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Fixing The Foundations To Deliver Change
On October 30, Rachel Reeves, the first female Chancellor of the Exchequer, unveiled the 2024 Autumn Budget, long-awaited as a major development, thus marking a tremendous turning point in the UK economy.
Reeves’ speech also touched on the reshaping of public expenditure and revenue proceeds by the Labour government after 14 years under the Conservative government. This budget is said to mark the turning point or a devoted budget which woos spending on public services with a flexible target of bringing in an extra £70 billion from Yes, it’s about 2% of GDP.
There are notable changes such as the employer National insurance contributions which are being raised to generate an extra £25 billion on average each and every year, increases on capital gains tax and revision on inheritance tax by the government. Looking into the practical implications of this historical budget, it is apparent that the Labour government has come of age to take the country into a new direction characterised by growth-oriented policies and investments.
If you are selling property which is furnished and used for commercial purposes, you have a good news. You can get entrepreneur’s relief and save money on taxes. This means that the basic tax rate payer and the those paying their income tax at higher rate will be paying CGT at 10 % instead of 28%. The announcement by Rishi Sunak that the CGT will remain at the same rate is seen as a relief for all those who are letting their rental properties and many property owners who were expecting that they will have to bear a high CGT on the sale are now analysing if they should sell the property now. So if your property qualifies for furnished holiday lettings make sure that you utilise the reliefs available. The reliefs available are entrepreneurs relief, business asset roll over relief and the gift relief. To be eligible for all the CGT reliefs the property should meet the following criteria: To be eligible for Entrepreneur’s relief both of the following must apply: If both the above conditions apply, you will be able to pay the CGT at the reduced rate of 10 %. If you are own more than one FHL and you are selling one of the properties you will have to consult and accountant whether the relief will apply to you or not as might not be treated as the business disposal. HOW DOES IT WORK ? Step 1: Work out the gain from the property disposal Step 2: If you are selling more than one property combine all the gains Step 3:Deduct the annual capital gains tax allowance £12, 300 Step 4: You will be paying 10% on what is left. Your property is stop being treated as FHL if it is used for the private use. If you have more than one property in the UK it will be treated as one business for FHL purposes. If you are looking for a property accountant contact Taxaccolega at 020 8127 0728. We are affordable accountants based in Croydon and South hall and our expert team will help you with all your taxes if you are buying or selling property or even If you are already in the property business and you want accountant to make rental accounts. Source: www.gov.uk
When you make a profit on the sale of an asset (although there are few exemptions), you will have to pay tax on it. HMRC emphasises that you need to pay tax on the profits and not on the proceeds of the sale. If you own shares and you want to sell them when they have increased in value you will have to pay CGT on the profit that you will make from disposing them 1. Making use of the Annual Capital Gains Tax Allowance Each individual is given an annual allowance of £12 300. If you sell your shares and you earn a profit which is £12 300 or less then you will not have to make any tax on it. 2. Splitting the sales over 2 years Since you are not allowed to carry the Capital Gains Allowance to the next year, sometimes it is a good idea to spread the selling of your shares over 2 years, instead of selling the shares in 1 year. In this way you sell your shares without paying any Capital Gains Tax on the profits for upto £ 24, 600 in total. 3. Transferring the shares to your wife Transferring the shares of a company to your spouse is tax free. This means that you can sell or transfer the shares to your wife. The profit that you will make will be free of Capital Gains Tax. Transferring the shares that you own to your wife can be advantageous if you are a higher rate taxpayer and your wife is not. She either falls in the Basic rate taxpayer band or if she has no income at all she might have her unused annual personal allowance. If she is a basic rate taxpayer she will be paying tax at 7.5%. The dividend allowance for the couple will also increase, and so will the annual capital gains tax allowance when she is selling the assets, therefore reducing the overall tax. 4. Making use of the losses If you made any loss during a tax year don’t forget to offset it against the gains during that tax year. This will help you bring down the profit and the capital gains tax bill. You might consider selling the shares at a loss during a tax year in which you have made a gain if that reduces your overall tax bill. The losses can be carried forward to the next tax year and can be used against the future gains. You should report the losses within the 4 years of making the disposal. The loss is reported in the self assessment tax return. You might need to hire an accountant to sort out the taxes for you. You might be in the position to claim other reliefs as well and reduce your capital gains tax bill. We at Taxaccolega will give you tax advice depending on your individual situation. Simply call us at 020 8127 0728 or drop us a message here and our expert team of accountants based in Croydon and South hall will be happy to help you.
A discretionary trust is one of the trusts which can be set up by an individual to manage their assets. By creating a discretionary trust you can manage your cash, other investments such as shares, land and buildings in such a way that it can be beneficial to your family in the future when they need it the most. Creating a discretionary trust involves a settlor (an individual who puts the assets in the trust), a trustee (the one who manages the trust), and a beneficiary (anyone who is benefitted from the trust). The beneficiary in the discretion trust does not have a right over the trust assets until they are distributed by the trustees according to the` trust deed’. For example, you want to set some money aside for your grandchildren from your estate and not give them right away, you (the settlor) will put the money in the trust which will then be distributed to the beneficiary (in this case your grandchildren) at a certain age say for example at the age if 25 when they can sensibly manage their money and this will be distributed by the trustee. WHY SHOULD I CREATE A DISCRETIONARY TRUST? Many people want to put their money in the trust as part of the estate planning. . Once the assets are added to the trust they are not part of your estate and therefore they are excluded for the inheritance tax purposes. A discretionary trust is created to ensure the family gets the wealth when they require it. It may be set by an individual going through a divorce who wants to secure his wealth or it may be set by an individual who wants to give some wealth to his parents who are already on state benefits. Once you put your wealth in the Discretionary trust you can make gifts to your family during your lifetime or even after your death. HOW DO WE CREATE A DISCRETIONARY TRUST? Creating a trust usually is a 4 step process in which an individual who is the settlor decides upon which assets to put in a trust, they then appoint the trustees who has the discretion over the distributions from the trust. The beneficiaries are chosen. The terms of the ‘terms of deed’ are defined. WHAT ARE THE TAX IMPLICATIONS? A discretionary trust has a standard rate band of £1000. This means the first £ 1000 is taxed at the standard rate of 20 % while the dividend income up to £1000 is taxed at 7.5%. Dividend income above £1000 is taxed at 38.1% while the other income is taxed at 45%. The trustees will pay the income tax on the income generated from the trust. For example if the trustees received the dividend income they need to pay £45 on the income of £100. The trustees need to fill in the tax return each year if there is income generated by the trust. When the income is then distributed to the beneficiary it comes with a tax credit. It will be treated as though it was already taxed at 45 %. If the trustee is a basic tax rate tax payer or a higher rate tax payer of 40 % they can reclaim the difference between the tax paid by them and the tax paid by the trustee by filling the Self-Assessment form. IF YOU NEED FURTHER HELP Putting money in a trust many require some expert advice. You need to consult a solicitor and a financial advisor to deal with the complex matters such as taxes. We at Taxaccolega can help you with this. Please feel free to contact us at 020 8127 0728 or drop us a message here and we will get back to you.
Today, many people are talking about fair pay and workers’ rights. Let’s Dive in Together! Join the conversation about fair pay and workers’ rights with Taxaccolega! We’re here to simplify the complex world of wages to make sure you understand everything you need to know about these crucial topics, focusing on the National Minimum Wage (NMW) and the National Living Wage (NLW). The Basics: National Minimum Wage (NMW). The National Minimum Wage Act 1998 creates a minimum wage across the United Kingdom. It serves as the minimum hourly rate that employers are legally required to pay their workers. It applies to most employees in the UK, with rates varying based on factors such as age and apprentice status ( apprentice is a person who is learning a trade from a skilled employer, having agreed to work for a fixed period at low wages). The Enhanced Standard: National Living Wage (NLW) The National Living Wage, effective since April 2016, guarantees a higher minimum wage for workers aged 23 and over. It aligns with the rising cost of living, supporting older workers’ financial needs. Key Advantages of NMW and NLW Consequences of Violating Minimum Wage and Living Wage Standards Great News for London Residents! Living in London comes with higher expenses compared to other parts of the UK. But here’s some good news for Londoners: The Living Wage rate in London is £13.15 per hour as per Mayor of London official website. This rate is set to help ensure that people working in London can afford the higher costs associated with living in the city. It’s a step towards ensuring fair compensation for all workers, reflecting the unique challenges of living and working in the vibrant capital. Our Promise to Follow the Rules As a best accountancy firm in London (Croydon), we know how crucial it is for businesses to follow the rules set by NMW and NLW. We help businesses make sure they’re doing everything right and meeting their legal duties when it comes to wage standards. Wrapping Up At Taxaccolega, we provide expert guidance on National Minimum Wage (NMW) and National Living Wage (NLW) compliance. Our chartered accountants in London ensure businesses understand and implement these regulations, fostering fairness in the workplace. Together, let’s build a brighter future founded on principles of fairness, equality, and economic prosperity. To get more information, please contact Taxaccolega Chartered Accountants in Croydon on 0208 127 0728 or email us on info@taxaccolega.co.uk
I have an Online Store – What are the VAT implications? If you are thinking of starting a business online where you will be selling your product through your e store you will have to register your business as usual. You will also have to comply with other legal obligations such as registering yourself for VAT if you cross the threshold of £ 85 000.If you are supplying VAT able supplies and you are not VAT registered you will have to bear heavy penalties. Being online means that you will be selling products in UK as well as internationally. So when and how you will have to register for VAT? WHEN SHOULD I REGISTER FOR VAT? There are different thresholds for online businesses depending on where the business is registered and from where the business is being operated, who the customers are and what the product is which is being sold. It is a very simple concept, if you are operating your business from UK you will have to register for UK VAT. Just make sure that you charge the right rate of VAT. If you have an online store you should be aware of the terms such as : Distance Selling: Distance selling means that you are outside UK but in the EU country and you are selling your product to a customer in UK who are not VAT register either because they are selling product which is exempt from VAT or they are individuals or small businesses who are not required to register themselves for VAT. If the annual sales in distance selling exceeds £ 70, 000 the seller needs to register for UK VAT and charge VAT at the UK rate. Online Market place: If you are selling goods online, you might be operating in an online marketplace. Online marketplace is a website through which anyone can sell the goods. It does not matter if the online market place is established in UK or not, if you have access to the online marketplace or its contents you will be responsible for the online sellers unpaid VAT. And therefore you will have to make sure that the sellers are VAT registered if cross the threshold. You don’t have to register for VAT if you supply VAT exempt supplies such as equipment for disabled but you will be registering for VAT if you sell VAT exempt items but you are buying items of more than £ 85 000 from EU VAT registered suppliers. It is very important that you apply for VAT on time, you should register for VAT as soon as you think that your Vatable supplies will exceed the threshold of £ 85 000 in the next 12 months. Otherwise you won’t be able to charge VAT from your buyers as you won’t have your VAT number, however, you will be paying VAT to HMRC for this period. HOW SHOULD I REGISTER FOR VAT? Once you have crossed the threshold, you will have to register by post. By filling the form VAT1A if you are an EU business and distance selling the goods to UK you will have to fill in the form VAT 1A and post it to HMRC. Within 30 days of applying for VAT registration you will get a VAT registration certificate. It will have your VAT number, deadline of your VAT return and payment, and the effective date of VAT registration. PENALTIES HMRC defines some serious penalties if you default meaning if you are not able to submit the VAT return on time, or if you made a mistake in your return and you do not correct it within 30 days. HOW CAN WE HELP? We at Taxaccolega can help you register your business for VAT, prepare and submit your returns on time. We make sure that all the deadlines are met. Please feel free to call us at 020 8127 0728 or drop us a message here and we will get back to you. The above information is extracted from HMRC website: https://www.gov.uk/vat-businesses
According to the policy paper published by HMRC there are following changes in the income tax additional rate from 6 April 2023: If you are in one of the following in category you will be affected by the change: Will you be paying extra taxes as a result of the increase in the threshold? HMRC has estimated that around £232 000 of the income tax payers will pay the additional rate of tax. If you want to know how much tax you will pay on your income use Taxaccolega payslip calculator and you will get the results immediately and you will know how much tax and national insurance you will pay. The income threshold for the tax year 2022-2023 are in the table below: Income threshold Tax percentage £12 570 0% £12 571- £50 270 20% £50 271-£125 140 40% £125 140 above 45% Should I pay income tax on my investments? Income is paid on all kinds of earnings. If you are employed by an employer or you are self employed you should pay income tax . Income tax will also be paid on the following: What can I do to minimize my taxes if my total income is falling in the additional rate tax band. Because of the changes expected in the higher and the additional rate band a lot of people currently paying tax at 40% will start to pay tax at 45%. This will affect their net pay. If you are self employed you can be creative with the way you get your income, however if you are employed and getting a fixed salary from your employer you won’t have much choice but to lose some extra money in paying taxes. For information on calculating your take home pay and taxable income, get in touch with us today! If you are self employed Employing your partner If you are running your own business and getting your income as salary you can employ your partner as well.If your partner has some unused personal allowance you can make use of their allowance this can lower your taxable income and therefore your income tax. Deciding on the timing of your dividend wisely Although different tax rates apply to your dividend income, the dividend income is added to your total income and it might raise the tax band your income falls in pushing you to the higher or the additional rate band .Each year you get a dividend allowance of £2000 this means you only pay tax on the income above this amount. Can you carry forward the allowance? Consider investing in ISA You don’t have to pay tax on the dividend income from ISA. To reduce your overall taxes if you want to have some investments in the form of shares you can invest in ISA. If you are a landlord If you are a landlord and you have rental income you should make sure that you claim all the allowable expenses which can lower your taxable income. You might also want to consider transferring it in the name of your spouse if they have a lower or no other income . If they have no other income you can utilize their personal allowance and if they have a lower income you can pay tax on the lower tax rates. You might also consider transferring it to a company . If you want more information contact Taxaccolega and our team of accountants in london will be happy to help you.
Research and development plays a vital role when it comes to the growth of your business. Every company should invest in research and development to improve their existing products and to innovate new ones. The government also encourages companies to invest in research and development projects by giving tax relief .This can be in the form of cash injection or reduced corporation tax. Many companies do not realize that they qualify for research and development tax relief. If you are not sure if the research and development relief applies to you contact Taxaccolega, accountants in croydon and they will help you with it. In simple words you can qualify for the relief if the following applies to you: You will have to be very organized if you want to get relief. In Fact the rules are getting even more serious. One of which is you will be required to provide additional information in relation to the claim which will include description of R&D undertaken,breakdown of qualifying costs, details of the agent who advised on the R&D claim and a space for the sign off from the senior officer of the company. Also there is a requirement for the digital submission of all the corporation tax returns that contain R&D claims. You will be eligible for different types of R&D relief depending on the size of your company or if the project has been contracted to you. What can I claim? If you are an SME If you are an SME, R&D tax relief allows companies to What are the qualifying costs? For your employees working directly on the R&D project you can claim a portion of their employee costs which will include their salaries, wages, class 1 NI, pension fund contribution. If you have hired someone else for R&D activities you can claim 65% of the relevant costs. 3.Software Costs If you have bought any software which you are using for R&D activities you can claim costs such as license fees 4.Consumable Items You can claim for materials and utilities When can I claim R&D costs? If you need help with your research and development claims and you are looking for research and development agents, we at Taxaccolega can help you with your R&D claims. Source: https://www.gov.uk/guidance/corporation-tax-research-and-development-rd-relief
What is stamp duty? Stamp duty is a tax which you have to pay when you buy a property over a certain value. The stamp duty is paid by the UK residents and also by the non UK residents at a surcharge of 2% for buying property in the UK which costs more than £ 40 000. The Stamp duty cut in the mini budget As part of the government’s growth plan 2022, the chancellor announced that the stamp duty cuts.The changes are as follows: This stamp duty cut applies to any purchases that are finalised on or after 22 September 2022. You can also benefit from the stamp duty cuts if you are in the process of buying the house. If you want to know how much stamp duty you will have to pay as first time buyers or as purchasers of additional property go to our stamp duty tax calculator Do the changes apply to the landlord as well? These changes apply to the landlords as well, however, the landlords will continue to pay the additional 3% surcharge on the purchase of an additional property. The 3% surcharge will apply when you are buying a second home as an investment buy to let or a holiday home. However,it will not apply on the purchase of caravans, house boats or mobile homes The 3 year rule If you buy a second property which will be your main residence now but there was a delay in the selling of your previous property which was your main residence you must have paid the higher rates of the stamp duty as you owned 2 properties at one time. However, there is a 3 year rule, according to which if you sell your previous property within 3 years of buying the new one you can apply for a refund for the additional rates which you paid above the normal stamp duty rates. How much stamp duty will I pay if I buy a buy-to -let property The additional stamp duty will apply to any property which is bought for £40 000 or more. How much stamp duty you pay depends on the price of the property. The thresholds and rates are listed in the table below: Property price / transfer value Stamp duty rate Upto £250 000 3% From £250 000 to £925 000(the rate will apply to £675, 000) 8% From £925,001 to £1.5 million(the rate will apply to the next £525,000) 13% From £1.5 million above(the rate will apply to the remaining amount) 15% Stamp duty tax relief for multiple dwellings According to HMRC you can get a relief when you buy more than one dwellings if a transaction include freehold and leasehold interests in more than one dwelling.This means that if the home buyer is purchasing multiple properties they can claim this relief. Landlords can be benefitted by this relief as well. For more on this relief you can contact Taxaccolga and our property accountants can help you. Taxaccolega, accountants based in croydon,London specialises in property tax, inheritance tax, social media tax, personal tax and corporation tax. For any queries related to book keeping, tax planning please contact us at 020 8127 0728 or email us here
If you started your business as a self employed person or as a sole trader or as a partnership you need to register for a self assessment tax return with HMRC latest by 5th October in the second tax year of your business so you can pay your taxes. At Taxaccolega Chartered Accountants, we offer a range of advice for dealing with taxes for sole traders and start ups, to larger established companies, and we believe that everyone should benefit from submitting their tax returns early. So it’s important to keep the deadlines to submit in mind. You have to submit your tax return to HMRC latest by Or HMRC no longer sends self assessment tax return forms however, you if you want to submit the paper return you can download one from here Whichever way you choose to submit your tax return online or offline you should not leave it to the last minute. HMRC will accept the completed tax return for the tax year 2021 to 2022 anytime between 6 April 2022 till 31 Jan 2023. There are benefits for submitting the tax return early and few are listed below. If you plan to submit the tax return early you will be better off in a way that you will have time to budget your tax payments. You can keep the tax money aside aswell.You will also have time to consult your tax advisors and accountants for ways to reduce your taxes by suggesting some reliefs that might apply to your situation. Submitting your tax return early doesn’t mean that you have to pay the tax due early as well. Submitting your tax return and paying your tax liability are two different things.
However, if you submit your tax return early and you HMRC owes you a refund you will get the refund early and this will make your cash flows look better. HMRC helpline is very busy and especially during the times near the tax deadlines. You have to wait for long hours if you want to ask HMRC questions. This adds stress when you don’t understand something about your tax return and only a few hours are left before you can submit the return otherwise you will have to bear penalties if they are not submitted on time. If you start to work on your self assessment tax return early you can have your queries answered and you can fill in the tax return properly, this will give you peace of mind and you won’t be worried that you have over under or over paid which can affect your cash flows. When you plan to do your self assessment tax return early you are more likely to be better organized. When you are more organized you can reduce your tax bill by including all the allowable expenses. If you need to file your self assessment tax return and you are looking for a tax advisor for professional advice contact Taxaccolega and our team of specialist accountants will be happy to help you.nec ullamcorper mattis, pulvinar dapibus leo.
The government announced that the corporation tax will increase from 19% to 25% from April 2023 as already legislated for. Although the growth plan statement on 23rd September proposed to cancel the changes, it was announced on 14th Oct that the original plan to increase the corporation tax will go ahead. What are the changes? The tax rate will increase to 25% for companies making a profit of £250 000 or more.Corporation tax will be paid at 19% for companies making a profit upto £50 000. Companies with profits between £50 000 and £250 000 will pay tax at the main rate reduced by a marginal relief. How does it affect the associated companies? The upper and the lower limits are reduced in case of the associated companies. This is because in the associated companies the profits are equally divided among the companies. What is an Associated company? According to HMRC a company is associated(no matter where it is resident for tax purposes) if : How should I be prepared ? Make sure you are utilizing your AIA(annual investment allowance) You can deduct the full value of an item that qualifies for AIA from your profits before tax. There is also an AIA extension which is going to affect the businesses investing more than £200 000 in plant and Machinery from Jan 2022.This extension is for the investments from Jan 2022 till March 2023. The AIA amount has temporarily increased to £1million between 1 Jan 2019 and 31 March 2023.The companies can claim 130% in the first year relief on the main pool qualifying asset and 50% in the first year on the special rate pool . Make sure you are using all kinds of reliefs When you are making your accounts you should make sure that you are saving costs by utilizing reliefs available to your business. There are different reliefs that apply to different businesses and in different situations. You can talk to your accountant to make sure you are saving as much costs as you can, Be clear on your group structure If you own more than one company you should be very clear about the control issue. Make sure you understand if your company is associated or not in order to use the right tax rates to your profits and avoid any penalties. Maximize your profits With the rising costs it’s important that you focus on maximizing your profits. You can do this by better advertisement on social media, introducing more innovative products etc. Need help ?If you are looking for an accountant you can help you with your corporation tax, your group structures, tax returns contact your accountants in croydon, Taxaccolega and our team of accountants will be happy to help you.
