covid Archives - Ilyas Patel Accountants in Preston

Claiming Back Stamp Duty On A Second Home

ilyas Patel — Thu, 23 Feb 2023 11:19:05 +0000

Claiming Back Stamp Duty On A Second Home

Our article outlines a way of claiming back stamp duty on a second home or buy-to-let.

(3-minute read)

We will cover:

How stamp duty is calculated
Reclaiming SDLT if you’ve bought a second home or buy-to-let

How stamp duty is calculated

Stamp duty, also known as SDLT (Stamp Duty Land Tax) is a tax paid in England and Northern Ireland upon purchasing property.

Different rates apply depending on your tax bracket, and the property’s value.

They also vary depending on whether the property is your main residence, or additional property – such as a second home, or even a buy-to-let or holiday home.

However, the tax is only payable if the property is worth over £125,000.

The rates increase as the property value increases, and an additional surcharge applies if you’re purchasing a second home or additional property.

The SDLT rates for each property value are as follows:

Property Value	Standard SDLT Rate	Second Home/Buy-To-Let SDLT Rate
Up to £125,000	0%	3%
£125,001 – £250,000	2%	5%
£250,001 – £925,000	5%	8%
£925,001 – £1,500,000	10%	13%
From £1,500,001	12%	15%

Stamp duty on a second home

As outlined above, a second home adds a 3% surcharge to the stamp duty you pay.

The amount of SDLT payable for each property value brackets are as follows:

Property Price	Stamp Duty on Main Residence	Stamp Duty on Second Home/Buy-to-Let
£400,000	£5,500	£17,500
£500,000	£7,500	£22,500
£600,000	£12,500	£30,500
£700,000	£17,500	£38,500
£800,000	£22,500	£46,500
£900,000	£27,500	£54,500
£1,000,000	£36,250	£66,250
£1,100,000	£46,250	£79,250
£1,200,000	£56,250	£92,250
£1,300,000	£66,250	£105,250
£1,400,000	£76,250	£118,250
£1,500,000	£86,250	£131,250

Claiming back stamp duty on second home

As you can see, the amount of stamp duty can be quite significant on a second home, so it is worth knowing when you can reclaim.

It is indeed possible to reclaim stamp duty on a second home if it is to become your main residence.

If you sell your previous residence within three years, you can claim back the amount.

This is useful, for example, for individuals who need to relocate quickly or who struggle to sell their previous residence.

What about couples?

Married or unmarried couples are treated as a unit for tax purposes if they purchase a second home. Therefore, the 3% surcharge still applies to them.

However, if you jointly own property, you can still reclaim SDLT when you’ve sold your share of the property – for example, in the case of getting a divorce.

How to reclaim stamp duty?

If you want to reclaim the higher rate of stamp duty on your second home, you can do it through HMRC.

In order to do this, you must access a form called “Apply for repayment of the higher rates for additional properties”.

Additionally, make sure you reclaim stamp duty within 12 months of selling your previous residence.

It’s best to speak to a Tax Expert if you require further assistance, to reach the best possible outcome and make sure you don’t fall prey to any unexpected surprises.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

Kind regards Ilyas

The post Claiming Back Stamp Duty On A Second Home appeared first on Ilyas Patel Accountants in Preston.

How to reduce your VAT bill

ilyas Patel — Thu, 23 Feb 2023 11:10:26 +0000

How to reduce your VAT bill

Everyone wants their business to be as tax efficient as possible. You want to make sure your VAT bill is accurate, and you are not paying more than you have to. Here are 8 easy ways to reduce your VAT bill.

(4-minute read)

We will cover:

The role of business expenses in minimising VAT
Different VAT reliefs you might not know about

1- Maximise VAT on business expenses

Running a business means incurring a variety of expenses, such as travel costs, insurance, telephone bills and internet fees.

You can offset these expenses against company profits and reduce your corporation tax.

A good example is the home phone line of the businessperson or director of the company. If you’re running your own business, you’re bound to use the phone for business-related calls.

HMRC will accept a reasonable apportionment between business and private and all kinds of other partially or mainly private expenses.

The same goes for the purchase of items like broadband costs, computers, and printers, which have got partial business use.

You can also put in a back claim where you’ve missed off these expenses in a prior VAT return.

If a limited company runs a business but the bills for part private/part business expenditure are in the names of an individual as a director of the company, it is still possible to claim back VAT on these expenses.

If the bill is no more than £250, it doesn’t matter if it isn’t addressed to the company or other business entity as such, but it still needs to be a valid VAT invoice. Additionally, the individual can make a reasonable apportionment between the business and private use of these expenses.

2- Claim VAT on ‘subsistence’

‘Subsistence’ is a posh word for eating and drinking. When travelling on business you’re entitled to claim the VAT back on a ‘reasonable’ bar, restaurant, or hotel bill.

What is ‘reasonable’ isn’t defined, but absolutely no rule says that you’re not allowed to drink alcohol.

If you’re away from home for work reasons, you can claim these subsistence costs.

3- When converting buildings

If you’re a contractor, you might know about this valuable VAT relief.

Rather than paying the 20% VAT rate, you can dramatically reduce your construction budget.

The 5% reduced rate of VAT is available for a wide range of residential conversion and renovation projects. However, many overlook it.

The 5% rate of VAT applies for three types of ‘residential conversion’:

-A ‘changed number of dwellings’ conversion

-A house in multiple occupations (HMO) conversion

-A ‘relevant residential purpose’

If you convert a building or part of a building and the result is a different number of dwellings, whether that number goes up or down, then the services of builders, and the materials they provide along with their services, are at the rate of 5%, rather than the usual 20%.

The rate also applies for converting single occupancy dwelling to multiple occupancy dwelling (HMO), and converting buildings into certain types of residential property, of which the most frequently found are care homes and children’s homes.

4- Use unregistered traders

This is a benefit to using the small guy, operating on his own or perhaps with one partner.

If you are using a VAT-registered contractor for a more major project, it’s sometimes possible to arrange to pay their subcontractors direct, rather than via the main contractor.

In this instance, you may be getting the benefit of a VAT-free deal, whereas the main contractor would, of course, have to add on 20%.

5- Car accessories

If you use a car for business purposes and it has been purchased by the VAT-registered business, you can claim back VAT on accessories you buy and fit later.

6- The scorched-earth policy when rebuilding a house

Often such alterations are so wide ranging as effectively to create a new house.

But the nub of the VAT situation here is that anything short of a complete rebuilding, involving razing the walls of the old house to the ground, will not qualify for the VAT ‘zero rating’.

So, if you demolish the old house completely, rather than, say, retain some walls it could also end up quite a bit cheaper because all the materials and labour involved in building the new house are completely VAT free.

7- Business splitting

In some business, 20% of turnover is equivalent to 20% of profits, because the sort of businesses whose customers can’t reclaim the VAT can find a 1% increase in their sales income results in a 19% reduction in their profits.

This basic rule is got round by different individuals, or different companies, running the different businesses.

8- Keep your accounts in order

The most important tip of all is to make sure your accounts are in order, as VAT mistakes can be costly and time-consuming.

Make sure you have a good team of accountants handling your tax affairs for you, especially if you decide to embark on tax-saving strategies.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

The post How to reduce your VAT bill appeared first on Ilyas Patel Accountants in Preston.

Tax Free Employee Benefits

ilyas Patel — Thu, 23 Feb 2023 11:03:29 +0000

Tax Free Employee Benefits

Looking for a way to motivate employees? Have a look through these tax-free benefits you can offer your staff as a way of rewarding them for their hard work.

(2-minute read)

We will cover:

Tax free ways to reward employees

Tax free benefits for employees

There are a number of tax exempt rewards or ‘perks’ you can offer to employees.

Employers can use these options to set up a tax efficient remuneration strategy.

You can tailor any of these options which will provide different benefits of value to employees, completely free of tax and National Insurance Contributions (NICs):

A mobile phone or a Personal Digital Assistant (PDA)

Equipment e.g. computers, laptops, smart phones

A bicycle and safety equipment

Refreshments

Breakfast for early starters if available to all staff (see Lunch)

Lunch and refreshments while at work

Travel expenses: to temporary workplaces

Travel expenses: late night working/car sharing failure

Subsistence costs when travelling on business

Annual parties and functions

‘Trivial’ gifts & benefits (up to £50 per gift, £300 per year)

Round sum overnight allowances

Free vehicle parking at work

Interest-free borrowing beneficial loan (up to £10,000)

Employer contributions to company or employee’s own pension scheme

Pensions advice to the value of £500

Recreational benefits

Childcare vouchers, or a workplace nursery

Training and course fees

£6 per week for homeworking

Medical and optical check-ups

A pool car

Low benefit-cost on low emission car

Low benefit-cost on low emission van

A van for commuting

A personal numberplate

Relocation expenses

Reimbursement of travel costs when coming to work in the UK

Capital growth in your company via EMI options

Staff Suggestion Schemes: £25 to £5,000

Legal fees: employees no longer pay tax on legal support from their employer

Workplace charging facilities for electric vehicles (from 6 April 2018)

Job-related accommodation

Long service awards for at least 20 years service: max £50 per year of service

Life assurance policy premiums that provide an employee with death benefits

Premiums paid to a QROPS that provides retirement benefits are tax-exempt benefits

This is a good checklist, but if you require any further information on any other of the above perks please contact us. It is important that you read the details so that you do not fall foul of any tax traps.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

Kind regards Ilyas

The post Tax Free Employee Benefits appeared first on Ilyas Patel Accountants in Preston.

How To Minimise Inheritance Tax

ilyas Patel — Thu, 23 Feb 2023 10:56:56 +0000

How To Minimise Inheritance Tax

Worried about paying too much inheritance tax? We can help – read today’s tax tip to find out how to minimise your inheritance tax bill.

(4-minute read)

We will cover:

A few ways to lower inheritance tax
Why you should seek expert advice

An unwelcome tax

Inheritance Tax (IHT) is still as unpopular as ever.

In the UK, 1 in 25 deaths results in an IHT liability.

For the 2021-22 tax year, the government collected £6.1bn in inheritance tax bills, a 14% increase from the year before.

The figure for this year already looks set to breach that, and the Office for Budget Responsibility thinks the bill could reach £8.3bn by 2026.

The tax is payable when assets exceed the value of £325,000, at the rate of 40%.

Last November, chancellor Jeremy Hunt announced that the IHT nil-rate bands will remain frozen until 2028.

It has remained the same since 2009, and following the latest freeze, 10,000 more families could be dragged over the threshold.

However, with careful planning, there are ways to drastically minimise your inheritance tax bill and save more for your family.

How To Reduce Inheritance Tax UK – 6 Tips

1. Make a Will

First things first – make a will.

Without one, your estate will be divided according to a set of pre-determined rules, which could mean more money to HMRC than your loved ones.

2. Gifting Assets

The easiest way to pass your assets on to a loved one whilst minimising your tax bill is by gifting them.

But there are some things to consider.

Make sure you know the limits: you can gift up to £3,000 tax-free a year.

Gifts of £5,000 to children and £2,500 to grandchildren made in advance of a wedding are also exempt.

But anything over these allowances will be taxed if you die within seven years of making the gift.

3. Pension Pot

Another way to minimise your inheritance tax bill is by putting assets into your pension.

You can nominate beneficiaries should you pass away before you receive it.

The nominations must be submitted directly to your pension provider, and generally IHT isn’t payable.

However, if you die after the age of 75 your beneficiaries will need to pay income tax on the money they take out of the pension.

4. Hold AIM shares for two years

Investing in the London Stock Exchange’s AIM (previously the ‘Alternative Investment Market’) comes with IHT benefits.

You can minimise your inheritance tax liability through BPR (Business Property Relief) if you invest in AIM shares.

BPR is an important tax relief for shareholders of family companies because the shares will be covered by BPR on death.

This allows multi-generational family businesses to minimise their tax bill, including inheritance tax.

However, not all AIM shares qualify, and you must hold the shares for at least two years to be exempt from IHT.

To avoid any headaches, speak to a financial adviser.

5. Set up a trust

Setting up a trust to hold your assets is another option to consider.

You can transfer assets with a value up to £325,000 into a discretionary trust potentially without paying IHT.

The reason for this is that when assets are transferred into a trust, they are no longer part of your estate.

This might be a useful option when you believe your beneficiaries (e.g., your children) are still too young to look after your assets.

You could also buy an insurance policy that covers IHT liability.

This should be written in trust, and you should seek help from a financial adviser to do so.

Writing your life insurance policy in trust means the pay-out will go directly to your beneficiaries, rather than forming part of your legal estate, which could mean no IHT will be due.

6. Donating to charities

Finally, you could donate to charity, as well as museums and political parties.

If you give at least 10% of your estate to charity you could get a discount on your IHT rate for the rest of your estate, lowering it from 40% to 36%.

It may be worth speaking to a financial planner for some of these ideas because they depend on your specific case and must be followed carefully.

By speaking to us, you can significantly reduce your inheritance tax bill. Find out how by getting in touch with our team.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

Kind regards Ilyas

The post How To Minimise Inheritance Tax appeared first on Ilyas Patel Accountants in Preston.

Plant and Machinery: Definition

ilyas Patel — Thu, 23 Feb 2023 10:50:20 +0000

Plant and Machinery: Definition

What’s the definition of ‘plant and machinery’? Find out on today’s tax tip.

(3-minute read)

We will cover:

Some examples of plant and machinery items
How they relate to claiming business expenses

Plant and machinery definition

Plant and machinery is a broad term that refers to the items you can claim using capital allowances.

They’re existing items within the building that you use to maintain your business and include a broad variety of categories.

Some examples listed by HMRC are:

Items that you keep to use in your business, including cars
costs of demolishing plant and machinery
parts of a building considered integral, known as ‘integral features’
some fixtures, for example fitted kitchens or bathroom suites
alterations to a building to install plant and machinery – this does not include repairs

Integral features

Integral features are:

lifts, escalators and moving walkways
space and water heating systems
air-conditioning and air cooling systems
hot and cold water systems (but not toilet and kitchen facilities)
electrical systems, including lighting systems
external solar shading

Fixtures

Fixtures can be:

fitted kitchens
bathroom suites
fire alarm and CCTV systems

In accounting, plant and machinery are assets used by a business for the purpose of running it, but do not include stock in trade, the business premises or part of the business premises.

What’s the difference between plant and machinery?

The difference between plant and machinery is that generally machinery will have moving working parts, and plant will not (though computers and similar electronic devices are considered machinery, despite having no moving parts). The working parts of a machine are also considered to be machinery.

Classification

For the purposes of claiming capital allowances, which are expenditure a company can claim against taxable profit, most tangible capital assets used in the course of a business can be classed as plant and machinery.

Plant and machinery examples

There is no exhaustive list of plant and machinery assets, and whether an item qualifies for capital allowances depends on its use for your business.

Some examples of assets which may qualify for either the super-deduction or the 50% FYA include, but are not limited to:

Solar panels
Computer equipment and servers
Tractors, lorries, vans
Ladders, drills, cranes
Office chairs and desks
Electric vehicle charge points
Refrigeration units
Compressors
Foundry equipment.

As you can see, it’s a wide-ranging classification as this list includes vehicles, miscellaneous equipment and machinery as well as furniture.

Plant and machinery valuation

If you’re running a business that maintains a large fleet of vehicles, equipment, machinery, or tools, it’s important to value your assets.

It’s also important to keep receipts of any expenditure to claim back the costs.

We have posted a series of articles to better inform you of the benefits of claiming capital allowances and the types of reliefs available:

Speak to us and we will help you get the best savings. Don’t miss out on this valuable tax-saving tip!

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

The post Plant and Machinery: Definition appeared first on Ilyas Patel Accountants in Preston.

Can A Furnished Holiday Let Claim Capital Allowances?

ilyas Patel — Thu, 23 Feb 2023 10:44:30 +0000

Can A Furnished Holiday Let Claim Capital Allowances?

If you own a Furnished Holiday Let (FHL), you’ll be able to highly benefit from claiming capital allowances.

(4-minute read)

We will cover:

The tax benefits of claiming capital allowances for FHL owners
The rules surrounding capital allowance claims

Furnished Holiday Let Rules

But what qualifies as an FHL?

To start with, it’s seen as a separate category from residential or commercial properties.

More specifically, for the purposes of tax, an FHL business is a trading activity.

To qualify as an FHL, a property must be:

Rented out for at least 105 days per year
Available for rent for at least 210 days per year
Furnished to a standard that allows everyday occupancy
Used as a let by tourists and holidaymakers (i.e., not rented out to family and friends)
Located in the United Kingdom or another country within the European Economic Area (EEA)
A short-term rental that is not rented out for more than 31 days to one individual or family

It’s important to take these factors into consideration for the purposes of claiming capital allowances as residential properties aren’t eligible.

Claiming Capital Allowances on FHL

You can claim capital allowances on certain items such as furniture and white goods (fridge and freezer) amongst others.

The general rule is that the expenditure must be wholly and exclusively for the purposes of the holiday letting business. This is an important factor in terms of eligibility to claim capital allowances.

You should therefore keep full and detailed records of all expenditure (obtaining receipts wherever possible) so that you do not miss out on claiming valuable tax relief.

Cash basis

If you want to claim capital allowances and your profits are under 150k a year, a cash basis is a simpler way of keeping track of your profits and losses.

Under the cash basis, property business income and expenses are accounted for when money is received or paid, not on the date of the invoice.

So instead of preparing a balance sheet and profit and loss account, the business records only need to show money when it comes in or goes out.

Pensions

Keep in mind that the income generated from an FHL property is classed as ‘relevant earnings’ which allows you to make tax-advantaged pension contributions.

Capital allowances will deduct the cost of capital expenditure from your taxable income, allowing you to keep more money for your pension.

Furnished Holiday Let Capital Allowances

Capital Allowances can provide you with significant tax savings, depending on your tax bracket and expenditure.

The value of capital allowances will vary significantly depending on the build costs and specification but can exceed 25% of the purchase and refurbishment costs on a new holiday let project.

For example, if you purchase a property for £550k and spend £250k in development expenditures, the available capital allowances could amount to £200k, which for an additional rate taxpayer would mean tax savings of up to £90k.

Therefore, you should speak to an adviser to find out how much you could benefit from claiming capital allowances.

So, what are some of the specific tax benefits you get through capital allowance claims?

Annual investment allowance (AIA)

This can be particularly lucrative for higher and additional rate taxpayers, who can set the relief against their rental profits at their highest marginal rate of tax – 40 per cent or 45 per cent.

While capital allowances are generally spread over several years, keep in mind that the annual investment allowance (AIA), which provides 100 per cent tax relief in the year of expenditure, will generally be available, meaning you can take full relief upfront and significantly reduce your tax liabilities.

Super deduction

The super deduction allows you to deduct 130% of the qualifying expenditure from your profits and could save you thousands.

Companies can also benefit from a 50% first year allowance for expenditure incurred in the same period which would otherwise qualify for writing down allowances at the special rate of 6%.

Private use adjustment furnished holiday lets

Keep in mind the point we’ve made earlier in the article, that FHLs must meet a series of criteria to qualify and claim capital allowances.

The period in which you let a holiday property is verified by HMRC and they only allow the expenditure and allowances when it is let out to tourists and visitors.

If the property is let out to friends and family, i.e., for ‘private use’, HMRC will limit your ability to claim.

Consider the appropriate adjustment fully and ensure that it has been documented accordingly before completing your self-assessment tax return.

In conclusion, you should highly consider the help of a qualified tax adviser to ensure you get the most out of capital allowances.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

Kind regards Ilyas

The post Can A Furnished Holiday Let Claim Capital Allowances? appeared first on Ilyas Patel Accountants in Preston.

Capital Allowances On Commercial Property

ilyas Patel — Fri, 27 Jan 2023 16:31:54 +0000

Capital Allowances on Commercial Property

If you own commercial property or even a Furnish Holiday Let (FHL), you can benefit from capital allowances. Find out more and start saving on tax!

(5-minute read)

We will cover:

The legislation surrounding capital allowances
Why so many commercial property owners fail to claim

Definition

Capital allowances are a type of tax relief that is often overlooked by commercial property owners.

You can claim capital expenditure as an individual, company or partnership when you build or acquire commercial property.

They allow you to deduct part or the entirety of the cost of an item off your profits before you pay tax, and the savings can be quite significant!

When and what can you claim?

You claim capital allowances on your tax return, normally 12 months after you’ve made the capital expenditure.

However, you may also be able to make retrospective claims, to claim back the costs even years after making the expenditure.

It can be used for freehold or leasehold expenditure, specifically to fixtures within a building.

The term ‘fixture’ defines something that is fixed within a building – it is otherwise known as ‘plant and machinery’ which is installed, for example, items such as toilets, lifts, general lighting, among many others.

Capital allowances on commercial property

If you own a commercial property or furnished holiday let, capital allowances are a valuable form of tax relief.

Because you can make historical claims, it doesn’t matter whether you own a building or not, you can still claim capital allowances.

It can come to you in the form of a huge tax rebate and an ongoing reduction in your tax bill.

It is estimated that less than 10% of UK commercial property owners have made capital allowance claims, and more than 90% of property owners have huge sums of money resting within the HMRC awaiting claim.

Plant and machinery

A reason why commercial property owners might forget about the benefits of capital allowances is because they might think they’re not eligible.

However, the ‘plant and machinery’ within the building you own can provide you with huge tax savings.

Plant and machinery items will make up the intrinsic fabrication of a commercial building and include heating and cooling systems, emergency lighting, security systems and sanitary ware etc.

Their costs are typically not segregated from the building cost and no allowances have been claimed when acquired on a freehold agreement.

To claim allowance, the items must be on this list and therefore be an ‘integral part of the building’ whether you’ve acquired them or need to replace them.

When you cannot claim:

According to HMRC,

You cannot claim on costs:

for any residence or any structure located in the grounds of a residence which also qualifies for plant and machinery allowances

you’ve already used to claim another allowance

for other items included in the price of the structure, such as land, integral features and fixtures

for planning permission

for financing, such as loans

for public enquiries or legal expenses

for landscaping or land reclamation

for which you received a grant or contribution

Structures and buildings allowance

If you’re unable to claim capital allowances, you might be able to claim structures and buildings allowance (SBA), at 3% per annum.

Capital allowances pooling requirement

When it comes to sales agreements, a buyer normally must abide by legislations to be able to claim capital allowances.

One of such legislations is the pooling requirement.

It states that the vendor must pass the potential claim value of the fixtures in the property through their capital allowances computations before transferring any such value to the buyer.

So if a seller might have potentially claimed capital allowances, he will have to add the full amount of claimable fixtures to his capital allowances computations (into a ‘pool’), and agree on transferring them to the property buyer.

This will allow the buyer to access the tax benefits.

Capital allowances on residential letting property

You can claim capital allowances for certain types of residential lettings businesses.

You cannot claim Plant and Machinery allowances used in a dwelling house.

A Furnished Holiday Letting (FHL), however, is treated as a trade for Income Tax, so you can claim capital allowances.

Landlords of furnished and unfurnished properties may claim replacement of domestic items relief instead of capital allowances.

A landlord can also claim capital allowances on the cost of office furniture and equipment.

Conclusion

Capital Allowances are now more valuable than at any point in the last decade.

The super deduction will end when the new tax rate goes up, but this doesn’t mean a reduction in relief for capital allowances.

The super deduction could offer 24.7p on the £1 saving for main pool plant & machinery expenditure.

From April 2023 onwards, the Annual Investment Allowances will attract relief of 25p on £1, for all plant & machinery expenditure up to £1m spend.

With the AIA limit now remaining at £1m permanently, you can still get huge relief through capital allowances when buying and developing commercial property.

Relief generated through capital allowances can offer savings of up to 45p on the £1 for those paying the additional rate.

Keep in mind that all these benefits will remain hidden unless you are proactive and seek the help of a tax adviser.

At Tax Expert, we will help you maximise your tax reclaim by assessing your specific situation.

Sending an e-mail is simple too, just fill out this short form and we’ll get back to you!

Kind regards Ilyas

The post Capital Allowances On Commercial Property appeared first on Ilyas Patel Accountants in Preston.

Is it time for an Accountant in Preston?

ilyas Patel — Wed, 26 May 2021 10:51:27 +0000

Is it Time for an Accountant in Preston?

Have you ever wondered, “Do I need an accountant?”

How long can you hold the fort before an investigation comes knocking over a mistake and you need an accountant by your side?

This article will explore the difficulties of managing the financial aspects of a business and how an accountant in Preston can help.

Help with your payroll.

If you’re a small business owner, you already understand the importance of keeping your payroll up to date. Especially if you’re looking into COVID-19 business support initiatives such as furlough grants.

It’s hard work, keeping the payroll free from mistakes, processing it, preparing the tax filings, and tracking paid time off. So many places to slip up and leave behind errors.

A qualified accountant can dramatically reduce the time you already spend on finances and allow you free time to focus on what really matters: Improving your business & making a profit.

It’s important for business owners to spend time “on” their businesses rather than “in” their businesses if they ever hope to grow and expand.

An accountant takes care of the financial aspects of a business and offers the following advantages:

Ilyas Patel Accountants help you get and stay organized.
Business accountants create and manage effective systems to track all your financial data. They prepare processes that stick to deadlines and cater to all your responsibilities.
Accountants help you document finances.
All businesses need simple and clear documentation of their operations in case a stakeholder or auditor comes knocking.
An accountant removes all guesswork and makes things as transparent and easy to understand as possible.
Accountants catch details you can easily miss.
The smallest details can carry the biggest repercussions. Payroll is an important aspect of any business and failing to pay attention to the nitty gritty can affect the future of your business.
Accountants know the ins and outs of your books and help you minimise liability and maximise payroll processes instead.

What is “Making Tax Digital”

Making Tax Digital(MTD) is the government’s endeavour to make it easy for individuals to get their taxes right, on time, and without any fuss.

The HMRC is taking huge steps forward to create a paperless future where all tax records are administered digitally.

MTD is an effort to make the entire tax process effective, efficient, time-saving, and simple.

The Exchequer reports that avoidable mistakes can end up costing the masses £8.5 billion in a single financial year. Most people want to get their taxes right, and on time, but are intimidated by the whole process and want a simpler way to do things.

MTD helps in this regard by introducing powerful software to create digital records that can avoid errors, reduce the amount of tax lost, and keep things simple.

The HMRC introduced the MTD initiative on 1 April 2019, with the ultimate goal of going paperless. Here are some of the powerful tools that you can use to reach that goal.

Xero Accounting Software

Xero is a powerful platform with nearly a million users all over the world.

Xero can automate bank feeds.

Xero can seamlessly import bank statements for you and automate the entire process.

Xero can convert currencies with ease.

An automatic currency converter handles every currency you can think of, minimising expensive errors with its built-in algorithms.

Xero is user-friendly.

This software is powerful, yet easy enough for the average layperson to use even if they don’t have in-depth accounting knowledge.

Quickbooks Pro Accounting Software

This complex software can tackle everything from accounts payable, accounts receivable, reconciliation, payroll, and financial reporting.

Quickbooks can manage your money efficiently.

This software connects to your bank accounts and displays all the relevant information in a single screen. It can check pending invoices and makes tracking transactions easy in the event of audits.

Quickbooks lets you bill your customers with ease.

From small expenses such as dinners, to large expenses such as international flight payments, Quickbooks manages it all and allows you to quickly send your bills to your clients.

Quickbooks manages all your sales invoices.

This software can instantly generate receipts and keep track of all sales and invoices at the single click of a mouse button.

Free Agent Accounting Software

This simplified tool allows you to handle complex transactions with ease.

Free Agent is small-business friendly.

This software comes with all the financial tools you will ever need to benefit contractors and freelancers alike with its vast array of features.

Free Agent provides invoice management

You can create and send invoices with ease. You can estimate the invoices and sort them based on approval or rejection.

Free Agent tracks your expenses

By connecting to your bank feed and importing bank statements, you can track your expenses with a simple click. You can attach expenses to individual projects and shoot out an invoice quickly and smoothly with minimal interference.

Tax Investigations Support & Advice

A tax investigation can be an expensive and damaging affair. Even if you successfully defend yourself, you might not be able to recover costs from the tax authority. So what can you do?

A tax accountant can help you through the entire investigation process and make it as painless as possible. They can ensure your tax returns are accurate and complies with all UK tax regime laws.

Aside from providing essential COVID-19 business support, an accountant can protect you against future tax inspections and give you critical peace of mind at the tensest moments.

Ilyas Patel Accountants in Preston prides itself on high-quality professional advice rendered with competitive prices and a friendly smile. Contact us today to get your affairs in order and protect your future self from unwanted tax investigations.

Why do I Need A Bookkeeper?

A bookkeeper creates and handles a system that organizes your sales, purchases, payments, and receipts.

They record all your financial transactions and help you make sense of the numbers. Are you at a profit or at a loss? What steps can you take to pull out of a loss and move into a profitable scenario instead?

Qualified business accountants and bookkeepers are essential to handle the financial health of your company.

They don’t just collect receipts and track payments and expenses. They give you a total picture of your financial health. They allow you to make sound business decisions based on accurate financial data that can be hard to understand without a background in finance.

Most of all, a professional bookkeeper will save you an incredible amount of time you would otherwise spend on tedious financial tracking. Most people leave the account books until the last minute and only scramble into attention when the tax filing deadline creeps up. A bookkeeper will stay on top of your finances and never play catch-up. We at Ilyas Patel accountants in Preston, assure you that you’ll be ahead of the curve.

A bookkeeper identifies cash flow problems.

By recording the day-to-day transactions that take place, your bookkeeper understands your income, expenses, and spending habits to see where problems lie.

A bookkeeper gently guides you into tax season.

By providing you with interim or year-end financial statements, you have a clear picture of your financial health and understand your annual tax obligations.

A bookkeeper protects you against audits.

By keeping up-to-date and complete records, your bookkeeper allows you to undertake audits with ease and allows you to get back to business sooner.

Help with HMRC Self-Assessment

The last thing you want is to scramble as the tax filing deadline draws near and wonder how to even file a return.

Most people want to ensure their taxes are done correctly, on time, and without any complications. At Ilyas Patel, we help you do just that.

Accountants in Preston help you get things right the first time around and save you an incredible amount of time otherwise spent on guesswork. Professional accountants have a wealth of experience handling tax returns, so they can offer you peace of mind knowing that your HMRC self-assessment will be done in a timely manner.

A specialist accountant even provides additional insight into your tax obligations. You can use this to save money, minimise liability, and submit your tax return to the HMRC and confirm the amount due to be paid.

Help with my Annual Accounts

All businesses must submit annual accounts and the tax return to the Companies House and HMRC within nine months before the end of the financial year.

This is a complex and intimidating endeavour that requires a lot of expertise and specialist knowledge. A complex endeavour that is solved easily with the help an accounting firm can offer.

At the end of the day, accuracy and timeliness are key.

Your business will be evaluated by third parties to ensure everything is in order when it comes time to lend money to your business or invest in your business. A knowingly wrong financial report can throw those things into jeopardy.

A qualified accountant can help you with your annual accounts. At Ilyas Patel, we have a combined 40 years of experience in filing the tax returns of our clients, and they have never been happier.

If you’d like simple, clear, and time-saving advice on what to do for your annual accounts, contact us below, to see how we can help you.

Contact us Today

The post Is it time for an Accountant in Preston? appeared first on Ilyas Patel Accountants in Preston.

Coronavirus Business support 2021

ilyas Patel — Tue, 25 May 2021 13:06:48 +0000

Coronavirus Business Support 2021

COVID-19 has left an irreversible mark on the world and economy with effects that will last for years to come.

Since the government has issued social distancing measures and lockdown orders to curb the spread of Covid-19, the market has faced unprecedented difficulties that has hit many businesses hard.

The financial and banking sectors have responded by introducing a range of measures meant to support business owners during this time. This comes after heavy recommendation by tax experts that the coronavirus would only increase income inequality unless immediate measures were taken.

Employment, travel, retail, shipping, and a number of industries have been gravely disrupted. But there is plenty of support and guidance such as COVID-19 business loans to help people get back on track.

Covid Lockdown Grants

Chancellor Rishi Sunak set forth a £4.6 billion grant for the retail, hospitality, leisure, and other sectors most harshly affected by the pandemic.

Non-essential businesses have been forced to close, but they will be provided with a one-off grant that is worth up to £9,000. COVID-19 support also comes in the form of discretionary funds being used to support disrupted businesses. This is in addition to £1.1 billion being allotted for local authorities and local restriction support grants that offer £3000 every month along with an extension of the furlough scheme.

These top ups are expected to help people recover from the current crisis and benefit more than 6,00,000 businesses all across the UK.

The cash grants are dispensed on a per-property basis and provide benefits of up to £3000 every single month along with an extension of the furlough scheme.

These top ups differ based on the rateable value of the property.

Businesses with a value of £15,000 or under receive £4000.

Businesses with a value between £15,00 and £51,000 receive £6000.

Businesses with a value over £51,000 receive £9000.

For more information, contact your local council to see the options available to you.

Coronavirus Job Retention Scheme (Furlough)

The Coronavirus Job Retention Scheme(CJRS) is an initiative that allows employers to access financial support to pay a portion of their employee’s wages. The purpose of this is to help businesses retain talent that they might be otherwise forced to lay off because of the pandemic.

All employers with staff can claim support under this scheme.

This initiative entails the CJRS paying a portion of a worker’s salary for up to £2,500 per month. Staff that have been previously fired due to COVID-19 since 23 September 2020 can be re-employed and then furloughed.

The business is required to provide payment for the National Insurance Contributions and the pension contributions.

There is no need to pay for the hours an employee hasn’t worked under this initiative. You can use the partial or complete furloughing options to top up your employees wages as you see fit.

While on furlough, your employees cannot do any work that makes money or provides services for your business whatsoever.

This initiative will continue until 30 September, 2021. After June, employers will be expected to pay 10% of the hours the staff don’t work, with that amount increasing to 20% come August and September.

All claims need to be made in advance, and an absolute cap of £2,500 applies every month. Along with claims made with respect of an employee for a minimum seven day claim window.

To start the process, simply

Identify your employees as furloughed or flexibly furloughed
Notify them via writing that they are furloughed
Calculate how much you need to claim using the convenient online government calculator provided here.

Statutory Sick Pay (SPP)

Your employees qualify for SPP if they have been sick and cannot work. This requires them to take more than 4 days off in a row, which includes non-working days.

The first three days are known as the waiting days and require no payment. The fourth day is called the qualifying day and is the day on which you start making payments.

Employees do not qualify if they have worked even a single minute on a day before taking the day off for sickness.

The SPP rates for the years of 2020-2021 stand at £95.85 per week. This caps out at a maximum of 28 weeks.

The SPP rates for the years of 2019-2020 stand at £94.25 a week.

To reclaim SPP, your employees must either have

Presented COVID-19 symptoms
Self-isolated because of having to share a household with someone presenting COVID-19 symptoms.
Been advised to shield themselves

You can ask employees that are shielding to give you a letter from the NHS or their GP stating that they are advised to stay at home.

SPP is earned income that requires payment of income tax and Class 1 National Insurance contributions. You should always consult a Tax Expert to ensure your SPP isn’t causing unwanted ramifications.

This initiative lasts until 30 September 2021.

Deferred Holidays

The government introduced new laws in 2020 to allow employees to carry over four weeks of statutory paid holidays into their next two holiday leave years. This applies to holidays not taken due to COVID-19 related issues.

As part of Coronavirus business support, employers are advised to encourage all workers to take their statutory entitlement to holidays in one year. They will lose the holiday otherwise, and it is especially important during these times to take care of one’s health.

Some businesses might have existing arrangements in place regarding their extra holidays that determine if they can be carried over or not. If they don’t, it’s left entirely up to the employer’s discretion whether to allow extra holiday carry over or not.

Self-Employment Income Support Schemes(SEISS)

In addition, the fourth and fifth Self Employment Income Support Schemes(SEISS) have been introduced as part of Coronavirus business support.

The fourth SEISS grant stands for 80% of trading profits, up to a total of £7,500. This covers the income affected from February 2021 to April 2021.

The fifth SEISS opens in July 2021 and covers the period of May 2021 to September 2021..

This grant also stands for 80% of the trading profits, up to a total of £7,500. But this only applies if turnover is reduced by at least 30%.

If the turnover is below 30%, then you will be entitled to only 30% of your trading profits over this time period.

The online applications must be completed by 31 May 2021 so that HMRC can process the 2019-2020 Self Assessment Tax Returns.

Restart Grant Scheme

The Restart Grant scheme is a one-off initiative that’s aimed at providing support for businesses that are reliant on in-person services for the general public during these difficult times.

Workers in the fields of non-essential retail, hospitality, accommodation, leisure, personal care, and gym sectors are affected under this scheme, as it has come into effect on 1 April 2021.

This scheme comes in two types

Grants of £6000 aimed at helping non-essential retail businesses
Grants of £18,000 aimed at helping workers in the hospitality, accommodation, leisure, personal care, and gym fields.

To qualify for this scheme, you business must be listed with premises as a Rate Payer. Local councils are allowed to further limit or change the criteria under which people can qualify for this scheme.

To find out if you qualify, consult your local council for more information here.

Recovery Loan Scheme

The Recovery Loan Scheme(RLS) is a government sponsored loan program. It supports the borrowing of amounts up to £10 million for individual businesses, and amounts of up to £30 million for those in a group.

This initiative was designed to help businesses of all sizes transition through the COVID-19 pandemic safely. It was launched on 6th April 2021, replacing previous government initiatives such as Bounce Back Loans and the Coronavirus Business Interruption Loan Scheme.

Funds acquired through the RLS can be used for any legitimate business purpose. Lenders are provided a guarantee of 80% on losses that arise on facilities of up to £10 million. The government essentially provides 80% of the support. However, you personally assume 100% of the liability in exchange.

Facilities above £250,000 are required to take security. It’s at the lender’s discretion on whether they take any personal guarantees or not.

The maximum length for overdrafts and invoice finance facilities is three years. The maximum length for loans and asset finance facilities is six years.

The RLS initiative is available for anyone that’s previously borrowed under COVID-19 lending schemes. Unlike prior loans, Business Interruption Payments will not be provided to cover interest payments.

You might qualify for this scheme if

You are trading in the UK
Your business would be viable if not for COVID-19.
Your business isn’t involved in collective insolvency proceedings.

You can access the details of this scheme through the government’s network of authorised lenders, such as the BBB.

The British Business Bank and accredited lenders have been asked to administer the government’s coronavirus Business Interruption Loans Schemes to help in funding businesses.

This initiative only runs from 6 April until the end of 2021.

Contact us Today

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