Expenses if you're self-employed
Ready for Christmas! The end of a calendar year is always busy for us with Self Assessment returns becoming due for submission and payment by 31st January.
We have usually completed the majority of our clients returns by now, with many already receiving a tax rebate (eg CIS contractors with Gross deductions). However, it is a busy time as it can take a while to collate the information required for the return and we do pick up new clients looking for support with their tax returns.
One of the most common questions we receive is “What expenses can I claim?”. In a true response, “it depends”. It will depend on your business and of course the reason for purchase, but importantly whether it is an ‘Allowable Expense’.
The reason for deducting as many allowable expenses as possible is that your taxable profit, used to calculate your tax liability, is basically your turnover less your allowable expenses.
You can read HMRC guidance by clicking here or please feel free to contact us with your question.
If you are registered for VAT, have you considered whether you are using the best VAT scheme for your business? There are thresholds to consider, but here is a quick overview of the more popular schemes.
Accrual VAT - The standard VAT scheme - VAT is accounted for as at the tax date quoted on the your sales and purchase invoices. The amount of VAT due payable (or to be refunded!) to HMRC each quarter is the difference between the VAT on your total sales invoices and purchase invoices for the period. You have to report these figures and pay any money to HMRC even if the invoices have not been paid. This can cause cashflow concerns if paying for VAT for which you have not yet been paid.
Cash Accounting Scheme - The VAT liability is calculated based on the actual payment date. So you do not pay the VAT until you have been paid, which can be good for cashflow. However, this is also the case for your purchase invoices and related VAT. Therefore if your margins are low, there is a long lead time before your raise an invoice and in the interim receive many VAT related costs, then cashflow is certainly a consideration.
Annual Accounting Scheme - You only submit one VAT return per year, but do continue to make payments to HMRC. These interim payments are usually in 9 monthly or 3 quarterly instalments with the balancing payment or refund when the VAT return is submitted. The instalments are based on the previous year's VAT or an estimate from HMRC.
Flat Rate Scheme – Where your VAT liability is calculated as a fixed percentage of your gross sales for the period (eg inclusive of the VAT amount, the amount payable). You don't claim back the VAT on your purchases, except for capital purchases over £2,000. We certainly recommend considering this scheme if you do not have many purchase invoices that include VAT (eg some food supplies)
There are pros and cons for each scheme. If you would like to discuss your VAT set up, then please contact us.
HMRC to stop accepting personal credit card settlement of tax bills
HMRC have announced that from 13 January 2018 it will no longer be possible to settle a self assessment bill with a personal credit card.
The personal credit card option being removed is a response to a government ban on credit and debit surcharges in the UK. From 13 January, retailers and traders will no longer be able to pass on charges to users for spending via a credit or debit card, hence the decision by HMRC to remove the option.
Therefore, with self assessment liabilities due for settlement by 31st January, if you plan to pay using a personal credit card, then you will need to schedule this payment earlier in January.
Keeping your device secure
We continue to read and hear stories where networks have been attacked. Quite often the attack starts at a device level, such as the a PC or laptop, rather than directly against the server. So here are a few things to help keep your device secure:
- Keep your firewall and security software up to date at all times
- Be mindful of the web sites you visit. Are they trusted, secure websites?
- Ensure you install the genuine security updates for your internet browser and the operating system
- When considering whether to download a file or software, be confident that it is a trusted source
- Be cautious when opening email attachments or clicking on links requested. Are you expecting an attachment? Is it normal? Check the real senders email by clicking on the from name to reveal the real email address.
- Run the security scans on your device on a regular basis
If your device becomes infected, then disconnect from any network and the internet straight away and seek professional advice.
As always, our usual reminder to regularly back up your data to a separate location to where the source data is held. If your security is breached and your data is corrupted or held to ransom, at least you can restore and return to business as usual as soon as possible.
If you have any questions on your device security, then do not hesitate to call our IT-tech team at HCA.
Autumn Budget 2017
The Chancellor of the Exchequer, Philip Hammond, has announced that the government will publish its Autumn Budget on Wednesday 22 November 2017.
As always, there are many stories being circulated based on thoughts, theories and possibly leaked content. However, we won’t really know until the day what announcements will be made.
Keep up to date with announcements at https://www.gov.uk/government/topical-events/autumn-budget-2017 We will look to share some thoughts after the budget and of course via social media (Twitter and Facebook).
Protect your pension – don’t be next
With Auto Enrolment and the workplace pension regulations, then setting up pension scheme has been and continues to be a consideration for many employers and individuals.
Scammers are after your pension pot. They know you can now access your savings in new ways and will try to lure you with promises of upfront cash and one-off 'deals' with guaranteed high returns.
Learn how to spot the signs and give yourself the best possible protection against pension predators by following the five-step guide produced by the Pensions Regulator.