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 : 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. 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
I have income from abroad do i report it to HMRC?
In the time of pandemic as the economic uncertainty continues the last thing anyone can think of is giving away money to HMRC in the form of penalty. The deadline to submit Self- Assessment tax return is 31 Jan 2021. You can pay your tax bill till 31 Jan 2020, however it is always a good idea to start filing the return early and make the payment before the deadline in order to avoid any delays in the payments which can incur a penalty. Even if you are thinking of paying the penalty over the phone its always better to do it early than when the deadline is near as HMRC call centre is very busy at that time. HAVE YOU INCLUDED ANY INCOME FROM ABROAD IN YOUR SELF-ASSESSMENT TAX RETURN? If you had any foreign income and you were UK resident you should report it to HMRC by filling self-assessment tax return and pay UK tax on it. You can do this by registering yourself for self-assessment, you should have done this by 5th October. In case you have missed the deadline you might incur a penalty, however, if you have a valid reason you can appeal against it. UK RESIDENT OR NOT? If you want to know you are a UK resident or not you should ask yourself 2 simple questions: If the answer to any of the above questions is yes then you are a UK resident and you will be filling in the self-assessment tax return and paying tax. FOREIGN INCOME Foreign income will include rental property, any online sales, and dividends from foreign investments for example if you have invested in shares or you have income coming from different funds. IF THE ONLY FOREIGN INCOME THAT YOU HAVE IS DIVIDENDS There is an exception when you do not have to fill in the self-assessment tax return If you have invested in shares abroad but all of the following apply then you do not have to register and fill in the self-assessment form: If your only foreign income is dividends and your total dividends which also includes your UK dividends are less than £ 2000 you do not have to fill in the self-assessment tax return provided you do not have any other income (foreign or UK income ) to report. HOW CAN WE HELP YOU? We at Taxaccolega, have an expert team of accountants. If you want any advice on personal taxes please free to contact us. We can advise you, prepare accounts and file your returns on time. If you have received any penalty and you want to appeal against it we can do it for you. Call us at 020 8127 0728 and we will be happy to help you.
How will VAT change after Brexit?
As the transition period of Brexit is coming to an end in Jan 2021, it`s time that businesses who are dealing with EU countries should start to look at the changes that will follow and get their businesses ready for the change. Although the government has tried its best to minimise the impact of Brexit on sales, the no-deal Brexit will affect the way the business in many ways including how VAT is charged. This is because the UK will probably no longer be part of the EU VAT area. VAT AND LOCAL BUSINESS If you are a VAT registered business and you are selling goods and services, hiring or loaning goods to someone, selling business assets, or even providing canteen meals to your employees you charge VAT on the items you are selling. A VAT registered business can also reclaim any VAT on the business-related purchases. A standard rate of 20 % will be charged on the sales unless the goods supplied come under the list of ‘zero-rated’ or ‘reduced’ supplies. Following Brexit, the rules for VAT will remain the same for the local businesses. HOW VAT IS CHARGED CURRENTLY ON THE SALES TO THE EU COUNTRIES? Dispatches/ Exports: If VAT able supplies are supplied to a VAT registered business in an EU country by a VAT registered business in the UK, the sale is considered a ‘zero rate’ sale, and this is known as a `dispatch`. It will be considered an ‘export’ if the supplies are made to a VAT registered business in a non-EU country by a VAT registered business in the UK. VAT will be charged at a zero rate in both EU and non-EU countries. Distance selling: If a UK VAT registered business is selling VAT able supplies to an EU member country that is not registered for VAT this is known as distance selling. UK rates will be charged on the sales made to these countries although there is a threshold for each country and UK businesses will need to register for VAT in that country once that threshold has passed. HOW THE VAT CHARGED WILL BE CHANGED AFTER BREXIT? Dispatches/ Exports: Following the Brexit, although sales to EU countries will be called exports and the UK businesses will no longer report the EC sales list in their VAT return. Distance Selling: Following Brexit, the rules for distance selling will no longer apply and UK businesses will zero-rate these supplies. The Customer in the EU country will pay local VAT. VAT REFUNDS FROM 1 JAN 2021 If you have incurred any expenses in the EU member state before 1 January 2020, you will be able to claim a refund through the EU VAT refund system. HOW CAN WE HELP? If you are doing business with EU countries and you are not sure how Brexit will apply to your business, you can contact Taxaccolega at 020 8127 0728 and we can advise you depending on the type of business that you have.
Profits and Losses from UK Rental – How to calculate and Report them?
If you have rented a property in the UK, you should declare it to HMRC and pay tax on your profits. If you rent a property abroad and you are a UK resident you should be paying tax on it as well but the profits and losses on the rental income from overseas property should be done separately. WHAT TO DO IF I HAVE PROFITS? If you have profited from your rental income, you should report it to HMRC in the self-assessment tax return. You should register yourself by 5 Oct following the tax year you had rental income and pay tax on it. WHAT TO DO IF I AM HAVING A LOSS ON MY RENTAL PROPERTY? If you rent a property and it is making losses you are not required to declare it to HMRC unless you are already required to fill in the self-assessment tax return for some other reason. If you are self-employed and you are already required to fill in the self-assessment tax return because you might be self-employed and running your own business then you should declare your income from all the sources even if it making a loss. However, it should be noted that the loss from the property business cannot be offset against the gain from any other business. It can only be offset either against the gains from the property business in the same tax year or carried forward against the future gains from the same property business. It is therefore advised that even if the property is making a loss it should be declared to HMRC so that the losses can be automatically carried forward and the loss figure is not challenged by HMRC. For example, if you have 2 rental properties one is making a profit and the other one is making a loss you should declare both to the HMRC. CALCULATING PROFIT It is very important to know how the profit figure is calculated. Income Expenses Profit/ Loss Property 1 1000 500 500 Property 2 2200 1200 1000 Property 3 750 800 -50 Total Income 3950 2500 1450 If the` overall figure’ from your property business is a profit you will pay tax on it as in the example above and you will be paying tax on it. The tax you pay will depend on the tax rate band that you fall into. When you have income from other sources for example from employment, self-employment, or any other investment you have to add them all together. Each year every individual is given a free allowance of £12, 500. Up to this amount an individual does not have to pay any income tax. Tax is paid at the rate of basic rate 20% (£12, 501- 50 000), higher rate 40% (£50 001- £ 150 000), Additional rate of 45% (over £150, 000). The first £1000 of your income from your rental property is tax-free this is called property allowance. You will pay tax on the income above this. If you are looking for accountants in Croydon please free to contact Taxaccolega at 020 8127 0728. We have an expert team of property accountants dealing with the renting and sale of a property. We can advise you in all sorts of areas such as Capital Gains Tax, Inheritance Tax, and Stamp Duty Land Tax. For queries message us here or email us at info@taxaccolega.co.uk and we will get back to you. Sources: https://www.gov.uk/renting-out-a-property/paying-tax
Should I incorporate my property business?
Recently, it is noticed that many landlords who were managing their buy to let property personally or through in a partnership are now looking to incorporate their business. They can then manage their property portfolio through a limited company. It should be noted that transferring the property to a limited company will come with a cost. For example, there will be additional administrative costs involved when managing property through a company. Tax liabilities such as SDLT and Capital Gains Tax will also arise as the transfer takes place at a market value. Managing a company might not be very straightforward for all individuals and they will consider hiring an accountant who will make sure that all the accounting and tax deadlines are met. The accountant fees will be an additional cost however, it is an allowable expense and will be deducted from the rental income and decrease the value of taxable profit. Therefore it is generally seen that setting up a limited company will be beneficial for you if you rent more than one property. The increase in the landlords wanting to transfer their property portfolio to the limited company is mainly due to the changes to the tax relief for the residential property which was being phased out since 2017 and is finally implemented in the tax year 2020/2021. This means that the property to let which is held by the individuals , in a partnership or by a non- UK resident who is letting the property individually in the UK will not be able to deduct the finance cost as an expense when calculating taxable profits. In other words it won`t be an allowable expense. However, the individuals can claim basic tax rate reduction (20%) from their income tax liability on the portion of finance cost that was not deducted in calculating the profit. Finance cost all the costs relating to financing such as mortgage interest, legal fees for obtaining the loan and valuation fees. This restriction is not applied to commercial property and all these costs can be deducted as an expense therefore reducing the tax liability arising on rental profit. The corporation tax for the tax year 2020/2021 is 19%. Whereas if the property is held by an individual he will have to fill in the self-assessment annually and pay the tax at 20 % in case of a basic rate tax payer, 40 % tax on the income in case of a higher rate tax payer and 45 % if he is an additional tax payer. In the incorporated business the individuals can draw money as dividends or wages. The dividend allowance for the tax year 2020/2021 is £ 2000 and this amount is after the personal allowance available to each individual. Tax will be paid for any dividend received above this amount. For basic rate tax payer tax will be paid at 7.5%, for higher rate tax payer it will be 32.5% and for additional it will be 38%. The individuals can also draw some money as a director loan. If the property is managed through a company it is always easier to transfer change the directors of the company rather than change the ownership of the property. Transferring of the ownership of the company may be for tax efficient reasons. You might also want to read an article on reducing the tax bill click here. There are other ways in which taxes on the rental income can be managed. There are reliefs available which can be used to mitigate the taxes which arise on the transfer such as incorporation relief, however, some criteria needs to be met. We at Taxaccolega can advise you whether incorporating your property business suit you financially by doing the calculation based on your personal circumstances. Please feel free to contact us at 020 8127 072 or drop us a message here and we will get back to you.
My taxes if I sell on amazon as a sole trader
In these days of pandemic and lock down many people are struggling with finances. Although government has been really supportive during these tough times .Many grants were issued to the employed as well as to sole traders. While many people who were made redundant used loans to start their businesses online many of the high street sellers also started selling their products online. Because of the convenience of packaging and delivery that amazon provides selling products through amazon is becoming quite popular. In one of our blogs previously we discussed the taxes if you are selling on amazon through a limited company. Check out our blog by clicking here. If you do not own a company and you are selling products online just to make some extra money or you have just started a small business online because you don’t have a job right now you will need to register yourself for self- assessment with HMRC. Please note that you need to register yourself with HMRC as self-employed if you have income it does not matter if you are making a profit or not you have to register yourself any way. If in the last tax year 6 April 2019 to 5 April 2020 you were self-employed and you earned more than £1000 you need to register yourself for self- assessment by 5 Oct 2020 and file paper tax returns by 30 Oct 2020 and file and pay online tax returns by 31 Jan 2020. If you fail to submit your tax returns on time you might have to face penalties. Income tax rate: If you are self-employed you will pay income tax on the profits earned. If you are a basic tax rate payer you will be paying tax at 20 %, higher rate tax payer will pay 40 %, and additional rate tax payer will pay at 45 %. Income tax rates and thresholds are explained here National Insurance: If you are self- employed you will pay 2 types of NI. Class 2 NI which is £3.05 a week if your profits are £6475 or more per annum and Class 4 NI(4 %) on profits between £9501 and £50 000 and 2% on profits above £ 50 000. Allowances: each year an annual allowance of £12 500 is given. This means income earned up to this amount is not taxed. You might also be eligible for the trading allowance of £1000.You will also get a `use of home` allowance which is £4 per week. Allowable expenses: Don’t forget to claim allowable expenses. These are the expenses which are allowed for tax purposes. This means you can deduct these expenses from the income when calculating the profit figure. These expenses reduce the taxable profit thereby reducing the tax liability. Allowable expense include any printing and stationery, use of home, proportion of telephone bill which is used to take business related calls, advertisement costs, accountancy fees. If you want further advice on what expense you can claim you can call our accountant at Taxaccolega and we will help you with that Capital Allowances: It is very important that you keep record of any machinery that you bought to be used in your business for example, if you bought a computer, laptop, mobile phone etc. According to HMRC you can claim capital allowance if you use traditional accounting, however if you are claiming trading allowance you cannot claim capital allowances. If you use cash basis and you buy a computer you can claim this as capital allowance. If you need help in registering, filling your self- assessment tax return, or you failed to fill in self-assessment tax return in the previous years and you want to do it now we at Taxaccolega can help you with this. We are accountants based in Croydon and South hall, you can visit us, call us at 020 8127 0728 or drop us a message here and we will be happy to help you.
Self- Assessment tax return and Capital Gains Tax
If you have disposed any personal possession such as antiques, jewellery, paintings etc. which are worth more than £6000 you should declare it to HMRC and pay tax on any gains that arise as a result of the disposal. In other cases where you have to pay Capital Gains is when you sell your property which is not your main home, if you are selling your property which was inherited by you, if you selling your main home and you were renting part of it or it was used for business purposes and if you are selling shares which are not held in ISA. For more information on CGT and selling your family home you can get some detailed information here. In all the cases above, you need to report it to HMRC in the Self-assessment annual tax return. The deadline to register for self-assessment tax return is 5 Oct 2020. You need to fill in the paper form of self-assessment tax return on 31 Oct 2020 and the deadline to submit and pay the tax online is 31 Jan 2020. Capital Gains Tax free allowance is £12300, tax will be paid on the gains from the disposal of the asset above this amount. You can also make use of the reliefs available. However, you need to report it to HMRC even the gains are below the tax free allowance in your self-assessment tax return. If the total value of the asset that you were selling was more than 4 times your allowance and you are registered for self-assessment. If you are non UK resident you need to fill in the non-resident capital Gains tax return even if your gain is below the tax free allowance or you make a loss. Make sure that you have all the records of the money received when the asset was sold. You should have a record of the date and the price that you paid to purchase it. It is also important to keep the record of the any other additional costs (if they were incurred) such as professional fees or stamp duty (in case of property) Capital Gains Tax rates: If you are a higher or additional tax payer you will pay 20% tax on the gains of chargeable assets except on the gain from the residential property which is 28%. If you are a basic tax payer you will work out your taxable income after deducting the personal allowance. Deduct any reliefs available. Work out your capital gains and deduct the tax free allowance from your total taxable gains. Add the taxable capital gains to the taxable income. If the total of both is within the basic rate band then 10 % will be paid on the gains and 18% will be on the gains from the residential property. Business Asset Disposal Relief: If you are a sole trader and have owned the business for at least 2 years and you are disposing all or part of the business you can qualify for the business asset disposal relief which means you will pay 10% CGT on the gains from the disposal of part or all of the business. To read more about business asset disposal relief check out our blog here. We can help you The tax calculations are not very straight forward. Every situation is different any you might qualify for reliefs which can mitigate your taxes and you might not be aware of. To make sure that you calculate your taxes accurately and in the most efficient way you can contact Taxaccolega at 020 8127 0728 and we will advise you, we can do all the calculations for you and report it to HMRC in the timely manner. If you have any query end us a quick message here.
Sold my property back home. When and how do I Report it to HMRC?
What taxes do you need to pay if you sell your property abroad depends on your living status in UK. There are different rules if you are a UK RESIDENT According to HMRC Website if an overseas property is sold Capital Gains Tax will need to be paid on the gains if the seller is a UK resident. You might also have to pay taxes in the country where you sold the property, in that case you can claim a relief. You can either apply before you are taxed or you can even apply after you are taxed on your foreign income. How to apply for the relief visit the website here. UK NON- RESIDENT If you are Non UK resident but living in UK for work you won`t have to pay any Capital Gains Tax on the sale of the property abroad. TEMPORARY NON- RESIDENT You are considered temporary non-resident if you return to UK within 5 years of moving aboard ( and you lived in UK for at least 4 in 7 years as a UK resident before moving abroad ) If you are non- resident in UK but return to UK within 5 years of selling the property then you have to pay Capital Gains Tax. If after returning you are still domiciled outside UK you won’t be paying any tax on the gains from the sale of foreign property. IF YOU ARE DOMICILED OUTSIDE UK. Domiciled outside UK means if you are UK resident( you are considered a resident if you lived for 183 days in UK in the tax year or you rented, owned the home in UK and lived in it for at least 91 days) but your main home is outside UK. If you are non- domiciled and your income is less than £ 2000 and you don’t bring it to UK you don’t have to report it to HMRC. However, if the income is more than £ 2000 you must report them to HMRC in the Self-Assessment. To summarise, you will have to report and pay tax on your gains from the sale of foreign property if you are UK resident or you are non-domiciled but your gains were more than £2000. You need to report gains in the annual self-assessment tax return. You will have to report the gains in the ‘foreign’ section of the tax return. Make sure you have already done all your Capital Gains Tax calculations and you have all the relevant records such as document that has date and the sale price at which the property was sold. If you do not usually fill in the self-assessment tax return you can register for self-assessment in the tax year after the sale was made. The deadline for registering for self-assessment is 5 Oct. the deadline for submitting your self-assessment tax return in the paper form in 31 Oct ad deadline for submitting online is 31 Jan . WE CAN HELP YOU Calculating the capital gains tax can be tricky and there are various reliefs which might apply to you and it can lower your tax bill we at Taxaccolega have a team of expert accountants and we will be very happy to help you. Don’t hesitate to call us at 020 8127 0728 or email us at info@taxaccolega.co.uk
I am a taxi driver can I apply for a grant through Self Employment Income Support Scheme?
If you are a taxi driver, registered as `self Employed’ with HMRC (you are not eligible for the grant if you work through a limited company) and your business is adversely affected by the Covid -19 from 14 July 2020 onwards you should go ahead and apply for the second grant government is offering. You can get this grant even if you are on a work visa. To be eligible you should have traded in the tax year 2018/19 and must have submitted your tax return for that year on or before 23 April 2020, you must also have continued trading in the tax year 2019/ 2020 and you intend to continue trading in the tax year 2020/2021. You need to take a quick action as the deadline to apply for the grant is 19 Oct 2020. What Documents do I need to apply for the loan? To be eligible for the grant you need to prove that your business was adversely affected by the Covid-19. As a taxi driver you might be eligible for the SEISS second grant because your business has been adversely affected by Covid-19. This may be mainly due to added costs, for example buying a protective shield, hand sanitisers and also due to decrease in the income as the number of customers have decreased even after the restrictions of the lockdown were eased. However, you should have proper records to prove this to HMRC. You should have your bank statements as a proof that there is a decrease in income or an increase in the costs incurred, if you had applied and were given any other grants or loans because you were struggling in your business you should have a proof for that. For example, bank showing the loan received in the account or a letter confirming that the loan will be given. If you are applying because you were showing symptoms of Covid and you wanted to self-isolate or because of the high risk and vulnerable situation the taxi drivers were at you decided to self-isolate and therefore the business was affected you should provide the dates you stopped working. How Can I apply for the Loan? You can apply for the loan online yourself, tax agents are not allowed to apply on your behalf as it’s a busy period and the online service might be slow it`s better to have things ready before you go online to apply: This grant is to support the self-employed who are struggling financially. This grant doesn’t have to be returned. An individual can use this to start a small business. HMRC will do its working to see if you are eligible and how much needs to be given to you by looking at your trading and no trading profits for the last 3 years. If you think you are given less than you are eligible for you can contact tax agents and they can deal with it. For more information on how much you will get go to HMRC website: https://www.gov.uk/guidance/how-hmrc-works-out-total-income-and-trading-profits-for-the-self-employment-income-support-scheme If you need any help relating to tax and accounting services such as filling and submitting your self-assessment tax return, registering your new businesses and making annual accounts do not hesitate to call us at 020 8127 0728 or email us at info@taxaccolega.co.uk and we will be happy to help you.
3 Reasons You need to fill in Annual Self -Assessment Tax Return
You need to fill in the self-assessment tax return and pay income tax in the following cases: 1. YOU ARE SELF EMPLOYED If you are running a business and you get an income through dividends you will have to submit annual self-assessment tax return. The reason is that since this income is not taxed at source like your wages you will need to declare this in your annual self-assessment tax return and pay the tax on it. 2. INCOME If your income is more than £100 000 per year before tax or if your annual income from savings or other investments such as shares is £10 000 or more before tax. 3. FOREIGN INCOME You are a UK resident and you have a foreign income. There is an exemption to this rule: if the foreign income is in the form of dividend and it is less than £300 you don’t have to declare it. So If you have any foreign income you should first establish if you are UK resident, or a UK non- resident. You will also have to figure out where you are domiciled. This will help determine the tax implications on your foreign income. 4. YOU SOLD AN ASSET AND YOU PAID CAPITAL GAINS TAX If you have sold an asset and which was worth £49,200 or more in the tax year 2020/2021 or your asset might be valued less but you made a gain of £12300 which is the threshold and also In case you sold the asset and it made a loss but there are other gains as well and the net that means (gain – loss)is more than the exemption of £ 12, 300. In all the cases you will have to register for the Self-Assessment tax return and pay CGT. 5. IF YOU ARE A TRUSTEE If a trust is established with some income generating assets such as shares and you are appointed its trustee you need to declare it in the self-assessment tax return. This is not an exhaustive list and there are many other cases in which you might need to fill in your self-assessment tax return. By filing the self-assessment tax return you are telling HMRC that you have some untaxed income on which you are supposed to pay tax. You can also register for self-assessment if you have any reliefs to claim. It is always a good idea to submit your self-assessment tax return early. In this way it can be processed quickly and if you are to get any relief you can get it quick. There is also a less chance that you get a penalty. Once you have submitted and paid early you will have a much better idea of your finances and cash flows as well. We at Taxaccolega, can help you with your self-assessment tax returns. Simply call us at 020 8127 0728 and we can sort out the things for you. In case you have some untaxed income in the tax year 2019/ 2020 , the deadline to submit the self-assessment tax return in Jan 2021 and you must have registered for self-assessment latest by 5 Oct 2020 otherwise you can get penalties.