Taxation Archives - Page 12 of 13

News,May 2018

Difference Between Sales Tax and VAT

George08/07/2022Tax Issues , Taxation

The development of a country’s economy has a lot to do with tax and related policies. There is a possibility of the production of the growth of the economy through the policies of taxation before the time as well. Due to this, the professionals keep on updating and making new policies with the help of finance experts. To make such decisions, the growth and capacity of people who will pay the tax are considered every year. People tend to confuse the difference between sales tax and VAT. Keeping this in mind, we aim to make this clear in this guide. VAT and sales tax are known to be the two popular tax structures. Their structure came into being a long time ago. This is certain that both VAT and sales tax serve the same cause as both of them are meant to apply to the services and products offered by different systems. However, there are still some differences that make them both define uniquely. We have gathered a basic and introductory explanation of VAT and sales tax along with the prominent differences between them. Get in touch with one of our experts if you are stuck with your sales or value-added tax. We will offer to provide instant help. What is Value Added Tax VAT is the abbreviation of value-added tax. It is a system that is multi-stagged taxation. At the level of production, VAT is the kind of tax that is charged whenever a value is added. VAT is paid by the consumer and it tends to increment at every stage of the production of whatever product your business offers. In the case of shared services, VAT is compensated as well. VAT is not meant to charge on each step of the production. When it comes to export, VAT is not charged and exports are considered exempt from this. It is vital to keep in knowledge that when a buyer pays the amount of money to purchase your service or product, the cost of material used in the production will be subtracted. Moreover, VAT is a standardised model and does not tend to affect the customers more than the income tax. individuals with lower income find it difficult in the longer run. Because VAT cumulates at the production stage, it is known as cascading tax. VAT is not affected by the income of the taxpayers because it is allowed to charge only on the utilised products and services. Unlike the case of income tax where the tax percentage is more if one earns more money. VAT is equal for all the consumers who use your services and products. An Introduction to Sales Tax When it comes to the sales tax, it is charged on a product at the time of sale. It is known as the consumption tax that applies at the point of sale of any products or services. The formula for sales tax collection is easy and simple. When a consumer purchases any product, the retailer will collect it and submits it to the government. All the businesses come under the liability of the sales tax. The total value of the product is charged with the sales tax. Unlike VAT which is shared on every level of the production stage when value is added to the product, sales tax is known for adding to the cost of the product. The value of the product is changed due to this and the tax will be collected in this process as well. According to the research of economists, sales tax does not involve any harmful factors to intervene in the growth of the economy. This is because the sales tax does not change as the income or business profit of the consumer changes. Difference Between Sales Tax and VAT The prominent difference between VAT and sales tax is the way it is applied to a commodity. Other prominent features that belong to these types of taxation structures are listed and explained below: The application of the tax in both structures is different. Because in the case of VAT, it is allowed to charge tax at every level of production while sales tax is charged on the cost of the product when it is time to sell the product. VAT is known as a taxation system that is multi-stagged and tends to cascade at all levels of production. On the other hand, sales tax is known to be a single-point ta system. It is not possible to evade VAT, however, there are legal possibilities to evade sales tax. VAT is a tax type that belongs to the vale added stages of a product whereas sales tax belongs to the single-stage when the overall value of the product is finalised. VAT is supposed to be a burden that is given to all the manufacturing entities right from the initial stage of production till the product is finalised. However, sales tax is only for the end-user to be paid. The Bottom Line Now that you have gathered a fair amount of information about the difference between sales tax and VAT, we can bring the discussion toward wrapping up. We can sum up by saying that VAT and sales tax are two prominent structures of the taxation system that are mainly used to charge tax on the products and services offered by businesses. However, the way both VAT and sales tax is applied to the products is different from each other. Which makes each tax structure different and unique in its way. We hope these few minutes of reading will help you to develop a better understanding and help you to deal with the taxation systems more professionally. Reach out to our young, clever, tech-driven team members to learn the difference between sales tax and VAT. Call us on 02086868876 or email us today. Disclaimer: The information about the difference between sales tax and VAT provided in this blog includes text and graphics in general. This does …

Making Tax Digital (MTD): What Every Limited Company Must Know

George30/06/2022MTD , Tax Issues , Taxation

The process of making tax digital was designed by the government so that an easy and approachable way can be offered to business people as well as organisations. This will allow them to get the tax process promptly and manage it professionally. This way the submission of tax will be done with increased efficacy and in an effective manner. You will also be able to spare your time and energy to invest in your business and organisational growth. In this blog, we will provide information about the requirements of the MTD (Making tax digital) Scheme. This will help you to know how MTD work and the required tools that you will use to maintain well-managed online taxation. This will save a lot of your time to invest more efficiently in your business growth. Even if your organisation is under the list of thresholds that will compel you to make the tax online. We will initiate with a basic understanding of MTD (making tax digital). A Basic Understanding of MTD (Making Tax Digital) MTD is a way to make the tax process easy and handy. This option is placed by the government for the business individuals as well as the organisations. You will be away from the paperwork and the paper-based processes. This will make your work efficient and you will be able to save on cost, space, as well as your time. It will affect to increase the output of your financial planning. This will let you have more time and you will be more focused on the growth of your business and organisation. Speak to our young and clever team members to get your queries about MTD answered swiftly. Give us a call on 02086868876 to discuss your concerns and we will love to provide the best possible solutions. Who Needs to Follow MTD? 1. MTD for VAT If your business is VAT-registered, you must follow MTD rules, regardless of your turnover. This includes: Keeping digital VAT records Filing VAT returns using MTD-compatible software Submitting returns every quarter Important update for 2025: All new VAT-registered businesses are automatically enrolled into MTD. 2. MTD for Income Tax (MTD for ITSA) Starting in April 2026, MTD will expand to include individuals who are: Self-employed (sole traders) or Landlords earning income through property rentals The rollout will be phased: Start Date Who It Affects 6 April 2026 Income over £50,000 6 April 2027 Income over £30,000 Expected April 2028 Income over £20,000 (TBC) You’ll need to: Maintain digital records of your income and expenses Send quarterly updates to HMRC Submit a final declaration at year-end These rules apply in addition to your usual payment deadlines (e.g. 31 January). What Are the Benefits of MTD? Reduces paperwork and manual entry errors Saves time and boosts efficiency Provides real-time insights into tax liabilities Ensures compliance with HMRC requirements Helps avoid penalties by submitting on time Threshold Scenarios – What Applies to You? 1. Your Organisation Is Above the VAT Threshold If your taxable turnover is above £90,000, MTD for VAT is mandatory You must keep digital records and submit VAT returns using MTD-compliant software 2. Your Organisation Is Below the VAT Threshold If you are voluntarily VAT-registered (turnover below £90,000), you are still required to follow MTD rules for VAT 3. You’re Self-Employed or a Landlord If your total self-employment or property income exceeds £50,000, MTD for Income Tax applies from April 2026 If your income is under £30,000, you may not be required to comply until April 2027 or later What Software Do You Need? You must use HMRC-recognised MTD software to: Record income and expenses Submit VAT or income tax returns Stay compliant with reporting deadlines Popular MTD-compliant tools include: Xero QuickBooks Online Sage Business Cloud Accounting FreeAgent Spreadsheets alone are no longer acceptable unless they’re connected to bridging software. What Happens If You Miss a Deadline? HMRC has introduced a points-based penalty system for late submissions under MTD. One point is added for each missed deadline After reaching a penalty threshold, a fine is triggered (e.g. £200 for MTD for VAT) Points reset after a compliance period This makes it even more important to stay organised and submit on time. Are you confused about registering MTD and looking for professional help in this regard? We can help. Talk to one of our experts now and get instant help. The Bottom Line We can bring the discussion of making tax digital towards wrapping up as you have gathered a fair amount of information that will help you to develop a basic understanding. There is no doubt that the process of making the tax digital is to provide ease to businesses individuals and organisations, however, if the process is not done right, you will not get any benefits from it. This will rather put you in trouble. This will hinder the progress of your business growth. You can turn into being so occupied with the process that it will not spare your time and energy to invest and focus on the business. We hope these few minutes of reading will help you to process your MTD more efficiently. If you still seek for further help and information, getting in touch with a professional is always a good idea. Disclaimer: The information about making tax digital is provided in this blog including text and graphics in general. It does not intend to disregard any of the professional advice.

A Guide Based On Uber Drivers And Taxes!

George24/05/2022Tax Issues , Tax Saving Tips , Taxation

If you aim to be part of the strong community of Uber drivers in the UK, you need to have your calculations done about how much you can make as an Uber driver and what are the details of taxes for Uber drivers. The Uber drivers must be well aware of the fact that Uber is considered a self-employed company and this makes you liable for paying payroll taxes. The income Uber drivers are making is not subject to Uber taxes unless they think of filing taxes with HMRC. This will allow Uber the deduction from taxation. Sounds complicated much? The tax affairs are often complicated but you don’t need to worry as we have got you covered here in this comprehensive guide. You will everything you need to know about the eligibility to become an Uber driver, how much can you make by being an Uber driver, and what kind of tax details you will handle. What are the Requirements To Become An Uber Driver? There are certain conditions to be a part of any process or business. So is the case of being part of the Uber drivers’ community. It is wise to check the eligibility criteria to see if you meet the required standards before investing your energy further in the process. This includes the following: The individual must be of age 21 or over that to become an Uber driver. One should own a valid licence in the UK to work as an Uber driver. In case you own an EU or other foreign driving licence, the requirement is to exchange it with the driving licence of the UK. Uber offers help with the Ignition programme to get through the process even if you own a private car driving licence. It is required to have a car that was manufactured in the year 2008 or after that. Any car older than that is not workable as per Uber requirements. Income of Uber Drivers Explained By now you must be wondering about how much money you can make being an uber driver. Well, this purely depends on the amount of work you do. The more you work the more money you will get. In case you are occupied and willing to take minimum rides, even if it is one ride a month, you will be part of Uber books. The good news is that there is no limit to how much work you can do. It totally depends on you to decide your working hour and how many rides you can allow yourself in a month. Here comes the need to discuss the hourly rate. According to the head of the public policy in Uber UK, there are three typical hourly rates. The details are listed below: You can make £15 per hour in case you have your own car. In case you have a car available but you are paying for that vehicle and deal with car finance, your rate becomes £9 per hour. This rate becomes even lower in case you drive a car that is hired for the purpose. The rate in such a case is £8 per hour. By calculating these hourly rates you can have an idea that how much money you can make in your specific circumstances. And of course, you will deduct the expenses to reach the final figure of your income. Moreover, Uber’s cut is important to consider here. Uber’s cut is 25% of your income. Our Uber Accountants are just the right people to handle your tax queries, get in the car and reach out to us today or call us on 02086868876 or email us today. We will love to answer your tax queries. How Much Do I Pay? – Taxes For Uber Drivers? You know that Uber drivers are considered to be self-employed and they are responsible for paying the taxes as well as the national insurance. There is a requirement of completing self-assessment tax returns every year as well. But don’t you worry as you don’t have to pay the tax on all your income. This is applied only to the number of profits you are making. In simple words, you can make the deductions of your expenses before you calculate your profits and the tax you are bound to pay for it. In the UK, Uber drivers are sole traders mostly. The tax rates are the regular ones to follow for the sole traders as well. just like other regularly employed individuals. According to HMRC, the tax rate for the year 2022-2023 is as follows. The rates of national insurance are slightly different for sole traders. You have to pay as: The wage received from the company is £4.62 and £9.50 an hour. If your profits are between £9,501 and £50,000, you will follow 9 percent on profits and you come under class 4 national insurance. If it goes above £50,000, you will pay 2 percent. What Expenses Can I Claim as an Uber Driver? Being an Uber driver in the UK has benefits like flexible hours, but there are also car-related fees. To reduce your tax burden, you can claim costs just for Uber journeys. This includes gas, tolls, car washes, maintenance and even some of your vehicle’s depreciation. Don’t forget about phone expenses, ride-sharing insurance, and even passenger food! Keep careful records, however, as HMRC expects verification of deductions. The Bottom Line The discussion of Taxes For Uber Drivers can finally be summed up as you have gathered the basic information about the tax details applied as an Uber driver. This is important to realise that as an Uber driver, you are the one who is the major expense as a driver in this business. The expenses related to the car are also supposed to be deducted to get error-free figures about the expenses and the profits. Ensure the process wholly and exclusively to bring success factor to your business growth. We offer free …

A Guide Based on Key Ways to Reduce Corporation Tax!

George20/05/2022Tax Issues , Tax Saving Tips , Taxation

If a business owner aims to find key ways to reduce corporation tax, he can find more than 100 ways to do so. The will of reducing the taxes will help find a way. In this comprehensive guide, the smart and easy keyways are narrowed down for you which will be really helpful. Especially in the case of owners who carry out small businesses, there are multiple options to do so. If you are in the UK and associated with the business world the chances of reducing your taxes are even higher. There is no need to panic as according to research there are actually 32 ways to reduce the tax with the owners who carry out small businesses. Let’s discuss the most prominent keyways here to make the deadly tax year-end a little relaxing. Pay Your Civil Partner or Spouse In case you tend to pay your civil partner or your spouse for working without business as a salary. This will come under allowable expense and will save you from the tax bills. Consider the following ways to make it possible: Your spouse or civil partner earns an amount that is less than the amount of income tax-free allowance. The process will be free of tax and the amount goes straight into their pockets. This will help to grow family wealth and reduce taxes. So get ready to treat your family to some family trips with this smart earned amount. Moreover, in the case of a family member having shares in the business, he can additionally get the tax-free amount of dividends. This way makes it possible to extract some amount from your limited company and pay no tax on it. Furthermore, it is important o follow the right share structure for your business if you want to avail such benefits from the company. Our young and qualified team of professionals can actually give easy solutions to your tax problems. So pick up the phone and reach out to us now for instant help. Call us on 02086868876 or email us today. Gift Shares to Family It is to be considered that while you decide to gift shares to any of your family members, there is the possibility of tax implications. However, this is still worth doing as you will definitely be in a win-win situation. Employ Your Children Several people who are even carrying out their own business are unaware of this option and the possibility. This is important to know that your child should be over the age of 13. Some conditions for the working hours have to be followed as well as the child has to practically do some work for your business. Furthermore, a fair commercial rate can be given to the child. There can be a discussion on if you are paying your children, should it be a tax-deductible amount or not. Pension Contributions For those who are tired of dealing with the high tax rates, this one is the best solution to go with. The contributions we make for pensions are normally free of tax. Business and Personal Assets Sometimes businessmen use their own personal assets for the business. In order to reduce the tax liability there is a possibility to make a claim. An example of such businesses where you are using your gadgets like a laptop and mobile phone are considered as personal assets. You can make a claim for this personal asset. Wrapping Up Finally, the discussion of ways to reduce corporation tax can be summed up as the important information is well gathered and discussed in the guide. Dealing with taxation is often considered a complicated process, business-related individuals usually seek professional help to get rid of paying high amounts for tax bills. We hope these few minutes of reading will further help you to make smart and accurate choices to save your amount from paying taxes over the end of the financial year. If you are looking for a helping hand to talk about taxation, we offer a one-hour free consultation. Call and discuss your requirements with us for an instant solution. Disclaimer: The information about ways to reduce corporation tax provided in this article is general in nature. It does not intend to disregard any professional advice.

A Simple Guide Based On Small Business Tax!

George16/05/2022Tax Issues , Tax Saving Tips , Taxation

Individuals who are associated with sole trading or small businesses in the UK are mostly aware of small business tax. You might know about these several types of taxes like VAT to PAYE, however, this does not mean you are certainly sure about which one applies to your structure of the business. It mostly depends on the type of business your company carry out and then your business performance. This will help to measure the statistics and eventually narrow down to reach the tax type that applies to you. So, it is important to learn what are the unique circumstances you have at work and what pertains to those specific needs. Moreover, this comprehensive guide will explain the following: Learn Multiple Types of Small Business Tax The Suitable Type of Tax for Your Business Structure Wrap Up Learn Multiple Types of Small Business Tax The requirement of tax depends upon the type of business structure you have. Your business profits and income will also make a difference in the specific needs of your company. It is better to consider all the small details like your business is offering services or selling products as well as other specific conditions. It has been observed that people find it way complicated to figure out the suitable category for their specific business needs. Before delving further into the discussion, we will outline the possible types of small business tax types that your business might require to pay. Furthermore, this will help you to know the tax relief that you can claim and enjoy the benefits for your business. Here is a comprehensive overview of the types of tax. National Insurance Income Tax PAYE (Pay As You Earn) Business Rates Value Added Tax (VAT) Corporation Tax National Insurance: This is applicable when you are eligible for government benefits like state pension and others. Income Tax: This is a kind of tax that is on the business income and it has to be paid by the company if it is applied to it. PAYE (Pay As You Earn): A business that has a requirement to hire employees. This type of tax is applied to the income that is deducted from the employees’ salaries. Business Rates: At times your business is run with the use of non-domestic properties. If this situation relates to your business practices, tax on non-domestic properties is applicable to you as well. Value Added Tax (VAT): VAT is required if your business turnover exceeds £90,000 in a 12-month period. Corporation Tax: This kind of tax refers to the tax that is applicable to business profits and is paid by the corporation. We’ll help you get your VATs sorted out, get all your taxes filed on time, and let you know when you’re overpaying for any of them. Talk to our chartered accountants in Croydon today! The Suitable Type of Tax for Your Business Structure After reviewing the type of tax, you must be wondering about the suitable type that applies to your business structure. This depends on the legal structure you choose to carry out your business. This could include any one of the following: Sole Trader Partnership Private Limited Company Sole Trader: The taxable business profits come from the business, a sole trader has to pay tax on it. This is also a part of self-assessment. This practice is done on annual basis. The tax-free personal allowance limit has to be considered. If you are making any figure beyond this limit, you will have to pay income tax. Private Limited Company: The limited companies are liable to pay corporation tax on the profits that they are making. The good news is that you can claim certain tax reliefs on corporation tax as well. Some examples include the following: Creative Industry Relief, it is mandatory to pass the cultural test to get this relief. Some examples of such creative industries are video game production, museum and qualified galleries, and film production companies. Research and Development Relief is applicable when you intend to work with the creative advancement in your field or a project that is mostly related to technology and science. Property and income loss relief is applicable when you are struggling with property income loss. The disposal or sale of a capital asset also makes you eligible for this relief. Trading loss in the case of publically trading can make a claim as well. Partnerships: Normally the partnership directors are happened to be self-employed. The share of profits also comes under the responsibility of paying income tax. Here it is important to consider taxable income and personal allowances. Are you stuck with your taxes? Feel free to get our guys on a quick call. Call us on 020 8686 8876 or email us today. Wrap Up Finally wrapping up the discussion of small business tax since you have gathered important information that can help to build a basic understanding. The tax process is often considered complicated and we have tried to make it simple in these few minutes of reading. This can work as a roadmap to figure out the suitable type of business for your business. If you are still in doubt as to when it is due or how much you owe to pay, you can always seek additional help from professionals. We hope this guide will help you to make the right decisions in order to avoid any tax complications in future. Disclaimer: The information about small business tax provided in this article is general in nature. It does not intend to disregard any professional advice.

Second Job Tax: How to Pay Tax on Second Job

George20/04/2022Budgets & Other , Tax Issues , Tax Saving Tips , Taxation

Wondering about second job tax and how it might affect your income? If you’re thinking about taking on a second job, it’s important to understand how taxes work—so you don’t underpay or overpay. Whether you’re doing it for extra income, to support your household, or simply because you enjoy it, knowing your tax responsibilities will help you avoid surprises. Let’s explore the basics, how much tax you pay, and how to stay on top of it all. The Basics: Can I Take a Second Job? Before you start working a second job, consider these important points: Check your current employment contract. Some employers include clauses that restrict taking up additional employment, especially in similar industries or if it might affect your performance. Understand the working hours. Taking on more hours may affect your wellbeing or work–life balance. You must be paid at least the National Minimum Wage in both jobs. There’s no law stopping you from having a second job, but make sure it doesn’t breach any of your primary job’s terms and conditions. How Much Tax Do I Pay on a Second Job? In the UK, HMRC considers your highest-paying job as your main job and applies your personal allowance (£12,570 for 2025/26) to it. Your second job is usually taxed at the basic rate (20%) from the first penny you earn, as it doesn’t get any personal allowance. This is done using a tax code—typically: BR (Basic Rate – 20%) D0 (Higher Rate – 40%) if your total income is above £50,270 D1 (Additional Rate – 45%) if your total income is above £125,140 Example: If you earn £10,000 from your first job and £6,000 from your second job: Your first job will be tax-free (under personal allowance). Your second job income will be taxed at 20% using BR code. If your total income from both jobs pushes you into a higher bracket, HMRC may change your second job tax code to D0 or D1. How to Avoid Underpaying or Overpaying Tax To stay accurate: Tell HMRC when you start a second job so they can assign the correct tax code. Provide a P45 from your first job or complete a starter checklist for the second job. Check your tax codes on your payslips. Your main job should have a code like 1257L, and your second job should have BR, D0, or D1 depending on your income level. Review your income regularly to ensure you’re not pushed into a higher tax bracket unknowingly. Can I Split My Personal Allowance Between Jobs? Yes—but only if your total income from both jobs is below the personal allowance (£12,570). You can ask HMRC to split your personal allowance across both jobs so you don’t overpay tax. You’ll need to contact HMRC to arrange this. National Insurance (NI) on a Second Job You also need to consider National Insurance contributions: You pay NI separately on each job. If you earn more than £242 a week in either job, you’ll pay Class 1 NI at 12% (for earnings between £242–£967). If you’re self-employed for one job, you’ll pay Class 2 and Class 4 NI through Self Assessment if profits exceed £1,000 per year. What If My Second Job is Self-Employed? If your second job is freelance or self-employed: You must register for Self Assessment with HMRC. Submit an annual tax return by 31 January. Pay tax and National Insurance (Class 2 and 4) based on your profits. Even if your self-employed income is less than £1,000, it’s good to keep records and check whether you’re eligible for the trading allowance. Conclusion Now that you understand how second job tax works in the UK, you’re in a better position to plan your finances. The most important things to remember are: Inform HMRC as soon as you take on a second job. Watch your tax codes and total income to avoid overpaying or underpaying. Consider the impact of National Insurance and higher tax brackets. Need Help with Tax Codes or a Second Job Setup? We advise on personal tax, prepare tax returns for sole traders and directors, and help you manage your PAYE jobs correctly. Our accountants in Croydon are happy to help. Disclaimer The information in this article is for general guidance only. It does not replace professional advice tailored to your circumstances.

Reclaim VAT On Business Expenses

George06/01/2022Taxation , VAT

VAT-registered businesses need to charge VAT on their sales and can reclaim the VAT they pay for business expenses. However, reclaiming VAT on expenses isn’t as straightforward as it seems—several complex rules apply. With these complexities, reclaiming VAT on expenses can be trouble. In this quick guide, you’ll learn when you can and can’t reclaim VAT, how you can reclaim VAT, reclaiming VAT for business vehicles, fuel, and staff travel and can you claim back VAT on purchases made before registration. Let’s explore! Getting professional advice from a VAT accountant is preferable to get your VAT refunds and to be saved from hefty tax implications that can wipe out your profit. So get in touch with our experts to be on the safe side. When You Can and Can’t Reclaim VAT? It is an understood fact that only VAT registered businesses can reclaim VAT on goods and services. If you have paid VAT on the goods and services purchased by the business (input tax), you can make a reclaim. Here are the circumstances under which you can reclaim VAT: when a customer leaves you with a bad debt you’ve bought goods or services for your business Things like stock, computers, phones, and stationery are considered business expenses include. You can’t claim VAT on client entertainment. Here, you need to keep a record of all your invoices and receipts to provide as evidence. However, you can’t make a reclaim on goods and services that: are exempt supplies or relate to it are for non-business or personal use are for client entertaining are for car purchases (exceptions) You can’t claim for input VAT if you operate a VAT flat rate scheme unless it is related to Capex (capital expenditure) of more than £2,000 (including VAT). So, as a result, this scheme works better for businesses having fewer expenses (on which VAT can be claimed) compared to their turnover. However, it is not good for those who purchase a lot of standard-rated items. How You Can Reclaim VAT? The VAT you claim back will depend upon the input VAT you have paid at the time of submitting your VAT return. You need to include the relevant figure in Box 4 of the tax return. HMRC will subtract this from the VAT charged by you in the relevant period and you’ll be required to pay the difference. HMRC may repay the amount to VAT you collected if you paid more than you have collected. Want to get your VAT concerns sorted! We’ll take care of everything. Get in touch with our VAT experts! Reclaiming VAT on Business Vehicle and Fuel You can’t claim input VAT on cars, but you can claim it on some vehicles provided some conditions are met. If the input tax on the vehicles is reclaimed by a business, then VAT must be levied at the time of the vehicle’s sale. Read more about Reclaiming VAT on Business Vehicle Reclaiming VAT on Staff Travel VAT can be reclaimed on employee travel expenses (like fuel, meals and hotels). However, you cannot claim back VAT if you pay your employees for flat-rate expenses ( equipment like tools, uniforms and stationery). Want to register for VAT? Fill out this form and leave the rest to us! Can VAT be Reclaimed on Purchases Before Registration? Generally, you can reclaim VAT for goods purchased up to four years before you are registered for VAT. But for services, it is six months before registration. Here the goods purchased need to be: used for taxable business purposes still, be held by the business or used to manufacture other goods Services -to qualify- must also be utilised for taxable business purposes. These may include legal or accountancy fees. Quick Sum Up Hopefully, this guide help you ou to understand the process of reclaiming VAT on expenses and how you can reclaim it. In addition, you can also reclaim the goods bought back up to 4 years before VAT registration. Bear in mind that VAT can only be reclaimed on the goods and services purchased for business use. So, you need to keep all the invoices and receipts to reclaim VAT on business expenses. CruseBurke offers inclusive VAT services at a reasonable price! Contact our qualified VAT accountants and sort out your VAT issues in no time! Get an instant quote right away! Disclaimer: This blog provides general information on reclaiming VAT on expenses.

How to Avoid Capital Gains Tax on Gifts?

George03/01/2022Tax Issues , Tax Saving Tips , Taxation

If you are wondering how to avoid capital gains tax on gifts, you’re in the right place. You might have heard this many times that gifting a property will cut down or eliminate the capital gains tax. But this assumption is not correct with every person to whom you gift. As the gift should be only given to a specified person or organisation to avoid CGT. In this quick post, you’ll learn what is CGT, and how to avoid it. So before discussing how to avoid capital gains tax on gifts, let’s start with when you actually need or needn’t pay capital gains tax. If you are stuck with accounting or tax issues, particularly the CGT? How about speaking to us via a call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Understanding Capital Gains Tax (CGT) Capital gains tax or CGT is the tax levied on the profit when you sell or dispose of any asset that has increased its value since it was bought. CGT is only payable on the gains you made not on the amount you receive while selling or disposing (or gifting) of any assets. You don’t need to pay CGT on the assets that are non-taxable and if the gains you made are below the tax-free allowance in a year. When Do You Need to Pay CGT? Here are the circumstances where you need to pay CGT on the gain when you sell or dispose of: a property that is not your main residence or home shares that are not in ISA or PEP assets of your business most personal possessions worth £6,000 or more, apart from your car your main home if you’ve rent it, used for business or it’s very large The assets listed here are all considered chargeable assets. When You Don’t Need to Pay CGT? In addition to the gain on the non-taxable assets, you don’t need to pay CGT on gains above any tax-free allowance (£12,300. £6,150 for trusts). Furthermore, when you gift something to your spouse, civil partner or a charity, you are not required to pay this tax. Let’s dig deeper into it. Find out: CGT rates here! How to Avoid Capital Gains Tax on Gifts? Here are some ways to avoid capital gains tax on gifts: Use your CGT allowance of £12,300 (2021-22) Offset against losses over gains Transfer your assets to spouse or civil partner Contribute to a pension Gives shares to charity Use your annual ISA allowance Reduce your taxable income Spread gains over tax years Invest in small companies Have a query or need more help? Get help from our accountants to find out how to avoid CGT! CGT on Gifts to Your Spouse The gifts you made to your spouse or charity are exempted from capital gains tax. It means that you don’t pay Capital Gains Tax on those assets you sold or gifted to your spouse or civil partner, unless: you gave them goods for their business to sell on you separated or divorced and did not live together at all in that tax year However, your spouse or civil partner need to pay tax on the gain if they further sell or dispose of the asset. You can work out the gain by subtracting the value of a first owned asset with their value when they’re disposed of or sold. You also need to keep records of the documents as evidence. Gifts Made to Charity Assets that are sold or disposed of to the charity are exempted from CGT. If you fall within both conditions, you may be liable to pay if you sell an asset to charity: less than market value more than you paid for it Calculate your gain according to the amount you are paid by the charity, rather than the asset’s actual value. Quick Sum Up Hopefully, you have got a basic overview of what is CGT, when it is taxed, when you don’t need to pay it and how to avoid capital gains tax on gifts. So, by using the above tips, you can save thousands of pounds. With careful planning and by taking the help of our accountant, you can reduce your CGT effectively without getting into any tax avoidance or evasion. Contact us right away! Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your CGT issues! So, allow us to do this at an affordable package! Disclaimer: This blog is just written for general information and should not be taken as expert financial advice in any form.

Reverse Charge on EU VAT

George20/12/2021Taxation , VAT

When an individual has experience with suppliers to avail their products or services in the EU countries, due to reverse charge the responsibility of recording VAT transactions moves from the supplier to the buyer to avail the products or services. This makes the supplier free from the responsibility of recording VAT registration in the very country where he is making the supply. Moreover, in case the seller has to deal with any local VAT for the products and services supplied by them due to the reverse charge, even that can be easily reclaimed and recovered with the help of EU VAT. In order to make the VAT simple among 27 member states, a reverse charged mechanism was introduced in 1993 when the tax system was of the European Union was reformed as well to ensure the single market. Before we delve into further discussion, we need to have a look at the following points of discussion in this article. This includes the following: Reverse Charge – How Does It Work? Exapmles and Use of Reverse Chaarge The Bottom Line Stuck with your accounts and looking for a helping hand? How about you get our guys on a quick call. We love talking about taxes, payroll management and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. Reverse Charge – How Does It Work? The moment the reverse charge is actually applied, the declaration is made about the purchase and sale that include input VAT and output VAT by the recipient of the products and the services while doing the VAT return. In this process, the same return is associated with the cancellation of the cash payment of both entries. However, the authorities are of the view that the transaction is still reported to them by some of the special boxes that are in the return for the supply of the products and services made for cross-border purchasers. Do you intend to learn more about the reverse charge? Get in touch with one o our professionals and get instant help now. Examples and Use of Reverse Charge: Here is the discussion of some examples that will explain how to reverse charge is applied among EU members states. This includes the following: The reverse charge is applied when there is a supply of required products or services is made in an EU state to a business that is VAT registered. Some of the services like live events and immovable properties come under the special rule and this depends on the place where the supply is made for any product or service. The reverse charge is also applied when the products or services are being provided to a person or business who is in another EU state Moreover, if the EU business is not VAT registered, it becomes an obligation to get VAT registration completed before the supply is made. In order to get yourself the services outside of Europe. The Bottom Line: Now that you have developed a basic understanding of the reverse charge and the relevant details, we can sum up the discussion by saying that the process in itself is simple with its rules, however, if not followed according to the set of rules it may cause problems for the supply and recording. We hope this article helped to develop a better understanding and ensure the seamless working for your supplies. Our accountants at CruseBurke are qualified and cost-effective! We save your time, money, and stress by handling all your finances and business problems in no time! So, allow us to do this at an affordable package! Disclaimer: This article intends to provide general information based on reverse charge and the relevant details.

National Insurance for Limited Companies Explained!

George17/12/2021Limited Company , Taxation

If you are wondering about national insurance contributions, we can simply know them as one type of tax. For several employees, it comes just like the income tax and around the same time as well. However, when it is concerned about the limited companies national insurance is a way to gain or lose tax efficiencies. Moreover, it is important to know that not everyone is bound to pay national insurance, it is applicable to the individuals who are earning by being self-employed or employed with a company and are over the age of 16 as well as below the stature retirement age. Often people tend to mix up national insurance and other tax payments. The prominent difference is national insurance comes with some state benefits for the workers and this includes statutory maternity pay and state pension. The directors of the limited companies will have different NIC rates and this depends on the circumstances. To have a further understanding of the rules, we need to look at the points of discussion in this article that are explained below. This includes the following: National Insurance Limited Company Classes Benefits In-Kind Self-Employed Rates The Bottom Line Want to learn more? How about you get our guys on a quick call. We love talking about taxes, payroll management, and any opportunities that help you expand your prospects. Call us on 020 8686 8876 or email us today. National Insurance Limited Company Classes: There are basically three classes of national insurance contribution systems. They are mentioned below for you: Class 1: This is applicable to the earnings from employment. Class 2: If you are self-employed, NICs is payable on the profits. Class 3: These are the contributions that are related to voluntary payments. If you are the director of a company, you come under class 1 because this makes you an employee of your own business. Benefits In-Kind: The category letter can directly affect the rates of NICs. In case your category letter is changed, this is because maybe a refund is due or maybe because you have to pay an extra amount of money. In case your income is above £8,500, you come under class 1. Even if you are a director in the business who is there for the material purpose. Such classes are associated with taxable benefits in kind. Self-Employed Rates: It is important to have a basic understanding of self-employed rates for NICs if you are a self-employed individual, contractor or working as a director of your own company. This can be charged in the following ways: You are underclass 2 in case your profits are equal to or go above £6,515 (2021-22) annually. In case your profits are £9,568 (2021-22) or more then you come under Class 4. NIC contribution is £3.05 every week for class 2. This happens to be paid by the debit. If we talk about class 4, the contribution is 9% from £9,568 to £50,270. There is no doubt that income tax depends upon the profitability factor associated with your business. Working as a self-employed individual and still confused about your national insurance rates? Get in touch with one of our professionals and get your queries answered instantly. The Bottom Line: Now that you have developed a better understanding of National Insurance Limited Company rates, we can sum up the discussion by saying that there is no way to possibly find an escape from national insurance contributions if you are self-employed, work as a contractor or a director of your own limited company. If you still seek for further guidance to see what is payable in your case, feel free to go for professional advice in order to ensure seamless working. We hope this article helped to develop a better understanding of the basics of NICs. Can’t find what you are looking for? why not speak to one of our experts and see how we can help you are looking for. Disclaimer: This article intends to provide general information based on National Insurance Limited Company and relevant details.