Do you have any cash in reserve? 6m UK families don’t! Reply

I was watching the BBC news this morning and in the Reality Check report they were talking about Debt.

Obviously the biggest amount of debt is mortgages and compared to other countries we are close to the average for Debt.

But its not just an issue for families its an issue for businesses too. We often work with landlords and typically their net cash flow out of the rent received is 2% or less.

That’s the Rental Income less mortgage interest, expenses and tax.

Landlords tend to be asset rich and cash poor, liquidity is vital to cover even minor problems such as repairs and void periods. It is of course easier to have liquidity with a bigger portfolio.

Landlords are facing many problems at the moment not least the Section 24 Interest Restrictions which start this year. This will mean large numbers of landlords with high Loan to Value ratios will have negative cash flow and if the sell they face 18% to 28% capital gains tax (as buy to let get an 8% penalty).

I wonder how many landlords have the resources to handle negative cash flow, how long could they cope what are their contingency plans?

The Lenders and Bank of England have anticipated this problem and for sometime now have tightened the lending rules coverage is now 145% for personal borrowers, but its still 125% for companies as they are aren’t affected by Section 24.

Now is the time to work on your strategy!

steve@bicknells.net

 

Tax and Performers – what can you claim? Reply

Most people don’t like doing accounts and actors, singers, musicians, dancers and performers are no exception.

Making Tax Digital will mean they will need to be on top of their expenses in order to do quarterly returns from April 2018.

Here is quick summary of claimable expenses.

Section 352 Limited deduction for agency fees paid by entertainers

(1) A deduction is allowed from earnings from an employment as an entertainer for agency fees (and any value added tax on them) if the fees are calculated as a percentage of the whole or part of the earnings from the employment.

This is subject to the limit in subsection (2).

(2) Amounts may be deducted under this section in calculating the net taxable earnings from an employment in a tax year only to the extent that, in aggregate, they do not exceed 17.5% of the taxable earnings from the employment in the tax year.

(3) Subsections (4) and (5) apply for the purposes of this section.

(4) “Entertainer” means an actor, dancer, musician, singer or theatrical artist.

(5) “Agency fees”, in relation to an employment, means—

(a) fees paid under a contract between the employee and another person, to whom the fees are paid, who—

(i) agrees under the contract to act as an agent of the employee in connection with the employment, and

(ii) at the time the fees are paid is carrying on an employment agency with a view to profit, and

(b) fees paid under an arrangement under which a co-operative society or the members of such a society agree to act as the employee’s agent in connection with the employment.

(6) For the purposes of subsection (5)—

“co-operative society” does not include a society which carries on or intends to carry on business with the object of making profits mainly for the payment of interest, dividends or bonuses on money invested or deposited with or lent to the society or any other person, and

“employment agency” has the meaning given by section 13(2) of the Employment Agencies Act 1973 (c. 35).

http://www.legislation.gov.uk/ukpga/2003/1/section/352

Trade and Magazine Subscriptions

You can claim for:

  • trade or professional journals
  • trade body or professional organisation membership

Travel & Subsistence

The normal rules apply https://stevejbicknell.com/2017/03/27/what-are-the-rules-on-subsistance-and-travel/

Travel to auditions, rehearsals and performance related activities should all be claimable.

Car Mileage can also be claimed at 45p for the first 10,000 miles then 25p per mile

Clothing and Costume Cleaning

If the clothing is for a performance then it should be fine but if used for personal use it has duality of purpose and can’t be claimed.

Generally rehearsal clothes can’t be claimed.

If the clothing counts as for a performance then the cleaning costs can be claimed

Other things

Tickets to events, shows, movies and museums may be claimable if they are for research purposes.

Props and equipment, even Ipads and computers could also be business expenses.

Websites, marketing, photography can all be business expenses.

Working form Home can also be claimed https://stevejbicknell.com/2015/02/02/simplified-expenses-working-from-home/

Also Mobile phones, stationery, insurance, accountancy and many more

 

steve@bicknells.net

How do you correct errors at Companies House? Reply

Basically there are 2 procedures to correct errors at companies house.

Amending Published Accounts

You must send amended accounts to Companies House on paper.

Amended or corrected accounts must be for the same period as the original accounts.

You must clearly say in your new accounts that they:

  • replace the original accounts
  • are now the statutory accounts
  • are prepared as they were at the date of the original accounts

You must write “amended” on the front – the accounts may be rejected as duplicates if you don’t.

Your original accounts will remain on file at Companies House.

If you only want to amend one part of your accounts, you need to send a note saying what’s been changed. The note must be signed by a director and filed with a copy of the original accounts.

https://www.gov.uk/annual-accounts/corrections-and-amendments

Depending on the changes made you might also need to change the corporation tax returns!

Second Filing of Documents (RP04)

The Power of Referrals Reply

Bournemouth Chamber of Trade & Commerce

We all love happy clients and there is nothing better than a client referring you to their business contacts.

We love referrals too, so don’t forget to tell your friends how Bournemouth Chamber of Trade and Commerce help businesses and charities in Bournemouth.

3 great referral tips

  1. Only refer people when you have first hand experience – so its someone you have done business with or have worked with – don’t refer people that you don’t know, its all about trust
  2. Be Specific – try to give examples of how the person/business you are referring have done a good job and why you are referring them now
  3. Don’t look for financial reward – referring people for a referral fee or other financial rewards starts to  make people wonder if you are referring in their best interests or your own.

What goes around, comes around. If you refer people and try…

View original post 102 more words

5 reasons why you need to network Reply

Bournemouth Chamber of Trade & Commerce

It’s often said that ‘your network is your net worth’ in otherwords the more business connections you have the more value you can add to your business and increase your chances of success.

There are many business networks in Bournemouth, you could probably network every day – Breakfast, Lunch and Evening.

Bournemouth Chamber of Trade & Commerce is different!

  • The Directors of the Chamber are all unpaid volunteers who want to help your business succeed – its a not for profit organisation
  • The Chamber works for the benefit of Bournemouth Businesses and Charities
    • Meeting the Council each month to help resolve members issues and contribute to the economic development of Bournemouth
    • Working with local charities each quarter in the Charity Forum
    • Working with hotels through BAHA and supporting the Bournemouth Tourism Awards
    • Holding regular networking events
      • NEO Breakfast
      • BH Banter – Free to attend
      • BH About – Free to attend

View original post 273 more words

The Mini Finance Bill Reply

The Finance Bill 2017 was to be the largest at 762 pages but in order to rush it though it was cut to 148 pages!

That’s an 80% reduction dropping 72 out of the 135 clauses and 18 out of 29 schedules.

One of the items dropped was Making Tax Digital (MTD).

But its widely expected that following the general election there will be another bill to bring in all the items that were dropped.

Our tax system is already far too complex:

  • 6,102 pages of legislation (according to Tolleys in 2012)
  • 639 monetary values
  • 425 thresholds
  • 214 penalties

Its a shame they couldn’t cut all the tax rules by 80%!

 

steve@bicknells.net

Can HMO’s and Residential Properties claim Capital Allowances? Reply

Capital Allowances are for commercial properties.

https://stevejbicknell.com/2017/02/21/why-are-capital-allowances-important-on-commercial-property/

They can be worth a lot money, sometimes a third of the property value can be plant and machinery and they are often over looked and under claimed.

There are companies who say you can claim them for HMOs but that doesn’t fit with rules!

Yes you could but them on your tax return but that doesn’t mean you have a valid claim as HMRC have process now and check later approach.

Here are the rules…

Capital Allowances Act 2001

http://www.legislation.gov.uk/ukpga/2001/2/section/35

The person’s expenditure is not qualifying expenditure if it is incurred in providing plant or machinery for use in a dwelling-house.

General: Definitions: Dwelling house

CAA01/S531

There are several references to dwelling house in CAA2001. The term appears in Part 2 (plant and machinery allowances), Part 3 (industrial buildings allowances), Part 3A (business premises renovation allowances), Part 6 (research and development allowances) and Part 10 (assured tenancy allowances).

For Part 10 (ATA) only “dwelling house” is given the same meaning as in the Rent Act 1977 (CAA01/S531).

There is no definition of “dwelling house” for the other Parts and so it takes its ordinary meaning. A dwelling house is a building, or a part of a building; its distinctive characteristic is its ability to afford to those who use it the facilities required for day-to-day private domestic existence. In most cases there should be little difficulty in deciding whether or not particular premises comprise a dwelling house, but difficult cases may need to be decided on their particular facts. In such cases the question is essentially one of fact.

A person’s second or holiday home or accommodation used for holiday letting is a dwelling house. A block of flats is not a dwelling house although the individual flats within the block may be. A hospital, a prison, a nursing home or hotel (run as a trade and offering services, whether by the owner-occupier or by a tenant) are not dwelling houses.

A University hall of residence may be one of the most difficult types of premises to decide because there are so many variations in student accommodation. On the one hand, an educational establishment that provides on-site accommodation purely for its own students, where, for example, the kitchen and dining facilities are physically separate from the study-bedrooms and may not always be accessible to the students, is probably an institution, rather than a “dwelling-house”. But on the other hand, cluster flats or houses in multiple occupation, that provide the facilities necessary for day-to-day private domestic existence (such as bedrooms with en-suite facilities and a shared or communal kitchen/diner and sitting room) are dwelling-houses. Such a flat or house would be a dwelling-house if occupied by a family, a group of friends or key workers, so the fact that it may be occupied by students is, in a sense, incidental.

The common parts (for example the stairs and lifts) of a building which contains two or more dwelling houses will not, however, comprise a dwelling-house.

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca11520

steve@bicknells.net

Making Tax Digital will see the end of VAT Returns Reply

Whilst we know that due to the election Making Tax Digital was dropped from the Finance Bill, we also know HMRC has said it will be back as soon as the elections are over!

The plan is that by 2019 VAT returns will be abolished for businesses including the Self Employed, Landlords and Partnerships.

But don’t start celebration too soon, they are being abolished because we will be providing more information each quarter online to HMRC.

Interestingly HMRC say they may be able to accept spreadsheets if they meet specific criteria, but realistically, surely everyone should now be using online accounting software. DIY spreadsheets are not the best way to keep your accounts and there is a high risk of error.

Why create your own spreadsheet when you can get software like Sage One Start for £6/mth or you might get an even better deal if you ask a Sage One Accountant.

So what is the expected timetable for Making Tax Digital

  • April 2018 – quarterly reporting for income tax purposes for unincorporated businesses with a turnover over £85,000
  • April 2019 – quarterly reporting for both incorporated and unincorporated businesses for income tax and VAT
  • April 2020 – quarterly reporting for corporation tax purposes

2018 is just the beginning as Sage explain …

What Making Tax Digital really means

  • All self-employed individuals, landlords and incorporated entities with business income over £10,000 will be required to keep digital records of all their income and expenditure and submit these records electronically to HMRC. Those in employment who have secondary income of more than £10,000 per year through self-employment or property will also be affected.
  • HMRC will not provide you with the tools for digital record keeping and submission. These will be offered through commercial software providers.
  • Those affected have the option to make the electronic submission in collaboration with their accountant or bookkeeper or can do this on their own.
  • Updates to HMRC will need to be made at least quarterly, taxpayers will have an option to pay tax based on their quarterly submissions, if they wish.
  • Any activity at the end of the year must be concluded and sent either by ten months after the last day of the accounting period, or by 31st January, whichever is sooner.

http://www.sage.co.uk/business-advice/legislation/making-tax-digital

The truth is, we don’t know exactly what the rules will be until the bill is drafted which won’t be till after the election, but what we do know is that big changes are coming!

steve@bicknells.net

Are you an employee and is a yacht a ship for the seafarers earnings deduction? Reply

The rules say….

If you’re an employee and work at sea, you may be able to reduce your tax bill by getting the Seafarers’ Earnings Deduction.

To get the deduction you must have:

  • worked on a ship
  • worked outside of the UK long enough to qualify for the deduction – usually a minimum of 365 days
  • been resident in the UK or resident for tax purposes in a European Economic Area (EEA) State (other than the UK)

You can’t get the deduction if you were:

  • a Crown employee (eg, a Royal Navy sailor)
  • not a UK resident
  • not a resident of an EEA State (other than the UK)

If you had more than one job you’ll still get the deduction against your seafarer pay if you meet all the conditions.

https://www.gov.uk/guidance/seafarers-earnings-deduction-tax-relief-if-you-work-on-a-ship

So if you are self employed – Sole Trader or Partnership – you can’t be an employee.

If you work on cruise ship or a shipping line you will probably be an employee so that’s fine but if you would on other ships then you should create your own Limited Company so that you can be an employee.

HMRC are actively investigating many self assessment returns where the claim for Seafarers Deductions has been incorrectly made.

The mechanics of the deduction –  the first stage is to calculate what the legislation (ITEPA 2003, s 378(2) and (3)) calls an eligible period, which:

  • is a period of at least 365 days;
  • begins and ends with a period of absence from the UK;
  • does not include any single period of presence in the UK in excess of 183 days; and
  • at least half of which is spent outside the UK (the 50% test to which All at Sea refers).

Then its based on employment earnings.

Here is a tax calculator to help http://seafarerstaxcalculator.com/

A Ship is large sea vessel carrying passengers or cargo, so its unlikely a yacht would be considered a ship. Although if its large enough it might.

steve@bicknells.net