One in five micro-businesses unaware of Making Tax Digital, research shows

Research published by FreeAgent has found that a fifth of the smallest business are unaware of Making Tax Digital (MTD) – HM Revenue & Customs’ (HMRC) flagship policy, which will introduce quarterly electronic reporting for most businesses.

The FreeAgent survey also found that 84 per cent of micro-businesses thought the Government had not provided enough information about its plans and how they will affect businesses.

While the lack of information available about MTD was a clear cause for concern amongst respondents, 41 per cent of the businesses that were aware of MTD were positive about its introduction and 27 per cent thought it would make it easier to run their businesses.

Ed Molyneux, CEO and co-founder of FreeAgent, said: “Making Tax Digital will be one of the biggest changes made to the UK tax system for generations and will potentially start to impact businesses from as early as 2018. But although many micro-business owners appear to be positive about the proposals, it’s clear from our research that many others still require more information about what tax digitisation actually is and how it will potentially impact them.”

He went on to urge the Government to keep business owners up to speed on the changes, pointing out that, where businesses are aware of MTD, they are often positive about its likely impact.

Link: Fifth of micro-businesses unaware of Making Tax Digital

Changes to non-dom rules in the pipeline

As part of a raft of recently launched consultations, the government has unveiled its latest plans for the changes to non-dom status announced by the previous Chancellor in his 2015 Budget.

Under the plans, non-doms who are deemed to be long-term residents will be required to pay UK tax on their worldwide income.

The changes are designed to prevent people living in the UK with non-dom status permanently. Instead, anyone who has resided in the UK for at least 15 of the last 20 years will be considered to be UK domiciled for tax purposes.

One of the key implications of the policy relates to Inheritance Tax (IHT). Current rules mean that UK domiciles that leave the UK cease to be domiciled for IHT purposes if they have not lived in the UK for three years prior to their death.

Under the new rules, a permanent resident non-dom who had lived in the UK for 15 years until five years prior to their death would remain UK domiciled for IHT purposes.

To address this, the government proposes to treat people as domiciled in the UK for six years after they have left the UK or on the date they become domiciled in another jurisdiction, depending on which is later.

Link: Reform to the taxation of non-domiciles

Amy gives us an update on the Brexit…

Brexit – what does it all mean?

 On 24th June 2016, the UK awoke to the news that after 43 years of membership, the public had voted to leave the European Union.

The lead up to the vote saw accusations of scare mongering against the remain campaign for their claims of what would happen to the economy should we vote to leave on 23rd June.  Many believed the remainers’ fears were justified when we learnt that overnight, after the referendum, the pound plummeted to a 31 year low against the dollar and that the FTSE 250 index was down by 7%.

Mild panic seemed to ensue, with many calls from the remain side for another referendum to be held, and even some strong leave voters admitting that they may vote differently given the chance again. David Cameron resigned, stating that the country needed fresh leadership to take them out of the EU. Teresa May was soon given the position of Prime Minister and despite calls from the public and some MPs that the UK should still remain in the EU, she quickly announced publicly that “Brexit means Brexit.”

brexit

So where does that leave the UK just over a month on from the EU referendum? The FTSE 100 has recovered from its brief post referendum dip and whilst its recovery has not been as strong, the FTSE 250 is currently at levels comparable with much of 2015. The pound is still down around 13% on the dollar, however some analysts claim it was overvalued before the referendum. Interest rates have remained the same at the 0.5% rate, meaning these have not changed since May 2009.

There haven’t yet been any changes made to the tax system, but with a new chancellor in charge, the next budget is likely to bring about new rules and we will just have to wait and see what this means for UK individuals and businesses.

Predictions for the future of the UK economy are modifying all the time and initial concerns seem to have diminished slightly. Despite this, the IMF predicts the economy will grow 1.7% in 2017 which is 0.9% lower than it estimated in April of this year. As has become clear over the last few months, predictions are very difficult to get right, so really all we can do is wait and see what will happen in the coming years as Article 50 is invoked and the UK begin their exit from the European Union.

At the moment our advice would be not to panic and we will have to wait and see how the situation pans out as the negotiations on the Brexit continue. If you do have any concerns over how the Brexit will affect you do not hesitate to contact us for an informal chat.

Nick Smith warns us about cyber crime…

cyber attacks

Cyber attacks on large businesses such as Talk Talk and dating website Ashley Madison make front page news but the fact that small to medium sized organisations are equally, if not more, at risk of being targeted is rarely publicised.

 

Many SME owners have adopted a ‘we are too small to be attacked’ or ‘it’s not happened before, so why now?’ approach to cyber security.

 

However, some experts believe that a third of SMEs will fall victim to a breach so if hasn’t happened yet, it may be more down to luck than design.

 

Recent government figures suggest a SME hit by a cyber attack could lose as much as £310,000 with 64% of customers saying that they would be discouraged from buying from a business that has been subject to a breach.

 

Cyber criminals are becoming increasingly sophisticated with their tactics and on the basis that SMEs may not have the resources to invest in state of the art security systems, they are often viewed as low hanging fruit.

 

There is no time for complacency and SME owners must take this threat more seriously. They need to ask themselves, ‘could my business survive if I lost two-thirds of my customer base overnight?’

 

Cyber security does not need to be over complex and businesses that implement the following three simple steps can reduce the risk of being breached…

  • Use 3 random words to create a strong password
  • Install security software on all devices
  • Always download the latest software updates

Amy tells us about a new service…

We know that for small businesses, getting paid from customers in a timely manner is extremely important, especially for maintaining a healthy cash flow. We have recently become aware of a product on the market designed to help small businesses take payment from customers where ever they are which could help boost sales and reduce the amount of trade debtors.

credit card

I Zettle enables businesses to take card payments by connecting the I Zettle card reader to their smart phone or tablet via Bluetooth. The ability to take card payments could allow tradesmen to take payment as soon as the job has been completed, or pop up food markets and taxi drivers to take card payments rather than just cash.

 

How much does it cost?

Based on monthly sales it starts at 2.07% from £2,000 sales per month and gradually reduces to 1.5% for sales of £12,800 per month and above.

The card reader costs £59 + vat if you want to accept contactless, otherwise it’s free.

No fees for refunds.

 

How does it work?

To get setup, you need to manually add a library of products that you sell. Then as a customer pays, select the product from the library you have created on the app. You can take cash or card payments and can buy a printer to produce instant receipts, or these can be emailed to the customer.

 

Visa, MasterCard, Visa Electron, V pay, Maestro, and American Express are all accepted.

 

After the sale

trendsAfter the sale has been made you can generate different reports to spot patterns and trends eg sales over time/ average spend/ returning customers.

 

I Zettle can be synced with bookkeeping software such as Xero to automatically put the sales data into the accounts of your choice.

 

Who could use it?

Anyone that makes sales on the go, and has a compatible smart phone or tablet.

There are also other suppliers on the market who offer this service, if you would like to discuss your options we would be happy to talk them through with you.

Our top tips for employees at the tax year end…

This week we are giving our top tips for employees at the year end and what they can do to ensure they are being taxed correctly and what expenses they can claim for…

 

P60’s

P60’s show how much money, tax and national insurance you have paid in the last year. When you receive your P60 you should check it carefully to ensure it includes the correct figures.  P60’s should be kept safe as they are typically needed when preparing a self-assessment tax return or when applying for a mortgage or state financial support.

 

Tax Codes

Your tax code changes each tax year, usually because the Personal Allowance is increased, however there may be other reasons for example benefits that need to be taxed such as a company car or expenses for which you get tax relief. It is important to check you are on the right tax code as you may be paying the wrong amount of tax.

 tax code

Specialist Clothing Expense

If you clean, repair or replace specialist clothing for example a uniform or safety boots then you may be able to claim tax relief on the cost. You can either claim for what you’ve spent or a ‘flat rate deduction’. This will need to be claimed on a P87 form for the first year but for following years the expense will be added to your tax code so you receive the tax relief throughout the year.

 

Mileage Expense

If you use your own vehicle for business and pay the fuel cost and your employer does not reimburse you 45p per mile for business mileage you can claim tax relief on the difference.  This can be claimed on form P87 if the expenses are under £2,500 for the year otherwise you will need to complete a self-assessment tax return.

mileage

Other Expenses

Other expenses for which you can claim tax relief if they have not been reimbursed by your employer include:

  • Travel and overnight expenses
  • Professional fees and subscriptions
  • Working at home
  • Buying equipment you need for your work

If you have any questions about what we have mentioned above do not hesitate to contact us to discuss on 01772 735865 or payroll@rtaccountants.co.uk.

 

Amy Sharples shares her tips to save some pennies…

5th April  is an important date in the diary for accountants! The new tax year brings about changes in the world of tax which can bring opportunities to save money. With this in mind, I’ve been thinking of easy ways to save money for me personally, which I have decided to share in this blog.

 

  1. Help To Buy ISA

The new tax year is a great opportunity to open a Help to Buy ISA, as you don’t need to worry about whether you have already reached your ISA limit for the year. This ISA is a no brainer if you’re saving for a deposit for your first home. The government will pay a bonus of 25% of your savings, up to a maximum bonus of £3,000. When else would you get given £3,000 from the government!

help-to-buy

  1. Cash back credit cards

There are many credit cards on the market which offer cash back on spending which is paid out annually. As long as you always pay off the total balance and never incur any interest charges, the extra cash can be a welcome boost, and is especially great for large planned expenses such as holidays. Often the cash back is paid in January which really helps with the cost of Christmas!

  1. Swap your bank account

Some bank accounts offer cash back on payments such as household bills and then pay the money directly into your bank account, helping to boost your monthly income. Other bank accounts offer a bonus for swapping your current account of up to £100. Banks are trying to make changing accounts much easier, so this is definitely worth considering.

piggy bank

  1. Pensions

With many smaller companies entering into auto enrolment this year, now may be a good time to consider saving for your pension. Once your employer reaches their staging date, and if you are an eligible employee, you must be automatically enrolled into the company pension scheme. Opting out of the scheme will mean you’ll miss out on the additional contribution made by your employer which would result in extra pension income for when you retire.

  1. Swap your utility provider

Although it may seem like a hassle, swapping your utility provider can save you money. There are plenty of websites out there which allow you to quickly compare prices, so do some research and see how much money you can save.

utilities

Top tips from our business contacts…

In the final post of our business tips series we have top tips from local businesses, which you will hopefully find interesting and useful to you or your clients:

 

Ensure you have core values as a business and stick to them. For example we aim to deliver an experience that combines fun, quality and innovation to gain the most rewarding results for all.

Nick Howarth – Workplace Pensions Co-ordinator – Taylor Patterson Financial Planningtaylor patterson

 

While borrowing money from friends and family might be an easier solution initially, in the long term it will act as an impediment to growth. As fast growing SMEs’ funding needs change and their funding requirements become more sophisticated, the tap of familial generosity will run dry. Invoice financing is good way of gaining access to cash that you are already owed, instead of having to wait for weeks, if not months, for clients to pay their invoices. Additionally, trade and export finance offer specialist funding for businesses trading abroad. Now is the time for the small business owner to heed this advice and start using their own assets to finance growth in 2016. There is no need to borrow money from others – whether a loan or funds from a family member – when you are sitting on hard-earned profits that you can release today, instead of tomorrow.

Christopher Rimmer – Business Development Manager – Bibby Financial Services

bibby

 

More than 3 billion people are now using the internet, with people from all over the world spending time online. This means that having a website has never been so important to your business. Not only will it give you the opportunity to introduce your brand and engage with new customers but you can also make sales that would otherwise not have been possible.

If you’re looking to get a new website or perhaps want to upgrade your existing one you will need to consider Quality of the design,  Functionality, Search Engine Optimisation and Content.

Sharon Challiner – Piranha Advertising & Marketing Solutions

piranha

 

No one can predict the future so to reduce any unnecessary stress on yourself and your business ensure you have adequate insurance in place to protect you from fire, flood, water leaks, storm damage, malicious damage, theft and business interruption. If the worst does happen and you need to make a claim appoint a FCA regulated loss assessor as they will do their utmost to expedite your insurance claim as quickly and efficiently as possible, maximising your settlement and minimising the disruption to your business.

Martin Curran – Martin Curran & Associates

curran

 

As a firm of accountants we come across many businesses and service providers on a day to day basis, we love to recommend local businesses to our clients and visa versa. It is just one of the ways we go the extra mile.

Rebecca Bradshaw, our Director, gives 5 top tips for businesses…

In the last few weeks we have had blogs on our top tips for employers and also individuals. This week our focus is on businesses.

Working at RT I am in contact with a variety of businesses on a daily basis, operating in a variety of business sectors and all of different sizes, despite their differences most businesses do have some underlying common traits and face the same issues.

 

My top 5 tips for all businesses are;

 

  • Employ the right staff and reward them well.

Staff are the forefront of any business and to invest in the future of your business you needemployee to spend some time selecting, recruiting and training the best people for the job. Ensuring a fair remuneration package is also key, some people are rewarded by money, and others consider work life balance to be more important. Understanding the people in your business can only lead to a more productive business as a whole.

 

  • Work on the business not just in it.

thinkWe all struggle to find time to fit all our daily tasks in but in order for a business to prosper it is vital to always be thinking of ‘what’s next’. A common problem with many business owners is that their time is zapped by the minutiae of daily problems which doesn’t give them enough time to focus on strategy. Businesses of all sizes need to set clear goals for the future, devise a plan to work towards and then evaluate this periodically.

 

  • Choose quality.

Over the years I have seen many people choose the cheaper option only to regret it later on. Whatever you do consider the cost/benefit analysis. Sometimes the cheapest advice, stationery, equipment etc. seems the best option but it is generally true that in life that you do get what you pay for!

 

  • Forewarned is forearmed.master

Everyone knows someone who already has an established business or has been involved in one. Take advice from others where possible and learn from their mistakes. Not everyone needs to wear the T Shirt of disaster.

 

  • Be your best advocate

Who better to sell your business than yourself? In theory any business owner is the most passionate about their business and so is the best ‘shop window’ for their product or service. Networking doesn’t have to be through official channels, talk to people about what you are doing as the situation arises – you don’t know who the person sat next to you knows and so on.

 

At RT we pride ourselves on being business advisors as well as number crunchers. Our ultimate aim is to provide a service that ticks all the boxes of statutory compliance as a minimum and then go much further. We believe where we really excel is working with our clients to help take them to the next level in their business. If you or anyone you know could benefit from a free initial meeting with one of our team them please get in touch.