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News,May 2018

is there VAT on business insurance

Business Interruption Insurance – Are Pay-Outs Taxable?

01/11/2022tax , Tax Issues , VAT

Do you get the thoughts of the sudden reason that can cause a business closure? Here comes the help of business interruption insurance that can cover the profit and loss of the business immediately. This has to do a lot with the type of cover you might want to opt for. Several people enquire if is there VAT on business insurance. You need to get the idea of whether or not business interruption insurance was included. The process turns out to be quite a straightforward experience just like it sounds. Further in the discussion of this article, we will focus on what is business interruption insurance, how it works for your business, and what are different types of business interruption insurance.   Reach out to one of our professionals to get to know if is there VAT on business insurance for your business. We will love to offer instant help!   What is Business Interruption Insurance? The different types of insurance are specially designed to protect your business and you as well. This protection is provided when your business and you are going through an event or a disaster that is not in your control. Moreover, the business practices and other relevant activities are unable to operate like the regular norms of the business.   How Does Business Interruption Insurance Work? The main role of this type of insurance is to protect the cash flow and profits of your business. This will ensure to help your business to be unaffected after the incident happens, be it a natural calamity or any other such event. Sometimes the coverage is so good that it will turn out to be as if the incident never affected the growth of your business. However, sometimes a set period of time is required in this process. This period is known as the name of the maximum indemnity period. This period is considered to be the period that will be taken into account for the recovery of your business operations after any natural calamity or any other event has occurred. Generally, 36, 24, or 12 months are considered for this process.   Is There VAT on Business Insurance? Most of the policies will only focus to cover the valid damage claim caused by such events. Storms, fires, or floods are certain examples to make such claims. The specific policy wording is required to be referred to identify what is the available cover for you. Are you now wondering whether is there VAT on business insurance? Generally, there is no VAT on the amount you get from any kind of insurance policy.   Business Interruption Insurance – What are the Different Types? Business insurance generally has three types. They are listed and explained below:   1- Increased Cost of Working This type of insurance is only related to businesses that have the space to minimise the cost related to working. Also if not too much cash is required to move ahead according to the plan.   2- Loss of Gross Revenue This is to claim for the loss of gross revenue. The service industry generally uses this kind of claim. Hotels are such examples that find this type of insurance the most appropriate.   3- Loss of Gross Profit This type is used commonly in the UK. If there is a reduction in turnover, this kind of insurance is used to cover the loss of profits. The increased cost of working and standing charges are also covered by this type.   Business Interruption Insurance – Are Payouts Taxable? When it comes to the discussion of tax implications in the case of business insurance or you might wonder whether the payouts are taxable or not, the general stance of HMRC explains that if the premium is considered to be tax deductible then the insurance receipt will be taxable too.   The Bottom Line Now that you have gathered a fair amount of information about ‘is there VAT on business insurance’, we can bring the discussion towards wrapping up. Business interruption insurance is a professional way to cover the loss of your business profits in the unfavourable circumstances of natural calamity or any other such events that are out of the control of business owners. We hope these few minutes of reading will help you to handle your business insurance choices in the future.   Get in touch with our young, clever and tech-driven professionals if you want to choose the best guide on capital gains indexation allowance for your business.   Disclaimer: The information about ‘is there VAT on business insurance’ provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

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VAT on overseas services

The VAT Complexities of Supplying Services Abroad

24/10/2022VAT

We can not deny that technology today is the reason that international business has reached its peak and has become more than accessible. It’s just a game of having the availability of a laptop and a good connection and there you go. Any kind of freelancer can offer services internationally. Even the small initiates in the business world can connect with rafts and work for clients that are looking for relevant services on an international level. However, you do not need to forget about the tax implications that come with foreign services or supplies abroad. Predominantly, this procedure is a kind of revolves around VAT on overseas services and the place that is used to supply the services. Moreover, this will help to identify which country’s rules are to be followed and considered for the sale of specific services or products. This depends on the nature of your that will decide the rules of supplies as well. You might have chosen the supply for a business-to-business method which is also known as B2B. You could also opt for the options business to the client which is known as B2C. Further in the discussion of this article, you will get to know about the method of charging VAT when your services are supplied abroad. This will be useful even if you are supplying the services in the UK as an international client has asked you to do it for him.   Seek no further help after contacting CruseBurke’s team of experts and advisors about VAT on overseas services with peace of mind and within your budget.   VAT on Overseas Services – What is General Rule? As you might know already there is a common set of rules and caveats to keep track of certain services. The general rule introduced by HMRC has covered a lot of information about it and has guided the suppliers from basic to detailed information about the rules and certainties to follow when being a supplier to deal with international clients. The general rule provided by HMRC says that if you aim to deal with a business customer that means you are following B2B. The place of supply will be considered from the place that your customer belongs to. For instance, if your customer is from the US, you will deal according to their set of rules. On the other hand, if you are offering your services to a customer who is considered non-business, the place of supply will be considered the place from where the supplier belongs according to the general rule of HMRC.   When and What Can You Charge as VAT on Overseas Services? As mentioned earlier that it turns out to be that the place of supply is considered the UK after you have applied the general rule. You are now obliged to follow the general rule that is applicable in the UK. On the other hand, when you are dealing with a case that turns out to be within the EU after the general rule is applied, you will have to consider EU VAT to be charged. However, such a case will rewire an account registration for VAT in the country that is being used for the supply. Now let’s suppose that the place of supply is even out of the EU. This is considered to be out of scope in the case of VAT. Box 6 of the VAT return will be used to record the sales.   The Bottom Line Now that you have gathered a fair amount of information about VAT on overseas services, we can say that we can not deny the complexity of dealing with clients internationally and following the relevant set of rules to consider whether the business activity is business-to-business or business-to-client. However, this will help you to identify the accurate procedure and follow it accordingly. This will ensure seamless processing in the future. We hope these few minutes of reading will help you to develop a better understanding to deal with VAT obligations in the future.   Are you stressed about VAT on overseas services? Feel free to contact our team of tax advisors and accountants to help you find accurate information and guidance.   Disclaimer: All the information provided in this article on VAT on overseas services, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.

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VAT inspection tips

How to Prepare for VAT Inspection?

07/09/2022VAT

You are running your business smoothly, and everything seems fine. Suddenly, you receive a letter from HMRC, which calls you for a business inspection regarding VAT. It sends a shiver down your spine. For many business owners, an HMRC VAT inspection can feel daunting, but it’s a routine part of ensuring tax compliance. While it can be stressful, proper preparation can help avoid fines and complications. This guide will give you hands-on information regarding the VAT compliance tips, what to expect when a VAT inspector is in your office, and how to prepare to be inspected by an HMRC VAT inspector. Using these guidelines, you can be ready and make your business inspection as painless as possible. Do get in touch with one of our experts to get your VAT queries answered quickly. We will help you decide about VAT inspection tips with a clear mind. What to Expect in a VAT Inspection? HMRC notifies you about the visit by letter or email. Their advance notice will be received, and a list of the records they are interested in will be mentioned in it. The actual inspection will be done at your business place, in the office of your accountant, where you give them access to your records. The visit is typically a two-step process in that you have a discussion, and your records are reviewed. What they are probing will include: Sales invoices: To make sure you have applied the right VAT rate and that you have all of your sales records well-maintained. Purchase invoices: To ensure that you have only claimed on the difference between actual business expenses and that the invoices fulfil all the requirements (e.g., the suppliers have provided their VAT number and your business name). Bank statements: To get your bank transactions matched with the amount stated on your VAT returns. Bookkeeping and accounting records: To view your records of transactions and your returns, which are prepared. The time spent in the visit may take a few hours or a few days, depending on the size and complexity of your business. Meanwhile, in the case of larger businesses, it may take up to four days or more, where matters become complicated. They may randomly sample invoices or target certain areas, such as big repayment claims. What Happens in a VAT Inspection? Calm down, VAT inspection is a routine check to ensure your VAT records are in order. This can be made stress-free with the appropriate VAT inspection tips. A VAT inspection typically covers the following business activities: 1. Documents Review During the visit, a VAT inspector from the HMRC will visit your premises or the office of your accountant. He will conduct a thorough review of your VAT documentation. This involves reviewing sales and purchase invoices to ensure that VAT has been charged accurately. Moreover, your VAT returns and calculations, bank statements to compare them to the figures reported, and general accounting records. 2. Bookkeeping Scrutiny He will also discuss your business activities with you or your accountant. Questions may include your customer base, imports and exports, your assets, and the way in which you maintain bookkeeping. When it comes to export-related businesses, he will be interested in such evidence as shipping documents to ensure zero-rated supplies. 3. VAT Awareness Questions The VAT inspector will start by asking a set of questions that will provide a clear understanding of your business, business activities, and your trading practices. This first discussion is typically done to assess your familiarity with your VAT responsibilities as well as to gain a view of your business. 4. Record Analysis Over Years They will make an analysis of the records over a certain time frame, normally the past two to four years, though this may extend. The inspector will also be interested in finding how you calculate and prepare your VAT returns and will likely pick a sample of both sales and purchase invoices to examine in detail. 5. Sharing Findings The inspector will talk to you about his/her findings at the conclusion of the visit. They can find that all is well, they can trace small mistakes which can be corrected in an update visit, or they can trace more critical problems which will result in an assessment. VAT Compliance Tips for Preparation Ease of conducting a business inspection is always achieved with the right preparation. Begin by getting your records in order, getting invoices, receipts, and returns, either in files or electronically. Take advantage of online accounting software to meet the requirements of ‘Making Tax Digital’. Check and maintain the returns of VAT for the last four to six years. Rectify the usual mistakes, such as wrong VAT rates on bills or missing bank statements, if any. When you are found to have problems, address them early to streamline the process and minimise penalties. It is beneficial to get your accountant on board. They can help schedule the visit, organise it in their office, and efficiently respond to the inquiries of the VAT inspector. How Far Back Can VAT Inspection Go? The period that an HMRC VAT inspection covers is generally four years from the current year. However, if someone has deliberately underpaid or undeclared VAT, or mistakenly claimed unentitled VAT, HMRC can extend this period. Normal Four-Year Limit: HMRC usually assesses the past four years for VAT compliance during an inspection. Six Years For Careless Behaviour: If HMRC can prove that a tax inaccuracy resulted from your careless behaviour, they can extend the inspection period to six years. Careless behaviour means failing to take reasonable care to avoid errors when preparing your returns. Twenty Years: In cases of deliberate actions such as VAT evasion or fraud, HMRC can extend the assessment period to up to 20 years. This occurs when a business has failed to reveal certain information or provided incorrect records to HMRC. One should remember that these time limits show the extent to which an inspection may be conducted. As a general rule, you should …

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when to pay vat

When are VAT Payments Due?

26/08/2022VAT

When to pay VAT? If this is the question bothering you as you have registered your business for VAT with the HMRC. VAT is very confusing and you must ensure you have to pay VAT and you get a VAT refund from HMRC at the end of each tax year. For this, you need to maintain a proper and accurate record of all the VAT received and VAT incurred to avoid any convenience later. The earlier you get your returns filed with HMRC, the better the chances to avoid any hassle on the last date of VAT payments. The last-minute payments and calculations are not only stressful but also likely to bring inaccuracy in the calculation and ultimately in the tax return. So, let’s discuss when you should pay VAT and how many penalties you have to pay for late VAT payments! Get in touch with one of the young and clever professionals and discuss VAT payments today.  What is VAT? Value Added Tax (VAT) is a tax on the supply of goods and services. This tax is supposed to be submitted by business owners or organisations who are supplying or delivering goods and services. This tax is collected and paid to the government on a quarterly basis. It is applicable to all standard and reduced-rated goods and services. If you have paid tax and received this VAT from other sellers or customers, you need to calculate the difference and submit it to the HMRC. If the VAT received is more than the VAT incurred, you will submit the residual to the HMRC. Otherwise, you will get a refund from HMRC if the VAT paid is more than the VAT received. All the financial services including bank charges, lottery games, insurance and medical services are exempt from VAT. When to Pay VAT? At the end of each financial period of a company, the company must submit the VAT returns to the HMRC. The deadline for these returns is one month and seven days after the accounting period of an organisation or a business comes to an end. If your business is associated with an annual accounting scheme, the deadline for the VAT returns will be changed and you must submit returns on that basis. Normally, the VAT returns are submitted quarterly and after one month and seven days. On the other hand, if you want to get notified about the VAT deadlines from the HMRC, you can create a VAT account and activate the reminders for VAT. You will be notified when the VAT returns are due and so you pay them on time without paying any penalty. What Happens If I Get Late for VAT Returns? If you default or are late on your VAT payments for the first time, you won’t pay any penalty to the HMRC. However, HMRC will add this default to their records. Next time, if you do not pay VAT returns on time, you will pay a penalty fee in addition to the VAT payable or due. On your second default, you will pay no penalty if the VAT is less than £150 000. If it is above this, you will pay a fee of 2%. However, there will be no surcharge if 2% is less than £400. On your third default, you will pay a fee of 2% for a VAT of less than £150 000 and 5% for beyond this. On your fourth default, you will pay a surcharge of 5% of a VAT for less than £150 000 or 10% for a VAT of more than £150 000. It could be a fixed amount of £30. You will pay 10% or a fixed amount of £30 for a VAT less than £150 000. You will pay 15% or a fixed amount of £30 for a VAT of more than £150 000 on your fifth default in a year. If it is your sixth default in a year, you will pay the same amount for a VAT of £150 000. It is 15% or a fixed penalty of £30. Moreover, if you fail to declare any error, you will be surcharged with a penalty of 15% by the HMRC. Use VAT652 to inform HMRC about the VAT errors to avoid any inconvenience later. The Bottom Line Finally, we conclude that every VAT-registered business should file its tax return at the end of each accounting period. This period is extended to one month and seven days after the accounting period. It is submitted quarterly for each company or organisation. If you fail to pay your VAT on time, you are liable to pay the penalty on VATs less than £150 000 or more than this amount. It ranges from 2% to 10%, depending on the frequency of defaults in a year. There is no penalty for the first-time default. I hope you found the answer to your question of ‘when to pay VAT?’ We recommend finding professional help to further learn about how can you manage your VAT payments. Talk to our qualified tax advisors and get your queries answered quickly. Disclaimer: The general information provided in this blog about when to pay VAT includes its text and graphics. It does not intend to disregard any of the professional advice.

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is there VAT on coffee shops

Why Cafes and Coffee Shops are at Risk of VAT Mistakes?

24/08/2022VAT

We all know how people are so inclined towards coffee shops these days, especially the youth is a prominent frequenter of cafes and coffee shops. This makes you aware of the frequently asked question at the coffee shop for the popular product coffee, whether to get you a white or black coffee? Are you interested in taking away or eating in? Will you have the cold sandwich or the heated one? People often get irritated by a lot of questions that are irrelevant at times at the coffee shops. From a perspective of a customer, you and I will get annoyed after getting a paper-wrapped order even after the instructions. However, the queries are important for the taxman to be on the accurate side. Have you started to wonder about ‘is there VAT on coffee shops’ yet? In this guide, we will cover all the relevant queries related to the questions asked at the cafes and coffee shops, VAT rules applied for takeaway food and other orders, and how can you avoid getting into trouble if you are not clear about the VAT rules for coffee shops and cafes.   Reach out to one of our professionals to know more about ‘is there VAT on coffee shops’. We will love to offer instant help!   What are VAT Rules for the Takeaway Food? At the beginning stage of VAT after the introduction of relevant rules, some of the services and products are considered zero-rated and free of certain limitations as well. This refers to the no addition of anything that is like VAT rules. Cold sandwiches are one such example. However, people often confuse the policy and take the heated products in the list as well. For your clarity of mind, cold sandwiches when not served at the coffee shop premises are taken in the list of zero-rated products only. On the other hand, when the cold sandwiches are ordered for the dine-in and they are now served on the premises, this will not make them zero-rated. This means that you will have to pay higher rates for the dine-in option as you will be charged VAT. The standard rate will be applied. There is another important thing that you should be aware of if you frequently go to the coffee shops for your sandwiches interest. When you ask for the heated sandwiches, whether to be served on the premises for dine-in or you take away the parcel, the standard rate of VAT will be applied. The heated products instantly call for higher rates.   Is There VAT on Coffee Shops? The rules for VAT on coffee shops are quite easy and simple to follow, however, there is still a chance for the staff to make a mistake while they are being implemented. This is because of the workload during lunch and other busier hours of the day. You should be forced for the coffee menus and added VAT charges on them. Most coffee shops make the menus so complicated that it becomes annoying on a point. Sometimes the staff deliberately do not follow whether the customer wants to dine in and sometimes they tend to forget because of the busy hours of lunch etc. Whatever the case is, the important thing to know here is that this act is very risky for the owners to maintain the records, As this increase the chances of error in the record, overstating zero-rated sales will turn out to be damaging for your business. When the customer is not enquired about the dine-in or takeaway for the order, the chances are the customer is being charged for the higher dine-in prices and there is a mistake in the record. Because of the popularity of coffee shops in the UK, HMRC will soon take close notice of such details and if not handled well, you will be in trouble. You are surely eager to claim the VAT, you need to pay attention to minute details for accuracy.   What are Business Owners Required to do to Avoid Mistakes? Several factors are responsible for VAT errors at a coffee shop, sandwich bar, and bakery. Sometimes the staff is super busy with the customers and orders that they can not make it right in those hours. Another reason for such mistakes is the lack of training for the new staff members. If the turnover of the catering staff is notoriously high, this leads to the basic training for the new staff and there is no focus on the tax rules and other relevant issues. The business owners should pay close attention to training the employees in a way that makes them realise the importance of VAT rules. Focus on the employees and make it their habit to ask the basic questions about the order as a routine on day to day basis. Moreover, you should be aware of the updated VAT sales figures in case of any changes. Drop down in dine-ins should be focused. This could be because of the more takeaways or picnic season.   The Bottom Line Now that you have gathered a fair amount of information about ‘is there VAT on coffee shops, we can bring the discussion towards wrapping up. We can say that although the VAT rules for coffee shops and cafes are quite simple to understand and easy to implement, however, the chances of errors are still high in this process. This could be because of the lack of staff training or focus on the minute details. To avoid such mistakes, the business owners should take the responsibility to train the staff and control the staff turnover. Also, focus on the tax issues other than the basic training only. We hope after reading these few minutes read, you will be able to develop a better understanding of how to handle VAT rules professionally.   Get in touch with our young, clever and tech-driven professionals if you want to know more about ‘is there VAT on coffee shops.   …

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are bank charges VATable

Are Bank Charges VATable in the UK?

23/08/2022Accounting , VAT

The majority of people ask the question “Are Bank Charges VATable in the UK?” This question is frequently asked by people who file their tax returns to the HMRC. The bank charges are the expenses of the taxpayer and you might want to get relief and claim a refund on these bank charges. So, we are going to discuss if you need to pay VAT on your bank charges and if can you claim VAT from the HMRC. So, let’s start! Seek no further help after contacting CruseBurke’s team of experts and advisors and managing your business, finances and taxes with peace of mind and within your budget. What are Bank Charges? Typically, every business charges the customer for selling their goods and services. Similarly, banks charge for the provision of their financial services to their clients. This fee covers the minimal amount for the transfer of funds, providing loans and paying an interest rate on the savings. Are Bank Charges VATable? The simple answer is No. The bank charges are not VATable in the UK. So, HMRC will not remind you for paying VAT when filing tax returns. So, you cannot claim a refund from HMRC because bank charges are exempt from VAT. This is because they are not delivering any goods to the customers. Instead, they are charging a minimal fee for providing financial services in different domains for your wealth management, funds transfer and providing loans and mortgages. Which Bank Services are VATable? The simple transfer of funds is exempt from VAT in the UK, However, there are some services where you have to pay VAT and so, you can claim a VAT refund from HMRC. The bank charges you for the investment, finance and taxation advice The bank is managing your portfolio The bank is providing you with depository and trustee services You are being charged for the service companies’ activities, for example, administration, payment of salaries and wages You are getting bookkeeping services You are getting debt collection and credit control services You are getting equipment leasing services You are getting professional merger and take-over advice You are getting registrar services from the bank You are using the executor and trustee services and the administration of estates You have paid for the safe custody and safe transportation services You pay for the management consultancy services The Bottom Line The bottom line is that you don’t need to pay VAT on the bank charges you have occurred. So, you cannot claim a VAT refund from the HMRC. Similarly, you cannot get VAT relief from the HMRC when you don’t pay any VAT on the banking services. However, the banking services related to the packaging, collecting and delivery are VATable and you have to pay a VAT when you enjoy these banking services. You need to maintain a proper record of these services and calculate the accurate VAT for avoiding any inconvenience and penalty later when you file your tax returns. Are you stressed about VATable bank charges? Feel free to contact our team of tax advisors and accountants to help you find accurate VATable charges on your bank charges. Disclaimer: All the information provided in this article on Are Bank Charges VATable, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.

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the eBay fee calculator UK

Do you Pay VAT on eBay Fees?

18/08/2022VAT

In the UK, when you sell any product or service, value added tax which is known as VAT is charged in most cases. Market place retailers are clear here that they will have to pay VAT on sellers’ fees. This makes a requirement of charging VAT to the customers on any product purchase. The standard VAT is 20%, however, it is vital to have an understanding of all the VAT obligations as a seller. You should have an understanding of how the eBay fee calculator UK works for you as well. Before delving further into the discussion, you should be able to know the basic requirements that require your attention if you are a seller on eBay. You must be aware of how to define value added tax, what are VAT charges for the sellers that they are allowed to charge on their product purchases, what is eBay fees calculator in the UK and how it works. Reach out to one of our professionals to get to know what is the best way to use the eBay fee calculator UK  for your business. We will love to offer instant help! What is VAT? VAT is the abbreviation of value added tax. The standard VAT is 20% which is charged as a consumption tax on several products and services sold out in the UK. However, there is an exception in this case. VAT is charged at a zero rate or 5% on a few products that are sold out in the UK. The businesses that expect to exceed a certain limit of turnover within 12 months are bound to get VAT registered and reach out to HMRC for this purpose. In simple words, once you are done with making your business VAT registered, you are now able to charge VAT on all the services and products that you are selling. While you are submitting your quarterly VAT returns, you will have to submit this payment to HMRC as well. In the case, your business is outside of the UK and you’re sending products to the UK, you will have to register your business for VAT. There is no limit on the registration threshold. The most beneficial point after VAT registration is that you are allowed to reclaim the VAT amount that you have paid for the products and services. Even the VAT you have paid as a seller fee is allowed to be reclaimed. eBay Sellers and VAT Charges for the Customers Some people purchase the products and services to resell. You are required to have an eBay business account for this purpose. In the initial stage, it is not required to have charged VAT on the products. Unless your business turnover goes over the figure of £90,000, you can go on carrying out the business activities without charges of VAT. Once your turnover reaches the required limit, you will have to get registered for VAT and you can then start charging VAT on your products and services to the customers as well. At the time of VAT returns, you will have to pay the amount of VAT to HMRC as well. In the process of charging VAT on the selling point of your services and products, you should ensure prices include the amount of VAT. This is because once the customer has decided to make a purchase, you will not be able to add it then. In the case of international sellers who are using eBay sellers in the UK and sending your products to UK customers, you will have to register your business for VAT. This makes you charge VAT on all the products and services you are offering to your UK customers. eBay Fee Calculator UK If you are a seller who is UK-based, you are eligible to pay 20% VAT on the eBay seller fee. In the case your business is registered for VAT, you have a piece of good news to reclaim the amount of VAT that you paid with the eBay fees. If you are a European Union seller, you are allowed to apply for the exemption of the seller fee once you are done with the registration process. In case of being unsure whether you should register for VAT or not, get in touch with the relevant professionals to find out the best for your business. The Bottom Line Now that you have gathered a fair amount of information about the eBay fee calculator UK, we can bring the discussion towards wrapping up. We can say that being an eBay seller may sound easy, however, it comes with the struggle of certain requirements that are discussed above. We hope these few minutes of reading will help you to know whether or not your business should be VAT registered and how to handle VAT on eBay fees. Need help with VAT Registration? Understanding VAT rules can be tricky, but registering for VAT doesn’t have to be. Let our experts handle it for you. Register for VAT with CruseBurke. Disclaimer: The information about the eBay fee calculator UK provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.

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tax relief on mortgage interest

Explained: Buy to let Mortgage Interest Tax Relief

05/08/2022tax , VAT

In previous years, landlords in the UK could deduct mortgage interest payments directly from their rental income, significantly reducing their tax bill. However, since Section 24 of the Finance Act 2015 was fully implemented in April 2020, this is no longer the case. The landlord tax landscape has shifted, and many landlords—particularly higher-rate taxpayers have faced increased tax liabilities as a result. If you’re a landlord wondering how this affects you and whether incorporation might help, this guide will give you a clear overview. What Changed Under Section 24? Prior to April 2020, landlords could offset 100% of their mortgage interest against their rental income. This meant you were taxed only on your net rental profit after deducting mortgage expenses. Now, under the Section 24 rules, mortgage interest is no longer an allowable expense for individuals. Instead, all landlords—regardless of tax bracket—receive a basic rate tax credit of 20% on eligible interest payments. Example: You pay £8,000 in mortgage interest. Under the old rules, this could reduce your taxable rental income by £8,000. Under the new rules, you pay tax on the full rental income, then claim a 20% tax credit, saving just £1,600 instead of up to £3,200 if you were in a higher tax bracket. Why This Matters for Higher-Rate Taxpayers For basic rate taxpayers, the 20% tax credit largely aligns with their income tax rate—so the change is relatively neutral. However, for higher-rate (40%) and additional-rate (45%) taxpayers, the financial impact is significant. You are now taxed at your full marginal rate on the gross rental income, without relief for interest costs, and only receive a 20% credit. This can: Push your total income into a higher tax bracket Reduce your personal allowance if your income exceeds £100,000 Affect eligibility for child benefit, pension contributions, or student loan repayments Why Your Tax Bill May Appear Higher With no interest deduction, your taxable rental income increases—even though your real (cash-based) profit hasn’t changed. This results in higher reported income on your Self Assessment tax return and, in many cases, a higher tax bill. Other forms of income—such as employment, pensions, or dividends—may also compound this effect. Is Incorporating a Buy-to-Let Business the Solution? One increasingly popular strategy is setting up a limited company to hold your rental properties. Incorporated landlords (i.e. companies) can still treat mortgage interest as a deductible expense before calculating corporation tax (currently 25%), rather than dealing with the Section 24 restrictions. Potential Benefits: Deduct full mortgage interest Lower effective tax rate (corporation tax vs personal income tax) Greater flexibility on reinvesting profits Retain earnings within the company Considerations: You’ll face additional accounting and legal costs Transferring properties from personal to company ownership may trigger: Stamp Duty Land Tax (SDLT) Capital Gains Tax (CGT) Mortgage refinancing requirements Before incorporating, it’s crucial to weigh the long-term financial impact, as it’s not a one-size-fits-all solution. Making Tax Digital (MTD) – What Landlords Need to Know in 2025 Another key development affecting landlords is Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). From April 2026, landlords with property income over £50,000 per year must: Keep digital records Use HMRC-compliant software Submit quarterly updates and an end-of-year finalisation MTD will apply to those earning over £30,000 from April 2027, with a pilot scheme already in place. If you’re affected, preparing now can make the transition smoother. Can You Still Claim Any Relief? Yes – although full mortgage interest relief is gone, you still receive: A 20% tax credit on eligible interest Deductions for other allowable expenses, including: Letting agent fees Repairs and maintenance Property insurance Council tax and utility bills (if paid by landlord) Keeping good records and understanding what you can still claim is key to minimising your tax bill. The Bottom Line Section 24 has significantly changed how landlords are taxed in the UK. While you can no longer deduct mortgage interest from your rental income, you do receive a 20% tax credit. This change hits higher-rate taxpayers hardest and has prompted many to consider incorporating their property business. If you’re a landlord with a growing portfolio—or you’re concerned about rising tax bills—speak to an accountant before making decisions. Incorporation may help, but only if structured correctly. Our team of professional members loves to hear out your business problems and find out the possible and suitable solutions quickly. Call us on 02086868876 or email us today. We will come up with fine solutions. Disclaimer: The information about tax relief on mortgage interest provided in this blog includes text and graphics that are general. This does not intend to disregard any of the professional advice.

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Reclaiming VAT on EU purchases

How to Reclaim VAT on EU Purchases?

04/08/2022VAT

We all love being abroad and going on a vacation to get a break from work. Whether you are associated with the business world and carrying out your business activities or you work for an employer and own different employment status, the mutual ground of employees is to be agreed on being abroad. This changes the air once in a while. However, have you ever experienced being on a vacation abroad? Find out a product that is very useful for your business that was not available in the UK.  This could be any business tool and you have made up your mind to make a purchase. However, all you are now thinking about is reclaiming VAT on EU purchases. This is quite understandable that you have invested in the product as a business purchase. And now wondering how will you manage to reclaim VAT. You need to stop wondering as we have gathered the answers to all possible and frequently asked questions here. This includes the basic information about what is the service related to EU VAT refund or what is the process to claim VAT on the products and services that you have purchased in the EU.   Get in touch with one of our team members to know more about Reclaiming VAT on EU-purchased products and services. We will ensure to provide the best possible tax advice for your business.   Services and Products In the EU Countries In the previous years, if you are experiencing a business purchase of a tool, product or service while you are visiting any of the countries in the EU, the only possible method to reclaim VAT was to get the process initiated in the same country where you have made the purchase. You had to deal with the new tax authorities of the relevant country. The only limitation applied to this practice was to be VAT registered in the other country to do the process in other EU countries. However, in the case when you were not a VAT registered individual there, the only way out was to go for a stand-alone claim to get the amount back as VAT. This process of stand-alone claim was not much appreciated by people because of its slow pace. People would get frustrated and leave the process halfway there. After considering these factors, HMRC and the EU countries introduced the EU VAT refund service just to make the process swift and easy for such people. It turned out to be very practical when people are visiting EU countries which brought the popularity of this service among them. The reason this scheme is still intact to date.   Reclaiming VAT on EU Purchased Products and Services The good news is that it is allowable for you to deal with your submission in this case online as well. However, you have to be clear about the process that you will claim for foreign VAT and bring this into HMRC’s knowledge. There is no such requirement of getting in touch with the tax authorities of the EU country where you bought the product or service. People are still confused about this rule which makes them mishandle the whole process which results in claim rejection by HMRC. Look into the following suggestions to make a successful claim.   Trap: Do not consider the shopping items you bought in other countries and brought them back to the UK to claim for VAT. Such cases will not make you eligible to make a claim. These items are considered imported items and the regular VAT rules are implemented for them. You will then get the sale zero-rated by the seller and while you are in the process of claiming in the UK, you will mention the items are imported. In case you have paid the foreign VAT on these items, you are no longer eligible to claim VAT in the UK.   Example: Let’s take the example of Henry who has bought IT equipment from Germany and has paid the German VAT already. When Henry is back in the UK and finally decides to claim VAT. He is no more eligible because he has paid VAT in the EU. HMRC will reject the claim and the foreign tax authorities will not entertain the case as well. He can not even use the EU VAT refund service.   Tip: This is advisable in Henry’s case to inform the seller that he will take the IT equipment with him back to the UK for business use on a permanent base. He could request the seller to zero rate his VAT. This is a simple process and Henry had to provide the seller with his VAT number, business address and name details.   Uses of EU VAT Refund Service In case you are using EU VAT refund service for the business products you aim to take to another EU country, car hires and hotel bills are a few such examples. There are a few limitations to getting this accepted by HMRC. These are listed below for you: This is for a usage period that should not exceed a year. The minimum period is three months. This should be submitted at the end of September.   The Bottom Line Now that you have gathered a fair amount of information about reclaiming VAT on EU purchases, we can bring the discussion towards wrapping up. We can say that reclaiming VAT on EU purchases has made the process a lot easier than dealing with other countries’ tax authorities. However,  if the rules are not followed as instructed by HMRC, your case will face immediate rejection which is a damaging factor for your business. We hope you will handle your VAT claims more efficiently now.   Reach out to us to get your queries answered today. Our young and creative team members love to deal with and hear out your problems.    Disclaimer: The information provided in this article about reclaiming VAT on EU purchases includes text and graphics …

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