Making Tax Digital coming in Spring 2019 for VAT. Are you ready? Get in touch...
Brexit Uncertainty: How To Manage In These Worrying Times

Brexit Uncertainty: How To Manage In These Worrying Times

Managing Brexit Uncertainty

Due to Brexit, 2019 looks set to be a year filled with uncertainty for businesses. The future is always unknown, but this year managers will need to navigate some particularly choppy waters, due to market uncertainty and global political turmoil.

Focus on what you can control

As a manager, you can always control your response, attitude, behaviour, actions and words. You can choose to be proactive and inquisitive rather than paralysed. In these times of Brexit uncertainty, the best managers step up and embrace their authority. When times are uncertain, your team wants you to lead the way. Bring your team with you on the journey, ask them for their opinion, include them in your planning conversations and challenge them to come up with new solutions.

Cash is king

In uncertain times, the old adage that “cash is king” carries even more weight. Cash is the lifeblood of your business, and poor cash flow management kills businesses during tough economic times. Market volatility also creates opportunities. If you have cash or credit available to take advantage of these opportunities when they present themselves, you may be able to move quickly and move your business forward. As such, good cash flow management can allow you to cash in and manage Brexit uncertainty effectively.

Embrace change and adapt

As your particular market changes, there will be opportunities for you to adapt. For example, if your customers have less budget to spend on buying products and services in your sector, it might be an opportunity for you to introduce a lower priced “value offering.” You could even go one step further and change your pricing model. For example, you could move clients to monthly retainers, rather than charging a once-off annual fee. Hence capitalising on Brexit uncertainty.

Diversify

If you depend on one big client to keep your business going, you should consider how to diversify your client base. Sometimes even giant businesses fail during tough times. If your biggest client goes out of business, you don’t want to be collateral damage. Just like in investing, the key is to have a diversified portfolio. Precisely because of Brexit uncertainty, now could be a good time to look at trying to win some new clients in order to make your business more resilient.

Lotuswise Chartered Accountants and Business Consultants can help you make sense out of Brexit uncertainty and potentially worrying times and also help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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MTD for VAT Pilot: This Is What You Should Know

MTD for VAT Pilot: This Is What You Should Know

MTD for VAT Pilot is Now… Open to All

You may have heard that, on 10 January 2019, HMRC announced that their Making Tax Digital for VAT (MTDfV) pilot was now open. As such, it is accessible to all those mandated to keep digitally compliant records and to file MTD-compatible VAT returns, for return periods commencing after 31 March 2019. Plus, in an email issued, HMRC stated that: “this marks a significant milestone towards our ambition to become one of the most digitally advanced tax administrations in the world.” And, HMRC boasts that over one hundred VAT-registered businesses, of which you may well be one, are now signing up to the scheme on a daily basis, with more than 3,500 having already joined.

Testing time

Even though,  like the majority, you may not need to file up your first MTD-complaint return until early August, the department wants you and “as many eligible businesses as possible to join the pilot ahead of the mandation of the service in April”, as it will provide assurance that the service works for you and all types of customers.

What does it mean?

This means that, if you are a VAT-registered entity, with an annual VAT-able turnover in excess of the £85,000 compulsory registration threshold – i.e. you are mandated to onboard from April – you will now have the chance to test your accounting system, prior to April. If you are in the minority of compulsory registered businesses – i.e. with the most complex VAT affairs – you would have had your mandation date deferred to your first return period, starting on or after 1 October 2019.

VAT groups now able to join the pilot  

In addition, HMRC has also opened its MTDfV pilot to VAT groups with immediate effect. What that means is that if you are within a VAT group, you are now able to start testing the service – even though you are not mandated to join until October. The department stated that it “will continue to update you as we open up the pilot to the remainder of the population who are mandated to join from October.”

Want to know more?

You can find further details in HMRC’s updated guidance for businesses, updated guidance for agents, and the stakeholder partner packs on GOV.UK.

 

Lotuswise Chartered Accountants and Business Consultants can help you make sense out of the MTD for VAT scheme and also help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

   

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How To Overcome Your Fear Of Failure

How To Overcome Your Fear Of Failure

One of the most common things holding us back from achieving our potential in business is our fear of failure.

 

Fear of failure is often linked to our human nature: to fear the unknown. When we push ourselves outside of our comfort zones, whether in business or in our personal lives, it is pretty normal to feel some degree of stress and anxiety.

We Are What We Do

In business, many of us consider our work to be representative of who we are as a person. As such, we can often view a failure in the workplace as a personal failure. This fear can often manifest itself in such a way that, we avoid reaching for new targets or striving towards new goals, in case we fail. We fear that such a failure, in such a public way, could change the way others view us, and indeed how we view ourselves. This can result in us holding ourselves back, because we fear failure.

No such thing as failure, only learning opportunities

It can be helpful to refocus and see “failures” as “learning opportunities”. Some of the world’s greatest entrepreneurs, including the likes of Richard Branson, have failed several times in business. However, they view these failures as learning opportunities. Each time you fall over, you must learn how to get back up and apply that learning next time around.

Change the way you think

Change the way you think about your goals and objectives. Don’t frame each business objective in order to avoid a potential failure. This is setting the objective in a negative context. Instead, set your objectives in a positive context. For example, set an objective to explore a new potential business case in order to learn about that opportunity. The goal is to learn, rather than to create, a new part of the business.

Visualisation is key

Finally, it can be helpful to visualise obstacles. Think of a situation in which you are afraid of failure.  Visualise yourself hitting an obstacle, allow yourself to feel the fear, and then see yourself moving forward. Next, spend a few minutes planning how to overcome whatever obstacles may stand in your way. Then see yourself succeeding despite these obstacles. You need to train your brain to focus on the solution, rather than the fact that there is an obstacle in your way!

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

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Marketing Trends 2019: This Is What You Should Know

Marketing Trends 2019: This Is What You Should Know

Marketing Trends To Watch Out For 2019

As we leave 2018 behind, it’s worth taking stock of this period of increased regulation on customer data protection and privacy – in parallel with its acceleration in marketing technology capabilities. Here, we give you an overview of what to consider in terms of the evolving expectations, demands on customer journeys, and the impact they may have on the marketing aspect of your business. Here are the top three marketing trends and strategies for you to consider for 2019.

 1. Evolving customer experience and journeys

2018 brought us more paths through which customers can satisfy their ideal approach to buying. As such, you need to take into account the onset of conversational user interfaces, through voice search and recognition, from the likes of Apple Siri and Amazon Alexa. Have you then considered how this is adding a key customer touchpoint your marketing approach needs to adopt and adapt to? Such examples help fuel the customer need for convenience, being able to request what they want, when they want it, and how.

Marketing Data

As data becomes richer in terms of what we understand about customer behaviour, the personalisation of the customer experience can become deeper – albeit at a time when the use of data is being re-evaluated by companies, such as Facebook. If you are continuing with the over-used approach of marketing to “millennials”, this will limit how your brand or customer experience connects with twenty- to thirty-year olds today – as building your marketing approach will be subject to change in observing this consumer group. There is a huge opportunity in blending customer data from silos, such as combining what you know from your business data on your customers, with that which is coming from social data. Your marketing teams will need to best balance the careful use of client data, segmenting based on specific personas, and on a personalised experience on how your customers wish to interact. 

2. Be more than a service. Be a trusted brand with values

“Your brand is what people say about you when you’re not in the room” (Jeff Bezos)

If you have not yet positioned your brand to a set of values, you should do so in 2019. The majority of today’s customers are belief-driven buyers, harnessing their brand loyalty to what the company stands for. Whether that is helping others, trust, quality, innovation etc. Although there maybe a danger of alienating some of your customers, your brand values can deepen your customer-company relationship at an emotional level. 

3. Manage your reputation; be prepared for a crisis

“It takes twenty years to build a reputation and five minutes to ruin it” (Warren Buffett)

With Google, if a result is based on an established view, it will find its way on to the first page. Taking this approach, if the sentiment about your brand is a bad one, intentionally or accidentally, then this may cause significant collateral damage for a long time – if a suitable response is not deployed. With the depth of opportunity for brands to advertise on nearly every website and platform consumers use, negative reviews can proliferate rapidly. And it is essential you’re able to respond to help mitigate, correct, or address the perception. For example, you might be listening to what people are saying online and making adjustments accordingly. No company is safe from reputation or brand crises and, as such, you should have a dedicated team owner to manage such an unfortunate event.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores

 

Watch the video here.

 

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Why choosing the right location for your business matters

Why choosing the right location for your business matters

How Do You Choose The Right Location For Your Business?

When you consider Amazon’s recent decision on the new location for their business, it makes you think about some aspects to consider, when making a similar investment of your own. Your location should be consistent with your particular style and image. If your business is retailing, do you want a traditional store, for example? Or maybe you’d like to operate from a kiosk or a cart you can move from place to place? Let’s look into a few aspects of business location and why they matter so much…

 

1. Who Are Your Customers?

Demographics play an important part in your choice of location. So, consider who your customers are, and, how important their proximity might be to you. If you are a retailer or some service provider, this is a critical consideration. But if you are any other types of businesses, however, this might not be as important. Research and review the community in which you want to establish your business and ask yourself: is  there a sufficient percentage of that population that matches your customer profile? But you should also look into communities that are largely dependent on a particular industry for their economy, as a downturn could be bad for business. In addition, consider any of the work force skills required. Are there people with these skills in the community? With sufficient housing, schools, recreational opportunities, and culture?

 

2. What Is The Footfall, Traffic And Parking like?

If you are a retail business, then consider where shoppers are likely to pass by, rather than being hidden away. Try monitoring traffic outside of the location at various times throughout the day. Then assess how accessible the facility will be for customers, employees and suppliers. If requiring deliverables, try to establish whether suppliers are able to easily and efficiently courier. You also need to make sure there is convenient parking for both customers and employees. As with foot traffic, you also need to monitor the facility at various times and days, and see how demand for parking fluctuates.

 

3. Are There Any Competitors / Other Services?

Another important factor you need to take into account is: are competing companies located nearby? As this could sometimes be good. Like for example for industries where comparison shopping is popular, as you can catch the overflow from existing businesses. If a nearby competitor is only going to make your marketing job tougher, look elsewhere. In addition, consider what other businesses and services are in the vicinity: is there any benefit from customer traffic, is there a suitable range of places and restaurants for employees? You might also want to think about the location of other facilities nearby, such as child care, convenient shops, etc.

 

4. What About The Infrastructure, Utilities And Costs?

You really want to check the building you’re interested in, has the actual infrastructure you need – adequate electrical, air conditioning, and telecommunications services – to support your business requirements and meet your present and future needs. For utilities, check what’s actually included in your rent, as this can be a major part of your expenses. Lastly, verify the medium-to-long-term rental expectations and commitments, so you can mitigate any potential rental rise.

 

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

 

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Gifts…7 things you should know about Gifts… And Taxes

Gifts…7 things you should know about Gifts… And Taxes

‘Tis The Season for Gifts… And Taxes…

Christmas Is The Time For Giving

If you are thinking about making gifts this Christmas, you should take advantage of the various inheritance tax (IHT) exemptions and reliefs available to you. But you should also bear in mind that certain gifts can also have capital gains tax (CGT) implications.

The IHT Annual Exemption – Use It Or Lose It!

Although not particularly generous at £3,000 per donor per annum, if your annual IHT exemption is not used by 5 April, it is lost, although it is possible to carry your allowance forward one year if unused. This means that if your annual allowance for 2017/18 was not used, you may make gifts of up to £6,000 in 2018/19. So, where gifts to individuals exceed your annual exemption, there may still be no inheritance tax to pay, if they survive for 7 years following the gift or the gift falls within the £325,000 nil rate band.

Gifts Out of Income Are Not Taken Into Account For IHT

A more generous inheritance tax exemption might apply to you if, as a donor, you can prove that you are not transferring capital, but making gifts out of your income. In fact, there are detailed conditions for this exemption to apply, requiring that you keep records of your income and expenditure, to prove that you have sufficient surplus income each year, to make regular gifts to beneficiaries. 

Certain Gifts Can Have Capital Gains Tax Consequences 

Although you may not have to pay any CGT on gifts of cash, you may well have to pay it where gifts include shares or other assets. This is because the transaction will generally be deemed to take place at market value, between connected persons, even though no money changes hands. The amount of the gain would normally be determined by comparing the market value, with the original cost of the asset gifted. Where the amount of this gain is within the annual CGT allowance (currently £11,700), then you wouldn’t have to pay any CGT. Where your gift comprises shares in a trading company, or other business assets, it may be possible for you, as a donor and recipient to sign an election, to hold over the gain, so that no CGT is payable by the donor, at the time of the gift. The effect of such an election, is that if you are the recipient of the asset, you will take over the donor’s original cost for subsequent disposal. 

Not All Shares Qualify For CGT Entrepreneurs’ Relief Now

As the result of changes announced in the Autumn Budget, and now incorporated into the latest Finance Bill, if you have any shares, not all ordinary shares necessarily qualify for the 10% CGT entrepreneurs’ relief rate on disposal. As mentioned in our last month’s Autumn Budget Special post, the definition of a personal company was tightened up. So, from 29 October, if you are a shareholder, you must have entitlement to at least 5% of the company’s ordinary share capital, voting rights, profits available for distribution, and assets available on the winding up of the company. As a shareholder, as before, you will also need to be an officer or employee of the company. Subsequently, this change means that certain “alphabet” and other shares with limited rights, may no longer qualify for CGT entrepreneurs’ relief when disposed of. 

Gifts Of Up To £50 To Employees

From April 2016, new rules were introduced to allow you, as an employer, to provide your directors and employees with certain “trivial” benefits in kind, tax free.

The new rules were brought in as a simplification measure, so that, if you are considering certain benefits in kind, they now do not need to be reported to HMRC, as well as being tax free for your employee. You must of course meet a number of conditions to qualify for the exemption.

Conditions for the exemption to apply:
•    The cost of providing the benefit does not exceed £50
•    The benefit is not cash or a cash voucher
•    The employee is not entitled to the benefit as part of any contractual obligation, such as a salary
sacrifice scheme
•    The benefit is not provided in recognition of particular services performed by the employee, as part of their employment duties (or in anticipation of such services)

So this exemption will generally apply to your small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers. Note that as an employer, if you are a “close” company, and you are providing the benefit to an individual who is a director or other office holder of the company, the exemption is capped at a total cost of £300 in the tax year. 

Gifts To Charity

Where possible, if you are a higher rate taxpayer, you should “Gift Aid” any payments to charity, to provide them with an additional benefit and for you, as an individual, to obtain additional tax relief on the payment. For example, where you make a £20 cash donation to charity, the charity is able to reclaim a further £5 from HMRC, making a gross gift of £25. Where you are a 40% higher rate taxpayer, you are able to claim a further £5 tax relief under self-assessment, reducing your net cost to £15. Note that you, as a donor are required to make a declaration that you are a UK taxpayer, and those that have not suffered sufficient UK tax to support the Gift Aid amount, will be taxed on the shortfall. Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell your donated items on your behalf, and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities, land and buildings, to charity and claim Gift Aid on the market value of those assets.

Collecting Unpaid Tax For 2017/2018 Through Your PAYE Coding

Under certain circumstances, you can arrange the collection of unpaid tax through your PAYE coding, rather than making a balancing payment on 31 January. This will depend upon the amount outstanding, and the amount of income taxable under PAYE. But you must submit your return to HMRC, online, before 30 December 2018, for the 2017/18 tax to be collected, by amending the 2019/20 PAYE coding. 

Diary Of Main Tax Events – December 2018 / January 2019

Date

What’s Due

01/12/2018 Corporation tax for year to 28/02/2018 unless quarterly instalments apply
19/12/2018 PAYE & NIC deductions, and CIS return and tax, for month to 5/12/18 (due 22/12 if you pay electronically)
30/12/2018 Deadline for filing 2017/18 tax return online in order to request that HMRC collect outstanding tax via the 2018/19 PAYE code
01/01/2019 Corporation tax for year to 31/03/2018
Unless quarterly instalments apply
19/01/2019 PAYE & NIC deductions, and CIS return and tax, for month to 5/1/19 (due 22/1 if you pay electronically)
31/01/2019 Deadline for filing 2017/18 self-assessment tax return online and paying your outstanding tax for 2017/18
01/02/2019 Corporation tax for year to 30/04/2018
Unless quarterly instalments apply

 

Lotuswise Chartered Accountants and Business Consultants can support your business with the complexities of these tax and payment rules and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Making Tax Digital for VAT – Don’t join until you read this!

Making Tax Digital for VAT – Don’t join until you read this!

Making Tax Digital – Growing confidence 

It’s official! If you are a Sole trader or a company with up-to-date VAT affairs, you are now able to join HMRC’s test phase for VAT Making Tax Digital (MTD). While testing of VAT-MTD started last April, until now, it has been on a limited, controlled, invitation-only basis.  In what can be taken as a clear indication of the department’s confidence, the VAT MTD pilot has now been opened to accept everyone.
 

New Guidance

In support of the public test phase, you can now consult a suite of new and updated guidance, available to help you, VAT-registered businesses and their agents, get to grips with the new requirements. The newly published guidance covers:

HMRC has also published a series of videos on its Help and Support page:

Can everyone join?

As of last month, provided you haven’t incurred a default surcharge in the last two years, you and just over 40% of the approximate 1.1 million VAT-registered entities, who are required to keep digital records and file MTD-compliant VAT returns from April next year, will be able to apply to onboard early. A further 100,000 will be able to join the public pilot by the end of this month.  

What if you can’t join?

There’s a small but significant list of VAT registered entities who, as of yet, remain unable to join the pilot. You can’t join if:

  • Trade with the EU
  • Are based overseas
  • Submit VAT returns annually
  • Make payments on accounts
  • Use the flat rate scheme
  • Are newly registered and have not yet filed a return
  • Are members of VAT groups or VAT divisions
  • Have received a Default Surcharge notice in the last 24 months. However, they will be allowed in by the end of this month.
  • Are unincorporated not-for profit organisations
  • Are trusts
  • Are Local Authorities who complete VAT form 21
  • Are Public Corporations

Timetable

To help you plan, HMRC has published a timetable indicating when each of the embargoed cohorts will be able to join the pilot.

3.5% to get a deferral

HMRC has reported that 3.5% of those mandated will not be able to onboard before the end of December. This cohort will have their mandation date pushed back to October 2019. You are affected if you are / have:

  • VAT groups or VAT divisions
  • Overseas traders registered for VAT
  • Trusts
  • Local Authorities
  • Public Corporations

If you are in the deferral group, HMRC will contact you in writing.

What is Making Tax Digital?

Making Tax Digital is a key part of the government’s plans to make it easier for you, individuals and businesses, to get your tax right and to keep on top of your affairs. This will ultimately result, for you and millions of people, in the end of the annual tax return. As the first stage of a wider roll-out process, if you are a VAT-registered business with VAT-able turnover above the compulsory £85,000, your registration threshold will be mandated to join the VAT Making Tax Digital for Business regime. To meet your VAT return obligations, this will apply to all return periods commencing April 2019. As a minimum, you will be required to maintain your VAT records digitally and to file MTD-compliant VAT returns, using third party software. If you are mandated to join, you will no longer be able to log on to HMRC’s portal to complete and file your online return. If your business is voluntarily registered for VAT, with a VAT-able turnover under £85,000, you will not be required to use the system, although you can choose to do so voluntarily.
 

 

Lotuswise Chartered Accountants and Business Consultants can help you with Making Tax Digital and help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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5 Steps to a Successful Business Strategy

5 Steps to a Successful Business Strategy

Creating A Successful Business Strategy

When setting out on a new venture or business idea, so many businesses do not succeed. This could be down to a combination of factors. Yet, one common factor is the challenges associated with executing the idea and establishing it in the market. To ensure your idea or business has the best start, or if you are reviewing current plans and progress, you must first develop an effective business strategy to support you. Here are five steps to guide you.

1. Build up your data and knowledge

To know where you want to go, is first to understand where you are today. The best way to do this is to investigate the past. This could be through data from your market, so you understand the size of the opportunity at stake. Investigate the total market size, the number of potential customers, and the growth rates of similar projects. Using the SWOT framework helps you identify Strengths, Weaknesses, Opportunities, and Threats, both internally and externally. You might want to use the PESTLE model to explore deeper into external factors that may affect your business. This looks into the Political, Economic, Social, Technological, Legal, and Environmental aspects of your business and market. It is key to make sure you involve the right people in this process to help you build up your data and knowledge. Once you understand the market, begin to narrow down your idea, exploring the unique business problem you are looking to solve, and the market opportunity associated to it.

2. Build Your Vision and Mission Statement

Your vision should be used to describe the future direction of the business, and its aims in the medium to long term. It’s about describing your organisation’s purpose and values. This should be built in parallel with your mission statement, which defines the organisation’s purpose and outlines its primary objectives. In simple terms, your organisation should summarise its goals and objectives in mission and vision statements. These serve different purposes but are often confused with each other. While your mission statement describes what your company wants to do now, your vision statement outlines what your company wants to be in the future. Your mission statement focuses on what you need to do in the short term to realise your long-term vision. So, for your vision statement, you are asking where do you want to be in three to five years’ time. Your mission statement, alternatively, asks: what do we do? how do we do it? for whom do we do it? and what value do we bring? 

Examples:

  • Amazon’s Corporate Vision Statement: “To be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
  • Google’s Corporate Mission Statement: “To organise the world’s information and make it universally accessible and useful.”

3. Define your Business Strategy and Tactical Plans

At this stage, your aim is to develop a set of high-level objectives for all areas of the business. These need to highlight your priorities and inform your plans that will ensure delivery of your company’s vision and mission. By reviewing your work in step one across the SWOT and PESTLE analyses, you can layer these into your SMART Objectives (Specific, Measurable, Achievable, Realistic and Time-related). Your objectives must also include factors such as KPI’s, resource allocation, and budget requirements. It is key to align your resources and structure according to your business strategy, so as to clarify everyone’s role and accountability.

4. Track and Manage Performance

All your planning and hard work may have been done, but it’s vital to review continuously all your objectives and action plans – to ensure you’re still on track to achieve your overall goal. Managing and monitoring a whole business strategy is a complex task, which is why many directors, managers and business leaders are looking into alternative methods to handle strategies. Creating, managing and reviewing your business strategy requires you to capture the relevant information, break down large chunks of information, plan, prioritise, and have a clear strategic vision.

5. Execute, Learn and Review

Firstly, execute your business strategy with excellence and, throughout, capture learning so that it can be reapplied or used to adjust the plan if necessary. Don’t be afraid to make mistakes, but make sure each mistake is an opportunity to apply learning to the business strategy. Executing at the highest level is key: anyone can have a good idea, but those who can execute make a lesser idea into a successful business. Always remember to celebrate your team and business successes. It can be quite easy to get dragged into the here-and-now and forget to reflect on the great achievements of your organisation.

A daunting prospect?

If after reading this, you feel daunted by what you need to do, we are here to help you every step of the way. Simply give us a call on 020 3367 1106 and we will guide you through the challenging start-up maze.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Autumn Budget Special: 10 Things You should Know

Autumn Budget Special: 10 Things You should Know

Autumn Budget 2018: More Money For NHS And An End To Austerity?

As previously announced, these were the main themes of the Chancellor Philip Hammond’s third Autumn Budget, but what we were waiting to hear was, where the extra money was going to come from? Had he found a “Magic Money Tree”, or would tax and borrowing have to increase? We now know that the extra money will come from better than expected economic growth and consequential increased tax revenues. But there may have to be a Spring 2019 Budget, if Brexit negotiations don’t go to plan….

 

1. Personal Allowance And Higher Rate Limit Increased Early

The Government’s manifesto pledge, back in 2015, was that the personal allowance would rise to £12,500 in 2020 and the higher rate tax threshold to £50,000. However, in this Autumn budget, the Chancellor has decided to bring forward these increases one year early from 2019/20, taking an estimated 1 million taxpayers out of higher rate tax. Note that up to 10% of the personal allowance (£1,250 from 6 April 2019) may be transferred from one spouse or civil partner to the other, if unused, and the transferee is a basic rate taxpayer.  As announced last year, this transfer is now available on behalf of deceased spouses and civil partners.

 

2. No Changes In Tax Rates 

The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000. There had been rumours that the dividend rate might be increased, but dividends continue to be taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate. Note that only the first £2,000 of dividend income is now tax free. The annual ISA investment limit increased to £20,000 from 6 April 2017, and remains at that level for 2019/20. Dividends on shares held within an ISA continue to be tax free. The much rumoured further restriction in pension tax relief failed to materialise.

 

3. IR35 “Off-Payroll” Rules To Be Extended To Private Sector

Very controversially, in this Autumn budget, the Government has decided to extend the rules for personal service companies in the public sector, to workers in the private sector from April 2020. This follows a consultation in Summer 2018 on how to tackle non-compliance with the intermediaries legislation (commonly known as IR35) in the private sector. The legislation which has applied in the public sector since April 2017, seeks to ensure that individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a company. There will be further consultation on the detailed operation of the rules, and small businesses (yet to be defined) engaging such workers will be excluded. This will represent a significant administrative burden on large and medium-sized businesses, who will be required to decide whether the rules apply to payments to such workers and deduct tax and NICs.

 

4. Capital Gains Entrepreneurs’ Relief Changes

In this Autumn budget, the Chancellor has announced that the minimum qualifying period for CGT entrepreneurs’ relief will be increased from 12 months to 24 months, for disposals on or after 6 April 2019. There are further changes in this Autumn budget, affecting shareholdings in personal companies. In addition to the individual holding 5% or more of the ordinary share capital and voting control, they will also now be required to be entitled to 5% or more of the company’s distributable profits and assets in a winding up.   As now, the individual must also be an officer or employee of the company concerned; and the company must be a trading company or the holding company of a trading group.

 

5. Company Tax To Reduce To 17%

As previously announced the current 19% rate, is scheduled to reduce to 17% from 1 April 2020.

 

6. Annual Investment Allowance Increased To £1 m

The Annual Investment Allowance (AIA) which provides businesses with a 100% write off against profits when they acquire plant and machinery, has been temporarily increased from £200,000 to £1 million for two years, from 1 January 2019. This will again mean that the timing of expenditure will be critical. It may be advantageous to delay expenditure until after 1 January 2019, to get full benefit in certain circumstances. However, the current enhanced capital allowance for energy efficient plant will be abolished from April 2020. A further change, in this Autumn budget, is that the writing down allowance for special rate pool equipment, broadly long-life assets and fixtures in buildings, is being reduced from 8% to 6% from April 2019.

 

7. New Capital Allowance For Commercial Buildings 

A new 2% straight line tax deduction is being introduced for the cost of construction or renovation of commercial buildings and structures. This tax break will apply to eligible construction costs, incurred on or after budget day, and will be available to commercial property landlords as well as trading businesses. The cost of the land is specifically excluded.

 

8. R&D Tax Credit Restricted 

The amount of repayable R&D tax credit for Small and Medium Sized Enterprises (SMEs) will again be restricted, by the amount of the claimant company’s PAYE and NIC liability from April 2020. The new Autumn budget limit will be set at three times the company’s total PAYE and National Insurance contribution (NICs) payment for the period.

 

9. VAT Registration Limit Continues To Be Frozen 

The VAT registration limit normally increases in line with inflation each year. However, It was announced last year that the limit would be frozen at £85,000 until 1 April 2020. It has now been announced that the limit will now remain at the same level until 2022.  The deregistration limit will remain at £83,000.

 

10. More Rates Relief For Small Businesses

There has been much lobbying from the small business sector to reduce business rates to enable traditional retailers, in particular, to compete with internet traders. In this Autumn budget, the Chancellor has announced a one third reduction in business rates for small businesses, with premises with a rateable value up to £51,000.

 

DIARY OF MAIN TAX EVENTS – NOVEMBER / DECEMBER 2018

 

Date

What’s Due

19/11/2018

PAYE & NIC deductions, and CIS return and tax, for month to 5/11/18 (due 22/11 if you pay electronically)

19/12/2018

PAYE & NIC deductions, and CIS return and tax, for month to 5/12/18 (due 22/12 if you pay electronically)

30/12/2018

Deadline for filing 2017/18 tax return online in order to request that HMRC collect outstanding tax via the 2018/19 PAYE code

01/01/2019

Corporation tax for year to 31/03/2018
Unless quarterly instalments apply

01/02/2019

Corporation tax for year to 30/04/2018
Unless quarterly instalments apply

 

 

Lotuswise Chartered Accountants and Business Consultants can support your business with the complexities of these tax and payment rules and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

Watch the video here.

 

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No-Deal Brexit: This is what you should know!

No-Deal Brexit: This is what you should know!

Hold tight! Business guidance in the event of a no-deal Brexit

 

With less than six months to go until the UK leaves the EU – and with no post-Brexit deal yet on the table – there’s no doubt that we are entering uncharted waters. So, what should you do to prepare your business in case of a no-deal Brexit?

Chequers statement

You may be aware that the UK’s Government has insisted that preparations for a no-deal Brexit scenario are part of its overall Brexit preparation strategy. Indeed, the Prime Minister’s Chequers statement, issued after her cabinet’s infamous July away day, included a pledge to step up preparedness for all possible outcomes of the negotiations, including a no-deal Brexit scenario.

August technical notices

You may remember that on 23 August, a little over a month after May’s statement, the Department for Exiting the EU published 25 ‘technical notices‘. The documents covered such diverse areas, as:

  •  Applying for EU-funded programmes
  • Driving and transport
  • Farming
  • Money and Tax
  • Importing and exporting
  • Regulating medicines

You will find that the notes were supported by guidance entitled “UK government’s preparations for a ‘no deal’ scenario”. Its aim was to put the technical notices in context by explaining the Brexit negotiation’s progress to date, and what might happen if the UK were to crash out of the EU.

September White paper

We then saw in early September, the House of Commons joined the party by publishing a briefing document (white paper) called “What happens if there’s no Brexit deal?” At 172 pages, it’s not exactly a bedtime read. Nevertheless, its fifteen chapters cover all areas from “how could no deal happen?” through to “external relations”, and it is an excellent source of no-deal Brexit information.

HMRC published a letter

But you may not know that, in an unprecedented move, HMRC wrote to 145,000 businesses across the UK about the ramifications of a no-deal Brexit, should Britain crash out of the EU and the Customs union on 29 March 2019. The letter, written by HMRC’s Deputy Chief Executive Jim Harra and published on 17 September, started positively by acknowledging: “The UK government has reached agreement with the EU on the vast majority of withdrawal issues, including the terms of an implementation period. Full agreement on this, will mean that trading with the EU during the implementation period would broadly stay the same until 31 December 2020.” This is meant to give you a degree of reassurance by stating “The approach of continuity does not mean that everything will stay the same, but the priority is maximising stability at the point of departure.”

After referring to the government’s focus “on securing a future partnership with the EU following the end of the implementation period in December 2020”, the letter’s tone changed. Harra referred to a no-deal eventuality being unlikely and continued to reassure readers: “In the event of no-deal, the government is committed to prioritising stability for businesses”. He added that: “we will continue to work closely with industry to ensure that interventions in a no deal scenario are conducted in a way which minimises delays and additional burdens for legitimate trade, while robustly ensuring compliance.” If a disorderly exit was to happen, there would, of course, be immediate changes to the way you, as a business, trade with the EU. Jim’s letter set the position out very clearly: “If we leave the EU without a deal in March 2019, there would be immediate changes to the way UK businesses trade with the EU that impact on your business”.

UK businesses trade with the EU in case of no-deal Brexit

  • You, as a UK business, will have to apply customs, excise and VAT procedures to goods traded with the EU, in the same way that already applies for goods traded outside of the EU.
  • Trading partners in the EU will have to apply customs, excise and VAT procedures to goods they receive from you, in the same way they do for goods received from outside of the EU.

In particular, if your business currently trades only with the EU, then you’d have to start completing customs declarations from March 2019, and customs checks would apply to your business for the first time.” The letter concludes by saying, “there is no need to contact HMRC at this stage”. However, it suggests, “If you’re a member of a trade body, they might have useful information on their website. VAT advisers, customs agents, freight forwarders and other businesses also have services to help you, to follow customs rules”.

Public domain Brexit sources of information

There are many sources of information on Brexit you can consult, from TV, radio and reading newspapers to searching the web. However, some are more reliable than others. To get a balanced and informed view of what is going on, you would be well inspired to access information from more than one source.

Brexit Government sources of information

  • GOV.UK “Brexit” pages – you can sign up to receive regular updates.
  • The Government has published technical notices across a range of topics on GOV.UK, to explain what will apply if the UK leaves the EU without a deal, including:
    – The House of Commons white paper in early September
    – HMRC’s Jim Harra’s “advice and guidance” letter

Lotuswise Chartered Accountants and Business Consultants can support you with the impact Brexit may have on your business and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Brexit Uncertainty: How To Manage In These Worrying Times

Brexit Uncertainty: How To Manage In These Worrying Times

Managing Brexit Uncertainty

Due to Brexit, 2019 looks set to be a year filled with uncertainty for businesses. The future is always unknown, but this year managers will need to navigate some particularly choppy waters, due to market uncertainty and global political turmoil.

Focus on what you can control

As a manager, you can always control your response, attitude, behaviour, actions and words. You can choose to be proactive and inquisitive rather than paralysed. In these times of Brexit uncertainty, the best managers step up and embrace their authority. When times are uncertain, your team wants you to lead the way. Bring your team with you on the journey, ask them for their opinion, include them in your planning conversations and challenge them to come up with new solutions.

Cash is king

In uncertain times, the old adage that “cash is king” carries even more weight. Cash is the lifeblood of your business, and poor cash flow management kills businesses during tough economic times. Market volatility also creates opportunities. If you have cash or credit available to take advantage of these opportunities when they present themselves, you may be able to move quickly and move your business forward. As such, good cash flow management can allow you to cash in and manage Brexit uncertainty effectively.

Embrace change and adapt

As your particular market changes, there will be opportunities for you to adapt. For example, if your customers have less budget to spend on buying products and services in your sector, it might be an opportunity for you to introduce a lower priced “value offering.” You could even go one step further and change your pricing model. For example, you could move clients to monthly retainers, rather than charging a once-off annual fee. Hence capitalising on Brexit uncertainty.

Diversify

If you depend on one big client to keep your business going, you should consider how to diversify your client base. Sometimes even giant businesses fail during tough times. If your biggest client goes out of business, you don’t want to be collateral damage. Just like in investing, the key is to have a diversified portfolio. Precisely because of Brexit uncertainty, now could be a good time to look at trying to win some new clients in order to make your business more resilient.

Lotuswise Chartered Accountants and Business Consultants can help you make sense out of Brexit uncertainty and potentially worrying times and also help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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MTD for VAT Pilot: This Is What You Should Know

MTD for VAT Pilot: This Is What You Should Know

MTD for VAT Pilot is Now… Open to All

You may have heard that, on 10 January 2019, HMRC announced that their Making Tax Digital for VAT (MTDfV) pilot was now open. As such, it is accessible to all those mandated to keep digitally compliant records and to file MTD-compatible VAT returns, for return periods commencing after 31 March 2019. Plus, in an email issued, HMRC stated that: “this marks a significant milestone towards our ambition to become one of the most digitally advanced tax administrations in the world.” And, HMRC boasts that over one hundred VAT-registered businesses, of which you may well be one, are now signing up to the scheme on a daily basis, with more than 3,500 having already joined.

Testing time

Even though,  like the majority, you may not need to file up your first MTD-complaint return until early August, the department wants you and “as many eligible businesses as possible to join the pilot ahead of the mandation of the service in April”, as it will provide assurance that the service works for you and all types of customers.

What does it mean?

This means that, if you are a VAT-registered entity, with an annual VAT-able turnover in excess of the £85,000 compulsory registration threshold – i.e. you are mandated to onboard from April – you will now have the chance to test your accounting system, prior to April. If you are in the minority of compulsory registered businesses – i.e. with the most complex VAT affairs – you would have had your mandation date deferred to your first return period, starting on or after 1 October 2019.

VAT groups now able to join the pilot  

In addition, HMRC has also opened its MTDfV pilot to VAT groups with immediate effect. What that means is that if you are within a VAT group, you are now able to start testing the service – even though you are not mandated to join until October. The department stated that it “will continue to update you as we open up the pilot to the remainder of the population who are mandated to join from October.”

Want to know more?

You can find further details in HMRC’s updated guidance for businesses, updated guidance for agents, and the stakeholder partner packs on GOV.UK.

 

Lotuswise Chartered Accountants and Business Consultants can help you make sense out of the MTD for VAT scheme and also help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

   

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How To Overcome Your Fear Of Failure

How To Overcome Your Fear Of Failure

One of the most common things holding us back from achieving our potential in business is our fear of failure.

 

Fear of failure is often linked to our human nature: to fear the unknown. When we push ourselves outside of our comfort zones, whether in business or in our personal lives, it is pretty normal to feel some degree of stress and anxiety.

We Are What We Do

In business, many of us consider our work to be representative of who we are as a person. As such, we can often view a failure in the workplace as a personal failure. This fear can often manifest itself in such a way that, we avoid reaching for new targets or striving towards new goals, in case we fail. We fear that such a failure, in such a public way, could change the way others view us, and indeed how we view ourselves. This can result in us holding ourselves back, because we fear failure.

No such thing as failure, only learning opportunities

It can be helpful to refocus and see “failures” as “learning opportunities”. Some of the world’s greatest entrepreneurs, including the likes of Richard Branson, have failed several times in business. However, they view these failures as learning opportunities. Each time you fall over, you must learn how to get back up and apply that learning next time around.

Change the way you think

Change the way you think about your goals and objectives. Don’t frame each business objective in order to avoid a potential failure. This is setting the objective in a negative context. Instead, set your objectives in a positive context. For example, set an objective to explore a new potential business case in order to learn about that opportunity. The goal is to learn, rather than to create, a new part of the business.

Visualisation is key

Finally, it can be helpful to visualise obstacles. Think of a situation in which you are afraid of failure.  Visualise yourself hitting an obstacle, allow yourself to feel the fear, and then see yourself moving forward. Next, spend a few minutes planning how to overcome whatever obstacles may stand in your way. Then see yourself succeeding despite these obstacles. You need to train your brain to focus on the solution, rather than the fact that there is an obstacle in your way!

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

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Marketing Trends 2019: This Is What You Should Know

Marketing Trends 2019: This Is What You Should Know

Marketing Trends To Watch Out For 2019

As we leave 2018 behind, it’s worth taking stock of this period of increased regulation on customer data protection and privacy – in parallel with its acceleration in marketing technology capabilities. Here, we give you an overview of what to consider in terms of the evolving expectations, demands on customer journeys, and the impact they may have on the marketing aspect of your business. Here are the top three marketing trends and strategies for you to consider for 2019.

 1. Evolving customer experience and journeys

2018 brought us more paths through which customers can satisfy their ideal approach to buying. As such, you need to take into account the onset of conversational user interfaces, through voice search and recognition, from the likes of Apple Siri and Amazon Alexa. Have you then considered how this is adding a key customer touchpoint your marketing approach needs to adopt and adapt to? Such examples help fuel the customer need for convenience, being able to request what they want, when they want it, and how.

Marketing Data

As data becomes richer in terms of what we understand about customer behaviour, the personalisation of the customer experience can become deeper – albeit at a time when the use of data is being re-evaluated by companies, such as Facebook. If you are continuing with the over-used approach of marketing to “millennials”, this will limit how your brand or customer experience connects with twenty- to thirty-year olds today – as building your marketing approach will be subject to change in observing this consumer group. There is a huge opportunity in blending customer data from silos, such as combining what you know from your business data on your customers, with that which is coming from social data. Your marketing teams will need to best balance the careful use of client data, segmenting based on specific personas, and on a personalised experience on how your customers wish to interact. 

2. Be more than a service. Be a trusted brand with values

“Your brand is what people say about you when you’re not in the room” (Jeff Bezos)

If you have not yet positioned your brand to a set of values, you should do so in 2019. The majority of today’s customers are belief-driven buyers, harnessing their brand loyalty to what the company stands for. Whether that is helping others, trust, quality, innovation etc. Although there maybe a danger of alienating some of your customers, your brand values can deepen your customer-company relationship at an emotional level. 

3. Manage your reputation; be prepared for a crisis

“It takes twenty years to build a reputation and five minutes to ruin it” (Warren Buffett)

With Google, if a result is based on an established view, it will find its way on to the first page. Taking this approach, if the sentiment about your brand is a bad one, intentionally or accidentally, then this may cause significant collateral damage for a long time – if a suitable response is not deployed. With the depth of opportunity for brands to advertise on nearly every website and platform consumers use, negative reviews can proliferate rapidly. And it is essential you’re able to respond to help mitigate, correct, or address the perception. For example, you might be listening to what people are saying online and making adjustments accordingly. No company is safe from reputation or brand crises and, as such, you should have a dedicated team owner to manage such an unfortunate event.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores

 

Watch the video here.

 

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Why choosing the right location for your business matters

Why choosing the right location for your business matters

How Do You Choose The Right Location For Your Business?

When you consider Amazon’s recent decision on the new location for their business, it makes you think about some aspects to consider, when making a similar investment of your own. Your location should be consistent with your particular style and image. If your business is retailing, do you want a traditional store, for example? Or maybe you’d like to operate from a kiosk or a cart you can move from place to place? Let’s look into a few aspects of business location and why they matter so much…

 

1. Who Are Your Customers?

Demographics play an important part in your choice of location. So, consider who your customers are, and, how important their proximity might be to you. If you are a retailer or some service provider, this is a critical consideration. But if you are any other types of businesses, however, this might not be as important. Research and review the community in which you want to establish your business and ask yourself: is  there a sufficient percentage of that population that matches your customer profile? But you should also look into communities that are largely dependent on a particular industry for their economy, as a downturn could be bad for business. In addition, consider any of the work force skills required. Are there people with these skills in the community? With sufficient housing, schools, recreational opportunities, and culture?

 

2. What Is The Footfall, Traffic And Parking like?

If you are a retail business, then consider where shoppers are likely to pass by, rather than being hidden away. Try monitoring traffic outside of the location at various times throughout the day. Then assess how accessible the facility will be for customers, employees and suppliers. If requiring deliverables, try to establish whether suppliers are able to easily and efficiently courier. You also need to make sure there is convenient parking for both customers and employees. As with foot traffic, you also need to monitor the facility at various times and days, and see how demand for parking fluctuates.

 

3. Are There Any Competitors / Other Services?

Another important factor you need to take into account is: are competing companies located nearby? As this could sometimes be good. Like for example for industries where comparison shopping is popular, as you can catch the overflow from existing businesses. If a nearby competitor is only going to make your marketing job tougher, look elsewhere. In addition, consider what other businesses and services are in the vicinity: is there any benefit from customer traffic, is there a suitable range of places and restaurants for employees? You might also want to think about the location of other facilities nearby, such as child care, convenient shops, etc.

 

4. What About The Infrastructure, Utilities And Costs?

You really want to check the building you’re interested in, has the actual infrastructure you need – adequate electrical, air conditioning, and telecommunications services – to support your business requirements and meet your present and future needs. For utilities, check what’s actually included in your rent, as this can be a major part of your expenses. Lastly, verify the medium-to-long-term rental expectations and commitments, so you can mitigate any potential rental rise.

 

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

 

 

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Gifts…7 things you should know about Gifts… And Taxes

Gifts…7 things you should know about Gifts… And Taxes

‘Tis The Season for Gifts… And Taxes…

Christmas Is The Time For Giving

If you are thinking about making gifts this Christmas, you should take advantage of the various inheritance tax (IHT) exemptions and reliefs available to you. But you should also bear in mind that certain gifts can also have capital gains tax (CGT) implications.

The IHT Annual Exemption – Use It Or Lose It!

Although not particularly generous at £3,000 per donor per annum, if your annual IHT exemption is not used by 5 April, it is lost, although it is possible to carry your allowance forward one year if unused. This means that if your annual allowance for 2017/18 was not used, you may make gifts of up to £6,000 in 2018/19. So, where gifts to individuals exceed your annual exemption, there may still be no inheritance tax to pay, if they survive for 7 years following the gift or the gift falls within the £325,000 nil rate band.

Gifts Out of Income Are Not Taken Into Account For IHT

A more generous inheritance tax exemption might apply to you if, as a donor, you can prove that you are not transferring capital, but making gifts out of your income. In fact, there are detailed conditions for this exemption to apply, requiring that you keep records of your income and expenditure, to prove that you have sufficient surplus income each year, to make regular gifts to beneficiaries. 

Certain Gifts Can Have Capital Gains Tax Consequences 

Although you may not have to pay any CGT on gifts of cash, you may well have to pay it where gifts include shares or other assets. This is because the transaction will generally be deemed to take place at market value, between connected persons, even though no money changes hands. The amount of the gain would normally be determined by comparing the market value, with the original cost of the asset gifted. Where the amount of this gain is within the annual CGT allowance (currently £11,700), then you wouldn’t have to pay any CGT. Where your gift comprises shares in a trading company, or other business assets, it may be possible for you, as a donor and recipient to sign an election, to hold over the gain, so that no CGT is payable by the donor, at the time of the gift. The effect of such an election, is that if you are the recipient of the asset, you will take over the donor’s original cost for subsequent disposal. 

Not All Shares Qualify For CGT Entrepreneurs’ Relief Now

As the result of changes announced in the Autumn Budget, and now incorporated into the latest Finance Bill, if you have any shares, not all ordinary shares necessarily qualify for the 10% CGT entrepreneurs’ relief rate on disposal. As mentioned in our last month’s Autumn Budget Special post, the definition of a personal company was tightened up. So, from 29 October, if you are a shareholder, you must have entitlement to at least 5% of the company’s ordinary share capital, voting rights, profits available for distribution, and assets available on the winding up of the company. As a shareholder, as before, you will also need to be an officer or employee of the company. Subsequently, this change means that certain “alphabet” and other shares with limited rights, may no longer qualify for CGT entrepreneurs’ relief when disposed of. 

Gifts Of Up To £50 To Employees

From April 2016, new rules were introduced to allow you, as an employer, to provide your directors and employees with certain “trivial” benefits in kind, tax free.

The new rules were brought in as a simplification measure, so that, if you are considering certain benefits in kind, they now do not need to be reported to HMRC, as well as being tax free for your employee. You must of course meet a number of conditions to qualify for the exemption.

Conditions for the exemption to apply:
•    The cost of providing the benefit does not exceed £50
•    The benefit is not cash or a cash voucher
•    The employee is not entitled to the benefit as part of any contractual obligation, such as a salary
sacrifice scheme
•    The benefit is not provided in recognition of particular services performed by the employee, as part of their employment duties (or in anticipation of such services)

So this exemption will generally apply to your small gifts to staff at Christmas, on their birthday, or other occasions and includes gifts of food, wine, or store vouchers. Note that as an employer, if you are a “close” company, and you are providing the benefit to an individual who is a director or other office holder of the company, the exemption is capped at a total cost of £300 in the tax year. 

Gifts To Charity

Where possible, if you are a higher rate taxpayer, you should “Gift Aid” any payments to charity, to provide them with an additional benefit and for you, as an individual, to obtain additional tax relief on the payment. For example, where you make a £20 cash donation to charity, the charity is able to reclaim a further £5 from HMRC, making a gross gift of £25. Where you are a 40% higher rate taxpayer, you are able to claim a further £5 tax relief under self-assessment, reducing your net cost to £15. Note that you, as a donor are required to make a declaration that you are a UK taxpayer, and those that have not suffered sufficient UK tax to support the Gift Aid amount, will be taxed on the shortfall. Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell your donated items on your behalf, and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities, land and buildings, to charity and claim Gift Aid on the market value of those assets.

Collecting Unpaid Tax For 2017/2018 Through Your PAYE Coding

Under certain circumstances, you can arrange the collection of unpaid tax through your PAYE coding, rather than making a balancing payment on 31 January. This will depend upon the amount outstanding, and the amount of income taxable under PAYE. But you must submit your return to HMRC, online, before 30 December 2018, for the 2017/18 tax to be collected, by amending the 2019/20 PAYE coding. 

Diary Of Main Tax Events – December 2018 / January 2019

Date

What’s Due

01/12/2018 Corporation tax for year to 28/02/2018 unless quarterly instalments apply
19/12/2018 PAYE & NIC deductions, and CIS return and tax, for month to 5/12/18 (due 22/12 if you pay electronically)
30/12/2018 Deadline for filing 2017/18 tax return online in order to request that HMRC collect outstanding tax via the 2018/19 PAYE code
01/01/2019 Corporation tax for year to 31/03/2018
Unless quarterly instalments apply
19/01/2019 PAYE & NIC deductions, and CIS return and tax, for month to 5/1/19 (due 22/1 if you pay electronically)
31/01/2019 Deadline for filing 2017/18 self-assessment tax return online and paying your outstanding tax for 2017/18
01/02/2019 Corporation tax for year to 30/04/2018
Unless quarterly instalments apply

 

Lotuswise Chartered Accountants and Business Consultants can support your business with the complexities of these tax and payment rules and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

Watch the video here.

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Making Tax Digital for VAT – Don’t join until you read this!

Making Tax Digital for VAT – Don’t join until you read this!

Making Tax Digital – Growing confidence 

It’s official! If you are a Sole trader or a company with up-to-date VAT affairs, you are now able to join HMRC’s test phase for VAT Making Tax Digital (MTD). While testing of VAT-MTD started last April, until now, it has been on a limited, controlled, invitation-only basis.  In what can be taken as a clear indication of the department’s confidence, the VAT MTD pilot has now been opened to accept everyone.
 

New Guidance

In support of the public test phase, you can now consult a suite of new and updated guidance, available to help you, VAT-registered businesses and their agents, get to grips with the new requirements. The newly published guidance covers:

HMRC has also published a series of videos on its Help and Support page:

Can everyone join?

As of last month, provided you haven’t incurred a default surcharge in the last two years, you and just over 40% of the approximate 1.1 million VAT-registered entities, who are required to keep digital records and file MTD-compliant VAT returns from April next year, will be able to apply to onboard early. A further 100,000 will be able to join the public pilot by the end of this month.  

What if you can’t join?

There’s a small but significant list of VAT registered entities who, as of yet, remain unable to join the pilot. You can’t join if:

  • Trade with the EU
  • Are based overseas
  • Submit VAT returns annually
  • Make payments on accounts
  • Use the flat rate scheme
  • Are newly registered and have not yet filed a return
  • Are members of VAT groups or VAT divisions
  • Have received a Default Surcharge notice in the last 24 months. However, they will be allowed in by the end of this month.
  • Are unincorporated not-for profit organisations
  • Are trusts
  • Are Local Authorities who complete VAT form 21
  • Are Public Corporations

Timetable

To help you plan, HMRC has published a timetable indicating when each of the embargoed cohorts will be able to join the pilot.

3.5% to get a deferral

HMRC has reported that 3.5% of those mandated will not be able to onboard before the end of December. This cohort will have their mandation date pushed back to October 2019. You are affected if you are / have:

  • VAT groups or VAT divisions
  • Overseas traders registered for VAT
  • Trusts
  • Local Authorities
  • Public Corporations

If you are in the deferral group, HMRC will contact you in writing.

What is Making Tax Digital?

Making Tax Digital is a key part of the government’s plans to make it easier for you, individuals and businesses, to get your tax right and to keep on top of your affairs. This will ultimately result, for you and millions of people, in the end of the annual tax return. As the first stage of a wider roll-out process, if you are a VAT-registered business with VAT-able turnover above the compulsory £85,000, your registration threshold will be mandated to join the VAT Making Tax Digital for Business regime. To meet your VAT return obligations, this will apply to all return periods commencing April 2019. As a minimum, you will be required to maintain your VAT records digitally and to file MTD-compliant VAT returns, using third party software. If you are mandated to join, you will no longer be able to log on to HMRC’s portal to complete and file your online return. If your business is voluntarily registered for VAT, with a VAT-able turnover under £85,000, you will not be required to use the system, although you can choose to do so voluntarily.
 

 

Lotuswise Chartered Accountants and Business Consultants can help you with Making Tax Digital and help your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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5 Steps to a Successful Business Strategy

5 Steps to a Successful Business Strategy

Creating A Successful Business Strategy

When setting out on a new venture or business idea, so many businesses do not succeed. This could be down to a combination of factors. Yet, one common factor is the challenges associated with executing the idea and establishing it in the market. To ensure your idea or business has the best start, or if you are reviewing current plans and progress, you must first develop an effective business strategy to support you. Here are five steps to guide you.

1. Build up your data and knowledge

To know where you want to go, is first to understand where you are today. The best way to do this is to investigate the past. This could be through data from your market, so you understand the size of the opportunity at stake. Investigate the total market size, the number of potential customers, and the growth rates of similar projects. Using the SWOT framework helps you identify Strengths, Weaknesses, Opportunities, and Threats, both internally and externally. You might want to use the PESTLE model to explore deeper into external factors that may affect your business. This looks into the Political, Economic, Social, Technological, Legal, and Environmental aspects of your business and market. It is key to make sure you involve the right people in this process to help you build up your data and knowledge. Once you understand the market, begin to narrow down your idea, exploring the unique business problem you are looking to solve, and the market opportunity associated to it.

2. Build Your Vision and Mission Statement

Your vision should be used to describe the future direction of the business, and its aims in the medium to long term. It’s about describing your organisation’s purpose and values. This should be built in parallel with your mission statement, which defines the organisation’s purpose and outlines its primary objectives. In simple terms, your organisation should summarise its goals and objectives in mission and vision statements. These serve different purposes but are often confused with each other. While your mission statement describes what your company wants to do now, your vision statement outlines what your company wants to be in the future. Your mission statement focuses on what you need to do in the short term to realise your long-term vision. So, for your vision statement, you are asking where do you want to be in three to five years’ time. Your mission statement, alternatively, asks: what do we do? how do we do it? for whom do we do it? and what value do we bring? 

Examples:

  • Amazon’s Corporate Vision Statement: “To be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
  • Google’s Corporate Mission Statement: “To organise the world’s information and make it universally accessible and useful.”

3. Define your Business Strategy and Tactical Plans

At this stage, your aim is to develop a set of high-level objectives for all areas of the business. These need to highlight your priorities and inform your plans that will ensure delivery of your company’s vision and mission. By reviewing your work in step one across the SWOT and PESTLE analyses, you can layer these into your SMART Objectives (Specific, Measurable, Achievable, Realistic and Time-related). Your objectives must also include factors such as KPI’s, resource allocation, and budget requirements. It is key to align your resources and structure according to your business strategy, so as to clarify everyone’s role and accountability.

4. Track and Manage Performance

All your planning and hard work may have been done, but it’s vital to review continuously all your objectives and action plans – to ensure you’re still on track to achieve your overall goal. Managing and monitoring a whole business strategy is a complex task, which is why many directors, managers and business leaders are looking into alternative methods to handle strategies. Creating, managing and reviewing your business strategy requires you to capture the relevant information, break down large chunks of information, plan, prioritise, and have a clear strategic vision.

5. Execute, Learn and Review

Firstly, execute your business strategy with excellence and, throughout, capture learning so that it can be reapplied or used to adjust the plan if necessary. Don’t be afraid to make mistakes, but make sure each mistake is an opportunity to apply learning to the business strategy. Executing at the highest level is key: anyone can have a good idea, but those who can execute make a lesser idea into a successful business. Always remember to celebrate your team and business successes. It can be quite easy to get dragged into the here-and-now and forget to reflect on the great achievements of your organisation.

A daunting prospect?

If after reading this, you feel daunted by what you need to do, we are here to help you every step of the way. Simply give us a call on 020 3367 1106 and we will guide you through the challenging start-up maze.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

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Autumn Budget Special: 10 Things You should Know

Autumn Budget Special: 10 Things You should Know

Autumn Budget 2018: More Money For NHS And An End To Austerity?

As previously announced, these were the main themes of the Chancellor Philip Hammond’s third Autumn Budget, but what we were waiting to hear was, where the extra money was going to come from? Had he found a “Magic Money Tree”, or would tax and borrowing have to increase? We now know that the extra money will come from better than expected economic growth and consequential increased tax revenues. But there may have to be a Spring 2019 Budget, if Brexit negotiations don’t go to plan….

 

1. Personal Allowance And Higher Rate Limit Increased Early

The Government’s manifesto pledge, back in 2015, was that the personal allowance would rise to £12,500 in 2020 and the higher rate tax threshold to £50,000. However, in this Autumn budget, the Chancellor has decided to bring forward these increases one year early from 2019/20, taking an estimated 1 million taxpayers out of higher rate tax. Note that up to 10% of the personal allowance (£1,250 from 6 April 2019) may be transferred from one spouse or civil partner to the other, if unused, and the transferee is a basic rate taxpayer.  As announced last year, this transfer is now available on behalf of deceased spouses and civil partners.

 

2. No Changes In Tax Rates 

The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000. There had been rumours that the dividend rate might be increased, but dividends continue to be taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate. Note that only the first £2,000 of dividend income is now tax free. The annual ISA investment limit increased to £20,000 from 6 April 2017, and remains at that level for 2019/20. Dividends on shares held within an ISA continue to be tax free. The much rumoured further restriction in pension tax relief failed to materialise.

 

3. IR35 “Off-Payroll” Rules To Be Extended To Private Sector

Very controversially, in this Autumn budget, the Government has decided to extend the rules for personal service companies in the public sector, to workers in the private sector from April 2020. This follows a consultation in Summer 2018 on how to tackle non-compliance with the intermediaries legislation (commonly known as IR35) in the private sector. The legislation which has applied in the public sector since April 2017, seeks to ensure that individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a company. There will be further consultation on the detailed operation of the rules, and small businesses (yet to be defined) engaging such workers will be excluded. This will represent a significant administrative burden on large and medium-sized businesses, who will be required to decide whether the rules apply to payments to such workers and deduct tax and NICs.

 

4. Capital Gains Entrepreneurs’ Relief Changes

In this Autumn budget, the Chancellor has announced that the minimum qualifying period for CGT entrepreneurs’ relief will be increased from 12 months to 24 months, for disposals on or after 6 April 2019. There are further changes in this Autumn budget, affecting shareholdings in personal companies. In addition to the individual holding 5% or more of the ordinary share capital and voting control, they will also now be required to be entitled to 5% or more of the company’s distributable profits and assets in a winding up.   As now, the individual must also be an officer or employee of the company concerned; and the company must be a trading company or the holding company of a trading group.

 

5. Company Tax To Reduce To 17%

As previously announced the current 19% rate, is scheduled to reduce to 17% from 1 April 2020.

 

6. Annual Investment Allowance Increased To £1 m

The Annual Investment Allowance (AIA) which provides businesses with a 100% write off against profits when they acquire plant and machinery, has been temporarily increased from £200,000 to £1 million for two years, from 1 January 2019. This will again mean that the timing of expenditure will be critical. It may be advantageous to delay expenditure until after 1 January 2019, to get full benefit in certain circumstances. However, the current enhanced capital allowance for energy efficient plant will be abolished from April 2020. A further change, in this Autumn budget, is that the writing down allowance for special rate pool equipment, broadly long-life assets and fixtures in buildings, is being reduced from 8% to 6% from April 2019.

 

7. New Capital Allowance For Commercial Buildings 

A new 2% straight line tax deduction is being introduced for the cost of construction or renovation of commercial buildings and structures. This tax break will apply to eligible construction costs, incurred on or after budget day, and will be available to commercial property landlords as well as trading businesses. The cost of the land is specifically excluded.

 

8. R&D Tax Credit Restricted 

The amount of repayable R&D tax credit for Small and Medium Sized Enterprises (SMEs) will again be restricted, by the amount of the claimant company’s PAYE and NIC liability from April 2020. The new Autumn budget limit will be set at three times the company’s total PAYE and National Insurance contribution (NICs) payment for the period.

 

9. VAT Registration Limit Continues To Be Frozen 

The VAT registration limit normally increases in line with inflation each year. However, It was announced last year that the limit would be frozen at £85,000 until 1 April 2020. It has now been announced that the limit will now remain at the same level until 2022.  The deregistration limit will remain at £83,000.

 

10. More Rates Relief For Small Businesses

There has been much lobbying from the small business sector to reduce business rates to enable traditional retailers, in particular, to compete with internet traders. In this Autumn budget, the Chancellor has announced a one third reduction in business rates for small businesses, with premises with a rateable value up to £51,000.

 

DIARY OF MAIN TAX EVENTS – NOVEMBER / DECEMBER 2018

 

Date

What’s Due

19/11/2018

PAYE & NIC deductions, and CIS return and tax, for month to 5/11/18 (due 22/11 if you pay electronically)

19/12/2018

PAYE & NIC deductions, and CIS return and tax, for month to 5/12/18 (due 22/12 if you pay electronically)

30/12/2018

Deadline for filing 2017/18 tax return online in order to request that HMRC collect outstanding tax via the 2018/19 PAYE code

01/01/2019

Corporation tax for year to 31/03/2018
Unless quarterly instalments apply

01/02/2019

Corporation tax for year to 30/04/2018
Unless quarterly instalments apply

 

 

Lotuswise Chartered Accountants and Business Consultants can support your business with the complexities of these tax and payment rules and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

Watch the video here.

 

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No-Deal Brexit: This is what you should know!

No-Deal Brexit: This is what you should know!

Hold tight! Business guidance in the event of a no-deal Brexit

 

With less than six months to go until the UK leaves the EU – and with no post-Brexit deal yet on the table – there’s no doubt that we are entering uncharted waters. So, what should you do to prepare your business in case of a no-deal Brexit?

Chequers statement

You may be aware that the UK’s Government has insisted that preparations for a no-deal Brexit scenario are part of its overall Brexit preparation strategy. Indeed, the Prime Minister’s Chequers statement, issued after her cabinet’s infamous July away day, included a pledge to step up preparedness for all possible outcomes of the negotiations, including a no-deal Brexit scenario.

August technical notices

You may remember that on 23 August, a little over a month after May’s statement, the Department for Exiting the EU published 25 ‘technical notices‘. The documents covered such diverse areas, as:

  •  Applying for EU-funded programmes
  • Driving and transport
  • Farming
  • Money and Tax
  • Importing and exporting
  • Regulating medicines

You will find that the notes were supported by guidance entitled “UK government’s preparations for a ‘no deal’ scenario”. Its aim was to put the technical notices in context by explaining the Brexit negotiation’s progress to date, and what might happen if the UK were to crash out of the EU.

September White paper

We then saw in early September, the House of Commons joined the party by publishing a briefing document (white paper) called “What happens if there’s no Brexit deal?” At 172 pages, it’s not exactly a bedtime read. Nevertheless, its fifteen chapters cover all areas from “how could no deal happen?” through to “external relations”, and it is an excellent source of no-deal Brexit information.

HMRC published a letter

But you may not know that, in an unprecedented move, HMRC wrote to 145,000 businesses across the UK about the ramifications of a no-deal Brexit, should Britain crash out of the EU and the Customs union on 29 March 2019. The letter, written by HMRC’s Deputy Chief Executive Jim Harra and published on 17 September, started positively by acknowledging: “The UK government has reached agreement with the EU on the vast majority of withdrawal issues, including the terms of an implementation period. Full agreement on this, will mean that trading with the EU during the implementation period would broadly stay the same until 31 December 2020.” This is meant to give you a degree of reassurance by stating “The approach of continuity does not mean that everything will stay the same, but the priority is maximising stability at the point of departure.”

After referring to the government’s focus “on securing a future partnership with the EU following the end of the implementation period in December 2020”, the letter’s tone changed. Harra referred to a no-deal eventuality being unlikely and continued to reassure readers: “In the event of no-deal, the government is committed to prioritising stability for businesses”. He added that: “we will continue to work closely with industry to ensure that interventions in a no deal scenario are conducted in a way which minimises delays and additional burdens for legitimate trade, while robustly ensuring compliance.” If a disorderly exit was to happen, there would, of course, be immediate changes to the way you, as a business, trade with the EU. Jim’s letter set the position out very clearly: “If we leave the EU without a deal in March 2019, there would be immediate changes to the way UK businesses trade with the EU that impact on your business”.

UK businesses trade with the EU in case of no-deal Brexit

  • You, as a UK business, will have to apply customs, excise and VAT procedures to goods traded with the EU, in the same way that already applies for goods traded outside of the EU.
  • Trading partners in the EU will have to apply customs, excise and VAT procedures to goods they receive from you, in the same way they do for goods received from outside of the EU.

In particular, if your business currently trades only with the EU, then you’d have to start completing customs declarations from March 2019, and customs checks would apply to your business for the first time.” The letter concludes by saying, “there is no need to contact HMRC at this stage”. However, it suggests, “If you’re a member of a trade body, they might have useful information on their website. VAT advisers, customs agents, freight forwarders and other businesses also have services to help you, to follow customs rules”.

Public domain Brexit sources of information

There are many sources of information on Brexit you can consult, from TV, radio and reading newspapers to searching the web. However, some are more reliable than others. To get a balanced and informed view of what is going on, you would be well inspired to access information from more than one source.

Brexit Government sources of information

  • GOV.UK “Brexit” pages – you can sign up to receive regular updates.
  • The Government has published technical notices across a range of topics on GOV.UK, to explain what will apply if the UK leaves the EU without a deal, including:
    – The House of Commons white paper in early September
    – HMRC’s Jim Harra’s “advice and guidance” letter

Lotuswise Chartered Accountants and Business Consultants can support you with the impact Brexit may have on your business and help you succeed. To find out how, please contact us. To also get even more useful business and finance information and tax advice tips, check out our app on Google or Apple stores.

Watch the video here.

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