give us a call on 01622 738165 if you want more information or help with this change.

Claim your PAYE

Tue, 14 Apr 2026 08:00:12 GMT

HMRC is now reaching out to employers and employees by letter and text to let them know when a tax refund is due. The big change? Refunds aren’t automatic anymore; you have to claim them yourself.

The quickest way to do this is through the HMRC app. Just open the app, go to the PAYE section, and if you’re owed a refund, a green Claim button will show the amount. Tap it, and the money should hit your bank account within a week.

No app? No problem, you can also claim online or by contacting HMRC directly using the details in their letter.

The key point: if you don’t take action, the refund won’t be paid. So check your PAYE info and claim what’s yours! Not sure if you have received a letter or text? Give Rustrick Accountants a call on 01622 738165 and we can help you out

Sole Traders, Partnerships and HMRC

Tue, 07 Apr 2026 08:00:22 GMT

HMRC has started a new campaign targeting sole traders and partnerships, checking that expenses claimed in self-assessment returns are properly adjusted for private use. If you’re self-employed, it’s worth paying attention; mistakes can trigger unnecessary questions or even penalties.

The focus is on disallowable expenses (especially costs that are partly personal). Think cars, phones, and similar items where you use them for both business and private purposes. For example, if you spend £2,200 on car costs and only 8,000 of the 14,000 miles are business, HMRC expects you to adjust the private portion proportionally.

It’s not just cars and phones, either. Business entertainment, travel, or marketing expenses can also come under scrutiny if they include personal use. The safest approach is to be clear and consistent in your calculations and records.

Tips to stay on HMRC’s good side:

Keep detailed records for items like mileage or phone use. Don’t just copy last year’s figures.
If you account for private use before filling in your tax return, explain it in the additional information section.
HMRC accepts reasonable estimates where precise calculation is tricky (for example, home office costs or phone use). Using simplified expenses for homeworking can help avoid disputes.

In short, make sure you understand HMRC’s rules on private use, check each tax return carefully, and adjust expenses appropriately. Unsure or just want a friendly, helping hand? Give Rustrick Accountants a call on 01622 738165 !

Spring 2026 Newsletter

Fri, 27 Mar 2026 17:31:16 GMT

Trouble viewing file? Download it here instead.

Fuel Benefit Charges for 2026-27

Tue, 24 Mar 2026 09:00:37 GMT

If you provide employees with a company van (or fuel for private use) the benefit-in-kind charges are going up again next tax year.

These charges are increased annually in line with the Consumer Price Index, and the 2026/27 figures have now been confirmed.

The benefit applies if an employee:

Has a company van available for private use
Receives fuel for private journeys in a company van
Receives fuel for private use in a company car

It’s worth noting that the van charges are fixed flat rates, while company car fuel uses a multiplier system.

Here’s how the numbers compare:

For company cars, the fuel benefit is calculated by multiplying the fuel benefit figure (£29,200 for 2026/27) by the car’s “appropriate percentage”, the same percentage used to calculate the car benefit itself.

So, if employees use company vans privately, or receive employer-paid fuel for private journeys, the taxable benefit will be slightly higher in 2026/27. Give Rustrick Accountants a call on 01622 738165 if you want more information or advice

Missed the Tax Deadline

Tue, 17 Mar 2026 09:01:21 GMT

Late January can hit hard—especially if you suddenly realise you need to file a tax return but haven’t even told HMRC yet. Don’t worry, you’re not alone. This happens more often than you think, particularly if you’re a first-time filer or returning to Self Assessment after the Christmas break!

Usually, HMRC expects you to let them know you’re liable for Income Tax or Capital Gains Tax by 5 October following the end of the tax year. If you miss the 5 October deadline, you could face penalties, but if you act quickly you can significantly reduce them.

So, if it’s late January and you realise you’ve missed the notification deadline, the most important thing is to act immediately:

Register for Self Assessment online as soon as you can.
Work out your tax liability and pay it by 31 January. If you haven’t received your Unique Taxpayer Reference (UTR) yet, you can still use your National Insurance number.
Paying the tax you owe on time can reduce the risk of penalties, as HMRC will base fines on any ‘potential lost revenue.’

Any HMRC penalties will depend on:

How late your notification was
Whether your disclosure was prompted by HMRC or unprompted
Whether the failure was deliberate

The penalty will be 0% if the notification was unprompted and not deliberate, but it could be up to 100% of the tax due for “deliberate concealment”. You might avoid penalties entirely if you have a reasonable excuse, weren’t deliberately late, and notified HMRC without unnecessary delay!

Once you’re registered, submit your tax return as soon as possible to avoid more late filing penalties. Remember, the deadline is the 31st January after the tax year or three months after HMRC issues the notice.

If you’ve filed your tax return before, don’t create a new account. Doing so can delay processing and mess up your tax calculations. Instead, reactivate your existing Self Assessment record by calling the Agent Dedicated Line or completing form SA1.

If you have received a late tax return notification, don’t panic! Give Rustrick Accountants a call on 01622 738165 and the friendly team will sort it out for you and reduce the penalties by as much as possible

8 Weeks Left

Tue, 10 Mar 2026 09:00:18 GMT

Changes to Business Property Relief

From April 2026, big changes are coming to Inheritance Tax - and business owners should pay attention. Reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) could significantly increase the tax due on business and farm assets when you pass on.

The biggest change is a new £2.5 million cap on 100% relief. Anything above this may now be taxed, often for the first time. On top of that, inheritance tax could apply at 20% or 40%, depending on the asset - making future liabilities harder to predict.

There’s also a hidden trap! If cash has to be taken out of a business to pay an IHT bill, that may trigger further personal tax, increasing the overall cost to your family.

For owners of asset-rich or long-established businesses, the impact could be significantpotentially forcing sales, restructures, or difficult family decisions at the worst possible time.

The rules take effect next month, but early planning can still make a real difference. Reviewing ownership, succession, and wills now may help reduce tax and protect both you and your business! Give us a call on 01622 738165 and we can help you out!

How to Help your Children with Business Expenses

Mon, 09 Mar 2026 09:52:37 GMT

It’s very common for parents to help their kids get a business off the ground, but when it comes to taxes, things can get a bit tricky!

Normally, if a business buys equipment for trade, it can claim a capital allowance (CA) to reduce taxable profits. For most purchases, you can use the annual investment allowance (AIA) to claim up to £1 million in the year of purchase. If the AIA doesn’t apply, the deduction is spread over several years as a writing down allowance (WDA).

To qualify, the owner of the equipment must use it in their business. So if the parent has bought the equipment for their child’s business, the usual rules for capital allowances don’t apply.

So, if you want a tax benefit from helping a family member, you need to do a bit of planning such as:

Treating the repayments as rent for use of the equipment, under a formal agreement.
Transferring ownership of the equipment, so they can claim the capital allowance himself.

Without doing either, neither the parent nor the child gets a deduction!

Helping your children with a business is generous, but it can easily backfire tax-wise if you don’t plan carefully. If you are thinking of getting involved or want to get some advice before you start, give Rustrick Accountants a call on 01622 738165 and we will happily chat through the best steps for you

Winter 2025 Newsletter

Thu, 15 Jan 2026 16:44:11 GMT

Trouble viewing file? Download it here instead.

Autumn 2025 Newsletter

Mon, 27 Oct 2025 08:27:59 GMT

Trouble viewing file? Download it here instead.

Reduce Tax on Residential Property Gains

sean@rustrick.co.uk (Sean Rustrick) — Mon, 11 Aug 2025 08:00:11 GMT

If you sell a property for more than you paid for it, the difference is liable to Capital Gains Tax (CGT).

In 2025/26, you will be liable to 18% CGT when your income and gains fall in the basic rate band. You will be charged up to 24% if it is over the basic rate band. This actually works out as you paying a mixed rate, i.e 18% and 24%, and the difference in these rates can reduce the CGT bill on the sale of assets.

Before your CGT exemption is deducted from your gains, any capital losses you’ve made in the same year are deducted alongside any capital losses from earlier tax years (that you haven’t already used against gains).

In addition, the first £3,000 of any capital gains you make in 2025/26 is exempt. Remember, this renews every tax year and is the allowance per person, so if the asset you’re selling is joint with your spouse, the exemption increases to £6,000.

Before any sale, a married couple or civil partners can change the proportion of the property they own to double up on these annual exemptions, reduce tax rates and use available capital losses to minimize the tax payable on gains from property.

This can get complicated, give the team at Rustrick Accountants a call today to chat through things on 01622 738165 and see if you can save today!

Director Shareholders Must Disclose Dividends

sean@rustrick.co.uk (Sean Rustrick) — Mon, 04 Aug 2025 08:00:04 GMT

MRC is now demanding that small companies and their owners will have to report all income; not just a single total figure for all dividend income.

If you receive dividends from a close company in your tax return for 2025/26, you must indicate whether you were a director of it at any point in the tax year and you must now provide the company’s full name and registration number. You must also disclose details of the director’s highest percentage of share capital held in the year. Directors are not limited to just those registered at Companies House, it also includes shadow directors and if you control more than 20% of the company’s ordinary share capital.

From 6th April 2025, directors of close companies must make sure they are making detailed records of dividends, changes to the company’s shareholdings and the rights attaching to every class of issued shares. If these details aren’t accurate you may face a penalty of £60 for each error.

If you have alphabet shares or if your class rights/shareholdings have changed, give us a call on 01622 738165 as this could complicate things.

Summer 2025 Newsletter

sean@rustrick.co.uk (Sean Rustrick) — Fri, 01 Aug 2025 09:07:05 GMT

Trouble viewing file? Download it here instead.

HMRC Trap

sean@rustrick.co.uk (Sean Rustrick) — Mon, 28 Jul 2025 08:00:09 GMT

Interest rates have risen and the personal savings allowance (PSA), the amount on which 0% tax applies to savings income, has frozen at £1,000 and £500 per tax year for basic rate and higher rates.

If in 2023/24 you received interest exceeding the PSA, you don’t normally submit a self-assessment tax return, you haven’t received a P800, you should contact HMRC now to notify them you may owe tax. This also applies for 2024/25, but you have until 5th October 2025 to tell HMRC.

Trivial Benefits

sean@rustrick.co.uk (Sean Rustrick) — Mon, 21 Jul 2025 08:00:06 GMT

A trivial benefit is something that costs the employer little, which they give to their employees as a perk of their job. A perk counts as trivial and is exempt from income tax and NI as long as it costs the employer no more than £50 and meets other conditions. This £50 includes both the price of the item/service and all the related costs. If a gift is shared by employees and you can’t work out the exact cost, you can use the average to determine if the exemption applies.

It would not be counted as trivial (even if it is less than £50) if it is part of a salary sacrifice, paid in cash or a voucher that can be converted to cash, part of the employee’s contractual earnings or if it is in recognition for services performed as part of employment duties.

The trivial benefits exemption exists to allow employers to reward employees tax and NI free and to reduce paperwork and admin for both employers and HMRC. So give us a call on 01622 738165 and let us help you today!

Accelerating Pension Relief

sean@rustrick.co.uk (Sean Rustrick) — Mon, 14 Jul 2025 08:00:00 GMT

Did you know that contributing to a registered pension scheme qualifies for income tax relief? You can pay into a workplace pension or set up your own, but either way you will be entitled to relief dependent on the rate of income tax you pay.

If you are a higher (40%) or additional (45%) rate taxpayer you can claim further income tax relief on personal pension contributions (this includes contributions to workplace pension that is deducted from your pay!).

If you are not in self-assessment (only have PAYE income) you can claim this extra tax relief through HMRC’s new online form. You can access this by logging into the Government Gateway and then supply proof that you’ve paid contributions (your pension company can give you this). HMRC will then make an adjustment to your tax code so you receive the income tax relief.

If you are registered for self-assessment, you can simply claim it on your tax return. Remember you will have to wait until the end of the year to do this! If you have PAYE income, you can get the tax relief faster by logging into your HMRC personal tax account and updating your tax code (remember to report the pension contributions on your tax return!).

Not sure if you are entitled to the extra tax relief or how to get it? Give us a call on 01622 738165 and the team will help you out.

High Income Child Benefit Charge

sean@rustrick.co.uk (Sean Rustrick) — Mon, 07 Jul 2025 08:00:01 GMT

High Income Child Benefit Charge (HICBC) uses the income tax system to get back child benefits from couples when one or both of them have an annual income of over £60,000.

HMRC has announced that from August 2025 if you pay tax through PAYE and are liable to HICBC you have to report it through a new online service. So if you were previously filling out a self-assessment form, ask HMRC to remove you from the self-assessment system and collect the HICBC from your PAYE income. This is a new system so there is a high risk of over or underpayments and will be under review for a period of time.

Not sure how this will affect you? Give us a call on 01622 738165 and we can talk you through the change.

Income Splitting with Alphabet Shares

sean@rustrick.co.uk (Sean Rustrick) — Mon, 30 Jun 2025 08:00:11 GMT

Can you reduce your tax and NI bill if you give your spouse shares in your company? Usually this would be the case, however it isn’t always guaranteed! If your spouse has other income that places them in a higher tax bracket it would increase the bill! To get around this you can use alphabet shares.

Alphabet shares are “ordinary shares” but they have a different designation. For example ordinary A shares, ordinary B shares etc. This means that the company can declare a dividend at one rate for A shares and another for B shares. So if one shareholder in a company has more income than another, the first shareholder can be paid a lower dividend to keep their income within the income tax basic rate band.

These shares must be issued correctly. They must be sent to Companies House within 15 days with a Form SH01 within 30 days of issuing the new shares. HMRC aren’t always a big fan of alphabet shares, so make sure your paperwork is in order when declaring a dividend- it will either be a director’s resolution for an interim dividend or a shareholders’ resolution for a final dividend.

First time you have heard of alphabet shares? Worried about issuing them yourself? Give us a call on 01622 738165 and Rustrick Accountants will sort it out for you.

Land Remediation Relief

sean@rustrick.co.uk (Sean Rustrick) — Mon, 23 Jun 2025 08:00:03 GMT

The government wants to build over 1m new homes by 2029. They need land to do this and have decided to start to clean up brownfield sites. But where does Land Remediation Relief (LRR) come into this? At the moment, the government is deciding whether LRR should be continued, so if you do qualify- time could be of the essence!

LRR is a corporation tax (CT) deduction of 150% when a company cleans up contaminated land and buildings in which they have a major interest (freehold/leasehold interest of at least seven years). The CT relief depends on whether the company holds the land as stock or a capital asset and which band of CT is applicable. Loss-making companies can only access a maximum tax credit of 24% of the LRR spend.

But watch out for the exclusions! Contamination due to living organisms, air or water does not qualify (apart from Japanese knotweed, radon and arsenic). This means that any costs relating to drainage, mine shaft grouting and protection of land from soil, gases or flood waters is excluded. Any contributor to the contamination (including a connected party!) is also ineligible, this also includes any failure to act (even if the pollution was accidental!).

As long as the work either prevents or mitigates the effects of harm (this could be removal, containment or treatment of contamination) there is no “prescribed” method of how to do it. However, only the additional costs incurred to carry out the remediation work will qualify for CT relief. Any costs must be borne by the company and not subsidised (i.e land was discounted due to the contamination).

LRR offers a maximum tax relief of 37.5% of the qualifying spend (including capital costs) but it must be submitted within two years of the accounting period end.

This is a tricky topic so give us a call on 01622 738165 to make sure it is done properly!

Travel Expense Exemptions

sean@rustrick.co.uk (Sean Rustrick) — Mon, 16 Jun 2025 08:00:02 GMT

Should you be deducting tax and NI from your employees’ travel expenses? You must decide if job-related expenses are exempt from tax and NI contributions. If they are, the expense can be paid or reimbursed to an employee without reporting it to HMRC. If it isn’t exempt, you must treat the payment as either earnings or a benefit in kind.

For a travel expense to be exempt, it must happen whilst the employee is doing their job or is visiting a location that isn’t their normal place of work for the purpose of performing their job. If the employee’s journey is between their home and their permanent workplace, it is called ordinary commuting and if you pay the costs, they are taxable and liable to NI.

This can get a bit confusing, get in contact with us on 01622 738165 and we can help you decide what the best course of action is for you.

Rollover Relief could save you Capital Gains Tax

Mon, 09 Jun 2025 08:00:00 GMT

You can reduce your capital gains tax liability by using proceeds from the sale of one asset to reinvest in the purchase of a new asset- this is called Rollover Relief.

To qualify for Rollover Relief, you have to get rid of an old asset (which was used only for trade purposes) and then get a new asset (that will only be used for trade purposes). If you are a sole trader, you can use the new asset for a different trade but there must not be a gap longer than three years between these trades. Qualifying assets include buildings, land, plant and machinery used for your trade, but will not include shares and securities.

Rollover Relief can be claimed if the proceeds of the old asset are used to enhance the value of other trade assets immediately, or if you use the proceeds to acquire a further interest in another asset (that is already used for trading purposes). You will get the full Rollover Relief if you reinvest all of the proceeds of your asset sales, if you only partially reinvest, then the relief will be proportionate.

If you reinvest in a depreciating asset (an asset with a predictable life of 60 years or less e.g. machinery) there will be special rules. Any rolled-over gain from the depreciating asset is not deducted from the cost of the replacement asset, instead it is frozen until the replacement asset is no longer being used for trade purposes, or ten years from the acquisition of the depreciating asset.

The new asset must be acquired 12 months before the disposal of the old asset or three years after the disposal. A claim has to be made within four years after the end of the tax year when the disposal happened or the new asset was acquired.

Give us a call on 01622 738165 and we can help you decide if Rollover Relief is right for you!

New PAYE procedures are being overlooked

sean@rustrick.co.uk (Sean Rustrick) — Wed, 04 Jun 2025 08:00:05 GMT

This is a subtitle for your new post

You must follow the new tax residency rules that began in April 2025. These changed rules are a side effect of the changes to the UK taxation of non-UK individuals. This is known as the Foreign Income and Gains (FIGS) regime and will also affect UK individuals paid by UK employees for work they do abroad.

So, if one of your employees works both in and outside of the UK, from April 2025 you should not assume that employees who qualified for s.690 relief previously will continue to do so. There is now a new process for you to follow if your employees want to limit PAYE with the new version of s.690 relief. You must now go online and it will be applied immediately, meaning that you will not have to wait for HMRC’s permission before limiting PAYE to UK-generated earnings.

If you think this may affect you, give us a call today on 01622 738165 and we can chat through the best options for you.

1 Person Companies

sean@rustrick.co.uk (Sean Rustrick) — Mon, 02 Jun 2025 08:00:02 GMT

Did you know that the Employment Allowance (EA) has more than doubled? It now stands at £10,500! EA is the amount that employers can deduct from their annual NI bill. But why has it increased so drastically? Basically it is to soften the blow of the increase to employers’ NI rate (to 15%) and the lowering of the point at which employers must start paying NI on an employee’s salary (£5,000 per annum).

Watch out! Employers may be excluded from entitlement to EA if the company only has one employee who is also a director and the only person paid by the company. It doesn’t matter how many shareholders/directors a company has, what matters is who is paid above the secondary earnings threshold.

So how do you get around this? Simply pay another person just enough to prevent the exclusion from applying to the company! Even if this is just for one week in a tax year, you will qualify for the full £10,500!

It is a simple solution and a very easy thing to capitalise on! Make sure you aren’t missing out by giving us a call today on 01622 738165 - we will be more than happy to help you.

Joint Properties and Form 17

sean@rustrick.co.uk (Sean Rustrick) — Mon, 26 May 2025 08:00:11 GMT

When spouses own a property together, they are taxed 50% equally on any income that may arise. However, when they own property as tenants in common and in unequal shares, they can elect for the income to be split for tax purposes like their ownership- to do this you use a Form 17 (watch out- it can’t be split differently to the share balance!).

After a Form 17 election has been made, it has to get to HMRC within 60 days of the date of the last signature. From this date, the income is split according to the shares, anything before this date is treated as arising equally.

This election is useful because you get a lower tax bill- you won’t be taxed on 50% of the income! For example, Bob has a 95% share and Bill has a 5% share. They make £10,000 rental profit a year and Bob has no other income whilst Bill is a higher rate taxpayer. Bob will be taxed on 95% of the profits (£9,500) which would be tax-free (it is under his personal allowance) whilst Bill is only taxed on 5% (£500) which is only £200. They are both saving tax!

This can be hard to get your head around- give us a call on 01622 738165 and let us work out the best solution for you!

Spring Statement

sean@rustrick.co.uk (Sean Rustrick) — Fri, 23 May 2025 09:25:23 GMT

How is the spring statement going to affect you?

If you are late paying your self-assessment tax, HMRC will charge penalties that have doubled from 5% to 10% of the overdue tax. They will also charge another 10% penalty for any tax still unpaid after 6 months from when it was due. There will also be an increase in VAT penalties and anyone registered for Making Tax Digital for Income Tax Self-Assessment. The rates have risen from 2% to 3% for 15 days overdue and 4% to 10% after 31 days.

The government will carry out a review of ISAs. For now, there is an annual cap of £20,000 for adult cash,stocks and shares and lifetime ISAs remain for 2025/26. But there have been hints that while the £20,000 will continue, only £4,000 will be allowed for cash savings.

In terms of MTD ITSA for very small businesses (including landlords), there was an announcement that if your annual turnover exceeds £20,000 in 2026/27, you will have to register for MTD ITSA and start using it from 6th April 2028.

Any questions about what has been announced or how it could affect you and your business? Give us a call on 01622 738165 and we can answer any queries you may have.

Are you treating repairs and improvements correctly?

sean@rustrick.co.uk (Sean Rustrick) — Mon, 07 Apr 2025 07:00:00 GMT

The way that expenses relating to business premises are grouped can often cause problems with HMRC if they are found out to be non-deductible for tax purposes. If you take the correct steps to begin with it makes everything a lot smoother!

Before recording any property expenditure, first identify if it is a revenue cost (day-to-day expense) like decoration or maintenance or a capital cost. A capital cost could be divided into two sections:

1. Acquisition/Improvement of building or structure

2. Plant/machinery/ equipment that is permanently attached to the building (lights, water system etc)

Remember, if you do your own bookkeeping there is a much higher risk of errors- so double check everything!

Revenue costs: if you incur a repair or maintenance cost relating to the premise, a tax deduction for the expense is allowed in the same way that other revenue expenditure (energy bills, staff costs and overheads) are recorded in the profit and loss account.

Capital costs: these tend to be extensive and go beyond simple repairs. Capital expenditure should be recorded as a fixed asset on the business’ balance sheet.

Hidden capital costs: there can be costs that are normally treated as revenue but can also be related to capital improvements. For example, you may have changed your office into an open plan structure (capital) but now need to paint the walls. This cost is related to capital and not revenue!

Timing also comes into play for determining if expenses are capital or revenue. If a building is acquired in a condition that stops it from being used for the purpose it was intended for, expenses incurred to make it fit for use are usually capital even if they fall under the revenue category. Categorization is not always simple and luckily HMRC will accept a common-sense approach to it!

No deduction from profits is allowed for capital expenditure if it has been incurred on or after 29 October 2018. However, it may qualify for a special capital allowance deduction known as the structures and buildings allowance (SBA). The tax relief for SBAs is equal to 3% of the costs per year (2% until April 2020).

If you need help identifying what is a hidden capital cost and whether your capital costs may be eligible for the SBA, give us a call on 01622 738165- we are here to give you a helping hand!

Are you buying a car or a commercial vehicle in 2025?

sean@rustrick.co.uk (Sean Rustrick) — Fri, 04 Apr 2025 07:00:01 GMT

Direct tax rules are changing in April 2025 and more vehicles are being classed as cars rather than commercial vehicles. VAT is not claimable when buying a new car, however it can be claimed when a car will be used as a tool of trade (e.g. a car hire business, driving school or taxi firm). Input tax can also be claimed on a genuine car that is used for carpooling and made available for use by all staff and not kept overnight at an employee’s home.

Input tax can be claimed on a purchase of a commercial vehicle which has three/four wheels (no motorbike!), has been constructed solely/mainly to carry passengers and has roofed accommodation to the rear of the driver’s seat with side windows. Put simply, if it can carry either only one passenger, or over twelve passengers it is not a car and so it does not count.

Like most things, there are exceptions to this rule. If the vehicle has an unladen weight of three tonnes or more it will always be classed as a commercial vehicle. Caravans, ambulances and prison vans are commercial vehicles. If you are planning to purchase a car, van or combi-van, it is worth checking out if it is a commercial vehicle.

Get in contact today on 01622 738165 and we can advise you on what would be best for you and your business.

Have you exceeded the registration threshold?

sean@rustrick.co.uk (Sean Rustrick) — Wed, 02 Apr 2025 07:00:04 GMT

Have you noticed that your company has temporarily exceeded the VAT registration threshold? You know that it is unlikely you will exceed the threshold in the foreseeable future, can you just ignore it?

As a business owner, you can voluntarily register for VAT as soon as you start or intend to start trading. You have to register when your sales turnover exceeds the registration threshold (£90,000 in any twelve-month period). For VAT purposes, your turnover includes all businesses you own, so if you have two companies, it will be the combined turnover compared with the threshold.

You can ask HMRC for an exception from registration by providing evidence that the threshold was only exceeded temporarily. You must be able to convince HMRC that your turnover is not expected to exceed the deregistration threshold of £88,000 at any time in the twelve months following the date on which the registration threshold was exceeded. If you fail to apply for the exception, HMRC may assess you for VAT on all sales from the date you should have registered!

So, if your turnover temporarily exceeds the limit, you should apply for registration and ask for the exception by answering 10 questions on the application form. The deadline is often missed but it is not a huge problem. You can make a late application but you will need an explanation with your application explaining how, at the time the registration threshold was exceeded, you could have known that your future turnover would be less than the deregistration threshold.

If you need help with this explanation or need further information, give us a call on 01622 738165 and the team will be happy to help.

Are employer pension contributions worth it?

sean@rustrick.co.uk (Sean Rustrick) — Mon, 31 Mar 2025 07:00:00 GMT

Does the Inheritance Tax (IHT) charge on pensions coming in April 2027 mean that employer pension contributions are now nullified?

Pension contributions paid by employers have always been a very tax-efficient way of providing an income to directors and is generally better than a salary or dividends- but only to an extent!

Income tax relief for pension contributions is capped at £60,000 per year for both employer and personal contributions, with employer contributions being especially tax efficient. In the past, it also meant that whatever remained at death was usually outside your estate.

However, from April 2027, pension savings will be part of your estate for inheritance tax (IHT) and so will be subject to the usual IHT exemptions and nil rate band.

Any IHT payable on your estate reduces the amount remaining for your beneficiaries who will still have to pay income tax on the money they receive. However, you can still save tax with these two simple options:

1. Draw enough from your pension fund to utilise your tax-free allowances and lower rate bands. From this, make regular gifts (at least once every two years) of some or all of this income. These gifts are exempt from IHT.

2. Make gifts from capital because this will be ignored when calculating IHT on your estate if they were made seven or more years before death.

So, despite the changes coming in April 2027, employer pension contributions are still worth it for tax-efficiency. Even though IHT can apply, it can be reduced by using the above options. If you are still unsure on what will be best for you, give us a call today on 01622 738165 and the team will help you out.

Tax Relief on Travel Expenses

sean@rustrick.co.uk (Sean Rustrick) — Thu, 27 Mar 2025 08:00:00 GMT

Any payment or reimbursement of job expenses by an employer is exempt from PAYE tax and NI. However, job-related travel does have its own special set of rules. Any exemptions applies when the travel expense is either:

Made in the course of doing your job (if your role involves visiting customers)
For a temporary purpose required by your job (you need to check a building site etc)

Travel expenses cover all associated costs so this means that things such as hotel bills and subsistence are also included!

Even if the expenses are exempt or taxable, it does not affect the business’s right to deduct the cost when working out taxable profits or losses. But, if the expense is not exempt, the employer is liable to Class 1 or Class 1A NI (at 15% for 2025/26!).

But, some tax inspectors sometimes argue that some travel costs are more luxurious than they need to be. If so, HMRC has the right to treat the expense as a reward for the employee and so it is not covered by the exemption. This means that at least a part of it would be taxable and liable to NI. To make sure this doesn’t happen, just take a reasonable approach- HMRC can’t dictate what hotel you stay in!

If you are challenged about the expenses by HMRC get in contact with us on 01622 738165 and we can help you with the internal guidance.

Are you selling goods online?

sean@rustrick.co.uk (Sean Rustrick) — Tue, 25 Mar 2025 08:00:01 GMT

Selling goods online can bring in a great income, but you must be aware of the VAT rules!

If you run an e-commerce business, you usually sell your goods through an online marketplace. It is the online marketplace that is ultimately responsible for any unpaid VAT relating to sellers on the platform. An online marketplace is a business platform like a website or app that is facilitating the sale of goods. It must have set terms and conditions for supplying goods, it must authorise customer payments and must be involved in the ordering/delivery of goods.

Overseas sellers may also be involved and so there may be UK VAT implications. For VAT purposes, an overseas seller will have an overseas e-commerce business, but not a business establishment in the UK and make taxable sales of goods to UK customers. On the other hand, a UK-based e-commerce business will have decision-making and central administration in the UK and a permanent presence with resources for taxable sales.

When an overseas seller trades and sells goods in the UK via an online marketplace, the online marketplace must be VAT registered and the overseas seller is responsible for paying import VAT and customs duties. If the customer is VAT registered, the sale is made by the overseas seller and not the online marketplace. The overseas seller must register for UK VAT and charge UK VAT on the first sale (the mandatory VAT registration threshold does not apply). If the UK customer is not VAT registered, the sale is made through the online marketplace, therefore it is responsible for charging VAT (the overseas seller is treated as making a zero-rated supply).

However, if the goods are stored outside the UK and the value of the sale is less than £135, the online marketplace charges supply VAT. If it is over £135, import VAT is paid by the customer at the UK border.

There are rules that must be followed if you are a UK seller conducting business on an online marketplace depending on where the customer is based. For UK-based customers, UK VAT will apply only if the VAT registration threshold is exceeded. For EU-based customers, goods exported to the EU are sero-rated. BUt, local VAT and customs duties may apply. Sales under €150 can be simplified using the ‘Import One Stop Shop’.

If you think you will be affected by anything you have read today, give us a call on 01622 738165 and we can give you a helping hand or clarify anything for you.

Spring 2025 Newsletter

Mon, 24 Mar 2025 17:24:46 GMT

Trouble viewing file? Download it here instead.

Have you got your NI credits?

sean@rustrick.co.uk (Sean Rustrick) — Thu, 20 Mar 2025 08:00:00 GMT

Were you a carer between April 1978 and May 2000?

If so, check your NI record to make sure it includes home responsibility protection (HRP). If you do, the number of years needed to qualify for a full state pension will decrease. Usually it is automatically applied, but only if you provided your NI number for a child benefit or social security payment. HRP applies if you looked after a child aged under 16 or received income support while caring for a sick or disabled adult.

If you think this applies to you, check HMRC’s online portal or give us a call on 01622738165 today and we can sort this out for you.

Year-end tax saving strategies- Gifts

sean@rustrick.co.uk (Sean Rustrick) — Tue, 18 Mar 2025 08:00:01 GMT

Gifts & Taxes

Now is the time to make a gift of qualifying property to qualify for holdover relief under s.165 Taxation of Chargeable Gains Act 1992 instead of s.260. Whilst quite technical, this basically means that there is no need to use a trust agreement (which has its own legal and financial consequences!), making it the ideal time to pass on a property, claim holdover relief and provide a house to your children which they can claim private residence relief on!

Finally, with inheritance tax (IHT), there will be a restriction on business property relief on AIM-listed shares to 50%. You should think about changing such shares to unlisted shares to make sure you qualify for 100% relief for the first million.

IHT has a £3,000 “use it or lose it” annual exemption, so it is a good idea to start making regular gifts- ideally before the end of the tax year in April!

We have given you a lot of information to think about, the best first step would be to give us a call on 01622 738165 today and we can make sure you aren’t missing out on anything that will help you navigate this next tax year!

Year-end tax saving strategies- Part 2

sean@rustrick.co.uk (Sean Rustrick) — Thu, 13 Mar 2025 08:00:00 GMT

Part 2

If you are undertaking the sale of a business to a third party, you need to be aware of the increase in the rate of BADR in April 2025 and 2026. Look into accelerating the sale date to secure the higher rate without triggering the anti-avoidance rule announced in the Autumn Budget.

In addition, you can trigger qualifying gains when gains qualifying for BADR have been deferred using the enterprise investment scheme (EIS). These gains retain their qualifying status when they are revived, so you could look to make a disposal of the EIS shares ahead of 6th April 2025 or 2026. You need to make sure that the termination date has passed or you risk losing the CGT exemption on the EIS shares.

Furthermore, furnished holiday letting (FHL) landlords will no longer be able to benefit from the previous tax reliefs from the 6th April 2025. You have to start planning now to make sure you make the most of them! By stopping letting activity on or before 5th April 2025, you will have a three-year window to make disposals of previously qualifying properties and enjoy BADR. If you dispose of a FHL property on or before 5th April 2025, you will qualify for rollover relief which would work well if you are intending to get a replacement asset!

Give us a call on 01622 738165 today and we can talk you through which options make the most sense for you!

Year-end tax saving strategies- Part 1

sean@rustrick.co.uk (Sean Rustrick) — Tue, 11 Mar 2025 09:00:02 GMT

Part 1

Every tax year brings new changes to year-end planning and 2025/26 is no exception! April 2025 will see an increase in Class 1 NI, the termination of furnished holiday let status, the beginning of a decrease in benefits of business asset disposal relief (BADR) and restriction of inheritance tax relief for business assets. These are all major players that need to be kept in mind when planning ahead to remain as tax efficient as possible.

The first strategy that springs to mind to compensate for these changes is to take a small salary and extract anything else needed as dividends. If this is the case, you need to think about what is the best level to set the salary at to maximise savings- should it be the primary or secondary threshold? Just like last year, there is a minimal difference but worth thinking about!

If you need additional short-term cash, but no profits to extract as a dividend, you can make a bonus payment (subject to the company being able to fund it!). However, remember that this will be more expensive from the 6th April due to the secondary NI rate increase! If the amount needed is relatively low, the company can make an advance of expenses or a loan instead.

Give us a call at 01622 738165 today to get some advice about setting next year’s dividend level and what you can do to make sure you are moving forward as tax efficiently as possible.

Watch out- increase in employer’s NI

sean@rustrick.co.uk (Sean Rustrick) — Thu, 06 Mar 2025 08:00:00 GMT

Watch out- increase in employer’s NI

From the 6th April 2025, there will be an increase in employers’ NI. But how can we help you navigate the changes as tax efficiently as possible?

Class 1 NI is payable by both employees and employers on earnings. For employees, the Class 1 NI contributions earn them a qualifying year of state pension and contributory benefits. In the latest Budget, we can confirm that there will be no changes to the primary Class 1 rates, threshold or upper earnings limit until the 6th April 2028.

For 2025/26, employees will pay primary contributions at the rate of 8% on earnings between £242 and £967 per week and at the rate of 2% on any earnings above this.

The lower earnings limit will increase to £125 per week. If you fall under this threshold you will not be liable to pay the primary Class 1 NI contributions but treated as though you have paid at a zero rate, therefore still qualifying for a year of state pension and benefits!

However, employers were not so lucky! From the 6th April 2025, the secondary Class 1 rate will increase by 1.2% to 15% and the secondary threshold will fall from £9,100 to £5,000 per year.

The Class 1A and Class 1B rates are also rising to 15% for 2025/265, increasing the cost to an employer of providing employees with taxable benefits or meeting a tax liability on their behalf by means of a PAYE settlement agreement.

To try and reduce the impact of the increases, you could look into hiring more employees that are under the age of 21 or veterans that have just left the armed forces so they can take advantage of the upper secondary thresholds (and only pay secondary contributions on earnings over £50,270). You could also look into hiring more part-time employees and less full-time employees as this increases the number of secondary thresholds available where no contributions are payable.

As you can see, this may get very complex for individual situations. Give us a call today on 01622 738165 and we can formulate a plan for you to make sure you are getting the most out of your business.

Solvent Liquidation

sean@rustrick.co.uk (Sean Rustrick) — Mon, 03 Mar 2025 08:00:00 GMT

This is a subtitle for your new post

The recent Budget Announcements included changes to CGT (Capital Gains Tax) and BADR (Business Asset Disposal Relief) that was not great news for anyone closing down a business.. Unfortunately these changes were not what we wanted to hear in regards to anyone seeking an exit in the future in as tax efficient manner as possible.

If you are considering closing down your company by using a solvent liquidation/MVL (members/shareholders voluntary liquidation) you need to pay attention to the timeframes.

1. First of all, time will be needed to prepare the final full set of accounts for the directors to then settle with all creditors prior to liquidation. So the earlier the better!

2. When the company is (hopefully!) in the position of only having cash and no creditors, an MVL can be effected quite quickly.

3. When the company is officially in liquidation, a notice must be advertised to creditors for 21 days before a distribution to shareholders is allowed.

This means that any shareholders that need distribution before the 5th April must have their company in formal liquidation by the end of February at the latest. Formal liquidation means that there has been a board meeting and shareholder resolutions passed- just a signed engagement letter is not enough!

If you are considering solvent liquidation/MVL, get in touch today and we can talk you through the steps and put you in contact with some great liquidators that we work with and ensure that it is all completed by April 5th. Give us a call on 01622 738165 and the team here will gladly chat through an issues

Companies House update

sean@rustrick.co.uk (Sean Rustrick) — Fri, 31 Jan 2025 08:00:00 GMT

The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

Email Etiquette

sean@rustrick.co.uk (Sean Rustrick) — Tue, 28 Jan 2025 13:54:23 GMT

Email Etiquette

What you write in your emails and how you write them really makes a difference! According to industry findings, these are the top ten most disliked email habits;

1. CC’ing people in unnecessarily

2. Long-winded emails

3. Using slang terms

4. Spelling mistakes/ no proofreading

5. Marking emails as “urgent” when they are not

6. Swearing

7. Poor grammar

8. Using emoticons

9. Passive aggressive language

10. Gossiping

Whilst the top ten friendliest email sign-offs are;

1. Have a great day!

2. Many thanks

3. Best wishes

4. Cheers

5. Thanks/Thanks again

6. Warm regards

7. All the best

8. Let’s catch up soon

9. Best Regards

10. See you soon

Avoid using tara/tata, sent from iPhone, may the Force be with you, to infinity and beyond and take it easy when signing off emails!

So, when writing emails remember to keep it professional and succinct, avoid jargon, slang and emoticons and always proofread for any spelling mistakes. You can never underestimate the power of a professional, well-worded email when contacting new and existing clients!

Autumn Budget 2024 - Update

sean@rustrick.co.uk (Sean Rustrick) — Tue, 26 Nov 2024 09:10:58 GMT

The Chancellor delivered her Autumn budget on Wednesday which included the following key tax announcements:

Taxation

• Rates of income tax and national insurance paid by employees to remain unchanged

• Income tax band thresholds to rise in line with inflation after 2028

• Basic rate capital gains tax to increase from 10% to 18% and higher rate to increase from 20% to 24% (second property capital gains tax rate to stay at 24%)

• Inheritance tax thresholds freeze to be extended for a further two years to 2030

• Minimum wage for over 21s to rise from £11.44 to £12.21 per hour

• Minimum wage for 18-20 year olds to rise from £8.60 to £10.00

Business

• From April employer’s national insurance rate to increase from 13.8% to 15% and the secondary threshold when these contributions are due will reduce from £9,100 to £5,000

• The employment allowance for small businesses will increase from £5,000 to £10,500

• The main rate of corporation tax, paid by business on taxable profits over £250,000 to stay at 25%

Indirect Tax and Duties

• 5p cut in fuel duty to be extended by a year to April 2026

• Stamp duty surcharge, paid on second home purchases, to go up from 3% to 5%

• Single bus fares cap to increase from £2 to £3 from January

• Tax on tobacco to increase by 2% above inflation and 10% above inflation for hand-rolling tobacco

• New tax of £2.20 per 10ml of vaping liquid to be introduced from October 2026

As always, if you require more information or want to talk about how this budget may affect you or your business, please just give us a call.

How to get YOUR tax refund

sean@rustrick.co.uk (Sean Rustrick) — Mon, 18 Nov 2024 10:00:01 GMT

Each year, HMRC reviews the income and tax paid by employees and pensioners who don’t need to file a self-assessment tax return. If you’ve overpaid or underpaid, they’ll send you a P800 letter or a Simple Assessment.

Remember- refunds are no longer automatic! So you now need to take action to claim your refund. But don’t worry—if you don’t claim right away, the refund will remain on your tax record until you do. It won’t be lost!

It is very easy to claim and receive your refund, just:

• Log in to your personal tax account

• Use the online bank transfer service

• Access the HMRC app

• Contact HMRC to request a cheque

If you claim online, your refund will arrive within 5 working days. If you need help claiming, get in contact with the team on 01622 738165 and we can do that for you today! Make sure to stay on top of your tax affairs and claim what’s owed to you!

New IHT rules benefit British Expats

sean@rustrick.co.uk (Sean Rustrick) — Tue, 29 Oct 2024 16:48:54 GMT

Inheritance tax (IHT) applies to your estate if you reside in the UK. You are considered to reside here even if you live abroad but have strong ties to the UK.

However, from 6th April 2025, where you reside will be more closely linked to your country of tax residence. So, even if a UK expat considers their permanent home to be the UK, they might be seen as residing overseas. Therefore, part or all of the estate may fall outside of IHT!

If you reside outside the UK, current rules state that for IHT purposes you may be considered as residing in the UK if you have been a tax resident in the UK for 15 or more years out of the last 20. Therefore, you will have to move abroad for long enough to be considered as a non-UK resident for tax purposes!

But from April 2025 where you reside will not define if your estate is subject to IHT. Instead, if you have been a resident in the UK for 10+ years, your estate (including worldwide assets) will be within the scope of IHT. If you are a resident abroad and your estate is ruled by both UK and the other country’s IHT, a double tax treaty may reduce/eliminate the UK IHT on foreign assets. So the key to escaping the IHT net will be establishing ten years as a non-UK resident!

If you haven’t been a resident for UK tax purposes for at least 10 years on the 6th April 2025, you can return to the UK for a further ten years without your estate coming into the IHT net, but your UK assets will remain liable so to reduce IHT, consider moving your assets out of the UK!

Like always, the Rustrick Accountants team are here to help for any and all tax queries. Give them a call today on 01622 738165 and they will be able to advise on the best plan of action for you!

New Student Loan Thresholds!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 29 Oct 2024 16:41:50 GMT

The earnings thresholds for student loan repayment increases in April 2025 for Plan 1 and Plan 2 for undergraduate loans in England, Wales and Northern Ireland. Like usual, this will be automatically added to your employee’s pay when the payroll software is updated in 2025.

The change for Plan 1; £26,065 (£2172.08 per month, £501.25 per week)
The change for Plan 2; £28,470 (£2,372.50 per month, £547.50 per week)

There will be no change to the repayment rate (which is currently at 9% of earnings in excess of your plan threshold).

If you have savings and investment income that exceeds £2,000 in a tax year, you must take this into consideration when calculating your loan repayments.

You must also inform HMRC on your self-assessment tax return.

If you think that you will be affected by this change, get in touch with the team at Rustrick Accountants on 01622 738165 and we will help you out today!

Navigating VAT Across Borders?

sean@rustrick.co.uk (Sean Rustrick) — Wed, 16 Oct 2024 09:44:53 GMT

Are you a UK-based business providing services to EU clients? Confused about VAT registration and compliance? �� Don’t worry! Discover how the reverse charge mechanism works and what it means for your VAT obligations in our latest blog. From invoice requirements to VAT thresholds, we’ve got you covered.

Simplify VAT Compliance for Your EU Clients with These Key Insights

At Rustrick Accountants Limited, we’re dedicated to being your trusted experts for all things accounting and tax related. Our mission is to make VAT and tax compliance straightforward, so you can focus on what matters most growing your business.

VAT Registration and Compliance: Essential Tips for UK Businesses

If you’re a UK-based business providing services to clients across the EU, understanding your VAT obligations is crucial. Here’s what you need to know when dealing with EU clients:

B2B Services (Business-to-Business)

When providing services to an EU company (B2B), the reverse charge mechanism generally applies. Here’s how it works:

No VAT Charge: You do not need to charge VAT on your services. Instead, the EU company (your client) is responsible for accounting for the VAT in their country.
No Need for EU VAT Registration: Typically, you don’t need to register for VAT in the EU. However, you must include a statement on your invoice indicating that the reverse charge mechanism applies. Ensure your invoice includes your UK VAT number (if applicable) and the VAT number of your EU client.
Conclusion: Whether you’re a UK-based self-employed professional or a limited company supplying services to an EU company, you don’t need to worry about VAT registration in the EU. The EU company will handle the VAT via the reverse charge mechanism. Just make sure your invoices are correctly formatted and that you comply with any UK VAT requirements.

Outside the Scope Sales

It’s also important to note that sales to your EU clients are "outside the scope" of UK VAT, so they don’t count towards the £85,000 threshold for VAT registration. However, any other UK-based sales within the scope of VAT will contribute to this threshold.

Why Partner with Rustrick Accountants Limited?

Navigating VAT regulations can be complex, especially with cross-border transactions. That’s where we come in. At Rustrick Accountants Limited, we provide expert advice and hands-on support to ensure your business remains compliant without the stress.

Are you considering MVL (Member Voluntary Liquidations)?

sean@rustrick.co.uk (Sean Rustrick) — Wed, 16 Oct 2024 09:39:59 GMT

There will be a new Budget on the 30th October 2024 and there is an anticipation of Capital Gains Tax rates increasing. This will mean that there will be an increase in voluntary liquidation. We are hoping that any changes made by the Budget will not take effect until the new tax year, but it is much better to be prepared now!

Why would you consider MVL? Usually, it is used where a successful business owner intends to close a company to gain the benefit of a capital distribution from a liquidator and, often, Business Asset Disposal Relief too.

If you feel like MVL would be beneficial for your business, then consider these points:

- Your accountants will need time to prepare the final full set of accountants and then the directors will need to settle all creditors before liquidation.

- When the company is in liquidation, you must advertise a notice to creditors for a minimum of 21 days before making a distribution to shareholders

- MVL will be implemented quickly only if the company has no creditors and only cash!

As you can see, it does take some time, so start thinking about it today and get in contact with us now to talk through the procedure and first steps.

If you want your shareholder distribution to be made before the new Budget, the formal liquidation needs to be started by Friday 27th September.

Of course, the Budget has not been announced yet and it is inevitable there will be delays so nothing is set in stone, but it is essential that we get the ball rolling to make the procedure as stress-free as possible!

Give us a call on 01622 738165 and talk to one of the team at Rustrick Accountants who will be more than happy to talk you through the steps and whether MVL would be beneficial for you!

Personalised Number Plates: VAT

sean@rustrick.co.uk (Sean Rustrick) — Wed, 16 Oct 2024 09:26:36 GMT

Have you bought a personalised number plate?

Did it include VAT?

Will it be promoting your business?

Unlike VAT with cars, you can reclaim VAT for personal registration numbers! But the number plate must be used for business purposes and linked to making VAT-able sales.

Of course, there is no stated definition of “business purposes”, so it will always be down to a court’s opinion. Generally, business purposes are something more than just being commercially beneficial. There must be a direct and immediate connection between the core activity and the expenditure.

The most effective argument to justify reclaiming VAT is where the registration number advertises your business. This means that anyone on any street would be able to associate the number plate with your business’ trading name.

To reclaim the VAT, you must own the rights to the registration, and it must be recorded as a business asset (if you paid for it personally, the business should reimburse you!)

HMRC will consider each case individually, so get in contact if you want some advice or more information about reclaiming the VAT on 01622 738165 and talk to team Rustrick today!

Leaky loos losing you money?

sean@rustrick.co.uk (Sean Rustrick) — Wed, 16 Oct 2024 09:22:30 GMT

95% of businesses are throwing money down the drain when it comes to utility bills- and water bills make up the majority of this!

Did you know that an average person uses 1,000 litres per week? So, when you think about a whole business and how much water it would use, you can see how the money adds up!

Thames Water suggests that up to 25% of water supplied to business customers could be leaks. When Thames Water visited businesses, it found that the average leaky loo in business properties loses over 2,000 litres per day and uncontrolled urinals lose approximately 1,800 litres per day! The cause of the leak is usually the mechanical flush valve- seal degradation, faulty fill valves and faulty dual flush valves. A leak needs to develop to 300 litres per day before it is visible, audible or leads to higher bills. This means that 215 to 400 litres of clean drinking water is wasted per toilet every day.

What should you do today? Put a sheet of toilet paper on the back of the bowl (above the water) and if it gets wet then you might have a leak! If you can find the cause of the leak, fix it straightaway as it will be costing you money right now! Many water companies will come and fix leaky loos for free!!

Toilets are not the only area to look at when it comes to saving water. Start by asking yourself: do you know how much water you are currently using? Do you know how much this is costing you? If you can work out what your expenditure is, we can help you figure out how to cut that number down! Just give us a call on 01622 738165 and talk to the team today to find out more!

Autumn 2024 Newsletter

sean@rustrick.co.uk (Sean Rustrick) — Wed, 16 Oct 2024 09:13:50 GMT

Trouble viewing file? Download it here instead.

Capital Contribution can Reduce the Company Car Tax

sean@rustrick.co.uk (Sean Rustrick) — Tue, 27 Aug 2024 08:00:01 GMT

The more expensive your company car is, and the higher its CO2 emissions, the greater the tax bill is for you and the NI bill is for your company. To reduce both bills you can contribute to the car purchase- remember, the higher the tax and NI, the greater the savings. The maximum contribution that affects the tax and NI payable on a company car is £5,000 (anything higher will not have an effect!).

You can borrow up to £5,000 interest free from your company to contribute to this payment. After three years, if your company sells the car and uses the proceeds to reduce the loan and write off the balance. So, for a car that costs £40,000 the net tax and NI saving is more than £1,000!

To find out more information and to see how we can save you money get in contact today on 01622738165!

HMRC is hiding an IHT exemption from you!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 20 Aug 2024 08:00:00 GMT

Did you know that you can make gifts during your lifetime that can affect the inheritance tax (IHT) payable on death? The rule is; gifts by one individual to another during the seven years before they die become liable to IHT.

Completing IHT forms requires executors to look through the deceased’s financial records for at least seven years before the death to look for gifts. These are then recorded on the IHT forms, specifically the IHT403.

On the IHT403, HMRC states “Do not tell us about any gifts where the total value was £3,000 or less in any tax year, small amounts of £250 or less”, however if cash gifts of £3,000 or less are ignored, then the “normal expenditure out of income” exemption will be overlooked (This exemption must be “normal expenditure” which means that it must be gifts that form a pattern over multiple years). This means that HMRC will be demanding IHT that it wasn’t entitled to!

This can get quite confusing, let us look over your IHT form or set up a plan to ensure you get the “normal expenditure out of income” exemption! Give us a call on 01622 738165 today!

Illegal Dividends

sean@rustrick.co.uk (Sean Rustrick) — Tue, 13 Aug 2024 08:00:01 GMT

Dividends are paid to shareholders from the current year profits (usually!). According to the Companies Act 2006, dividends can only be paid from distributable profits. When a company pays dividends without sufficient profits, this makes them illegal dividends.

Any director authorising illegal dividends will have to repay the dividends as well as any shareholders who knew or suspected those dividends were illegal.

Previously, HMRC argued that unlawful dividends were salary payments (because this meant greater tax liability!) but now, HMRC are more willing to treat them as director’s loans.

The unlawful dividends must be attributed proportionally to each shareholder and recorded as a loan in the company’s records. Shareholders must repay the loans (but there is no specified deadline!). However, if the loan is not repaid within nine months after the company’s accounting period ends, the company will face a corporation tax charge of 33.75% on the outstanding amount.

If a single shareholder owes the company more than £10,000 (including any other amounts owed) a taxable benefit in kind applies. It is also possible to waive the outstanding loan to avoid any illegal dividends, but this may lead to taxable consequences!

To find out more and to avoid the chance of illegal dividends, get in contact today on 01622 738165 and the team will be more than happy to help!

Incorporating your business- don't forget property tax!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 06 Aug 2024 08:00:00 GMT

Are you a sole trader? Did you know that you can save income tax by transferring your business to a company? But watch out- this will trigger other taxes!

A sole trader can transfer their business to a company, this is called incorporating. This will save you income tax but may trigger capital gains tax (CGT). To get over this hurdle you can make a special CGT claim.

If you transfer land/buildings to a private company (which you own/control a significant chunk of), the share capital is seen as if it were a sale at market value with your company as the buyer. This means that it is liable to SDLT (Stamp Duty Land Tax) if the value exceeds the nil rate band. A simple solution to this would be to not transfer the property and instead keep personal ownership (in the future this may mean you miss out on tax savings though!).

Did you know that there is also a clause within the SDLT rules which allows a partnership which transfers land/buildings to a company to escape SDLT? This works by reducing the amount chargeable to SDLT in proportion with the partners connection with the company. So, if the partner owns or is connected to 50% of the company, then 50% will not be subjected to SDLT. Spouses, civil partners and close family are classed as connected persons, so if a married couple are in partnership and property is transferred to a company, only one of them needs to be connected to obtain this SDLT relief.

Get in contact today and we can talk through the rules and guidelines when it comes to SDLT as HMRC can be quite strict! Give us a call on 01622 738165 today!

Summer 2024 Newsletter

Thu, 01 Aug 2024 08:23:42 GMT

Trouble viewing file? Download it here instead.

How to protect against insider fraud

sean@rustrick.co.uk (Sean Rustrick) — Tue, 30 Jul 2024 08:00:02 GMT

Did you know that in 2023 embezzlement (by managers or employees) was the most common type of fraud?

Insider fraud can take many forms such as generating/paying false claims, payroll or invoices, falsifying timesheets and forging documents. But how do you spot this? Employee behaviours to watch out for are:

- Working excessive hours at unusual times of the day (when the office is empty!)

- Not taking annual leave (they don’t want others covering their work in their absence)

- Introducing overly complicated working practices (such as for invoicing)

- Hiding what they are doing from other staff

- Living beyond their means (having an expensive car etc)

- Personality changes (more secretive or anxious)

To minimise the opportunity for fraud, put set procedures and controls into place such as:

- Authorisation for transactions

- Separate duties (ensure 1+ employees handle key financial tasks)

- Independently monitor data and documents

- Conduct regular audits

- Put a reporting procedure in place for anyone who is suspecting fraud

If you suspect fraud is taking place, act quickly to investigate the matter. Preserve evidence and do not rule out third parties that may be involved. Evoke disciplinary procedures and report suspected fraud to the police. Remember you can dismiss any employee for gross misconduct based on any evidence you do have available; even if they say “no comment” at any disciplinary hearing.

Home-To-Work Travel

sean@rustrick.co.uk (Sean Rustrick) — Tue, 23 Jul 2024 08:00:00 GMT

Is your home your workplace? Will this affect your right to tax relief?

Travel costs are not tax deductible if they are for an ordinary commute between home and a permanent workplace (usually your employer’s premises!). But travelling between home and a temporary place of work (e.g. a customer’s premises) would be tax deductible!

HMRC are now saying that there are some circumstances when travel could be deductible from one workplace to another (e.g. from your home to your employer’s workplace).

What matters is whether you’re required by your employer to work at home!

So, if an employer agrees to you working from home some of the time, make sure it is written into the contract that you will receive tax relief when travelling between workplaces!

New form for property gains!

sean@rustrick.co.uk (Sean Rustrick) — Mon, 15 Jul 2024 08:00:01 GMT

If you make a capital gain from either a sale or transfer of a UK property on which tax is payable, you MUST declare it to HMRC and pay the tax within 60 DAYS from the completion of the sale/transfer.

To declare it to HMRC, there is a new form available from HMRC’s website. This means that it can be filled out online before printing and sending to HMRC. But watch out- HMRC say this paper form should only be used in certain situations, otherwise we can help you create an online capital gains tax account.

Just give us a call on 01622 738165 and we can get that sorted today!

HMRC could be running out of time for tax enquiries!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 09 Jul 2024 08:00:00 GMT

When it comes to self-assessment tax returns, HMRC tends to be “process now, check later”; so, they assume that it is correct, but they reserve the right to later make enquiries about it! There is a deadline for taxpayers to amend their tax returns or HMRC to start an investigation.

For personal tax returns HMRC must deliver an enquiry notice within 12 months from the filing date of the return (usually, the filing date will be 31 ^st January!). If you submit your tax return after the normal filing date (or submit on time and amend later) the enquiry deadline is extended to the next quarter-end date (31 ^st January, 30 ^th April, 31 ^st July and 31 ^st October).

For companies, a notice of enquiry must be delivered within 12 months from the normal filing date of a corporation tax (CT) return (the normal filing date is twelve months from the end of your company’s accounting period). Like the personal tax returns, this deadline is extended for late or amended returns (e.g if a return wasn’t submitted until 10 ^th May 2025, HMRC has until 31 ^st July 2026 in which to start an enquiry).

However, if HMRC miss the enquiry deadline, they have a secret weapon to use called “discovery rules”. These rules mean that they can make a limited enquiry into your or your company’s tax affairs. If they suspect that tax has been underpaid (due to carelessness or by deliberate action) and they could not have been expected to be aware of the circumstances by the time the enquiry deadline has passed, HMRC will also issue a discovery assessment.

This assessment is usually up to 4 years from the end of the tax year in which the underpayment occurred, or the assessment was used. This will be extended to 6 years if the error/omission from your tax return was deliberate and to 20 years if it was deliberate and you tried to hide the error.

Personal Expenses should be tax efficient!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 09 Jul 2024 08:00:00 GMT

HMRC does not like when company owners dip into their companies’ bank accounts whenever they feel like it to pay for anything personal. However, according to tax and company law, there is nothing wrong with it! HMRC objects because they believe that it is difficult to spot unruly individuals and fraud transactions. Therefore, you must ensure that you are properly recording each transaction (stating whether it is a personal/company bill) and any tax/NI consequences are dealt with correctly.

When the company pays a personal bill, it counts as earnings and so is taxable like a salary and PAYE tax and Class 1 NI is payable. However, the company must account it to HMRC for tax and NI if the amount was net salary paid to you. This can get tricky, and it may be more tax-efficient to use dividends- if you are unsure how this works, we can walk you through it!

Tax and NI can be entirely avoided if the company paid the bill but treated it as a loan to the individual. But remember ultimately the loan would have to be repaid, or written off, and this may only be possible with an extra salary or dividend to clear the loan. This can trigger similar tax/NI liabilities!

In certain situations, there are options that are tax and NI free, and we can help you figure that out! Give us a call on 01622738165 for a quick chat and we can sort it out for you!

Working and Resting: What are the rules?

sean@rustrick.co.uk (Sean Rustrick) — Thu, 04 Jul 2024 11:00:00 GMT

The Working Time Regulations 1998 (WTR) limit an employee’s working hours to provide them with a break. Self-employed individuals aren’t covered by the WTR and some workers may be completely excluded from the WTR whilst others are excluded from specific rights. The rules also change if the employee is an adult or young worker (above minimum school leaving age but still under 18).

Working time means any period of time when the worker is carrying out their duties for their employer. This doesn’t include time spent on a call away from the workplace or the commute to and from work.

An employer must take all the reasonable steps to ensure that a worker does not work (including overtime) more than 48 hours a week on average. This average is calculated over a rolling 17-week reference period, so technically an individual can work more than 48 hours as long as they consistently do not do this! Employees can opt out of the 48-hour limit by voluntarily signing an opt-out agreement- but they have a right to cancel it at any point.

Employers must take all reasonable steps to ensure a night worker (someone who works 3 hours between 11pm and 6am) must not exceed an average of 8 hours a day, again, on that rolling 17- week reference period. Night workers must not undertake work that involves special hazards or physical/mental strain for more than 8 hours in a day during which they perform night work. Night workers are also entitled to a free health assessment before they start night work and at regular intervals afterwards.

Workers are entitled to:

- 11 hours of uninterrupted rest per day

- 24 hours uninterrupted rest per week (or 48 hours per fortnight)

- a rest break of at least 20 minutes when working more than 6 hours per day (not at the start or end of the day!)

- if the work is monotonous, employees must have adequate rest breaks!

As always, get in contact with Rustrick Accountants to talk things through on 01622 738165 today!

When and why should you opt to tax a property?

sean@rustrick.co.uk (Sean Rustrick) — Tue, 02 Jul 2024 08:00:00 GMT

Since the 1980s, an EU ruling has overridden UK VAT rules. This means that you must charge VAT when you make property supplies (e.g charge rent) if you choose to opt to tax a property.

But why would you opt to tax a property?

Unless your property is new (less than 3 years since construction), any supplies (letting/selling) are VAT exempt. If opting just meant there was an obligation to add VAT to rent etc it would be pointless.

However, opting also allows you to reclaim VAT paid on maintenance repairs and improvement costs. Therefore, you only need to consider opting to tax property if you intend to make supplies of it (letting etc).

How would you opt?

Usually, you don’t need permission from HMRC to opt to tax a property but, like most things, there are exceptions. You need permission to opt if there has been an exempt supply of the property to prevent an unfair VAT advantage.

In all other cases all you need to do is record when the option was made in your records and notify HMRC- we can do that for you today!

If you need help figuring out if you are exempt or if you need permission from HMRC, get in contact with us on 01622 738165.

What's new at Companies House?

sean@rustrick.co.uk (Sean Rustrick) — Thu, 27 Jun 2024 11:00:03 GMT

Recently there have been reforms to do with Companies House (CH) to improve the reliability of the Register of Companies and help combat fraud.

From the 4 ^th March, the Economic Crime and Corporate Transparency Act 2023 has started to be introduced in phases. This gives CH the power to investigate the Register of Companies and clamp down on shady businesses. This has all come about due to hundreds of false fillings of Form MR04 (used to show that a debt has been fulfilled).

CH can now query, annotate and remove information that appears to be misleading, inconsistent or inappropriate on the Register. They have also made administrative changes in terms of paper filings (they can only be sent to Cardiff now!) and all documents must now be authenticated with a printed name or signature.

A company’s registered office address must now be one at which the receipt of a document can be acknowledged and passed on to the person acting for the company. This means a PO box is no longer acceptable! If you do currently have a PO box, talk to us about changing the address to Rustrick Accountants, if you do not then the address will automatically be changed to CH’s address, and you may be fined.

Companies will also now have to register an email address; you must include this on your next confirmation statement!

Companies cannot be incorporated for an unlawful purpose therefore they are now obliged to include a statement of lawful purpose in their incorporation applications from the 5 ^th March.

CH can now also refuse to register names with a criminal purpose, that contain computer codes or suggest a link with a foreign government or similar body. CH will now direct a company to change a name if it does breach this policy or refuse to reregister the company.

Now is the right time to update your CH file (if necessary!) before the rise in fees on 1 ^st May. If you think you may need to change anything, just get in touch with us on 01622 738165 and we can walk you through the steps!

How to create a tax efficient home office

sean@rustrick.co.uk (Sean Rustrick) — Tue, 25 Jun 2024 08:00:00 GMT

Have you got a cabin in your garden?

Are you thinking of using it as a home office?

Will you and your family also use it for private purposes?

Will it be more tax efficient for you or your company to pay for it?

Your company may provide you with assets such as a computer (or a garden office!) for the purpose of working from home. It will not be a taxable benefit if there is minimal private use, however, if there is significant private use, it will be a taxable benefit.

But what will the taxable amount be? Well, this depends on 2 factors; the cost of providing the asset and any additional expenses (maintenance etc). For example, you have a garden office which costs £25,000 to install. The taxable benefit is 20% a year, so £5,000 each year. If it is used for 15 years (15 x £5,000) you will be taxed on £75,000! Your company may also be paying Class 1A NI on the same amount, so if you are a higher rate taxpayer for the 15 years (and assuming tax/NI rates stay the same!) the tax and NI cost would be £40,350 ((£75,000 x 40%) + (£75,000 x 13.8%)).

But remember, if the garden office was rented or leased, the taxable benefit will not be 20% of its cost but the amount of rent paid. It doesn’t matter how many days you use it- this will not reduce the taxable benefit!

Rather than make an asset (garden office) available to a director or employee for long-term use, the NI cost can be reduced if a dividend is paid. Therefore, it would be more tax and NI-efficient to pay a dividend to enable the purchase!

When do you need reverse charges on VAT returns?

sean@rustrick.co.uk (Sean Rustrick) — Tue, 18 Jun 2024 08:00:00 GMT

A reverse charge means that customers will account for VAT on your sales instead of your business (the supplier!) and vice versa.

This helps prevent fraud (there have been cases when a supplier has charged 20% VAT then have disappeared without declaring tax to HMRC!).

It also helps reduce administration (e.g. overseas suppliers don’t have to register for UK VAT).

If you buy services from abroad, you must account for reverse charge on your tax return (based on the VAT rate that applies to the service under UK law- usually 20%). This is how you would write it in your return:

Box 1 (output tax) - usually at 20% of the invoice value
Box 4 (input tax) - the same as Box 1, unless your business has an input tax restriction with partial exemption
Box 6 (outputs) and Box 7 (inputs) - based on the net value of the invoice issued by your overseas supplier.

If your business imports goods you should elect for postponed VAT accounting. This means that you will not be charged VAT by HMRC (at the time of import), but you will carry out a reverse charge calculation on your next return.

In certain industries the reverse charge will sometimes apply to business-to-business sales and purchases. This includes the building industry, mobile phones and computer chips (if the sale value exceeds £5,000 excluding VAT), wholesale gas and electricity, emissions allowances and renewable energy certificates.

Get in contact with us today and we can tell you exactly when and how the reverse charge applies in each case!

Pension Age and NI contributions

sean@rustrick.co.uk (Sean Rustrick) — Thu, 13 Jun 2024 11:00:02 GMT

One of your employees is about to reach state pension age but has decided to postpone their retirement. How would this affect National Insurance contributions (NICs)?

There is no default retirement age anymore (it used to be 65!) therefore no employer can force their employees to retire. All employees are entitled to choose when they retire (they do not have to reach state pension age!) but the state pension age is the earliest age at which they will start receiving their state pension.

Currently state pension age is 66 for all individuals but it is scheduled to rise to 67 between 2026 and 2028. Once they reach state pension age, they no longer have to pay Class 1 and Class 2 NICs so an employer must stop deducting them from their pay. This doesn’t happen automatically; the employee’s NI category letter must be updated to “C” in the payroll software.

To start this process, get your employees to show you either their birth certificate, passport or a letter from HMRC to prove that they have reached state pension age.

However, employers must continue to pay employers’ NI on the earnings of an employee who has reached state pension age. The employers’ NI liability remains whatever the employee’s age. If employees continue working past state pension age, they qualify for that benefit and will receive their salary AND their state pension.

Remember, if your salary and state pension together exceed your annual tax-free allowance you will have a personal income tax liability. Get in contact with us on 01622 738165 if you think you will be affected by anything!

Have you underclaimed expenses?

sean@rustrick.co.uk (Sean Rustrick) — Wed, 12 Jun 2024 11:00:02 GMT

Did you know that in 2022/23 HMRC sent a letter to taxpayers that state that upgrading a boiler would not be a deductible expense for tax purposes?

Now they are admitting that this was wrong!

They were previously implying that upgrading a boiler would be an improvement not a repair (as a property letting expense) therefore is a capital expense. But now they have admitted this was a mistake and that it would be a repair and so would be a deductible expense!

So, if you haven’t claimed the cost of a replacement boiler, you could be owed a tax refund and you need to take action . Get in contact with us on 01622 738165 and we can get that done for you today!

Digital NI Payment Service

sean@rustrick.co.uk (Sean Rustrick) — Tue, 11 Jun 2024 07:45:00 GMT

Did you know that gaps in your national insurance (NI) could affect your State Pension?

Luckily, HMRC and the government have launched a digital service called “Check your State Pension forecast”. It works by giving an overview of an individual’s potential State Pension benefits.

All you must do is log in with your Personal Tax Account details on GOV.UK or the HMRC app.

This will allow access to personalised information including any gaps in your NI record!

If there are any gaps, the service will be able to offer details of voluntary NI contributions that they can make which will fill these gaps and could even increase your State Pension when you retire!

So, if you haven’t started receiving your State Pension you have until 5 ^th April 2025 to register for this service and fill any gaps in your NI record (between 6 ^th April 2006 and 5 ^th April 2018).

After 5 ^th April 2025 you will only be able to contribute to your NI gaps from the previous 6 tax years. The service isn’t limited to just UK residents, anyone living abroad is also able to take advantage of this service to fill in the gaps in their NI record for the time they lived in the UK!

Get in contact with Rustrick Accountants today if you want to find out more or want help registering! 01622 738165!

Budget announcements affecting YOUR business

sean@rustrick.co.uk (Sean Rustrick) — Mon, 10 Jun 2024 11:02:16 GMT

Most of the announcements in the recent Budget affect individuals, but there were still some hidden changes for businesses!

VAT Limits: The VAT registration/deregistration limits have changed. From 1 ^st April 2024 the registration limit will increase to £90,000 and the deregistration limit increases to £88,000.
VAT and Taxis: if the taxi/mini cab firm acts as the agent for their drivers then they will now have to charge VAT on fares. However, this could still change!
Capital Allowances: Corporation tax deductions will be permanent for full expensing and the 50% first year allowance for the purchase of new equipment. In due course this will also apply to leasing companies.
SME Loan Scheme: The Recovery Loan Scheme, which offers 70% government guarantee on loans to SMEs (small/medium enterprises) has been renamed to the Growth Guarantee Scheme. It was also be extended until 31 ^st March 2026.
Business Rates: There will be changes to business rates to prevent the unfair use of the Empty Property Relief (EPR) by landlords of commercial properties. If you are a landlord and you have a vacant property, remember to check your eligibility for EPR under the new rules- if you aren’t sure just give us a call!

Remember, you can remain VAT registered even if your turnover falls below the deregistration limit (£88,000)- this may be to your advantage! Come to the office or give us a call if you want to chat about it and see what is best for you! 01622 738165

Are you a digital hoarder?

sean@rustrick.co.uk (Sean Rustrick) — Mon, 03 Jun 2024 14:44:09 GMT

Do you keep too many digital files?

Do you have messy folders?

Are you convinced that you might need them later?

If you answered yes, then you could be a digital hoarder! Keeping too many folders without organising them can lead to many problems, not just with finding things quickly but also with keeping important information (such as sensitive information about other people!) safe. It can also slow down the device and decreases efficiency and productivity.

So, what can you do? The easiest solution would be to use a cloud-based software including bookkeeping software, practice management software and payroll systems. They use centralised storage to organise documents and data and have automated organisation to tidy things without extra effort. It also means you can access your files from anywhere at any time and duplicate files are removed.

Under the UK GDPR guidelines there is no requirement about how long you must keep clients’ data. However, you must justify holding data based on its purpose. This means you should delete any data that is no longer required. If a customer requests that their data be deleted, you must comply asap!

Are overseas business trips with your family taxable?

sean@rustrick.co.uk (Sean Rustrick) — Fri, 26 Apr 2024 09:00:00 GMT

You’re going on a business trip and bringing your family along so they can holiday at the same time. Can you claim expenses through your company and are there any tax considerations?

The short answer is ‘yes’, the company can reimburse the cost of the trip for everyone, but it may not be tax efficient to do so.

Taxi Fares - If the fare to and from the airport is the same regardless of how many people are in the taxi, then it can be included as a corporation tax (CT) deductible expense without further tax or NI issues. If the fare is per passenger, it can still be tax deductible but there will be income tax and NI charges for the additional fare charged for the family. If the company pays the fares directly it is taxable as a benefit in kind. If the employee pays the fare and the company reimburses them, PAYE tax and NI will be applied to the reimbursement.

You can avoid the income tax and NI charges for the family if the travel expenses are recorded as a personal expense rather than including it in the firm’s profit and loss account. You can debit it to the directors' loan account (DLA)!

Flights - CT, income tax and NI rules apply just like the taxi fare.

Hotel and Living expenses - Once again, the same tax rules apply. If they can be specifically attributed to each person then the costs are deductible for CT purposes for the employee and the family can avoid tax and NI if it is recorded as a personal expense.

If there’s no extra cost for a family member/spouse or person accompanying you on a business trip, the whole cost is deductible for CT purposes and there are no other tax/NI charges to consider!

No more “Furnished Holiday Lets” Tax Regime!

sean@rustrick.co.uk (Sean Rustrick) — Wed, 24 Apr 2024 09:00:00 GMT

In the Spring 2024 budget it was announced that the furnished holiday lettings (FHL) tax regime will be abolished. This is to remove the tax advantage for landlords who let short term furnished holiday properties (compared to those who let out residential properties to long term tenants). Those operating furnished holiday lets as part of their business will be significantly impacted.

Whilst no legislation has be published yet, we can expect that by removing the FHL tax regime:

Business asset disposal relief (BADR) (allowing the sale of a qualified property to be taxed at 10% rather than 28%) will no longer be available so capital gains tax (CGT) will be payable at a higher tax rate from 6 ^th April 2025.
Residential CGT will fall to 24% from 28% from 6 ^th April 2024 for higher rate taxpayers.
Business asset rollover relief (gains made on the sale of an FHL property can be deferred if the proceeds are reinvested in another asset) will be abolished from 6 ^th April 2025.
Gift hold-over relief (allowing a gain made on gifting an FHL property to be held over will- currently, a property which has been used as qualifying FHL throughout ownership can be gifted with no CGT payable) will no longer be available from 6 ^th April 2025.
The capital allowances given to FHLs owners for fixtures and furniture may not be available.

There has been a suggested “brightline” test to provide tax relief where property letting subject to income tax would qualify as trade. Factors such as; minimum number of properties, no personal use of let and letting on a short-term basis would be considered.

If you own FHL you may wish to consider selling or gifting FHL property before the rules are abolished in April 2025. You can also join other significant businesses in lobbying for the “brightline test”.

Please get in touch with us if you want to get some advice on what to do if you own an FHL. The withdrawal of CGT reliefs will likely result in higher tax liabilities in the future so it will be key to plan for this over the next 12 months- we can start helping you today!

Reduce your CGT bill by selling today!

Tue, 23 Apr 2024 09:00:00 GMT

The current capital gains tax (CGT) exemption is going to be reduced from £6,000 to £3,000 from the start of the new tax year on 6th April 2024. If you don’t use the current year’s exemption, then it will be lost forever!

To make use of any unused part of your annual CGT exemption, first identify assets on which you would make a capital gain if you sold them (shares, currencies, crypto-assets, antiques etc). A limited exemption known as the chattels exemption applies to gains made from the sale/transfer of physical assets such as furniture, jewellery etc. This must be knocked off any non-exempt gains on chattels before your annual exemption can apply to them!

After identifying the assets that would produce gains if sold, you must decide which to sell to make sure you use your annual exemption. Take account of any losses made from the sale/transfer of assets in the current tax year. This must be deducted from your gains before the annual exemption is applied.

Selling shares that have increased in value and buying them back reduces long-term taxable gain as and when the shares (or other assets) are sold permanently.

Reducing a CGT bill can be fiddly, and many exemptions will apply. Give us a call on 01622 738165 today to see what would be most beneficial for you.

How to avoid a trust tax trap

sean@rustrick.co.uk (Sean Rustrick) — Thu, 18 Apr 2024 10:00:11 GMT

You have been looking after a trust for your children for years, but now is the time to wind it up (distribute assets/money to beneficiaries). How can you make this the most tax efficient it can be?

Most trusts must be assessed for IHT (inheritance tax) every 10 years. IHT is payable on the value of trust funds if they exceed £325,000 for 2023/24 (this is the nil rate band). You can’t avoid this 10-year charge by winding up the trust before the 10 years because it accrues every three months (quarter) so there will always be a proportionate charge for each quarter (assuming the funds exceed the nil rate band) since the last tax charge (this is called an exit charge). If you wind up a trust within the three months after a ten-year charge, there’s no exit charge BUT it leads to a capital gains tax (CGT) trap!

CGT applies to assets such as shares, units and property which are passed from trusts to beneficiaries. When you wind up a trust, the transfer of assets is counted as if the assets had been sold for their market value (MV). If the trust acquired the assets for less than the MV, the difference is taxable. When CGT is calculated, trusts can knock their CGT exemption (£3,000 for 2023/24 and £1,500 for 2024/25) off the gains to reduce the amount on which tax is payable.

CGT can be deferred if the trustees and beneficiaries make a “holdover election”. This means that the gain only becomes taxable when the beneficiaries sell/transfer the property.

A “holdover election” is only allowed if the transfer of assets is chargeable to inheritance tax (there doesn’t have to be inheritance tax payable- this happens if the transfer value is below the nil rate band). In addition, it isn’t allowed if the assets are transferred from a trust within three months of an inheritance tax 10-year charge (because the transfer isn’t chargeable to inheritance tax!). To avoid this, just make sure that you allow three months from the 10-year charge to elapse before making any transfer!

If you want to talk things through with one of the team, just give us a call on 01622 738165 and we can help you today!

The Seed Enterprise Investment Scheme (SEIS)

sean@rustrick.co.uk (Sean Rustrick) — Thu, 11 Apr 2024 10:20:55 GMT

Do you need extra finance for your new company? Are you interested in outside investors but want a tax incentive scheme to sweeten the deal?

Traditionally you would borrow money to help finance your company but more recently you would bring in outside investors who would provide cash in return for shares. Of course, this would create many pros and cons for both you and the investors, but now there has been the introduction of the seed enterprise investment scheme (SEIS) that is helping cancel out those cons!

The SEIS is available for new or recent start-ups. It allows you to use tax incentives that will attract investors. The tax incentives are:

- Income tax relief equal to 50% for investments of up to £200,000

- Exemption from any capital gain tax growth in value of the SEIS shares

- Capital gains tax reinvestment relief (an exemption of 50% of any capital gain which occurs in the same year as the income tax incentive)

- Shares can qualify for inheritance tax business property relief

The maximum total SEIS investment your company can receive is £250,000 but the income tax and reinvestment relief can be claimed by the investor for the tax year of the investment, or they can choose for it to be the previous year!

To offer SEIS shares to potential investors as long as you follow these conditions:

- The company must be unquoted at the time you issue the shares

- Immediately before the share issue there must not be gross assets in excess of £350,000

- The company must have a permanent establishment in the UK for the following 3 years and carry on a qualifying trade

If you meet these conditions, then you can request that HMRC provides an “advance assurance” to prove that your company is entitled to issue shares that qualify for the SEIS tax breaks. You can then give this to prospective investors to encourage their investment!

Make sure your investors understand that after you have issued shares, they must wait until you send them a SEIS 3 certificate (from HMRC) to then claim the tax breaks. This will only be after 4 months of trading and at least 70% of the SEIS investment has been received!

Some conditions must continue to be met for a further 3 years to qualify for SEIS- if they aren’t then the tax relief will be lost. Get in contact on 01622 738165 to find out exactly what they are and how we can help ensure you are maximising the potential of your new business!

Spring 2024 Newsletter

Wed, 27 Mar 2024 22:33:44 GMT

Trouble viewing file? Download it here instead.

Attention cash traders in hot food and catering!

sean@rustrick.co.uk (Sean Rustrick) — Wed, 20 Mar 2024 11:05:05 GMT

HMRC has identified 4,000 traders in the hot food and catering sector that may be under-recording sales. It is important to regularly check the credibility of your returns by making a comparison to the same quarter in the previous two or three years before you submit your return online to HMRC. Although they are currently targeting VAT underpayments, under-recording of sales will also mean that your business has underpaid income tax or corporation tax (if your business is incorporated).

If HMRC thinks that your business has underpaid tax (with deliberate underpayments for the past 20 years) it will issue a “best judgement” assessment for the last four years and interest and penalties may be charged.

If you trade in the catering sector, get in contact with us at Rustrick Accountants or contact your agent to see if they have received a letter from HMRC. It is down to your agent to contact HMRC to get a list of the 4,000 taxpayers they are targeting, and you and your agent are responsible for identifying if VAT has been underpaid and reporting it.

What should you do?

If you account for VAT on a cash (rather than invoice) basis, ensure your takings records and audit trails are robust. Make sure your staff are properly trained to know when sales are standard or zero-rated. Ensure all delivery sales are being properly recorded as a part of your takings and take positive action now just in case HMRC comes knocking!

Of course, if the search for under-recordings of sales in the catering sector proves fruitful HMRC will extend its search to other sectors- so be prepared!

Give us a call if you want to chat more about this topic on 01622 738165 or pop into the office today!

Pressure is increasing on cryptoasset owners

sean@rustrick.co.uk (Sean Rustrick) — Wed, 20 Mar 2024 11:01:18 GMT

HMRC is stepping up investigations into crypto-assets. In 2022, nearly 5 million people owned crypto-assets such as Bitcoin and Ethereum, consequently HMRC started a campaign in late 2023 to track down who has bought and sold crypto-assets over the past few years.

Buying and owning crypto-assets does not cause you to be liable for tax- even if their value has grown substantially. HMRC will only be interested if you have received income and made gains by selling assets (and even then, you might not have to pay tax). If you have bought and sold crypto-assets infrequently, any gains (after knocking off any losses) you have made will fall within the scope of capital gains tax (CGT). However, if your gains for a tax year from the sale of all assets (not just crypto-assets) were less than the CGT annual exemption (£12,300 for 2022/23) there’s no tax to pay and no requirement to report the transaction. If you frequently trade in crypto-assets HMRC might consider that you are liable to income tax on any gains that you make. The CGT exemption won’t apply and if you haven’t declared your gains you might have tax to pay!

When HMRC starts an enquiry, you’ll receive a letter stating the legislation it’s using as authority. They will ask for records of your cryptocurrency transactions for the previous tax years. You will have to provide information and documents within 30 days, if you don’t think you will be able to comply you must get in contact with HMRC without delay.

0% VAT Building Certificates

sean@rustrick.co.uk (Sean Rustrick) — Wed, 20 Mar 2024 10:58:22 GMT

The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

New Fuel Rates Apply for Cars and Double-cab Pickups!

sean@rustrick.co.uk (Sean Rustrick) — Wed, 20 Mar 2024 10:45:48 GMT

HMRC’s advisory fuel rates (AFRs) can be used to prevent a taxable benefit in kind for fuel being triggered if an employer provides a car to an employee/director.

AFRs: Employees can use AFRs to work out how much to reimburse their employer for fuel, if the car was used for a private journey. Employers can also use AFRs to calculate how much to reimburse the cost of fuel paid for by employees for business journeys.

From 1 ^st March 2024 these are the new AFR rates (prices in brackets are the previous rates):

Water- Switch and Save

sean@rustrick.co.uk (Sean Rustrick) — Wed, 20 Mar 2024 10:23:31 GMT

Why should you switch your water supplier today? Put simply it is an open market! Retail suppliers buy wholesale services (the physical supply of water/ removal of wastewater) and offer a package to sell to customers. Since 1 ^st April 2017, for non-residential customers the retail water market has been deregulated!

This means that non-household customers can buy their supply from any regulated provider- you are free to choose whoever you want. You can even have one retailer for water supply and another for removing wastewater!

Ofwat, the water regulator, has found that only 10% of businesses have switched, renegotiated or explored their water options and 41% of these businesses saved between 46% and 50% by switching providers!

Because there are many companies to choose between, there is competitive pricing, so savings are maximised. In addition, you can consolidate water and wastewater services and services for multiple sites- which saves you even more!

Make the most of your freedom- change water supplier! Water companies can offer tailor services to help you cut consumption and offer better data on your use and smart metering. This lowers your water bill and keeps you keep track of what you are using as a business.

Finding a new deal is relatively straightforward; you can just use a comparison site such as open-water.org.uk . Sometimes you wouldn’t even have to switch provider- if you find a cheaper deal just ask your current supplier to match it!

Salary Sacrifices and National Minimum Wage

sean@rustrick.co.uk (Sean Rustrick) — Wed, 20 Mar 2024 10:18:48 GMT

In February 2024, HMRC confirmed that 524 employers failed to pay their workers nearly £16 million, violating the national minimum wage (NMW) laws and leaving over 172,000 workers out of pocket. Over a third of these companies had made pay reductions or deductions which left workers receiving below the NMW.

HMRC has issued an educational tool for employees which specifically focuses on salary sacrifice schemes. In these schemes, workers consent to giving up part of their contractual pay in exchange for a new (or enhanced) non-cash benefit. This could be increased pension contributions, a cycle to work scheme or a company car. This means the worker’s pay is reduced, but under the NMW legislation, regardless of the salary sacrifice, the overall pay cannot be less than NMW.

By offering a salary sacrifice, including allowing workers to buy additional annual leave by agreeing to reduce their pay, you can unintentionally breach NMW laws. Even a one-off salary sacrifice, such as sacrificing salary in exchange for a single lump sum pension contribution, will breach the NMW!

Make sure you are checking each worker’s reduced salary in each pay reference period to ensure it is still at or above their NMW rate!

Give us a call on 01622 738165 to see if this applies to you or to find out more- we are happy to help no matter how big or small your business is!

Lessons from the Horizon Scandal

sean@rustrick.co.uk (Sean Rustrick) — Wed, 13 Mar 2024 15:10:51 GMT

Horizon is the flawed accounting system, introduced by the Post Office in 2000, that led to the wrongful conviction of hundreds of sub-postmasters. What lessons can we learn from this when implementing new accounting software?

Horizon endeavoured to automate accounting processes at Post Office branches. However, it led to accounting shortfalls that they were unable to be reconciled due to the lack of paper-based evidence. The sub-postmasters were blamed, and the system’s bugs were not investigated at the time. This highlights the need for IT governance when a new IT system is introduced.

When implementing a new IT system, you must:

Always go through rigorous system testing of its functionality and reliability.
Ensure that mechanisms are in place for immediately detecting system errors and there is the capacity to provide a quick solution to them.
All users (staff, customers, suppliers) have a clear way to report issues
Allow users and stakeholders to give feedback to identify potential problems early

Email us at sean@rustrick.co.uk or give us a call on 01622738165 if you want to discuss this further.

Company Law Changes

sean@rustrick.co.uk (Sean Rustrick) — Wed, 21 Feb 2024 15:04:14 GMT

From March 4 ^th 2024, Companies House will be making 2 key changes:

Companies will no longer be allowed to use PO boxes as a registered office address. The address that is used must be “appropriate”, so any documents that are sent there will be acknowledged on arrival.
Companies must have (and provide!) a registered email address. Next time you file your confirmation statement you will be prompted to supply one. Pick a shared mailbox so that you can ensure it will be monitored regularly so you will always receive important information about your company. You can make Rustrick Accountants your registered address and we can monitor it for you!

Get in contact with us today and we can make that switch for you right away!

Should you change to monthly VAT returns?

Thu, 15 Feb 2024 21:42:40 GMT

Is your business submitting quarterly returns? Has your trading model has changed? Will your future sales be zero-rated? Maybe it is time to think about submitting monthly returns to HMRC!

But remember:

You must submit 12 returns rather than 4 per year!
For VAT periods beginning 1 ^st January 2023 and later, HMRC will now penalise late repayments and nil returns with a new points system!
HMRC may reject your amendment because your business has a poor compliance track record- but this is very rare!

Should you make the switch?

If your business has a high percentage of zero-rated sales but is not claiming significant input tax (i.e you are a labour only service business that isn’t buying a lot of goods), then the cash-flow benefits of changing to monthly returns isn’t worth it.

If your business uses the cash accounting scheme (CAS), it would be worth leaving the scheme so you can claim your input tax quicker if you suddenly have more zero-rated sales. It would be particularly worthwhile if you get extended credit terms from your suppliers! If you choose to leave the CAS you don’t need to tell HMRC but you must account for output tax on the return.

How to make the switch

Log into your gateway account to make the change from quarterly to monthly returns.
You can also ask your authorised agent (Rustrick Accountants!) to login to their account and make the change on your behalf.
You must be able to show HMRC why your future returns will be repayments if asked.

You can ask HMRC to submit returns for special tax periods, for example your management accounts period might run to the 5 ^th day of every month, and you want your return submission to line up with this.

Still need a bit of extra help? Contact Rustrick Accountants today or pop into the office!

Further Construction Industry Scheme (CIS) changes

sean@rustrick.co.uk (Sean Rustrick) — Thu, 15 Feb 2024 21:38:10 GMT

The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

Bank of England: base rate will remain at 5.25%

sean@rustrick.co.uk (Sean Rustrick) — Fri, 02 Feb 2024 15:13:37 GMT

On the 1st February 2024, the Bank of England announced that the base rate (the interest rate that they will charge commercial banks/lenders for loans) would remain unchanged at 5.25%.

They also expect inflation (currently at 4%) to drop quickly over the next 6 months to 2% (the inflation target) before rising again near the end of the year.

This means that interest rates could be cut by June 2024. So, if you have excess cash to invest in a fixed-term savings product, open an account today- don't leave it too late!

Pop along to the office or give us a call on 01622738165 if you think you will be affected or want more information!

Should you be using a credit card for cash flow?

sean@rustrick.co.uk (Sean Rustrick) — Fri, 02 Feb 2024 11:12:10 GMT

Credit cards are becoming even more popular with business owners when making business purchases. But is it worth it?

Credit cards usually have an interest-free period of up to 56 days from the date of purchase and if you pay off the balance in full, the business will not be paying any interest. They also allow you to manage cash flow until customers pay, giving you the flexibility to use a card as a line of credit. It is relatively easy to apply for a credit card and often approval comes instantly and it works as a method of purchase protection if goods are lost, stolen or damaged. Credit cards can also be given to employees which enables spending to be tracked and monitored using spending limits. In addition, a business credit card can offer more perks than a personal credit card, this may be points for cashback or frequent-flyer programmes- it is always worth checking to see what you can gain!

However, credit cards do have a very high interest rate in comparison to other forms of lending. This means that you shouldn’t just make the minimum payments each month- always stick to the full balance repayments! If things do start to go downhill with the card, it will impact your credit score. This would then limit options for securing other, more suitable, sources of finance later in life.

A credit card really does help manage cash flow ups and downs, as long as you pay off the balance in full each month, so set a budget and stick to it!

The Gift of Capital Allowances

sean@rustrick.co.uk (Sean Rustrick) — Fri, 02 Feb 2024 10:53:11 GMT

Can you claim a Capital Allowance

After Christmas it is time to review any gifts and to see if they can keep giving! Did you receive a new laptop for Christmas? Do you plan to use it for work? Can you claim a tax deduction if you do?

If you use a gift in your job or business you may be entitled to an extra tax deduction (called capital allowances). It doesn’t just have to be from Christmas- any present will do! You can claim a capital allowance (CA) for equipment (computers, briefcases, stationery etc) that you receive as a gift even if you’re self-employed!

All you have to do is follow these conditions;

Self-employed: CAs can be claimed for any equipment starting in the accounting period you first use it for work. (If you receive it in December 2023 but don’t use it until May 2024 you can only claim for the tax year 2024/25)

Employees and Directors: The same conditions as the self-employed category applies but in addition, the equipment must be required for the job (meaning that you can’t reasonably do the job without it!) For example, you need a computer to do admin.

Watch out! For employees/directors cars and vans do not qualify- instead a mileage rate deduction for business journeys is allowed.

But how much tax relief could you receive? The amount on which CAs can be claimed is limited to its market value when it first qualifies for CAs. This is the amount you could expect to get if you sold the equipment to a stranger. The CAs are then equal to a percentage of the qualifying value each year.

Have you received any fantastic gifts this year that will help you and your business but not sure how to go about calculating the CAs? Give us a quick call or pop into the office and we can sort that out for you today!

Small and Medium-Sized Enterprises- Extra Financial Support!

sean@rustrick.co.uk (Sean Rustrick) — Fri, 02 Feb 2024 10:41:09 GMT

New measures to help small and medium-sized enterprises (SMEs)

The UK Export Finance (UKEF) has just announced there will be new measures to help small and medium-sized enterprises (SMEs) get more exporting opportunities. They have decided to expand their “auto-inclusion” scheme, meaning that more businesses can now get fast-track access to finance products such as the General Export Facility (GEF). The GEF gives partial guarantees to banks to help UK exporters gain access to trade finance facilities such as trade loans (cash facilities) and bonding/letters of credit (contingent obligation facilities).

The biggest change is that the UKEF support maximum has now doubled from £5m to £10m. Also, exporters can now access more support from participating banks and the maximum term for GEF loans has increased from 2 to 5 years. This means that there are even more flexible repayment terms if you need it!

If you aren’t sure if you would be eligible for this extra support or just want advice about applying for it, just give us a shout or pop into the office, we will be more than happy to help you!

Have you missed the Tax Return Deadline

sean@rustrick.co.uk (Sean Rustrick) — Thu, 01 Feb 2024 15:08:23 GMT

By midnight on 31st January 2024, over one million tax returns were not filed!

What should you do if you have missed the deadline, and should you double check your filing just in case?

By missing the deadline, you will have received a £100 filing penalty regardless of whether any tax was due! Everyone should check that their return has been accepted by HMRC, particularly if you filed your tax account online. A lot of people believe that their return is complete after viewing the calculation but don’t press submit before logging out.

If you have missed the deadline or discover your return is outstanding, submit it today as daily £10 penalties will start from 1st May. Pay any outstanding tax (even if it is an estimate!) as penalty interest is charged at 7.75% and a penalty of 5% of the tax owed applied on the 1st of March.

Check to see if you still meet the criteria for completing a tax return, and request for it to be withdrawn if you don’t and the penalty will be cancelled. However, you can’t do this once you’ve submitted the return!

Is it your first time making a self-assessment return, check the date the return was issued- you are allowed three months from the issue date if this is later than 31st January. This is also the case if HMRC issuing your unique taxpayer reference has been delayed.

At Rustrick Accountants we can walk you through these steps and give you peace of mind that everything is working for you- just get in contact today!

Airbnb Host? Declare your rental income TODAY!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 23 Jan 2024 21:25:21 GMT

Airbnb has revolutionized how we see hospitality and is an easy way for landlords to earn extra income. But HMRC are becoming increasingly vigilant about potential tax evasion with Airbnb hosts who may be underreporting rental income and avoidance of tax obligations.

Airbnb now has to share all income details of all UK hosts since 2017/18. Any hosts who have failed to declare rental earnings since then will now be under a 20 year tax investigation under the ‘Discovery Laws’.

If you are an Airbnb host/landlord of a short-term property letting and you haven't disclosed your rental income to HMRC yet, you will receive a letter informing you about the fact you need to pay tax on your rental income.

But it isn’t all bad news- HMRC has provided Airbnb hosts with an opportunity to come forward and voluntarily disclose previously undeclared rental income. This means you will receive a reduced penalty compared to those that are identified by HMRC’s investigation. All you would have to do is go through HMRC’s Digital Disclosure Service (DDS), an online confidential service for individuals to declare unreported income or gains, disclose tax obligations, calculate the amount owed and settle outstanding tax liabilities.

Using the DDS will not make you immune from any penalties, the penalty will depend on the nature and seriousness of non-compliance, cooperation with HMRC and whether the disclosure was unprompted. If you fail to notify HMRC of your tax liability you will face a penalty for failure to notify. These will be the penalties:

Type of behaviour Unprompted Disclosure Prompted Disclosure

Non-deliberate-within 12 0% to 30% 10% to 30%

months of tax being due

Non-deliberate-12 months or 10% to 30% 20% to 30%

more after tax was due

Deliberate 20% to 70% 35% to 70%

Deliberate and concealed 30% to 100% 50% to 100%

Of course, this won’t apply to just Airbnb, all hosts on any online rental platform including Booking.com, HomeAway, TripAdvisor will be targeted!

Remember, you can earn up to £1000 tax-free from rental income (this is called Property Allowance) and if you rent a room in your main home, you can get a tax-free allowance of £7,500 every year under the Rent a Room Scheme.

As always, if you want to learn more or have some questions, pop along to the office for a chat and a chocolate biscuit.

"Side Hustle" - tax?

sean@rustrick.co.uk (Sean Rustrick) — Tue, 23 Jan 2024 21:16:44 GMT

HMRC is now going to be receiving information about profits from online selling platforms such as TikTok, Etsy, Depop and Vinted. So far, no new tax has been introduced in relation to this, there is a continuation of being subjected to income tax and NI on any profits gained from trading.

If your profits exceed £1000, you have to report the income and expenses to HMRC with your self-assessment tax return, even if there is no tax to pay! If online selling is a secondary income source, you still are allowed to earn up to £1000 as a self-employed individual tax free, even if your earnings from your main job exceed the personal allowance (£12,570 per year).

So, if you are using these selling sites, you need to recognise if you are trading or not. If you make a profit on any item you are trading. If you are making goods, such as plant pots and selling them on Etsy, you are trading. On the other hand, if you are selling unwanted gifts or secondhand clothes you are unlikely to be trading because you are unlikely to be making a profit!

Come along to the office for a chat and a cup of tea if you have anything on your mind- we would be more than happy to see you!

TO BE LEASING OR TO BE BUYING- that is the question!

sean@rustrick.co.uk (Sean Rustrick) — Tue, 23 Jan 2024 21:11:05 GMT

Leasing or buying a property

Business is booming, growth is inevitable, there’s only one thing for it- you need new premises. But do you lease or do you buy a new property? It can be a big decision, these are the factors you need to consider:

Leasing:

How fast will you outgrow these new premises? Leasing makes sense if you will!
Is the property market unstable? Only committing to shorter term (three-year or five-year leases) will give you peace of mind long term
Can you afford the deposit? Is capital tight?
How quickly do you need to move? If it is within the next 30 - 60 days, leasing is the more sensible option
Do you need to stay in the same area? Consider if your customer base is in a certain geographic area, the only option may be leasing if you don’t want to lose customers!
Are the lease terms favorable? It is always good to weigh up whether it is overall a good deal!

Remember- lease payments are tax deductible as a business expense!

Buying:

Do you want full control over the property? You wouldn’t have to answer to a landlord therefore would be able to customize and renovate the property!
Would you be looking to sell or refinance in the future? If the property value increases you may benefit from appreciation
Will you be there long term? If yes, then this will give you stability and the opportunity to establish a long-term presence in that location
Do you want to build equity whilst paying down the mortgage?
Are you thinking about providing a potential source of capital in the future?

Of course, at the end of the day there is always one thing on your mind; the cost considerations!

Leasing:

Monthly lease payments (think about the total cost over a whole term)
Service charges for common areas
Solicitor fees for dealing with the lease

Buying:

Deposit (what percentage of the whole price do you need?)
Mortgage interest rate (what will you be charged per month?)
Stamp duty land tax (how much will be due on the purchase?)

If you want to discuss buying or leasing a property, pop along for a cuppa and a chat!

Financial forecasting for small businesses

sean@rustrick.co.uk (Sean Rustrick) — Mon, 04 Dec 2023 15:21:15 GMT

Financial forecasting for small businesses: Why it's important and how to do it

Financial forecasting is all about being forward thinking. When you are running a small business you are so busy thinking about the next sale you tend to not think about the future and staying ahead of the competition. When you start thinking about forecasting you can use it as a guide for positive decision making and this will help your business grow.

What actually is financial forecasting?

Forecasting is needed for any size business. It is a planning process that revolves around uncertainties about the future. You use past and present numbers to identify trends and estimates about future outcomes to create projections about your business’s financial future (such as future sales and expenses). This allows you to look at things such as staffing and cash requirements for example, how much will my VAT bill be if sales increase by that amount?

How to do it

Top-down forecasting - you start with a picture of the future (dream big!) and zoom into the specifics of how you can achieve this. You use this for future performance (working with numbers and needs to focus on sales). This is the most useful type of forecasting for small businesses because you identify goals for the company and then identify what sales you want.

Bottom-up forecasting - you look at specific customers/products and their relation to estimated sales needed.

Hybrid - you use both of the above forecasting techniques in combination.

Why is forecasting important?

- Helps determine long-term vision - where do you want to be in in 1 year,3 years and 5 years? This could be a mission statement or the overall vision for the business. Put simply - it helps you figure out where you want both yourself and the business to be in 5-10 years’ time.

- Shows a pathway for achieving goals - the forecast helps create a roadmap for establishing short and long-term attainable goals and a pathway to reach those goals based on historical business data and market trends.

- Provides investors in the business (you, the bank, a family member, anyone) with information - people investing in the business (including you and your spouse or partner) will want to know financial health and projections for reaching profitability. This requires predictions based on solid data (market trends, past performance). If you are investing your own money and time you will want to minimise risk and a forecast will show where the business is going.

- It identifies risks and opportunities - you always want to limit risk and increase opportunity to succeed in business. Forecasting flags up possible unforeseen risks (not having enough staff or hours in the day!) and identifies new opportunities because it allows you to understand your current customer base and attract new business.

- You can plan and predict cash flow - you can look at multiple years of numbers and see at what time of year there is a cash flow problem (making increased profit will lead to higher tax bills….it’s life!) This allows you to investigate, understand the issue and find ways to limit future impacts.

At Rustrick Accountants, we help lots of clients with financial forecasting, cash flows and business plans.

If you want to pop along and, at no cost, have a chat to see what help we can give you to get your forecasting going, then contact us. Financial forecasting can help you grow your business from an acorn to an oak tree.

www.rustrick.co.uk 01622738165

Winter 2023 Newsletter

sean@rustrick.co.uk (Sean Rustrick) — Wed, 29 Nov 2023 21:49:10 GMT

Trouble viewing file? Download it here instead.

Tax-saving tips for small business owners

sean@rustrick.co.uk (Sean Rustrick) — Mon, 27 Nov 2023 09:35:14 GMT

Keep Accurate Records

This simple tip is always overlooked. By keeping track of income and outgoings you can reduce taxable income. Keep invoices and receipts up to date to back up your expenses. Always separate personal and business finances!

Claim All Allowances and Deductions

I t’s surprising how many people don’t take advantage of allowances and deductions such as claiming capital allowances for equipment and expenses for business-related costs.

Take Advantage of the VAT Flat Rate Scheme

If your annual turnover is less than £150,000 you will be eligible for this scheme. Rather than calculating the VAT on your sales and purchases, you pay a flat rate percentage to HMRC (subject to conditions)

Make Pension Contribution

You can make contributions and claim tax relief up to £60,000, boosting your retirement savings as well as reducing tax liabilities.

Give Gifts to Charity

By giving gifts (money, shares, property or land) to charity you reduce the amount of tax you pay. This can be achieved through personal contributions or Gift Aid but you are required to make a record of any donations.

Offset losses against your profit

If your business makes a loss in a year, through trading, selling assets or on property income you can claim relief from tax by offsetting any losses via a tax return. You can also carry over losses to offset against future years’ profits to reduce next year’s tax.

If you would like to talk to use about reducing your tax bill, or have any accountancy queries, get in touch with Rustrick Accountants for a free initial consultation and a cup of tea – let us help you get 2024 off to a flying start!

www.rustrick.co.uk 01622 738165

Autumn Statement 2023

sean@rustrick.co.uk (Sean Rustrick) — Fri, 24 Nov 2023 17:09:31 GMT

Chancellor's Autumn Statement Update 2023

Please download our review of the Chancellor's Autumn statement 2023. If you think there is anything from the Autumn statement might have an impact on your or your business, then please do not hestiate to email us or call us.

The benefits of hiring an accountant for your small business

sean@rustrick.co.uk (Sean Rustrick) — Mon, 20 Nov 2023 19:22:46 GMT

You’ve just started your own small business and are looking for that next step forward into the business world. Before making any decisions, remember that the best foundation for any business is a trustworthy team focused on driving you in the right direction. That’s why hiring the right accountant is crucial for success. A good accountant will offer a wide range of services that will: assist you in staying on top of current tax requirements and regulations, help you to save money, reduce risk and manage the growth of your business. Critical decisions will be made based on your specific financial situation, therefore it makes sense to hire an accountant that will provide you with advice tailored for your needs, and can speak in a language you understand!

Your accountant should be a trusted colleague who is on hand to provide advice and guidance. They provide you with the reassurance that your legal, financial and tax responsibilities are taken care of, saving you time and giving you the peace of mind you need to focus on your business. An accountant is a trained and qualified professional who can prepare, check and analyse financial affairs, this includes company formation, preparing annual financial reports, overseeing tax returns and helping future budgeting decisions. Still not convinced? An accountant will:

o Help you improve your cash flow

o Provide valuable business advice

o Help you manage growth sustainably

o Improve cost efficiency

o Process payroll

o Measure business performance

If you are interested in boosting your business or reducing your financial concerns, get in touch with Rustrick Accountants for a free initial consultation and a cup of tea – let us help you get 2024 off to a flying start!

September 2023 Newsletter

sean@rustrick.co.uk (Sean Rustrick) — Thu, 21 Sep 2023 14:53:09 GMT

Trouble viewing file? Download it here instead.

Ten tips to improve the profits of your business

sean@rustrick.co.uk (Sean Rustrick) — Thu, 31 Aug 2023 10:25:10 GMT

Making a good profit is the lifeblood of any business, especially for small to medium-sized businesses (SMBs). It determines how sustainable and successful your business is and how much it can grow. Today's markets are very competitive, so in this blog post, we will explore ten effective strategies for you to quickly think about and implement to improve the profitability of your business . By understanding the purpose and need for each strategy, businesses can make informed decisions and drive positive change to increase their profits.

1. Reduce your costs:

Cost reduction is an essential method for SMBs to improve profitability. By identifying and eliminating unnecessary expenses, you can optimise your operations and increase your bottom line and end up with more money in the bank! For example, regular checks of your costs and outgoings can help identify areas where expenses can be reduced, such as excessive energy consumption or inefficient processes.

Example: A review of standing orders and direct debits can reveal payments for services that are no longer used or required.

2. Purchase efficiently:

Efficient purchasing goes hand in hand with cost reduction. By negotiating better prices with your suppliers, exploring bulk purchasing options, or seeking out alternative supplier contracts, a business can reduce their various costs.

Example: Regularly review your overheads and see whether your current supplier or another supplier can requote or offer discounts for the same service.

3. Increase your sales:

Increasing sales is a fundamental way to increase profits. You can achieve this by focusing on obtaining new customers and making sure existing customers are happy with your service and fees, improving them as necessary. For instance, you can use targeted marketing campaigns to reach your ideal customers or offer discounts to incentivise repeat purchases. Additionally, using social media platforms and online marketplaces can expand your customer reach and boost sales.

Example: Offering limited-time promotions or discounts can incentivise customers to make more frequent purchases, boosting sales and revenue for a restaurant.

4. Streamline your operations:

Streamlining operations involves improving workflows and processes to increase efficiency. By identifying bottlenecks, eliminating redundancies, and automating repetitive tasks, your business can save time and resources. This allows you to allocate your resources more effectively, which leads to improved profitability.

Example: Integrating a cloud-based inventory management system can automate stock tracking, reducing inventory holding costs for a manufacturing company.

5. Target your marketing:

Targeted marketing is a powerful way to maximise the return on marketing budgets. By identifying your target customers and tailoring your marketing efforts accordingly, your business can reach more of the people who want what you’re offering and reduce wasteful spending.

Example: A local bakery could target its marketing efforts towards nearby residents through direct mail campaigns or localised social media advertising.

6. Upsell and Cross-sell:

You can increase average transaction values and boost your profits by encouraging customers to purchase a comparable higher end product than the one in question. In addition, some customers may be unaware of the other services you provide, so by offering complementary products or services during the sales process, you can encourage them to spend more. For example, a software company could offer premium features or add-ons to their basic package, providing additional value to customers while increasing revenue.

Example: An IT service company can offer additional features or upgrade options to existing customers, thereby increasing the average transaction value and profitability.

7. Enhance your customer service:

We all appreciate great customer service and this is crucial for your business to build loyalty and generate repeat business. By investing in employee training programmes and implementing customer feedback systems, you can improve your business’ service quality. This leads to higher customer satisfaction, your customers remain loyal to you and ultimately, your profits improve.

Example: Providing exceptional after-sales support and timely resolution of customer queries can increase customer satisfaction, loyalty, and repeat business for a service-based business.

8. Diversify your revenue streams:

It can be risky for a business to rely on a single source of revenue. Diversifying revenue streams can provide stability and reduce potential losses. Businesses can explore new product lines, expand into different markets, or offer additional services to existing customers.

Example: A fitness studio could introduce online classes or sell branded merchandise to diversify its income streams.

9. Optimise your pricing:

Pricing plays a crucial role in profitability. Analyse market trends, see what other people charge and conduct pricing experiments to find the best price point for your business’ products or services. Many businesses, especially small ones, quite often underprice the great product or service they supply.

Example: A software-as-a-service (SaaS) company could offer different pricing options to cater for different customer needs.

10. Invest in training and development:

Investing in training and development programmes for employees can yield long-term benefits. If you enhance the skills and knowledge of the people who work for you, your business can improve its productivity, customer service, overall performance and staff satisfaction. This leads to increased efficiency, reduced errors, and improved profits.

Example: A retail store could provide sales training to its staff to improve upselling techniques and customer satisfaction.

So, to sum up …..

Improving profits is essential for the long-term success of any business. By considering these ten strategies, your business can optimise its operations, increase sales, reduce costs, and enhance customer satisfaction and retention. It's important to remember that profitability requires a holistic approach, focusing on multiple business areas simultaneously. By continuously evaluating and adapting these strategies, SMBs can thrive in today's competitive landscape.

July 2023 Newsletter

sean@rustrick.co.uk (Sean Rustrick) — Wed, 26 Jul 2023 15:21:14 GMT

Trouble viewing file? Download it here instead.

Improve your Cashflow

sean@rustrick.co.uk (Sean Rustrick) — Thu, 20 Jul 2023 08:40:25 GMT

Want to improve your cashflow?

Running a small business can be a wild ride. You're constantly juggling a million things at once, from managing employees to keeping customers happy. But there's one thing that can make or break your business: cash flow. Yep, that's right, money talks! Understanding your cash flow is like having a cheat code to success. It helps you keep track of the money coming in and going out, so you can make informed decisions about your business. And the best part? When you have a grip on your cash flow, you can finally stop stressing about whether you can afford that third cup of coffee for the day. Trust us, your bank account will thank you.

I’ve put together a few tips on how you can improve your cashflow.

Regularly check who owes you money:

Keep track of the money that customers owe your business and follow up on any overdue payments and generally nag until you get paid….. he who shouts loudest gets paid!!

Invoice management:

Make sure you're not doing work that isn’t being invoiced as this ties up cash that could be used elsewhere. If you don’t send out an invoice, you can’t get paid!

Negotiate and agree payment terms:

Try to negotiate payment terms with suppliers and customers that work better for your business's cash flow. Consider a monthly payment on account from your customers.

Reduce expenses:

Look for ways to cut expenses, such as switching to a cheaper supplier or reducing unnecessary costs. Also, look at supplier terms especially if they were agreed a few years back. They may not be relevant and fit your business now i.e you could be paying for things you don’t need anymore.

Think about technology:

Use technology to streamline your business processes and reduce costs. You might consider automated chasing emails to customers for example.

Increase sales:

Find ways to increase sales, such as offering promotions or expanding your customer base.

Improve cash flow forecasting:

Make accurate cash flow projections so you can plan ahead and avoid unexpected shortfalls. It’s amazing how much a looming tax or VAT liability focusses the mind and prompts you to ensure your clients pay up!

Consider alternative financing:

Explore alternative financing options, such as loans or lines of credit, to help cover short-term cash flow needs.

Regularly monitor cash flow:

Keep a close eye on your cash flow on a regular basis so you can quickly identify any issues and take action to address them.

As always we are here to help and to work with you on all your accounting needs. Please do not hesitate to contact us.

Sean Rustrick

Spring 2023 Newsletter

sean@rustrick.co.uk (Sean Rustrick) — Mon, 29 May 2023 15:18:02 GMT

SEISS FIFTH GRANT

Sat, 07 Aug 2021 11:00:42 GMT

SEISS FIFTH GRANT

It is now possible to make a claim for the fifth SEISS grant. It is different from previous grants as in most cases, when making your claim you’ll need to tell HMRC about your business turnover so that they can work out the amount you are entitled to.

The claim is calculated by comparing two figures and basing the amount you receive on any fall in turnover.

The first is the turnover from April 2020 to April 2021 (you can choose any date from the first to the fifth of April to start from), the second is either of your accounting years 2019 to 2020 or 2018 to 2019.

If there is a reduction in turnover by 30% or more you will receive 80% of 3 months’ average trading profits up to a maximum of £7,500. If the reduction is less than 30% this will shrink to 30% of 3 months’ average trading profits up to a maximum of £2,850.

To work out your average profit HMRC will look at the last 4 years trading profits to calculate this figure. The calculation is different if you do not have this length of trading history.

Any earlier grants, SEISS, eat out to help out receipts, local authority or devolved administration grants should be excluded from you turnover calculations.

To make a claim visit the HMRC website and complete the necessary form.

Remember we cannot make the claim for you and as with all SEISS grants, any amount you receive will form part of your taxable income.

As always, should you wish to discuss please call us .

Furlough Scheme Winding Down

Mon, 19 Jul 2021 13:06:18 GMT

From 1 July 2021, employers must now pay part of employees’ furlough wages as the Coronavirus Job Retention Scheme (CJRS) starts to wind down.

For claim periods ending on or before 30 June 2021 companies could claim from the CJRS 80% of an employee’s usual wages for hours not worked, up to a maximum of £2,500 per month, and the company only needed to cover the employers’ NI and auto-enrolment pension contributions. However, for claim periods from 1 July 2021, the level of government grant under the CJRS is being gradually reduced and the business must now contribute towards the cost of furloughed employees’ wages as follows:

July - government contribution to wages for hours not worked: 70% up to a cap of £2.187.50; employer contribution to wages for hours not worked: 10% up to a cap of £312.50.
August - government contribution to wages for hours not worked: 60% up to a cap of £1,875; employer contribution to wages for hours not worked: 20% up to a cap of £625.
September - government contribution to wages for hours not worked: 60% up to a cap of £1,875; employer contribution to wages for hours not worked: 20% up to a cap of £625.

Companies must also still pay the employers’ NI and auto-enrolment pension contributions.

Furloughed employees will therefore continue to receive 80% of their usual wages, up to the cap of £2,500 per month, for the time they spend on furlough, but their wage payment is now partly funded by you.

The CJRS is then due to come to an end on 30 September 2021.

We know that the various lock down helping schemes are confusing, so please call if you need to discuss the above or any other confusing matter.The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.