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News,May 2018

Section 24

Everything that you Need to know about Section 24 as a Landlord!

07/12/2021Landlord , Property , Taxation

There are multiple cases in which we find the landlords confused about section 24. This is also known as the tenant tax. This basic guide will help you understand section 24 in a better way. Section 24 was introduced in April 2017 by the Government. If we explain in simple words, the right of deducting the mortgage and agreement fees is reduced due to section 24 which was happening before in the dealing of rental income. Because of this change in tenant tax, landlords tend to face higher taxes and pay more taxes than ever. However, before we delve into further discussion, we need to have a look at the points of discussion in this article:     Reason for Introducing Section 24 Section 24 – How does it Work? How are Landlords Affected The Bottom Line   Are you looking for a helping hand to solve the accounts that you are stuck with? 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.   Reason for Introducing Section 24: The rapid growth of the private rental sector is one of the major reasons why section 24 was introduced. There are certain reasons involved and some of them are discussed below as well: To slow down the pace and the moving tendency was a major purpose. Due to the foreseeable property bubble danger in 2015, the safer ways were taken because if the property bubble burst out this could cause serious damage to the economy of the UK. Ensure to remove the less professional landlords from the field by making hard rules to earn profit by letting the property. To boost the tenants’ stability in the market. Making it easy for first-time buyers to gain confidence in order to foothold for the first time in the ladder of property letting. More options of properties will be in the market for making good purchase options. Moreover, several professionals do not really agree with the purpose and rules of section 24 that go against the landlords and lower their pace of profits in the market. There is a view that this is making the landlords hike their rents in order to gain more and more profits to stay in the market and make their rental income stable as well. For those landlords who are still willing to be in the market, they are bound to try new ways and models to continue being part of the letting property business.   Are you a landlord who is seeking professional help to know more? Give it a try and talk to one of our professionals today.   Section 24 – How Does it Work? When it comes to the rules and functioning of section 24, the landlords’ rights are put to limit and they can’t offset finance costs at the time tax liability is being calculated. This makes the landlord pay more tax than before. This also means that the landlords who are in the higher tax bracket will face the loss of tax relief. This can further push them to the further tax bands as well. The increase in gross income means that it will affect student loan repayment, child benefits and tax credits etc.   How are Landlords Affected: Landlords involved in finance costs are super affected by the implementation of the rules that are under section 24.  This can include the following types of landlords as well: Accidental landlords Landlords who are working as an individual in the property business. The Landlords who are non-UK Residentials but have to let properties here are affected as well.   The Bottom Line: Now that you have developed a better understanding of section 24 and how does it work, we can sum up the discussion by saying that there are serious concerns that prove how individuals in the letting property business can be affected by the rules of section 24 and this is further acknowledged by the professionals. However, if you intend to continue in the letting property, others are a chance to gain profits by trying multiple structures. We hope this article helped to provide fair information to develop a better understanding.   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 section 24 and relevant details.

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potential exempt Transfer

All about Gifts and Exemptions from Inheritance Tax!

25/11/2021Accounting , Finance , Personal Tax , Taxation

It sounds like a great idea to gift your friends and family when you can enjoy the benefit of reduced estate value for inheritance tax purposes. This will immediately be advantageous for your own people as well. However, the potentially exempt transfer is a critical area and most people need professional help in order to ensure that they are avoiding any mistakes that might cause problems or loss in the future. This is important to know that a non-cash gift like the property share can make you or the recipient pay the capital gain tax if you do it while you are still alive. Choosing the right adviser with professional help can help you and the recipient make the most out of the opportunity. Before we delve further into the discussion, let’s have a look at the focused points of discussion in today’s article:     Explanation of Potentially Exempt Transfer Civil Partner, Spouse, Family and Charity – How much can I Give? The Bottom Line Explanation of Potentially Exempt Transfer (PET): PET is the abbreviation of potentially exempt transfer and primarily this allows a person to make a gift of unlimited worth that can later be exempted from the inheritance tax. The condition here is that the person tends to live for seven years after this. In case the person does not live for the required time period, PET will be considered chargeable. This will result in adding the worth of the inheritance tax. Moreover, there are certain conditions that needed to be met for a lifetime potentially exempt transfer. Such transfers are normally considered as a gift from one person to another person or to a trust. The important point to notice here is that the gift can’t be given to a company or a corporation. 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. Civil Partner, Spouse, Family and Charity – How Much Can I Give? It allows civil partners and married couples that they pass their estate to their partner or spouse tax-free after the demise. In simple words, we can consider this fact as that the living spouse or partner can have the tax-free benefits of the whole estate without worrying about the inheritance tax IHT. Moreover, the unused tax-free allowance can also be transferred to the surviving spouse or partner. For instance, if a husband dies and the wife has the right to enjoy the entire estate, she can now add her husband’s tax-free allowance to her allowance as well. In the case of the unmarried partner, there is a slight difference which means that they have to pay the inheritance tax. Making gifts to family and children: This will depend totally on you, however, it is important to plan correctly. As mentioned above the family members and children will not be accountable for paying inheritance tax if you survive after seven years of making the gift. Make sure you make a record of the following if you intend to give money or gifts to your friends and family: The worth of the gift The time when you make the gift The person you plan to give the gift A clear defined explanation of the gift or asset. Coffee, cookies and taxes. What a perfect match. Get in the car, and reach our Croydon office today. Call us on 020 8686 8876 or email us to book your initial free one-hour basic consultation to discuss your requirements. We’ll make sure that we get all your documents submitted on time. Talk to our guys today! Charity in Will: In case you decide to leave your money or physical asset for a charitable body, you can do it either in your lifetime or through your will. This will be exempt from inheritance tax. This will also help to reduce the IHT rate but if the condition of 10% of the net estate is met. This complex point will require professional help to make a qualifying gift. The Bottom Line: Now that you have developed a better understanding of potentially exempt transfer, we can sum up the discussion by saying that it is suggested that the decision of making a gift should be considered with professional help due to the complexity of this area. This will help to ensure that the gift will qualify and you can benefit the most out of it. Can’t find what you are looking for? why not speak to one of our expert’s accountants in London and see how we can help you are looking for. Disclaimer: This article intends to provide general information based on potentially exempt transfers and relevant details.

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benefits of being vat registered

What are the Benefits of Being VAT Registered?

23/11/2021Tax Issues , Taxation , VAT

When setting up a new business, some people may think that it is necessarily important to register for Value Added Tax (VAT). But, you need to know that it is not mandatory to register, provided that your VAT taxable turnover is over £85,000 (VAT threshold). However, even if your annual turnover is below the threshold, you can still register for it voluntarily as it comes with a lot of advantages. There are a lot of benefits of being VAT registered. As it helps your new or emerging business to appear more professional and stable in the business world. So before we delve into the benefits of being VAT registered, let’s see what is VAT?   Want to register for VAT? We’ll take care of everything from scratch to acquire your VAT number. So, fill out this form and leave the rest on us!   What is VAT? VAT, Value Added Tax is a consumption tax on products and services collected by businesses on HMRC’s behalf. All businesses having a VAT taxable turnover of over £85,000 need to register for it. For businesses that are VAT registered, VAT is charged on the majority of all goods and services they provide. In addition, this tax is also charged on the goods and services imported from EU or non-EU countries. This tax is added to the sale price of things sold to commercial and non-commercial businesses. Businesses that are VAT registered can claim back the VAT paid to their suppliers or other businesses. Now let’s see the benefits of being VAT registered!   Benefits of Being VAT Registered This question is often asked by many new businesses that why there is a need to register for it if their turnover is below the VAT threshold. There are many advantages of doing so as it has a lasting impact on the financial health of your business. There are a lot of benefits of being VAT registered:     Improve Your Business’s Credibility To appear an established business and to improve your perception, you should consider registering for VAT voluntarily. As many businesses know that £85,000 is the VAT registration threshold. If your business is not VAT registered, your competitors will know that its turnover is lower than the VAT threshold. So, it is a great way to improve business credibility and to appear a large business in the eyes of your clients and competitors. Access to VAT Registration Number By registering for VAT, you can display your VAT registration number on all the business documents, and its website to show the public that you are a VAT registered business. It improves your credibility and provides others with a trustworthy image of your business. Increased Cash Flow One of the other benefits of VAT registration is better cash flow. Once your business is VAT registered, you can claim back your VAT costs. The higher your set-up costs, the more you can claim them back. All the costs you put in on your business like getting stocks, investing in technology, or getting professional services, so getting these costs back can be a life-saving step. Claiming VAT Refunds Your business will be able to reclaim the VAT that you paid for. If your input tax (VAT paid) exceeds the output tax (the VAT you charged), you can claim the difference from HMRC. When you invest in buying machinery, plant or equipment, you can reclaim a large amount of VAT. While submitting your VAT return, you may find that you can reclaim a lot from the HMRC.   Need professional advice from a VAT accountant? Get in touch with our experts today!   Reclaiming VAT from the Past Once you are registered for VAT, you can get the advantage to claim VAT for the last 4 years on the things you still use. To do it, you need to be VAT registered for a considerable time and keep all the records, invoices and receipts of the past 4 years. More Work Opportunities Many investors, buyers, lenders, and clients prefer to work with VAT registered business. So by registering, you will open doors to more business opportunities to widen your business spectrum.   Quick Sum Up Now that you are well aware of the benefits of being VAT registered, you can improve the position of your business by registering for VAT.  You can register for it directly on HMRC’s website or by filling out the VAT1 form. However, the process can be daunting, therefore allow us to register your business for VAT to avoid the hassle.    Register For VAT today!!!   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 the benefits of being VAT registered.

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How does VAT Work

What is Value Added Tax (VAT) and How Does VAT Work?

05/11/2021Personal Tax , Taxation , VAT

VAT can be complicated, especially for the one who has just started out. Newcomers face a lot of difficulties to understand financial technicalities and jargon. Among those complex terms, the VAT is the one. Many business owners come across this term a lot while purchasing goods and services as private individuals from businesses. But only some of them are familiar with what actually is VAT, how does VAT work and how to charge and claim VAT. Let’s find out all in this short blog.   Want to register for VAT? Fill out this form and leave the rest to us!    What is Value Added Tax (VAT)? It is a general consumption tax that consumers need to pay for almost all goods and services in the UK. In simple words, it is an additional amount on most purchases for consumers. Any business operating within the UK with an annual turnover over the VAT threshold (£85,000 in 2021/22) is required to register for VAT and need to submit a VAT return. However, businesses below this threshold can voluntarily register for it. This is an indirect tax collected by the businesses on the government’s behalf. As they add VAT on all their goods and services, then they send the VAT paid to HMRC. They charge this tax on the items and services they sell to their customers and pay VAT on goods and services they buy from other businesses. All VAT-registered businesses need to keep records of the VAT charged and paid to others.   How Does VAT Work? VAT is levied on most of the goods and services. Businesses that are VAT registered save a lot of money by charging VAT on the goods and services they sell and pay VAT on the things and services they use. Instead of sending VAT charged on every single transaction, businesses submit a VAT return to HMRC showing the total VAT they collected and paid in a tax quarter or year (as per the scheme). The VAT paid by a business to its suppliers is known as input tax and the VAT collected from other businesses is known as output tax. The amount of money you need to pay to HMRC will depend upon the difference of VAT you paid and charged. In case, if you collected more VAT from your customers than the VAT you paid, you need to pay the surplus to HMRC. On the other side, if you pay more VAT to your suppliers than you receive from your customers, you can request HMRC to reclaim the additional amount.   Need help a VAT Accountant to Reclaim VAT, Contact CruseBurke!   Current VAT Rates You need to be aware of the current VAT rates you pay and collect to reclaim the VAT on products you buy for your business. There are currently three VAT rates depending on the goods and supplies you deal with. These are: Standard VAT Rate (20%) A standard VAT rate of 20% is applied on most goods and services that fall under the category of luxury items like ice cream and sweets etc. Note: Due to Covid, you need to pay temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions (Currently it is 12.5% from 1 October 2021 to 31 March 2022). For more details click here.   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.    Reduced Rate VAT (5%) This rate applies to some specific goods. It is charged at the rate of 5% on goods like domestic fuel and power, etc. Zero Rated VAT (0%) Goods that are considered essential are charged a 0% VAT rate. It includes: Basic Food items Newspaper Books and newspapers Clothes of children The goods supplied to non-EU counties and VAT-registered EU businesses would also be charged a zero-rated VAT. You need to keep records of it and report them on your VAT return.   Exempt Items There are some goods and services that are totally exempt from VAT like: training and education insurance, medical, finance, credit selling, leasing and letting of commercial land or buildings subscriptions fees to membership organisations fundraising events ( managed by charitable organisations)   How We can Help? So you are now well aware of what is VAT and how does VAT work. Remember that this blog just serves as a basic guide for you. We have not discussed the complex VAT issues here. Our team of VAT experts are there for your assistance with anything complicated. From VAT registration, submission of VAT returns, consultation to complex issues like assessments, cross borders transactions, our VAT experts will help you with everything.   For further queries on VAT, reach out to our accountants for expert advice. Get in touch today!   Disclaimer: This blog provides general information on how does vat work.

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Enterprise Management Incentive

Enterprise Management Incentive (EMI) – A Basic Guide!

25/10/2021Business , Finance , Taxation

The Enterprise Management Incentive (EMI) scheme offers tax advantages for many SMEs. It’s a share option scheme that allows employees to acquire shares after meeting some conditions. This scheme attracts employees by providing them the opportunity to equally participate in the business. Continue reading this blog to know more about EMI…!   We have a team of EMI experts who can help you with this scheme, including valuation HMRC filing, vesting schedules, and long-term administration for your company’s growth. We guarantee that working with us will save you time and money!   What is an Enterprise Management Incentive (EMI) Scheme? The EMI scheme provides a share option, which gives you the right to get shares based on the terms of the agreement. This specifies how many shares a person can acquire, how much each share costs, and when you can get the shares through the exercise of the option. Option exercise can take place after a particular time of employment. It can also occur when achieving performance targets or when the company is sold.   Why Have EMI Schemes? If you’re a small business with a limited budget, you might attract staff by offering a share or share option package. Suppose an employee came to know that selling the respective company’s share can result in getting a profitable lump sum. In that case, he or she will join your company even if the compensation package is not above that of competing companies. As a result of shares grants, employee ownership causes them to be concerned about the company’s interest, just as the employer is. In this way, the entire staff works together to increase the shareholder’s value. They’re all working to grow the company and for increasing the value of the stock and dividends.   Qualifying Companies: Your company should meet the following conditions to qualify for the EMI scheme: Gross assets of £30 million or less. Is not amongst the industries excluded by HMRC: banking, farming, shipbuilding, property development, and provision of legal services. Containing 249 employees (fewer than 250). It is not majority-owned or run by another company. Eligibility for Employees: To be eligible, an employee should fulfill the below conditions: Should not hold more than 30% of the company’s shares. Should not have share options worth above £250,000 (at the time of grant). Must spend 25 hours weekly, and 75% of his/her working time as a company’s employee.   Want to register for EMI, contact us right away!   When your Company can Lose the Tax-Advantaged Status? Your company can lose it if: It hasn’t registered for Enterprise Management Incentive within the terms of the legislation. The company is unable to inform HMRC about the grant of the EMI option within 92 days. The company’s option holders are unable to exercise their option within 90 days because of a disqualifying incident.   The Working of an Enterprise Management Incentive Scheme: First of all, the company should establish if it is enterprise management incentive qualifying or not with the help of its experienced advisors. In case the company is, then it needs to decide the working of an EMI scheme plan. EMI is too flexible, but there are some important issues to consider: Which employees should be given share options, and how many should they be granted? What kind of shares should have options? In order to exercise options and to get shares, how much will employees need to pay? What happens in case a company’s option holder leaves? The formal EMI option agreements containing all relevant terms should be prepared once all the issues mentioned above are resolved. The options are formally granted when both the employer and the employee have signed. Within 92 days, the option grant has to be notified to HMRC.   Quick Sum Up We would summarise our blog by saying that enterprise management incentive (EMI) options are worth considering for both companies and employees. Companies would face recruitment problems if they do not provide offer options. Therefore, if your company has not implemented an option plan yet, now is the time to do so.   We at CruseBurke provide a full-fledged Package on EMI, including legal/ Tax and valuation requirements with expert advice and in-depth discussions! Contact us now!   Disclaimer: This blog post covers the basic information about EMI.  

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Self-employed and employed

Can I be Self-Employed and Employed at the Same Time?

18/10/2021Payroll & PAYE , Sole Trader , Taxation

If you’re looking for a way to increase your income while still working full-time, you might be thinking if you can be self-employed and employed at the same time. The short answer is a resounding yes! If you’ve already had a full-time job while running your own business, you’re probably aware of the liabilities that come with it. Therefore, if you have never been through this situation, then read this blog till the end! We will inform you about its advantages, the tax to pay with, and its further details. So, let’s start!   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!    Can I be Self-employed and Employed at the Same Time? Yes, you can. For instance, you work for an employer/company throughout the day, but in the evenings or at night, you work for your own business. When you run your own business and are solely responsible for its success or failure, you are considered self-employed. On the other hand, you are an employee or employed when you work for an employer on their own payroll and you are paid through it. If you fall under both categories, you are both self-employed and employed at the same time. The money you earn from your job will be taxed under Pay As You Earn, and you’ll need to file a Self-Assessment Tax Return to declare the income you made from your own business.   Advantages of Being Self-employed and Employed The advantages are valuable, although they are simple. One of the main reasons is taxation. Several employment ways and forms of income are taxed differently. So, by taking advantage of your possibilities, you can save your money.  Moreover, having your own business while working for someone else can be a great source of prosperity and mental satisfaction that you will not find anywhere else.   How Does Tax Work If You are Self-employed and Employed? The income tax and NI (national insurance) implications can be complicated in case you are self-employed and working for another employer at the same time or are changing from self-employed to employed or vice versa.  You have to inform HM Revenue & Customs immediately as you become self-employed even if you are also working for someone else at the same time or you have already completed a tax return every tax year. You should not inform them late (when filing a tax return).    We can register you as self-employed to HMRC on your behalf!  Fill out this form and let us handle everything!    After registering, every year, you will be required to complete a tax return. You will enter your self-employment earnings as well as any allowable expenditure incurred details in the tax return. This will permit HMRC to calculate the amount of your income tax and NI you must pay. If you have file your tax return you must pay the tax amount at the end of the tax year.    Am I Exempt from PAYE If I’m Self-Employed You are exempt from PAYE if the following case applies to you: You are doing business for yourself and are liable for its success and failure and you can make a profit or a loss of your business. You can control what work you do, when, how, and where you do it. You can outsource the work to anybody else. Your employer agrees to a fixed commission for your work. You utilise your amount of money to purchase business things, cover operating expenses, and provide equipment and tools for your own work or the work of the employees you hire. In case you are a self-employed person, you must fill self-assessment tax return form once every year. Also, you have to pay HM Revenue & Customs twice a year ( in January and July). In some cases, you can pay just via PAYE. It means that your taxes will be automatically paid through it and there will be no risk of not meeting a deadline.  To use PAYE, You must submit your tax return by October, 31st (manually). You can also submit it online by December, 30th. HM Revenue & Customs will collect the money automatically you owe via PAYE, in case you meet the conditions mentioned above; otherwise, pay through instalments.   Unable to calculate your employed and self-employed tax? Let us handle this!   What is a Self-Assessment Tax Return? If you are self-employed and do not pay income tax through Pay As You Earn, you must register for Self-Assessment. After the end of a tax year (5 April), self-employed businesses and individuals must file a Self-Assessment tax return to record their earnings. To fill out and submit your returns, you only need to keep track of your receipts and bank statements. HM Revenue & Customs will assess what you have to pay on the information you’ve provided. By the 31st of January, you have to pay your Self-Assessment bill. In addition, the amount of tax you are required to pay is based on your income tax band. You have to send a self-assessment tax return in case: You’re self-employed with a profit of over £1,000 You are a partner in a partnership Remember that submitting your tax return up to three months late will result in a £100 penalty. You will pay more if it is late for more than three months.    Final Thoughts To summarise the discussion, we can say that you can be self-employed and employed at the same time, which has many simple but valuable advantages. However, you should be aware, that there are tax implications with this. PAYE is a system that deducts income tax and NICs from employees. But as a self-employed, you must pay tax and NI through Self-Assessment.    Turn to us if you need any help with accounting, tax payroll, and other finance-related problems! We will solve you are all …

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How to Avoid Emergency Tax

How to Avoid Emergency Tax? A Basic Guide!

07/10/2021Tax Issues , Tax Saving Tips , Taxation

When you start work and fail to provide accurate and complete details to your employer, he will deduct the emergency tax from your paycheck. In addition to that, you will also pay an emergency tax on your pensions. So, read this blog to know how to avoid emergency tax and stop paying this. Reduce your business burden by letting us manage & record your finances! Our team could help you claim what is rightfully yours! So, Contact us now! What is an Emergency Tax? It is a tax that is charged by HM Revenue & Customs to your salary. It is charged when HMRC does not have enough details about your income and tax for a year. The other reasons for paying an emergency tax are as follows: If, after being a self-employed person, you have started working for an employer. If you have started a new job. If you have started getting benefits or state pension. How to Know if You are On an Emergency Tax Code? In order to know whether you are on an emergency tax code, check your payslips. HM Revenue & Customs will charge you emergency tax if your payslip contains any following tax codes. 1257 W1 1257 X 1257 M1   What is the 1257 Emergency Tax Code? Within the United Kingdom, almost everyone is authorised to a tax-free personal allowance. It means that a specific amount of your profits is paid to you every year without any tax charged on it. You will be provided with a tax-free allowance which currently stands at £12,570 if your tax code is 1257. It means that you will pay tax on anything above this threshold. This is because HM Revenue & Customs turned in the personal allowance of £12,570 into this tax code. Therefore, it simply means that you can earn £12,570 before paying tax if you have this tax code. How to Avoid Emergency Tax? The simpler way to avoid this tax is to provide a P45 or information about your previous income and tax payments to your employer. This information will tell about your paid tax in the last job to the new employer. Then, he will inform HMRC about these details. HMRC will send a Pay As You Earn (PAYE) coding notice to provide the correct tax code to your new employer. Then, on the recent payslip, this new tax code will appear from your employer. In case you do not have a P45, your employer will have to complete a Starter Checklist. This will assist your new employer in allocating a tax code to you that will be forwarded to HMRC. How Much Will You Pay in the Emergency Tax? This totally depends on your earnings and emergency tax code. It implies that you will be taxed on anything above your basic personal allowance (£12,570). Your personal allowance will not be taken into consideration if you have the BR code. You might pay up to fifty percent of your salary as an Emergency tax (the max it can be). Therefore, it is better to prevent emergency tax as you have to pay a high amount of tax. What is the Method to Prevent the Emergency Tax? You can stop paying emergency tax by the following method. The emergency tax code may imply that you have overpaid tax in the past; in this case, the HMRC will refund any overpayment of tax. You can call HM Revenue & Customs directly in case you have been working with your new employer for above three months and still paying the emergency tax. Final Thoughts After knowing about how to avoid emergency tax and the method of not paying an emergency tax, we will conclude our blog by saying that HMRC will charge you emergency tax if you fail to provide your new employer with your income and tax details. However, in order to avoid paying an emergency tax, it is crucial to provide these details. You can also claim back overpaid taxes, although avoiding emergency taxes is better. Turn to CruseBurke for managing finances and for claiming overpaid taxes! We have a team of skilled accountants who will handle everything with HMRC on your behalf. Contact us right away! Disclaimer: This blog contains general information about how to avoid emergency tax.

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