1st Addition Accountancy blog : The 1st Edition

HMRC Tax Error. The Facts.

2010-09-08T23:38:00.013+01:00

Almost 6 million people have been caught up in what has been dubbed a huge tax blunder. Here we look at who is affected and what they can do.

What's happened?

In a nutshell, around 4.3 million people have paid too much tax through the Pay As You Earn (PAYE) system, while HM Revenue & Customs says a further 1.4 million people have not paid enough tax.

How has this happened?

Every year, HMRC checks that the amount of tax and national insurance deducted by the employer matches the information held on its records. This is called the "end of year reconciliation" process.

However, this wave of errors is linked to the introduction in June 2009 of a new IT system, which holds all the information on an employee in one place, rather than having it spread over several different systems - making it easier to see if people have paid the wrong amount of tax.

The Revenue admitted a few months ago that the transition to the new system had "brought to light discrepancies... and this is resulting in a number of incorrect [PAYE coding] notices being issued".

This same system is now being used to do the reconciliation process for the tax years 2008-09 and 2009-10 - resulting in these new underpayment and overpayment calculations.

What sort of people are affected?

The wrong amount of tax may have been paid if people failed to tell HMRC about a change to their circumstances, such as starting a new job, having more than one job or receiving a new benefit through work, such as a company car. Individuals may also have paid the wrong amount of tax if their employer has used the wrong tax code.

How do I know if I'm one of them?

HMRC this week began sending out the first batch of letters to around 45,000 of those affected. It will contact the remaining people between now and early January. "Most people have paid the right amount of tax so won't get a letter from us with a revised tax calculation. So don't worry if you don't receive a letter (and there is no need to contact us if you haven't received one)," says the Revenue.

How does the Revenue intend to take the money back?

If you owe less than £2,000, you won't get a bill - instead, your tax code will be changed from April 2011. Effectively, you will pay it back in monthly instalments deducted from your salary during the 2010/2011 tax year.

If you owe more than £2,000, you must repay the amount in a lump sum.

Do I have to pay up?

Some experts said people hit with an unexpected tax demand may be able to refuse to pay up as Revenue & Customs could have exceeded its own time limits in which to ask for the money.

The Low Incomes Tax Reform Group said any calculations produced by HMRC which result in an underpayment of tax should be treated with caution. It is urging recipients to "check and challenge" them.

"The underpayment may have arisen because HMRC have failed to make timely use of information about you which they have had in their possession," said the group. In such cases, individuals have the right to ask for the unpaid tax to be written off through what is known as an "Extra Statutory Concession" or ESC A19.

The rules state that if Revenue & Customs was provided with all the necessary information needed to correctly attribute a tax code, it should have used this within 12 months of the end of the tax year in which it was received to claw back the full amount of money. As a result, individuals cannot normally use ESC A19 to ask for tax owing for 2009/10 to be written off, but a group spokesman said: "If HMRC have persistently got something wrong year after year, we would expect them to write the tax off for all years up to and including 2009/10."

Is there some help available?

The Low Incomes Tax Reform Group was one of the first to produce sample letters that those affected can tailor to their own situation and send off to HMRC in an attempt to get the underpayments waived. Its guide, including the template letters, is available from the LITRG website via the link: http://tinyurl.com/taxletters

What if I can't afford to pay back the money?

HMRC advises people who genuinely cannot afford to pay the tax to contact it to see if it can come to some arrangement with them. It may be that they can pay some now and some in the future. This will be done on a case by case basis.

What is happening with refunds?

Around 4.3 million people have paid too much tax, and are due average refunds of £420. If you are one of them, a "payable order" (essentially a cheque) should be sent to you within five to 14 days of receiving the letter.

Source: www.guardian.co.uk (To view the original article, click on the heading at the top of this post).

Worried About Renewing Your Tax Credits? New Video Help Is Available.

2010-05-24T23:16:00.006+01:00

As 31 July rapidly approaches, many of you will be mindful of the need to complete your Tax Credits Annual Renewal Pack.

For those of you who are still unsure as to how to go about it, HMRC have released a series of brief videos to make the whole process a little simpler.

You can check these out here:

http://campaigns.direct.gov.uk/taxcreditsvideos/index.html?cid=taxcreditsvideos&cre=mainimage

HMRC Introduces New Self Assessment Three Line Account Limit (TLA)

2010-04-21T14:31:00.005+01:00

For those of you who complete your own Self Assessment Tax Returns, there has, for a number of years, been a concession in place for smaller businesses, below the qualifying threshold.

Under this concession, full accounting information was not required to be shown on the Return. Instead, the financial position could be summarised in just 3 lines; Turnover, Total Expenses and Profit or Loss, thereby keeping the whole process much simpler.

For the tax year to 5 April 2010 onwards, the limit for providing details of just these three items has been increased from £30,000 for self employed, and £15,000 for those with property income, to permanently bring them in line with the VAT registration threshold (currently £68,000).

This means that, if your turnover is less than the limit, you no longer need to provide a detailed breakdown of your business or property expenses. Instead, all you need to provide is;

Business Details
Turnover
Total Allowable Business Expenses
Net Profit or Loss
Details of Any Adjustments, Allowances And Losses

The TLA facility is optional. You are, however, still required to maintain adequate business records. Details of how to do this can be found on one of our earlier posts, at; http://1staddition.blogspot.com/2010/03/hmrc-issues-keeping-records-factsheet.html

New PAYE Late Payment Penalties

2010-04-07T16:58:00.005+01:00

Employers and contractors may be liable to penalties if they do not pay PAYE, National Insurance contibutions, Construction Industry Scheme deductions and student loan deductions on time and in full for periods starting on or after yesterday, 6 April 2010.

HMRC have produced a guide to these new penalties, Which apply to all employers and contractors, from May 2010.

These penalties are in addition to any interest charged. Full details can be found on the HMRC website:

http://www.hmrc.gov.uk/paye/problems-inspections/late-payments.htm

2010 Budget. A Quick Summary

2010-03-25T00:01:00.010Z

Today saw the presentation of Alistair Darling’s much anticipated pre election budget.

Let’s face it, it was hardly going to be an easy task with three main issues to contend with.

The first big challenge for Mr Darling was that of the current financial deficit.

The second headache to contend with is that of unemployment.

Finally, there was the added pressure of knowing that this budget was the last one before the upcoming General Election, with all the media and public attention that would, inevitably ensue.

The Basics

Mr Darling confirmed a growth forecast of 1-1.5% for 2010 and growth of 3-3.5% in 2011. The national debt was forecast to fall from 56% to 54% of GDP in 2009/10.

Borrowing was lower than the £178 billion forecast in the last Budget at £167 billion for 2009/10.

He also predicts the national deficit will fall to £163 billion in 2010/11, £131 billion in 2011/12, £89 billion 2013/14 and £74 billion in 2014/15.

There are a number of reasons why the deficit is not as bad as predicted.

Firstly, there is the income derived from bankers’ bonuses. The super tax was originally introduced to deter high bankers’ bonuses, however, much to the dismay of the banks’ shareholders, these bonuses were still paid, resulting in a £2 billion reduction in the overall deficit.

Secondly, with the announcement of the increase of the top level of income tax to 50%, from 6 April, many business owners will have taken larger than normal dividends from their companies, in order to take advantage of the 40% rate, while they still can.

Whilst this will have swelled the coffers of the Government, for now, it’s likely that, as a result, April will be a particularly bad month.

Also, the return of the VAT rate, to 17.5%, will have had an impact on incoming revenues.

Public sector cuts of £5 billion were announced for the coming financial year and £11 billion of further efficiency savings, with 15,000 civil servants to be relocated out of London within the next five years. Public sector pay rises will be held at maximum of 1% until 2013.

The Highs

There were no new hikes in VAT, income tax, capital gains tax or national insurance. The inheritance tax threshold is frozen at £325,000 for a further four years.

Mr Darling moved to combat financial exclusion with the guarantee that everyone will have a basic bank account under new legislation to be announced.

The child tax credit to increase by £4 a week for one and two-year-olds from 2012.

The guarantee of a job or training for all 16 to 24-year-olds, who have been unemployed for 6 months, was extended, by a year, to March 2012.

The tax-free ISA limits, having risen from £7,200 to £10,200 (with 50% being in cash) will now increase annually in line with inflation.

Help will be provided for first-time buyers, and the faltering housing market, through the doubling of the stamp duty threshold to £250,000 for two years but for first-time buyers only. The measure will be paid for through an increase in stamp duty to 5% for homes priced at £1 million and above, effective midnight Wednesday.

The 3p fuel duty increase previously announced will now be phased in by 1p a month from April, another 1p in October and a final 1p in January 2011. The chancellor also allocated £285 million to improve motorway network and £100 million for the maintenance of local roads.

Higher winter fuel payment for pensioners will be renewed for another year - worth £250 or £400 a year for over-80s. Also, from next month, because of above-inflation increases in the basic state pension, and the introduction of the pension credit, every pensioner will be entitled to a weekly income of £132.60.

According to the chancellor, almost 400,000 more people now go to university than when Labour came to power in 1997.To help support this growing student base, the government will provide £270 million funds in 2010/11, with a specific focus on key subject like science, engineering, tech and maths.

The chancellor announced a £2.5 billion one-off growth package to help small businesses and invest in key skills. New measures to force Lloyds and RBS to issue £94 billion of new business loans were also announced. A new growth fund of £200 billion for small businesses unveiled for coming financial year. Annual investment tax allowance for small businesses doubled to £100,000 and entrepreneur tax relief threshold increased to £2 million.

Mr Darling also vowed to sell shares in state-owned banks in a way that "gets all taxpayers money back" - but offered no concrete measures.

The feared increase in VAT, from 17.5% to 20%, in line with some of our European cousins, never actually materialised, neither did any hikes in PAYE & National Insurance. (Let’s see what happens after the Election)

The Lows

Duty on cider will rise at 10% above inflation from midnight Sunday in measure designed to tackle binge drinking.

Duty on beer, wine and spirits to rise by 2%, also from Sunday.

Tobacco duty will rise at 1% above inflation from midnight Wednesday.

Conclusion

So, once again, on the face of it, there are way more highs than lows in this budget, but it is a cautious and, some would argue, non committal one. Then again, few of us would expect anything any different, this close to an Election.

On the whole, this budget has been welcomed, as a positive step forwards, but there are many, myself included, who have concerns as to the over optimism of many of Mr Darling’s predictions.

CBI director-general Richard Lambert summed up the general consensus in his statement;

"With the election just weeks away, this was a clever, political Budget. However, anxiety remains on how the deficit is going to be paid down, and the growth forecasts for 2011 and beyond are still on the optimistic side"

HMRC Produces First Ever 'Super Podcast'

2010-03-22T21:57:00.012Z

This month, HMRC launched it's first ever 'Super Podcast'. In it, HMRC experts, Stephen Banyard and Don Macarthur discuss forthcoming VAT, PAYE and Corporation Tax filing.

You can check out the podcast below:

http://podcasts.hmrc.gov.uk/audio/21-HMRC_Superpodcast.mp3

If you prefer, you can view a transcript of the podcast at the following link.

http://www.hmrc.gov.uk/podcasts/super-podcast.pdf

HMRC Issues The 'Keeping Records' Factsheet

2010-03-16T21:18:00.003Z

The Keeping Records Factsheet is the first in a series to be published shortly, by HMRC, giving guidance on a variety of useful topics.

If you're starting out in self employment, or just interested to know what the requirements are, it might be worth a look.

http://www.hmrc.gov.uk/record-keeping/index.htm

Download Your Free 'Complete Guide To Tax And Expenses'

2010-01-24T20:39:00.009Z

The Home Business Network is producing a series of 'Complete Guides' to running a business from home.

There are, currently, two guides in the series, The Complete Guide to Legal Requirements, and The Complete Guide To Tax And Expenses.

The latter has been written by 1st Addition CEO, Alan Young.

You can check out a brief overview of the Tax & Expenses guide, and download both guides from the Home Business Network web site.

http://www.homebusinessnetwork.co.uk/completeguide

Between the two guides, you should be able to answer most questions arising from starting and running a business from home, so why not check them out.

HMRC Warns of New Phishing Scams

2010-01-24T16:01:00.008Z

In January 2010 HMRC issued new guidance on current phishing scams now in circulation.

This is something that is very much on the increase, with at least a dozen of our own clients having received one or more of these in the last month or so.

The key scams are listed on the HMRC web site as follows:

You have 1 new ALERT message

An email from "HMRC Online services - test@test.com" is being issued, stating the recipient has 1 new ALERT message, and should log into their Online Account to read the message.

The email contains a link to a fraudulent website that requests the disclosure of personal account information and password.

The email is not from HMRC. If you have received a copy please forward it to them at phishing@hmrc.gsi.gov.uk.

Tax rebate

HM Revenue & Customs (HMRC) would not inform customers of a tax rebate via email, or invite them to complete an online form to receive a rebate of tax.

Do not visit the website contained within the email or disclose any personal or payment information.

Email addresses used to distribute the tax rebate emails include:

tax.refunds@hmrc.gov.uk
attached.form@hmrc.attached.gov.uk
service@hmrc.gov.uk
hmrcrefunds@hmrc.gov.uk
refundsdept@ir-efile.gov.uk
noreply@hmrk.co.uk
customers@hmrc.gov.uk
taxcredits@hmrc.co.uk
officer.robinson@hmrc.co.uk
securemail@hmrc.gov.uk

HMRC does not send out emails using these email addresses.

An example of the tax rebate scam:

Example 1 (PDF 22K) (added 21 August 2009)

Example 2(PDF 43K) (added 6 July 2009)

Example 3(PDF 211K) (added 7 January 2009)

Notice of Underreported Income

Emails entitled Notice of Underreported Income are currently being circulated from

no-reply@hmrc.gov.uk
relations@hmrc.gov.uk
commuinication@hmrc.gov.uk

The email links to a fake HMRC website entitled 'Fraud Application' and asks that you download and review a tax statement document. The website then opens an executable file on your machine.

The email is not from HMRC. You should be aware that opening executable files (.exe) over the internet can potentially compromise the security on your machine.

HMRC do not issue emails asking for personal details.

Do not visit the website contained within the email or disclose any personal or payment information.

If you receive an email requesting such information, please forward it to

phishing@hmrc.gsi.gov.uk and then delete it.

National Insurance Contributions email

An email is in circulation entitled National Insurance Contributions, stating that a payment has not been made. The email contains a link to a fraudulent website that requests the disclosure of payment/personal details. The email is not from HMRC.

Update from HM Revenue & Customs' email

HMRC has received reports of emails being sent asking recipients to 'update your account to the new EV SSL certification'. This is a scam email attempting to steal User IDs and passwords.

The email is being sent from info@hmrc.gov.uk.

An example can be seen here (PDF 21K)

You should never disclose personal information such as User IDs or Passwords.

Approval of funds scam email

An email is being issued displaying the email address postmaster@hmrc.co.uk with the subject 'You are a winner of 168,240.00 GBP'.

The email features an attachment and requests that personal details are recorded on the attachment and forwarded to info@lloydstsbprize.com.

Previous phishing scams

The following are phishing attempts that you need to be aware of. Each of these has been reported to HMRC previously.

Anti-Terrorist Certificate - this is a scam involving postal items supposedly being stopped by Customs that require the purchase of an Anti-Terrorist Certificate before being released. There is no such certificate in existence within HMRC.

Child Benefit and Income Support - unsolicited emails are being issued advising the recipient may be entitled to Child Benefit. A non-departmental email address and mobile numbers are being used as the contact points for this scam. An example of the Child Benefit and Income Support scam (PDF 26K).

Compensation - this scam is aimed at people who supposedly have already been the subject of a fraud attempt. The email requests personal details on the pretext that compensation will be paid. An example of the compensation scam (PDF 32K).

Export Clearance Process (Delivery Stop Order) - a number of frauds state that a parcel containing a cheque in respect of lottery winnings, or a legacy left in a will, has been held up by Customs at an airport or dock and requires payment of a percentage of the winnings. This will be a fraud. An example of the Export Clearance Process (Delivery Stop Order) (PDF 92K).

Fake P86 form - letters are being sent with fake P86 Forms, which ask for personal information from taxpayers employed outside the UK. These forms are fake and should not be completed. Further details can be found at Fraud attempt - Fake P86 Form.

Lottery winnings - emails requesting tax payments are required to release funds won on a foreign lottery. This is fraud. An example of the Stop Order fraud (PDF 92K)

Telephone variations - the individual may be contacted by telephone rather than email. HMRC has seen examples where customers are contacted by someone purporting to be from HMRC, claiming that a rebate of tax was due and requesting for payment details to make the payment into. Please note: HMRC would only notify you of eligibility to a tax rebate in writing, not over the phone or email. If you are asked to give any personal details over the telephone you should always check with HMRC that the caller is a genuine representative of the department.

Source: http://www.hmrc.gov.uk/security/examples.htm

Are We Making The Most Of The Video Revolution?

2009-12-20T19:58:00.008Z

Ever wondered if search is important for video?
.

In November of last year, YouTube surpassed Yahoo for the first time in total U.S. search queries, making it the second largest search engine, surpassed, only, by its owner, Google.

Since then, YouTube has continued to dominate the search space in respect of the total number of search queries.

When you think that all the searches on Youtube are users looking for video content in particular, there is no doubt that YouTube is THE largest video search / discovery destination.

In October, 2009, there were more than 3.7 Billion search queries on YouTube as measured by comScore. This represents and increase of more than 31 percent year on year (vs 2,580,000.000 queries in Oct. 2008) and an increase of 7% over just last month.

Yahoo, although still the 3rd largest search engine, has now fallen more than 1 billion queries per month behind YouTube.

It stands to reason, then, that anyone not using You Tube as a promotional tool could, possibly, be missing out on a vast potential audience.

This is something we, at 1st Addition, are taking very seriously, and, some time ago, we set up our own channel on YouTube, in order to showcase the key videos we use for both educational and promotional purposes (as well as one or two of our favourite humerous ones). You can check this channel out at; http://www.youtube.com/user/1stAddition

Also, in the spirit of moving with the times, wherever possible, from here on in, the key posts in this blog will now also be in video format. As well as being more user friendly, these videos will also be uploaded to YouTube, thereby increasing both our online presence, and SEO rankings, due to increased incoming traffic.

Pre Budget Report 2009. A Quick Summary

2009-12-10T02:12:00.007Z

Yesterday saw Mr Darling’s second Pre Budget Report since taking office last year. So, how does it compare with last years, and how will it affect us all?

Some of you may recall that my main concern last year, as it was for most commentators, was the optimistic nature of the Mr Darling’s projections, both in terms of future economic growth and potential cost savings.

In the 2008 Pre Budget Report, the Chancellor predicted 2009 borrowings of £78bn, rising to £118bn in 2010. (Earlier in 2008, he was predicting borrowings of £38bn).

So where are we now? Well, according to Mr Darling, the Government will spend £178bn more than it earns, this year alone, with overall borrowings rising by £789bn in the next 5 years.

The concern at the moment is that these projections are based on assumptions that the economy will start to grow rapidly, and that taxes will rise, after which, the level of debt should fall. Bearing in mind the Chancellor’s ongoing history of extreme optimism, it’s not the most encouraging of plans.

Ok, but why is this Pre Budget Report so important? Well, it’s the last throw of the dice (perhaps a rather unfortunate analogy) for Labour and it will lay down some of the policies that will be used to fight the general election next year. This is particularly important, as we plough our way through the longest recession on record, when employment is on the increase, and Labour are about as popular as a fart in a spacesuit.

The Government really needs to cut spending and increase taxes if they are to tackle our current debt crisis, but that will hardly boost their popularity in the run up to the election.

So that’s where we are, but what’s the plan, and how will it actually affect us?

The Highs

Bankers’ bonuses will, effectively, be taxed at 90%. (Yes, I know that’s not a high, if you’re a banker, but I can’t help feeling it will raise an approving smile from the majority of us) The bankers, themselves, already pay tax of 40% on these bonuses, and, now the banks, themselves, will also have to pay a further 50% of any bonuses in excess of £25,000. Sounds great, but it is only expected to raise around £500 million, a drop in the £178bn deficit ocean expected this year alone.

The 2008 Pre Budget Report announced plans to allow businesses to spread their tax payments in times of financial hardship. This has now been extended “for as long as it is needed” which should avoid too many businesses going bust as a result of a large, unexpected tax demand.

The ‘Access To Credit Scheme” has been extended. This is the scheme whereby the Government guarantees borrowing by businesses, thereby increasing the likelihood of the banks lending to them.

Empty property relief (where empty properties, with a rateable value below £18,000, are not subject to business rates, as long as they remain empty) has also been extended.

The Increase in small company taxation, originally scheduled to kick in from April next year, has been suspended for a second year in a row.

In order to allow more over 65s to claim Working Tax Credits, the hours needed to work, in order to qualify for them, have been reduced.

Currently, any 18-24 year old, who has been out of work for more than 12 months is guaranteed work or training. From next month, this has been reduced to 6 months.

State pension is to increase by 2.5% in April next year.

At the other end of the spectrum, child benefits are to increase, by 1.5%, from the same date.

Interestingly, Mr Darling has given a global guarantee that anyone in work will always be better off than they were on benefits.

One piece of good news for the elderly is the announcement of discounts on new boilers, which will, hopefully, help those who struggle with the rapidly increasing energy prices.

Free school meals were announced for 500,000 children from low income families.

The Lows

VAT will return to 17.5% from 1 January 2010. Not only will this reverse the, admittedly questionable, benefit of reducing the VAT level last year, but those businesses who spent the time and money changing price lists etc must now repeat the process, once again.

As with VAT, the stamp duty threshold reverts to its previous level of £125,000.

Anyone earning in excess of £20,000 will see an increase in tax, and a further 0.5% increase in National Insurance, for both the employer and the employee.

Missed by some, the 40% tax threshold has remained the same. This means that anyone getting a pay rise this year, who is already close to this level, will now fall under the 40% income tax rate for the first time.

Spending will be capped at £32bn (the same as last year) although there are expected to be further ‘efficiency savings’. In the long term though, spending is expected to slow down.

Pay rises for Government employees are to be capped at 1% from 2011 onwards.

Plans to increase the inheritance tax threshold, from £325,000 to £350,000 were postponed until 2011. It is estimated that over 100,000 additional homes will be caught by this, as a result.

Conclusion

On the face of it, there are more highs than lows in this budget, but is it enough? The current economic climate demands immediate and dramatic action.

Unfortunately, the Pre Budget Report has been prepared by a Chancellor who (a) has a history of excessive optimism, and (b) will not want to ‘rock the boat’ too much, in the face of an upcoming general election.

Mr Darling has hinted at future tax hikes and cuts in spending, but ‘not yet’.

There are one or two popular moves, such as the super tax on bankers’ bonuses as well as some of the new greener policies and help for the youth of the country, but, once again, we have to ask; “Is it enough?” The statement that; “anyone in work will always be better off than they were on benefits” is a bold and admirable one, but is it really achievable, and, more importantly, how will it help the expected £178bn deficit this year?

Once again, it remains to be seen.

For those of you with no life, and loads of time on their hands, we have reproduced the full transcript of Mr Darling's Pre Budget Report Speech on our web site.

Check it out at http://www.1stadditions.biz/cdata/33039/docs/2213990_1.doc

Working From Home. What Are The Implications?

2009-12-08T02:19:00.008Z

If you work at or from home, the part of the property used for work may be liable to business rates (also known as non-domestic rates) whilst the remainder of the property will continue to be liable to council tax (although an alteration may be made to its banding).

To decide whether or not part of your property should be liable to business rates there are a number of things we have to consider, including the extent and frequency of the non-domestic (business) use of the room (or rooms) and any modifications made to the property to accommodate that use.

Each case is considered on its own merits, and normally The Valuations Office Agency (VOA) will visit your property to check the facts before an assessment is made for non-domestic rates.

Business rates

If your property needs to be assessed for business rates, the VOA will work out a rateable value for the part that is used for non-domestic purposes. Rateable values are based in broad terms on the annual rent for a building or part of a building if it was available to let on the open market at a fixed valuation date. Currently this is 1 April 2003

It is important to note that rateable values are a key factor in the calculation of business rates but they are not the rates bill. An increase or decrease in rateable value does not automatically lead to a smaller or larger bill because the final calculation is based on a number of other factors.

These include transitional relief and the multiplier, (rate in the pound) which is set by the Department for Communities and Local Government (for England) and the National Assembly for Wales. Local authorities are responsible for calculating actual rates bills and for collecting rates.

For more information, please contact your local Valuation Office - details are in the phone book - or visit www.voa.gov.uk and http://www.businesslink.gov.uk/bdotg/action/layer?r.l1=1073858808&topicId=1074019801&r.l2=1073859221&r.s=tl - both official government websites

Below are some examples of assessments we might make where part of a property is used for both domestic and non-domestic purposes

1. A detached Edwardian dwelling in a residential area owned and occupied by a self-employed solicitor who practices from the property, specialising in matrimonial law. The front room on the ground floor is furnished with sofa and comfortable chairs, has a TV set, and ornaments/photos of a personal nature displayed around the room. It is used on an occasional basis as a waiting room for clients during weekdays, and as the lounge by the solicitor during evenings and weekends.

The former dining room is used as an office equipped with computer, dedicated fax and telephone line, filing cabinets, desk and shelving stocked with law books. No domestic use is made of this room. It is used by a part-time secretary when the solicitor is visiting clients or attending court.

The ground floor kitchen is used for preparation of family meals, but also to make tea or coffee for clients. The first floor accommodation of bedroom and bathroom is wholly used for domestic purposes.

Conclusion: The office is the only non-domestic part and will be assessed for business rates. The main purpose of the front room is to serve as a lounge. In this instance, the non-domestic use is sufficiently minimal so as not to warrant assessment for business rates. The lounge and the remainder of the dwelling will be banded for council tax purposes.

2. An integral garage of an estate house is converted to an office with plastered walls, electric power points, solidfront, suspended ceiling and floor screed suitable for carpeting. A separate telephone line has been installed. Access is through the hallway of the house. All toilet facilities are in the main house.

The room is used by the family in the evenings and occasionally at weekends. During the day the occupier designs computer software. He is employed by a major company to work at home, because of a physical disability. All of the equipment has been provided by his company and is specially adapted for his needs. He visits his employer's office on an occasional basis for meetings with colleagues and customers.

Conclusion: The former garage is no longer domestic property. It has been adapted for office use and should be assessed for business rates. The remainder is domestic.

3.The occupier is employed as a site finder by a major building company, and travels across most of the southern part of the country, using her home as a base, but calling into the company office once a week to pick up new instructions, for meetings, and to leave completed work.
She has a four drawer cabinet in the corner of a dining room, which also functions as an 'office' for the family computer, and there is no dedicated telephone line for business purposes.
The occupier is out visiting sites four days a week, and does 'writing up' at home on the dining room table in the evenings and at weekends. No clients or members of the public visit the house for business purposes.

Conclusion: Dwelling is domestic property, and should be banded for council tax.

4. A doctor uses a room in his house as a consulting room three days a week. The main practice surgery is situated some three miles away near the town centre. The house is more convenient for patients who live locally.

A concrete ramp has been added to the front door and the door opening to the hall and the consulting room has been widened to accommodate a wheelchair. No one in the doctor's family is disabled.

In the room itself there is an examination couch which is essentially a single bed with a cotton sheet thrown over it. A paper sheet is added and removed after use by each patient.

There is no office desk as such but there is a computer, table and chair in a corner of the room, which are used by the doctor during his consultations.

No patients records are held at the house, nor are there any medicines. Basic medical equipment is kept in the doctors medical bag or stored in a drawer after use.

There is planning consent for use as a branch surgery and part of the front garden has been surfaced to accommodate two to three extra private vehicles. There are parking restrictions in the street.

On the walls of the consulting room the doctor has attached pictures painted by his young children, and there are toys in the corner of the room, which belong to his children but can be played with by young patients. There is a brass sign outside the front door to advertise surgery hours.

The remainder of the week the doctor attends surgeries at the main premises, and in the afternoons he makes house calls. Other than for consultations the room is often unused, but when friends come to stay it can be used as a spare bedroom. At weekends, and some evenings the doctor uses the room to read professional papers or watch a portable TV away from the children.

Conclusion: The principal use of this room is as a doctor's surgery, and occasional use for domestic purposes is minor. The room should be separately assessed for business rates, and the remainder of the dwelling banded for council tax.

5. A teleworker formerly employed by a large national company in a call centre now works for the company five days a week at home, using a spare bedroom to house an office desk, telephone consul, computer terminal and chair all supplied by her employer. Her hours are flexible but generally the room is used for the purposes of work at least 40 hours each week. During evenings and weekends it is used by other members of the family for leisure purposes, and by the taxpayer for doing domestic chores such as ironing. No physical alterations have been made to the property other than installation of new telephone lines, and no members of the public or work colleagues visit the house for business purposes.

Conclusion: Rateability will not arise unless equipment of a non-domestic sort is installed or the property is physically adapted for the business use. This is because the character of the room remains as domestic living accommodation, and the purposes of living accommodation may include recreational and leisure use and work. Also the taxpayer uses furniture and equipment of the kinds that are commonly found in domestic property.

OK, so why is this so important, and what are the tax implications of this legislation?

Well, firstly, for most of us who work from home, we are able to claim an element of the household running costs, based on floor area, or, more simply, number of rooms. This will include a proportion of domestic council tax for the whole property. Where a room is deemed to be used exclusively for business purposes, and is, therefore, subject to business rates, those rates will be 100% allowable, for business purposes.

On the down side, there could just be a Capital Gains Tax implication. Contrary to popular opinion, simply claiming part of your property as a business expense will not automatically mean that element of the property is subject to CGT, but you need to be aware of the criteria.

You will still be eligible for Private Residence Relief, providing you keep using all of the house as a home. In other words, if the room or rooms used have dual purpose (office and spare room, for example) or have not been modified in any way, then full PRR will still be available. If, on the other hand, you have converted your garage to a joiner's workshop, including modifications to the power supply etc, this is likely to be subject to both business rates and, ultimately, Capital Gains Tax on the sale of the property.

For this reason, it's always wise to plan your business usage claims properly, especially if there is a private usage of the room, or rooms, concerned.

Remember, there may well be other things to consider, such as notifying your insurers, landlord or mortgage company, as well as being aware of any covenants that may affect the property, and, more specifically, running a business from it.

HMRC Offers Practical Help For People Affected By Flooding

2009-12-06T11:15:00.005Z

HM Revenue & Customs (HMRC) has a special Helpline for anyone affected by the recent floods, where, they say, fast, practical help and advice is available.

You can contact the Helpline on 0845 3000 157 between 8am and 8pm Monday to Friday and 8am to 4pm Saturday and Sunday.

Financial Secretary to the Treasury, Stephen Timms MP said:

“We want people to be able to concentrate on recovering from the recent events. A quick call to the HMRC helpline will give peace of mind, enabling customers to focus on restoring their homes and businesses.”

Each call to the helpline will be handled on its own merits but HMRC may be able to help by:

agreeing a revised payment schedule when customers are unable to pay due to financial difficulties caused by the flooding

agreeing practical arrangements where individuals and businesses cannot comply with their tax obligations perhaps because their records have been lost or destroyed in the flooding

reviewing any penalties or not imposing additional surcharges that may be triggered where customers have missed deadlines as a result of the flooding

providing help and advice in dealing with other practical, tax related matters arising as a result of the flooding.

The service is available for all HMRC taxes, including VAT, Corporation Tax, Income Tax and NICs (PAYE) and for individuals affected by the flooding.

Tax credit recipients are asked to continue to use the helpline number 0845 300 3900.

Businesses needing to discuss rescheduling payments as a result of the general economic situation rather than issues relating specifically to flooding should continue to contact the

Business Payment Support Service on 0845 302 1435.

Contacts

NDS Enquiries

Phone: For enquiries please contact the above department

ndsenquiries@coi.gsi.gov.uk

Reproduced from NAT 83/09

HMRC Advisory Fuel Rates Change Again

2009-12-06T10:36:00.005Z

On 3 January this year, we blogged on the new HMRC advisory fuel rates. These are the rates used to calculate the VAT element of any vehicles mileage rates claimed, such as those under the Fixed Profits Car Scheme.

This original article can be revisited at; http://1staddition.blogspot.com/search?q=Mileage+rates if you want to check out the specifics.

As of 1 December 2009, these rates have, once again, changed. The revised rates are now available on the HMRC web site, at the following link; http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

New Minimum Holiday Entitlement

2009-10-19T13:32:00.006+01:00

October has been a busy month for changes in legislation. One of these is the increase in holiday entitlement from 24 to 28 days (5.6 weeks) including bank holidays.

The 28 day entitlement applies to those of us working a full 5 day week. This is applied pro rata to those on part time hours. (For example, 22.4 days, for anyone on a four day week).

Other holiday pay basics are as follows:

Holiday starts to accrue as soon as an employee begins work.
The employer can control when the holdiay is taken.
Employees are entitled to normal pay whilst on holiday.
When an employee leaves, they are entitled to be paid for holiday accrued but not taken.
Bank & public holidays can be included in the annual entitlement.
An employee continues to be entitled to their holiday leave throughout their ordinary and additional maternity leave, paternity leave and adoption leave.

New National Minimum Wage From 1 October 2009

2009-10-18T23:04:00.008+01:00

The National Minimum Wage has increased, again, from the beginning of this month.

New rates from that date are as follows;

For workers aged 22 or over: £5.80 per hour
For workers aged 18 - 21, inclusive: £4.83 per hour
For workers aged under 18 (but above compulsory school age): £3.57 per hour

Almost all workers are entitled to NMW, but there are some groups who are not.

Self employed people
Apprentices under the age of 19
Apprentices aged 19 years or over, but only for the first year of their apprenticeship
Children who are still of compulsory school age.

So, if you're an employee, you should now be paid at least these hourly rates. As an employer, you need to be aware of the rates, to ensure you are keeping up with your legislative responsibilities.

Companies Act 2006, Introduces Complete Set of New Companies House Forms

2009-10-13T20:25:00.005+01:00

From 1 October 2009, the Companies Act 2006 has introduced a set of new forms for conducting day to day company business.

These new forms cover everything from Annual Returns to changes in directors, registered office, accounting reference date etc.

Those of us familiar with the completion of a Form 363 (Annual Return) will now be doing so on a Form AR01. The original Form 288(a) (Appointment of Director / Secretary) has now been replaced by a Form AP01 (Director), AP02 (Appointment of Corporate Director), AP03 (Secretary) and AP04 (Corporate Secretary). (Good to see, another Government Department helping to simplify administration. Hmmmm).

A full list of the new Companies Act 2006 forms is available on the following link (including details of the original 2005 Act forms they are replacing).:

www.companieshouse.gov.uk/forms/formsOnline.shtml#Company

Full details of the new Companies Act implications can be found at:

www.companieshouse.gov.uk/companiesAct/companiesAct.shtml

VAT Changes For Online Payment & Filing

2009-10-06T12:02:00.006+01:00

In a bid to move ever closer to the phasing out of paper filing, HMRC have announced new Government proposals as follows:

From 1 April 2010, all VAT registered businesses with an annual turnover of £100,000 or more (excluding VAT) must file their tax returns online and pay electronically.
From that same date, all businesses newly registering for VAT, whatever their turnover, must file their returns online and pay electronically.

Paper returns will still be an option for the remaining VAT registered businesses, but this will be reviewed More information can be found on the HMRC web site, at http://www.hmrc.gov.uk/vat/start/register/signup-online.htm

Changes To Banking Services And Making Payments To HMRC

During 2009, H M Revenue & Customs are moving over to new banking arrangements.

The banking details are as follows:

Current Bank Account Details:

Account Name: HMRC VAT

Sort Code: 10 00 00

Account Number: 52055000

New Bank Account Details:

Account Name: HMRC VAT

Sort Code: 08 32 00

Account Number: 11963155

If you use online banking, and have stored templates or transactions, that you use when making your current VAT payments, you may need to update these to reflect the changes.

More information or guidance can be found at http://hmrc.gov.uk/payinghmrc/

HMRC Introduces Standard 'Benchmark' Scale Rates For Subsistence

2009-09-27T11:42:00.007+01:00

On 2 April 2009, HMRC issued Brief 24/09 covering the new scale rates for day subsistence. (Day rates only, overnight allowances are unaffected).

Their aim is to cover allowable travelling expenses, paid to employees, free of Tax & NI.

Introduction

HM Revenue & Customs (HMRC) has introduced an advisory system of benchmark scale rates which employers can use to make subsistence payments to employees who incur allowable business travel expenses free of tax and National Insurance contributions (NICs). The new advisory system was implemented from 6 April 2009.

The advisory system only covers benchmark scale rates for day subsistence payments. If an employer wishes to pay subsistence to employees who have to stay overnight they can either reimburse the actual cost incurred by the employee or agree a tailored scale rate to cover meals and other expenses in a dispensation with HMRC.

The brief sets out the framework for the system.

Overview

Under the current rules an employer is required to notify HMRC of all expenses paid to an employee, even where those expenses would be allowable, unless they have a dispensation. A dispensation is an agreement between HMRC and an employer which allows the employer to pay an agreed rate for allowable expenses without the need to report the expenses to HMRC. An employer may apply for a dispensation by submitting a completed form P11DX. As part of this process, where business travel expenses are paid, the employer often agrees scale rates for travel and subsistence expenses with HMRC that broadly match the allowable expenditure incurred by its employees on business travel.

HMRC currently expects employers to conduct a sampling exercise before it will agree to a particular rate being included within a dispensation. The aim of the exercise is to identify a reasonable level of allowable expenditure that reflects the most common level of spending.
HMRC recognises that a sampling exercise can be burdensome and expensive for employers. It has therefore introduced an advisory system of benchmark scale rates for day subsistence payments that an employer can use without having to carry out a sampling exercise.

As part of this new approach, in response to concerns from some employers and professional advisers about consistency between what is agreed for different employers, HMRC also proposes to standardise the different scale rates that it will agree with employers.

Benchmark system/rules

Under the benchmark system, HMRC has set advisory scale rates for particular day subsistence expenses that it will accept for all employers. As long as the employee has incurred subsistence expenses while travelling on an allowable business journey, employers will be able to make tax and NICs free subsistence payments up to the advisory rates without agreeing them with HMRC. Employers wishing to use the benchmark scale rates for subsistence payments will simply need to notify HMRC of their intention by ticking the appropriate statement/box on form P11DX before starting to use the system.

The rates that can be used will be:

Breakfast rate (irregular early starters only) - A rate of up to £5.00 may be paid where a worker leaves home earlier than usual and before 6.00 am and incurs a cost on breakfast taken away from his home. If the employee regularly leaves home before 6.00 am because, for example, he works an early shift he would not be entitled to use the breakfast benchmark scale rate.

One meal rate (Five hour rate) - A rate of up to £5.00 may be paid where the worker has been away from his home/normal place of work for a period of at least five hours and has incurred a cost on a meal.

Two meal rate (Ten hour rate) - A rate of up to £10.00 may be paid where the worker has been away from his home/normal place of work for a period of at least ten hours and has incurred a cost on a meal or meals.

Late evening meal rate (irregular late finishers only) - A rate of up to £15.00 may be paid where the employee has to work later than usual, finishes work after 8.00 pm having worked his normal day and has to buy a meal which he would usually have at home.
If the employee is paid an allowance under the five or ten hour rule, the late meal allowance could still be paid if he finishes work after 8.00 pm and buys a meal that he would usually have at home. However, if the employee regularly finishes work late because, for example, he normally works the afternoon or evening shift, he would not be entitled to use the late evening meal rate.

Particular issues and exemptions

Payments in excess of the benchmark rates

The benchmark rates are the maximum tax and NICs free amounts that could be paid by employers who choose to use this system. An employer could pay less than this rate if it wants to do so. If a higher amount is paid without agreeing a tailored scale rate with HMRC, the excess should be subject to tax and NICs.

Qualifying conditions

Benchmark scale rates must only be used where all the qualifying conditions are met.

The qualifying conditions are:

• the travel must be in the performance of an employee’s duties or to a temporary place of work

• the employee should be absent from his normal place of work or home for a continuous period in excess of five hours or ten hours

• the employee should have incurred a cost on a meal (food and drink) after starting the journey
Early starter and late finisher ratesThe early starter and late finisher rates are for use in exceptional circumstances only and not intended for employees with regular early or late work patterns.

Tax and NICs free scale rate payments must be limited to three meal rates in one day (or 24 hour period). A meal is defined as a combination of food and drink.

Where employees are required to start early or finish late on a regular basis, the over five hours or over ten hours rates could be paid provided all the other qualifying rules are satisfied.

Working Rule Agreements

Benchmark scale rates would not apply to employees covered by Working Rule Agreements, for which separate specific rates are already set for particular occupations.

Friends and Family Allowance

Some existing dispensations also include a tax free scale rate for staying with family and friends when employees are required to stay overnight on business. HMRC has reviewed this policy and concluded that there is no legal basis for giving tax relief because it is not linked to any specific underlying expense. Therefore, a scale rate for staying with family and friends will not be included within the advisory system or given in any new dispensations. All agreed tax and NICs free scale rates in existing dispensations covering such an allowance will be withdrawn when the dispensation comes up for review.

Questions and answers

What you have to do if you want to pay scale rates to your employees?

You should apply to HMRC for a dispensation. You need to complete a form P11DX, which is the form used by employers to apply for a dispensation, and submit it to HMRC. On the form you need to indicate with a tick against the appropriate statement under 'Travel and Subsistence' that you intend using HMRC’s benchmark scale rates to reimburse your employees’ subsistence payments. By ticking this box you would be merely notifying HMRC that you intend paying HMRC’s benchmark scale rates for day subsistence and that you have adequate management processes in place to ensure that payments are only made where all the qualifying conditions are met. If you want to apply to include other items of allowable expenditure in a dispensation for example fees and subscriptions, laundry, telephone charges, etc, you need to tick the appropriate boxes and supply the requested information on the form.

When can you pay a scale rate?

Scale rate payments may be made to employees who necessarily travel in the performance of their duties or have to travel to a temporary place of work. The statutory rules are in Section 336 to 342 of Income Tax (Earnings and Pensions) Act 2003. Where the employer agrees a scale rate in a dispensation, the scale rate may also be taken into account for NIC purposes.
Guidance on how the employment income travel expense rules work can be found in HMRC’s Booklet 490. This booklet will be updated shortly to reflect the new scale rates system available to employers from April 2009.

When must you not pay tax and NICs free scale rates?

Tax and NICs free scale rates must not be paid where the employee is not travelling on a qualifying business journey. For example, when on a journey that involves ordinary commuting (or similar to ordinary commuting), or private travel.
Additionally, no tax and NICs free payment should be made if an employee does not incur an expense on meals after leaving home or his normal place of work, even if the journey was a qualifying business journey. This means that employees who do not buy a meal or who take a packed lunch from home are not entitled to a tax and NICs free payment.

Do employers have to use the benchmark scale rates?

Employers do not have to use the benchmark rates. They can reimburse their employees’ actual expenditure or apply to HMRC to agree a scale rate appropriate for their business needs in a dispensation. However, where an employer wants to use a higher scale rate, it will have to undertake a sampling exercise to show the higher rates are in line with what its employees’ typically spend on subsistence and agree the rate with HMRC.

What records would an employer need to keep?

An employer will need to keep sufficient records to be able to demonstrate that the employee was entitled to the payment. An employer also needs to be able to demonstrate that routine checks are undertaken to ensure that the travel expenses rules are being followed.

What happens to existing dispensations?

Existing dispensations will remain in force until they come up for review in accordance with HMRC’s rolling review programme, usually on a five year cycle. When the existing dispensation comes up for review the employer can choose to switch to benchmark scale rates or apply to continue to use a tailored rate. Where a new dispensation is requested the employer will have to go through the process of undertaking a statistically valid sampling exercise.

Uprating benchmark scale rates

HMRC will review the rates annually and consider revising them when there has been a change in the scale rate of plus or minus 10 per cent based on the Consumer Price Index from when it was last revised.

How has HMRC arrived at the benchmark scale rates in question?

HMRC reviewed the scale rates agreed for a number of employers, both large and small, and based the rates on the most commonly agreed rates.
Why not have higher benchmark rates for London or other locations where prices are more expensive?The benchmark rates are linked to what employers typically reimburse their employees and it would not be possible to break this down between different locations. Personal expenditure on subsistence varies significantly between employees even when working at the same location.

If an employer typically reimburses more than the benchmark rates then it will remain open to them to agree a higher rate with HMRC or to reimburse actual expenditure.

Companies Act 2006 Kicks In From 1 October 2009

2009-09-10T19:59:00.007+01:00

The Companies Act 2006 has made a number of changes, many of which will affect us, as small businesses, and some of which have already been actioned.

Where Are We Now?

The following changes have already taken place. (Some are optional, others are not).

You Must:

be aged 16 or over to be appointed a director.

You Do Not Need To:

appoint a company secretary, if you are a private company (though you can still do so, if you wish).
hold an annual general meeting, if you are a private company, again, unless you opt to do so.
have a unanimous vote for resolutions. Subject to articles, if you are a private company. Members may agree in writing to resolutions.
get a court order to make capital reductions as a private company - they can be supported by a solvency statement instead.

What We Can Look Forward To:

Directors address protected from disclosure. From 1 October, each director will have a service address, and a usual residential address. The former will be in the public domain, with the latter only being available to public authorities and credit reference agencies. Initially, the director's residential address will automatically become the service address, though you will be able to specify an alternative address (such as the company's registered office) on the Companies House website.
Also, there will be an alternative address for the company to specify where its registers can be made available for public inspection. This can either be the registered office, or a single alternative inspection location (SAIL).
A number of changes have been made to make it easier to set up a limited company..
There will be changes to company articles for new companies. They will include the company's objects and liabilities - which were previously in the memorandum. Copies of model articles are available on the Companies House website.
Any ammendments to the company's articles must be notified to Companies House, within 15 days. Failure to do so is a criminal offence, carrying a civil penalty of £200.

Also remember; all Companies House accounts filing deadlines have been reduced, by one month to 9 months (private companies) and 6 months (public companies). This applies to all accounting periods beginning on, or after, 6 April 2008.

Failure to comply will result in a fine of up to £1,500.

From 1 October 2009, all original Companies House forms are being replaced. Watch this space for a future blog post on this particular change.

In the interim, you can check out the new provisions of the Act on the following link, including transitional provisions, and downloadable versions of the new forms.:

http://www.companieshouse.gov.uk/companiesAct/companiesAct.shtml

Companies House has produced guidance notes, in a variety of formats, giving step by step instructions on how to form a limited company.

Blackberry Users 'Work An Extra 15 Hours A Week'

2009-08-31T18:54:00.004+01:00

New research finds that staff with mobile technology such as Blackberries work an extra 15 hours a week as they constantly check emails even out of the office.

A survey of over 600 employees revealed many were turning into workaholics because of the ability to receive and send messages and work online even when they were at home.
Employment law firm Peninsula said the working week was being extended to around 55 hours for many people and urged employers to make sure their staff were not breaching working time regulations.

Managing director Peter Bone said: "It is important for staff to spend quality time away from the office, spending time with the family, or undertaking recreational activities rather than tapping away responding to client emails or deadlines so that they keep a healthy work/life balance.

"Bosses should encourage staff not to work from home unless necessary. Inform staff that they should limit working from home. If they are happy to work away then ensure they agree to opt out of the maximum working week and have this signed. Limit the extent to which employees are using their devices when they choose to do so; unrested employees will be less productive during the working day."

"The recession has forced everyone to become more productive and for those with access to work at home, this is an opportunity for them to catch up or get ahead. With email on tap, employees with smartphones are able to respond a lot quicker and also get themselves prepared for the working day ahead by checking their email first thing.

"Employees should be encouraged to take appropriate rest breaks if they do choose to continue working out of hours. Having a well rested employee with a good work/life balance is a lot more useful than a tired employee that put one too many hours in the night before."

Source: Business Matters Magazine

www.bmmagazine.co.uk

Home Business Uncovered

2009-08-11T19:16:00.002+01:00

Home business website, Enterprise Nation, is going on a national road trip to produce a documentary on the rise of home business in the UK.

Starting in Scotland on Monday 14th September, a crew of three will travel south to interview home business owners and talk to experts and politicians, with the team expecting to meet over 400 businesses at events and meet-ups over the course of the week.

More than 2 million businesses are run full time from home but the documentary will also take a closer look at what Enterprise Nation has termed the ‘Working 5 to 9’ trend that is seeing millions of people hold down a day job and build a business at nights and weekends. It’s a way of easing out of insecure employment, into self-employment.

Founder of Enterprise Nation, Emma Jones, says:
‘Streets are buzzing with people starting and growing their own business. Amazing businesses that utilise the best of technology to make and sell niche products and services. We’ll be revealing the stories of people turning business dreams into reality and showing that home business is truly the bright spot of the UK economy. Yet we don’t think enough is being done to allow home business to flourish – and it remains almost a hidden sector - so we’ll be calling for action from policy makers and politicians and recording their response.”

The Enterprise Nation team will visit home business hotspots in Scotland, North East, London, South West and return home to the West Midlands on Friday 18th September. They will film by day and at night host get-togethers for anyone starting and growing a business from home. They will also show how to work whilst on the move in a trip that’s sponsored by communications company, Orange.

The documentary will be aired on Friday 20th November – a date that marks the UK’s first ever Home Enterprise Day, held as part of Global Entrepreneurship Week. The first people to see footage will be delegates at the Enterprise Nation Conference.

As Jones says:
“Visitors to the conference may not be surprised by what they see as they are living and breathing home business owners but for those in Government and large organisations this documentary will uncover the incredible entrepreneurial activity underway. It will also call on them to act. Home business is Britain’s best-kept secret and its story needs to be told!”

Over 60% of new businesses were launched from home in 2008. The attraction is lower costs, no commute and being on hand for friends and family. Sectors range from fashion design and food production through to IT and business services with whole families coming together to make these businesses a success and growing profits through outsourcing and sub-contracting.

Media notes

Full details of the roadtrip and registration for meet-ups is online at http://www.enterprisenation.com/

Updates are being posted to Twitter at www.twitter.com/e_nation

The Home Business Roadtrip starts in Scotland on Monday 14th September and travels south. Dates and locations are:

Monday 14th September – Scotland
Tuesday 15th September – North East
Wednesday 16th September – London
Thursday 17th September – South West
Friday 18th September – West Midlands

The trip is being sponsored by Orange, supported by One North East, Business Link for London and Enterprise HQ, with accommodation generously provided by Malmaison Hotels

The crew will be:

Emma Jones, Founder, Enterprise Nation
Tim Sargent, Mint Video
Nick Clark, 1st Class Travel

The documentary will be aired at the Enterprise Nation Conference on Home Enterprise Day, Friday 20th November. Home Enterprise Day is part of Global Entrepreneurship Week http://www.gew.org.uk/

For media enquiries, please contact:

Marisa Harrison, Tadpole PR
Marisa@tadpolepr.co.uk
Tel: 01743 741161 Fax: 01743 741161 Mobile: 07767608563

Emma Jones
emma@enterprisenation.com
0789 9871698

Last Chance To Be Ex Directory On Your Mobile Phone

2009-07-07T20:35:00.012+01:00

As many of you may have heard, there is a new mobile phone directory being introduced shortly, called; '118 800'.

Many will welcome this, but others are concerned that their mobile number will now be available to anyone looking to use it, which could mean being swamped by unsolicited messages and calls.

It is extremely easy to unsubscribe, but it must be done before the begining of next week, to make sure that you are ex directory.

Removal has been recommended by the BBC;
http://news.bbc.co.uk/1/hi/programmes/working_lunch/8091621.stm and you may wish to pass this on to friends, family and colleagues.

To remove your number from the directory, click on the link below. You will need your mobile number with you, as they will text you a code.

http://www.118800.co.uk/

Click on; 'Ex Directory' on the top right hand side, and follow the straight forward instructions.

**Update** Looks like people are registering in droves. Shortly after posting this, the 118800 site posted a 'Service Suspended' notice, as follows:

"The 118 800 service for mobile phone connections is currently unavailable - from this website and by phone - whilst we undertake major developments to our 'Beta Service' to improve the experience for our customers. We'll be back as soon as possible with the new improved service.

All ex-directory requests made by people in our directory to date are being processed. There will be no need to resend these requests. And we will take further ex-directory requests when the service resumes. We will not be taking ex-directory requests by phone or text whilst the service is not operational.

Please do not call us on 118 800 for anything other than landline directory enquiry requests as you will be charged for the call.

Sorry for any inconvenience caused"

Coincidence? I doubt it. What's the odds the service will be restored 5 minutes before deadline, thereby preventing many people from registering as ex directory? Let's hope they prove me wrong, but I wont hold my breath.

Tax Credits Renewal Pack Due At The End of This Month

2009-07-07T20:35:00.007+01:00

Your tax credits are awarded for a tax year. You are required to renew your claim after the end of each year so that your payments will continue. HMRC need to check whether they have paid you the right money during the year and whether they will carry on paying you the same amount of money going forward.

The Tax Credits Cycle

When you first make a claim for tax credits, any payments you get are based on your income from the last tax year, and your current personal circumstances. A tax year runs from 6 April one year to 5 April the next. So if you're making a claim because you've just had a baby, HMRC will take this into account along with your income for the year that ended on 5 April 2009.
The tax credit payments you get throughout the year are temporary or 'provisional' until you confirm your actual income and circumstances as part of the renewals process.
It is important that you tell HMRC about any changes to your circumstances straight away as it could affect the amount of money you should be getting. For example, you must tell them within one month if you split up from your partner, or if you start working fewer hours. Otherwise you might not get all the money you should - or you may end up getting too much and may have to pay it back.
When you tell them about a change, they will send you an award notice confirming the new information provided by you, and any changes to your payments. It is important that you check each award notice you get carefully using the checklist that came with it, and let them know if anything is incomplete, missing or wrong within one month.
After the end of each year they ask you to renew - or in some cases they will automatically renew your claim. This helps them to check that the payments we've made to you are correct, and to set your payments for the coming year.
Sometimes they will have paid you too much (an overpayment) or not enough (an underpayment). If this happens, they will either make an adjustment to your payments, or if you have been paid too much but you're no longer getting tax credits, they will ask you to make a direct payment - a one off payment for the full amount.

Why Is It Important To Renew?

It's important to renew so that you can:

· check that we have the right information
· make sure your income is still within the limits for getting tax credits
· tell HMRC if anything has changed
· continue to get all the money you're entitled to

If you don't renew your tax credits, you may only receive payments for a limited period after the end of the tax year and you'll have to repay any overpayment from the previous year as well as any money paid to you since 6 April.

How To Renew

HMRC will send you a renewal pack between April and June which you must respond to. You don't have to complete any paperwork if you don't want to, you can renew by phone.
The renewal pack includes an Annual Review notice which tells you what to do to renew your tax credits. Most people will also get an Annual Declaration form in their pack as well.
It's important you read the Annual Review notice carefully - it will tell you how to renew your tax credits.

You must:

· check the information provided on your Annual Review notice
· tell HMRC if anything has changed

You may also be asked to give details of your income in the last tax year on the Annual Declaration form.

You can return the information by either:
· calling the Tax Credit Helpline on 0845 300 3900
· completing the Annual Declaration form - if you were sent one, and returning it in the envelope provided.

If you've only got an Annual Review notice, you don't need to do anything if:

· nothing has changed in your personal situation
· your income is still in the limits shown in the notice
· there are no mistakes or missing details in the notice

Your tax credits will be automatically renewed.

Who Will Receive A Renewal Pack?

You will receive a renewal pack even if you claimed tax credits but didn't get them because your income is too high (a nil award), and even if you only got tax credits for part of the year.
If you have made more than one tax credits claim during the year, you will be sent a separate renewal pack for each claim. You must fill in each one separately.

What Happens If You Don't Renew?

If you don't renew, your payments will stop and you will have to pay back any overpayment from the previous year as well as any money paid to you since 6 April.
The deadline for all replies is shown on your Annual Review form - usually 31 July. Don't wait for the deadline. The sooner you check your details and tell HMRC of any changes, the sooner they can make sure you get the money you're entitled to.

Why You Need To Tell HMRC About Changes

You should tell them about changes in your personal circumstances straight away. You could lose money if you don't as tax credits can only be backdated by up to three months. For example if you have a baby on 12 June, but do not tell us until 12 October, we will only backdate your payments until 12 July.

Contact the Tax Credit Office

If you need more help you can call the Tax Credit Helpline, which is open from 8.00 am to 8.00 pm every day except Christmas Day, Boxing Day, and New Year's Day. The numbers you can ring are:

· telephone 0845 300 3900
· textphone 0845 300 3909 - if you are deaf or have a hearing or speech impairment.

If you’re calling from overseas you can also contact the Tax Credit Office on Tel + 44 289 053 8192.

P11D Deadline is Upon Us Again

2009-07-05T17:05:00.003+01:00

Don't forget, tomorrow, 6 July is the deadline date for submission of 2009 Forms P11D and P11D(b) for all companies who pay qualifying benefits in kind to their directors and higher paid employees (including, of course, MPs. Wouldn't we all like to see one or two of those?)

Left it to the last minute? Don't worry, you can pop on and do it online to speed things up.

It's also worth bearing in mind that the Class 1A National Insurance arising on any benefits in kind is due by the 19th of this month, when you pay your normal monthly PAYE / NI bill for June.

As usual, fines can run to £100 a month, per 50 employees, so, if you still haven't done so, get yourselves straight to it, and get those forms in.

New Online Tax Help For Small Businesses

2009-06-18T17:49:00.007+01:00

For those of you just starting out in business, or thinking of doing so, there's a new online resource, set up by HMRC, via Business Link, to help you through a few of the basics, such as starting out in business, National Insurance, record keeping and employing other people.

This help takes two main forms. There are 10 brief, bite sized videos, providing an overview of each topic, as well as a downloadable guide, entitled; "Giving your business the best start with tax".

It's not going to answer every question, and as usual, I would always suggest seeking specific business advice from an expert, however, it's a useful start for those wishing to answer a few of the more common questions.

This information can be found at http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1081677261&type=CAMPAIGN&site=1000&furlname=taxhelp&furlparam=taxhelp&ref=&domain=www.businesslink.gov.uk

Definately worth a quick look.

**Update** These videos have now been updated to our own web site. You can also check them out there. http://www.1stadditions.biz/30920/info.php?p=9&pno=0

New 'Ask Alan' Spot For Enterprise Nation TV

2009-06-15T18:42:00.008+01:00

Always keen to help the small business person wherever I can, I have been involved with Enterprisenation.com for a litle over a year now, providing articles and features for the site as and when required, and answering questions in the Forums, as they arise.

It seemed a logical next step to take this to the small screen, and I have agreed to host a fortnightly 'Ask Alan' slot on Enterprise Nation TV, starting with a trip to Redbrick House this Wednesday (17 June) to film the first of these slots.

Enterprise Nation is an invaluable and free resource for anyone running, or thinking of starting, a home based business, and I'm really excited to be involved with this new project.

OK. Two days to find a clean shirt and get it ironed. Best get cracking.

**Update** Enterprise Nation has been taking suggestions for alternatives to coffee in the workplace. They are running a taste test tomorrow, looking at some of these ideas. No prizes for guessing who will be doing the taste test. Should be interesting.

New 2009 Tax Amnesty

2009-06-14T18:33:00.009+01:00

What can I say? We've only just all surrendered our weapons in the latest knife amnesty, and now HMRC have re introduced the Tax Amnesty.

Announced in the 2009 Budget, there is one last chance to review any irregularities in your tax affairs, and take advantage of the new disclosure facility, before the window of opportunity closes in March 2010.

Although penalty rates have yet to be published, they are likely to be lower than under normal penalty legislation.

1 April this year saw the introduction of higher penalties for incorrect Tax Returns, making it even more important to assess any potential tax risks and, where appropriate, make a disclosure to HMRC.

An interesting decision then. Do we keep quiet and risk having both of our children seized and sold into slavery, or do we 'fess up and guarantee that only one child is sold?

The decision is yours....

Extra 7 Days Concession For P35s / P14s

2009-05-19T10:44:00.004+01:00

Today, 19 May 2009, as we all know, is the deadline day for submission of our P35 and P14 end of year returns to HMRC.

Ideally, we should all try to make this deadline, but, if you can't, don't panic.

Thanks to Extra Statutory Concession number B46, you can actually file your returns by midnight on 26 May 2009 (up to 7 days beyond the deadline) without incurring a penalty.

For those who have not yet done so though, you should also bear in mind that employee P60s must be with them no later than 31 May 2009.

UK's First Home Enterprise Day Announced

2009-05-11T22:20:00.010+01:00

At 1st Addition, we're happy to announce our involvement with the UK's first ever Home Enterprise Day, which will will be held on Friday, November 20th.

The celebration forms part of Global Entrepreneurship Week, for those interested in getting involved.

Global Entrepreneurship Week

Global Entrepreneurship Week is a week long celebration of enterprise that's been running since 2004, albeit under a different guise in the UK ('Make Your Mark: Enterprise Week').

Over 644,000 people took part in last year's events and this year looks set to be even bigger.
This is the first year to include a day on which to celebrate home business - so let's make it a good one!

Home Enterprise Day
.

Global Entrepreneurship Week runs from November 16th - 22nd and our day will be on the Friday, November 20th.

Our friends at Enterprise Nation are leading the celebrations and recognising the millions of people in the UK who are starting and growing a business from home.

The highlight of the day will be the Enterprise Nation annual conference. At the event, you'll hear from inspirational speakers, meet other home business owners and be the first to congratulate winners of the 2009 Home Business Awards, announced on the day.

How you can get involved

More details about the conference are on their way - and Enterprise Nation members will hear first, so don't forget to register. The whole process is free and simple - and you can get started n the link below:

http://www.enterprisenation.com/content/UserInformation.aspx

Also, for regular updates, prior to the event, you can follow Enterprise Nation on Twitter:

http://twitter.com/e_nation

As events unfold, and our own involvement is finalised, we will continue to keep you updated as well.

Watch this space.

Judge Freezes Credit Claims

2009-05-09T10:33:00.004+01:00

Consumers overwhelmed with debts are unlikely to be able to write of credit card debt due to unenforceability.

A judge has frozen more than 100,000 claims by indebted borrowers attempting to write-off credit and loan debt by using a loophole in the law which could make the contracts unenforceable.

In a hearing last Friday in Chester County Court, Judge Derek Halbert announced that all cases have been put on hold pending the outcome of "a few carefully selected" test cases in the Commercial Court in London.

The ruling means that over-indebted borrowers will have to carrying on repaying loans until a judgement is made.

In the meantime, consumers have been warned not to fall for adverts by claims handlers promising to wipe out credit card debt alleging that agreements put in place before April 2007 are potentially unenforceable.

Daniella Lipszyc, a solicitor at Ultimate Law, a law firm, said: "The ruling by His Honour Judge Halbert is a landmark decision that will have massive implications on cases involving the enforceability of credit agreements.

“After a number of early wins, many claims management companies have jumped on the band wagon, promising desperate consumers that they can write off credit card balances.

"In reality, cases have simply ground to a halt as banks and lenders up their game and become more clued up on the Consumer Credit Act and subsidiary legislation. It’s now extremely inappropriate and misleading for any company to promise to write off balances in light of this judicial move.”

Last week the Solicitors Regulation Authority (SRA) announced that it was investigating ten claims management firms for misleading customers over the prospect of writing off debts.

It also warned consumers to be wary of statements suggesting that 80 per cent of credit agreements and unenforceable.

Antony Townsend, chief executive of the SRA, said: "These ads appear to offer an easy way out of difficulty to people who have debts they are struggling to pay. But many credit agreements do meet the legal requirements and, therefore, can't easily be challenged as unenforceable."

This blog post is reproduced directly from an article in TimesOnline, dated 7 May 2009

Companies House Deadlines Cut By One Month

2009-05-04T16:52:00.005+01:00

The Companies Act 2006 has brought about many changes in recent months. One of these is the reduction of filing dates for accounts from 10 months to 9 months for private companies and from 7 months to 6 months for plcs.

These new deadline come into effect for accounting periods beginning 6 April 2008 (so, for most of us, that means years ending on or after the 30th of last month).

This change, coupled with the dramatic increases in late filing penalties, means that companies have to be extra vigilant with their filing deadlines, in order to avoid undue extra expense.

Budget 2009. What Does It Mean To Us?

2009-04-22T23:24:00.007+01:00

Another highly anticipated Budget comes and goes, so what are the key points in this one?

The Chancellor used the Budget speech to cut his growth forecasts. The economy is now expected to contract by 3.5% this year, but grow 1.25% in 2010. If he's correct, this would mean growth starting towards the end of this year

Public sector net borrowing will be £175bn this year, 12.4% of GDP. From 2010, it will be £173bn (11.9% of GDP), then £140bn (9.1%), £118 bn (7.2%) and £97n (5.5%).
National debt as a percentage of GDP, including the cost of stabilising the banking system, will increase from 59% this year to 68%. It will rise to close to 80% by 2013/14 - twice the level Labour inherited in 1997. The Chancellor expects underlying current budget deficit to come back into balance two years later. RPI inflation is forecast to remain negative, falling to minus 3% by September, before moving back above zero next year. Inflation is expected to continue falling sharply, reaching 1% by the end of this year. The Bank of England inflation target remains unchanged at 2%.
The UK's current deficit is expected to halve within four years

So that's all the numbers out of the way. How does this affect most of us?

Personal taxation

The following changes have been announced which will come into effect from April 2010:

an additional Income Tax rate of 50 per cent will apply to people earning over £150,000
the income tax personal allowance will be reduced for those with incomes over £100,000

Pensions and Savings

The Budget announced the following changes to pensions:

An increase of £100 to over-80s households and £50 to over-60s households in 2009/10, alongside their Winter Fuel Payment.

Tax relief on pensions contributions will be reduced for those earning £150,000 and over

The overall annual investment limit for ISAs rises to £10,200 of which £5,100 can be saved in cash.

These higher limits will be available to over-50s from 6 October 2009 and to everyone from 6 April 2010.

Housing and Homeowners

The Stamp Duty land tax threshold on residential properties costing £175,000 or less will be extended until 31 December 2009.

As a result of this 'holiday', some 60% of UK homes are currently exempt from Stamp Duty.

Local Housing Allowance (LHA) is being reformed - households will no longer be able to keep any surplus LHA if it is higher than their rent.

Budget 2009 announced a £600 million fund to kick-start housebuilding, with the aim of delivering an additional 10,000 homes in England over the next two years.

This package includes £100 million for local authorities to build new social housing at higher energy efficient standards. The current economic climate continues to have a significant impact on housing supply. Additional, short-term, spending during the downturn is planned to stimulate housing development as well as boost the capacity of the house building industry in the long-term.

Motoring and Transport

The Government has announced a temporary vehicle scrappage scheme - it offers consumers a £2,000 discount when buying a new vehicle to replace a vehicle more than 10 years old, provided they have owned the vehicle for at least a year.

Budget 2009 confirmed the fuel duty increase announced in the 2008 Pre-Budget report, and further increases from 2010 to 2013.

Alcohol and Tobacco

Alcohol duty rates increase from 23 April 2009. The duty will increase by 2 per cent, adding one penny to the price of a pint of beer, 13 pence to the price of a bottle of spirits and four pence to the price of a bottle of wine.

Duty on tobacco will increase by 2 per cent from 22 April 2009.

Employment and Training

The Budget announced that 18 to 24 year olds who have been unemployed for 12 months will be guaranteed a job, training or a work placement.

An extra 54,500 places will be created in the next academic year for 16 and 17 year olds who wish to take them up.

Other Changes

Statutory Redundancy Pay is to increase from £350 to £380 a week.
Help is to be extended to allow loss making companies to reclaim taxes on profits made in the last 3 years to November 2010.
Businesses main Capital Allowances Rate has been doubled to 40%, giving enhanced tax relief for capital expenditure of up to £50bn this year.
The intention is to raise £1bn of extra revenue, by closing a number of tax loopholes and schemes.
From April next year, the child element of Child Tax Credit will increase by £20.
Pensioners' Winter Fuel Allowance is to be kept at the higher level of £250 for over 60-s, and £400 for over 80-s for another year.

For a link to the full Budget report, click on the heading of this feature, or you can check out a pdf of it from the 1st Addition web site.

G20 Summit Agrees Trillion Dollar Boost To World Economy

2009-04-02T20:05:00.003+01:00

The G20 countries are to make available an additional one trillion dollars through the International Monetary Fund to boost the world economy, Gordon Brown has said today.

In a news conference to mark the end of the London summit, the Prime Minister said the funding formed part of a package that would shorten the recession and save jobs.

Other measures included action to "clean up" the banks - with new rules on pay and bonuses - and measures to tackle tax havens.

"We believe that global problems require global solutions," he said.

Mr Brown said the leaders agreed a "new consensus" to do what was necessary to restore growth and jobs and to rebuild confidence and trust in the financial system.

"This is the day that the world came together to fight back against the global recession, not with words but with a plan for global recovery and reform," he said.

Mr Brown said new rules on pay and bonuses "at a global level" that reflected actual performance not failure would "encourage corporate responsibility in every part of the world".

A new "financial stability board" would "ensure co-operation across frontiers and to stop risk to the economy" and provide an early-warning mechanism, he said. For the first time, there would be a "common global approach to how we deal with impaired, or toxic, assets".

The "unprecedented fiscal expansion" already under way would mean a five trillion dollar injection by the middle of next year, he said, helping save or create millions of jobs.

Central banks had agreed to "maintain expansionary policies as long as they are needed using the full range of options available to them". But there would also be an additional one trillion dollars "made available to the world economy through the International Monetary Fund (IMF) and other institutions".

How Feng Shui Is Your Office?

2009-04-02T11:57:00.008+01:00

Feng shui? So what’s that all about then? Isn’t it just a load of foreign mumbo jumbo?

Well, actually, no!

Whilst it is understandable that many of us might be a little sceptical that tying three coins together with red ribbon (let’s face it, not that easy with UK currency, anyway) and placing them in the back of your accounts book, will bring you good luck, there are a lot of basic, common sense principles that many of us simply ignore in both our domestic and working environments.

The overriding purpose of feng shui is to create an environment where, through a variety of components, we are able to maximise our physical and mental wellbeing. Let's face it, we could all do with a bit of that.

We’ve all walked into a room and felt uncomfortable, and, likewise, there are places we go where we feel totally relaxed and ‘at home’. Feng shui is the 'science' that explains why this happens.

Basically, it’s all about balance. Most of us have heard of the yin and the yang, the concept of positive and negative energies, conflicting with each other to obtain dominance. Sounds like we’re heading back to mumbo jumbo land, BUT we can apply this to any real world situation.

For example, imagine a slow moving yin river, when it hits rocks, it drops, speeds up, and creates turbulence. It is now yang. As it reaches a lake, it becomes yin again. A boat travelling on this river will be at its optimum speed when the energies are balanced. Too much yang, and it could be damaged by the currents. Too much yin, and much more work is needed to paddle it.

So what about our own working environment? What can we do about that?

It’s all about creating a balanced and harmonious environment. Common sense really, but we experience our environment through our five senses, so we need to make sure they’re all accounted for.

Some of the key factors we need to think about are:

Sight

Lighting will play a key part in how we feel. Our bodies are in tune with the sun and its natural cycles. Just ask anyone who suffers with SAD (Seasonal Effective Disorder) caused by changes in lighting conditions in the winter months.

Natural light is important, and we should position our furniture and arrange our activities to make the most of it.

Ordinary bulbs produce light which is towards the red end of the spectrum, with little blue or green light. Fluorescent light is the opposite. It emits higher electromagnetic fields, and its flicker can cause headaches

Colours will also play an important part in how we feel too:

White represents a clean canvas, and black symbolises a clean slate. Both provide a base on which we can create a picture, from the main colours below:

RED: Red is stimulating and dominant. It reduces the size of a room, and increases the size of objects. It is associated with warmth, prosperity and stimulation, but also with anger, shame and hatred.

YELLOW: Yellow is associated with enlightenment and intellect. It stimulates the brain and aids digestion. Its positive qualities are optimism, reason and decisiveness, whilst its negatives are craftiness, exaggeration and rigidity.

GREEN: Green symbolises growth, fertility and harmony. It is restful and refreshing. Its positive associations are optimism, freedom and balance, and its negative ones are envy and deceit.

BLUE: Blue is peaceful and soothing and is linked with spirituality, contemplation, mystery and patience. It’s positive associations are trust, faithfulness and stability. Negatives are suspicion and melancholia.

PURPLE: Encouraging vitality, purple is impressive, dignified and spiritual. Positive associations are excitement, passion and motivation, negatives are mournfulness and force. Can’t quite see it in our office somehow!

ORANGE: A powerful and cheerful colour, orange encourages communication. Its positive qualities are happiness, concentration and intellect, and its negative is rebelliousness.

BROWN: Brown suggest stability and weight (good one for me then). Its positives are safety and elegance, while its negatives are dinginess, depression and aging. Good for studies / offices, but not for bedrooms.

Sound

Pleasant sounds, in the right place, at the right time can really add to the ambiance. Wind chimes, water features, etc or even a little background music can make a real difference to our mood.

Smell

We all know that smells can influence the way we feel about a place. Who hasn’t popped on a pot of coffee or wafted some fresh baked bread around when trying to sell a house? At 1st Addition’s offices, we always have scented oils and air fresheners in the office (even when none of us have had a curry the night before. That’s how feng shui we are)!

Electrostress

We are becoming increasingly aware of the negative effects of electromagnetic radiation on the human body. The effects of exposure to ionising radiation in X rays and ultraviolet rays in sunlight are well known. Also, the low frequency radiation which surrounds power lines has been linked to childhood illnesses

Despite our awareness of the effects of radiation, we are so dependent on the equipment that produces it, that we are unwilling, or unable, to live without it. We should, therefore, take precautions, where possible:

+ Laptop computers should never actually be used on our laps.

+ Mobile phones should be used as little as possible

+ Screen filters should be fitted to all unfiltered VDUs

+ It helps if we can sit as far away as possible from the computer, when not actually using it.

+ For those of us that use a microwave in the office, we should keep as far away from it as practical whilst it is on. Microwave ovens have been found to emit low frequency radiation far in excess of that known to cause lymphatic cancer in children.

Clutter

Clutter is a state of mind, not just the state of our physical environment. It can be all the things we haven’t done, like unreturned phone calls and appointments not made. It’s everything we do not use or wear, inherited objects and things given to us as presents that we don’t like, but feel guilty about parting with.

We may stay in a job, thinking we are indispensable, or due to a misguided sense of loyalty, but, often it is because we are afraid to take a leap and change direction.

It is this fear of change that can cause us to stagnate. We need to clear our homes, our work places, and even our minds. This may not be something we do in one go. Often it is the little things that add up. Clutter represents stagnant energy, and the list is endless – blown light bulbs we keep forgetting to replace, dead wasps on the window sill and that squeaking door we never get round to fixing. All just a minute or two each to fix, but their accumulated affect can have a significant impact on the pace and quality of our lives.

Plants

Plants will have a variety of uses in an office environment. As well as their obvious aesthetic charm, they have a number of uses, including hiding a jutting corner, draining excess water energy from a room, breaking up long corridors and bringing life into an office environment. Some will even clean the air for you.

We should remember though that cut flowers may look beautiful in a vase, but, like dried flowers, they are, technically, dead. Potted plants are much better as they bring life to the environment.

Furniture.

The positioning of our desks and other furniture can also play a vital part in the feel and energy of a room. (See Below).

To finish, we have a few top tips to feng shui up your office. These are split between the workplace office and the home office. Why not give one or two of them a try?

Office Feng Shui In A Workplace Office

Here are few tips to keep the energy flowing in your office.

According to office feng shui guidelines, your desk should be placed at a diagonal to the doorway, or directly facing it, rather than with your back to it.

If there's more than one desk, place two on a diagonal facing towards the door and any others on a diagonal facing into the centre of the room. They should not be placed in rows in a traditional classroom layout, or back to back.

If the doorways of offices that face each other across a hallway are not exactly aligned, place a mirror in front of each door.

If you face a partial wall or partition, when entering an office, place a mirror on the partition.

Soften jutting walls with plants.

Break up dull walls with mirrors or paintings.

The feng shui elements that are easiest to blend into an office decor are pictures and photographs. Look out for pictures that represent the various aspects and display them in the appropriate areas. Very obvious feng shui symbols, though, might invite unwelcome questions from visitors or co workers.

Office Feng Shui In A Home Office

Use office feng shui, if you're working from home, to maintain a professional approach to your business.

Use a separate entrance to your office, if at all possible

Otherwise, chose a room near the front or back door of the house or flat.

Separate your office from living areas, to keep your business and personal lives separate.

If your office space is part of another room, divide it from the rest of the room with a screen or large plants. Even a large mat will help to define the spaces.

Take a short walk before entering your office to work each day, and another one at the end of the working day. This separates the business and personal aspects of your life.

Place your desk on the corner, diagonally opposite the doorway.

Don't place your desk under a window, but let the light reflect on it from the side. Some people prefer to have their desks facing east.

Leave space between your furniture (bookshelves etc) and the walls. Feng shui experts suggest leaving a 7-9 inch gap.

An important aspect of office feng shui is to keep your work space tidy, to allow a free flow of energy throughout the room.

Differenciate between clutter and storage. Stored items don't have to be catalogued and labeled but they should be stacked neatly in a cupboard or in binders, so as not to impede energy flow.

So why not give it a try. You never know, you might just notice a difference.

1st Addition Sign Up For Utility Warehouse Distributorship

2009-03-24T20:31:00.006Z

As part of our drive to assist clients with the minimisation of their operating costs and, therefore, the maximisation of their profits, 1st Addition Accountancy have signed up for a distributorship with Utility Warehouse.

Utility Warehouse have won a whole range of awards in recent months, for both their prices and levels of customer support.

For example, The April edition of Which? magazine features a follow-up to the survey of energy suppliers they conducted last year.

The new survey has found that; "customer satisfaction with suppliers has got worse."

With one exception - the Utility Warehouse!

Utility Warehouse's customer satisfaction rating has actually increased - to an amazing 83%! The closest any of the 'Big 6' come to that is SSE - with just 53%, placing Utility Warehouse miles ahead of the oposition!

Utility Warehouse received:

billing accuracy: 5 stars!
clarity of bill: 5 stars!
customer service: 5 stars!
telephone support: 5 stars!
value for money: 5 stars!

This is a further improvement on the ratings achieved in the previous survey.

With Utility Warehouse, customers value taking the 'total package', not just their energy, but their phone and broadband too.

Once more, Which? spells it out: for service, value and all-round customer satisfaction, the Utility Warehouse is number one.

To find out more, and see how much you could save, why not give us a call, for free, on 0800 061 2441.

Time For Some Last Minute Tax Planning?

2009-03-17T19:31:00.005Z

For many, particularly the self employed, 31 March / 5 April is not only the tax year end, but also the financial year for their accounts. For those of you in that position, there are only a couple of weeks left to get in any last minute items of tax planning.

Most of us have heard of capital allowances. They are, effectively, a ‘wear and tear’ allowance give by HMRC to help us claim the cost of our major purchases of capital equipment, vehicles etc over a number of years.

What many do not realise, though, is that, in April last year, the Finance Bill 2008 introduced ‘Annual Investment Allowance’ for the first time.

Under the provisions of this allowance, any business (sole trader, partnership or limited company) can, from April 2008, claim 100% of the cost of their new equipment in the year in which it is incurred, up to a maximum of £50,000 of capital expenditure.

For those of us with a year end coming up, it’s definitely worth a look. Whilst I would never advocate buying equipment unnecessarily, just to save tax, if you do have any imminent capital expenditure on the horizon, I would give some serious consideration to getting it in before your accounting year end.

By way of clarification, if the company profits for the year are £15,000, and you purchase a new piece of equipment, costing £10,000, on the last day of the year, you will be able to reduce your taxable profit down to just £5,000 (in spite of the fact that you have not had the equipment for the whole year)!

Food for thought I think.

Further guidance on this is available in HMRC Guidance Booklet BN12:

http://www.hmrc.gov.uk/budget2008/bn12.pdf

National Minimum Wage For Directors

2009-03-01T23:34:00.002Z

On 2 September 2008, we posted details of the new National Minimum Wage for employees.

One question we often get asked is; "How does this affect us as directors"?

Many are aware of recent speculation and debate as to the legality of paying ourselves, as directors, less than the NMW. This is relevant for many small business people who pay themselves a small salary only, with the balance being topped up by dividends.

This is perfectly legal, as long as the director concerned does not have a contract of cmployment. As soon as a contract of employment is signed, then the NMW must be applied.

Sounds simple, except that the decision to sign a contract will also have an impact on the director's eligibility for Working Tax Credit (WTC).

If you are a director with no contract of employment, you will not qualify for WTC, unless your partner works the required number of hours each week.

If you do have a contract of employment, and pay yourself at least NMW, for the hours you do work, then you should qualify for WTC.

HMRC To Change The Way It Carries Out Compliance Checks

2009-03-01T11:51:00.007Z

The way HM Revenue & Customs (HMRC) carries out compliance checks (also known as enquiries, visits and inspections) will change from 1 April 2009. These changes will affect how we manage compliance checks for:

Income Tax
Capital Gains Tax
VAT
PAYE
The Construction Industry Scheme
Corporation Tax

The new compliance checks legislation is designed to make the tax system simpler and more consistent.

From 1 April 2009, HMRC will have one set of powers covering PAYE, VAT, Income Tax, Capital Gains Tax, Corporation Tax and Construction Industry Scheme to:

visit businesses to inspect premises, assets and records
ask taxpayers and third parties for more Information and documents

These powers are provided by Schedule 36 of the Finance Act 2008.

The new legislation will also provide:

greater flexibility in setting record-keeping requirements after 1 April 2009
new time limits for assessment and claims which will not be fully in force until April 2010 - but there will be some transitional arrangements from 1 April 2009
important safeguards for customers
These measures are provided by Schedule 37 and Schedule 39 of the Finance Act 2008.

Legislative changes at a glance:

The new legislation provides HMRC with:

one set of powers to inspect business records, assets and premises
the ability to see statutory business records without a right of appeal
the ability to look at records for PAYE, Income Tax, the Construction Industry Scheme,
Capital Gains Tax and Corporation Tax during the tax year before a return has been submitted
a new power to correct obvious errors in a tax return based on information held by HMRC
a single approach across all taxes to asking taxpayers and third parties for supplementary information, based on formal information notices with a right of appeal

The legislation also makes some changes to the way HMRC must carry out compliance checks, including:

a new four-year time limit for assessments and claims - a reduction from six years for Income Tax, Capital Gains Tax and Corporation Tax and an increase from three years for VAT
reductions in extended assessment time limits
a streamlined process for closing Corporation Tax assessments
a new statutory ban on inspecting purely private dwellings without consent
a statutory requirement for HMRC to give at least seven days prior notice of a visit, unless either an unannounced visit is necessary, or a shorter period is agreed
a new requirement that unannounced visits must be approved beforehand by a specially trained HMRC officer
a statutory requirement on HMRC to act reasonably.

Soooo. That's the official line out of the way, but how will affect the average Tax Payer?

Well, for once, HMRC appear to be genuinely trying to streamline the system, and, not only that, there is a wealth of information around to help us understand the new regime, including the HMRC web site, a podcast and online learning tool (see the links below).

There has been much concern amongst smaller, home based, businesses that these new powers will, effectively, give HMRC carte blanche to visit their home premises whenever they wish. The reality is, this would only happen in instances of suspected fraud, or if there were a strong reason to do so (such as significant levels of equipment and / or stock being stored there or employees working from a home office). HMRC have also confirmed that they would be happy to conduct any such visits with the client's accountant in attendance, to minimise the 'fear factor' involved.

In conclusion then, although the penalties can be severe for non compliance, if we stay within the legislation, we have nothing to fear. This is being made easier to achieve, by standardising the procedures and penalties across all key areas of tax.

As usual, only time will tell.

The HMRC web site, http://www.hmrc.gov.uk/about/new-compliance-checks.htm, outlines the basics.

It also has a link to the online e learning module, http://www.hmrc.gov.uk/e-learning/compliance-checks/Externalmodule/HTML/Externalmodule_menu.html.

There's even a podcast available, at: http://podcasts.hmrc.gov.uk/audio/18_HMRC_Compliance_Checks.MP3. It's only 8 minutes long, so why not check it out?

Recession Hits Government Coffers Too!

2009-03-01T10:31:00.005Z

We're all feeling the effects of the recession, but many might be surprised to hear jst how much it is now taking its toll on public finances, addording to recently released official figures.

The UK's public sector finances recorded a surplus of £8.4bn in January, well down on the £15.3bn surplus in the same month last year.

Government borrowing for the first 10 months of the financial year now stands at £67.2bn. The chancellor has forecast borrowing for the full year of £77bn.

The year-on-year drop in January's surplus was largely due a slump in tax receipts, which fell by £7bn.

Government borrowing now stands at 47.8% of the UK's economic output. Last January, it stood at 42.2%.

"It's clear that public sector finances are deteriorating quite rapidly," said Amit Kara at UBS.

"The tax take is being hammered by the recession," commented Howard Archer, economist, Global Insight

January is traditionally a good month for the public finances as they are boosted by annual tax receipts, however, these have been hit by falls in income tax caused by rising unemployment and the curbing of bankers' bonuses in the City, and by falls in corporation tax as businesses' profits suffer during the recession.

The temporary cut in VAT from 17.5% to 15% has also affected tax revenues.

The Office of National Statistics, which releases the public finance figures, also said that it plans to incorporate the finances of the Royal Bank of Scotland (RBS) and Lloyds Banking Group into the public finance balance sheet. It said this could add between £1 trillion and £1.5tn to public sector.

Better Late Than Never? 2009 Budget Date Announced

2009-02-16T16:46:00.007Z

Alistair Darling has finally announced the date for the 2009 Budget Statement.

Scheduled for 22 April 2009, this makes it the latest budget statement since labour came to power in 1997.

It is thought the budget will have to include downwardly revised growth predictions, reflecting worsening economic conditions.

In last year's Pre-Budget Report, which was also delivered far later in the year than normal, the Chancellor said the UK's ecnomy would return to growth by the second half of this year. This is not a view held by many commentators.

As ever, we will keep you informed.

Watch this space.

Alan Young To Host 'Frugal-Preneur' Web Chat on Make Your Mark

2009-02-10T09:26:00.005Z

In these difficult financial times, we are all more conscious then ever of how we spend our money. But what can entrepreneurs learn about applying thriftiness to their business?

If you would like to find out more about how to save money for your business and make your money work smarter, then the frugal-preneur web chat, hosted by Make Your Mark, could be for you.

In this web chat, I shall be advising home based entrepreneurs on the most cost effective ways to set up and run a business from home. 1st Addition Accountancy Limited was, in fact originally set up and run from my own home, in a bid to minimise start-up costs and maximise efficiency.

Joining me will be Clive Lewis, Head of Small and Medium Sized Enterprise (SME) Issues at the Institute of Chartered Accountants in England and Wales (ICAEW). Clive is responsible for developing ICAEW policies on SME issues and communicating to government.

We will both be there live from 1pm today, Tuesday 10 February to provide expert answers to your questions.

To access the web chat, just click on the link below:

http://www.makeyourmark.org.uk/get_involved/make_your_mark_webchats

See you there.

New HMRC Advisory Fuel Rates

2009-01-03T10:27:00.009Z

Many people are now aware of the Fixed Profits Car Scheme. For those who aren't, we covered it briefly in our post of 27 May 2008; http://1staddition.blogspot.com/2008/05/how-do-i-run-my-vehicle-through.html

The question we often get asked is; "How do I claim VAT on the FPCS, if I'm no longer putting my petrol receipts etc through the business?"

In order to facilitate this, HMRC introduced the Advisory Fuel Rates. These are the deemed fuel elements of the FPCS, based on the engine size of the vehicle concerned, and the fuel used, and we are allowed to claim VAT based on these rates.

As of 1 January 2009, due to the current economic circumstances, the Advisory Fuel Rates have been increased. Full details are shown on the HMRC web site;

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

The Fixed Profit Car Scheme (FPCS) rates remain unchanged with the first 10,000 miles payable at 40p then 25p thereafter for cars, 24p for all mileage for motorcycles and 20p for all miles by bicycle.

Yes, that's right; we can claim 20p per mile simply for cycling to work. The Government are always pushing for us to become ‘greener’ and have put some incentives in place to encourage us down that route.

So if you fancy becoming ‘greener’ and fitter consider ditching the car and pedalling to work.

Basically your employer buys a bike and any equipment relating to it and hires it to you until you have paid back its full cost, usually over a year.

The tax break is facilitated because you pay for the bike by agreeing to reduce your monthly/weekly salary, before tax and NIC is deducted under the ’salary sacrifice scheme’. Paying in this way you can meet your repayments out of your pre-tax rather than post taxed income.

This can translate to almost a 50% cash discount on the price of a new bike. Higher rate tax payers will benefit more from the scheme.

The scheme applies to employees only, with a contract of employment and earnings that are at or above the national minumum wage level once the salary sacrifice has been applied.

So, if your new year's resolution was to 'get fit' this might be the option for you.

Spreading The Tax Burden

2008-12-20T21:43:00.005Z

In the Pre Budget Report delivered by the Chancellor Alistair Darling on 24 November 2008, he said “at this time of real difficulty for many small businesses, they need ‘time to pay’ when meeting their tax bills. I intend to meet this need”.

This means that HMRC must now enable firms facing difficulties to spread their tax on a timetable they can afford.

This will apply to all business taxes. VAT, corporation tax, income tax and national insurance. And not for just for three to six months but for as long as they need.”

So How Does This Affect Us?

This now means that many businesses, who are struggling financially, do not have to get into difficulties paying their tax or VAT liabilities.

If you are going to struggle with your cash flow and have some payments to make to HMRC then make use of this service – now.

They will not make any surcharges for late payment as they would normally do, but there will, of course, be an interest charge.

The Business Payment Support Service however only applies to amounts that are about to become due, or are just overdue. They cannot deal with outstanding overdue payments where HMRC have already contacted you about payment. There are separate provisions in place to deal with the longer term debts, but, again, these are considerably improved on the original arrangements.

More details are available at: http://www.hmrc.gov.uk/pbr2008/business-payment.htm

What Do I Do?

Call 0845 302 1435 and talk about your circumstances to one of the advisors. They promise to give you a decision in about 10 minutes for straight forward cases.

What Do I Need To Do To Prepare?

You do need to do a little homework first. They will need your tax reference number, details of the amounts that you will have trouble paying and, in their words, “basic details of your businesses income and outgoings”. This really means you need to have done at least a basic cash flow forecast.

Before you call, spend a bit of time forecasting your cash flow out as far as you need to, so you can see with a good margin how quickly you will be able to repay the amounts due. There is no point in agreeing a deal that you cannot achieve, so spend some time beforehand getting to grips with where you are.

The Business Payment Support Service do have a mandate to resolve all calls within 4 days, although their aim is to deal with them when you call and put in place a ‘time to pay’ deal. It is critical that you are prepared before you call as this will give you the best chance of getting a deal that works for you.

It's a Gift!

2008-12-09T20:00:00.001Z

The tax man doesn't let us get away with much, even at Christmas time, but one question we get asked a lot, at this time of year, is; "What can we actually claim for our Christmas entertaining?"

Most of these business owners will be looking to extend the Christmas spirit to both their staff and customers alike, so, what can we actually get away with at this festive time?

Staff Entertaining

Where a client provides a Christmas party or other social or sporting event, for their employees, which is open to employees only, the expenditure will be allowable.

Employees, for this purpose, include partners of employees. But beware. Although the expenditure is allowable as a tax deduction, if the bill totals more than £150 per head then then employees may have to pay tax on the entertainment received as a benefit in kind.

Entertaining Customers / Business Gifts

Business entertaining, including that of customers is, generally speaking, diasallowable, and has been for many years, regardless of the purpose of that expenditure.

Business gifts are also not allowed as a deduction against profits – they are treated the same way as entertaining expenditure.

In some instances, what appears to be a gift may actually be a part of the costs of a sale to a customer. For instance a bunch of flowers presented to a customer who has just purchased a new car would effectively have been paid for by the customer – it’s part of the cost of the car.

But there is an exception for gifts that are presented which contain a conspicuous advertisement for the business.

Provided the cumulative value given to any one person does not exceed £50 in any one accounting period then such gifts will be allowable for tax purposes. This would cover promotional goods such as pens or key-rings emblazoned with your name or logo.

Companies House Increases Late Filing Penalties

2008-12-09T19:59:00.007Z

Not to be outdone by HMRC, Companies House have decided to significantly increase the penalties levied for late filing of accounts.

Small limited companies are required to file a copy of their accounts each year with Companies House.

If you file even one day past the filing deadline you will be penalised.

The new late filing penalties which will be levied from 1 February 2009 are increasing dramatically!

The new fines for private companies are:

Not more than 1 month - £150 (presently £100).

More than 1 month but not more than 3 months - £375 (presently £100).

More than 3 months but not more than 6 months - £750 (presently £250).

More than 6 months - £1,500 (presently £500 between 6 to 12 months, £1,000 over one year).

The new fines for public companies are:

Not more than 1 month - £750 (presently £500).

More than 1 month but not more than 3 months - £1,500 (presently £500).

More than 3 months but not more than 6 months - £3,000 (presently £1,000).

More than 6 months - £7,500 (presently £2,000 between 6 to 12 months, £5,000 over one year).

Additionally if you were late filing in the previous year (and the previous financial year had begun on or after 6 April 2008) the above fines are doubled.

The new fines also apply to flat management and dormant companies.

The message is clear. If you are responsible for the management of a limited company make sure you give yourself plenty of time to prepare and file accounts on time.

Pre Budget Report. A Summary

2008-11-24T16:52:00.008Z

This afternoon saw the Chancellor, Alistair Darling, present his pre budget report to the nation, including one or two announcements we all expected.

So how does this affect most of us, and what are the first reactions to this PBR. In this post, we will take a quick look at the highs and lows of the budget, and quantify the impact on our pockets.

Initial Reaction

The financial markets have rallied slightly, even this soon after the announcements.

There are, however, concerns that this is a short term impact, whilst many analyse the long term implications. Much of the market has focused on the current instability of the economy, rather than it's long term sustainability, and, once these long term implications begin to sink in, the initial optimism may be dented somewhat.

This is, by far, the most 'socialist' budget from the current Labour Government, and is also a far more risky one, representing a major shift for the ever cautious Mr Brown and his government.

The main concerns are the, apparently, optimistic projections, from Mr Darling in respect of both future economic growth, and potential cost savings.

The Highs

VAT is to be reduced from 17.5% to 15 with effect from 1 December 2008. This will last for 13 months, until 31 December 2009, when it will revert back to its current rate.
The temporary £120 allowance for those who lost out when the 10% banding was scrapped is to be made permanent, with the amount rising to £145.

Pension credits will increase from £124 to £130 per week for single people.

The state pension will also increase, from £90.70 to £95.25, and every pensioner will receive a lump sum payment of £60. (£120 for couples).

The increase in child benefit will be moved forward, from April to January.

There will be a temporary increase in tax relief thresholds for empty properties. Also, some firms struggling to pay these, will be able to spread the timetable for payment.

£1bn has been promised for a temporary Small Business Finance Scheme.

An extra £100bn is being provided to help households improve insulation.

£15m is promised to offer debt advice.

Repossesion should be the last resort for mortgage lenders, with a 3 month grace period for those struggling to make payments.

The Government is seeking to find a further £5bn in effieciency savings in 2010/11

£3bn of capital spending will be brought forward from 2010/11, to include housing and road projects.

Taxpayers with genuine financial reasons, will now be able to spread payments of both tax and VAT over whatever period they can genuinely afford.

A proposed 1% increase in the Small Companies rate of Corporation Tax has been postphoned.

The Lows

The single most unpopular announcement in this PBR was the increase of 0.5% in all rates of national insurance, from April 2011. On the plus side, the starting point is to be raised to the level of income tax.

Again, from April 2011, a new 45% income tax rate will be charged to all those earning in excess of £150,000 per annum.

Alcohol, tobacco and petrol taxes will all be raised to offset the VAT cut.

Although deferred, and reduced on original plan, new vehicle excise duties will soon be introduced.

Conclusion

There is no doubt there are some positive aspects to this budget, but there are some serious doubts as to

(a) The credibility of the projections, and;

(b) The actual impact of these changes.

In order to fund the VAT cuts, The Chancellor is projecting borrowings next year of £78bn, rising to £118bn in the subsequent year. (Earlier in the year, he was projecting a peak borrowing of £38bn). This is also being funded, in the main, by the increases in national insurance contributions. There are concerns that Mr Darling's growth projections are unduly optimistic, which may then impact on the government's ability to repay these unprecedented levels of debt.

In the real world, how will these changes affect the majority of us? The VAT reduction has, in the main, been greeted very favourably, but, will it make that much of a difference?

There are concerns that a 2.5% reduction will not have a significant impact on spending, especially when many high street retailers are already having 'sales' of 20, 30 or more percent already. A much bigger impact (though not a positive one) is the practical issues, such as the cost and inconvenience of changing paperwork, product prices, web sites, signs, etc etc. This is particular annoying when we know it is only for 13 months, when we shall have to go through the whole process again.

There is also the concern arising for those of us on the flat rate scheme. (See our earlier post of today).

A brave PBR, but also a risky one. Time will tell if the gamble will pay off.

Anyone concerned as to the implications of the new VAT changes can check out the HMRC Guidance notes, at the following link. http://www.hmrc.gov.uk/pbr2008/measure1.htm

Proposed VAT Rate Reduction. Is It All Good?

2008-11-24T12:32:00.007Z

This afternoon, in the Pre-Budget Report, one of the hugely anticipated announcements is the reduction in the standard VAT rate, from 17.5% to 15% (the minimum rate allowed without EEC approval).

It is expected that this will provide a kick start to the ailing economy, increasing consumer spending in the run up to Christmas.

But is it good news for everyone? What about those companies currently operating a Flat Rate VAT Scheme? Potentially, depending on the changes made, this could be a disastrous move for companies in that position.

So how will this arise?

Well, if we are paying under the Flat Rate Scheme, we pay a fixed percentage of turnover to HMRC, regardless of what we charge to our customers / clients.

A typical consultancy business, working from home (with a first year 1% discount) will currently be paying 10% of their turnover to HMRC, in the form of VAT. At present, they are charging 17.5% on their sales, giving them a 7.5% surplus.

If the rate reduces, as planned, they will still pay (unless changes are introduced) 10% to HMRC, but will only charge, on sales, 15%. This reduces the surplus to 5% of turnover.

Based on a turnover of £100,000, this reduction will cost the average business some £2,500. This could, however, be as much as £5,625, for a company operating at the upper threshold of £225,000.

So. We await the announcement with bated breath.

Will the Chancellor reduce VAT? If so, will he ammend the Flat Rate Scheme rates to compensate?

If not, there could be a large number of unhappy small business owners out there.

Watch this space.

***UPDATE***

It would appear that the flat rates are reducing, but (surprise, surprise) not by the same as the standard rate.

For example, the standard flat rate for 'other business services' has reduced from 11% to 9.5%, representing only a 1.5% fall, compared with a 2.5% fall for the standard rate. This means that anyone in this situation will be worse off to the tune of 1% of their total turnover.

Yet another stealth tax, the sceptics amongst you may be thinking.

Details of the new flat rates can be found at the following link, and are contained within Annex E.: http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf

1st Addition Sign Up For Bartercard

2008-11-23T19:41:00.006Z

1st Addition Accountancy have, this month, signed up as members of Bartercard.

We have taken this decision for two main reasons:

1. The barter facility extended to us will fund the expansion of out Telford office, and;

2. Athough we have only been signed up for a week, we have already picked up two new clients through Bartercard.

How Bartercard Works

Since 1991, Bartercard has combined the latest technology and a global network of members to transform the traditional form of simple bartering into a flexible and modern business tool to meet the demanding needs of today’s businesses.

Bartercard enables member businesses to exchange goods and services with other member businesses without using valuable cash, or having to engage in the direct two-way swap of goods and/or services.Members gain access to a network of other member businesses. Each member is issued an account number, a transaction card, an interest free line of credit and access to Bartercard’s printed and online business directory, offering members a world of trading opportunities.

Members use their Bartercard transaction card to trade anything from stationery to real estate, all facilitated by Bartercard’s global transaction technology. Bartercard operates similar to the common credit and debit card systems, as operated by VISA and MasterCard.Members earn Bartercard Trade pounds for the goods and services they sell and this value is recorded electronically in the member’s account database.

The Bartercard Trade pound is recognised by the HMRC and financial institutions as having the same value as the one pound.This service particularly benefits the world’s largest business sector – small and medium enterprises (SMEs) – which are often faced with fluctuating cashflow, slow sales growth and high business financing rates.

How the Bartercard transaction works:

1. A Bartercard transaction is similar to a credit/debit card transaction. Members receive a plastic transaction card and an interest-free line of credit. Monthly statements detail member transactions and Trade pound balance.

2. Trade pounds are credited to the member’s Bartercard account upon the sale of goods and services through the exchange.

3. Members use their Bartercard transaction card to spend their credit balance, or draw on their interest-free line of credit, on goods and services from any other Bartercard member. Trading within the Bartercard system includes a number of transaction methods, such as electronic transactions via the internet, EFTPOS swipe card facilities, telephone, e-Commerce or by traditional transaction voucher.

In essence…Bartercard is a strategic business tool that acts as a third party record keeper for global business-to-business trading. It facilitates and monitors all purchases (debits) and sales (credits) undertaken by its members. Bartercard’s credit/debit system functions in the same way the MasterCard and Visa systems deliver service to cash-paying consumers.

Benefits of Barter:

Barter increases sales

A barter exchange markets your company to thousands of local, national and international businesses who are all potential customers. For example, as at 2006, Bartercard had over 4,000 member businesses in the UK and over 55,000 member businesses around the world to facilitate incremental business over and above your daily cash-paying customers. Businesses barter to purchase what they need or want, and pay for them with the additional sales of their goods or services.

Barter improves cashflow

Cash savings are the primary benefit of barter. Barter allows you, as a business owner, to pay for what you need with your own goods or services, allowing you to preserve working capital for other expenses. When you use barter, instead of cash, to purchase needed goods and services, you reduce your cash costs by paying for them with revenue generated by incremental barter sales. Making purchases with your Trade Pound means the payment is made with new sales - sales made by your exchange affiliation. Bartering helps reduce cash outlays for overhead costs. Many of the services offered through barter — such as accounting, cleaning, gifts, restaurant dining and travel — relate to overhead costs. Obtaining these overhead services through barter rather than writing out.

If you want to check out Bartercard for yourself, you can click on the title to this article, for a link direct to their web site.

Home Business Report 2008. A Summary

2008-11-09T15:26:00.010Z

October 2008 saw the launch of the BT Small Business Week, in conjunction with the publication of the Home Business Report 2008, featuring ourselves, 1st Addition Accountancy, as one of 16 case studies.

A link to this is given in our post of 13 October, however, this document is 54 pages long, so what, if any are the key findings?

Some of the more pertinent ones are listed below:

The 2008 report highlighted a 16% increase in businesses running from home.

This brings the total, in the UK, to over 2.5 Million. (Out of a total of 4.7 Million SMEs in the country).

Recent research, by O2, shows that many businesses are choosing not to renew their leases on business premises, and that 60% of those still in commercial property are considering giving it up to relocate back to a home environment.

Home based businesses now make a significant contribution to the economy, as expressed by Professor Colin Mason, of Strathclyde University; "The popular belief that home based businesses are part time, small and marginal does not reflect the reality. The majority provide work for other people, and just over half are generating revenues of more than £50,000 per year".

There are 5 key factors influencing the rapid growth of the home business sector:

Reducing Costs (Primarily in terms of rent and travelling, but there are others).

Increasing Income (Often in conjunction with another job).

Greater Demand (More requirments for the niche products and services they provide).

Lifestyle Choice (Offers freedom and flexibilty, thereby fitting in with family commitments).

Advances In Technology (Allowing / assisting the increase in cost effective tele working).

This popular way of working shows no sign of slowing, with 71% of home based professionals believing they can grow or maintain their business levels throughout the current economic downturn.

The most popular ideas for entering into this market sector are currently via franchises, and the number of opportunities in this area are likely to rise significantly in the coming months.

Not all business for the home based Entrepreneur is locally sourced. Back, once again, to Professor Colin Mason, for words of wisdom; "Contrary to what might be expected, home based businesses are not excessively dependent on their local market for sales: only 47% derive more than half their sales locally, compared with 56% for other SMEs. Indeed, home based businesses are more likely than other SMEs to derive a high proportion of their sales from regional and UK markets".

82% of home based business owners responded that technology was either critical, or very important as a factor, in enabling them to work from home.

A further 67% felt that technology had helped them to attain a better work / life balance.

So. What about the future? When asked what they would most like to see in their area, home businesses replied, in the majority, that they'd appreciate more events and networks tailored for their specific needs. Physical infrastructure (hubs live / work units, professional meeting space & enterprise units) came a close second.

The report is a comprehensive look at the home business sector, and includes 14 pages of survey data, giving a further insight into the world of the home based business owner. It's a sector of the market we ignore at our peril.

You can check out the Home Business Report 2008, in full, by clicking on the heading, at the top of this article.

2008-10-16T20:25:00.007+01:00

Waypoint Systems Ltd has been providing online applications to a wide range of SME’s since 2003 - specializing in the creation, development and maintenance of bespoke websites as well as online data collection systems.

In 2008 Waypoint launched two bespoke software applications, which have been developed in-house to suit the needs of their client mix. These are an e-commerce store and a website content management system – both of which are extendable and flexible enough to deal with Waypoints ever growing list of clients and industry sectors.

Olivia Willcocks is the Managing Director of Waypoint Systems and here, she shares her 10 top tips to check that your website is working for you.

(1) Ensure your website is up to date.

Keep on top of the content you have online, make sure you only have new and relevant news and that all the pages contain up to date material.

(2) Manage the content yourself.

Make sure you are able to change everything on your website and that you receive adequate training on how to do this. With a good system you should be able to change every word and image on your website including the metadata.

(3) Make sure you know how well your website is working for you.

Are you meeting the targets you set for the website? Do you know that you are – are you getting monthly statistics reports or do you get access to online statistics so you can ensure that your website works for you?

(4) Make sure you are in control of the metadata on each page.

Each page of your website should have its own set of keywords and you should be able to alter these yourself. The CMS element of your website should also let you know what are strong and weak keywords for that individual page. This will increase your search engine optimization ratings significantly.

(5) Purchase similar domain names.

By purchasing similar domain names to your primary domain name you will not only aid your search engine ratings but will also stop your competitors from purchasing them and pointing the domains to their website.

(6) Feel comfortable with your website supplier.

Having a holistic approach to your relationship with your website supplier will ensure that you are able to tell them exactly what you think and what you want – after all your website supplier is one of your top sales agents.

(7) Ensure your website has synergy with the other elements of your marketing mix.

It is imperative that the look and feel of your website resembles the other marketing material that you utilize within your company. Failure to do this can result in mixed and confusing messages being sent out to your potential clients.

(8) Use a bespoke CMS or e-commerce element that works for you.

Using a templated element to your website will leave you without the ability to expand your website as you grow. A bespoke solution tailored to suit your company needs will ensure that you can keep your web presence up to date and relevant at all times.

(9) Does your website pass W3C standards.

All websites should pass W3C standards – this is the World Wide Web Consortium and they are responsible for developing specifications and guidelines to lead the web to its full potential. These guidelines will include web accessibility – so ensuring that your website can be viewed by people with site disabilities for example.

(10) Publish your website.

Once you have a website that you are proud of make sure you publish it and advertise the URL on all your marketing equipment. This is especially important for online marketing in order for you to build up your link exchanges, which aid your search engine optimization.

For more information on anything covered in this article please contact Olivia A Willcocks (o.willcocks@waypointsystems.co.uk) or alternatively check out their website http://www.waypointsystems.co.uk/.

2008 Home Business Report

2008-10-15T11:19:00.005+01:00

As planned, Enterprise Nation today released the 2008 Home Business Report.

Included within it's 54 pages are a number of profiles on 16 key small businesses in the UK, including ourselves, 1st Addition Accountancy Limited.

To view the report, click on the heading to this post, or the link below. Essential reading if you are a home based business.

http://www.smallbusinessweek2008.co.uk/sp/media/direct/sbw/downloads/homebusinessreport2008.pdf

Small Business Week 2008 Is Launched

2008-10-13T10:34:00.012+01:00

Today sees the launch of Small Business Week 2008, starting today with a webinar, and the release of the 'State Of The Small Business Nation' report.

Later in the week, a the 2008 Home Business Report is due to be released also, and, amongst its contents, 16 case studies of expanding small businesses, including ourselves, 1st Addition Accountancy Limited. I shall be publishing this report to our blog, as soon as it is released.

In the meantime, please feel free to check out the Small Business Week website, at; http://www.sbw08.co.uk/

It's also worth checking out the State of The Small Business Nation report, at; http://www.visualwebcaster.com/imageslides/51544/2008%20State%20of%20the%20Nation%20Report.pdf

The Difference Between Making A Will And Estate Planning

2008-10-09T16:57:00.014+01:00

Pete Savage, MIPW, is an Estate Planning Consultant with DeedSafe Wills and Legal Services. In this brief feature, he gives us an insight into the importance of 'getting it right' before you go.

As Pete himself often reminds us, it's all about thinking outside the box before ending up inside one!

When people consider making a Will, experience has shown us that they will invariably think about leaving everything to their surviving spouse/partner on first death, then on second death to their children. This typical route has a host of hidden dangers which could mean your children are partially or totally disinherited. For example:

a) If after your death, your spouse/partner re-marries; their new spouse could inherit everything, not your children.
b) If you have children from a previous relationship; after your death your partner could change their Will to disinherit those children.
c) If you end up in a care home, your assets can be seized by the local authority to pay for your care.

Estate Planning is too important an area to risk making a do-it-yourself Will or to put in the hands of unqualified and unregulated so-called ‘will writers’.

A properly prepared Will can protect your family from all of the above scenarios.

You may also have specific wishes or situations which may need to be taken into consideration e.g. a disabled child or a beneficiary with acute behavioural problems or addictions. It would be potentially harmful for these people to benefit directly from your Will but you may not want to disinherit them completely.

Also you may wish somebody such as a partner or elderly relative to be granted the right to live in your property after your death but to not necessarily inherit it. These situations can be dealt with within a correctly drafted Will.

Of course within your Will you can name the people you want to do the important jobs such as who should take over parental responsibility for your children if you should die while they are still minors. You will appoint people to look after your cash and other assets also.

Furthermore, if you have an accident or worse still, become mentally or physically incapable, who’s going to arrange your finances and pay your bills? What if it becomes desirable to sell your home? Even if your husband/wife is still alive and well, they cannot give your consent to do any of these things.

A Lasting Power of Attorney document ensures all these matters are dealt with and stops the wrong people gaining control of your finances.

For further advice on any of the above topics please contact:

Peter Savage on 0800 781 9371

http://www.deedsafewills.co.uk/

New Self Assessment Deadline for Manual Returns Is Just Weeks Away

2008-09-28T23:19:00.004+01:00

HM Revenue and Customs (HMRC) has issued a reminder to anyone filing a Self Assessment tax return this year - there's now a new 31 October deadline for paper returns, and it's only weeks away.

Previously, both paper and online Self Assessment tax returns had to be filed by 31 January. But from this year, paper returns must be with HMRC by 31 October, or you could face a £100 penalty. The deadline for filing online returns remains 31 January.

If you file a paper tax return, you therefore need to get organised now. For example, start thinking about what information you need to complete your return, such as your P60, self employment accounts, records of your savings and investments, and details of any untaxed income.

Alternatively, you could switch to online filing. It's easy to register. Filing your tax return online has a number of advantages - your tax is calculated automatically, you get an immediate online acknowledgement once you've filed, and it's processed faster, so any money you are owed by HMRC is repaid more quickly.

Once you've filed your return, any tax due has to be paid by 31 January, whether you file on paper or online.

Buy-To-Let Landlords Beware

2008-09-28T09:01:00.008+01:00

HM Revenue & Customs have cottoned on to the substantial buy-to-let market out there, and are now targeting landlords who have failed to declare, and pay tax on, this income.

As agents, we are starting to receive letters stating; "I have information that suggests your client has received rental income from property that has not been included on their Tax Return. I need to verify if my information is correct, and, if they have received rents, to work out any tax that may be due."

Anyone receiving these letters should act immediately, as failure to do so could could incur additional financial penalties, and, ultimately, criminal prosecution.

An Inland Revenue spokesman said; "We are not planning a crackdown, or to otherwise target landlords. These letters are about helping customers with their tax affairs and answering common questions put to us by our landlord customers. It has got nothing to do with revenue raising. (Yeah, right, and and speed cameras are all about helping drivers with their driving skills).

The other impact of this strategy is that HMRC are seeking to gather information on buy-to-let properties, so that they can ensure these properties don't slip through the Capital Gains Tax net, when they are ultimately sold.

8 Keys To Recession Proof Your Business

2008-09-25T22:24:00.010+01:00

Have you noticed how often the words 'recession', 'economic downturn' and 'the credit crunch' are mentioned in the media these days?

Is your business starting to feel the pinch?

With businesses large and small downsizing and closing down, what are you doing to make sure your business isn't next?

Peter Lisney is a business development and copywriting specialist. He developed his first commercial website in 1998 and has been integrating online and offline marketing ever since.

He has produced a comprehensive 8 step guide to recession proofing your business.

We feel it's definately worth a look:

http://www.recession-proof.co.uk/

Why not check it out.

Estate Planning & The Seven Year Rule

2008-09-07T11:03:00.008+01:00

The Seven Year Rule allows us to gift an asset or some money to loved ones, whilst reducing your inheritance tax (IHT) bill. There is, however, a catch (isn't there always?) In order for the gift to be fully IHT exempt, you will need to survive for seven years after making the gift.

There is, currently, a £312,000 IHT threshold in place. This means that, on death, the first £312,000 of our estate will not be subject to IHT. Any amounts gifted above this amout will be subject to the Seven Year Rule, so we need to make sure that the receipients can afford to pay the bill.

There are other ways of making IHT exempt gifts. For example, you can give away an annual, tax free, allowance of up to £3,000 to family or friends. If this is not used in the first year, it can be carried forward to the next year only. So, if you've not done this before, you can gift up to £6,000 (bringing forward last year's allowance) in the first year. This means that a couple can gift £12,000 in the first year, and £6,000 per year thereafter.

Putting this money in trust for your children or grandchildren could give them a head start on the property ladder or pay for their education.

Elderly parents should review their estate as soon as possible, making sure they have an up to date will, and that loved ones know where it is.

Whether you provide care for them or not, they could look to make regular gifts from income to you (provided that, in doing so, they are not reducing the quality of their lifestyle).

These gifts (which can be for any amount) can fall outside their estate for IHT purposes. If they move into your home and contribute to running costs and bills, make sure a record is kept of all expenses, so you don't incur an unwelcome income tax or IHT bill.

As with all legislation, IHT law is subject to change, so always check out the current position when looking to make a gift of this nature.

National Minimum Wage Increases Next Month

2008-09-02T23:02:00.006+01:00

From 1 October, the national minimum wage (NMW) hourly rates will be increased to the following rates:

Adult rate (workers aged 22 and over) will increase to £5.73.

Development rate for 18-21 year olds will increase to £4.77

Development rate for 16-17 year olds will increase to £3.53

The rate for accomodation offset will increase to £4.46 per day (weekly maximum £31.22).

For more information about the changes, or for general advice, call the NMW Helpline on 08456 000 678, or visit http://www.berr.gov.uk/employment/pay/national-minimum-wage/index.html

Stakeholder Pension Schemes

2008-09-02T22:26:00.004+01:00

Stakeholder pension schemes were introduced on 6 April 2001, and are aimed at individuals on low earnings, with no pension provision.

Employers with five or more employees who do not provide access to a personal or occupational pension scheme, may be required by law to offer their employees access to a stakeholder pension scheme.

An employer can select a scheme by seeking the advice of an independent financial advisor, or by making their own enquiries. Having identified a scheme, the employer must ensure that the scheme is on the Pensions Regulator's register of stakeholder pensions, and consult with employees and their representatives about the choice of scheme.

Providing access to a stakeholder pension scheme does not mean the employer has to set it up and run it. It is up to the individual employee whether or not they decide to join a stakeholder pension scheme.

Employees who are members of stakeholder pension schemes pay National Insurance contributions at the standard not contracted-out rate, ie contribution Table letter A. Do not use any other Table letter. If an individual contracts-out of the State Second Pension using a stakeholder pension plan, HMRC will pay a rebate of National Insurance contributions into their stakeholder plan.

Information on stakeholder pensions can be found on the following sites:

http://www.pensionsadvisoryservice.org.uk/

http://www.thepensionsregulator.gov.uk/

http://www.thepensionservice.gov.uk/

Article reproduced from HM Revenue & Customs Employer Bulletin, Issue 30.

HMRC Introduces Streamlined Tax Returns And Extended Penalties

2008-08-25T22:50:00.007+01:00

The self-assessment tax return for self employed people who do not use an accountant has been simplified, with fewer questions and easier language.

Questions about less common types of income and reliefs have been moved to the Additional Information pages, whilst there is a new two-page form for more straightforward, smaller businesses, with turnover below £64,000.

Although online SA Tax Returns still need to be filed by 31 January, the deadline for paper returns has been shortened to 31 October.

What the Tax Man giveth, he also taketh away!

The 2008 Finance Bill has also extended penalties for the period from 1 April 2008 (due to be filed by 1 April 2009)

HMRC will charge penalties for documents containing careless or deliberate inaccuracies that lead to understatement of tax liabilities, a false or inflated statement of loss, or inflated claim for the repayment of tax. Their aim is to crack down on those who do not comply, whilst helping those who do.

They suggest that reasonable care should be taken when completing forms because errors will be penalised, and recommend that early disclosure of errors will reduce those penalties.

Top Ten Money Making Tips For A Successful Business

2008-08-25T22:15:00.010+01:00

Earlier this month, Sonia Colon, the lady behind My Fashion E-Mall Blog gave us some top tips on running a successful business. In this post, she takes a look at the top ten tips for maximising the earnings potential of a successful business.

1. Quality

Provide a quality product/service which people want and need.

2. Customer Loyalty/Service

Help your customers feel that they can trust you. Be honest and trustworthy. Offer money back guarantees and stick to your policies. Treat your customers like gold.

3. Offer something for free once in awhile

Your customers concern is how your product can help them. How will it meet their needs; improve their lives; make them happier; etc. Offer something of value and they will buy what you’re selling.

4. Creative / Unique

Own and control your products/services. Offer something that only YOU can provide. Have exclusive control over at least one of your products/services. It should be something that people cannot find anywhere else and wanted by a lot of people.
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5. Make Money to Spend Money

Spend money on advertising and promotion. Although there are many free methods to work within your budget, you will still need to spend some money in order to make money.
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6. Put back in what you harvest

Take a portion of your profits and re-invest that money back into the business. Use that money to purchase more ads, brochures, catalogs, t-shirts, flyers, etc.

7. Grow and Multiply

Put others firstSatisfy the needs of others. Help them achieve their dreams. Show your expertise and in the process others will follow your lead.

8. Seek the Help of Others

Use services to help you reach a wider audience, such as dealers, distributors, Internet, customers and networking.

9. Other Successful Business Owners

Seek the advise of other successful people. Find someone who is making the kind of money that you want to make. Do exactly what they are doing, why re-invent the wheel?

10. Get Personal

Know your customers by name. Thank your customers and acknowledge them.

There you have it the “Top ten money making tips for a successful business”
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Thanks again, Sonia!

Sonia Colon is writer/publisher of My Fashion E-Mall Blog & The Biz Buzz of a Latina Mom Blog! Writing & sharing powerful business articles & successful Internet marketing tips on starting & maintaining a lucrative work-at-home business is a passion

New Personal Allowances From September

2008-08-25T11:20:00.007+01:00

Next month, new changes will be implemented to personal tax allowances and bandings, as part of the Chancellor’s measures to offset the effects of the removal of the 10p in the pound tax band.

Personal Allowances for the 2008-09 tax year will be increased, by £600, to £6,035 (from the current £5,435). This will coincide with a reduction of the basic rate tax band limit from £36,000 to £34,800. (This is the income level, over which, we will pay higher rate tax).

If you are an employee, the changes will take effect on the first day on or after 7 September 2008, and will be back dated to the beginning of the tax year (April 2008). As self employed, these changes will be reflected in our 2008-09 Self Assessment Tax Return.

The changes will equate to an annual tax saving of around £120 per year (or £2.30 per week). Due to the backdating of the changes, depending on the date and amount they are paid, most employees will see a £60 or £70 reduction in their tax bill in the month of September or October respectively.

These changes are designed to benefit basic rate tax payers only. Higher rate tax payers will see no benefit at all, as the higher rate tax threshold has been reduced proportionately to counteract the increased personal allowances.

HM Revenue & Customs Issue Notice of Frauds & Scams

2008-08-24T22:03:00.005+01:00

Many people are currently in receipt of emails purporting to be from HM Revenue & Customs, and offering substantial rebates.

Although these emails appear to bear all the right logos and details, we should all be aware that they are fake, and, as with all such emails, we should never respond to an email that asks for personal information.

Whilst it is quite conceivable that HMRC may send out emails, from time to time, they would never do so requesting login names, passwords, bank and / or credit card details.

If you suspect you may have received one of these emails, under no circumstances should you follow any links within the mail, or disclose any of the information requested. Forward the mail to HMRC, at phishing@hmrc.gsi.gov.uk. Although HMRC can't, obviously, reply to every email, it will help with the reduction of online fraud.

If you have reason to believe to suspect that your personal details have been stolen, you should report the incident to your Internet Service Provider, as they are able to close down sites that subsequently prove to be fraudulent.

Top Tips On Improving Cash Flow With Jigsaw Business Services

2008-08-15T13:59:00.011+01:00

After 20 years working with businesses to help them improve their cashflow, Julie Owen, of Jigsaw Business Services gives us some of her top tips on how we might be able to achieve some of these results within our own businesses.

1) Contracts, Letter of Engagement or Head of Terms

It may sound obvious but, whether you’re selling a service or product, do you have a document which your client has signed to say they would like to enter into an agreement with you? The detail of the item being purchased along with the cost and timescales should also be included in the document. Should your client dispute the level of service or goods provided, you can refer to this contract, letter of engagement or Head of Terms to ensure you have delivered what was agreed at the price agreed. This way your invoices are less likely to be disputed.

2) Consider Whether You Have The Right Business Processes in Place

How will you deliver the service or product? What processes does your business need to have in place to ensure the smooth delivery? Do you have the necessary project management quality systems in place? How many times have you ordered a product and something has arrived broken or missing? Having the right business processes in place can and will save companies money in the long term. Business processes should be tailored to your business and that doesn’t mean lots of endless form filling. Remember, only happy clients will signoff the service or product. Unhappy clients will leave your invoice to gather dust on their desks!Where a business is providing a service, whether a one off service or one which will take several months to deliver, think about when you will invoice the client. Could you ask for staged payments rather than wait until you’ve delivered the service before invoicing?

3) Invoicing

Once you’ve agreed the invoicing schedule for each client, put these into one document to make it easy to refer to and which will clearly state all your client invoices to be issued each month making it easy to know who to invoice when.

Don’t leave it until the end of the month before drafting and issuing your invoices. Invoice your clients as soon as you’ve delivered the product/service or at the agreed stages during the project.

Think about who drafts and issues the invoices, are they the right person to do this? What business processes do you have in place to ensure your invoices are issued efficiently? Do they include all the expenses i.e. travel, postage etc, you have incurred? These costs really can mount up over 12 months and, by not passing on these costs to your clients, will result in an erosion of your profit!Explore whether you can issue invoices earlier in the month. If you only invoice at the end of the month and your terms are 30 days, it is likely you will not receive payment until the end of the following month, i.e. when you have to pay salaries and VAT. So by issuing as many invoices as you can during the month, it hopefully means you will have monies coming in during the month hence reducing your business risk and for the need of overdrafts or loans.

4) Cash Control

Who does this task in your business? If you are a Managing Director or a Director, is this a good use of your time and skills? Are you effective enough i.e. are you to close to the situation, do you think you might upset your clients, so don’t talk to them about overdue monies owing? Are your clients settling invoices within the agreed business terms? If not, then why not? It is very important to think about this area and to be honest.

If you have a member of staff performing this role, review how effective they are. Have they received proper training? Do they actually chase clients for payment? I have come across many companies where staff don’t like chasing for monies owed and have even admitted they actually don’t do it, keeping busy on other tasks in order to ‘get out’ of having to pick up the phone.

In this current climate, clients are unlikely to settle invoices if they are not being actively chased. This will become more apparent over the coming months, and it’s very important for businesses to keep on top of debtors.

If a client consistently takes longer to settle invoices i.e. not as agreed in your business terms, then ask yourself the question: Do I want to continue to do business with them? The answer may be yes, but you are then making the conscious decision. By ensuring you have the right business processes and people in place performing the right tasks, it reduces the need for you to make this decision. A business can only afford to have 1 or 2 clients who may take longer to pay than the agreed business terms. If you have more, you need to give this some urgent attention.

5) Cash Flow

Can you project your cash flow at the end of any one week or month? Do you know when monies are due in and when payments need to be made?

By monitoring cash flow based on sales, purchases, direct debits and standing orders, you can easily see if your business is generating enough sales or whether your overheads are too high. Monitoring cashflow will give you an early indication that more sales are needed or a reduction in overheads is required. You can then make an informed decision as you are in control. So many businesses don’t have this system in place and are put in a position of taking large overdrafts or loans which only further impacts on the business.

Reading the above tips may well lead us to ask ourselves the all important question; "Am I in control of my business?" If the answer is; "Yes" then you probably have a healthy business. If not, then what are you going to do about it?

For a no-obligation informal conversation about any of the issues raised above, contact Julie, on 07973 715738, or visit http://www.jigsawbusinessservices.co.uk/

Top 6 Tips For Business Success

2008-08-03T11:54:00.004+01:00

Sonia Colon offers the six essential skills to business success. Sonia says you may not have developed all of these skills, but like most things in life, you can by learning, practicing and determination. Implement them and you’ll be on the right track.

1. Personal Skills

A healthy self esteem is necessary for you to tackle the day to day tasks of business. As an entrepreneur, you will spend a great deal of time working solo. Listen to your heart but consult your head before making final business decisions. Keep motivated by staying on track of plans and organization.

2. Communication Skills

You must sharpen your communication skills if they have become a little rusty. You may find yourself needing to communicate with lawyers, accountants, bank managers etc. You need to be able to get your message across clearly. Good communication will reduce the chance of being misunderstood. It’s essential to be able to communicate effectively at a variety of levels, in a variety of manners, to a variety of people. There are many self-help books on this topic.

3. People Skills

People will make or break your business. You will make or break your business. You are Your business. The way you deal with people will determine much of you business success. Good manners, politeness, and attentiveness to your customers’ needs are what will ensure repeat business. Customers need to feel that they are important to you.

4. Marketing Skills

To round off your entrepreneurial skills, you will have to have a sound knowledge of marketing your business. Marketing is the ability to communicate to your potential customers and inform them of your products and or services. Know how to define and target your market. You need to know what will work for your business. Read books, talk to others and observe how other types of businesses successfully market their businesses. Usually effective marketing involves a combination of many techniques that can change from time to time.

5. Technical Skills

Read books, attend seminars, workshops, trade shows and conferences to add to your technical knowledge and keep a leading edge on your competition. Don’t make the mistake of working at your business and forget to work on your business. Never cease your education in your area of expertise, and remember to keep up with the changing technology within your chosen field.

6. Financial Skills

You have to be financially knowledgeable in the business world. Your entrepreneurial knowledge should include basic accounting, organizational and administrative skills, an understanding of all tax laws, federal and provincial requirements, and an in-depth knowledge of the business that you are running.

It may sound like a lot to learn, but take heart. You can learn everything you need to know to run a successful business. No one was born a business HOT-SHOT. There are an abundance of courses offering business management training. There are also self-help books that can assist you with the financial aspects of your business needs.

Top Tips For Mortgages, From Gallimore Adams.

2008-07-22T23:47:00.007+01:00

In the first of our features from our business partners, Laraine Adams, of independent mortage brokers, Galimore Adams Ltd, gives us a few top tips to help us make sense of our mortgages in this infamous 'credit crunch';

As everyone knows, today’s financial market is a tricky one. Not only has the number of mortgages available decreased dramatically, but the criteria for securing a mortgage has changed too. Here is a step by step guide to finding a new mortgage, and how to avoid the pitfalls.

1) Arm yourself with information

It may sound obvious but find out what rate your local bank is offering and note the competitor rates that are being advertised on the television and radio.

2) Consider how much of the work you want to do

If you are financially savvy, ensure you read the small print; in particular the rate, penalties, and the fees.

If you are not so confident, find a mortgage broker. Ask your friends and family if they can recommend someone. Perhaps do a Google search for mortgage advisers in your area and find out what ‘word of mouth’ has to say about them.

3) Narrowing down the options

Ensure the adviser you chose is ‘whole of market’. This means the adviser can look at all products available to them on the market, rather than just a specific panel of lenders.

Find out if the adviser charges fees. Charging a fee does not mean the advice you receive will be any better.

Ensure you choose an adviser you feel comfortable with. You need to trust them and feel confident they are going to find the best deal for you.

4) Adverse credit?

If you should have any adverse credit, do not just consider those brokers advertising that they specialise in poor credit histories. A whole of market adviser will have access to the same deals. And ensure you are upfront and honest with the adviser about your credit history.

5) Keep ALL of your options open

Some banks and building societies are offering rates that are only available if you go to them directly rather than through an adviser. A good adviser will tell you if you will benefit from going directly to a lender.

6) Protecting your mortgage

Don’t automatically take out payment protection in conjunction with your mortgage. This can be very expensive. Your adviser should discuss the protection you should consider and again the adviser can research the best deal for you.

As some lenders will only deal with you directly, do some research of your own as well. If you find a great PP deal that beats anything your adviser suggests, then ask your adviser to compare the cover. Again, a good adviser will be open and honest with you even if it means you take protection cover out elsewhere.

To find out more, contact Laraine or Laura, on 01952 463852, or why not check them out at http://www.gallimoreadams.co.uk/

Spreading The VAT Burden

2008-07-21T22:47:00.008+01:00

As the credit crunch continues to bite, an increasing number of companies are finding that the ‘once a quarter’ cash flow burden of paying their VAT bill all in one go is placing mounting pressure on the purse strings.

As with many other regular bills, wouldn’t it be great if we could spread the payments over a number of months, to help us to budget more effectively.

As accountants, we are dealing with more and more ‘time to pay’ arrangements on behalf of our clients.

HM Revenue & Customs have no plans to formally relax the rules by giving companies extensions on paying their quarterly VAT bill. They have, however, confirmed that businesses do, subject to certain criteria, have the option to spread the payments.

So, what are the criteria?

As soon as you realise you need to make a payment arrangement, you should contact your local office immediately. Alternatively, you can contact the Payment Helpline, on 01274 539 628, during office hours.

Making a Proposal

If you agree to pay the amount in full, within 28 days, no further action is required.

If you require longer, you will need to provide details of;

• Your savings and other assets, for payment arrangements of up to 3 months, and;
• Your income, spending, savings and other assets, for payment arrangements longer than 3 months.

Your Rights

HMRC will consider any payment arrangements you request. If you feel they’ve rejected it without considering it properly, you can make a complaint, but you can’t appeal against their decision.

Things to Remember

• HMRC will only entertain payment arrangement proposals if all returns (whether VAT or tax) are up to date.
• You will have to pay interest on any tax or VAT paid late. The current rate is 8.5% PA

So, although HMRC don’t really like it, and you may have to pay interest, and provide additional information, this could be an invaluable means of budgeting your VAT payments, thereby keeping the wolf from the door.

Free advice on arrears and dealing with HMRC is available through the charities; Citizens Advice Bureau, and TaxAid, by following these links.

Citizens Advice Bureau

http://www.adviceguide.org.uk/index/life/tax/help_with_tax_problems.htm

TaxAid

http://www.taxaid.org.uk/help.cfm?secnav=20

If in doubt, always seek the advice of these agencies, or your own accountant.

Home Business Mortgages

2008-07-19T20:00:00.000+01:00

Often, when we work from home, our house will have a dual purpose, as both a business premises, and a personal residence, so how does this affect our mortgage?

The simple answer is that, in most cases, it won’t.

Although we may need to notify our insurers, simply working from home is not something that mortgage companies generally need to be aware of.

The implications for buying a house will depend on its current usage at the time of purchase, as well as the level of business undertaken there.

If, for example, we buy a house with extensive outbuildings, as long as they are not currently used for business, then we will simply need a standard domestic mortgage. What we do to the buildings after that, is not relevant, until we come to sell or re finance the property. If, however, they have already been converted, say to offices, or a small retail unit, we would normally need a specialist mortgage, with dual residential / commercial usage.

This does not apply if the vendor simply ran a business from home. It is only relevant if there have been structural modifications, making the premises partly commercial.

Whilst looking at mortgages, I should just mention that it is common practice for small business owners to extend their mortgage, in order to finance a business venture. This could be for converting / fitting out our new office premises, or it could be for anything from web site design / production to recruiting new staff etc. As long as we can prove that some of the mortgage relates to our business, we can claim 100% of the mortgage interest relating to that proportion of the loan. This is something that often gets missed when completing our tax returns.

Can We Employ The Kids In Our Family Business?

2008-06-15T22:15:00.003+01:00

Some 60% of UK businesses are family owned, and, in an earlier post, I looked at the possibility of employing a spouse or partner in our family business, in order to reduce our year end tax bill with some extra wage costs.

That’s all very well, but what about the kids? Can we pay them a salary too? Everyone, including our children, has a tax / NI free personal allowance of around £5,500, so can we use this to our advantage?

The simple answer is; “Yes”, so here are a few of the basics:

The Children And Young Person’s Act states that no person under 13 years of age may be employed, other than in very specific areas, such as acting, modelling and sporting activities, so employing your 8 year old as head of marketing could just raise a few questions.

Under current legislation, the National Minimum Wage doesn’t need to be paid to workers in the family business, provided they are members of the employer’s family, and share the family home. That said, the more we can pay them, within reason the greater the expense, for tax purposes.

As with most things, common sense is the watch word here. We need to be able argue that our kids are performing tasks that are well within their capabilities. Many, these days, are highly computer literate, and may have done work for us on our web sites, spread sheets etc. Others may have helped us with despatching goods, filling mail shot envelopes etc.

So, as long as our kids are over 13, and they perform appropriate tasks, within our business, for a sensible salary, there is nothing to stop us paying them for work done, in order to reduce our business tax liability.

There is a wealth of legislation governing this, but, for most of us, it’s definitely worth some serious consideration.

Another Look At Claiming Home Expenses

2008-06-12T20:00:00.003+01:00

In an earlier blog entry (taken from an article I produced for Enterprise Nation) I covered the very basics of this subject. In a more recent article, for BHP Publishing, I was asked to explain the subject in a little more detail. This article is reproduced below:

One thing that any small, home based business owner will need to know is; “What expenses can I claim for running my business from home?"

Surprisingly, there are no ‘standard’ or recognised methods of calculating these allowable expenses, although there are a number of conventions and guidelines which we, in the profession, tend to adhere to.

In the ‘good old days’ we accountants would simply claim a global ‘round sum’ amount (often about £20 - £30 per month) to cover these costs, which was never challenged by HMRC, as it was not significant or worth amending.

However, since 2004, the limit of these round sum amounts has been capped at £2 per week (or £104 per year). Anything above this rate is increasingly likely to trigger an investigation.

If we feel that the £2 is insufficient, we can claim specific costs, based on actual expenditure.

Main Criteria

• We must actually work from home, and have a dedicated area for this work (doing the books on the kitchen table once a week simply won’t cut it)
• Expenses must be ‘wholly and exclusively’ for the business. If mixed usage (part business, part personal) the business part must be separately identifiable.
• Where an area of the house is used partly for business, and partly for personal, the expenses will be apportioned by time used, as well as floor area utilised.

What Can We Claim

The following property expenses can be claimed:

• Light and Heat
• Rent / Mortgage Interest
• Council Tax
• Water Rates
• Property Insurance
• Cleaning
• Re decoration and repairs (internal and external)

Calculating ‘Business’ Element

As a general rule, we tend to apportion all of the above costs on the basis of floor area utilised. In reality, this may be difficult to calculate, so it is perfectly acceptable to work on the basis of numbers of rooms in the house. If, for example, we use one room for business purposes, and there are four further rooms, the business element will be 1/5, or 20% of the total running costs of the home. If we further estimate that this room is used 50% for business, and 50% personal, the percentage claimed will be halved to 10%.

Other Claimable Costs

In addition to our home, we can claim any expenses utilised ‘wholly and exclusively’ for the purposes of the business, including:

• Telephone (including line rental) apportioned by call time (incoming and outgoing). A dedicated business line can be claimed in full.
• Broadband (as telephone costs)
• Business insurance
• Repairs to business equipment
• Capital allowances (wear and tear) on business equipment. (including computers and peripherals, office furniture and fixtures such as shelving etc).
• Printing, stationery, postage and advertising
• Computer software used for business
• Travelling and subsistence costs (a whole topic in it’s own right). Subsistence relates to the ourselves only. Any entertaining of suppliers, business associates and, even, customers is totally disallowable.
• Motor expenses of running business vehicles (less any personal element).

Examples of expenses claims we can make in certain circumstances are given in the HMRC guidance manual; http://www.hmrc.gov.uk/manuals/bimmanual/BIM47825.htm

Pitfalls

When claiming expenses relating to our home business, we need to be aware of some potential issues:

• We can claim any costs directly attributable to the business working area of our home (such as decorating the home office, installation of specialist equipment, additional utility supplies, insulation etc) However, if we treat a room as being 100% for business, then, on the sale of our house, the percentage of the sale relating to the ‘business’ area will, potentially be subject to Capital Gains Tax. This will only be an issue where a significant profit is made, as smaller gains will be covered by our annual exemption. **UPDATE** From June 2008, HMRC have announced that this will no longer be an issue, and that capital gains tax will no longer be charged where home business expenses, such as mortgage interest etc are claimed against profits.
• Most mortgage companies ask us to stipulate whether or not there is a business element to our occupation. We may need to be able to prove to them that we have separate business insurance to cover us for this.
• Running a business from home may attract the attention of the Valuation Office Agency who will determine whether or not a property will attract business rates. Guidelines for this can be found at: http://www.voa.gov.uk/council_tax/working_from_home.htm

Legislation is constantly being updated, and the only piece of advice that never changes is; Always check with your accountant, when looking to claim or calculate these expenses.

**UPDATE**

For the 2008/09 tax year, the flat rate allowance has been increased from £2 to £3 per week.

2006 Companies Act Further Simplifies Limited Company Structure

2008-06-07T20:00:00.001+01:00

In a number of features and articles, I have made reference to the fact that, for most of us, it will be preferable to run our business as a limited company, rather than as a self employed person or partnership, and in my last feature, I touched on some of the reasons why this might be the case, but what does it involve? Is it more work or more expensive? Will you have to have an audit, register for VAT or find a company secretary?

The latest Companies Act has now completed the task of simplifying the limited company process, by, amongst other things, removing the requirement to have a company secretary, from 1 April this year.

Other recent simplifications include:

• The audit requirement for small companies has been removed for companies whose turnover is below £5.6 Million.
• The requirement to have two directors has now also been removed.
• Limited companies were previously required to have at least two shareholders. This was, in reality, a bit of a pointless exercise, anyway, as business owners would simply issue 100 shares, 99 to themselves and 1 to their partner.

The net effect of all of this is that, from April this year, it is now possible to form and run a limited company with just one person, without the need to involve anyone else. The structure of the business, therefore, becomes as simple as that of a sole trader.

The other benefit of this is in the costs involved. The fact that most of us will never require an audit, will significantly reduce accountancy costs, and the simplified company structure means that you can now form a brand new limited company online from as little as £25.

Should I Run My Business As A Partnership / Sole Trader Or Limited Company?

2008-06-05T20:00:00.000+01:00

One of the fundamental questions when starting a new business is; “Should I run my business as a sole trader, partnership or limited company”?

In the majority of cases, it will be preferable to run your business as a limited company. Some of the benefits of doing so include:

Limited Liability.

If your business fails, your house and other assets are not at risk (unless you have guaranteed any debts personally).

Taxation savings.

Over the last few years, legislation has changed almost yearly. For some of that period, the first £10,000 of a limited company’s profits were tax free. Although this provision is not currently in force, the Small Companies Corporation Tax Rate presently stands at 21%, from 1 April 2008, for profits up to £300,000.
Although the Chancellor has now back peddled somewhat on the 10% tax band, a self employed person will pay a basic rate of Income Tax of 20% (rising to 40% from £36,000 of income) plus 8% Class 4 National Insurance. This, obviously, represents a minimum saving of 7% on every penny earned for a limited company..

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The perception held by most people is that limited companies are larger entities, and this automatically gives increased credibility.

As long as you actually pay tax (in other words, you earn more than the tax free threshold, currently £5,430 per annum) then the tax benefits of being a limited company will normally be significant, and one of the biggest misconceptions amongst new business owners is; “I’m too small to be a limited company.”

To all of you I would say; “You’re never too small to save tax!”

Should I Be Claiming Tax Credits?

2008-06-03T20:00:00.000+01:00

Everyone has heard of Tax Credits.

We’ve all seen the Inland Revenue publicity, but the usual reaction is; “That won’t apply to me. I earn too much” or “It’s not worth applying. The Government never give anything to people like me.”

Many people, though, particularly those with young families, are surprised to learn that they are, in fact, entitled to some form of Tax Credits.

There are two main types available; Working Tax Credits and Child Tax Credits. The former is only available to families with a household income below £15,000, but the latter can be available up to a household income of £66,000.

When starting out on a new business venture, money can often be a major issue, and any extra help is always welcome. It is important to remember, also, that, for the self employed, Working Tax Credits are paid, based on NET income. Just because you have total income of, for the sake of argument, £18,000, does not mean you’re not eligible. By the time you have deducted allowable expenses, such as travelling, telephone, insurance, etc, it is quite likely your net income will fall into the qualifying bracket, and this is where a good accountant will be able to help.

Also, people who are aware that they can claim Tax Credits, often fail to do so, as they feel it’s ‘not worth it’. In this situation though, we need to look at the bigger picture. Whilst the amount of the Tax Credits received may be small, there are a number of further benefits that will make a claim worthwhile, such as free dental treatment, assistance with childcare arrangements etc.

Still not sure? Why not check it out for yourself? The Government have a Tax Credits calculator available online. Simply by entering a few basic details, it will not only calculate whether you are eligible, but also give an indication as to how much you can expect to receive. This calculator is available at
http://www.taxcredits.inlandrevenue.gov.uk/Qualify/DIQHousehold.aspx

Can I Pay My Partner Through The Business?

2008-06-01T20:00:00.000+01:00

It used to be common practice to pay a spouse or partner a small wage, in order to utilise their tax free personal allowances, or lower rate tax banding (particularly if they have no other employment).

This loophole has been partially closed in recent years, as any such salary must now be ‘earned’ by the person concerned, which can be difficult to prove when they have a full time job elsewhere.

One way around this, if you run your business as a limited company (and it is likely that you should be) is to issue a number of shares to your partner, so that they are able to receive part of the dividend paid for the year.

Under current legislation, a dividend is classed as investment income, rather than earned income, and, as such, there is no requirement to prove any involvement on the part of the partner. (Also, as investment income, it won’t be subject to National Insurance).

Alternatively, if they do actually play a part in the business (such as bookkeeping, administration or company secretary) then a salary is permitted, as long as it is at a commercial rate. One of the best ways to prove this is to ensure that they sign the odd document, from time to time, such as letters, cheques, etc.

What Expenses Can We Claim For Working From Home?

2008-05-31T20:00:00.002+01:00

Something we are often asked is; “What expenses can I claim for running my business from home?”

Briefly, we can claim household running costs as follows:

Telephone

Firstly, we need to calculate the business element of the calls. The Revenue will now only accept a figure that has been calculated from at least two telephone bills from each line / mobile used over the year. In practice, this means going through the itemised bills to identify business / personal usage.

You don’t need to identify every call, but will need to calculate the business percentage of those you can.

Whilst this may seem a lot of effort, bear in mind that, without adequate evidence, the Revenue will not allow ANY costs against the business. Also, you only need to do this for a couple of bills, just to establish a pattern.

Use of Home As Office

This is a global allowance, designed to cover us for the element of the home used for business purposes.

The simplest way to carry out the calculation is to add up the annual costs (as applicable) of:

· Gas / electric / solid fuel
· Council Tax
· Contents / buildings insurance
· Water rates

Remember to keep all the bills to support these amounts.

Next, we simply count up the number of principal rooms in the house (kitchen, reception rooms, bedrooms, bathroom etc). If there are seven, and one is used for half for business, and half personal (eg spare bedroom / office) then we would allow half of one seventh.

We should remember that this ‘allowance’ is a Revenue concession, and is not supported as business expenditure in Tax Law.

Sticking to the Revenue guidance will avoid any suggestion of liability to Capital Gains Tax on the part or parts of your home you use for business.

You may have exceptional circumstances depending on your business, in which case, the calculation can be adapted. The more information you can provide, the easier it is for your accountant, and the greater the protection in the event of Revenue Enquiries.

When Do We have To Register For VAT?

2008-05-29T20:00:00.000+01:00

There are many misconceptions, amongst new business owners, as to when we should register for VAT. There is, however, no legal requirement to do so, until the business turnover exceeds the registration threshold (currently £67,000) though this is applied on a pro rata basis.

In other words, if turnover in a three month period exceeds £17,000, and it is likely that it will continue to do so, then registration is required immediately.

It is possible to register for VAT voluntarily, even if you are below the Registration Threshold.
Reasons we might want to would include:

* In order to reclaim the VAT incurred on large initial capital outlays at business start up. (Equipment, vans etc).

* To reclaim VAT on ongoing purchases and expenses, thereby making them 17.5% cheaper. (although we should be wary if we are mainly selling to the public).

* To improve company image. If a company is not registered for VAT, then any potential large customers will realise that its turnover is below £67,000, and may refuse to deal with such a small company, on the grounds that its continuity cannot be assured. This will be a potential issue for any of us working from home.

When considering voluntary registration, you need to be aware of who your customers are. If we are dealing mostly with business customers, then they will, in the main, be able to reclaim any VAT that we charge on our products and services.

If, on the other hand, we mainly deal with the public, they are unable to make such a reclaim and our goods and services immediately become 17.5% more expensive. Alternatively, we can make our current prices VAT inclusive, and lose out on the extra profit. Either way, this will be a major factor in choosing whether or not to register for VAT before we actually need to.

How Do I Run My Vehicle Through The Business?

2008-05-27T20:00:00.000+01:00

One area that most new business owners need to know about is how to run a vehicle (including, where applicable, their own car) through their business.

The answer to this will mainly depend upon whether you are running the business as a sole trader or a limited company, as follows:

Sole Trader

As a sole trader, YOU are the business, and your car automatically becomes part of the business, for tax purposes. In this scenario, you are simply required to keep a record of your business mileage, which can then be compared against the vehicle’s total mileage for the year, to give a ‘business’ percentage. If, for the sake of argument, this works out as 60%, you can then claim 60% of the entire running costs of that vehicle, including fuel, tax, insurance, repairs etc.

Limited Company

This is a totally different scenario, as the limited company is a separate legal entity in its own right. This means that, if you simply pay for the car through the business, then the company is, effectively, providing you with a company car, which will be subject to tax like any other employee. The last thing any of us want is to be taxed for using our own vehicle.

The way around this is to use what is know as the Fixed Profits Car Scheme, whereby we can claim a set mileage rate from the business, which we then use to finance the running of the vehicle. This way, the company indirectly pays the motoring costs, but there is no tax implication, and the vehicle remains your own property.

The FPCS rates are 40p per mile for the first 10,000 miles a year, and 25p per mile thereafter.

What Do We Do About PAYE / NI, Once We Are Self Employed?

2008-05-25T11:00:00.000+01:00

From commencement as a self employed person, you will be required to pay Class 2 National Insurance, which can be paid weekly, monthly or quarterly.

This is paid at the rate of £2.30 per week, and covers the taxpayer for profits of up to £5,435. Anything over and above this is subject to Class 4 National Insurance, at 8% (up to a maximum profit of £40,040 per year, after which the rate drops to 1%).
For limited companies, it is possible to pay yourself a salary of approximately £105 per week, without paying PAYE or NI, with the majority of remuneration being taken by way of a dividend, which, as investment income, is not subject to National Insurance.

However, to ensure a minimum contribution is paid, thereby ensuring future pension and other benefits, we recommend the payment of a slightly larger salary to each director (usually around £5,500 - £6,000 per annum).

In order to minimise work (and therefore cost) recent changes in NI legislation mean that this salary can now be paid annually, as long as the recipients are also directors.

When Do I Have To Tell The Tax Man About My Business?

2008-05-24T15:58:00.000+01:00

Many of us will have started out on a part time basis, whilst still holding down a full time job, until we are ready to ‘take the plunge’ into a full time business.

Often this will either be in the same line of work as our main employment, or it could be the development of a personal hobby or interest.

So, if it’s just a little income on the side, when do we have to register as a ‘proper’ business, with the Inland Revenue etc? Unfortunately, the ever benevolent Tax Man now requires us to register immediately, as soon as we have undertaken our first piece of self employed work.

A few years ago, we were able to notify the Inland Revenue at the end of the first year’s trading, on submission of the first year’s accounts and tax returns. This is no longer an option, and we are now all obliged to advise H M Revenue & Customs, by completion of a Form CFW1, within 3 months of undertaking our first piece of self employed work. Failure to do so will now result in an automatic fine of £100.

Once registered, you will now be classified as self employed, and you will be sent a Self Assessment Tax Return to be completed annually, showing your income and expenses from your self employment as well as details of your employment. You will be subject to tax and national insurance on any profits you make, but the good news is that any losses incurred (which is quite common in the first year or two) can be offset against your employed income, which will usually then result in a tax rebate.

So. There is no such thing as ‘casual part time income’ from self employment. You must register immediately, or face financial penalties. As the business continues to grow, you will then need to consider the tax advantages offered by the setting up of a small limited company.

Welcome

2008-05-24T12:00:00.000+01:00

Hello all, and welcome to the very 1st blog from myself, Alan Young, of 1st Addition Accountancy.

The aim of this blog is to provide a general forum to exchange information and ideas on any matters accounting and business.

A large part of my time these days is spent in an advisory capacity, assisting new and expanding businesses in every aspect of their ongoing growth and development.

Due to my expertise in these fields, I am often called upon to provide features and articles for numerous magazines and web sites, including http://www.enterprisenation.com/, a free resource, to help you start and grow your home based business.

I shall, from time to time, be posting some of these articles here on our blog, and all comments from readers are always welcomed.

Alan Young, FCCA
Managing Director