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Payment terms

How would you feel if your employer told you they were going to pay your salary in 4 months’ time instead? For the next 3 months, no wage packet. Would you be unable to pay your mortgage? Looking at a bleak Christmas? Feeling powerless? Trust shattered?
Welcome to the world of a supplier being told to accept ‘120 days credit terms’. In a digital world where it is possible to pay within days, more big companies are forcing suppliers into waiting 4 months to get paid.
Let’s be clear. It’s bullying. And theft. They are taking goods and services, and withholding payment. They are stealing the interest the companies should have earned in those extra 3 months and using it to line their own pockets.
For small businesses, often with their own suppliers to pay, and a wage bill, this can be disastrous.
And we’re not talking about the Ryanairs and Sports Directs of this world. These are large global companies with huge CSR programmes claiming “fairness”, “community action” and “respect”, and probably running branded “entrepreneurship” programmes.
This is truly unethical and shameful, even if legal.
If this is your company, please raise a voice against it. Just ask the question…. “Why do we want to bully and steal from the suppliers who contribute to our success?”

From Liz Tinlin via LinkedIn

What are claimable expenses?

What are claimable expenses?

This is a question we hear A LOT! What are claimable expenses? What can I claim back?

Self employed people can deduct certain claimable expenses from their turnover to reduce the amount of profit they make, and therefore the amount of tax they have to pay.

However there is always confusion around the expenses.

Ultimately the test that HMRC use is to ask if the expense is “wholly and exclusively” for the purpose of running the business.

Example: A beauty therapist can claim for beauty products she uses e.g. face creams. A bookkeeper cannot claim for face creams as they have no relation to her work.

The type of business is important when asking this question. Obviously the types of expenses that a retail shop will have are wildly different to those that a hairdresser will have. There is therefore no definitive list of claimable expenses as they differ so much between businesses.

As a bookkeeper I have a car that I use to go to clients premises and work. However I also use that same car to take my children to school and to go shopping. I use the car for both private and business use. I claim the business use against income. The same applies to other equipment that has a shared use between your private and business lives.

I have come across people in the past who believed that because they work from home they could have claimable expenses of their mortgage, council tax etc. Whilst there is an element of this that is claimable, obviously you also use your house to live in, not just work in.

HMRC introduced Simplified Expenses to solve this problem. This is a way of applying a flat rate to home premises that are used for work, or vehicles with shared use. More information can be found on this topic here.

There is also some useful guidance for claimable expenses here.

We would love to talk in more detail about your business and the expenses that you can claim. Please just contact us

 

Making Tax Digital – HMRC Initiative

What is “Making Tax Digital”?

Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system. The aim is to make the whole process of administrating tax simpler and more efficient. All of your tax information will be in one place (your digital account) and you will be able to pay tax based on your business activity during the year. You can upload and update your tax account in real time.

Will it affect me?

If you own a business, you are self-employed and you pay income tax, national insurance, VAT
or corporation tax then you will be affected. This means you will need to keep track of your tax affairs digitally using MTD compatible software. You will need to update HMRC at least quarterly via your digital tax account. Eventually this will abolish the annual tax return. This will be the law and there will be penalties for non-compliance.

What do I have to do?

You will need to open and log into your digital account. Everyone will be allocated one through the current Government Gateway. Then you will need to ensure your accounting software can update this account at least quarterly. For most businesses, this means a move away from desktop and onto Cloud based accounting software. You will use digital (Cloud) software to maintain your business records and to provide updates of information to HMRC. You will be prompted to send summary updates directly to HMRC – quarterly updates will need to be submitted within a month of quarter end, and an end of year activity report will be due within nine months of the end of the accounting year.

As your accountant and tax agent, we can advise you on the software you will need and how to comply with the new quarterly reporting requirements.

When is all this happening?

MTD starts with businesses above the VAT threshold limits (currently £85,000) for accounting periods commencing on or after 6 April 2019. Those affected will have to keep digital records for VAT purposes. By 2020 it is most likely all other businesses will have to comply.

What’s next?

We will be contacting all of our clients in 2017 to prepare you and get you ready for Digital Tax well in advance. If you want to discuss how this affects you and your business please contact us.

Summer holidays have come and gone…

As a parent of a school age child it is refreshing to be back into the routine of the school term. Thoughts begin to turn to self assessment tax returns if you’re self employed, along with thoughts of booking next year’s summer holiday.

Wouldn’t it be great if you knew exactly how much tax you have to pay to HMRC? Then you can make a decision about the long anticipated summer vacation? If you use a bookkeeper to calculate and submit your tax return they will be forever grateful to receive your information in the autumn when there is no panic to get the data submitted. Bookkeepers loathe January! They hate the influx of late clients needing self assessment returns done in a rush. We also hate having to work over Christmas. Remember, your bookkeeper is human too 🙂

In addition, doesn’t it make you feel a rather smug sense of self satisfaction when you know that your return is submitted, the tax is paid and when everyone else is panicking in January you can sit back and relax, whilst anticipating your summer break?

A bookkeeper will ensure that you claim all applicable expenses and that your income is declared correctly. This means less likelihood of an HMRC audit. However if an audit is carried out there is far less chance of HMRC finding any discrepancies. Contact us today to see how we can help you.

Top 10 Devon Bookkeepers – we are one

In breaking news, an especially relevant Twitter poll says that Bruton Young Bookkeeping is one of the top ten Devon Bookkeepers. I am therefore going out to buy champagne 🙂 Recognition is wonderful!

South West News Top 10 Devon Bookkeepers

We offer the very best customer service and client support. It is a massive compliment that Twitter users voted for us. As a result it seems that clients value and appreciate our hard work.

I would personally like to thank each and every Twitter user who voted for Bruton Young Bookkeeping in this poll.

There are hundreds, if not thousands of bookkeepers in Devon and we are in the top ten!

The south west news website is a very useful one for local information. The owners live in Devon and Cornwall so know the area very well. The writing is clear and concise. Local information is presented clearly and is therefore easily digestible.

South West News looks great and so it’s easy to read. THere’s a plethora of useful information on numerous topics. I think I’ll need to add it to my list of news sites to keep an eye on.

 

Workplace Pension (Automatic Enrolment)

What is Automatic Enrolment?

The law on workplace pensions has changed. Under the Pensions Act 2008, every employer in the UK must put certain staff into a pension scheme and contribute towards it. This is called ‘Automatic Enrolment’.

Does Automatic Enrolment apply to me?

Automatic Enrolment applies to all employers who have at least one member of staff. It doesn’t just apply to businesses; if you employ someone directly to work for you – like a cleaner, personal care assistant or nanny, for example – you are an employer and will need to ensure that any eligible employees are enrolled into a workplace pension.

To find out if it applies to you, visit The Pensions Regulator’s website and use the duties checker. This tool will ask you a few short questions about your employees, to work out which duties apply to you and when. The duties checker will give you tailored help and guidance through the steps to complete any Automatic Enrolment duties you may have.

Automatic Enrolment contributions are changing

The minimum contributions that you and your staff pay into your Automatic Enrolment workplace pension scheme are increasing. This is also sometimes known as phasing. Minimum contributions are increasing in two phases. The first increase must be in place from 6 April 2018 and the second from 6 April 2019.

You, the employer, must make a minimum contribution towards this amount and your staff member must make up the difference. If you decide to cover the total minimum contribution required, your staff won’t need to pay anything.

Date effective Employer minimum contribution Staff contribution Total minimum contribution
Currently until 5 April 2018 1% 1% 2%
6 April 2018 to 5 April 2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

Not sure if you’re an employer?

If you deduct income tax and National Insurance contributions from the wages of the person you employ, then you are usually their employer. If you have used an agency to hire the person and the agency pays their National Insurance contributions, the agency is the employer and you don’t need to do anything. Find out how Automatic Enrolment applies to you using the duties checker on The Pensions Regulator’s website.

If you need further guidance on whether you may be considered an employer or not, read our page still unsure if I’m an employer.

What do I need to do now?

Visit The Pensions Regulator’s website and use the duties checker to find more information on what you need to do and by when. You will need your PAYE reference* to hand.

 *The PAYE reference can be found on letters you have received from The Pensions Regulator about Automatic Enrolment. Alternatively, it can be found on the letter HMRC sent you when you first registered as an employer or from your payroll software package.

 

Who is The Pensions Regulator?

The Pensions Regulator is a public body set up by the UK Government to regulate work-based pensions.  There is information and help available on their website and they write to all employers to provide additional guidance.

Visit The Pensions Regulator

Don’t ignore the Workplace Pension. It’s the law.

Class 4 National Insurance Rising – another hit for the self employed

Phillip Hammond’s first budget as Chancellor was delivered on 8th March and delivers yet another hit to the self employed. Class 4 National Insurance will increase from 9% to 10% from April 2018 and to 11% the following year.

Class 4 National Insurance is already a shock for many self employed people but this change will make the impact even worse. As more and more people are becoming self employed it’s easy to see why the government has decided to increase this rate. It is thought that the average cost per week per person will be only around 60p and it will raise £145m per year by 2022.

However the flat rate Class 2 NI contributions will be scrapped from 2018.

See our previous post explaining National Insurance, including Class 4 here

For more information or advice please contact us.