How can you get a Tax Refund for Trading Losses? Reply

We are facing the worst recession in 300 hundred years, according to Bank of England

Worse than the Napoleonic wars 1812 to 1821

Worse than the Great Depression of the 1930’s

Worse than the 2 World Wars

Worse than the Financial Crash of 2008

The IMF predicts the UK economy will shrink by 6.5% in 2020, compared with the IMF’s January forecast for 1.4% GDP growth.

The Office for Budget Responsibility (OBR) said unemployment could hit 3.4 million – up from 1.3 million – leaving around one in 10 of the working population without a job, while the economy may shrink by 35% between April and June.

Businesses will make losses this year!

How can those losses into cash refunds?

Carry back the losses! Reclaim tax you have previously paid

You will probably need your accountant to help you, here are the basics

Historically most businesses have simply carried forward losses but you can carry them back

Corporation Tax

 

Instead of carrying a loss forward, you can claim for the loss to be offset against profits for the earlier 12 month period (not accounting period).

You can make a claim to carry back a trading loss when you submit your Company Tax Return for the period when you made the loss.

 

Self Employed

You may use the loss against your income of 2019 to 2020 or 2018 to 2019 or both years.

You can make this claim for losses made in the first 4 years of trade. Start with 2016 to 2017 income.

If the loss is more than your income use the remaining loss against your income in 2017 to 2018 and then 2018 to 2019.

Do not make this claim if you, your spouse or civil partner first carried on the trade before 6 April 2016.

 

 

Corporation Tax – Carry a trading loss back

Instead of carrying a loss forward, you can claim for the loss to be offset against profits for the earlier 12 month period (not accounting period).

You can only do this if your company or organisation was carrying on the same trade at some point in the accounting period or periods that fall in the earlier 12 month period.

For example, if your company or organisation has a loss of £8,000 in the accounting period 1 January 2016 to 31 December 2016 and profits of £20,000 in the earlier 12 months, you can carry back the £8,000 loss to be set off against the profits for the previous accounting year, this will reduce them from £20,000 to £12,000.

If an accounting period straddles that 12 month period, the profit for that period is apportioned and the loss can only be offset against that portion of the profit that falls within the 12 month period.

For example, your company or organisation has a loss of £8,000 in the accounting period 1 January 2016 to 31 December 2016 and it’s recently changed its accounting date, so that the accounting periods and profits of the earlier periods were:

  • £2,000 for 1 July 2015 to 31 December 2015
  • £10,000 for 1 July 2014 to 31 July 2015

You can carry back £2,000 of the loss to cover the whole of the profit in the period ended 31 December 2015.

The balance of the loss of £6,000 cannot be entirely carried back as only 6 months of the profits of £10,000 fall into the earlier 12 months of the loss making period.

Only a loss of £5,000 (6/12 x £10,000) can be used, and the balance of £1,000 is available to be carried forward to the year ended 31 December 2017.

How to claim for a trading loss to be carried back, or amend a claim

You can make a claim to carry back a trading loss when you submit your Company Tax Return for the period when you made the loss.

You can make your claim in your return or in an amendment to the return, as long as you’re within the time limit to amend it. You can also make your claim in a letter.

If you’re making a claim in your return that reduces your Corporation Tax liability for an earlier period, you must make sure you have put an ‘X’ in the appropriate box on the CT600 form.

A claim should be made within 2 years of the end of the accounting period when you made the loss. Your claim should include:

  • the name of your company or organisation
  • the period when the loss is made
  • the amount of the loss
  • how the loss is to be used

If you send your claim separately, send it to HMRC.

 

https://www.gov.uk/guidance/corporation-tax-calculating-and-claiming-a-loss

Income Tax – Using losses: types of claim

Trade losses may be used in a number of ways against:

  • income or possibly against capital gains of the same year or an earlier year
  • profit of the same trade
  • income from a company to which you transferred your trade.

Not all losses may be claimed in all of these ways and sometimes the amount of loss you claim is restricted or limited.

https://www.gov.uk/government/publications/losses-hs227-self-assessment-helpsheet/hs227-losses-2020

Loss set-off against income or income and capital gains

You may use the loss against your income of 2019 to 2020 or 2018 to 2019 or both years. The loss you claim against income will normally be the whole of the loss. If the loss is more than your income, claim the figure of income. You may be able to use the remaining loss, or part of it, against your chargeable gains.

Loss used against income in 2016 to 2017 to 2018 to 2019: early trade losses relief

You can make this claim for losses made in the first 4 years of trade. Start with 2016 to 2017 income.

If the loss is more than your income use the remaining loss against your income in 2017 to 2018 and then 2018 to 2019.

Do not make this claim if you, your spouse or civil partner first carried on the trade before 6 April 2016.

If you make any of these claims, make sure that you include losses claimed by you other than in your tax return. The section on stand-alone claims gives more on this.

If you use the loss against earlier year’s income or capital gains you must also tell us the:

  • amount of loss used for each year in the ‘Any other information’ box on the return
  • decrease in tax due for earlier years

The amount of loss relief you claim against income or capital gains may be restricted or limited for example if you:

  • worked for less than 10 hours a week on average on commercial activities of the trade
  • are a Limited Partner or a member of a Limited Liability Partnership
  • have a trade which is carried on wholly overseas
  • have claimed certain capital allowances
  • have income from oil extraction activities or oil rights

If you need more information on any of the restrictions on relief, ask us or your tax adviser.

There’s a limit on the total amount of Income Tax reliefs that you may claim for deduction from total income for a tax year. Loss relief is one of the reliefs affected. The limit is the higher of £50,000 and 25% of the adjusted total income of the year. See Helpsheet 204 if you think you may be affected by this.

 

Example

Phil has a total income of £70,000 in 2019 to 2020 and makes a trading loss in that year on one of his businesses of £60,000.

The maximum amount of relief Phil can set against his total income for 2019 to 2020 is £50,000 as this is the greater of £50,000 and 25% of his income. The remaining £10,000 loss can be carried forward.

https://www.gov.uk/government/publications/limit-on-income-tax-reliefs-hs204-self-assessment-helpsheet/hs204-limit-on-income-tax-reliefs-2020

 

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57 Ways to Grow Your Business 2

 

Download a free copy https://www.bicknells.net/

Contents

1 THE FOUR BASICS. 1

2 WHAT MATTERS TO YOU REALLY MATTERS. 2

3 DO A SWOT ANALYSIS. 4

4 GET CLEAR ON YOUR PRODUCTS AND SERVICES. 5

5 DEFINE YOUR UNIQUE SELLING PROPOSITION (USP) 8

6 WRITE A BUSINESS PLAN. 10

7 DEVELOP TARGETS, FORECASTS AND BUDGETS. 12

8 TRACK YOUR KEY PERFORMANCE INDICATORS. 13

9 SYSTEMISE EVERYTHING. 15

10 APPLY THE LATEST TECHNOLOGY. 16

11 OUTSOURCING. 17

12 SURVEY YOUR CUSTOMERS. 18

13 RESOLVE COMPLAINTS. 22

14 APPLY THE 80/20 RULE. 24

15 CONDUCT A FOCUS GROUP MEETING. 26

16 ANALYSE YOUR VALUE DIFFERENTIAL. 27

17 GET YOUR PRICING RIGHT. 30

18 BREAK SOME COMPROMISES. 33

19 OFFER MONEY-BACK GUARANTEES. 34

20 SURVEY YOUR COMPETITORS. 35

21 SURVEY YOUR TEAM MEMBERS. 37

22 INCENTIVISE YOUR TEAM.. 38

23 DEVELOP REFERRALS AND INTRODUCTIONS. 39

24 NO SECOND CHANCE TO MAKE A FIRST IMPRESSION. 42

25 ANSWER THE PHONE! 44

26 MAKE YOUR RECEPTION AREA SPECIAL. 45

27 HIRE A MARKETING PERSON. 47

28 DEVELOP YOUR BRAND IDENTITY. 49

29 BUILD A CONTACT MANAGEMENT SYSTEM.. 52

30 BUILD A HELPSHEET SYSTEM.. 54

31 CREATE A “FREEBIE” KIT. 56

32 GATHER TESTIMONIALS. 58

33 DEVELOP A BROCHURE. 59

34 SEND E-NEWSLETTERS. 61

35 SEND PRINTED NEWSLETTERS. 62

36 SEND WELCOME LETTERS. 62

37 SAY THANK YOU. 64

38 SEND DIRECT MAIL. 66

39 MAKE FOLLOW-UP PHONE CALLS. 69

40 WRITE ARTICLES. 73

41 SEND PRESS RELEASES. 74

42 GIVE SPEECHES. 76

43 RUN SEMINARS AND WEBINARS. 78

44 PARTICIPATE IN TRADE ASSOCIATIONS. 79

45 ATTEND TRADE SHOWS. 80

46 HOLD AN OPEN HOUSE. 81

47 USE GIFTS, GIMMICKS AND GIVEAWAYS. 83

48 GO TO LUNCH. 84

49 JOIN A BUSINESS REFERRAL GROUP. 85

50 ORGANISE BUSINESS-TO-BUSINESS LUNCHES. 86

51 GET A KILLER WEBSITE. 87

52 USE VIDEO. 89

53 USE SOCIAL MEDIA. 90

54 WOW YOUR CUSTOMERS. 93

55 WRITE AN ACTION PLAN. 94

56 GET CLOSE WITH YOUR ADVISER TEAM.. 95

57 THE FOUR PHASES OF OWNING AN ELEPHANT. 96

Bicknell Business Advisers Limited. 97

REFERENCES. 98

steve@bicknells.net

Best New Business Ideas 2020 and Free how get started business kit Reply

There are some fantastic business opportunities available now, not every business is suffering as a result of Coronavirus

 

These are some of those businesses that have thrived

Online, Online, Online!!!

Any business that can be home based and operate online is a winner, for example

 

Online Training

Live Webinars

Online Fitness, Cooking, Education

 

E Commerce and Online Shops, everyone wants to buy online

These businesses need

Copywriters

Content producers

Tools

And they need people to deliver their products, if you buy products online some needs to deliver them!

On top of these people need somewhere to live and food to eat, any business that delivers our basic needs will always be in demand even if you need to change the way you deliver it, like restaurants switching to takeaways

 

Our Free 50 Page New Business Kit is on the home page of our website, nest to the image of the kit, click download https://www.bicknells.net/

The-New-BBA-Business-Kit-2020-21.pdf

 

 

Download our free 50 page New Business kit covering

The Financial, Tax and Accounting Considerations of Starting a New Business

We think that as the C19 Pandemic unfolds there will be a significant number of people who will start new businesses

The Toolkit contains comprehensive content on:

  • Legal entity
  • Registering for tax
  • Accounting and bookkeeping
  • VAT
  • Payroll
  • Income and corporation tax
  • Cash planning and forecasting
  • Obtaining credit and finance
  • Insurance

 

 

 

Follow our Blog https://stevejbicknell.com/

Check out our website https://www.bicknells.net

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Connect on Linked In https://www.linkedin.com/in/stevebicknell1/

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New Business Tool Kit prepared by https://www.the2020group.com/

Working at Home – How can claim tax relief? Reply

Working from Home Tax Relief

Tax Savings for Employees and business covering VAT, Home Costs and Equipment

Further information on the items discussed in the video

VAT Notice 700 – 32. Apportionment of tax between business and non-business activities

This section explains how to treat tax incurred on goods or services that are used only partly for business purposes

https://www.gov.uk/guidance/vat-guide-notice-700#apportionment-of-tax-between-business-and-non-business-activities

 

Claim tax relief for your job expenses

From 6 April 2020 your employer can pay you up to £6 a week (£26 a month) to cover your additional costs if you have to work from home. For previous tax years the rate is £4 a week (£18 a month).

You will not need to keep any records.

If you work at home voluntarily

If you’ve agreed with your employer to work at home voluntarily, or you choose to work at home, you cannot claim tax relief on the bills you have to pay.

 

https://www.gov.uk/tax-relief-for-employees/working-at-home

 

Simplified expenses if you’re self-employed

 

You can only use simplified expenses if you work for 25 hours or more a month from home.

Hours of business use per month Flat rate per month
25 to 50 £10
51 to 100 £18
101 and more £26

Example

You worked 40 hours from home for 10 months, but worked 60 hours during 2 particular months:

10 months x £10 = £100
2 months x £18 = £36

Total you can claim = £136

https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Specific deductions: use of home: apportioning the expenditure

The factors to be taken into account when apportioning an expense include:

  • Area: what proportion in terms of area of the home is used for trade purposes?
  • Usage: how much is consumed? This is appropriate where there is a metered or measurable supply such as electricity, gas or water.
  • Time: how long is it used for trade purposes, as compared to any other use?

The method of apportioning an expense depends on the relative importance of each of these factors. There are examples at BIM47825.

https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47815

 

Claim capital allowances

 

You can claim capital allowances when you buy assets that you keep to use in your business, for example:

  • equipment
  • machinery

https://www.gov.uk/capital-allowances

Other Points to Consider

  • Capital Gains Tax
  • Planning Consent
  • Insurance
  • Business Rates
  • Benefit in Kind

 

Follow our Blog https://stevejbicknell.com/

Check out our website https://www.bicknells.net

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Connect on Linked In https://www.linkedin.com/in/stevebicknell1/

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Follow us on Twitter https://twitter.com/Bicknelladviser

 

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What is the Self Employed Income Support Scheme? 2

The scheme will allow you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether. This is a temporary scheme, but it may be extended.

If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

The grant will be subject to Income Tax and self-employed National Insurance.

There is other support available if you’re not eligible for the grant.

HMRC will work out if you’re eligible and how much grant you may get.

Last week HMRC contacted all tax agents (accountants), here is what they said….

As an agent you won’t be able to make a claim on behalf of your clients.

Designing a scheme that enabled agents to apply on behalf of clients would have taken substantially longer to deliver, at a time when speed is the priority.

Instead, we have designed the scheme to be as simple as possible for customers to use, and we will calculate the amount a customer is entitled to based on the information we already hold.

How to use the checker

To use the online checker, your client or you, on their behalf, will need their Unique Taxpayer Reference Number and their National Insurance Number.

If your client is eligible, they will be given a date, between 13 and 18‌‌ May, from which they can apply. This date is assigned randomly to help HMRC manage demand on the service, making sure that everyone who needs to make a claim can do so.

Your client will also be asked to provide their Government Gateway credentials (user ID and password) and check that their bank and contact details are up to date. This is important so that we can we can remind them by email or text message when it’s their turn to make a claim.

If your client doesn’t have Government Gateway credentials, they can set those up simply if they follow our guidance and use the SEISS eligibility checker. There will be no requirement for customers to wait for pins or codes through the post.

So it vitally important that you get a Gateway account with HMRC if you are self employed.

steve@bicknells.net