by Acuaccounts | Mar 11, 2019 | accounting, tax
Making Tax Digital (MTD) is the new regime for record keeping and filing of VAT returns.
We are fast approaching the start of this new regime and we know that change can be painful so here is a quick reminder of the upcoming changes and some pointers as to how you can prepare.
When do things need to change?
From 1 April 2019, if you are registered for VAT, or are in the process of registering, you must start using MTD. This means that you may already be operating within an accounts year that includes a VAT return period that will require digital records.
Filing with HMRC
Under the new regime, VAT Information must go to HMRC via an Application Programme Interface (API). This means that you will need software, bridging software or API enabled spreadsheets. For VAT return periods starting on or after 1 April 2019, there will no longer be an option to submit your return through the Government Gateway by logging in and completing the boxes.
It will become mandatory for businesses that fall within MTD to keep digital records.
How can businesses get ready?
HMRC are not developing MTD compatible VAT software. However, their website details MTD compliant software providers here: https://www.gov.uk/government/publications/software- suppliers-supporting-making-tax-digital-for-vat/software- suppliers-supporting-making-tax-digital-for-vat
If you currently use accounting software, you may need to upgrade. You should be able to obtain advice and support from your existing provider via a telephone or online support service but if you prefer then please call us as we may even get you a better deal.
If you currently use only spreadsheets and then submit the return through the Government Gateway, please get in touch to discuss the options available to you and the services we can provide as agent.
If you currently maintain records on paper, your processes must change. You will need to either acquire and use appropriate software or engage us to do your record keeping and reporting for you.
If you have authorised us to submit your VAT return for you as agent, we can still do this. We will need to have access to the functional compatible software that holds your mandatory records.
Will there be penalties if businesses are not ready on 1 April 2019?
HMRC are aware that these changes are challenging to businesses and they are proposing a soft-landing period of at least 12 months, with no record keeping penalties. This should allow businesses time to update their systems. During that soft-landing period, it will be acceptable for data to be transferred between software and spreadsheets manually; although the final submission will have to be made to HMRC using API enabled software.
What will not change?
Businesses will not need to adjust their VAT reporting dates or be required to provide any more VAT information than they do already.
The current exemptions for electronic submissions will also apply to MTD, e.g. on the grounds of a taxpayer’s religious beliefs, practical inability to use a functional compatible software system or when subject to insolvency procedures.
by Acuaccounts | Feb 8, 2019 | accounting, latest news
You may have seen previous blogs or newsletters from us regarding Making Tax Digital (MTD). However, here is a reminder.
What is MTD?
Making Tax Digital is an attempt made by the HMRC to do exactly what the name suggests. Currently, once a year, businesses have to file one headache of a document but once MTD is implemented, small businesses will be enforced to keep electronic records of their accounts using software which has been approved by HMRC. Business will have to file their tax information digitally and on a quarterly basis.
With a personal digital account, individuals will be able to send the information directly to HMRC and check details throughout the year to make sure that they are correct. This means there will be no more hunting around for receipts come tax time so in theory, an easier system all round.
Who will this affect?
From April 2019 if the business is currently above the VAT threshold (£85,000) businesses will need to keep their records digitally for VAT purposes.
It is likely smaller businesses will be required to keep digital records shortly after. This changes the way HMRC wants information from taxpayer and means that you may need to move from your existing desktop or manual record keep and onto an online accounting package
The good news is that AcuAccounts are certified in the installation and operation of Online Accounting software which is digitally compliant and specifically designed for small and medium-sized business.
How can AcuAccounts help you?
We have teamed up with various major Cloud software companies to provide our clients with the best possible fully compliant accounts package. The advantages are:
- It’s on the Cloud so you can get a clear view of your finances any time any place
- Run your business from work, home or on your mobile app
- Use your mobile to photograph purchase invoices and expenses and upload these to the software
- It automatically grabs bank statements in real time
The 3 main Cloud software companies we support are; Sage, QuickBooks and Xero.
The important bit – how much will it cost?
We don’t believe in set packages because we don’t want to sell you something that you won’t use, therefore, we tailor make all our client packages based on the features of which we think will be useful to you.
Speak to one of our team today for more details: info@acuaccounts.com or 02039079027
www.acuaccounts.com
by Acuaccounts | Jan 14, 2019 | accounting, tax
If you’re not used to filing self-assessment tax returns, they can seem like a minefield. Here are a few tips from our team:
DO get yourself registered for the self-assessment system. You’ll need a Unique Taxpayer Reference (UTR) number, and they’ll only send it by post. It can take a while, so don’t wind up missing a deadline due to a delay with receiving the letter! You will also need an account and activation code for the Government Gateway site if you want to file online.
DON’T ignore the deadlines or assume it’s okay to be a few days late. If you reach February and still haven’t filed your return, you’ll be walloped with a £100 fine. That’s just for starters, of course.
DO let the taxman know if you’ve got a genuine reason for missing the deadline. If it’s not your fault, he might give you a little breathing room. Don’t count on catching him in a forgiving mood and make sure your excuse is a good one. A major illness might get you off the hook for a week or two.
DON’T assume that you’ve been asked for a tax return by mistake. It can happen but ignoring the demand just because it’s unexpected is always a mistake. If you can prove you don’t need to file a return, HMRC will back off. Until you do, though, they’ll be expecting your paperwork on time.
DO file your self-assessment return even if you know you won’t owe any tax this year. It doesn’t matter how little you earned, HMRC still wants to know about it.
DON’T assume that HMRC doesn’t care about your hobby selling stuff on eBay. If you’re doing enough of it, they’ll call it a business and expect a self-assessment tax return from you.
DO remember to file your self-assessment return, even if you folded your business this year. You need to make sure your books are up to date until the very last day you were trading.
DON’T think you can skip over the self-assessment pages about renting out property just because you make a loss on it. Whether you’re up or down on the deal, you’ve got to account for the money.
The biggest “DO” of all: Talk to AcuAccounts if you need help with your self-assessment return or can’t understand why you must file one. Making a mistake or missing a self-assessment tax return deadline could wind up costing you more than just the tax you owe.
Far too many people are paying more than they should, simply because the rules are too complicated. AcuAccounts tax experts are here to help you understand the self-assessment process, even if you’re due a tax refund and providing support throughout tax return service and tax code queries.
by Acuaccounts | Dec 12, 2018 | accounting, latest news
All supplies could be classified as exempt, zero-rated or standard rated for VAT purposes. Supplies that are standard-rated or zero-rated are considered to be ‘taxable supplies’ as defined.
The supply of goods and services are generally subject to VAT at the standard rate (20%), unless such supply is specifically zero-rated or exempt in terms of the VAT Act.
A zero-rated supply is a taxable supply on which VAT is levied at the rate of 0%. No output tax will be payable to HM Revenue & Customs in respect of zero-rated supplies. Registered VAT entities making zero-rated supplies are entitled to claim their input tax deductions on goods or services acquired in the course of making such taxable supplies.
An exempt supply (i.e. not a taxable supply) is the supply of goods or services on which no VAT rate is chargeable. Registered VAT entities may not claim an input tax deduction in respect of goods or services acquired in the course of furtherance of making exempt supplies. A person that makes only exempt supplies cannot register for VAT as they are not providing taxable supplies as per the VAT Act.
Where goods and services are purchased for taxable and non-taxable purposes, only a portion of the input tax may be claimed. VAT registered entities making mixed supplies (taxable and exempt supplies), are required to apportion their input deduction to the extent to which the entity has utilised the goods or services in the course and furtherance of making taxable supplies.
Confusion often exists about ‘VAT at a Zero-Rate’, ‘Exempt supply’ and ‘Non-supply’. The main difference between zero rate and exempt supplies is that the suppliers of zero-rated goods and/or services can still reclaim all their input VAT, but the suppliers of exempt goods are either not registered for VAT or if they are, they cannot reclaim their input VAT. Examples of VAT at a Zero rated items and services include:
- Petrol leaded or unleaded;
- Mahango, mahango meal, maize meal and bread, but not as a prepared meal;
- Water and electricity to a residential account;
- Selling of residential property;
- Fresh milk
- Sunflower oil
For more information on anything related to VAT feel free to get in touch with one of our experts.
by Acuaccounts | Nov 12, 2018 | accounting, latest news
Do you purchase business-related equipment, stationary & so on from Amazon? If so why not create an Amazon Business account!
If you have not already done so, this is a great feature to utilise from accounts and record keeping as this enables you to gather:
- VAT exclusive pricing and VAT invoicing: See prices with and without VAT and benefit from VAT invoicing. This is great for when working out VAT Returns, note Amazon itself is not VAT registered
- Visibility and control: Add a Purchase Order number to orders, add multiple users, set spending limits, enable purchasing approval workflows and gain visibility into spending with Amazon Business Analytics
- Reconciliation: Easier to reconcile for your Accountant/Bookkeeper against payments, access can also be given to your accountant/bookkeeper
- Keep it Separate: Keep things separate from Personal and Business Related
In addition to competitive pricing and great selection, Amazon Business customers have access to the following features:
- Free One-Day Delivery: Free premiums shipping on qualified orders of £30 or more.
- Detailed transaction data on commercial card purchases: Track and reconcile business purchases with line-item detail on every Amazon Business purchase made with a Visa Commercial Card issued by Barclaycard, Citi, HSBC or Lloyds Bank.
- 30 days credit and paid by invoice options
Wondering how and why this would benefit your Company?
Speak to one of our team for more details.
by Acuaccounts | Nov 1, 2018 | accounting
The following is for illustration purposes only and should not be relied upon for your tax planning or tax affairs. As usual we like to keep things simple, not much has change for 2018/ 2019; just a small change to the national insurance limits and the Dividend Allowance reduces to just £2,000.
Salary
From April 2018 (and not before) you can pay a salary of £702 / month without paying any tax or NI. If you choose this option:
- You do get National Insurance Credits towards some benefits for example state pension
- You must be registered as an employer
- You have to file an RTI (real time information) through the Payroll
- No income tax or national insurance is due on a salary at this level
- This is a perfectly legal and an acceptable way of paying yourself from your company, in fact HMRC have been known to state that they do not have a problem with this approach
Dividends
From April 2018(and not before) any dividends paid over £2,000 will attract dividend tax.
The rates of tax will be:
- First £2,000 of dividends – tax free
- 7.5 % for dividends falling within basic rate tax (caution on how this is calculated)
- 32.5% for dividends falling within higher rate tax (which will be over £46,350 from April 2018)
- 38.1% for dividends falling within the additional rate of tax with income over £100,000 meaning restrictions on your personal allowance
How to work out your dividend tax
The calculations assume that you have no other income.
You would pay a salary of £702 x 12 from the company = £8,424
You can then pay £2,000 plus the remainder of your personal allowance as dividends without any tax = £2,000 + (£11,850 personal allowance less the salary of £8,424) = £5,426.
So a total of £13,850 will be tax free (dividend allowance + personal allowance).
Note – this is per person.
You will pay tax after £13,850!
Tax at 7.5%
For the next £32,500 of income you will pay tax at 7.5%.
So you can take
- a salary of £8,424
- dividends of £5,426 + £32,500 = £37,926
- Total income of £46,350
- Dividend tax due on this will be (£32,500 x 7.5%) £2,437.50
Tax at 32.5%
Dividend income over £37,926 will attract tax at 32.5%.
If your income exceeds £100,000 you should obtain a personalised illustration as your personal allowance is restricted at that level.
Dividend tax rule of thumb
The dividend tax rule of thumb to use is:
- take a salary of £8,424
- tax free dividends of £5,426 to use up the remainder of your personal allowance
- £75 of tax per £1,000 of dividends from £5,427 up to total dividends of £37,926
- £325 of tax per £1,000 of dividends over £27,927
- If your income exceeds £100,000 then give us a shout as this becomes complicated!
Notes
- Dividends are paid out of after-tax profits.
- Everyone has different tax affairs, the above is for illustration purposes only and should not be relied upon for your tax planning or tax affairs.
- Get your calculation checked with an accountant to make sure you have a tax plan that suits you.
- Operating as a limited company is perfectly legitimate and is purely a business choice.
- Salary is an allowable business cost and will reduce the profit subject to corporation tax.
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