Learning Ecommerce Accounting: Guide for UK Businesses

Ecommerce Accounting: Introduction for UK Businesses

Are you an ecommerce entrepreneur in the UK looking to navigate the complex world of accounting? Managing the financial aspects of your online business can be daunting, but with the right knowledge and support, you can streamline your processes and ensure compliance while focusing on growing your venture.

At CIGMA Accounting, we understand the unique needs of ecommerce businesses, and we’re here to help you master ecommerce accounting from purchase orders to tax management. Let’s delve into what ecommerce accounting entails and how it can benefit your UK-based online enterprise.

Understanding Ecommerce Accounting

Ecommerce accounting is more than just tracking sales and expenses; it’s about meticulously recording, organizing, and managing all financial transactions specific to your online business. From purchase orders to sales tax management, here’s a breakdown of key components to simplify your understanding:

1. Purchase Orders and Sales Orders:
These documents form the foundation of your ecommerce transactions. Purchase orders detail what your customers want to buy, while sales orders outline the specifics of each sale, including payment information and delivery details.

2. Accounts Payable and Receivable:
Stay on top of outstanding bills and invoices, ensuring timely payments from customers while managing your own financial obligations.

3. Cost of Goods Sold (COGS):
Calculate the total cost of production and distribution of your products, including shipping, warehousing, and other direct expenses. Understanding COGS is crucial for accurately assessing your profitability.

4. Ecommerce Sales Tax:
Navigating tax regulations can be challenging, especially for online businesses with customers across different states. Ensure compliance by tracking and remitting applicable state and local taxes, understanding sales tax nexus, and fulfilling tax obligations accordingly.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Ecommerce Tax Management

Tax management is a critical aspect of ecommerce accounting, and overlooking it can lead to costly consequences. Here’s how CIGMA Accounting can support your UK-based ecommerce business:

1. Comprehensive Tax Planning:
Our experts help you develop a strategic tax plan tailored to your ecommerce operations, ensuring compliance with UK tax regulations while maximizing tax efficiency.

2. Accurate Tax Filing:
From quarterly estimated taxes to year-end filings, we handle all aspects of tax preparation, keeping you updated on deadlines and obligations to avoid penalties.

3. Sales Tax Compliance:
With our in-depth knowledge of UK tax laws, we assist you in determining when and where to charge sales tax, minimizing the risk of non-compliance and associated fines.

4. Proactive Tax Advice:
Stay informed about changes in tax legislation and how they impact your ecommerce business. Our proactive approach ensures that you’re always ahead of the curve when it comes to tax matters.

Ready to streamline your finances? Contact the top accountants in Wimbledon at Cigma Accounting today!

Partner with CIGMA for Ecommerce Success

At CIGMA Accounting, we’re dedicated to helping UK ecommerce businesses thrive. From expert tax management to comprehensive accounting services, we’re your trusted partner every step of the way.

Let us handle the numbers so you can focus on growing your online venture with confidence. Reach out to us today to learn more about how we can support your ecommerce accounting needs.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

cigma accounting guide to employee change reporting for HMRc; london accountant; farringdon accountant

Guide to HMRC reporting: Employee Changes

Understanding HMRC Reporting: Essential Employee Changes for UK Businesses

In the intricate world of business finance, meticulous reporting is not just a legal obligation but also a crucial aspect of maintaining accuracy and compliance. As a UK-based accounting firm committed to your financial success, CIGMA Accounting understands the importance of navigating HM Revenue and Customs (HMRC) regulations effectively. Today, we delve into the nuances of reporting employee changes to HMRC, shedding light on the essential details that every business owner should know.

Why Reporting Employee Changes Matters

Businesses in the UK are required to adhere to strict reporting protocols outlined by HMRC. Central to this is the Full Payment Submission (FPS), a vital submission that must be completed every time employees are paid. This submission ensures that HMRC has accurate and up-to-date information regarding your workforce.

Require accounting services?

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What Constitutes an Employee Change?

When it comes to reporting employee changes, several scenarios warrant additional information on your FPS. These include:

  1. New Employee:
    Whenever a new employee joins your team, it’s imperative to include their details in your FPS.

  2. Employee Departure:
    Similarly, when an employee leaves your company, this change must be promptly reported to HMRC.

  3. Workplace Pension Commencement:
    If you start paying an employee a workplace pension, this information needs to be communicated through your FPS.

  4. End of Tax Year:
    The last report of the tax year requires specific attention, necessitating comprehensive reporting to HMRC.

  5. Address Change:
    Any change in an employee’s address should be updated in your FPS submission.

  6. Additional Notifications:
    Beyond the standard changes, there are specific instances where HMRC must be informed, such as when an employee becomes a director, reaches State Pension age, works abroad, goes on jury service, or passes away.

  7. Contracted-Out Company Pension:
    If an employee joins or leaves a contracted-out company pension scheme, this must be reported accordingly.

  8. Special Circumstances:
    Other scenarios, including an employee turning 16, being called up as a reservist, or undergoing a gender change, require meticulous reporting to HMRC.

Discover how Wimbledon accountants can save you money. Get a free consultation with Cigma Accounting!

Managing Leave of Absence

In instances where an employee takes a leave of absence, it’s essential to indicate this change in your FPS reports. By marking ‘Yes’ in the ‘Irregular payment pattern indicator,’ you ensure that HMRC is aware of the irregularity in payment patterns until the employee’s return.

Partner with CIGMA Accounting for Compliance and Efficiency

Navigating HMRC regulations can be daunting, but with the right support, your business can thrive while remaining compliant. At CIGMA Accounting, we offer tailored solutions designed to streamline your financial processes and ensure seamless HMRC reporting. From payroll management to comprehensive tax advisory services, we’re here to empower your business every step of the way.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

handling late filing penalties with hmrc; wimbledon accountant; london accountant

Handling late filing penalties from HMRC

How should you handle late filing penalties?

Are you one of the 3.8 million individuals who have yet to file their 2022-23 self-assessment return? With the 31 January 2024 deadline already passed, it’s essential to understand the consequences of missing this crucial date, especially if you’re in the UK.

Consequences of Missing the Filing Deadline

If you’ve missed the filing deadline, you’re subject to penalties imposed by HM Revenue & Customs (HMRC). Here’s what you need to know:

  1. £100 Fixed Penalty:
    For returns up to 3 months late, HMRC imposes a fixed penalty of £100, regardless of whether you owe tax or not.

  2. Daily Penalties:
    After 3 months, daily penalties of £10 per day, up to a maximum of £900, are added to your outstanding balance.

  3. Further Penalties:
    If your return is still outstanding after 6 months, a penalty of 5% of the tax due or £300 (whichever is greater) is applied. The same penalty is levied after 12 months.

  4. Late Payment Penalties:
    In addition to filing penalties, there are penalties for paying outstanding tax late. These penalties accrue at 5% after 30 days, 6 months, and 12 months, respectively.

  5. Interest Charges:
    HMRC also applies interest charges on any tax paid late.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

What can you do?

If you’re facing penalties due to missed deadlines or late payments, it’s crucial to take action promptly. Here’s how CIGMA Accounting can help:

  1. Appeals Process:
    If you have a reasonable excuse for missing deadlines, you can appeal against HMRC penalties. CIGMA Accounting can assist you in preparing and submitting your appeal, ensuring it meets HMRC’s requirements.

  2. Payment Assistance:
    If you’re unable to pay your tax bill in full, CIGMA Accounting can help you negotiate a Time to Pay arrangement with HMRC, allowing you to repay the amount owed in manageable instalments.

  3. Proactive Approach:
    Rather than ignoring the issue, CIGMA Accounting advises clients to be proactive and contact HMRC as soon as possible if they’re unable to meet their tax obligations. Ignoring the problem can exacerbate the situation, leading to further penalties and interest charges.

Why Choose CIGMA Accounting?

At CIGMA Accounting, we understand the complexities of UK tax regulations and the importance of timely compliance. By partnering with us, you gain access to:

  • Expert Guidance:
    Our team of qualified accountants provides personalized advice tailored to your specific circumstances, ensuring you understand your tax obligations and rights.

  • Compliance Assurance:
    We keep abreast of changes in tax legislation and deadlines, ensuring you remain compliant and avoid unnecessary penalties.

  • Strategic Support:
    Beyond tax compliance, we offer strategic advice to help you optimize your financial position and achieve your long-term goals.

Need expert financial advice? Reach out to the leading Wimbledon accountants at Cigma Accounting now!

Take Action Today

Don’t let missed deadlines and tax penalties derail your financial health. Contact CIGMA Accounting today to discuss your situation and explore your options for resolving outstanding tax liabilities. With our expert guidance and proactive approach, you can regain control of your finances and avoid future penalties.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

cigma accounting guide to carer's credit; london accountant; wimbledon accountant; farringdon accountant

A Guide to Carer’s Credit from CIGMA Accounting

Unlocking Financial Support: A Guide to Carer's Credit

Are you tirelessly caring for someone for at least 20 hours a week? If so, you might be eligible for Carer’s Credit, a National Insurance credit designed to bridge gaps in your National Insurance record. This credit not only supports your caregiving responsibilities but also plays a crucial role in enhancing your State Pension.

What is carer's credit?

Carer’s Credit is a valuable resource for those dedicating a substantial amount of time to care. It’s a National Insurance credit that aids in filling gaps in your National Insurance record, ensuring your State Pension is based on a comprehensive record.

Notably, eligibility is not impacted by your income, savings, or investments, making it a versatile financial support option.

If you qualify for Carer’s Credit, you receive credits that contribute to filling gaps in your National Insurance record. This means you can fulfill caregiving duties without compromising your eligibility for the State Pension.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Eligibility Criteria for carer's credit

To be eligible for Carer’s Credit, you must:

  • Be aged 16 or over
  • Be under State Pension age
  • Care for one or more people for at least 20 hours a week

The person you’re caring for must receive one of the following benefits:

  • Disability Living Allowance care component at the middle or highest rate
  • Attendance Allowance
  • Constant Attendance Allowance
  • Personal Independence Payment daily living part
  • Armed Forces Independence Payment
  • Child Disability Payment (CDP) care component at the middle or highest rate
  • Adult Disability Payment daily living component at the standard or enhanced rate

Even if the person you care for doesn’t receive these benefits, you may still be eligible. In such cases, a signed ‘Care Certificate’ from a health or social care professional can demonstrate the appropriateness of your caregiving level.

Carers not qualifying for Carer’s Allowance may still be eligible for Carer’s Credit.

Breaks in Caring and Eligibility

Carer’s Credit remains accessible even during breaks in caregiving, allowing for interruptions of up to 12 weeks. Whether it’s a short holiday, hospitalization of the cared-for person, or your own hospital stay, you’ll still receive Carer’s Credit during these periods.

If your break in caring extends beyond 12 weeks, it’s essential to inform the Carer’s Allowance Unit promptly.

You do not need to apply for Carer’s Credit if you:

  • Get Carer’s Allowance – credits are automatic
  • Receive Child Benefit for a child under 12 – credits are automatic
  • Are a foster carer – apply for National Insurance credits instead

Optimise your business finances with the best accountants in Wimbledon. Schedule a meeting with Cigma Accounting!

Need Assistance from an Accountant?

CIGMA Accounting takes pride in offering holistic financial advice, so you can take of both your business and those close to you. Become a CIGMA partner today and find out how we secure your family’s financial future.

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

using the flat rate VAT scheme to minimise your business VAT in the UK; wimbledon accountant; farringdon accountant; london accountant

Make VAT Efficient: Understand Flat Rate VAT

Maximizing VAT Efficiency: Understanding the VAT Flat Rate Scheme

Navigating the complexities of VAT can be a challenging endeavor for UK businesses, especially when looking for ways to simplify and potentially reduce tax liabilities. CIGMA Accounting, a leading UK accounting firm, sheds light on the VAT Flat Rate Scheme – an often underutilized yet beneficial approach for eligible businesses.

What is the VAT Flat Rate Scheme?

The VAT Flat Rate Scheme is a government initiative designed to streamline the VAT process for small businesses. Instead of calculating VAT based on the standard method (the difference between VAT charged to customers and VAT paid on purchases), businesses pay a fixed rate of VAT to HMRC. This simplification can lead to reduced administrative burdens and potential cost savings.

  • Fixed VAT Rate: Pay a set percentage of your VAT-inclusive turnover.
  • Simplified Accounting: Less paperwork and simpler VAT calculations.
  • First-Year Discount: Enjoy a 1% discount in your first year of VAT registration



Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Eligibility Criteria

To join the VAT Flat Rate Scheme, businesses must:

  • Be VAT-registered.
  • Have a VAT taxable turnover of £150,000 or less (excluding VAT).

Joining and leaving the scheme

Joining is straightforward – either apply online when registering for VAT or use form VAT600FRS if already VAT registered. Leaving the scheme is equally simple; however, businesses must exit if they are no longer eligible or if their turnover exceeds certain thresholds.

Calculate your flat rate

The VAT flat rate varies depending on your business type. For instance, accountancy services have a rate of 14.5%, while catering services range from 4.5% to 12.5%, depending on the period. Notably, ‘limited cost businesses’ – those spending less on goods – are subject to a higher rate of 16.5%.

CIGMA Accounting’s Expert Insights

  1. Assessment is Crucial:
    Before opting for the scheme, it’s vital to assess whether it’s financially beneficial for your business. Factors like your industry, expenses, and turnover play a crucial role in this decision.

  2. Navigating Limited Cost Trader Rules:
    Introduced in April 2017, these rules can significantly affect your VAT rate. Understanding whether you fall into this category is essential for accurate tax computation.

  3. Monitor Your Turnover:
    Stay vigilant about your turnover. Exceeding the £230,000 threshold means you’ll need to exit the scheme.

  4. Capital Purchases Exception:
    Remember, you can still reclaim VAT on certain capital assets over £2,000.

  5. Professional Guidance is Key:
    VAT legislation can be complex. Seeking advice from experienced accountants like CIGMA Accounting can ensure compliance and optimize your tax position.

  Looking for reliable Wimbledon accountants? Trust Cigma Accounting to handle your financial needs. Contact us today!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

financial strategies for 2024; london accountant; farringdon accountant; cigma accounting

Navigating Turbulent Times: Smart Financial Strategies for 2024

Navigating Turbulent Times: Smart Financial Strategies for 2024

As we step into a fresh new year, it’s the perfect time for business owners to engage in some essential business planning, particularly in the realm of protecting business capital. With the ongoing downturn in global trade – influenced by geopolitical tensions and economic challenges – it’s crucial to adopt a proactive approach in safeguarding your financial resources. CIGMA Accounting, a leading UK-based accounting firm, is here to guide you through these tumultuous times with expert advice and tailored solutions.

Understanding the Current Economic Climate

The business world is currently facing a myriad of challenges. The war in Ukraine, tensions in the Middle East, and disruptions in the Red Sea have significantly impacted global trade.

Additionally, the persistence of inflation, soaring interest rates, and escalating costs are creating a challenging environment for businesses. In such a scenario, it’s vital for business owners to implement strategies that protect their capital base, ensuring they’re well-positioned to re-engage with the market as consumer spending starts to rebound.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Strategic Steps to Protect Your Business Capital

1. Analyze and Adjust Fixed Costs:
Begin by listing all your fixed costs – the expenses that incur regardless of your income. Scrutinize these costs and identify which ones can be temporarily eliminated or reduced. While some costs might be tied to contracts, exploring options for flexibility is crucial.

2. Negotiate with Stakeholders:
Reach out to suppliers, landlords, and service providers to negotiate possible moratoriums on payments, reduced payment terms, or even contract cancellations. Open communication in these times can lead to mutually beneficial arrangements.

3. Revise Your Business Plan:
After addressing your immediate expenses, it’s time to rework your business plan. This should include strategies for navigating potential cash flow dips and a clear action plan for the upcoming year.

4. Prepare for a Market Rebound:
Anticipate and plan for the resurgence of consumer interest. How will your business adapt to meet the increased demand for your goods or services? This foresight is key to staying ahead in the game.

Transform your financial strategy with expert accountants in Wimbledon. Book an appointment with Cigma Accounting!

The CIGMA Accounting Advantage

At CIGMA Accounting, we understand the nuances of your business. Our expertise is not just in number crunching, but in comprehending the journey you’ve embarked on – the late nights, the hurdles you’ve overcome, and your aspirations for growth. Partnering with us means you’re not just getting accounting services; you’re gaining a strategic ally who’s invested in your success.

Why Choose CIGMA Accounting?

  • Personalized Advice: We know that each business is unique. Our tailored advice is designed to suit your specific needs and circumstances.
  • Expert Knowledge: Our team is equipped with the latest knowledge in finance and tax regulations, ensuring you’re always one step ahead.
  • Proactive Support: We don’t just react to problems; we help you anticipate and prepare for them.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

business asset disposal relief guide by cigma accounting; london accountant; farringdon accountant

Navigating Business Asset Disposal Relief for UK Entrepreneurs

Navigating Business Asset Disposal Relief for UK Entrepreneurs

For UK entrepreneurs and business owners considering the sale of their business, shares in a trading company, or an interest in a trading partnership, understanding Business Asset Disposal Relief (BADR) is crucial. At CIGMA Accounting, we’re dedicated to guiding you through the intricacies of BADR to ensure you maximize your financial benefits.

What is Business Asset Disposal Relief?

Previously known as Entrepreneurs’ Relief prior to 6 April 2020, BADR offers a significantly reduced Capital Gains Tax (CGT) rate of 10% on qualifying assets, as opposed to the standard rate. This relief is available when exiting a business under specific conditions, providing substantial tax savings.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Eligibility Criteria for BADR

To qualify for BADR, certain conditions must be met, including:

  1. For Business Owners:

    • You must be a sole trader or a business partner.
    • The business must have been owned by you for at least 2 years up to the sale date.
  2. For Shareholders:

    • You need to be an employee or office holder in the company.
    • The company must primarily be involved in trading activities.
    • For non-EMI shares, you must hold at least 5% of the shares and voting rights.
  3. Special Considerations for EMI Shares:

    • Shares must be acquired post-5 April 2013.
    • The option to buy them should have been granted at least 2 years before their sale.

The Financial Aspect: Calculating Your Tax

When claiming BADR, the calculation of your tax liability involves:

  • Summing up gains on qualifying assets and deducting any losses.
  • Applying the 10% tax rate to the remaining amount after your tax-free allowance.
  • For higher rate Income Tax payers, different rates apply for gains not covered by BADR (28% for residential property and 20% for other assets).
  • Basic rate taxpayers have varied rates based on their total taxable income and the nature of the gains.

Find peace of mind with Cigma Accounting, your trusted Wimbledon accountants. Get in touch for a free consultation!

Lifetime Limit and Claiming Process

An essential aspect of BADR is its £1 million lifetime limit, which can be higher for assets sold before 11 March 2020. Claims for BADR are made either through self-assessment tax return or by completing Section A of the Business Asset Disposal Relief helpsheet.

Professional Assistance from CIGMA Accounting

Navigating the complexities of BADR can be challenging.
At CIGMA Accounting, we offer expert guidance and support to ensure you meet all the qualifying criteria and maximize your relief. Our team is equipped to handle all aspects of your claim, from initial assessment to filing the necessary paperwork.

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

UK tax diary for october and november 2023, farringdon accountant

Key UK tax dates for October and November 2023

How to claim work from home tax relief in the UK

As we step into the final quarter of the year, it’s vital to stay ahead of the impending UK tax deadlines to ensure a smooth end to the financial year. Below, we have listed the crucial tax dates for October and November 2023 that UK businesses and individuals need to keep in mind.

October 2023

1st October 2023

  • Corporation Tax – Companies with a year-end of 31st December 2022 must ensure their Corporation Tax is settled by this date. Meeting this deadline is critical to avoiding penalties.

19th October 2023

A critical day with multiple deadlines, take note of the following:

  • PAYE and NIC deductions – The deductions due for the month ending 5th October 2023 should be completed. If you are paying electronically, you have until 22nd October to settle these dues.
  • CIS300 Monthly Return – The filing deadline for the CIS300 monthly return for the month ended 5 October 2023.
  • CIS Tax – Ensure to settle the CIS tax deducted for the month ended 5th October 2023.

31st October 2023

  • Self-Assessment Tax Return – This is the last date to file a paper version of your 2022-23 self-assessment tax return. Don’t miss this to avoid potential late filing penalties.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

November 2023

1st November 2023

  • Corporation Tax – Businesses with a year-end date of 31st January 2023 must ensure to pay their Corporation Tax by this date.

19th November 2023

Mark this date for several important submissions:

  • PAYE and NIC deductions – Due for the month ending 5th November 2023. If you are planning to settle this electronically, the due date extends to 22nd November 2023.
  • CIS300 Monthly Return – File the CIS300 monthly return for the month ended 5th November 2023 by this date to remain compliant.
  • CIS Tax – The CIS tax deducted for the month ended 5th November 2023 should be paid by today.

Maximise your savings with top-tier accountants in Wimbledon. Contact Cigma Accounting for expert advice!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

file your company accounts early to avoid penalties; london accountant; farringdon accountant

Early company account filing can save you from penalties

Early company accounting filing can save you from penalties

Running a business in the UK entails several responsibilities, and foremost among them is ensuring that your company’s accounts are filed on time. Companies House, the executive agency responsible for company registration, has recently emphasised the importance of this duty and emphasised the fines that result from late filing.

Mandatory Requirement for All

Companies House has made it clear: all limited companies must deliver their annual accounts each year, regardless of whether they actively trade or not. This also encompasses dormant companies. Thus, no company is exempt from this requirement.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Directorial Responsibilities

As a director, your role is multifaceted. It’s not only about growth and profits, but also about ensuring the company remains compliant with set regulations. This includes keeping all company records updated and ensuring timely submissions.

Credit Scores & Financial Reputation

Late or missing account filings could negatively impact your company’s credit score. This might hinder your access to vital financing options, and potentially deter other businesses from collaborating or transacting with you.

Consequences of Late Filing

Apart from the financial repercussions, there are potential legal consequences to be aware of:

  • Filing late by up to 1 month results in a £150 fine.

  • Delays of more than 1 month but less than 3 months result in a £375 fine.

  • If your accounts are late by more than 3 months but less than 6 months, the penalty stands at £750.

  • Delays of over 6 months see the penalty rise to a hefty £1,500.

Furthermore, in addition to these fines, you risk acquiring a criminal record or facing disqualification.

Elevate your financial game with the best Wimbledon accountants. Schedule a consultation with Cigma Accounting!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

changes to self assessment threshold for 2023-24 in the UK; london accountants

Self-Assessment Threshold Change for 2023-24: Find out if you’re affected

Change to Self Assessment Threshold: Are you affected?

The world of tax is always evolving, and we understand how crucial it is for our clients to stay informed. Recent changes by HMRC regarding the Self-Assessment threshold could affect many taxpayers, and we’re here to break it down for you.

Increased Threshold for Self-Assessment from 2023-24

Starting from 6 April 2023, HMRC has announced a notable increase in the threshold for Self-Assessment for taxpayers who are taxed solely through PAYE. The previous limit was set at £100,000, but this has now risen to £150,000.

While on paper this does mean fewer individuals will need to submit Self Assessment returns, HMRC thresholds (including tax bands) drift upwards annually to match wage inflation.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Impact on 2022-23 Tax Returns

It’s important to note that if you’re submitting a Self-Assessment tax return for the 2022-23 period, the earlier threshold of £100,000 still applies. However, taxpayers who have a reported income ranging between £100,000 and £150,000, and do not fit any other Self-Assessment criteria, can expect an “exit letter” from HMRC. Receiving this letter signifies that you won’t be required to file an annual Self-Assessment tax return, granted you meet the set qualifications.

Criteria for 2023-24 and Beyond

Despite the increased threshold for those taxed under PAYE, certain conditions will still necessitate a Self-Assessment tax return. You will have to file one if:

  1. You have received any untaxed income.
  2. You’re a partner in a business partnership.
  3. You’re liable to the High Income Child Benefit Charge.
  4. You’re a self-employed individual with a gross income surpassing £1,000.

Act Promptly!

If this is your first time completing a Self-Assessment return, it’s essential to notify HMRC swiftly. The deadline to inform them is by 5 October following the tax year’s conclusion. And if the 2022-23 tax year applies to you, remember to electronically file your tax return and settle any tax obligations by 31 January 2024.

Experience the difference with Cigma Accounting, the premier accountants in Wimbledon. Contact us to learn more!

Need Assistance?

For personalized advice and further assistance, feel free to get in touch with our expert team at CIGMA Accounting. We’re dedicated to simplifying the complexities of the financial world for you.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

survey reveals best and worst banks in great britain; london accountant

The Best and Worst Banks in Great Britain Revealed

BEST AND WORST BANKS IN GREAT BRITAIN

If you’re in the market for a new bank, whether for your personal or business needs, you’ll want to take a close look at the latest rankings. Recently, a comprehensive survey in Great Britain asked current account holders to rate their providers on various metrics, such as online and mobile services, branch and overdraft facilities, and the quality of relationship management for businesses. Read on to find out the top-rated and bottom-rated banks to help you make an informed decision.

Top-Ranked Personal Current Account Providers

1. Monzo

Monzo tops the list for personal current accounts. Known for its excellent mobile banking experience, Monzo offers convenient services and a user-friendly interface.

2. Starling Bank

Following closely behind is Starling Bank. Similar to Monzo, it offers a fantastic online and mobile banking service. Its financial products are designed to be straightforward and easy to use.

3. First Direct

A pioneer in telephone banking, First Direct has successfully transferred its emphasis on customer service to the digital world, earning itself the third spot on the list.

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Bottom-Ranked Personal Current Account Providers

Virgin Money, Royal Bank of Scotland

Tied for the last spot are Virgin Money and the Royal Bank of Scotland. While both banks have a long-standing presence in the UK, they seem to fall short in satisfying the modern consumer’s banking needs.

TSB

TSB comes in just above the last two, facing challenges in areas like online and mobile services, as well as customer satisfaction in general.

Top-Ranked Business Current Account Providers

Monzo, Starling Bank

Monzo and Starling Bank claim the top spots for business accounts as well, indicating a strong performance across both personal and business banking services.

Handelsbanken

Handelsbanken stands out for offering excellent relationship management, which is a crucial aspect for small businesses.

Bottom-Ranked Business Current Account Providers

HSBC UK

HSBC UK finds itself at the bottom of the list, signaling the need for improvement in multiple areas, particularly in relationship management for small businesses.

The Co-operative Bank, Virgin Money

Also struggling in the business banking sector are The Co-operative Bank and Virgin Money, who will need to up their game to compete with the leaders in the field.

Ready to streamline your finances? Contact the top accountants in Wimbledon at Cigma Accounting today!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

VAT recovery when leasing business vehicles; farringdon accountant; london accountant

How to Navigate VAT Recovery When Leasing Business Vehicles

How to claim work from home tax relief in the UK

The world of VAT (Value-Added Tax) can seem complicated, especially when it involves leasing vehicles for your business. While leasing often provides flexibility and financial benefits, the intricacies of VAT recovery on these leases can be confusing. This guide aims to simplify VAT treatment related to motor expenses, helping your business make the most out of tax recovery options.

What You Need to Know About VAT and Leasing Vehicles

Leasing Company’s Perspective:

If you run a leasing company, good news! You can generally recover the VAT incurred on the purchase of cars, provided they are leased at a commercial rate. This can offer you considerable savings and lower your operating costs.

Business Leasing a Car:

If your business is leasing a car for official purposes, the rules are a bit different. The tax authority, HMRC, allows the recovery of 50% of the VAT charged on what it considers a ‘qualifying car.’ This 50% that you can’t reclaim is designed to cover any private use of the car. It means that your business can recover the other 50% subject to the normal rules of input VAT recovery.

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Special Cases: Taxis and Driving Schools

For businesses that lease cars primarily for use as taxis or for providing driving instruction, there is a beneficial exception. You can reclaim all of the VAT charged on the lease if the vehicle is a qualifying car and is intended primarily for either:

  1. Hire with a driver for carrying passengers, or
  2. Providing driving instruction

This exception allows you to maximize VAT recovery and keep your business running efficiently.

Self-Drive Hire and Daily Rental

Do note that the 50% restriction on VAT recovery isn’t limited to just leasing scenarios; it also applies to self-drive hires or daily rentals. If you are hiring a car simply to replace an ordinary company car that’s temporarily off the road, the 50% VAT recovery block will still apply.

Key Takeaways

  1. Leasing Companies:
    Can usually recover all the VAT incurred if the cars are leased at commercial rates.
  2. Businesses Leasing Cars:
    Can generally recover 50% of the VAT on a qualifying car, the remaining 50% is blocked to account for private use.
  3. Special Business Uses:
    Taxis and driving schools may reclaim 100% of the VAT.
  4. Self-Drive or Daily Rentals:
    Subject to the 50% VAT recovery block, similar to leased cars.

Understanding the intricacies of VAT recovery on leased vehicles can go a long way in optimizing your business expenses. If you need specialized advice tailored to your business needs, feel free to reach out to our team of expert accountants who can guide you through the VAT maze.

Discover how Wimbledon accountants can save you money. Get a free consultation with Cigma Accounting!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

national insurance contributions for self-employed; wimbledon accountant

Class 2 and Class 4 NICs: Quick Reference for Self-Employed Individuals in the UK

How to claim work from home tax relief in the UK

When you’re self-employed in the UK, understanding your National Insurance contributions (NICs) is critical for both compliance and for securing your future benefits such as the State Pension. For the 2023-24 tax year, the HMRC highlights two primary classes of NICs that self-employed individuals need to be familiar with: Class 2 NICs and Class 4 NICs. Here’s a quick reference of what these contributions mean for you.

What are Class 2 NICs?

Class 2 National Insurance Contributions are payable by almost all self-employed individuals. However, if you earn under the Small Profits Threshold (SPT), which is currently set at £6,725 for the 2023-24 tax year, you are exempt from these payments.

Key Features:

  • Rate: The flat weekly rate for Class 2 NICs is £3.45.
  • Benefits: Payments count towards the basic State Pension, employment and support allowance, maternity allowance, and bereavement benefits.

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What are Class 4 NICs?

If you’re self-employed and your annual profits exceed £12,570, you’re also required to pay Class 4 NICs in addition to Class 2 NICs.

Key Features:

  • Rates: Class 4 NIC rates for 2023-24 are 9% on chargeable profits between £12,570 and £50,270. An additional 2% is payable on any profits over £50,270.

are you exempt?

There are a few professions where Class 2 NICs are not applicable. These include:

  • Examiners, moderators, invigilators, and people who set exam questions.
  • People who run businesses involving land or property.
  • Ministers of religion who do not receive a salary or stipend.
  • Individuals making investments for themselves or others, but not as a business and without a fee or commission.

If you belong to any of these categories, it may be beneficial for you to get a State Pension forecast and consider making voluntary Class 2 NICs to make up for missing years.

Next steps

  1. Calculate Your Earnings:
    Verify if you cross the Small Profits Threshold or the £12,570 limit for Class 4 NICs.
  2. Check Exemptions:
    Ensure that you don’t fall under any of the categories that are exempt from Class 2 NICs.
  3. State Pension Forecast:
    It’s wise to check your State Pension forecast to understand how your NICs impact your future benefits.
  4. Consult an Expert:
    Given the intricacies, it might be beneficial to consult with a tax advisor or accounting professional to help you navigate the NIC landscape.

Understanding your National Insurance contributions is vital for financial planning and fulfilling your tax obligations. If you have more questions about how these classes apply to your situation, feel free to get in touch with us.

Need expert financial advice? Reach out to the leading Wimbledon accountants at Cigma Accounting now!


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

VAT for no consideration; london accountant; farringdon accountant

VAT Supplies for No Consideration: What You Need to Know

VAT Supplies for No Consideration: What You Need to Know

Value Added Tax, commonly known as VAT, is a part of everyday business transactions. However, not all supplies are straightforward, and the landscape gets complicated when dealing with VAT supplies for no consideration. This concept seems counter-intuitive because, in most cases, ‘supply’ generally involves a transaction for some kind of ‘consideration,’ whether in the form of money or in-kind.

But did you know that UK VAT law includes provisions for transactions made without consideration? These are considered supplies for VAT purposes. In this article, we’ll delve into these less talked about, yet critical areas of VAT compliance, guided by the information from HM Revenue and Customs (HMRC).

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What is Consideration?

Although the VAT Act 1994 doesn’t provide a legal definition for ‘consideration,’ HMRC refers to a definition from the EC 2nd VAT Directive Annex A13. It defines “consideration” as everything received in return for the supply of goods or services, including incidental expenses like packing, transport, and insurance. However, it should be noted that this directive is no longer in force after Brexit, but the conceptual framework remains.

Supplies for No Consideration: The Exceptions

1. Permanent Transfer/Disposal of Business Assets

If a business permanently transfers or disposes of its assets, the transaction is treated as a supply for VAT purposes. For example, if you give away a business laptop to an employee, this counts as a supply and is VAT applicable.

2. Temporary Application of Business Assets to Non-Business Use

When a business uses its assets for non-business activities temporarily, it constitutes a supply for VAT purposes. Suppose your business owns a vehicle primarily used for business tasks but occasionally gets used for private purposes. In that case, that non-business usage is subject to VAT.

3. Self-Supply of Goods or Services

When a business uses its own resources to generate goods or services, this ‘self-supply’ is considered a supply for VAT purposes. For instance, a construction company building its own office must account for VAT on the self-supplied labor and materials.

4. Retention of Business Assets After VAT Deregistration

If a business retains its assets after deregistering for VAT, this also constitutes a supply for VAT purposes. VAT will be calculated based on the market value of the assets at the time of deregistration.

5. Non-Business Use of Services with Recovered Input Tax

If services are put to private or other non-business use where input tax had previously been recovered, it is deemed a supply for VAT purposes.

Optimise your business finances with the best accountants in Wimbledon. Schedule a meeting with Cigma Accounting!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Duty free limits if you are travelling abroad

DUTY FREE LIMITS WHEN returning from ABROAD

Looking to understand the ins and outs of UK duty-free allowances? At CIGMA Accounting, we’re committed to delivering the latest, most accurate information to help you enjoy your international travel stress-free.

When returning to Great Britain (England, Wales, Scotland) from abroad, here’s a rundown of what you can bring back duty-free for personal use.

You are permitted to bring back:

  • 200 cigarettes, 100 cigarillos, 50 cigars, 250g of tobacco, or 200 sticks of tobacco for electronic heated tobacco devices. Feel free to divide these allowances; for instance, 100 cigarettes and 25 cigars are perfectly fine.
  • 18 litres of still table wine.
  • 42 litres of beer.
  • 4 litres of spirits or strong liqueurs exceeding 22% volume or 9 litres of fortified wine (like port or sherry), sparkling wine or other alcoholic beverages under 22% volume. A split is possible here as well; for example, 4.5 litres of fortified wine and 2 litres of spirits meet the limit.
  • Other goods, including perfume and souvenirs, up to the value of £390. For those arriving via a private plane or boat for leisure, the limit is £270 tax-free.

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Returning to northern ireland from the eu

For those returning to Northern Ireland from an EU country, no limits are imposed on tobacco or alcohol, provided you can prove that the goods are for your personal use, and all relevant taxes and duties were paid at purchase. However, HMRC suggests these maximum guidelines:

  • 800 cigarettes
  • 200 cigars
  • 400 cigarillos
  • 1kg of tobacco
  • 110 litres of beer
  • 90 litres of wine
  • 10 litres of spirits
  • 20 litres of fortified wine (like port or sherry)

Exceeding these numbers may trigger additional inquiries from HMRC.

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Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

hmrc deadlines july and august 2023; london accountant; wimbledon accountant

Key HMRC Deadlines for July and August 2023 You Need to Know

Key HMRC Deadlines for July and August 2023

As we step into July and August 2023, it’s essential to stay updated with the upcoming deadlines from HM Revenue and Customs (HMRC). Here’s a comprehensive guide to help you navigate these crucial dates and ensure that your business remains tax compliant.

1 July 2023 – Corporation Tax
The due date for corporation tax for the fiscal year ending 30 September 2022 is 1st July 2023. This deadline applies to corporations and businesses operating within the UK, and it pertains to the tax owed on all profits from your trading, investments, and chargeable gains. Ensure your business has calculated and prepared to pay its tax liability by this date.

 

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6 July 2023Forms P11D and P11D(b)
By 6th July 2023, businesses should complete and submit the P11D and P11D(b) forms. These forms concern the return of benefits and expenses (P11D) and the return of Class 1A National Insurance Contributions (NICs) (P11D(b)). This obligation primarily concerns employers who have provided certain benefits to their directors or employees.

19 July 2023 – Class 1A NICs
The payment for Class 1A NICs is due by 19 July 2023. However, if you plan to pay electronically, the deadline extends to 22 July 2023. This payment pertains to employers who have provided benefits such as company cars to their employees.

19 July 2023 – PAYE and NIC deductions
PAYE and NIC deductions for the month ending 5 July 2023 must be made by 19 July 2023. If you opt to make your payment electronically, the due date extends to 22 July 2023. This deadline applies to all employers who deduct PAYE and NICs from their employees’ wages.

19 July 2023 – CIS300 monthly return and CIS tax
The deadline for filing the CIS300 monthly return for the month ending 5 July 2023, and payment of the CIS tax deducted for the same period, is 19 July 2023. This applies to contractors operating under the Construction Industry Scheme (CIS).

1 August 2023 – Corporation Tax
For the fiscal year ended 31 October 2022, the due date for corporation tax is 1 August 2023. All corporations and businesses operating within the UK need to ensure they’ve prepared to meet this deadline.

19 August 2023 – PAYE and NIC deductions
For the month ending 5 August 2023, the PAYE and NIC deductions are due by 19 August 2023. Electronic payments can be made until 22 August 2023. All employers deducting PAYE and NICs from their employees’ wages need to take note of this deadline.

19 August 2023 – CIS300 monthly return and CIS tax
The filing deadline for the CIS300 monthly return and payment for the CIS tax deducted for the month ending 5 August 2023 is 19 August 2023. This is crucial for contractors operating under the CIS.

Transform your financial strategy with expert accountants in Wimbledon. Book an appointment with Cigma Accounting!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

National Insurance credits

QUICK READS: NATIONAL INSURANCE CREDITS

At CIGMA Accounting, we understand the complexity of the UK’s National Insurance system and the value of optimising your benefits. This article explains National Insurance credits, a crucial element that can help build your National Insurance record and ultimately increase the entitlements you receive, including the State Pension.

National Insurance credits provide an invaluable lifeline for those not currently working, and thus, not contributing to their National Insurance. These credits can fill gaps in your National Insurance record, and we see it especially relevant to those who are job-seeking, on sick leave, maternity, paternity or adoption leave, caring for someone, or serving on a jury.

You can click here to read our full guide to UK National Insurance.

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Our firm often receives inquiries on how to apply for National Insurance credits. The process varies depending on the specific circumstances; sometimes they are applied automatically, while in other cases, an application is necessary. To better understand your situation, we recommend seeking professional advice.

Two primary types of National Insurance credits exist – Class 1 and Class 3. Class 3 credits contribute towards your State Pension and some bereavement benefits. Class 1 credits not only cater to the same benefits as Class 3 but also offer additional ones like Jobseeker’s Allowance.

However, it’s important to note that National Insurance credits usually don’t apply to self-employed individuals who pay Class 2 National Insurance or older married women who opted to pay a reduced rate of National Insurance before April 1977.

Find peace of mind with Cigma Accounting, your trusted Wimbledon accountants. Get in touch for a free consultation!

Need Assistance from an Accountant?

At CIGMA Accounting, we make it our mission to guide you through these complexities, helping you make informed decisions about your financial future. If you have more questions about National Insurance credits or other financial matters, reach out to us and our sales team will be in touch for a free consultation!


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Selling overseas property

UK CAPITAL GAINS TAX WHEN SELLING OVERSEAS PROPERTY

Are you a UK resident contemplating selling an overseas property? You need to understand the implications of Capital Gains Tax (CGT) on your transaction. This piece will guide you through what you need to know about CGT, your potential liabilities, and any possible exemptions or reliefs.

In the 2023-24 tax year, UK residents are liable for Capital Gains Tax when selling overseas property at a profit. A change in the annual exempt amount means you can exclude the first £6,000 of gains from CGT, down from £12,300 in the previous year.

You can click here to read our full guide to Capital Gains Tax in the UK.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

Capital gains rates and double taxation

When it comes to the rates of CGT, it’s usually a flat 20% on most gains for individuals. However, basic rate taxpayers with modest capital gains might qualify for a 10% rate. But beware, if your combined taxable income and gains cross the higher rate threshold, anything above this level is taxed at 20%.

When dealing with the disposal of residential property that’s not your primary residence, higher rates apply. Basic rate taxpayers face an 18% CGT, while higher-rate taxpayers have a 28% duty.

One critical point to remember is that you might also owe tax in the country where the property is located. But don’t worry – relief from double taxation could be available, thanks to various tax agreements between the UK and other countries. Dual residents can also seek additional guidance to understand their tax obligations better.

Do remember, there are special regulations if you’re a UK resident, but your permanent home (domicile) is overseas. To avoid any unexpected tax surprises, it’s always best to consult with tax professionals.

If you’re navigating the complexities of selling overseas property and Capital Gains Tax, our accounting experts are here to help. Contact us today for personalised advice and guidance tailored to your situation.

Maximise your savings with top-tier accountants in Wimbledon. Contact Cigma Accounting for expert advice!


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Understanding UK VAT; a comprehensive guide for business owners; london accountant

Understanding UK VAT: A Comprehensive Guide for Business Owners

Value Added Tax (VAT) is a tax on goods and services in the UK. If you’re a business owner, it’s important to understand how VAT works and how to comply with the regulations. This guide covers everything you need to know about UK VAT, including registration, rates, and filing requirements.

WHAT IS VAT AND WHO NEEDS TO REGISTER?​

WHY IS VAT CHARGED?​

The UK government adds Value Added Tax (VAT) to goods and services as a way to generate revenue for public spending. VAT is a tax on the value added to a product or service at each stage of its production or distribution. It is essentially a consumption tax that is paid by the end consumer.

The VAT system works by businesses charging VAT on the goods and services they sell, and then reclaiming the VAT they have paid on their own purchases. This means that VAT is effectively a tax on the final consumer, as the amount of VAT paid at each stage of production or distribution is passed on to the next buyer until it reaches the end consumer.

Who needs to register for VAT?

If you are a business owner and your annual turnover exceeds the VAT threshold (currently £85,000), you are required to register for VAT with HM Revenue and Customs (HMRC). However, you can also choose to register voluntarily if your turnover is below the threshold. Once registered, you will need to charge VAT on your sales and pay VAT on your purchases, and file regular VAT returns with HMRC.

Different types of VAT rates and when to charge them.

In the UK, there are three main rates of Value Added Tax (VAT) that apply to goods and services, as well as a number of VAT exemptions and reduced rates.

Summary of VAT rates and VAT-exempt goods and services; london accountant

Standard rate

The standard rate of Value Added Tax (VAT) in the UK is currently 20%. This means that for most goods and services sold in the UK, the VAT charged will be 20% of the sale price.

The standard rate of VAT applies to most goods and services, with a few exceptions that are either exempt from VAT or subject to reduced rates. Some examples of goods and services that are subject to the standard rate of VAT include:

  • Electronic goods such as televisions and computers
  • Clothing and footwear, except for children’s clothing and footwear which are zero-rated
  • Vehicles and fuel
  • Alcohol, tobacco, and soft drinks
  • Most services, such as legal and accounting services, advertising, and consultancy services

When a business is registered for VAT, they are required to charge VAT on their sales at the appropriate rate, which in most cases will be the standard rate of 20%. The business must then declare the VAT they have charged on their sales to HM Revenue & Customs (HMRC), usually on a quarterly basis.

If the business has incurred VAT on their own purchases, they can reclaim this input tax against the VAT they have charged on their sales. This means that the business effectively only pays VAT on the value they have added to the product or service they are selling.

The standard rate of VAT can have an impact on consumer behaviour, as it increases the cost of goods and services for consumers. Businesses may also need to adjust their pricing to account for the VAT they are charging. The standard rate of VAT is reviewed periodically by the government, and may be adjusted in response to economic conditions or other factors.

Reduced rate

The reduced rate of Value Added Tax (VAT) in the UK is a rate of 5% charged on certain goods and services. This reduced rate is lower than the standard rate of VAT, which is currently set at 20%.

The reduced rate of VAT applies to a specific list of goods and services, which include:

  • Domestic fuel and power, such as gas and electricity used in a home
  • Children’s car seats and booster cushions
  • Mobility aids for the elderly and disabled, such as wheelchairs and stairlifts
  • Sanitary products, such as tampons and sanitary towels
  • Energy-saving materials, such as insulation and solar panels
  • Certain types of renovations and repairs to private residences

Businesses that sell goods or services that are subject to the reduced rate of VAT are still required to register for VAT if their taxable turnover exceeds the VAT registration threshold. This means that they will need to account for the VAT they charge on their sales, but at a lower rate than the standard rate of VAT.

If a business is registered for VAT and they sell goods or services that are subject to the reduced rate of VAT, they can still reclaim the input tax they have paid on their own purchases. This means that they can offset the VAT they have paid against the VAT they have charged, resulting in a lower overall VAT liability.

The reduced rate of VAT can have an impact on consumer behaviour, as it reduces the cost of certain goods and services. For example, the reduced rate of VAT on sanitary products makes these items more affordable for consumers.

It’s important to note that the government can change the goods and services that are subject to the reduced rate of VAT, and that businesses should regularly check whether their products and services still qualify for the reduced rate.

Zero rate

The zero rate of Value Added Tax (VAT) in the UK is a rate of 0% charged on certain goods and services. This means that these goods and services are still subject to VAT, but the rate of VAT charged on them is set at 0%. This differs from exempt goods and services which are not subject to VAT at all.

The zero rate of VAT applies to a range of goods and services, including but not limited to:

  • Food and drink, including most groceries, milk, bread, and fruit and vegetables.
  • Books, newspapers, and magazines
  • Children’s clothing and footwear
  • Some medical equipment and supplies
  • Some services related to international travel, such as flights and hotel accommodation

Businesses that sell goods or services that are subject to the zero rate of VAT are still required to register for VAT if their taxable turnover exceeds the VAT registration threshold. This means that they will need to account for the VAT they charge on their sales, even though the rate is 0%.

If a business is registered for VAT and they sell goods or services that are subject to the zero rate of VAT, they can still reclaim the input tax they have paid on their own purchases. This means that they can offset the VAT they have paid against the VAT they have charged, resulting in a lower overall VAT liability.

The zero rate of VAT can have an impact on consumer behavior, as it reduces the cost of certain goods and services. For example, the zero rate of VAT on children’s clothing and footwear makes these items more affordable for families.

It’s important to note that the government can change the goods and services that are subject to the zero rate of VAT, and that businesses should regularly check whether their products and services still qualify for the zero rate.

Which goods and services are exempt from VAT?

The following are examples of VAT exempt items, which do not need to be added to your total VAT taxable turnover:

  • Financial services, including investments and insurance.
  • Garages, parking spaces and even houseboat moorings.
  • Education and training.
  • Property, land, and buildings.
  • Healthcare.
  • Funeral plans.
  • Charity events.
  • Antiques.
  • Gambling.
  • Sports activities.
  • Get the full list here.

VAT returns and deadlines for filing: Annual vs. Quarterly

As a VAT-registered business owner in the UK, you are required to file VAT returns with HM Revenue and Customs (HMRC) on a regular basis. The frequency of your VAT returns will depend on the size of your business and the amount of VAT you are liable to pay.

Generally, businesses with a turnover of less than £85,000 can file VAT returns annually, while those with a turnover of more than £85,000 must file returns quarterly. It’s important to keep track of your VAT deadlines and ensure you file your returns on time to avoid penalties and interest charges. The deadline for filing and paying your VAT is usually one month and seven days after the end of your VAT period.

Annual VAT Returns

In the UK, businesses that are registered for Value Added Tax (VAT) are required to submit an Annual VAT Return in addition to their quarterly VAT returns.

The Annual VAT Return is a summary of the business’s VAT records for the entire VAT accounting year, which runs from the start of the business’s VAT registration date to the end of the 12th month. The Annual VAT Return is due within two months and 10 days of the end of the VAT accounting year.

The Annual VAT Return includes the following information:

  • Total VAT charged on sales made during the VAT accounting year
  • Total VAT paid on purchases made during the VAT accounting year
  • Total VAT owed or overpaid for the VAT accounting year
  • The business’s VAT registration number and the accounting period covered by the return

Quarterly VAT Returns

In the UK, businesses that are registered for Value Added Tax (VAT) are required to submit quarterly VAT returns to HM Revenue & Customs (HMRC).

The VAT quarters run as follows:

  • 1 April to 30 June
  • 1 July to 30 September
  • 1 October to 31 December
  • 1 January to 31 March

The deadline for submitting a VAT return and making a payment to HMRC is one month and seven days after the end of the VAT quarter.

The VAT return must include the same information as an annual return, described above.

How to Complete a VAT Return?

To complete a VAT Return, businesses must calculate the total amount of VAT charged on sales and subtract the total amount of VAT paid on purchases. If the result is a positive figure, the business will owe VAT to HM Revenue & Customs (HMRC). If the result is a negative figure, the business will be due a VAT refund from HMRC.

If a business fails to submit their VAT Return or submit it late, they may be subject to penalties and interest charges. Additionally, if the Annual VAT Return shows that the business owes VAT to HMRC, this must be paid within the payment deadline to avoid further penalties.

It’s important for businesses to keep accurate records of their VAT transactions throughout the year in order to complete their Annual VAT Return correctly and on time. Some businesses may choose to hire an accountant or bookkeeper to help them with this task.

HMRC Penalties Relating to VAT

If a business that is registered for Value Added Tax (VAT) fails to submit their VAT returns or submit them late, they may be subject to penalties and interest charges. The VAT penalties system was updated on 1 January 2023, and is now based on a points system.

For each return you submit late, you’ll receive a penalty point until you reach the penalty point threshold. When you reach the threshold, you’ll receive a £200 penalty. You’ll also receive a further £200 penalty for each subsequent late submission while you’re at the threshold.

The penalty point threshold (PPT) is set by your accounting period. The threshold is the maximum points you can receive. Businesses who submit returns annually have a PPT of 2, those who submit quarterly have 4, and those who submit monthly have 5.

In addition to the penalties, HM Revenue & Customs (HMRC) may charge interest on any late payments of VAT owed.

If a business is experiencing difficulties with submitting their VAT returns on time or making VAT payments, they should contact HMRC as soon as possible to discuss their situation. HMRC may be able to offer support and advice to help the business get back on track with their VAT obligations.

VAT schemes for small businesses

There are several VAT schemes available for small businesses in the UK, designed to simplify the VAT process and reduce administrative burdens. The most popular scheme is the Flat Rate Scheme, which allows businesses with a turnover of less than £150,000 to pay a fixed percentage of their turnover as VAT, rather than calculating the actual VAT owed on each transaction. This can save time and money for small businesses, as well as providing a predictable VAT liability.

Here are some of the most common VAT schemes for small businesses:

VAT schemes for small businesses; london accountant
  1. The Flat Rate Scheme allows eligible businesses to pay a fixed rate of VAT to HM Revenue & Customs (HMRC) based on their turnover. The flat rate takes into account the business’s specific industry sector and is usually lower than the standard VAT rate. Businesses using the FRS are not able to reclaim VAT on purchases, except for certain capital assets over £2,000.
  1. This scheme allows eligible businesses to make one VAT payment per year, rather than four payments per year. The business must make interim payments throughout the year based on their estimated VAT liability, and then reconcile their account and pay any balance due or claim a refund at the end of the year.

This scheme allows eligible businesses to account for VAT on the basis of cash received and paid, rather than on invoices issued and received. This can help businesses to manage their cash flow, as they do not have to pay VAT on sales until they have been paid by their customers.

This scheme is designed for businesses that sell a high proportion of low-value items to non-VAT registered customers. The scheme allows businesses to calculate their VAT liability based on a percentage of their total retail sales, rather than on each individual sale.

This scheme is designed for businesses that sell second-hand goods, works of art, antiques, or collectors’ items. It allows businesses to pay VAT on the difference between the purchase price and the selling price of the goods, rather than on the full selling price.

Small businesses should carefully consider which VAT scheme is most appropriate for their business and seek professional advice if necessary.

Common mistakes to avoid when dealing with VAT

Dealing with VAT can be complex and mistakes can be costly. Here are some common mistakes to avoid when dealing with Value Added Tax (VAT) in the UK:

  1. Not registering for VAT on time:
    Businesses must register for VAT with HM Revenue & Customs (HMRC) if their taxable turnover exceeds the VAT registration threshold, which is currently £85,000. Failure to register for VAT on time can result in penalties and interest charges.
  2. Not charging the correct rate of VAT:
    Businesses must charge the correct rate of VAT on their sales, depending on the type of goods or services being sold. Charging the wrong rate of VAT can result in penalties and interest charges.
  3. Failing to keep accurate records:
    Businesses must keep accurate records of their VAT transactions, including sales and purchases, in order to complete their VAT returns correctly. Failure to keep accurate records can result in errors and omissions on VAT returns, which can lead to penalties and interest charges.
  4. Not reclaiming VAT on eligible purchases:
    Businesses can reclaim VAT on eligible purchases, such as goods and services used for business purposes. Failure to reclaim VAT on eligible purchases can result in increased costs for the business.
  5. Missing VAT return deadlines:
    Businesses must submit their VAT returns and make VAT payments on time to avoid penalties and interest charges. Missing VAT return deadlines can result in penalties and interest charges.
  6. Failing to notify HMRC of changes to business circumstances:
    Businesses must notify HMRC of any changes to their business circumstances that may affect their VAT registration or VAT liability. Failure to do so can result in penalties and interest charges.
  7. Not understanding VAT rules and regulations:
    VAT can be complex, and it’s important for businesses to have a good understanding of the rules and regulations surrounding VAT. Failure to understand VAT rules and regulations can lead to mistakes and errors on VAT returns, which can result in penalties and interest charges.

     

It’s important for businesses to take their VAT obligations seriously and to seek professional advice if they are unsure about any aspect of VAT.

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Save as you Earn SAYE employee share schemes and the benefits for employers; london accountant

Guide to the Save As You Earn (SAYE) employee share scheme

Saving money and investing in the stock market can be a great way to grow your wealth, but it can be difficult to know where to start. Fortunately, there are several tax-advantaged employee share schemes available in the UK that can help you invest in your employer’s company while reducing your tax bill. Examples include the Share Incentive Plan or the Save As You Earn (SAYE) share scheme, which is a popular way for both employers and employees to save money and invest in the success of the business.


Save as you earn; employee share scheme; share incentive plan; london accountant

What is an employee share scheme?

Before we dive into the specifics of the SAYE scheme, it’s important to understand what tax-advantaged employee share schemes are and how they work. In the UK, there are several different types of employee share schemes, including:

  • Share Incentive Plans (SIPs).
  • Enterprise Management Incentives (EMIs).
  • Company Share Option Plans (CSOPs).
  • Save As You Earn (SAYE) schemes.

These schemes are designed to encourage employees to buy shares in their employer’s company, which can be a great way to align their financial interests with the success of the company. In addition, these schemes often come with income tax advantages for employees when compared to direct income, which can make them a more attractive investment option.

 

What is the Save As You Earn scheme?

The Save As You Earn (SAYE) scheme is a type of employee share scheme that allows employees to save money over a period of time and use those savings to purchase shares in their employer’s company at a later date. You can save up to £500 under a SAYE scheme. Under the SAYE scheme, employees agree to save a fixed amount of money each month for a period of three or five years.

At the end of the savings period, the employee can use the money they have saved to purchase shares in their employer’s company at a discounted price. The discount is determined at the start of the scheme and can be up to 20% of the share price at the beginning of the scheme.

Save As You Earn BENEFITS for employees

There are several benefits to participating in a SAYE scheme as an employee. Firstly, the scheme allows employees to save money in a tax-efficient way, as the savings are deducted from their pre-tax salary. This means that employees can reduce their tax bill while also building up savings for the future.

SAYE also comes with specific extra tax advantages:

  • The interest and any bonus at the end of the scheme is tax-free.
  • You do not pay Income Tax or National Insurance on the difference between what you pay for the shares and what they’re worth.

You might have to pay Capital Gains Tax if you sell the shares. However, you will not pay Capital Gains Tax if you transfer the shares:

  • To an Individual Savings Account (ISA) within 90 days of the scheme ending.
  • To a pension directly from the scheme when it ends.

In this way, the SAYE scheme allows employees to invest in their employer’s company at a discounted price, which can be a great way to reward the effort they put into their work. If the company’s share price increases over the savings period, employees can potentially make a profit by purchasing shares at a lower price than they are currently trading at.

As a final point, the SAYE scheme is a flexible and low-risk way to invest in the stock market. If the employee decides not to purchase shares at the end of the savings period, they can simply withdraw their savings without penalty.

 

SAVE AS YOU EARN BENEFITS for employeRS AND BUSINESSES

The SAYE scheme can also be beneficial for employers. Firstly, it can be a great way to incentivise employees and align their interests with the success of the company. Employees who are shareholders are often more engaged and motivated, which can lead to increased productivity and profitability.

In addition, the SAYE scheme can be a cost-effective way for employers to offer a valuable employee benefit. Unlike some other share schemes, the SAYE scheme does not require the employer to give shares to employees for free, which can be expensive and dilute the ownership of the company.

 

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How do you set up a SAYE scheme as an employer / business?

Setting up a SAYE scheme as an employer or business owner is a relatively straightforward process, but it does require some planning and preparation. Here are the steps you will need to take to set up a SAYE scheme for your employees:

  1. Choose a savings provider:
    The first step in setting up a SAYE scheme is to choose a savings provider who will administer the scheme on your behalf. There are several providers to choose from, so it’s important to do your research and choose one that meets your needs.
  2. Determine the details of the scheme:
    Once you have chosen a savings provider, you will need to determine the details of the SAYE scheme, including the savings period, the amount that employees will save each month, and the discount that employees will receive when purchasing shares.
  3. Obtain regulatory approval:
    Before launching the scheme, you will need to obtain regulatory approval from HM Revenue & Customs (HMRC). This will involve submitting an application and providing details of the scheme.
  4. Communicate the scheme to employees:
    Once the SAYE scheme has been approved, it’s important to communicate the details of the scheme to your employees. This should include information on how the scheme works, how much employees will save each month, and the potential benefits of participating in the scheme.
  5. Launch the scheme:
    Finally, you can launch the SAYE scheme and start accepting employee contributions. You will need to provide regular updates to employees on the performance of the scheme and any changes to the discount or savings period.

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Overall, setting up a SAYE scheme can be a valuable way to incentivize and engage your employees, while also offering a tax-efficient way for them to save and invest in your company. With careful planning and preparation, you can launch a successful SAYE scheme that benefits both your employees and your business.


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About the Author
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Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

national insurance guide; london accountant; UK national insurance contributions; national insurance rates

Understanding National Insurance: Contributions, rates and employers

National Insurance (NI) is an essential part of the UK’s tax system, but it is often misunderstood. If you are new to the UK or starting your first job, understanding National Insurance contributions can be confusing, and you may be left wondering – how is National Insurance calculated? In this blog post, we will explain what National Insurance contributions are and how they differ from income tax, what services NI payments fund, National Insurance rates, and finding your National Insurance number.

 

What is National Insurance and how is it different from income tax?

National Insurance (NI) is an essential part of the UK’s tax system, but it is often misunderstood. If you are new to the UK or starting your first job, understanding National Insurance contributions can be confusing, and you may be left wondering – how is National Insurance calculated? In this blog post, we will explain what National Insurance contributions are and how they differ from income tax, what services NI payments fund, National Insurance rates, and finding your National Insurance number.

 

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What services do National Insurance CONTRIBUTIONS fund?

National Insurance contributions go towards a range of services and benefits provided by the UK government. The main services and benefits that NI payments fund are:

  • The State Pension.
  • Jobseeker’s Allowance.
  • Employment and Support Allowance.
  • Maternity Allowance
  • Widowed Parent’s Allowance.
  • Bereavement Support Payment.
  • The National Health Service (NHS).
  • Personal Independence Payment (PIP).
 

Who pays for National Insurance and what are National Insurance rates?

If you are employed, you and your employer will both have to pay National Insurance contributions. The amount you pay will depend on how much you earn. The current rate for employees is 12% on earnings between £242 and £967 per week, and 2% on earnings above £967 per week. Your employer will also pay 13.8% of your earnings above £175 per week.

If you are self-employed, you will need to pay Class 2 and Class 4 National Insurance contributions. Class 2 contributions are a fixed weekly amount of £3.45, and Class 4 contributions are based on your profits. The current rate for Class 4 contributions is 9% on profits between £12,570 and £50,270 and 2% on profits over £50,270.

For those working abroad, you can read our blog post on overseas NI contributions.

 

What are the benefits of paying National Insurance contributions?

Paying National Insurance contributions can provide you with access to a range of state benefits, including the State Pension, maternity and paternity pay, and sick pay. It can also help you to qualify for contributions-based Jobseeker’s Allowance and Employment and Support Allowance if you are unable to work due to illness or disability.

In addition to providing you with access to state benefits, paying National Insurance contributions can also help you to build up a National Insurance record, which is used to calculate your State Pension entitlement. To qualify for the full State Pension, you will need to have paid or been credited with enough National Insurance contributions.

 

UK national insurance contributions; london accountant; how is national insurance calculated

Can I make voluntary NI contributions?

If you are not employed or self-employed, you may still be able to make voluntary National Insurance contributions. This can be beneficial if you have gaps in your National Insurance record, for example, if you have taken time out of work to care for children or have lived abroad.

Voluntary contributions can help you to build up your National Insurance record and may help you to qualify for certain state benefits, including the State Pension. The amount you pay and the benefits you receive will depend on the type of voluntary contributions you make. 

There are two types of voluntary NI contributions:

Class 3 contributions:
These are voluntary contributions that you can make to fill gaps in your National Insurance record. The current rate for Class 3 contributions is £15.40 per week. You can make Class 3 contributions for any tax year in which you have a gap in your National Insurance record.

Class 2 contributions:
These are voluntary contributions that you can make if you are self-employed but have not earned enough to be required to pay Class 2 contributions. The current rate for Class 2 contributions is £3.05 per week. Paying Class 2 contributions voluntarily can help you to build up your National Insurance record and qualify for state benefits.

 

It is worth noting that voluntary contributions may not always be the best option for everyone. Before making any voluntary contributions, you should speak to a financial advisor or contact HM Revenue and Customs (HMRC) for advice on your individual circumstances.

 

How to find your National Insurance Number

Your National Insurance Number (NIN) is a unique identifier used by HM Revenue and Customs (HMRC) to track your National Insurance contributions and ensure that you are paying the correct amount. If you are unsure of your NIN, there are several ways to find it:

  1. Check your payslip – Your NIN should be printed on your payslip. If you are employed, your employer should have your NIN on file and include it on your payslip.
  1. Check official documents – Your NIN may be listed on official documents such as your P60, tax return, or any correspondence you have received from HMRC.
  1. Contact HMRC – If you are unable to find your NIN, you can contact HMRC and request that they send you a letter confirming your NIN. You will need to provide personal information such as your name, date of birth, and address to verify your identity.
  1. Use the government’s online service – You can use the government’s online service to find your NIN if you have a UK passport or a UK driving licence. You will need to create an account and provide personal information to verify your identity.

It’s important to keep your NIN safe and secure, as it is a valuable piece of personal information that can be used to steal your identity. Never share your NIN with anyone unless you are sure that it is necessary, and always keep it private.

 

Need Assistance from an Accountant?

National Insurance contributions are an important part of the UK’s tax system, and they fund a range of state benefits and services. Understanding National Insurance can be confusing, but it is essential to ensure that you are paying the correct amount and have access to the state benefits that you are entitled to.

If you are unsure about your National Insurance contributions or entitlement to state benefits, you should speak to a financial advisor. Our CIMA-registered accountants at CIGMA Accounting would be happy to assist with any of your personal or business accounting needs. Contact us via the form below for a free quote.


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Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

how to register trusts HMRC; london accountant; register trusts UK

Do You Need to Register Trusts with HMRC? Find out today

If you’re considering setting up a trust or have already established one, you might be wondering whether or not you need to register trusts with HM Revenue and Customs (HMRC). In this blog post, we’ll answer that question and provide you with all the information you need to know, including when and how to register trusts.

 

What is a trust?

A trust is a legal arrangement where assets are managed by one person (the trustee) for the benefit of another (the beneficiary). Trusts are commonly used for estate planning purposes, as they can provide a way to pass on assets to future generations while minimising tax liabilities and protecting assets from creditors.

You can also read our full post about legal trusts.

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Why would someone want to register trusts?

There are a number of reasons why someone might want to establish a trust, including:

  • To protect assets from creditors or legal action.
  • To minimise inheritance tax liabilities.
  • To provide for a vulnerable beneficiary.
  • To pass on assets to future generations.
  • To manage assets on behalf of someone who is unable to manage them themselves (such as a child or vulnerable adult).
 

Do you need to register trusts with HMRC?

The short answer is: it depends. If your trust generates income or capital gains, then you will need to register it with HMRC. This is because trusts are subject to the same tax rules as individuals, and any income or gains generated by the trust may be subject to tax. Registering trusts is also important for anti-money laundering efforts.

You must register a trust if it becomes liable for any of the following taxes:

  • Capital Gains Tax.
  • Income Tax.
  • Inheritance Tax.
  • Stamp Duty Land Tax.
  • Stamp Duty Reserve Tax.
  • Land and Buildings Transaction Tax (in Scotland).
  • Land Transaction Tax (in Wales).

 

If your trust is any of the following and does not have any tax to pay, it is classed as Schedule 3A and does not need to register with HMRC:

  • A statutory trust by a court order or by law — for example, a trust created by a court when a couple cannot agree how to split assets during a divorce.
  • Used to hold money or assets of a UK registered pension scheme — like an occupational pension scheme.
  • Holding life insurance policies that only pay out on death, illness, or disability.
  • A trust for a registered UK charity (or a charity not required to register with the Charity Commission under the Charities Act 2011).
  • Set up to open a bank account for a child.
  • Set up on death that takes assets from the estate and is closed within 2 years of death (also called a ‘will trust’).
  • A trust with less than £100 and set up before 6 October 2020 (also called a ‘pilot trust’).
  • A co-ownership trust set up to hold shares of property or other assets jointly owned by 2 or more people as ‘tenants in common’
  • A trust relating to financial markets — including those created by default arrangements of a designated system or of the default rules of a recognised body.
  • Created to hold money for people other than the trustee — or those relating to professional services
  • Holding client money, securities and other assets — this must be incidental to the carrying on of business by a relevant supervised person
  • A trust for capital markets and similar items.
  • Created to enable commercial transactions.
  • A trust relating to registration of assets — for example, trusts created to hold the legal title of an asset for the person to whom the transfer or disposal is being made.
  • A trust relating to legislative requirements — for example trusts set up to hold property, money from compensation for a personal injury or set up for a vulnerable beneficiary such as a disabled person.
  • Set up by government or other UK public authority.
 
how to register trusts; register trusts UK; london accountant

How do you register trusts in the uk?

You will need to complete the Trust Registration Service (TRS) online. The TRS is a self-assessment process that allows you to register your trust, provide details of the trustees and beneficiaries, and declare any income or gains generated by the trust. You can access the TRS through the government’s website, and you will need to have your trust’s Unique Taxpayer Reference (UTR) to hand.

For most trusts, you will have to register with HMRC within 90 days of it being created or becoming liable for tax, or on or before 1 September of the financial year in which it was established (whichever is later).

For the full list of details needed to register a trust, have a look at HMRC’s website.

 

GET EXPERT ASSISTANCE

If you have set up a trust, it’s important to understand whether or not you need to register it with HMRC. If your trust generates income or capital gains, then you will need to register it, and you can do so through the Trust Registration Service online. It’s always a good idea to seek professional advice when setting up a trust, to ensure that you’re meeting all your legal obligations and maximising the benefits of the trust for you and your beneficiaries.

 

Our CIMA-registered professionals at CIGMA accounting would be happy assist you or your business with any accounting needs. Contact us via phone or through the form below for a free quote.


Wimbledon Accountant

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

private residence relief; london accountant; capital gains tax when selling your home

Private Residence Relief: minimise tax when selling your home

Private Residence Relief: minimising tax when selling your home

Have you ever considered selling your home? If yes, you’ve probably wondered about the tax implications. Specifically, there might be one tax you’ve heard about: Capital Gains Tax (CGT). In this article, we aim to clarify what this tax is and how Private Residence Relief can potentially protect you from it.

If you need assistance with your tax and accounting, whether it is personal or corporate, CIGMA Accounting is here to help. Visit our Contact Page to set up a free consultation with our CIMA-registered professionals.

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What is Capital Gains Tax (CGT)?

Capital Gains Tax is a tax on the profit or gain you make when you sell or dispose of an asset that has increased in value. This applies to finance assets, investments like art, and company shares. In the context of property, if you sell a house that is not your main home, you may need to pay CGT on the profit you make.

What is Private Residence Relief?

Private Residence Relief, also known as Principal Private Residence Relief (PPR), is a valuable tax relief that can significantly reduce, or even eliminate, CGT when you sell your main family home. This relief recognises that your primary residence should not be subject to the same tax burdens as other investment assets.

Who Qualifies for Private Residence Relief?

There are specific conditions you need to meet for Private Residence Relief. According to the HMRC, the following conditions must be satisfied:

  1. Main Residence: The property must have been your only or main residence throughout the period of ownership.

  2. No Rental: You must not have let out part of the house (having a lodger is not considered letting out a part).

  3. Business Use: No part of your home should have been used exclusively for business purposes. However, using a room as a temporary or occasional office doesn’t count as exclusive business use.

  4. Property Size: The garden or grounds including the buildings on them should not be greater than 5,000 square metres (approximately an acre) in total.

  5. Profit Motive: The property must not have been purchased solely to make a financial gain.

If you meet all these conditions, you may be entitled to full Private Residence Relief on CGT.

Final Period Exemption

Even if you move out of your home, HMRC provides a Final Period Exemption. Under this provision, the last nine months of ownership are disregarded for CGT purposes. This means you might still qualify for Private Residence Relief even if you weren’t living in the property when it was sold. Under certain limited circumstances, this time period can be extended to 36 months.

Private Residence Relief for Married Couples and Civil Partners

It’s important to note that for married couples and civil partners, only one property can be counted as the main home at any one time for the purposes of Private Residence Relief.

In summary, understanding Private Residence Relief can save you significant sums of money when selling your home. However, it’s always wise to consult with a tax advisor or expert who understands your specific circumstances to ensure you maximise any tax relief you are entitled to.

Our CIMA-registered professionals at CIGMA Accounting provide affordable accounting services to clients across the UK and abroad. Get in contact via the form below, or via our Contact Page, to organise a free consultation.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

overseas workday relief; london accountant; farringdon accountant; wimbledon accountant

Guide to overseas workday relief in the UK

Guide to overseas workday relief in the UK

Are you a non-domiciled UK resident working abroad and curious about your tax obligations? If so, you’ve come to the right place. This article provides an in-depth look at a valuable tax relief known as Overseas Workday Relief (OWR) in the UK. We’ll explore what it is, how it works, who’s eligible, and how you can benefit from it.

Please note that this information can be complex, and it’s always a good idea to consult a trusted UK tax specialist when making any decisions. Our CIMA-registered accountants at CIGMA Accounting would be happy to assist with any of your personal or corporate tax needs. Go to our contact page to book a free consultation.

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What is Overseas Workday Relief (OWR)?

Overseas Workday Relief is a tax relief available to UK non-domiciled residents who work abroad during the tax year and utilise the remittance basis of taxation. It allows them to legitimately avoid paying tax on earnings from a UK employment when duties are performed wholly or partly overseas. Usually, any UK tax-resident with UK employment income is required to pay tax on all such income. However, OWR provides an exception to this rule for non-doms who work outside the UK as part of their employment.

Who is Eligible for Overseas Workday Relief?

To claim OWR, you must meet certain criteria. You must:

  1. Be a non-dom (non-domiciled) in the UK and utilise the remittance basis of taxation.
  2. Have been considered a non-resident of the UK for the previous three tax years but be considered a UK tax resident in the year you’re claiming the tax relief.
  3. Perform some or all your work duties outside of the UK.

How Does Overseas Workday Relief Work?

OWR operates on the remittance basis of taxation, which means that you are only taxed on the income you bring into the UK. To benefit from OWR, you must pay your foreign-earned income into a non-UK bank account and not remit the earnings to the UK. This process requires keeping accurate records of your movements and work records to provide evidence you have not remitted any foreign-earned funds into the UK.

To be eligible for tax relief, the account should be held in your name and contain less than £10 at the beginning of the tax year. Ideally, the account should only ever have employment income credited to it so that it qualifies as a special mixed fund.

Once you’ve established your tax residence status and you’re considered a UK tax resident, it’s important to start tracking the number of days you’ve worked outside the UK. The real benefits of OWR are for non-doms earning in the highest tax band (over £125,000 per year) who subsequently work for 10% or more of the tax year outside the UK. If someone meets this basic criteria, £12,500 of their income would be exempt from UK tax, saving them £5,625 (i.e., 45% of £12,500).

Claiming Overseas Workday Relief

To claim OWR, you need to provide proof that you worked outside the UK for a UK employer. This requires keeping records of the days you worked overseas along with supporting evidence, such as travel documents and copies of your work calendar. Remember, this is all done via your UK Self-Assessment Tax Return and may require specialist advice to ensure you’re making disclosures with reference to best practice.

Given the complexities around non-doms, the Remittance Basis of taxation, and OWR, it’s highly recommended that people wishing to make use of these schemes seek advice before making decisions. A UK tax specialist can advise you on the most tax-efficient strategy for working in the UK, help you plan your time, and help you keep suitable records to ensure you can benefit from OWR.

In conclusion, if you’re a non-dom UK resident working abroad, the OWR can offer significant tax savings. With careful planning and expert advice, you can optimise this tax relief and ensure that you’re in compliance with UK tax laws.

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About the Author
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Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

share scheme deadlines; london accountant

UK Share Scheme Filing Deadlines and Tax Advantages

UK Share Scheme Filing Deadlines and Tax Advantages

In this blog post, we’re going to delve into the world of UK share schemes, those exciting yet often perplexing plans that can offer some serious tax advantages to employees. We’ll unpack the four approved share schemes – Share Incentive Plans (SIPs), Save As You Earn (SAYE) schemes, Company Share Option Plans (CSOPs), and Enterprise Management Incentive (EMI) schemes. Most importantly, we’ll discuss their annual filing deadlines, with a focus on the tax year 2022-23.

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What are the approved share schemes?

Firstly, what are these approved share schemes? Let’s break them down:

  1. Share Incentive Plans (SIPs): SIPs allow employees to acquire shares in their employing company. The shares are usually held in a special trust and can offer significant tax and National Insurance contribution benefits if the shares are held in the plan for a certain period.

  2. Save As You Earn (SAYE) schemes: SAYE schemes, also known as Sharesave, allow employees to save between £5 and £500 per month over a set period (3, 5, or 7 years). At the end of the saving period, employees have the option to use their savings to buy shares in their company at a discount, or take the cash. You can read our full post on SAYE here.

  3. Company Share Option Plans (CSOPs): CSOPs offer employees the opportunity to acquire shares at a fixed price. The real advantage comes if the company’s share price rises above that fixed price, as the difference is not subject to Income Tax or National Insurance.

  4. Enterprise Management Incentive (EMI) schemes: EMI schemes are particularly suited for small, higher-risk companies. They offer selected employees the chance to acquire shares in the company. The tax advantages can be significant, especially if the company grows in value.

deadlines and penalties for share scheme filing

Now that we’ve defined these schemes, let’s talk about the important annual filing deadlines. For the tax year 2022-23, the deadline for submitting the online employment-related securities annual return is 6 July 2023. Failure to meet this deadline will result in an automatic late filing penalty of £100. Further penalties apply if the return remains outstanding after 6 October 2023 (£300) and 6 January 2024 (£300).

Even if a share scheme operator has received and paid the initial penalty, they must still submit an end-of-year or nil return to meet their filing obligations. Employers that don’t submit annual returns on-time run the risk that they and /or their employees may lose any tax advantages from the scheme.

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Wimbledon Accountant

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Farringdon Accountant

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Using Capital Gains Tax losses

Maximising Your Capital Gains Tax Benefits: Leveraging Losses

Are you aware that selling an asset at a loss can have its advantages when it comes to capital gains tax (CGT)? In this blog post, we’ll explore the concept of allowable losses and how they can be used to your benefit. By understanding the rules and options surrounding deducting losses and carrying them forward, you can optimize your tax strategy and potentially reduce your overall tax liability.

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Understanding Allowable Losses

When you sell an asset for less than its original purchase price, it results in a capital loss. Typically, if the asset would have been subject to CGT had you made a gain, the resulting loss is considered an allowable deduction. These allowable losses are automatically deducted from gains in the same tax year without the need for a specific claim.

Utilising unused capital Losses

If your total taxable gain exceeds the tax-free allowance, you have the opportunity to deduct any unused losses from previous tax years. This means that losses that couldn’t be set against gains in the current year can be carried forward to offset future gains. However, it’s important to note that you can only utilize losses brought forward if your net gains exceed the annual CGT exempt amount for the year.

optimising deductions

In most cases, you have the flexibility to deduct allowable losses and the annual exempt amount in the most advantageous manner for your situation. This typically involves offsetting losses against gains that are subject to the highest tax rate. By carefully planning and strategically allocating losses, you can potentially minimize your CGT liability.

time limits for loss claims

It’s worth mentioning that you don’t have to claim losses immediately after the sale of the asset. In fact, you have a window of up to four years after the end of the relevant tax year to make a claim for allowable losses. This allows you some additional time to evaluate your financial situation and determine the most optimal approach for utilizing your losses.

Need Assistance from an Accountant?

When it comes to capital gains tax, understanding how to leverage allowable losses is a valuable strategy. By taking advantage of these deductions, you can potentially reduce your tax liability and optimise your overall financial position. Remember to consult with a tax professional or financial adviser for personalised guidance based on your specific circumstances.

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Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

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Farringdon

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EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

how to claim double taxation relief in the UK; london accountant

Double Taxation: How to Claim Relief for Foreign Income

Double Taxation: How to Claim Relief for Foreign Income

If you earn income from a foreign source, you may find yourself in a situation where you’re taxed twice — both by the country where your income originates and by the UK. However, the good news is that you can often claim tax relief to recover some or all of the additional tax you’ve paid. In this blog post, we’ll explore the process of claiming relief for foreign income in an easy-to-understand manner.

This post explores double taxation for UK residents. There is a separate process for UK non-residents who are being taxed on their UK income by the foreign country in which they reside.

 

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Claiming Relief Before Being Taxed on Foreign Income

In some cases, you may need to apply for tax relief in the country where your income is generated before it is taxed. This is typically applicable when:

  1. Your income is exempt from foreign tax but is taxed in the UK (e.g., most pensions).
  2. It is required by the double-taxation agreement between the two countries.

To initiate the process, you should contact the foreign tax authority and request the appropriate form. If there is no form available, you can apply by letter. Before applying, you must prove your eligibility for tax relief. You can do this by either completing the form and sending it to HM Revenue and Customs (HMRC), who will verify your residency status and return the form to you, or by including a UK certificate of residence if you are applying by letter. Once you have obtained proof of eligibility, you should send the form or letter to the foreign tax authority.

Claiming Relief After Paying Tax on Foreign Income

If you have already paid tax on your foreign income, you can generally claim Foreign Tax Credit Relief when reporting your overseas income in your tax return. The amount of relief you receive depends on the UK’s double-taxation agreement with the country where your income originates.

Even if there is no specific agreement in place, you will usually still be eligible for relief unless the foreign tax does not correspond to UK Income Tax or Capital Gains Tax. If you’re unsure about whether you qualify for relief or need assistance with double-taxation relief, don’t hesitate to reach out to us at CIGMA Accounting for assistance.

Determining the Amount of double taxation Relief

It’s important to note that the full amount of foreign tax paid may not be refunded to you. The relief you receive will be reduced if:

  1. The double-taxation agreement specifies a lower relief amount.
  2. The income would have been taxed at a lower rate in the UK.

HMRC provides guidance on how Foreign Tax Credit Relief is calculated, including special rules for interest and dividends, which can be found in their ‘Foreign notes’ section. However, it’s essential to remember that you cannot claim this relief if the UK’s double-taxation agreement requires you to claim tax back from the country where your income originates.

Capital Gains Tax

When it comes to Capital Gains Tax, typically, you’ll pay tax in the country where you are a resident and be exempt from tax in the country where the capital gain occurs. Usually, you won’t need to make a claim for relief.

However, there is an exception for UK residential property. Regardless of your residency status, you are required to pay Capital Gains Tax on any gains made from UK residential property.

When to Claim Capital Gains Relief

The rules for claiming relief vary depending on the nature of the asset generating the gain. If the asset cannot be taken out of the country, such as land or a house, or if it is used for business purposes in that country, you’ll need to pay tax in both countries and seek relief from the UK.

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Wimbledon Accountant

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Farringdon Accountant

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

double tax treaties in the UK: what they are and how to claim after being taxed twice; london accountant; farringdon accountant

Understanding double tax treaties in the UK

Understanding double tax treaties in the UK

Double tax treaties, also known as double taxation agreements, play a vital role in facilitating international trade and investment by preventing double taxation. These agreements are designed to provide relief and clarity to taxpayers operating across borders. In this blog post, we will explore the concept of double tax treaties, examine their impact on taxpayers, and shed light on the countries with which the United Kingdom (UK) has such treaties.

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What are Double Tax Treaties?

Double tax treaties, also known as tax conventions or tax treaties, are agreements established between two or more countries to resolve potential conflicts regarding taxation. These treaties aim to eliminate or reduce instances of double taxation, where the same income is taxed by more than one jurisdiction. By doing so, they help avoid situations where taxpayers could be subjected to excessive tax burdens, fostering a favourable environment for cross-border trade and investments.

Double tax treaties typically address several key aspects, including:

Tax Residency
Determining an individual or entity’s tax residency status is essential to determine which country has the primary right to tax their income.

Income Categories
The treaties define the various types of income, such as dividends, interest, royalties, and capital gains, and allocate taxing rights between the countries involved.

Avoidance of Double Taxation
The agreements specify mechanisms to avoid double taxation, such as granting exemptions, providing tax credits, or applying a reduced tax rate.

Exchange of Information
Double tax treaties often include provisions for the exchange of information between tax authorities to prevent tax evasion and ensure compliance.

 

Which Taxpayers are Affected by double taxation agreements?

Double tax treaties impact different categories of taxpayers engaging in international activities. These include:

Individuals
Individuals who are tax residents of one country but earn income in another are directly affected by double tax treaties. These can include employees working abroad, students receiving scholarships, or retirees receiving pensions from foreign sources.

Businesses
Multinational corporations, small and medium-sized enterprises (SMEs), and sole proprietors engaged in cross-border trade or investment activities are significantly affected. Double tax treaties provide clarity on the taxation of business profits, dividends, interest, and royalties, avoiding potential tax burdens.

Investors
Individuals or entities investing in foreign countries may be subject to various taxes, including capital gains tax. Double tax treaties can help mitigate the impact of such taxes by providing relief or reducing tax rates.

 

Which countries have Double Tax Treaties with the UK?

The UK has an extensive network of double tax treaties with numerous countries worldwide. These treaties aim to promote international trade and investment by facilitating fair and efficient tax treatment. Here are some notable countries with which the UK has double tax treaties:

United States
The UK US double tax treaty helps prevent double taxation on income and capital gains for individuals and businesses operating across these two countries.

Germany
The double tax treaty between the UK and Germany addresses various aspects of taxation, including business profits, dividends, interest, and royalties, benefiting taxpayers from both nations.

France
The double tax treaty between the Uk and France focusses on avoiding double taxation, determining tax residency, and ensuring effective exchange of information, benefiting taxpayers in both countries.

China
The UK and China have a double tax treaty that helps avoid double taxation and provides relief for individuals and businesses earning income in both jurisdictions.

These examples represent only a fraction of the countries with which the UK has double tax treaties. The UK’s extensive network of such agreements enhances certainty, reduces barriers, and encourages cross-border economic activities.

 

How to claim tax relief if you are taxed twice

To claim relief on foreign income and avoid being taxed twice, there are a few important steps to follow. If you haven’t been taxed yet, you should apply for tax relief in the country where your income originates by contacting the foreign tax authority and submitting the necessary form or letter. If you’ve already paid tax on your foreign income, you can claim Foreign Tax Credit Relief when reporting your overseas income in your UK tax return.

The amount of relief you receive depends on the double-taxation agreement between the UK and the country where your income is from. Make sure to consult HM Revenue and Customs (HMRC) or seek professional tax advice if you have any uncertainties or need assistance with double-taxation relief.

You can also read our full post on claiming relief for double taxation.

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Wimbledon Accountant

165-167 The Broadway

Wimbledon

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Farringdon Accountant

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Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

work from home tax relief; london accountant; UK income tax relief

How to claim work from home tax relief in the UK

How to claim work from home tax relief in the UK

If you work from home, you may be eligible for work from home tax relief on some of your expenses. This will depend on whether working from home is a choice or is required by your work.

The amount of tax relief you can claim depends on how much your tax band and how much you spend on work-related expenses. When using the standard rate of relief, individuals paying the Basic Rate of tax can get up to £62 per year in tax relief, while those paying the Additional Rate of tax can get up to £140 per year.

It is worth noting that the tax relief for working from home is not a special scheme, but simply one of the job expenses you can claim tax relief on if they are not paid for by employers. You can click here to read our post on tax relief for travel expenses.

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Who Can Claim Work from Home Tax Relief?

Just like tax relief for other work expenses, you can only claim tax relief on working from home when your employer gives you no alternatives and they do not already reimburse you for those costs.

You can claim tax relief if you work from home and:

  • Your employer requires you to work from home, or requires you to travel an unreasonable distance every day to reach their office.
  • Your employer does not have an office, or has no appropriate facilities for you at their office.

You cannot claim tax relief if you work from home and:

  • Your employment contract allows you to work from home some or all of the time.
  • You work from home because of the coronavirus pandemic.
  • You work from home because your employer’s office is full.

What working from home expenses Can You Claim For?

HMRC will only allow you to claim expenses that are necessary, and are used only for work purposes. You can claim tax relief for the following expenses:

  • Heating and lighting for your work area.
  • Electricity for your work area.
  • Phone calls made for work purposes.
  • Internet access for work purposes.
  • Stationery and other office supplies.
  • Equipment used for work purposes, such as a computer or printer.

How Much tax relief Can You Claim when working from home?

You can claim tax relief on the full cost of the expenses listed above. However, you will have to keep accurate records to submit to HMRC. If you do not want to manage receipts, you can claim the standard rate, which assumes you spend £6 per week on the costs of working from home.

Now that you have your total expenses (either the exact amount or £6 per week), you multiply this by your tax rate to determine how much relief you will get. Using the standard £6 per week, this means that those paying the 20% Basic Rate of tax can receive £1.2 per week (£62.4 per year) in tax relief.

How to Claim Work from Home Tax Relief

To claim tax relief for your work-related expenses, you can either:

  • Claim the flat rate of £6 per week. You do not need to keep evidence of your expenses if you claim the flat rate.
  • Claim the actual amount of your expenses. You will need to keep evidence of your expenses, such as receipts, bills, or contracts, if you claim the actual amount.

You can work expense-related tax relief using HMRC’s online portal. If you submit a Self Assessment tax return for any reason, you must claim the relief on your tax return rather than through the online portal.

Deadline for Claiming Work expense Tax Relief

You can claim tax relief for your work-related expenses up to four years after the end of the tax year in which you incurred the expenses. For example, you can claim tax relief for expenses you incurred in the 2022/23 tax year until the end of the 2026/27 tax year. You can of course also claim relief for up to four years previous, meaning you can still claim expenses from the 2019/20 tax year in your 2023/24 tax return.

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Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

guide to tax relief for work expenses in the uk; london accountant; learn how to claim for job costs you pay yourself

Guide to tax relief for work expenses in the UK

Guide to tax relief for work expenses in the UK

If you find yourself paying for job costs out of your own pocket, making the most of available tax reliefs is essential. In the UK, HM Revenue and Customs (HMRC) offers tax relief for certain job-related expenses that are not reimbursed by your employer.

In this blog post, we will provide a comprehensive overview of the tax relief options available to UK taxpayers, including working from home, uniforms and work clothing, personal protective equipment (PPE), vehicles used for work, travel and overnight expenses, and buying other equipment.

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Which work expenses qualify for tax relief?

To be eligible for tax relief, expenses must be required for your job, bought with your own money, and only used for work purposes. You cannot claim relief for expenses that are reimbursed by your employer or for which your employer gives you an alternative. For example, you cannot claim tax relief on the cost of buying a work phone when your employer offers to pay for one, but you would rather get a different model.

In the rest of this post we explore the different expenses that are eligible for tax relief, assuming that HMRC’s conditions outlined above are met.

Work from Home tax relief

With the rise of remote work, many individuals find themselves working from home either full-time or part-time. HMRC allows eligible individuals to claim tax relief for additional household costs incurred while working from home.

To be eligible, you must meet certain criteria, such as living far away from your office or your employer not having a physical office. You cannot claim tax relief if you choose to work from home or due to COVID-19.

Allowable expenses include business phone calls and a portion of your gas and electricity bills. You can either claim a flat rate expense of £6 a week (for previous tax years, it was £4 a week) or the exact amount of your extra costs. However, to claim your exact expenses you will have to provide HMRC will receipts.

You can read our full post on claiming work from home tax relief here.

Tax relief for Uniforms, Work Clothing, and Tools

If your job requires you to wear a uniform or specialised work clothing, you may be eligible for tax relief on the cost of repairing, replacing, or cleaning them. A uniform is a set of clothing that identifies you as having a certain occupation, such as a nurse or police officer. Even if the clothing does not identify your occupation but is necessary for your work, such as overalls or safety boots, you may still be able to claim tax relief. Small tools can also qualify for this relief, such as electric drills or cameras.

It is important to clarify that you can only claim relief on the costs of cleaning, repairing, or replacing your specialist clothing or tools. You cannot claim for the initial cost of purchasing these items.

Also important to point out is that you cannot claim tax relief for the cost of buying or cleaning everyday clothing used for work. Similarly, you cannot claim tax relief for personal protective equipment (PPE) as your employer should either provide it free of charge or reimburse you for the costs.

You have the option to claim either the exact amount, which must be backed up by receipts, or you can claim the ‘flat rate expense’ for your job. You can find the list of available flat rates on HMRC’s website.