Tax Archives - Page 2 of 2 - Nimbus Accounting

Penalties for missing the 31 January deadline

If you are one of the many people that is getting over the festive period and now thinking about doing your personal Tax Return, here is a brief reminder of the penalties for missing the 31 January deadline:

• An initial £100 fixed penalty, which is chargeable even if there is no tax to pay.
• After 3 months, daily penalties of £10 per day, up to a maximum of £900.
• After 6 months, an additional penalty of 5% of the tax due or £300, whichever is greater.
• After 12 months, a further 5% or £300, whichever is greater. If the case is serious, the penalty after 12 months can be up to 100% of the tax due.

The penalties for paying late are 5% of the outstanding tax at:

• 30 days;
• 6 months; and
• 12 months.

Interest is chargeable on these penalties.

If you need an accountant to help and you live in the Brighton & Hove or Sussex area, give one of our Nimbus Accounting accountants a call on 01273 782 742. The cost of delaying this obligation could far outweigh any fees you might pay an accountant, plus an accountant will most probably reduce your tax bill.

Would you like to make money from the VATman?

If you run a VAT registered business, have you considered going on the flat rate? Providing your turnover is less than £150,000 HMRC will let you pay a fixed percentage of your sales (including VAT) each quarter, rather than analysing all the expenses and deducting the VAT you have suffered on your purchases from the VAT collected on your sales.

The VATman has a list of rates applicable to various industries, which can be found here: http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5 We suggest you calculate the payment that would have been due in your last quarter, if it is lower then it maybe time to change to the flat rate.

If you would like to talk to one of our chartered accountants about this, or any other accounting matter, please give us a call on 01273 782 742. 

Limited company contributions to a pension

If you run your business through a limited company and have made a profit that has not been declared as a dividend, we would recommend that you consider making a contribution to a pension.

Contributions to a pension, up to the £50,000 limit in any one input period, can form a deduction from the profits chargeable to corporation tax in the period in which the payment is made. Contributions within the limits do not give rise to tax or national insurance on the individual concerned, therefore making it an attractive method to extract funds from a company.

As part of our service at Nimbus Accounting, we regularly discuss the options available to our clients to help minimise their tax liability. If a pension contribution is something you are interested in, we recommend speaking to an independent financial advisor to ensure you get the best product to suit your current and future needs. If you would like us to help with this or any other tax matter, please give us a call on 01273 782 742.

Seed Enterprise Investment Scheme

Seed Enterprise Investment Scheme

With the banks still not lending to small businesses, are there other forms of external investment? The government has introduced the Seed Enterprise Investment Scheme (SEIS), which will sit alongside the existing Enterprise Investment Scheme (EIS), to promote investment in the smaller, early stage companies that would normally be overlooked by the EIS investor.

Does your company qualify?

The company must have fewer than 25 employees and assets of less than £200,000.  It can raise a maximum of £150,000 through the scheme, but no investor can receive more than 30% of the company.  The trade being carried on by the company at the date of issue of the relevant shares, must be less than two years old. The majority of trades are included, however there are exclusions and some other conditions to be aware of. More information is available at  http://www.hmrc.gov.uk/seedeis/how-to-qualify.htm.

How does the investor benefit?

The investor will receive 50% of the cost of the shares off his personal income tax bill, up to a maximum annual investment of £100,000. For the 2012/13 tax year only, if the investor has chargeable gains, realised on any assets in the year, he can also invest those in a qualifying SEIS in the same year (up to £100,000).  In both cases, if the shares are held for more than 3 years, on disposal there is no capital gains tax to pay. Therefore, it is possible to reduce your income tax bill by £50,000 and completely avoid capital gains tax on £100,000, so the maximum tax saving is £78,000 for a £100,000 investment. For more details and other conditions please visit  http://www.hmrc.gov.uk/seedeis/invest.htm

What do I do next?

Obviously you need to find investors; therefore you need an attractive proposition and a detailed business plan.  Once you have that in place, one of our professionals can help you obtain advance assurance from HMRC that your company will qualify for SEIS, something investors will insist on this prior to parting with their money. You also need to complete Form SEIS1 after the first 4 months of trading, or if not yet trading once you have spent 70% of monies raised, something we can help you with.

If you would like more information about the Seed Enterprise Investment Scheme, or any other approved tax saving opportunities, please get in touch http://www.nimbusaccounting.com/contact-us/.  Nimbus Accounting staff are all qualified accountants and have a specialist knowledge of SME accounting and taxation. We have offices in Brighton & Hove and offer face to face meetings in Sussex and virtual meetings to the rest of the UK. 

Use of home as an office

Use of home as an office

If you work from home then you are permitted to claim for the costs incurred in providing office/storage accommodation. You may claim a flat rate of £4 a week or a proportion of the specific costs incurred – https://www.gov.uk/tax-relief-for-employees/working-at-home. This provision can apply whether you are employed, self-employed or running your own limited company.  The rules are different in each case and the extent of your claim may impact your ability to claim Principal Private Residence (PPR) relief on any capital gain made on a disposal of your home. With this in mind, we will deal with each in turn:

Employed
If you are employed then your employer will need to specify that you need to work from home. This may be included in your contract or can be proved by routine (e.g. working from home on Fridays). The costs incurred (and not reimbursed by your employer) to provide the office space can be claimed as an expense in the employment pages of your tax return.

Self Employed
If you are self employed, you may use part of your home for storage or as an office. You may claim the cost of providing the space.

Limited Company
If you run your own company, you may use part of your home for storage or as an office. You may claim the cost of providing the space. Unlike the other examples above, this income needs to be reported in the land and property section of your tax return as the company is a separate legal entity. There will be no tax liability as the amount charged to the company will equal the costs incurred, so the profit is nil.

In all cases you will forfeit the PPR on any area that is permanently used as an office or storage.  Spare bedrooms that are only used during the day as an office, and revert back to private accommodation in the evening, will allow you to claim full PPR relief on the sale of your home.

If you would like to discuss the above in more detail, or want more tax saving ideas, don’t hesitate to contact Nimbus Accounting, http://www.nimbusaccounting.com/contact-us/.