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Self Assessment Tax Returns – 31 January 2020

Self Assessment Tax Returns – 31st January 2020.

Avoid problems with HMRC if you’re Self-Employed. The Self Assessment Tax Returns 31st January 2020 deadline is nearly upon us.

It’s sobering to think that probably over half million people will still miss this deadline, and hence they are likely to face some hefty financial penalties from HMRC.

To make sure that you don’t fall into that category, and to make the whole self-assessment process as trouble free as possible, here’s some helpful guidance……..

Get and Stay Organised

Good bookkeeping is not only essential to help steer yourself clear of tax hell, but is also a legal necessity for you to keep financial record for five years when self-employed. If you fail to keep adequate records you could put yourself in line for a fine. That’s where we can help you of course. We remove this hassle, our bookkeeping service is competive and trouble free. Self Assessment Service

However, beyond it being necessary for tax purposes, it is also just generally good business practice and keeping good business records will help you save time and therefore money down the line.

Having some good online accounting sofware will make life so much easier for you. We work with leading cloud accounting software providers includng Xero and QuickBooks.
Online Accounting AdviceO

Reducing Your Tax Bill (legitimately!)

While tax evasion is a crime, tax avoidance is smart business practice. Consider the various ways in which you can legally work to reduce your tax bill each year. We can help you so much here
For example, there are a whole host of tax free allowances, such as paying into a pension scheme, which can all help insulate your money from taxation. Various necessary business expenses also fall into this category. We will help you look into what sort of expenses could be covered by this.
For example, you could save on office or room rental costs, the cost of travel or supplies, and you can even claim tax deductible business expenses. We can help with all of this! Contact Us

As a self-employed individual, particularly if you’re a sole trader or freelancer, keeping track of your expenses can make a massive difference come deadline day. If you’re working from home, you can claim a flat percentage of your household expenses such as gas & electricity and council tax, based on the number of hours you spend working at home each month, bey you didn’tknow that ! Bookkeeping Service

Be Ready to Pay

Remembering that the only things that are certain are death and taxes, don’t get caught short when it actually comes to paying up! Because you’re paying a lump sum of tax when you’re self-employed, rather than having the tax deducted from your monthly salary, you can prepare for this considerable financial outlay by setting aside an amount of your earnings each month. . Aside from your personal allowance of £11,850 (for 2018/19), you are going to have to pay tax on almost everything you earn.

The best way to keep on top of it, and to avoid a nasty shock in January, is to effectively pay it in advance. Work out roughly what you’re supposed to be paying, and put it in a savings account each time you get paid.

Always keep in mind that that money technically isn’t yours, it’s HMRC’s

This may not help you for this years 31st January deadline, but bear it in mind for future years

Get in touch, it’s never too late, if you need help with your Self Assessment Tax Returns – 31st January 2020 tax returns Contact Us

by oandk oandk

New Year – New Start

In general New Year’s Resolutions, don’t work.

Think about it…how many resolutions have you actually kept past the
first couple of months of a New Year. The worst thing about “resolutions” is that they make us feel like we have accomplished something just
because we have “resolved” to do it. But resolving to do something and
actually doing it are two very different things!!

So instead of making another resolution that you know you won’t keep,
do this instead…

Set a BIG goal for yourself for 2020… something so exciting that it can’t help but get you out of bed each morning.

It’s a fact: Most people drastically overestimate what they can accomplish in a week, but they drastically UNDERestimate what they can accomplish in a year, so come up with something really big you want to accomplish
for yourself or your business in 2020 and write it down.

Make a 12-month plan. Why not try our One Page Business Success plan idea HERE

Once you’ve established your BIG goal, break down the actions needed
to accomplish that goal into monthly “chunks”.

Don’t get overly granular with this. We all know “life happens”, so decide on one or two things you can accomplish by the end of each month and
commit to incorporating it into your daily and weekly task list.

There isn’t much to it.

The key is you must have a goal that’s big enough to keep you excited all year, and then you MUST break it down into simple, easy-to-follow steps that will get you to that goal.

Alternatively this time of year is also an appropriate time to look at your business goals, maybe even renew them or just take stock of where you are at this point in time in your financial year. We’re not talking
‘New Years Resolutions !

So here is a little additonal advice, with another way on how to set
effective and powerful goals and objectives for 2020 ……….

Use SMARTER when it comes to formulating objectives, be they personal or business

S = Specific – Make sure your goals are clear and not wooly.

M = Measureable – If you can’t measure your progress, then your goal is merely a dream. If you can’t measure how can you guage your progress

A = Agreed – Is your goal part of a bigger plan, and if so do other people have to ‘buy in’ to what you are trying to achieve. Far better if you have team members (business goal) or family/friends (personal goal) bought in to your aspirations. They can help you to achieve success.

R = Realistic – Have you planned out the steps you need to take, and how realistic are they?

T = Timed – Set a deadline to retain focus and have something to work towards. It also helps maintain urgency and energy.

E = Exciting – If your goal does not inspire you, nor excite you, then why have it?

R = Resourced – What else do you need to help you achieve your dream? Time?, Knowledge? Money? Processes ? Systems ? etc

For some addtional start of the year, indeed start of the decade,
inspiration, here are some great quotes…….

“Communication is the most important skill any leader can possess.”
Sir Richard Branson

“My jobs is not to be easy on people. My job is to make them better.”
Steve Jobs

“One voice can change a room.”
Barack Obama

“The leader is one who, out of the clutter, brings simplicity… Out of
discord, harmony… And out of difficult, opportunity.”

Albert Einstein

For more information about our fabulously effective One Page Business
Success Plan
, get in touch HERE

by oandk oandk

R&D Tax Relief – Case Study

*** Calling all Architects and Engineers ***

We’ve just saved £33,000 in Corporation Tax by identifying £100k spend incurred by a structural engineer.

This industry is continually faced with problem solving, perhaps more so than ever before with the pursuit of sustainable and environmentally sound solutions.

Every project is unique and poses design challenges, which is why architects and structural engineers typically spend the majority of their time on the conceptual/ schematic design phase.

What may seem to be typical day-to-day design challenges during these phases, will often qualify for R&D tax relief. Most claims for R&D tax relief are for companies operating in the ordinary course of their business.

It is an unmissable opportunity to claim either a reduction in CT, or for loss making companies, a payable tax credit.

This particular company has been a trailblazer in historic building conservation and refurbishment through many years of experience, leading it to work on highly complicated and prestigious projects such as Grade 1 listed buildings.

Examples of qualifying development include the use of multiple different building methods& techniques including the use of steel frames, reinforced concrete frames, load bearing masonry and the use of timber.

Let us assess your R&D tax relief opportunity – you may well secure some valuable cash savings for your business.

Get in touch HERE

by oandk oandk

Incorporating Property Businesses

Property Business Incorporation

The Incorporating property portfolios is suitable for people who own property portfolios either in their own name or in conjunction with other family members. It enables you to transfer the property portfolio to a limited company in a tax efficient manner. It utilises statutory tax reliefs that enable individuals to transfer businesses to a limited company without triggering a capital gains tax charge subject to various conditions.

Please note that incorporation is not suitable for all property portfolios and for all individuals. We would need to consider your specific circumstances in detail. In addition you should be aware that there are some downsides that you should consider before taking a final decision, for example companies are subject to additional compliance obligations which will mean higher annual compliance costs.

Practical Steps

You would establish a limited company

You would be appointed as shareholder and director of the company.

The properties would be transferred to the company.

The company will issue shares to you.

The properties are re-registered in the name of the company.

Tax Implications

Capital Gains Tax

· In most cases no capital gains tax should arise on the transfer to the company.

· Furthermore the company will acquire the properties at market value. Any subsequent property disposals will only be subject to tax on future increases in value.

Tax on Income

· From the date of incorporation the rental income will be taxed at corporate rates of tax rather than personal rates of taxes, 40/45%.

· The restrictions on tax relief for mortgage interest for higher rate taxpayers will not affect property held in a company

Frequently Asked Questions

Who is incorporation suitable for?

The incorporation of property businesses is suitable for anyone who owns investment property.
What is the minimum value of assets that property incorporation is suitable for?

It will depend on the particular circumstances but typically incorporating a property business is not suitable for property portfolios worth less than £1m.

Can the family home be transferred to the property company?

Potentially yes but in most cases it would not be advisable.

What are the capital gains tax implications of transferring properties to the company?

The transfer of properties to a limited company is a disposalfor CGT purposes. However where the property portfolio constitutes an actively managed property business then a statutory relief should apply such that the gains are rolled over into the base cost of the shares issued.

Is the capital gain always held over in full?

Generally yes but the hold over can be restricted where the debt secured on the properties exceeds the base cost for tax purposes.

Does the legislation define what an actively managed property
business is?

No, but there is a substantial amount of case law which has looked at the definition of a business. It is important that the portfolio is run along business lines rather than simply held as an investment. We can review the portfolio and advise whether the portfolio is likely to qualify.

As you will appreciate these are only initial, basic questions. We have more answers for you in our FREE factsheet which you can download for Free HERE

by oandk oandk

Land Remediation Tax Relief- Your Questions Answered

Land Remediation Tax Relief entitles a company to claim an additional 50% tax relief on qualifying remediation expenditure as a trading expense, in the same year as the expenditure war incurred. This means that taxable profits are reduced, thus reducing the corporation tax liability of the company.

Their are several questions to be answered about land remediation tax relief, here are some of the key ones……

What is contaminated land?
Land is in a contaminated state only if there is something in, on or under the land which causes relevant harm, or if there is a serious possibility that relevant harm will be caused. Relevant harm can relate to:

Land is in a contaminated state only if there is something in, on or under the land which causes relevant harm, or if there is a serious possibility that relevant harm will be caused. Relevant harm can relate to:

Land is in a contaminated state only if there is something in, on or under the land which causes relevant harm, or if there is a serious possibility that relevant harm will be caused. Relevant harm can relate to:

  • death of living organisms or significant injury or damage to
    living organisms,
  • pollution of controlled waters,
  • a generally adverse impact on the ecosystem, or
  • structural or other significant damage to buildings or other structures or interference with buildings or other structures that significantly compromises their use. HMRC accept that the likelihood of relevant harm occurring varies according to the land use.

Is there a definition of contaminated land costs?
The general definition of contaminated land costs are those incurred in, ‘preventing, minimising, remedying or mitigating any harm or pollution of land or controlled waters, by reason of which the land is in a contaminated state, or restoring the land or controlled waters to their former state’.

What expenditure qualifies for Land Remediation Relief?

  • staffing costs
  • materials
  • subcontracted costs incurred from both connected and non-connected companies
  • professional fees incurred for advice on how to remediate the contaminated land.

Does the relief just apply to companies?
Yes! The relief is not available to individuals or partnerships. However, a company that is a member of a partnership can make an election in respect of its share of the partnership’s land remediation expenditure provided it satisfies the relevant criteria.

Are there any conditions to claim this tax relief?
The relevant conditions for relief are that:

  • land in the UK is, or was, ac-quired by the company for the purposes of its trade or property business, and
  • at the time the company acquired the land all, or part, of the land was in a contaminated or derelict state, and
  • the company incurs revenue or capital expenditure on qualifying land remediation in respect of the land.

Are there any exclusions?
A claim for land remediation relief will not be possible
if the company:

  • has already claimed capital allowances on the same expenditure
  • is the original polluter if the site was purchased from a connected company which was the original polluter, no claim will be possible.

How do I claim and is there a time limit?
The accounting treatment determines when a company can claim land
remediation relief for revenue expenditure. A company can claim land remediation relief for qualifying revenue expenditure in the accounting period where the expenditure is deducted in calculating the profits. Many
property development companies will hold land as WIP in their accounts during the development of a site. Only when the remediation costs are released to the profit and loss Account will a claim for land remediation relief become available.The normal rules apply when amending a corporation tax return (i.e. within 12 months of the statu-tory filing date).
A company, carrying on a trade or property business, can also elect that capital expenditure on qualifying land remediation is allowed as a deduction in computing their taxable profits. The deduction is allowed in the tax computation for the accounting period in which the capital
expenditure is incurred.

Can I claim land remediation re-lief for bringing derelict land back into productive use?
Yes! For expenditure incurred on or after 1st April 2009,relief is available for expenditure incurred in bringing derelict land back into use. What constitutes derelict land is dependent on several factors. It must also be noted that to claim land remediation relief, the land must be derelict at acquisition.

For more advice and information about Land Remediation Tax Relief please Contact Us Here