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Did You Know About These Tax-Free Benefits?

Did You Know About These Tax-Free Benefits?

Tax Doesn’t Have To Be Taxing!

When it comes to tax, it’s not every day you can enjoy tax free benefits, which, incidentally, also apply to Summer activities… Here are 2 great benefits you can take advantage of right now!

A Staff Summer Party Can Be A Tax-Free Benefit

Your organisation may have an annual Christmas party for staff, but the tax rules also allow staff parties at other times of the year, which are a tax-free benefit, if certain conditions are satisfied. The exemption applies to an annual party (for example, a Christmas party. Or similar annual function (for example, a summer barbecue), provided for employees and is available to all employees. Or it is available to all employees at that location, where the employer has more than one location. If the employer provides two or more annual parties or functions, no tax charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate. For each function the cost per head should be calculated. The cost per head of subsequent functions should be added. If the total cost per head goes over £150, then whichever functions best utilise the £150 are exempt, the other is taxable.

 

Make School Holidays Easier with Tax-Free Childcare

Did you know there is a government scheme available that can help contribute towards childcare costs? Which may mean fewer of your employees will need time off at the same time this summer. Tax-Free Childcare is a scheme available to working parents, with children from 0-11 years, and many parents are not taking advantage of the scheme. HMRC has said it would welcome help from employers in changing that. So please tell your employees about Tax-Free Childcare, and how it can reduce their childcare costs. Eligible parents can get up to £2,000 per child, per year to spend on qualifying childcare (effectively a 25% top up). Note that Tax-Free Childcare isn’t just for everyday childcare costs, such as childminders and nurseries, parents can also use it to pay towards the cost of: 

  •  After school clubs
  •  Summer camps
  • School holiday activities 

 

Lotuswise Chartered Accountants and Business Consultants can help you make sense out of tax 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.

Watch the video here.

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How To Manage Employees With A Side Business

How To Manage Employees With A Side Business

25% of UK Employees Run A Side Business

Did you know that a recent study suggests that 25% of UK employees are running at least one business project alongside their day job?

What Is A Side Business?

You would define a side business as a secondary business or job that brings in, or has potential to bring in, extra income. As such, It is particularly popular among millennials, who tend to start a side project as a hobby or in order to explore a new challenge. And millennials tend to have different attitudes towards work and technology. They are also used to being able to work from anywhere, using a smartphone or a tablet.

Employees With A Side Activity Feel more Content

Did you also know that various studies have shown that employees who have a side business, report feeling happier and more content. However as a business employer, you may view a side activity as a negative distraction from your employee’s day jobs.

The truth is that many of your best employees may have a side activity and you might need to be more supportive. A side job can actually be a good thing as long as it doesn’t involve working for one of your competitors or doing anything that might damage your main business, as an employer.

Employees With A Side Job Learn New Skills With No Cost To You

Your employees could actually learn new and useful skills from running their own side activity. They can gain real-life experience, in customer service, as well as project management or budgeting that can be applied,  in their day job. From your perspective as an employer, your employees are gaining new skills that can make them better at their jobs and you won’t need to pay for any training. In addition, and you may not realise this, but further research studies have found that employees who have the drive to work a side job, are more likely to be innovative, proactive, and organised. They are also more likely to come up with new ideas, which they have gained through their own new experiences. Hence benefitting you and your business two-fold.

Employees With A Side Activity Want to Remain In Full Employment

However, and you should note that, according to a well-known careers website recent survey, over 70% of employees with a side business want to remain in full time employment. They don’t want their side job to become their full time job, as it’s more of a hobby / passion that just happens to create an income.

Get Used To The Side Business Trend!

It seems that the side business trend is here to stay and if you are an employer, you need to shift your view – a side business is a positive thing. However, you should also consider adding a non-compete clause to contracts, just to ensure that there is no temptation for your employees, to side hustle in any way that could damage your business.

 

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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6 Ways an App Can Support Your Business Growth

6 Ways an App Can Support Your Business Growth

The use of smartphones has changed dramatically over the past decade: it’s gone from being merely a gadget to an increasingly used and important lifestyle and business tool. A report by Ofcom (the UK regulator for the communications services) referred to this change in our use of this technology as the ‘Smartphone obsession. Ofcom’s Director of Market Intelligence, Ian Macrae, said: “Over the last decade, people’s lives have been transformed by the rise of the smartphone, together with better access to the internet and new services. “Whether it’s working flexibly, keeping up with current affairs or shopping online, we can do more on the move than ever before. “ The report found that 72% of adults say that their smartphone is their most important device for accessing the internet; 71% say they never turn off their phone; and 78% say they could not live without it. The amazing thing is that these figures still appear to be rising. So, most importantly for you, how can mobile phones and mobile apps support and help your business grow? We have six approaches for you to consider.

1. Access to tools and resources around the clock

In general, our demands and expectations towards finding information, and towards the length of time it should take to find it, have vastly increased. The information we need, should be readily available, and, buffering and tedious searching will often be cut short, so we can try something else. Generally, we’re always on the lookout for a better user experience. Apps provide you with the opportunity to compile your information and resources into one streamlined solution, which can be accessed whenever it is convenient for you – with no waiting time. Apps can provide solutions for all your downloadable resources, communication requests, client referrals, marketing incentives, video content, up-to-date news, software, secure content sharing, tax updates, tax calculators and so much more.  

2. A new marketing and communications channel

An app can be an additional channel in your current marketing mix. Use it for targeted marketing, with geolocation tools which can filter customers according to where they are based. Your user can also set permissions and personalisations which tailor the app to be suitable to their preferred working methods. You can also send Push notifications to bespoke categories allowing only the most relevant alerts and reminders – for example, a deadline notification, an event RSVP, perhaps a special offer, or new content which is available in the app. Video content can be added to your app where your clients can access your most recent uploads with business advice, tutorials, and any other content you wish to include.

3. Gather consumer data

By fully utilising your app to streamline business processes, you can collect data on how your clients engage with the app. What content are they accessing, and how regularly do they use it? Which resources are most popular, and which resources are not used? You can then investigate what other services your clients require to get them more engaged with your service offering. Naturally, and in line with privacy regulations, this provides a directional view of your customer behaviour. In order to get more specific, you will then need to ask permission from your clients and to store their information securely, and in line with GDPR regulation.

4. A new contact and sharing solution

Today, there are plenty of quick options enabling your clients to get in touch with you, and any of them can be featured on your app.  It just depends on what you would prefer. To name a few, you could take client referrals via an app module, through meeting requests, and even by video calling.

5. Optimising business workflows

Whether your business is a complex manufacturing process or whether it manages a sales pipeline, apps can provide a convenient and efficient way to optimise your business workflow. For example, consider your salesperson taking business cards, who later records your client information from them. Through an app, you could streamline this process, through an off-the-shelf CRM, or through a bespoke module which can take a photo and automatically scan the data into the system.

6. Improved user experience through Smartphone capabilities

When considering using or developing your own app for your business, consider how you can leverage the technology inherent in the smartphone device – whether that’s Bluetooth, GPS, face recognition, or voice recognition. A common example is to use your camera to interact with QR Codes. If you are a firm with stock management, this approach can be used so that you can quickly assess product details through a simple scan of the code. In addition, consider how you can use GPS tracking, for example, to indicate where your package is being delivered and the estimated time of arrival. Lastly, interactions don’t need to be limited to typing. With voice recognition, apps can take on more of an “assistant” role, which you can engage with through voice commands and instructions.  In summary, whatever your business, there is an ever-growing need for the mobile workforce to have their office in their hand. Apps provide this capability, and, through bespoke development, your app can take on its own unique form and help accelerate and grow your business.

 

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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Freelancer: 5 Top Tips For Successful Freelancing

Freelancer: 5 Top Tips For Successful Freelancing

What does it take to be a successful freelancer?

Here are 5 top tips for keeping your freelancer work organised, healthy, and successful! Although it’s not possible to provide a one-size-fits-all plan, these tips will certainly help to keep your freelancing affairs in shape. 

 

1. Draw up a freelancer contract

Regardless of your skillset – whether it’s graphic design, project management, or writing – every new client project needs to be issued with a contract. While, at the outset, dispute might be far from your mind, this is the go-to document that others will seek to review should any disagreement arise later. If you’re new to freelancing, then a contract template is a great place to start – to avoid you getting too preoccupied with creating the perfect contract. You can then add more information, where necessary and make improvements along the way. Even the simplest contract should include all the following key terms:

  • The nature of your engagement and the services you’ve agreed to perform
  • Assurances your client’s information will be kept confidentially
  • How much you will be paid, and when, throughout the project
  • Details of any ownership of intellectual property
  • Once your work has been accepted by the client, the client also accepts full responsibility for any use of the project files moving forward
  • Details of liability insurance
  • Cancellation procedure for you and your client
  • Membership of relevant professional bodies

2. Agree payment terms before starting a project

A big issue with freelancing is ensuring you’re paid enough, you’re paid on time – and you are actually paid. Therefore, to ensure you’re going to get paid, it’s best to agree your payment terms upfront. This is better than diving into a new project, and trying to resolve payment later. Depending on the nature of your contract under negotiation, a successful payment structure could be to request 50% upfront, and the remaining 50% upon completion – but before you deliver the completed project files. In cases where the contract is of an ongoing nature, you may wish to agree staged payments, whereby money is paid after you have passed milestones, pre-agreed in your contract. You may also want to consider regular instalments. The price you choose to charge as a freelancer should include time spent on tasks such as sourcing clients, preparing proposals, sending/managing invoices, meetings, and other items which are required to run your freelancing business. By not considering these tasks in your pricing, you run the risk of not being paid sufficiently.

3. Be prepared to say ‘no’

When in the process of agreeing the terms of your project, don’t be afraid to say ‘no’. It’s too easy to get caught up in the moment and agree to everything your client asks – because you want the project and you want a happy client. But promising too much can come with a whole array of problems. It could end with you spending too long on an increasingly unprofitable project, and risk you not being able to deliver the project in the agreed timescale.

4. Create a freelancer portfolio

Create a portfolio of projects, in which you specialise, to showcase to prospective clients. We encourage you to include projects specifically in your specialist area – rather than putting together a portfolio of everything you’ve ever worked on. If there’s a particular topic you’d like to stick to, then make sure you do. Don’t take on those projects you fear you’re going to struggle to complete, or that may take you too long to deliver. This portfolio will also ensure clients best understand the work you’re able to deliver, and the expected standard they’re going to receive. If a client’s asking for work outside of this scope, be transparent about what you are / are not able to offer them.

5. Stay on top of your finances!

As a freelancer, it’s vital to view your finances as a small business owner would. Make sure you’re on top of your numbers, and ask yourself the following:

  • What is my business revenue?
  • What is my monthly living expenditure?
  • How many visits is my website getting each month?
  • What is my most popular service?
  • How much time is spent on each project, and am I providing accurate estimates?

If you’re a long-term freelancer, then you may want to consider how you’re allocating your earnings. For example, are you saving for VAT, business expenses, and making pension contributions? These are hugely important considerations in the long run. If you’re unsure how to best plan for these business costs, please contact us for more guidance, around planning for your business, and your personal financial affairs!  

 

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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Your Pension 2019: What You Need To Know

Your Pension 2019: What You Need To Know

What you need to know about your pension in 2019

What are the changes and news impacting pensions this year and how does it apply to you?

 

Doctors lobbying for Pension tax changes also impacting high income earners

Hospital doctors and GPs are currently lobbying the government to amend the pension tax rules. As the current system of restricting tax relief on contributions, means many doctors paying almost all of the extra salary back in tax, if they take on additional responsibilities or work additional shifts. What this means for you is that, this is an issue that doesn’t just affect doctors, as it also potentially restricts the tax relief available to you if you are are an individual with high income. The NHS Pension Service have alerted members of the NHS Pension Scheme, that they could receive a tax bill if their pension savings exceed limits set by HM Revenue and Customs (HMRC). These limits are known as the annual allowance, which is calculated each year, and the lifetime allowance, which is calculated based on overall pension savings. The normal annual pension allowance is currently £40,000 each tax year and limits the amount of pension contributions which qualify for tax relief. The limit covers the combined contributions paid by the taxpayer and their employer. A tapered annual allowance was introduced in April 2016, with the intention of reducing pension tax relief for high earners. It applies to you if you have an adjusted income of over £150,000 and threshold income in excess of £110,000. The rate of reduction in your annual allowance is by £1 for every £2 that your adjusted income exceeds £150,000, up to a maximum reduction of £30,000 at £210,000. This is a complex calculation and we can help you plan to minimise the impact of the rules, as you are taxable on the excess pension contributions over the annual limit.

Request that your pension charge is paid by your fund by 31 July

The Pension Annual Allowance tax charge depends on your marginal rate of tax. Where your income exceeds £150,000, it would be at 45%. Thus, if your pension input for 2018/19 was £40,000 and the limit is tapered to £10,000, the excess of £30,000 would incur a £13,500 tax bill on top of your normal tax liability. You can ask your pension provider to pay HMRC, out of your pension fund, if you’ve gone over your annual allowance and the additional tax is more than £2,000. The deadline is 31 July 2020 for the 2018/19 tax year.

High income child benefit charge and state pension

Last month we looked at tax planning to minimise or eliminate the high income child benefit to keep both husband and wife (or civil partners) looking after a child below the £50,000 threshold. Where your income or your partner’s exceeds £60,000, such that the whole of your child benefit is taxed, you may be tempted not to claim child benefit at all. This may, however, limit the amount of State pension and other benefits, at a later date. Under current rules, both of you must make National Insurance contributions for 35 years to receive a full State Pension. You may claim Child Benefit and choose not to receive the payments, which means you do not have to pay the charge but still receive the associated National Insurance Credits for that year and protect their State Pension entitlement. You should note that grandparents who have ceased working, and are looking after their grandchildren, may also claim NIC credits for that year, which would count towards their 35 year contribution history. Remember that you can check your National Insurance record online on the DWP website to see:

 

  • What you’ve paid, up to the start of the current tax year (6 April 2019)
  • Any National Insurance credits you’ve received,
  • If gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’)
  • If you can pay voluntary contributions to fill any gaps and how much this will cost

You can check your State Pension online at any time, for a forecast of how much you could get. The service will also confirm when you will reach State Pension age, under the law as it stands. Please also be aware that the Government proposes to increase the State Pension age to 68 from 2037.

 

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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Landlords: This Is What You Should Know

Landlords: This Is What You Should Know

“Rent A Room” Relief To Continue For Air BnB Landlords

If you are a landlord renting out part of your property, you will know that you need to pay taxes on any revenue coming from property income, but that there are also tax relief measures you can take advantage of. You should know that, last year, HMRC carried out a review of rent a room relief and proposed that the availability of this generous relief would be restricted to situations where the taxpayer was resident for at least part of the time, when the “lodger” was paying rent. The scheme currently exempts you as a UK taxpayer landlord, from tax gross rents up to £7,500, where rooms within your main residence are rented out. HMRC were concerned that the relief was being “abused” by letting out the entire property using websites such as Airbnb, and living elsewhere temporarily, whilst the tenants were in the property. An example would be for you, as a landlord, to be renting out your house in South London, during Wimbledon fortnight, and potentially receiving up to £7,500 tax free. So you should note, that the Autumn Budget announced that the proposed restriction, was not now being introduced.

 

But Possible Changes To CGT Private Residence Relief

In addition, as a landlord, you need to be aware that the government is currently consulting on important changes to private residence relief, that are likely to be introduced from 6 April 2020. Subsequently, the two possible changes, announced in the Autumn 2018 Budget are: Firstly, to limit to just 9 months the period prior to disposal that counts as a period of deemed occupation. The second is to limit “letting relief” to periods where you as a landlord and taxpayer are in shared occupation with the tenant.

Final period exemption to be reduced

The final period exemption was for many years, three years, and was always intended to cover situations where the landlord taxpayer was “bridging” and waiting to sell their previous residence. However, 36 months was felt to be too generous and was allegedly being abused by a strategy known as “second home flipping”. As a result, the final period relief was restricted to the current 18 month period of deemed occupation a couple of years ago. The latest proposal is to restrict further to 9 months, although it will remain at 36 months for those with a disability, and those in or moving into care.

Possible Lettings Relief Changes

Lettings relief currently provides a further exemption for capital gains of up to £40,000 per property owner. The additional relief was introduced in 1980 to ensure people could let out spare rooms within their property, on a casual basis, without losing the benefit of PRR, for example where there are a number of lodgers sharing the property with the landlord / owner. In practice, lettings relief extends much further than the original policy intention, and also benefits those landlords who let out a whole dwelling that has, at some stage, been their main residence. It is those situations that the government appear to be attacking under the proposed changes. You should note that, as a landlord, if you are renting your property temporarily, whilst working elsewhere in the UK or working abroad, you are then unlikely to be affected by this change as there are alternative reliefs available under those circumstances. Please check with us if you are likely to be affected by the proposed changes as it may be worth considering disposing of your property, before the new rules are introduced from 6 April 2020.

 

 

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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No Deal Brexit? What Does This Mean For Your Business?

No Deal Brexit? What Does This Mean For Your Business?

Is Your Business Ready For A No Deal Brexit?  

As you know, on 13 March, MPs voted to rule out a no deal Brexit. And until something else is decided, no deal Brexit is still the default position. And so, no deal Brexit has now become even more of a possibility, since Parliament has yet again rejected Theresa May’s Brexit deal last week. Subsequently, the UK has until April 12 to come up with an alternative to leaving without any deal. As the Commons’ failure to approve a deal, now means that Article 50 can only be extended until that date. So, what does this mean for your business, should the UK leave the EU without a deal?

No Deal Post-Brexit VAT Preparations

If you’re a UK VAT-registered business trading with the EU, you’re being urged by HMRC to be prepared for the possibility of a no deal Brexit. In this respect, HMRC sent letters to 145,000 companies, of which you may well be one,  advising to take 3 actions ahead of the leave date: 

  1. You need to register for a UK Economic Operator Registration and Identification (EORI) number.
  2. You need to decide if a customs agent will be used to make your import and/or export declarations, or if declarations will be made by your business, via software which is compatible with HMRCs systems.
  3. You need to contact the organisations responsible for moving your goods (such as haulage firms), to determine if your business will need to supply additional information to complete safety and security declarations, or if you will need to submit these declarations yourself.

In fact, a report jointly published by HMRC and the National Audit Office (NAO) recently revealed that approximately 55 million customs declarations are currently made by British businesses every year. This figure may rise to 255 million when the UK leaves the EU.

 

Simplified Import Procedures In The Event of No Deal Brexit

In addition, HMRC has implemented a simplified import and export system. So, in the event of a no deal scenario, a mechanism to ensure that your goods move to and from the UK, with a reduced administrative burden for your business is in place, in terms of the documentation required at the port of entry and exit. Hence making it easier for your business, if you import from the EU using roll on roll off (RO-RO) facilities. This development will be of interest to you, if your business is involved in intra-EU trade. And in particular, if your business goods arrive and depart from one of the UK’s RO-RO locations, for example, Dover or the Channel Tunnel. You need to consider if you wish to make use of this provision. Likewise, HMRC has advised that you will need to register your business to use Transitional Simplified Procedures (TSP), effective since 7 February 2019 via the following link: https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal. Altogether, these simplified transitional procedures will reduce the amount of information you need to give in an import declaration, when your goods are crossing the border. They do this by allowing you to defer giving a full declaration and paying the relevant customs duty.

 

Guidance Tool

The government has also devised a guidance tool to help prepare your business for the UK leaving the EU. You can use this tool to find out:

  1. What your business may need to do to prepare for the UK leaving the EU
  2. What’s changing in your industry
  3. Information on specific rules and regulations

You’ll need to answer 7 simple questions to get the relevant guidance for your business.

 

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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Self Employed: 5 Steps To Help You Set Up

Self Employed: 5 Steps To Help You Set Up

Self Employed?

If you’ve made the decision to move towards working for yourself, you should consider if you want to be a sole trader, a shareholding director of a limited company, or trade as a partnership. Once you’ve decided, you will need to inform HMRC. So, if you choose to go self employed or enter into a partnership, you will need to advise HMRC, so they can register you to receive a self assessment tax return.  In addition, you will also need to tell them if you form a limited company. And, as a self employed person (including a partner), you will likely be required to pay income tax and Class 2 and 4 National Insurance contributions, under self assessment.

1.     Self employed start up costs

Starting up a new business can be a costly exercise, and you’ll need to open a new business bank account for all your future work-related expenditure. It is vital you always keep records of accounts, to help you ensure you report the correct taxable profit to HMRC, after the end of any tax year.

Budgeting and forecasting

When you’re writing your financial forecast for your business, you should consider the following:

  • Do you have access to funds you can use to start up your business?
  •  Do you have savings to carry you through periods of no income or unexpected expenses?
  • Are there any life changing events on the horizon, such as moving to a new house or having a new baby?
  • When employing staff, have you considered sick pay and annual leave?

2.     Are there any self employed credits or grants available?

You also have to understand if you’re eligible to claim any self employed benefits, tax credits or even grants. You can check this easily by accessing organisations like the Citizens Advice Bureau or Gov.UK websites, to establish what you might be eligible for.

 

3.     What about Location?

If you go self employed, you’ll need to decide where to locate your new business. You could run it from the comfort of your own home, or you may need to rent or purchase another property, as your place of work. If you decide to rent business premises, it is vital you check if there are any rules in place, restricting business activity. What’s more, you also need to check if the environment is suitable for the type of work to take place. If you are renting an office space, you must ensure you know your monthly costs, outside of your initial rental payments. Costs such as services, or any upcoming upgrades to the building, which may increase the rental costs in the future. In addition, don’t forget that, if you convert part of your home into businesses premises, you may be required to pay business rates, on top of any existing council tax commitment. You will also be asked to pay these rates, if you convert any part of your property into a shop/workshop. This will also be the case if client visits become a daily occurrence and you have dedicated rooms in your home, solely for business purposes. 

 

4.     Insurance

Check your insurance policy and, if in any doubt, call your broker to see if you need to take out additional cover for any business activity within your household. This isn’t an expensive addition, and most companies will combine additional cover into one domestic and business policy. If your business requires clients to enter your property, you may be advised to take out public liability insurance, another inexpensive addition to your insurance policy. You may also be required to hold a licence, depending on the nature of your business.

 

5.     Business name

When deciding if you’re going to use a trading name for your business, you’ll need to be aware of any restrictions in place. If you’re thinking of forming a company, you can check if your proposed company name is already in use by using the Companies House name availability checkerIf your business is to have a website, you’ll need to check if there are suitable domains available for your business name. Once everything’s in place, you can get to work on your new business, and enjoy working for yourself.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business, setting up as self employed, forming a limited company, and selecting the right cloud accounting solutions, such as QuickBooks. 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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Did You Know About These Tax-Free Benefits?

Did You Know About These Tax-Free Benefits?

Tax Doesn’t Have To Be Taxing!

When it comes to tax, it’s not every day you can enjoy tax free benefits, which, incidentally, also apply to Summer activities… Here are 2 great benefits you can take advantage of right now!

A Staff Summer Party Can Be A Tax-Free Benefit

Your organisation may have an annual Christmas party for staff, but the tax rules also allow staff parties at other times of the year, which are a tax-free benefit, if certain conditions are satisfied. The exemption applies to an annual party (for example, a Christmas party. Or similar annual function (for example, a summer barbecue), provided for employees and is available to all employees. Or it is available to all employees at that location, where the employer has more than one location. If the employer provides two or more annual parties or functions, no tax charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate. For each function the cost per head should be calculated. The cost per head of subsequent functions should be added. If the total cost per head goes over £150, then whichever functions best utilise the £150 are exempt, the other is taxable.

 

Make School Holidays Easier with Tax-Free Childcare

Did you know there is a government scheme available that can help contribute towards childcare costs? Which may mean fewer of your employees will need time off at the same time this summer. Tax-Free Childcare is a scheme available to working parents, with children from 0-11 years, and many parents are not taking advantage of the scheme. HMRC has said it would welcome help from employers in changing that. So please tell your employees about Tax-Free Childcare, and how it can reduce their childcare costs. Eligible parents can get up to £2,000 per child, per year to spend on qualifying childcare (effectively a 25% top up). Note that Tax-Free Childcare isn’t just for everyday childcare costs, such as childminders and nurseries, parents can also use it to pay towards the cost of: 

  •  After school clubs
  •  Summer camps
  • School holiday activities 

 

Lotuswise Chartered Accountants and Business Consultants can help you make sense out of tax 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.

Watch the video here.

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How To Manage Employees With A Side Business

How To Manage Employees With A Side Business

25% of UK Employees Run A Side Business

Did you know that a recent study suggests that 25% of UK employees are running at least one business project alongside their day job?

What Is A Side Business?

You would define a side business as a secondary business or job that brings in, or has potential to bring in, extra income. As such, It is particularly popular among millennials, who tend to start a side project as a hobby or in order to explore a new challenge. And millennials tend to have different attitudes towards work and technology. They are also used to being able to work from anywhere, using a smartphone or a tablet.

Employees With A Side Activity Feel more Content

Did you also know that various studies have shown that employees who have a side business, report feeling happier and more content. However as a business employer, you may view a side activity as a negative distraction from your employee’s day jobs.

The truth is that many of your best employees may have a side activity and you might need to be more supportive. A side job can actually be a good thing as long as it doesn’t involve working for one of your competitors or doing anything that might damage your main business, as an employer.

Employees With A Side Job Learn New Skills With No Cost To You

Your employees could actually learn new and useful skills from running their own side activity. They can gain real-life experience, in customer service, as well as project management or budgeting that can be applied,  in their day job. From your perspective as an employer, your employees are gaining new skills that can make them better at their jobs and you won’t need to pay for any training. In addition, and you may not realise this, but further research studies have found that employees who have the drive to work a side job, are more likely to be innovative, proactive, and organised. They are also more likely to come up with new ideas, which they have gained through their own new experiences. Hence benefitting you and your business two-fold.

Employees With A Side Activity Want to Remain In Full Employment

However, and you should note that, according to a well-known careers website recent survey, over 70% of employees with a side business want to remain in full time employment. They don’t want their side job to become their full time job, as it’s more of a hobby / passion that just happens to create an income.

Get Used To The Side Business Trend!

It seems that the side business trend is here to stay and if you are an employer, you need to shift your view – a side business is a positive thing. However, you should also consider adding a non-compete clause to contracts, just to ensure that there is no temptation for your employees, to side hustle in any way that could damage your business.

 

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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6 Ways an App Can Support Your Business Growth

6 Ways an App Can Support Your Business Growth

The use of smartphones has changed dramatically over the past decade: it’s gone from being merely a gadget to an increasingly used and important lifestyle and business tool. A report by Ofcom (the UK regulator for the communications services) referred to this change in our use of this technology as the ‘Smartphone obsession. Ofcom’s Director of Market Intelligence, Ian Macrae, said: “Over the last decade, people’s lives have been transformed by the rise of the smartphone, together with better access to the internet and new services. “Whether it’s working flexibly, keeping up with current affairs or shopping online, we can do more on the move than ever before. “ The report found that 72% of adults say that their smartphone is their most important device for accessing the internet; 71% say they never turn off their phone; and 78% say they could not live without it. The amazing thing is that these figures still appear to be rising. So, most importantly for you, how can mobile phones and mobile apps support and help your business grow? We have six approaches for you to consider.

1. Access to tools and resources around the clock

In general, our demands and expectations towards finding information, and towards the length of time it should take to find it, have vastly increased. The information we need, should be readily available, and, buffering and tedious searching will often be cut short, so we can try something else. Generally, we’re always on the lookout for a better user experience. Apps provide you with the opportunity to compile your information and resources into one streamlined solution, which can be accessed whenever it is convenient for you – with no waiting time. Apps can provide solutions for all your downloadable resources, communication requests, client referrals, marketing incentives, video content, up-to-date news, software, secure content sharing, tax updates, tax calculators and so much more.  

2. A new marketing and communications channel

An app can be an additional channel in your current marketing mix. Use it for targeted marketing, with geolocation tools which can filter customers according to where they are based. Your user can also set permissions and personalisations which tailor the app to be suitable to their preferred working methods. You can also send Push notifications to bespoke categories allowing only the most relevant alerts and reminders – for example, a deadline notification, an event RSVP, perhaps a special offer, or new content which is available in the app. Video content can be added to your app where your clients can access your most recent uploads with business advice, tutorials, and any other content you wish to include.

3. Gather consumer data

By fully utilising your app to streamline business processes, you can collect data on how your clients engage with the app. What content are they accessing, and how regularly do they use it? Which resources are most popular, and which resources are not used? You can then investigate what other services your clients require to get them more engaged with your service offering. Naturally, and in line with privacy regulations, this provides a directional view of your customer behaviour. In order to get more specific, you will then need to ask permission from your clients and to store their information securely, and in line with GDPR regulation.

4. A new contact and sharing solution

Today, there are plenty of quick options enabling your clients to get in touch with you, and any of them can be featured on your app.  It just depends on what you would prefer. To name a few, you could take client referrals via an app module, through meeting requests, and even by video calling.

5. Optimising business workflows

Whether your business is a complex manufacturing process or whether it manages a sales pipeline, apps can provide a convenient and efficient way to optimise your business workflow. For example, consider your salesperson taking business cards, who later records your client information from them. Through an app, you could streamline this process, through an off-the-shelf CRM, or through a bespoke module which can take a photo and automatically scan the data into the system.

6. Improved user experience through Smartphone capabilities

When considering using or developing your own app for your business, consider how you can leverage the technology inherent in the smartphone device – whether that’s Bluetooth, GPS, face recognition, or voice recognition. A common example is to use your camera to interact with QR Codes. If you are a firm with stock management, this approach can be used so that you can quickly assess product details through a simple scan of the code. In addition, consider how you can use GPS tracking, for example, to indicate where your package is being delivered and the estimated time of arrival. Lastly, interactions don’t need to be limited to typing. With voice recognition, apps can take on more of an “assistant” role, which you can engage with through voice commands and instructions.  In summary, whatever your business, there is an ever-growing need for the mobile workforce to have their office in their hand. Apps provide this capability, and, through bespoke development, your app can take on its own unique form and help accelerate and grow your business.

 

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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Freelancer: 5 Top Tips For Successful Freelancing

Freelancer: 5 Top Tips For Successful Freelancing

What does it take to be a successful freelancer?

Here are 5 top tips for keeping your freelancer work organised, healthy, and successful! Although it’s not possible to provide a one-size-fits-all plan, these tips will certainly help to keep your freelancing affairs in shape. 

 

1. Draw up a freelancer contract

Regardless of your skillset – whether it’s graphic design, project management, or writing – every new client project needs to be issued with a contract. While, at the outset, dispute might be far from your mind, this is the go-to document that others will seek to review should any disagreement arise later. If you’re new to freelancing, then a contract template is a great place to start – to avoid you getting too preoccupied with creating the perfect contract. You can then add more information, where necessary and make improvements along the way. Even the simplest contract should include all the following key terms:

  • The nature of your engagement and the services you’ve agreed to perform
  • Assurances your client’s information will be kept confidentially
  • How much you will be paid, and when, throughout the project
  • Details of any ownership of intellectual property
  • Once your work has been accepted by the client, the client also accepts full responsibility for any use of the project files moving forward
  • Details of liability insurance
  • Cancellation procedure for you and your client
  • Membership of relevant professional bodies

2. Agree payment terms before starting a project

A big issue with freelancing is ensuring you’re paid enough, you’re paid on time – and you are actually paid. Therefore, to ensure you’re going to get paid, it’s best to agree your payment terms upfront. This is better than diving into a new project, and trying to resolve payment later. Depending on the nature of your contract under negotiation, a successful payment structure could be to request 50% upfront, and the remaining 50% upon completion – but before you deliver the completed project files. In cases where the contract is of an ongoing nature, you may wish to agree staged payments, whereby money is paid after you have passed milestones, pre-agreed in your contract. You may also want to consider regular instalments. The price you choose to charge as a freelancer should include time spent on tasks such as sourcing clients, preparing proposals, sending/managing invoices, meetings, and other items which are required to run your freelancing business. By not considering these tasks in your pricing, you run the risk of not being paid sufficiently.

3. Be prepared to say ‘no’

When in the process of agreeing the terms of your project, don’t be afraid to say ‘no’. It’s too easy to get caught up in the moment and agree to everything your client asks – because you want the project and you want a happy client. But promising too much can come with a whole array of problems. It could end with you spending too long on an increasingly unprofitable project, and risk you not being able to deliver the project in the agreed timescale.

4. Create a freelancer portfolio

Create a portfolio of projects, in which you specialise, to showcase to prospective clients. We encourage you to include projects specifically in your specialist area – rather than putting together a portfolio of everything you’ve ever worked on. If there’s a particular topic you’d like to stick to, then make sure you do. Don’t take on those projects you fear you’re going to struggle to complete, or that may take you too long to deliver. This portfolio will also ensure clients best understand the work you’re able to deliver, and the expected standard they’re going to receive. If a client’s asking for work outside of this scope, be transparent about what you are / are not able to offer them.

5. Stay on top of your finances!

As a freelancer, it’s vital to view your finances as a small business owner would. Make sure you’re on top of your numbers, and ask yourself the following:

  • What is my business revenue?
  • What is my monthly living expenditure?
  • How many visits is my website getting each month?
  • What is my most popular service?
  • How much time is spent on each project, and am I providing accurate estimates?

If you’re a long-term freelancer, then you may want to consider how you’re allocating your earnings. For example, are you saving for VAT, business expenses, and making pension contributions? These are hugely important considerations in the long run. If you’re unsure how to best plan for these business costs, please contact us for more guidance, around planning for your business, and your personal financial affairs!  

 

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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Your Pension 2019: What You Need To Know

Your Pension 2019: What You Need To Know

What you need to know about your pension in 2019

What are the changes and news impacting pensions this year and how does it apply to you?

 

Doctors lobbying for Pension tax changes also impacting high income earners

Hospital doctors and GPs are currently lobbying the government to amend the pension tax rules. As the current system of restricting tax relief on contributions, means many doctors paying almost all of the extra salary back in tax, if they take on additional responsibilities or work additional shifts. What this means for you is that, this is an issue that doesn’t just affect doctors, as it also potentially restricts the tax relief available to you if you are are an individual with high income. The NHS Pension Service have alerted members of the NHS Pension Scheme, that they could receive a tax bill if their pension savings exceed limits set by HM Revenue and Customs (HMRC). These limits are known as the annual allowance, which is calculated each year, and the lifetime allowance, which is calculated based on overall pension savings. The normal annual pension allowance is currently £40,000 each tax year and limits the amount of pension contributions which qualify for tax relief. The limit covers the combined contributions paid by the taxpayer and their employer. A tapered annual allowance was introduced in April 2016, with the intention of reducing pension tax relief for high earners. It applies to you if you have an adjusted income of over £150,000 and threshold income in excess of £110,000. The rate of reduction in your annual allowance is by £1 for every £2 that your adjusted income exceeds £150,000, up to a maximum reduction of £30,000 at £210,000. This is a complex calculation and we can help you plan to minimise the impact of the rules, as you are taxable on the excess pension contributions over the annual limit.

Request that your pension charge is paid by your fund by 31 July

The Pension Annual Allowance tax charge depends on your marginal rate of tax. Where your income exceeds £150,000, it would be at 45%. Thus, if your pension input for 2018/19 was £40,000 and the limit is tapered to £10,000, the excess of £30,000 would incur a £13,500 tax bill on top of your normal tax liability. You can ask your pension provider to pay HMRC, out of your pension fund, if you’ve gone over your annual allowance and the additional tax is more than £2,000. The deadline is 31 July 2020 for the 2018/19 tax year.

High income child benefit charge and state pension

Last month we looked at tax planning to minimise or eliminate the high income child benefit to keep both husband and wife (or civil partners) looking after a child below the £50,000 threshold. Where your income or your partner’s exceeds £60,000, such that the whole of your child benefit is taxed, you may be tempted not to claim child benefit at all. This may, however, limit the amount of State pension and other benefits, at a later date. Under current rules, both of you must make National Insurance contributions for 35 years to receive a full State Pension. You may claim Child Benefit and choose not to receive the payments, which means you do not have to pay the charge but still receive the associated National Insurance Credits for that year and protect their State Pension entitlement. You should note that grandparents who have ceased working, and are looking after their grandchildren, may also claim NIC credits for that year, which would count towards their 35 year contribution history. Remember that you can check your National Insurance record online on the DWP website to see:

 

  • What you’ve paid, up to the start of the current tax year (6 April 2019)
  • Any National Insurance credits you’ve received,
  • If gaps in contributions or credits mean some years do not count towards your State Pension (they are not ‘qualifying years’)
  • If you can pay voluntary contributions to fill any gaps and how much this will cost

You can check your State Pension online at any time, for a forecast of how much you could get. The service will also confirm when you will reach State Pension age, under the law as it stands. Please also be aware that the Government proposes to increase the State Pension age to 68 from 2037.

 

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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Landlords: This Is What You Should Know

Landlords: This Is What You Should Know

“Rent A Room” Relief To Continue For Air BnB Landlords

If you are a landlord renting out part of your property, you will know that you need to pay taxes on any revenue coming from property income, but that there are also tax relief measures you can take advantage of. You should know that, last year, HMRC carried out a review of rent a room relief and proposed that the availability of this generous relief would be restricted to situations where the taxpayer was resident for at least part of the time, when the “lodger” was paying rent. The scheme currently exempts you as a UK taxpayer landlord, from tax gross rents up to £7,500, where rooms within your main residence are rented out. HMRC were concerned that the relief was being “abused” by letting out the entire property using websites such as Airbnb, and living elsewhere temporarily, whilst the tenants were in the property. An example would be for you, as a landlord, to be renting out your house in South London, during Wimbledon fortnight, and potentially receiving up to £7,500 tax free. So you should note, that the Autumn Budget announced that the proposed restriction, was not now being introduced.

 

But Possible Changes To CGT Private Residence Relief

In addition, as a landlord, you need to be aware that the government is currently consulting on important changes to private residence relief, that are likely to be introduced from 6 April 2020. Subsequently, the two possible changes, announced in the Autumn 2018 Budget are: Firstly, to limit to just 9 months the period prior to disposal that counts as a period of deemed occupation. The second is to limit “letting relief” to periods where you as a landlord and taxpayer are in shared occupation with the tenant.

Final period exemption to be reduced

The final period exemption was for many years, three years, and was always intended to cover situations where the landlord taxpayer was “bridging” and waiting to sell their previous residence. However, 36 months was felt to be too generous and was allegedly being abused by a strategy known as “second home flipping”. As a result, the final period relief was restricted to the current 18 month period of deemed occupation a couple of years ago. The latest proposal is to restrict further to 9 months, although it will remain at 36 months for those with a disability, and those in or moving into care.

Possible Lettings Relief Changes

Lettings relief currently provides a further exemption for capital gains of up to £40,000 per property owner. The additional relief was introduced in 1980 to ensure people could let out spare rooms within their property, on a casual basis, without losing the benefit of PRR, for example where there are a number of lodgers sharing the property with the landlord / owner. In practice, lettings relief extends much further than the original policy intention, and also benefits those landlords who let out a whole dwelling that has, at some stage, been their main residence. It is those situations that the government appear to be attacking under the proposed changes. You should note that, as a landlord, if you are renting your property temporarily, whilst working elsewhere in the UK or working abroad, you are then unlikely to be affected by this change as there are alternative reliefs available under those circumstances. Please check with us if you are likely to be affected by the proposed changes as it may be worth considering disposing of your property, before the new rules are introduced from 6 April 2020.

 

 

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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No Deal Brexit? What Does This Mean For Your Business?

No Deal Brexit? What Does This Mean For Your Business?

Is Your Business Ready For A No Deal Brexit?  

As you know, on 13 March, MPs voted to rule out a no deal Brexit. And until something else is decided, no deal Brexit is still the default position. And so, no deal Brexit has now become even more of a possibility, since Parliament has yet again rejected Theresa May’s Brexit deal last week. Subsequently, the UK has until April 12 to come up with an alternative to leaving without any deal. As the Commons’ failure to approve a deal, now means that Article 50 can only be extended until that date. So, what does this mean for your business, should the UK leave the EU without a deal?

No Deal Post-Brexit VAT Preparations

If you’re a UK VAT-registered business trading with the EU, you’re being urged by HMRC to be prepared for the possibility of a no deal Brexit. In this respect, HMRC sent letters to 145,000 companies, of which you may well be one,  advising to take 3 actions ahead of the leave date: 

  1. You need to register for a UK Economic Operator Registration and Identification (EORI) number.
  2. You need to decide if a customs agent will be used to make your import and/or export declarations, or if declarations will be made by your business, via software which is compatible with HMRCs systems.
  3. You need to contact the organisations responsible for moving your goods (such as haulage firms), to determine if your business will need to supply additional information to complete safety and security declarations, or if you will need to submit these declarations yourself.

In fact, a report jointly published by HMRC and the National Audit Office (NAO) recently revealed that approximately 55 million customs declarations are currently made by British businesses every year. This figure may rise to 255 million when the UK leaves the EU.

 

Simplified Import Procedures In The Event of No Deal Brexit

In addition, HMRC has implemented a simplified import and export system. So, in the event of a no deal scenario, a mechanism to ensure that your goods move to and from the UK, with a reduced administrative burden for your business is in place, in terms of the documentation required at the port of entry and exit. Hence making it easier for your business, if you import from the EU using roll on roll off (RO-RO) facilities. This development will be of interest to you, if your business is involved in intra-EU trade. And in particular, if your business goods arrive and depart from one of the UK’s RO-RO locations, for example, Dover or the Channel Tunnel. You need to consider if you wish to make use of this provision. Likewise, HMRC has advised that you will need to register your business to use Transitional Simplified Procedures (TSP), effective since 7 February 2019 via the following link: https://www.gov.uk/guidance/register-for-simplified-import-procedures-if-the-uk-leaves-the-eu-without-a-deal. Altogether, these simplified transitional procedures will reduce the amount of information you need to give in an import declaration, when your goods are crossing the border. They do this by allowing you to defer giving a full declaration and paying the relevant customs duty.

 

Guidance Tool

The government has also devised a guidance tool to help prepare your business for the UK leaving the EU. You can use this tool to find out:

  1. What your business may need to do to prepare for the UK leaving the EU
  2. What’s changing in your industry
  3. Information on specific rules and regulations

You’ll need to answer 7 simple questions to get the relevant guidance for your business.

 

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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Self Employed: 5 Steps To Help You Set Up

Self Employed: 5 Steps To Help You Set Up

Self Employed?

If you’ve made the decision to move towards working for yourself, you should consider if you want to be a sole trader, a shareholding director of a limited company, or trade as a partnership. Once you’ve decided, you will need to inform HMRC. So, if you choose to go self employed or enter into a partnership, you will need to advise HMRC, so they can register you to receive a self assessment tax return.  In addition, you will also need to tell them if you form a limited company. And, as a self employed person (including a partner), you will likely be required to pay income tax and Class 2 and 4 National Insurance contributions, under self assessment.

1.     Self employed start up costs

Starting up a new business can be a costly exercise, and you’ll need to open a new business bank account for all your future work-related expenditure. It is vital you always keep records of accounts, to help you ensure you report the correct taxable profit to HMRC, after the end of any tax year.

Budgeting and forecasting

When you’re writing your financial forecast for your business, you should consider the following:

  • Do you have access to funds you can use to start up your business?
  •  Do you have savings to carry you through periods of no income or unexpected expenses?
  • Are there any life changing events on the horizon, such as moving to a new house or having a new baby?
  • When employing staff, have you considered sick pay and annual leave?

2.     Are there any self employed credits or grants available?

You also have to understand if you’re eligible to claim any self employed benefits, tax credits or even grants. You can check this easily by accessing organisations like the Citizens Advice Bureau or Gov.UK websites, to establish what you might be eligible for.

 

3.     What about Location?

If you go self employed, you’ll need to decide where to locate your new business. You could run it from the comfort of your own home, or you may need to rent or purchase another property, as your place of work. If you decide to rent business premises, it is vital you check if there are any rules in place, restricting business activity. What’s more, you also need to check if the environment is suitable for the type of work to take place. If you are renting an office space, you must ensure you know your monthly costs, outside of your initial rental payments. Costs such as services, or any upcoming upgrades to the building, which may increase the rental costs in the future. In addition, don’t forget that, if you convert part of your home into businesses premises, you may be required to pay business rates, on top of any existing council tax commitment. You will also be asked to pay these rates, if you convert any part of your property into a shop/workshop. This will also be the case if client visits become a daily occurrence and you have dedicated rooms in your home, solely for business purposes. 

 

4.     Insurance

Check your insurance policy and, if in any doubt, call your broker to see if you need to take out additional cover for any business activity within your household. This isn’t an expensive addition, and most companies will combine additional cover into one domestic and business policy. If your business requires clients to enter your property, you may be advised to take out public liability insurance, another inexpensive addition to your insurance policy. You may also be required to hold a licence, depending on the nature of your business.

 

5.     Business name

When deciding if you’re going to use a trading name for your business, you’ll need to be aware of any restrictions in place. If you’re thinking of forming a company, you can check if your proposed company name is already in use by using the Companies House name availability checkerIf your business is to have a website, you’ll need to check if there are suitable domains available for your business name. Once everything’s in place, you can get to work on your new business, and enjoy working for yourself.

 

Lotuswise Chartered Accountants and Business Consultants can help you and your business, setting up as self employed, forming a limited company, and selecting the right cloud accounting solutions, such as QuickBooks. 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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