The Construction Industry Scheme

27/07/202331/07/2023 by cigma, posted in Business, Construction Industry Scheme

Navigating the UK Construction Industry Scheme (CIS)

The Construction Industry Scheme (CIS) is a set of tax and National Insurance rules specifically crafted for individuals and businesses operating in the UK construction industry. Whether you’re a ‘contractor’ or a ‘subcontractor’, understanding CIS can ensure you manage your tax obligations effectively.

What is the Construction Industry Scheme (CIS)?

The CIS is a tax initiative by the UK government that mandates contractors to deduct a portion of payments made to subcontractors and transfer this amount directly to Her Majesty’s Revenue and Customs (HMRC). These deductions are essentially advance payments towards the subcontractor’s tax and National Insurance liabilities.

Who Does the Construction Industry Scheme Apply to?

The CIS applies to contractors who pay subcontractors for construction work or businesses that have spent more than £3 million on construction in the 12 months since their first payment. While subcontractors are not obligated to register for the CIS, they will see a 30% deduction from their payments if they remain unregistered. However, if a subcontractor registers under the CIS, this deduction is reduced to 20%. Alternatively, subcontractors can apply for gross payment status.

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What are the Reporting Obligations under C.I.S.?

Under the CIS, contractors are required to submit monthly returns online, which detail payments made to subcontractors for each tax month (from the 6th of one month to the 5th of the next). The deadline for submission is 14 days after the end of the tax month. If a contractor doesn’t make any payments to subcontractors in a particular month, they must submit a ‘CIS nil return’ or notify HMRC that no return is due.

Changes in VAT Rules under the c.i.s.

As of 1 March 2021, the VAT rules for building contractors and subcontractors have changed. For certain specified supplies, subcontractors no longer add VAT to their services for most building customers. Instead, contractors are required to pay the output VAT on behalf of their registered subcontractor suppliers – a mechanism known as the Domestic Reverse Charge. Contractors can then reclaim the output tax paid as input VAT, as per the standard rules.

Need Assistance from an Accountant?

Navigating the intricacies of the CIS can be daunting, but it’s an essential aspect of tax compliance for contractors and subcontractors in the UK construction industry. Partner with a trusted UK accounting firm to ensure you meet your CIS obligations, allowing you to focus on what you do best – building and creating.

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

Accountant Near Me or Remote Accountant

24/05/202325/05/2023 by , posted in Blogs, Business, Personal

Should I get an accountant near me or a remote accountant? This is what many small businesses are asking themselves lately. With life handing the whole world lemons (a.k.a COVID19), many industries have moved online just to be able to make it through various waves and lockdowns. While lockdowns are waning, industries seem to be sticking to the online space for convenience. But what would be best for you?

In this post we will be looking at the pro’s and cons of having an accountant near you and having a remote accountant so that you can make an informed decision for yourself and your business.

CIGMA has been operating in Wimbledon and surrounding areas, London for the last 6 years. However, when COVID hit, we, like most other businesses, branched out into online territory in order to meet our client’s needs. We currently serve as in-person accountants and remote accountants in the wider United Kingdom area. That’s why we have hands-on experience in the pro’s and con’s of both options.

Accountant near Me

When we talk about “Accountants Near Me” we refer to an accountant to whom you can conveniently and efficiently reach for in-person meetings and discussions regarding your tax, self-assessments and other accounting related affairs. We’ll be looking at all the pros and cons of having an accountant within driving distance from your business.

Advantages of Accountant Near You

There are two main advantages to having an accountant close to you. Let’s look at them below:

In-Person meetings

Having an accountant that you can meet with face-to-face can be easy, efficient and adds a personal touch to the service. A company where you get to shake the hand of the person handling your personal or small business accounting can give you a sense of comfort and relief. That’s why many people opt for having an accountant near them that they can schedule in-person meetings with.

Region-specific knowledge on taxes and business

The United Kingdom consists of four countries: England, Scotland, Wales and Northern Ireland. Each country in the United Kingdom has varying income tax rates to suit the needs of their population. Therefore, having an accountant in your region/country may benefit you as they will know all the ins and outs of the taxation system within your specific region.

Disadvantages of Accountant Near You

The disadvantages of having an accountant in your region is dependent on where you are based, and which accountants are available in your area. However, some potential disadvantages of looking for an accountant near you are discussed below:

Expertise

It is no secret that an accountant can save you A LOT of money if they are doing their job right. An accountant that has expertise within a specific industry will have the expertise and experience to know what to look out for in order to save you money and make informed recommendations.

However if you are in an area that does not have accountants that have expertise in your industry? That means you may be losing money when you don’t have to be. Sometimes restricting your accountant needs to a specific location may be a great disadvantage to you and your company.

Bad reviews / Turnaround times

Another pitfall to only utilising local accountants is that they might just not be the best accountants. While they are close to you, are they actually doing a good job? Perhaps your area only has accountants or accountancy firms with bad reviews, extended turnaround times and overall just lack the service delivery that you need.

Remote Accountants

Accountants that work with individuals and businesses remotely can work at the same, if not higher efficiency than accountants in your area. Let’s look at some of the advantages and disadvantages of hiring a remote accountant for your business or personal taxes.

Advantages of Remote Accountant

There are many advantages to looking for a remote accountant. Some of these advantages are discussed below:

Find the right fit

Finding an accountant is almost like looking for a business partner. These are people that you will trust with your financial wellbeing. That’s why it’s so important to find the right fit. Expanding your search for an accountant means you have a better chance of finding someone that just feels right for yourself and/or your business.

Flexible Times

Due to the nature of remote accounting firms in the United Kingdom, most accountants offer remote, secure portals to upload business documents. These portals do not rely on human working hours,which means you can upload your documents whenever it suits you. No hand delivering vital documents in person!

Efficiency

With remote accountants there’s no need for lengthy travel trips, copious amounts of small-talk or spending time outside of your home or office. It is efficient and convenient to have online meetings and interactions in the comfort of your own environment.

Competitive pricing

Accountants in your area just are not cutting it (the prices that is). Well, hiring a remote accountant may be your saving grace. When looking outside of your direct area, you can throw a wider net for more affordable services. Furthermore, you can get a company that offers a turnaround service (accounting package deals), with discounts available for handling all tax and registration affairs on your behalf. No need for 3 different service providers if you can have one to do it all!

Nationwide knowledge on taxes in different regions

If you are running a company that has offices in multiple countries of the United Kingdom, having a remote accountant may be the best thing for your company. Having an accountant that is knowledgeable on the tax rates for each region can help you and your business in following current legislation in your region.

Disadvantages of Remote Accountant

With the world moving online there isn’t much of a disadvantage for hiring a remote accountant to take care of your personal or business tax

Lack of In-person Meetings

In the case that it is a deal-breaker if you cannot meet your accountant in-person on a regular basis, unfortunately the remote option may not be suited for you. As remote accounts can work from anywhere in the United Kingdoms, having regular meetings in person may not be possible.

Cyber Security Concerns

If the company you are working with is not properly secured you may be faced with some cyber security issues. We highly recommend that you inquire regarding threat protection with a remote accounting firm.

How To Choose the Best Accountant for you and your business

As you can see, we are not for or against either options for your accounting needs. It is all about finding what works best for you. However, an accountant is vital to the growth of your business and it’s important that you do not make the decision lightly. We’ve compiled the 6 best tips to help you on your quest to find the best accountant for your business. Check them out here:

Location, location, location…

Does it matter to you whether your accountant is in the same city as you? If so, you have your first clue: You are looking to find someone local which narrows down your search significantly.

However, if you are keen on jumping on the “UK remote accounting services” train, then you have a wide pond to fish from.

Ensure certification

Unfortunately, the term “accountant” is not a protected term in the United Kingdom. What does this mean? That means many individuals and businesses may be making use of services from people that they think are qualified with years of training, when they actually are not qualified. That’s why it’s important that you separate those without certification from the certified and reliable accountants.

How to check Certification?

You can request proof of registration with a regulatory body in the United Kingdom. In the UK, there are four main regulatory bodies currently registering businesses:

A detailed post will follow to check each qualification.

Reviews and Feedback

Check the reviews and feedback from previous customers on their google business profile, social media platforms and third party sites. Do they not have any of those? That should be the first red flag to look into the company a little more closely to ensure that they are a legitimate service provider.

Experience and Expertise

In order to get the best results, you need to find the best accountant for you. Whether that accountant is based in your area or not. This means looking for an accountant that has a track record of experience and expertise. This can be done by asking questions and requesting reference from current or previous clients personally.

Ask basic accounting questions in the vetting process

Asking basic accounting questions will offer you valuable insight into two aspects of the accountant or company that you are working with: Firstly, it will assess whether they have basic accounting knowledge and secondly , it will assess their customer service. Having someone that can explain complicated procedures and ideas with patience can reveal their character. Having an accountant that is not willing to sit down and comb through the details in a way that you, the business owner or individual can understand to make informed decisions, is a clear sign that you do not want to create a professional relationship with the service provider.

Find someone that’s passionate about what they do

Finding someone that is passionate about what they are doing is always a good sign. Generally speaking, an accountant that is excited about possible savings for your company will do a much better job than someone that is just in it for the paycheck at the end of the month. So how do you determine whether or not they are passionate? It’s quite simple, you ask open-ended questions. Ask them to explain what they do. Someone who is passionate will most likely have a lot to say, be enthusiastic and highlight possible opportunities for growth and savings.

In conclusion, choosing an accountant is a very personal journey. Make sure that you know what you are looking for, and do your research to make a decision!

Comparing company formations in the UK

22/05/202324/10/2023 by , posted in Blogs, Business, Corporate Governance & Regulation, Corporation Tax, FAQ, Income Tax

All legal profit-seeking businesses fall into one of two broad categories: unincorporated and incorporated. The difference is that incorporated forms have what is called a ‘separate legal personality’. The business is considered its own entity under the law.

This means that those in charge of unincorporated businesses bear full responsibility for the company’s debts. The people running incorporated businesses, on the other hand, have what is called ‘limited liability’ – they only stand to lose what they have already invested.

To incorporate or not?

The most important difference between being self-employed and running a limited company is liability and the amount you are taxed. As explained above, self-employed individuals have full responsibility for any losses, while shareholders in a limited company only lose as much as they paid (or promised to pay) for their shares.

Company income is not taxed at the same level as personal income tax paid by employees and people that are self-employed. At under £50,000 annual income, corporate tax is only 1% lower than the standard 20%.

But above £50,270 your personal tax rate jumps to 40%. Even the highest corporate tax rate is only 25%, which means gaining income from a limited company more tax efficient no matter how much you earn.

Company formation agents

Company formation agents are independent, professional firms that specialise in company formation and registration with Companies House.

We at CIGMA Accounting specialise in helping sole traders incorporate their businesses. If you’re looking to take advantage of the lower tax rates for companies, our CIMA-registered accountants would be happy to assist with company formation in London and across the UK.

Unincorporated businesses

These businesses are not considered as separate entities from the owners. This means that owners have full responsibility, i.e. ‘liability’, for the company’s debts and legal obligations. Owners are considered self-employed and must submit annual self-assessment tax returns.

Sole Trader

This is the simplest way to set up and run a business. Ownership and control of the business rests solely with a single person. Regulation for the Sole Trader is minimal. There is no requirement to write a formal constitution for the business, and no need to register with the government’s Company House.

Profits are treated as personal income which is subject to income tax as well as national insurance contributions. Being a Sole Trader is risky by nature, as the owner has unlimited personal liability for the business’ debts and contracts.

Of course they also own all of the business’ assets, and can employ staff. It is unlikely that being a Sole Trader is best for any businesses that need more than small amounts of external investment. Being unincorporated puts limits on borrowing money and raising money by selling shares.

Unincorporated Association

Unincorporated Associations are groups of people that agree, i.e. ‘contract’, to work together for a specific purpose. These businesses usually have a constitution setting out its purpose, rules, and members.

They are usually run by a kind of management committee, all of whom have unlimited liability (unless specifically made immune in the constitution). They are subject to the same restrictions as the Sole Trader.

Partnership

A partnership is a relatively simple way for two or more people to set up a business aimed at making profit. While formal agreement isn’t needed for a partnership to form, it is usual to draw up a legally binding ‘partnership agreement’. This sets out things like the capital put in by each member, and how profits will be shared.

Partners share all the risks and responsibilities of the business. Partners do not need to be individual people, they can also be any ‘legal person’ – such as a company. In these cases, the partners have extra tax and reporting obligations.

Limited Partnership

This is not to be confused with the similarly named, but incorporated, Limited Liability Partnership. These businesses have two kinds of partners: general partners and limited partners.

Limited partners may not be involved in the management of the business and their liability is limited to the amount they have already invested. Unlike other unincorporated businesses, Limited Partnerships must register with Companies House.

Trust

Trusts are essentially legal tools for holding assets with the aim to separate legal ownership from economic interest. A trust holds assets on behold of another person or business, and is run by a small group of trustees.

Trusts usually just manage assets and do not give out profits. They are often used alongside unincorporated associations which can’t own property themselves.

Incorporated businesses

Incorporated forms of business are considered their own legal persons. This gives the owners of the business limited liability for its debts and obligations, but they are subject to stricter regulations.

Limited Company

The Limited Company is the most common kind of legal business, and is subject to corporate tax rather than personal income tax. They must have two constitutional documents:

A Memorandum, which records the fact that the founding members wish to form a company together. This cannot be amended.
Articles of Association, which sets out legally binding rules regarding decision-making, ownership, and profit sharing.

A Limited Company is owned by members, who have all invested in the business. The company’s finances are separate from the members’ personal finances. There are two ways to determine members: shares and guarantees.

Most companies are Limited by Shares. This means members own one or more shares in the company and are known as shareholders. If the company must be liquidated, the shareholders only stand to lose the amount still unpaid on shares. Shareholders also have voting rights, which may depend on the kind of share they own.

A company can also be Limited by Guarantee. This is where members give a guarantee to pay a set amount if the company fails and goes into liquidation.

The day to day management of a company, performed by a ‘director’ or board of directors, is in principle separate from its ownership. However, directors can also be members, meaning that the simplest Limited Company is a single member who owns and directs the whole company.

Limited Companies have a greater ability to finance themselves as they can use their assets as securities for loans. The stricter regulation on Limited Companies includes accountability to both shareholders and the public, as well as the need to provide annual reports to Companies House.

While Private Limited Companies are most common, Public Limited Companies are also possible. These companies can sell shares to the public, but attract even more regulation. This is to protect the public investor who is usually much less involved in managing the business than a private investor.

Limited Liability Partnership

A Limited Liability Partnership (LLP) is similar to a normal partnership, but with limited liability for the partners. Each member must register as self-employed with the HMRC and submit annual self-assessments. At least two members must be ‘designated members’, who are responsible for appointing auditors and filing accounts at Companies House.

LLPs have much more freedom than companies in arranging their internal affairs, making decisions, and sharing profits.

Community Interest Company

A Community Interest Company (CIC) is a form of company (limited by shares or guarantee) created for ‘social enterprises’. They want to use their profits and assets for community benefit. CICs have the flexibility and limited liability of companies, but also special features to make sure they serve the interest of the community:

CICs must submit statements and evidence every year to satisfy the ‘community interest test’.
CICs have an ‘asset lock’ to restrict the transfer of the company’s assets.
CICs have caps on profits paid to members

WHAT DO YOU NEED TO INCORPORATE YOUR BUSINESS?

In order to make your application to Companies House, you will need the following:

A company name
Your business activity (SIC) code. You can find it here
A registered office address. CIGMA accounting offers a service for using our address if you do not have a registered office.
List of shareholders or guarantors
List of directors
List of people with significant control (PSCs)
Details about your capital investments

is a company registration number the same as a VAT number?

No, your Company Registration Number (CRN) is not the same as your VAT registration number (VRN). Neither of these are to be confused with your Unique Taxpayer Reference number (UTR). The UTR is a 10-digit number issues by HMRC. The CRN is an 8-digit number assigned by Companies House to all new limited companies or LLPs.

What is a company registration number?

The Company Registration Number (CRN) is an 8-digit number assigned by Companies House to all new limited companies or LLPs.

You can find your CRN on your company’s Certificate of Incorporation or by using this online tool from Companies House.

What is a vat registration number?

A VAT registration number contains 9 digits and is issued by HMRC. You must register for VAT is your total VAT taxable annual turnover is greater than £85,000. You can check wich products and services are exempt from VAT here.

Need Assistance from an Accountant?

No matter your type of business, CIGMA Accounting can help manage your finances and tax obligations. Our organisation is registered with the Chartered Institute of Management Accounting (CIMA), and our accountants specialise in personal finance and cooperating with business management.

We believe small businesses can change the world, and love helping them work in the most tax-efficient way.

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

VAT on entertainment expenses, london accountant, business entertainment vat

Know when to recover VAT on entertainment expenses

04/05/202308/05/2023 by , posted in Blogs, Business, FAQ, Value Added Tax

When it comes to business entertainment expenses, understanding the treatment of Value Added Tax (VAT) is crucial for businesses operating in the UK. While VAT can generally be reclaimed on goods and services used for business purposes, there are specific rules governing the recovery of VAT on entertainment expenses. In this blog post, we will explore the conditions under which businesses can claim back UK business entertainment VAT, distinguish between business and employee entertainment, and provide insights on VAT recovery in different scenarios.

What is VAT Recovery and When Can Businesses Reclaim Input VAT?

Value Added Tax (VAT) is a consumption tax charged on most goods and services in the UK. Businesses are typically eligible to recover, or reclaim, the VAT they pay on goods and services used for business purposes. This allows them to offset the VAT paid against the VAT they charge on their own taxable supplies. However, there are some specific exceptions when it comes to business entertainment expenses.

Defining Business Entertainment VAT

Business entertainment refers to the provision of hospitality to individuals who are not employees of the business, without charge. It encompasses a range of activities such as providing food and drink, accommodation, tickets to events, and more. It is essential to note that employee entertainment is distinct from business entertainment and is treated differently for VAT recovery purposes.

Require accounting services?

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

Can you recover business entertainment VAT?

In general, businesses cannot reclaim input tax incurred on the provision of business entertainment expenses. This means that the VAT paid on business entertainment activities cannot be offset against the VAT the business charges on its supplies. However, there are certain exceptions for business entertainment provided to overseas customers.

VAT on entertainment expenses for Overseas Customers

If business entertainment is provided to customers who are not ordinarily resident or carrying on a business in the UK, including the Isle of Man, there may be a possibility to reclaim the VAT incurred. However, if there is a ‘private benefit’ to the individual enjoying the entertainment, an output tax charge may be applied, negating the recoverable input tax.

Can you reclaim VAT on entertainment expenses for employees?

Employee entertainment refers to the provision of entertainment for the benefit of employees, such as staff parties, team-building exercises, and staff outings. In most cases, VAT incurred on employee entertainment is considered input tax and is not blocked from recovery under the business entertainment rules.

Can you reclaim VAT on entertainment expenses for directors and partners?

VAT incurred on entertainment provided solely for directors or partners of a business is not considered input tax, as it is not used for a business purpose. Consequently, the VAT cannot be reclaimed. However, if directors or partners attend staff parties alongside other employees, the VAT incurred is eligible for recovery.

Can you reclaim VAT on entertainment expenses when employees host clients?

When employees act as hosts to non-employees, the VAT incurred on entertainment costs is considered input tax. However, this input tax is blocked under the business entertainment rules, thus making it non-recoverable.

Business Entertainment VAT events including Employees and Non-Employees

If an event is organised to entertain both employees and non-employees, businesses can only reclaim the VAT incurred on entertaining their employees. The portion of input tax related to entertaining non-employees is blocked from recovery under the business entertainment rules. Proper apportionment of VAT should be undertaken, considering the rules on partial exemption.

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

Company share buy-backs

30/03/2023 by cigma, posted in Business

Company share buy-backs are also commonly known as a company purchase of own shares. A company may decide to buy back their shares for a number of reasons including to return cash to shareholders or to provide for a shareholder exit.

The relevant legislation allows a company to purchase its own shares if its Articles of Association authorise it to do so. HMRC’s guidance is clear that to be valid, the terms of the purchase must provide for immediate payment. There are two parties to the transaction, the company making the purchase and the shareholder whose shares are purchased.

A private company limited by shares can purchase its own shares by passing an ordinary resolution with statements by a directors and auditor’s report confirming solvency. The company would be able to provide financial assistance for purchases of its own shares assuming it does not result in an unlawful reduction of capital.

A public limited company needs to apply for court approval for capital reduction and they are prohibited by CA06 from providing financial assistance for purchases of own shares.

Source:HM Revenue & Customs| 27-03-2023

what expenses can I claim back if I'm self employed; london accountant

What expenses can I claim back when self-employed?

08/03/202324/03/2023 by , posted in Blogs, Business, Capital allowances, FAQ

When you are self-employed, as with other types of business, you will have various costs to keep your business running. Many of these expenses qualify for tax relief, which means you can deduct the value of these expenses from your profits before working out how much tax you owe.

what qualifies for tax relief?

You can claim tax relief on small and regular costs as ‘allowable expenses’. These are things like fuel for business use, staff costs, and advertising. More expensive items which you are likely to use for more than 2 years can be claimed as ‘capital allowances’.

If you rent property, we have a guide for rental expenses that qualify for tax relief.

You will have to report these expenses on your Self Assessment tax return. You can follow this link to read our tips on common mistakes to avoid.

Allowable expenses

You can deduct the full amount of these expenses from your profits before tax. If some of these expenses benefit you personally as well as your business, you will need to decide on a fair way to split the cost when submitting your records to HMRC.

Stationery and goods

You can claim expenses for things like:

Phone and internet bills.
Printing.
Computer software your business uses for less than two years or which you make subscription payments for (otherwise claim capital allowances).
Postage.

You can claim the cost of uniforms, protective clothing, and costumes for entertainers. You cannot claim for everyday clothing you wear to work.

You can claim for the costs of your stock (goods bought for resale), costs of raw materials, and the costs incurred directly for producing goods.

Rents, power and insurance

You can claim expenses for:

Rent for business premises.
Utility bills.
Property insurance.
Security.
Repairs and maintenance for business premises or equipment.
Using your home as an office

If you use your home as an office, you will have to divide your costs either by the amount of the home used for business, or hours worked in the home.

Car and travel expenses

The following are allowable expenses:

Vehicle insurance.
Repairs.
Fuel for business use.
Parking.
Licence fees.
Train, bus, taxi and air travel fares.
Hotel rooms.
Meals on overnight business trips.

You cannot claim fines or costs for traveling between work and home.

If you buy a vehicle for your business, you can claim this as capital allowance, usually in the form of writing down allowance.

Staff expenses

Most costs relating to staff count as allowable expenses, such as:

Employee salaries.
Bonuses.
Pensions.
Agency fees.
Employer’s National Insurance.
Business-related training courses.

You cannot claim for the costs of nannies and domestic help.

Legal costs and financial charges

You can claim costs for legal, professional and bank costs such as:

Hiring accountants.
Hiring professionals who provide services, like architects or surveyors.
Overdraft and credit card charges.
Interest on bank loans.
Hire purchase interest.
Insurance policies.

Any legal costs involved in buying property or machinery should be claimed using capital allowances, which we explain further on.

Marketing and entertainment

You can claim for:

Advertising – such as in newspapers, mail advertising, free samples, website costs
Subscriptions to trade or professional journals
Professional organisation or trade body membership fees related to your business.

However, you cannot claim the following:

Entertaining clients or suppliers.
Gym membership fees.
Payments to political parties.

Capital allowances

Capital allowances are another kind of tax relief for businesses. This allows you to deduct a portion, or all, of an item’s value from your profits before working out how much tax you owe. Unlike allowable expenses, capital allowances are usually for items with a lifespan longer than two years.

This includes things like office furniture, computers and printers, tools, and equipment.

Most long-term items, except cars, bought by you for use in your business will qualify for Annual Investment Allowance. This allows you to deduct the full value of an item from your profits before tax for the tax year that the item was bought.

Is there a limit to this tax relief?

You can claim expenses according to the AIA until your total deductions for these long-term items reach the ‘AIA amount’, after which you will have to use ‘writing down allowances’ which are at only 18% or 6% of an item’s value.

The AIA amount has been set at £1 million.

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.

guide to compliance obligations for UK companies

Your guide to UK Compliance Obligations

23/02/202306/03/2023 by , posted in Blogs, Business, Corporate Governance & Regulation, Corporation Tax, Employee Benefits, Employment & Payroll, Employment Law, Income Tax, National Insurance, Pension, Value Added Tax

Companies need to follow rules set out by many different government bodies, written in various legislative documents. When setting up and running a limited company, you have to keep in mind all of the following:

Complying with applicable industry regulations set out by professional regulators – for example, the Financial Conduct Authority, the Office of Rail and Road, the Law Society or the Environment Agency
Complying with finance regulations – such as tax, payroll, HMRC, accounting, record keeping, Companies House and anti-money laundering regulations
Employment law and workers’ rights
Health and safety for workers and visitors to your offices/site
General Data Protection Regulation (GDPR)
Contracts and agreements with third parties
Sector-specific permits, licences, permissions

It’s an expansive list! Our accountants at CIGMA Accounting are CIMA-registered Management Accountants. They specialise in working with businesses to form companies, create strategies, and making sure you’re on the right side of financial regulation.

CIGMA Accounting helps businesses around the UK grow while navigating the red tape. You can contact us here for a free quote.

Limited company obligations

This article is going to focus on the Companies Act 2006, which is the main piece of law setting out rules and expectations for limited companies. The Act outlines what are called ‘compliance obligations’ for companies. These are actions which companies are obliged to do in order to comply with the rules.

company records

1. Registered office

Companies must provide an office address which is able to receive letters and documents. This address must be in the country where the company was registered. You are legally required to display the address on all communications with clients, and your website.

2. Confirmation statement

Companies must file a Corporation Tax Return to HMRC, even if the company has no tax to pay. This must include details about:

Capital allowances claimed for business asset purchases
Gains on assets sold
Directors’ loans that are unpaid
Reliefs to be claimed
Any losses carried forward

Businesses with a trade volume over £85,000 must also register with HMRC for VAT.

Your final tax obligation is Pay As You Earn (PAYE). The PAYE system collects taxes from employees at the source. You as the employer are responsible for running this system. This involves deducting income tax and National Insurance Contributions.

3. Directors

Aside from financial records, companies are also expected to keep up to date details about their addresses, directors, and shareholders. Incorporated businesses must supply the following information to Companies House:

This is an annual report which must record your:

Office address
Business activity
Details of directors
Ownership and division of shares

4. Event Driven Reporting

Companies must inform Companies House of changes such as:

Change of directors, shareholders, or their personal details
Change of office address
Sales of shares
Change of company name or constitution

This is in addition to the three statutory registers which businesses must keep.

Companies must appoint at least one individual as a director. Directors are legally responsible for running the company and ensuring reports are made. The director of a UK company does not have to be a UK resident and can live anywhere in the world. Directors must supply their personal information, including an address, which will be publically available.

tax requirements

financial statements

A company’s annual accounts are prepared at the end of a financial year. These accounts must include:

A balance sheet of what the company owns, owes, and is owed by others
An account of sales, running costs, and profit / loss made over the year
A director’s report

This account needs to be sent to all shareholders, HMRC, Companies House, and anyone who attends the company’s general meetings.

You are also required to appoint an auditor for each financial year. An auditor’s job is to report back to a company’s members and the government about the company’s accounts. They are meant to give a true and fair view of the company’s financial records and whether they have been done properly.

Workplace pensions

UK companies are required to put certain employees into a pension scheme, a process called ‘automatic enrolment’. If you employ at least one person aged between 22 and state pension age, who earns more than £10,000 per year, this applies to you.

Business licences

A business licence is a permit issued by the government or a professional body that outlines how specific business activities should be carried out. The most easily recognisable example is that of a liquor licence, which authorises businesses to sell alcohol and under what terms they can do so.

The list of licences is extensive, but you can use HMRC’s online tool to find out which licences your business may need.

steps to complaince obligations

Mastering your compliance obligations is essential for success – this step-by-step guide provides an introduction to understanding & fulfilling them!

Step 1 - Conduct a Self-Assessment and Risk Analysis

Analysis 20%

When getting started, first conduct a self-assessment and risk analysis to identify any current or potential noncompliance issues. Evaluate the nature and breadth of your operations, processes, policies and regulations that may affect your compliance needs. This assessment can identify any areas that require actionable strategies to help ensure compliance maturity at all levels of your organisation.

Step 2 - Research Your Relevant Regulatory Requirements and Standards.

Research 40%

Complying with regulations and standards is an essential step for keeping up with compliance obligations. It’s important to research the relevant regulations and standards that apply to your organisation, in order to understand exactly what is required from you in terms of compliance. Identify any applicable laws, industry standards, or government policies which are relevant to your operations and need to be adhered to, as not doing so could result in harsh penalties for noncompliance.

Step 3 - Identify Gaps Between Your Compliance & Regulations.

Identify Gaps 60%

Once you’ve identified the applicable regulations, standards and policies, it’s important to review your current compliance procedures and ensure that they meet the required expectations. Compare your existing process to the regulations and identify any gaps between the two. If there are any discrepancies or potential risks, it’s essential to address them as soon as possible in order to avoid penalties or other consequences of noncompliance.

Step 4 -Implement an Effective Compliance Program.

Implement Program 80%

Before developing your compliance program, it’s essential to ensure that you understand the expectations and obligations of each applicable regulation. Once you’ve done this, you can create a comprehensive compliance program which will guide you through the process of meeting all legal requirements. This program should include risk and compliance assessments, processes for monitoring and ensuring ongoing compliance, and plans for regularly tracking and improving performance.

Step 5 -Monitor, Measure, and Document Your Compliance Efforts.

Monitor 100%

Once you have developed a compliance program, it is necessary to continuously monitor, measure, and document any efforts to ensure that your organisation is compliant. All changes to processes made as part of ensuring compliance must be tracked and regularly assessed. Your organisation should also institute an effective system for processing internal complaints related to any violations of law or policy. This system will provide critical information that can be used by the compliance team when it comes to improving compliance efforts.

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.

start-up loan success and new working rules for feb 2023

Start-up loan success and new work hours rules – HMRC updates Feb Q2 2023

20/02/202324/03/2023 by , posted in Blogs, Business, Corporate Governance & Regulation, Corporation Tax, Customs Duties, HMRC notices, Latest News, Uncategorised

The week of 13 February 2023 has seen positive reports from HMRC about its Start-up Loan Scheme and a record high of on-time self-assessment tax filings.

Importantly, new legislation is on the table that would give more power to those with zero-hour contacts. This new bill is aimed at mitigating the effects of forcing workers to be available at any time, with little warning.

Start-up Loan Scheme success

The Start-up Loans scheme was established in 2012, to provide support for new businesses that have been trading for less than 36 months.

The loans range from £500 to £25,000, and charge a fixed interest rate of 6% per year. Businesses also get free support writing up their business plan, and up to 12 months of free tutoring.

Young people (aged between 18-24 years old) have received 14 percent of loans since the scheme was established. Of the total of more than 100,000 loans, 40 percent have gone to women and one-in-five to people from Black, Asian, and other ethnic minority backgrounds.

With 12,382 loans in the North-West, 7,117 in the East of England, 5,616 in the East Midlands and 15,39 in Northern Ireland, as well as many more across all parts of the United Kingdom, the Start Up Loans scheme has seen the entire UK benefit, with total economic activity estimated to be around £5.3 billion.

Predictable working hours bill on the table

The Workers (Predictable Terms and Conditions) Bill, proposed by Blackpool South MP Scott Benton, could bring forward huge changes for tens of millions of workers across the UK to request predictable working hours.

The move, which would apply to all workers and employees including agency workers, comes after a review found many workers on zero hours contracts (i.e. contracts with no minimum working hours) experience ‘one-sided flexibility’.

This means people across the country are currently left waiting, unable to get on with their lives in case of being called up at the last minute for a shift. With a more predictable working pattern, workers will have a guarantee of when they are required to work, with hours that work for them.

What does this change for zero-hours contracts?

If a worker’s existing working pattern lacks certainty in terms of the hours they work, the times when they work, OR if it is a fixed term contract for less than 12-months, they will be able to make a formal application to change their working pattern to make it more predictable.

All workers and employees will have this new right if the bill gets parliamentary approval. However, they must first have worked for their employer for a set period before they make their application. This period will be set out in regulations and is expected to be 26-weeks.

Employers do have the option to refuse a request for a more predictable working pattern on specific grounds, such as the burden of additional costs to make changes, or there being insufficient work at times when the employee proposes to work. Workers will be able to make up to two requests a year.

Record number of taxpayers file on time

HMRC reports that more than 11.7 million people submitted their 2021-22 Self-Assessment tax returns by the 31 January deadline. This included over 861,000 taxpayers who left their filing until the final day and over 36,000 that filed in the last hour before the deadline.

Whilst this was the highest ever number of filings, there are still an estimated 600,000 taxpayers that have missed the deadline and are yet to file. Are you among those that missed the 31 January 2023 filing deadline for your 2021-22 Self-Assessment returns?

If you have missed the filing deadline, have a look at this post explaining the penalties and this post on how to reduce your penalties.

If you are unable to pay your tax bill, there is an option to set up an online time to pay payment plan to spread the cost of tax due on 31 January 2023 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.

Late tax payment interest rate increase

For those who have not filed and paid their taxes on time, your repayment amounts have just gone up. Luckily, CIGMA Accounting can help you with this process.

The Bank of England’s Monetary Policy Committee (MPC) met on 2 February 2023 and voted 6-3 in favour of raising interest rates by 50 basis points to 4% in a move to try and continue to tackle upward pressures on inflation. This is the tenth time in a row that the MPC has increased interest rates with rates now the highest they have been since November 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.5% to 6.50%.

When do these changes come into effect?

These changes will come into effect on:

13 February 2023 for quarterly instalment payments
21 February 2023 for non-quarterly instalments payments

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will increase by 0.5% to 3% from 21 February 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Becoming an Authorised Economic Operator

Authorised Economic Operators (AEO) status is a recognised quality mark of businesses who deal with imports, and customs control procedures. Businesses that hold the AEO standard can demonstrate that their role in the international supply chain is secure and that they have customs control procedures that meet Authorised Economic Operator standards and criteria.

There are 2 types of status:

Authorised Economic Operator Customs Simplification (AEOC)
Authorised Economic Operator Security and Safety (AEOS)

You can apply for customs simplification or security and safety, or you can apply for both (Customs simplifications & Security and safety-AEOF).

What are the benefits of being an Authorised Economic Operator?

Businesses with AEOS status benefit from Mutual Recognition Agreements (MRAs). The UK negotiates MRAs with other customs authorities to reduce friction and excessive taxation. The UK currently has negotiated agreements with the EU, Japan, China and USA. Following Brexit, all Northern Ireland AEO authorisations continue to be recognised in the EU.

HMRC’s list of approved Authorised Economic Operator businesses has recently been updated and lists 1,237 businesses that hold status with HMRC.

Change in approved ISA managers list

Individual Savings Accounts (ISAs) are accounts for cash and investments (such as stocks and shares) for which you are not charged tax on interest, income, or capital gains. The maximum you can save in ISAs for the current tax year is £20,000.

HMRC releases lists of individuals and firms who it deems are able to manage ISAs satisfactorily. However, HMRC has not approved any ISA that the ISA manager may offer. Potential investors are advised to take independent advice if they’re in any doubt about the suitability of the ISA manager or of a particular ISA.

What can i hold in an ISA?

The list of investments that can be held in a tax-advantaged ISA also includes:

securities (including retail bonds) and shares issued by housing associations and other co-operative societies or community benefit societies (registered societies – formerly known as industrial and provident societies);
a broader range of securities issued by companies, including those admitted to trading on certain Small and Medium Size Enterprise (SME) market; and
shares in a wider range of investment trusts.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

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How to register a company in the UK

17/02/202306/03/2023 by , posted in Blogs, Business, Corporate Governance & Regulation, Corporation Tax, FAQ

Perhaps you’re self-employed and looking to expand your business. Or maybe you’re looking to start a new endeavour from scratch, and want to raise capital by selling shares. Whatever the reason, you’re thinking about creating an incorporated business, often called a company.

There are several steps to go through to establish and register a new company, but first and foremost is understanding what you’re signing up for.

What are the advantages of forming a company?

A limited company is a kind of incorporated business, meaning that the business is considered a separate entity under the law. The business’ finances are separate from the owners’.

Companies have access to different tax rules and options for raising funds, but are subject to stricter regulations. This includes more accountability to people who have invested in the business, as well as to the public. It also means having to submit more reports and documents to HMRC and Companies House.

But there are many kinds of legal businesses, which we break down here. If you’re aiming to be the sole owner and don’t need much external funding, being a sole trader is likely more appropriate. If you have a few external investors who won’t have any control of the business, a limited partnership may be best.

Choose a name

You must choose a name for your company, which must usually end in ‘Limited’ or ‘Ltd’. You can also use the Welsh equivalents Cyfyngedig’ and ‘Cyf’ if you registered the company in Wales.

A name is considered the ‘same as’ another if the only difference is punctuation, special characters, or words that look similar or mean the same thing. You will need to be part of the same group as or have written consent from a company to use a name considered the ‘same as’ its own.

Your company name also cannot be offensive, or use any legally protected terms like ‘Accredited’. You can check whether a name is already in use here.

Appoint a director

You will need to appoint at least one director for the company. They will be legally responsible for keeping company records, filing tax returns, and paying corporation tax. Directors do not have to live in the UK but the company must have a UK registered office address.

What if I don't have a physical office?

All limited companies need to have a ‘registered office address’. However, this does not mean you need to own or rent a building just for this use.

At CIGMA Accounting we offer services which allow you to use our address as your company’s registered address. We also offer services that can take you all the way through the incorporation process.

Decide on shareholders or guarantors

Most limited companies are ‘limited by shares’. This means they’re owned by shareholders, who have certain rights and ‘limited liability’ – they only stand to lose the money they have paid in for their shares.

Company profits are usually divided between shareholders according to what percentage of the shares they own, referred to as dividends.

A company limited by shares must have at least one shareholder, who can also be the director. The price of an individual share can be any amount, and usually give their holders one vote on company decisions per share.

Companies can also be ‘limited by guarantee’. Instead of shareholders, these companies have guarantors who have promised to pay a set amount of money if the company cannot pay its debts.

Listing people with significant control (PSCs)

A person with significant control of your company (PSC) is someone who:

Holds more than 25% of shares
Has more than 25% of voting rights
Can appoint or remove the majority of directors

You will need to submit a list of PSCs when you register your company with Companies House. You will need details about your PSCs such as their date of birth and home address. You can find the full list of required information here.

Company agreement documents

To register your company, you will need a ‘memorandum of association’ and ‘articles of association’.

The memorandum of association is a legal statement signed by all initial shareholders or guarantors agreeing to form the company. This will be created automatically if you register online.

The articles of association are written rules about running the company agreed by the shareholders or guarantors, and directors. You can use premade standard articles or write up your own.

Check which records you need to keep

Aside from your PSC list mentioned earlier, you must keep other records about the company and its accounting.

Among others, you will need to keep documents recording:

The directors and shareholders
The results of shareholder votes
Company loans and repayment dates
Bought and sold shares

Your accounting records will need to include the following, though this is not the full list:

All money received and spent
Details of assets
Debts the company owes or is owed

You are expected to keep records for at least six years.

Register your company

To register your company, you will need to provide an office address. This address must be a physical address in the UK and be in the same country that the company is registered in.

You will also need to use this document to check what your business’ SIC code is. The ‘standard industrial classification of economic activities’ (SIC) describes the kind of business or trade your company engages in.

You can then use this service to register your company with Companies House. You will also be registered for Corporation Tax at the same time. For the registration, you will need personal details about shareholders or guarantors, such as their town of birth and telephone number.

If you need any assistance with incorporating your business, or registering for Corporation Tax, our CIMA-registered chartered accountants would be happy to assist.

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Scotland’s non-domestic rates reliefs

16/02/202306/03/2023 by cigma, posted in Business

Business rates is the commonly used term for non-domestic property rates. Business rates are charged on most non-domestic premises, including most commercial properties such as shops, offices, pubs, warehouses and factories. Some properties are eligible for discounts from the local council on their business rates. This is called non-domestic property rates relief or business rates relief.

In Scotland, there are a number of reliefs available including Small Business Bonus Scheme, reliefs for empty or newly re-occupied properties and charitable rate relief. Businesses need to apply to their local council for relief.

Business rates relief through the Small Business Bonus Scheme (SBBS) scheme is available if the combined rateable value of all business premises is £35,000 or less, if the rateable value of individual premises is £18,000 or less and the property is actively occupied.

Empty properties in Scotland can receive 50% rates relief for the first 3 months they are empty. They can then claim a further 10% discount.

Empty industrial properties can qualify for 100% relief from non-domestic rates for the first 6 months that they are empty. They can then claim a further 10% discount. It is also possible, under certain circumstances, to receive 100% relief for the time a property is unoccupied, for example, if it is a listed building.

Registered charities in Scotland can apply for 80% rates relief. This only applies if their property is mostly used for charitable purposes. Certain councils may also offer up to 20% additional relief on top of the 80%, meaning that no rates would be payable. There are similar provisions for registered Community Amateur Sports Clubs.

Rates reliefs are handled differently in England, Wales and Northern Ireland.

Source:The Scottish Government| 13-02-2023

What to expect from HMRC behaviour charter

What to expect when dealing with HMRC

07/02/202306/03/2023 by , posted in Blogs, Business, FAQ, General

HMRC’s ‘Your Charter’ sets out what the public can expect from HMRC and vice versa. The HMRC Charter is a legal requirement under the Finance Act 2009. The Charter helps define the service and standard of behaviour that taxpayers should expect when interacting with HMRC.

What are these behaviour standards?

The Charter lists the following standards detailing what the public can expect from HMRC.

Getting things right
Making things easy, such as digitising the process of submitting property and self-employed tax by April 2024. You can read more about this process on this blog post.
Being responsive. You can use this tool from HMRC to calculate how long you can expect to wait for a reply.
Treating you fairly
Being aware of your personal situation. There are several reasons why you may be unable to submit or pay your taxes. Look at this post to find out which reasons HMRC will accept.
Recognising that someone can represent you.
Keeping your data secure.
HMRC is clear that they want to help taxpayers meet their tax responsibilities and claim any benefits, tax credits, refunds or other support to which they are entitled. However, HMRC will take firm action against the small minority who bend or break the law.

Taxpayers who feel that the service they have received does not meet the standards of the Charter can make a complaint to HMRC. There is a different process to follow if the taxpayer disagrees with a tax decision of HMRC.

The Charter can be found here.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

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Farringdon Accountant

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Who are the accounting regulatory bodies in the UK

06/02/202324/03/2023 by cigma, posted in Blogs, Business, FAQ, General

Accounting regulatory bodies are essential for ensuring that accountants, actuaries, and auditors are trained to a common standard and held to a code of ethics and good practice. In the UK, the top level of oversight is performed by the FRC, or Financial Reporting Council.

While FRC does not train or certify accountants, they serve as an independent regulator of professional bodies and set the UK’s Corporate Governance and Stewardship Codes. The FRC recognises six professional accountancy bodies, for which they provide oversight. This includes handling complaints regarding the actions of these bodies as a whole.

What is the role of professional accountancy bodies?

These professional accountancy bodies each oversee their own accountant qualifications, which differ in the details but often conform to internationally recognised standards. The bodies are responsible for setting and conducting exams, which candidates must pass in order to receive their qualification and be recognised as members of the professional body. Aside from exams, these qualifications also require candidates to have a certain amount of work experience to be eligible.

In addition, professional bodies provide support for their members in various ways, including conducting research to advance the field of accounting. Importantly, these bodies are also responsible for handling complaints regarding their members.

Who are the six main professional accountancy bodies?

The six professional bodies recognised by the FRC are the ACCA, CAI, CIMA, CIPFA, ICAEW and ICAS. All of these, except the CAI, are members of the International Federation of Accountants (IFAC), which is the largest global accountancy organisation. The IFAC holds no power to authorise professional bodies in the UK, but membership with IFAC demonstrates a commitment to the international standards used by its 180 member bodies.

Association of Chartered Certified Accountants (ACCA)

The ACCA was formed in 1904, with the aim to allow more open access to the profession than was offered by ICAEW and ICAS at the time. In 1909, they were the first professional accountancy body to admit a female member.

The ACCA is a truly global accountancy body, with 241,000 members and 542,000 students across 178 countries. Members hold the qualification of Chartered Certified Accountant.

Chartered Accountants Ireland (CAI)

Established in 1888, CAI now represents 31,000 members, including roughly 1900 members overseas. The Irish Chartered Accountancy qualification is fully recognised by the dominant accountancy body in the US (AICPA), one of the few finance and accountancy qualifications to have such valuable recognition.

Chartered Institute of Management Accountants (CIMA)

CIMA awards qualifications to management accountants, who partner with a company’s management to create planning and performance management systems, using their financial expertise to help create an organisation’s business strategy.

The CIMA qualification does not include audit, and members therefore cannot perform an audit.

Chartered Institute of Public Finance and Accountancy (CIPFA)

CIPFA touts itself as the only professional accountancy body in the world dedicated exclusively to public finance. The FRC revoked the recognition of CIPFA as an audit qualifying body in 2017, meaning it cannot authorise its 14,000 members to perform audits

Institute of Chartered Accountants in England and Wales (ICAEW)

The ICAEW was formed in 1880, and currently has over 198,000 members in 147 countries. The institute is also a founding member of Chartered Accountants Worldwide (CAW), a global collective that works to support and promote the role of chartered accountants.

Institute of Chartered Accountants of Scotland (ICAS)

The ICAS is the world’s first professional body of chartered accountants, having received its Royal Charter in 1854. Since the mid-1990s, ICAS has also trained students living in England and Wales, which puts it in competition with ICAEW. ICAS currently has around 23,000 members and trains around 3,700 students.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

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Farringdon Accountant

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What is a P11D in the UK?

29/12/202206/03/2023 by cigma, posted in Business, Corporate Governance & Regulation, Employee Benefits, General

A P11D is a statutory form that is used to declare the financial value of your taxable expenses and benefits from your company. In essence, a P11D is completed to report on any expenses or services that benefits the employee but is not given in money (salaries/wages).

Your employer is responsible for keeping track of these benefits on a P11D form (alternatively, they can include it in their payroll system to keep track). You should receive a copy of your P11D from your employer around July every year.

However, if you are a contractor, freelancer or sole-proprietor you will need to fill the P11D form out yourself to keep track of all your expenses.

WHY DO I NEED A P11D?

A P11D allows you to see all benefits provided by your company and the financial value attached to it. If you are self-employed it is vital for you to accurately complete your P11D for submission to the HMRC. The P11D is used byh the HMRC to determine how much Class 1A NICs need to be paid.

Download P11D example here.

The P11D consists of 14 sub-sections where the employer needs to specify the employee’s benefits. A breakdown of the standard layout and necessary information can be found in the next section of the blog:

Breakdown of P11D

Assets transferred
1. Cars, property, goods or other assets.
Payments made on behalf of employee
1. Tax on notional payments made during the year (A Notional Payment allows you to calculate and deduct the amount of tax and NI on a payment, without actually giving the payment to the employee. The employee won’t receive any more money, they will only pay the extra tax and/or NI.)
Vouchers and credit cards
1. The cost and any extra cost to you of providing any vouchers (including season tickets) which can be exchanged for:
  1. money
  2. goods
  3. services
2. All expenses and other payments paid by credit cards you provided, except expenses:
  1. directly in connection with the cars at section F of the P11D
  2. more appropriate to section N of the P11D
Living accommodation
1. Cash equivalent or relevant amount of accommodation provided for the employee, or his/her family or household. Exemptions do not apply if using optional remuneration arrangements.
Mileage allowance payments not taxed at source
1. Enter the mileage allowances in excess of the exempt amounts only where you’ve not been able to tax this under PAYE. The exemptions do not apply if using optional remuneration arrangements.
Cars and car fuel
1. If more than 2 cars were made available, either at the same time or in succession, please give details on a separate sheet.
2. You will need the following information of the vehicles:
  1. make and model, date of registration
  2. Approved CO2 emissions figure for cars registered on or after 1 January 1998
  3. Approved zero emissions mileage
  4. If your hybrid car’s CO2 emissions figure is between 1-50 (inclusive)
  5. Engine Size
  6. Type of fuel or power used (F – Diesel cars which meet Euro 6d standard, A – Diesel cars, B – All other cars)
  7. Dates car was available
  8. List price of car
  9. All non-standard accessories
  10. Capital contributions the employee made towards the cost of car or accessories
  11. Amount paid by employee for private use of the car
  12. Date free fuel was withdrawn
  13. Cash equivalent or relevant amount for each car
  14. Cash equivalent or amount foregone on fuel for each car
Vans and van fuel
1. Total cash equivalent or amount foregone for all vans made available in period
2. Total cash equivalent or amount foregone on fuel for all vans made available in period
Interest-free and low interest loans
Private medical treatment or insurance
Qualifying relocation expenses payments and benefits
Services supplied
Assets placed at the employee’s disposal
Other items (including subscriptions and professional fees)
Expenses payments made on behalf of the employee
1. Travelling and subsistence payments – Cost to you or amount foregone except mileage allowance payments for employee’s own car, read section E
2. Entertainment – Cost to you or amount foregone trading organisations read P11D Guide and then enter a tick or a cross as appropriate here
3. Payments for use of home phone
4. Non-qualifying relocation expenses those not shown in sections J or M

If you need assistance in completin yout P11D in the UK please feel free to contact CIGMA Accounting.

We have two offices accounting based in Farringdon, London and Wimbledon, London respectively. However, we are more than happy to assist with remote accounting for yourself or your business.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

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Farringdon Accountant

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London

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Comparing The 6 Best Accounting Software

22/12/202206/03/2023 by cigma, posted in Blogs, Business

Whether you are a small business in the UK or a large corporation looking for a more efficient way of keeping track of your bookkeeping needs, we are sure you’ll find something perfectly suited to you in this list. In this post we will be exploring some of the best Accounting Software in the UK and look at their features and pricing.

Software Accounting Abbreviations Key

Quickbooks BY INTUIT Accounting Software

Quickbooks was initially released by Intuit in 1998. In the last few years Quickbooks has positioned itself as the most popular bookkeeping software for small to medium-sized businesses. However, this is no surprise with the flexibility and features it offers business owners. Let’s look a little closer at what this accounting software can do for your business.

Quickbooks Pricing

Quickbooks has 5 different accounting plans to choose from. Starting from as little as £8 for the self-employed to £70 for an advanced subscription including all the features mentioned above. See which accounting plan will suit your business the best:

Self Employed

£8/mo. +VAT

Prepare for Self Assessment
Income Tax estimates
Free chat messaging support

Simple Start

£12/mo. +VAT

Making Tax Digital ready
Submit VAT directly to HMRC
VAT error checker
Prepare for Self Assessment
Income Tax estimates
Manage income & expenses
Send invoices that can be paid in one click
Forecast cash flow
Free onboarding session
Get free phone & chat support

Essentials

£22/mo. +VAT

Making Tax Digital ready
Submit VAT directly to HMRC
VAT error checker
Prepare for Self Assessment
Income Tax estimates
Manage income & expenses
Send invoices that can be paid in one click
Forecast cash flow
Free onboarding session
Get free phone & chat support
Manage bills and stay on top of what you owe
Accept and make payments in different currencies
Track employee time
3 users

Plus

£32/mo. +VAT

Making Tax Digital ready
Submit VAT directly to HMRC
VAT error checker
Prepare for Self Assessment
Income Tax estimates
Manage income & expenses
Send invoices that can be paid in one click
Forecast cash flow
Free onboarding session
Get free phone & chat support
Manage bills and stay on top of what you owe
Accept and make payments in different currencies
Track employee time
Manage stock
See the profitability of every project
Set smart budgets and know if you’re on target
5 users

Advanced

£70/mo. +VAT

Making Tax Digital ready
Submit VAT directly to HMRC
VAT error checker
Prepare for Self Assessment
Income Tax estimates
Manage income & expenses
Send invoices that can be paid in one click
Forecast cash flow
Free onboarding session
Get free phone & chat support
Manage bills and stay on top of what you owe
Accept and make payments in different currencies
Track employee time
Manage stock
See the profitability of every project
Set smart budgets and know if you’re on target
Restore company data
Run advanced reports
Batch invoices
Customise user permissions
Automate workflows & reminders
Manage employee expenses BETA
25 users

QUICKBOOKS NOTABLE FEATURES

With Quickbooks you can add up to 25 users on the highest plan. This is useful for companies of any size. There are many moving parts in a business, from employee management to stock control, Quickbooks has it all!

BANK TRANSACTION AUTOMATION

With Quickbooks you can connect your bank account and have the transactions imported automatically. This means you get a real-time overview of your current financial standing. No more spending hours with manual financial data entry.

Banks that Quickbooks Work With

CELL PHONE APP INTEGRATION

Just because you leave the office, does not mean you need to stop working. Quickbokos has an effortless app so that you can send invoices, receipts and reminders directly from your phone to clients. Convenience is key when it comes to quickbooks accounting.

APPLICATION INTEGRATIONS

Quickbooks application integration makes it easy to run your business. They have a powerhouse full of free and paid integrations to make managing your business effortless. View their Quickbook Apps Store to see the wide range of applications available.

Sage Accounting Software

Sage Accounting was originally launched in 1981. Since then they have become a robust, cloud-based accounting software. In the last few years, Sage Accounting has become notorious for being more in-depth and therefore, more difficult to set up and use than some of the other accounting software available on the market in 2022. Let’s look at Sage in a bit more detail:

Sage Accounting Pricing

Sage accounting has three plans starting from £12.00 a month for sole traders and freelancers, to £33.00 a month for well established and small businesses.

Accounting Start

£12/mo. +VAT

Create and send invoices
Track what you’re owed
Automatic bank reconciliation
Calculate and submit VAT
Be Making Tax Digital
Ready for VAT
Supports one user

Accounting Standard

£26/mo. +VAT

Create and send invoices
Track what you’re owed
Automatic bank reconciliation
Calculate and submit VAT
Be Making Tax Digital
Ready for VAT
Supports unlimited users
Manage and submit CIS
Run advanced reports
Send quotes and estimates
Forecast cash flow
Manage purchase invoices
Snap receipts with AutoEntry, 3 months free(2)

Accounting Plus

£33/mo. +VAT

Create and send invoices
Track what you’re owed
Automatic bank reconciliation
Calculate and submit VAT
Be Making Tax Digital
Ready for VAT
Supports unlimited users
Manage and submit CIS
Run advanced reports
Send quotes and estimates
Forecast cash flow
Manage purchase invoices
Snap receipts with AutoEntry, 3 months free(2)
Multi-currency banking and invoicing
Manage inventory

SAGE ONE NOTABLE FEATURES

As previously mentioned, Sage Accounting is more complicated than other accounting software, however, it is more robust as well. It boasts with a long list of features including:

UNLIMITED USERS

With Sage Accounting the standard and Accounting Plus plan comes with unlimited users. That means you can give multiple employees or external accountants access to see your financials and record transactions if needed.

XERO Accounting Software

XERO Accounting Software launched in 2006 with the goal to help more complex small businesses and larger corporations. Since then they have become a staple in the software accounting market with frequent additions.

XERO Pricing

XERO accounting has four plans starting from £14.00 a month for sole traders and freelancers, to £36.00 a month for well established businesses all over the United Kingdom.

Starter

£28 GBP per month

Send quotes and 20 invoices
Enter 5 bills
Reconcile bank transactions
Submit VAT returns to HMRC
Capture bills and receipts with Hubdoc
Automatic CIS calculations and reports
Short-term cash flow and business snapshot

Standard

£14 GBP per month

Send invoices and quotes
Enter bills
Reconcile bank transactions
Submit VAT returns to HMRC
Capture bills and receipts with Hubdoc
Automatic CIS calculations and reports
Bulk reconcile transactions
Short-term cash flow and business snapshot

Premium

£36 GBP per month

Send invoices and quotes
Enter bills
Reconcile bank transactions
Submit VAT returns to HMRC
Capture bills and receipts with Hubdoc
Automatic CIS calculations and reports
Bulk reconcile transactions
Use multiple currencies
Short-term cash flow and business snapshot

Ultimate

£49 GBP per month

Everything from Premium
Payroll for up to 10 people
Expenses for up to 5 people
Projects for up to 5 people
Advanced insights with Analytics Plus

XERO NOTABLE FEATURES

Xero accounting software is exactly what you need if you’re running a small business in the UK.

USER FRIENDLY

It has all of the most important features that a small business needs, but stays basic enough to be user-friendly. This means even people with very limited accounting knowledge can use the system.

UNLIMITED USERS

XERO offers unlimited users for the accounting software. This means that you can give access to those who need it in the business.

Zoho Bookkeeping and Accounting Software

Zoho Pricing

Sage accounting has three plans starting from £12.00 a month for sole traders and freelancers, to £33.00 a month for well established and small businesses.

fREE

£0 per month

20 Subscriptions
Limited to 20 Customers or 20 subscriptions – whichever is higher.(You can have multiple subscriptions per customer.)
1 User
Hosted payment pages
Create secure, PCI-compliant payment pages effortlessly.
Multi-currency support
Bill customers in their local currency
Integrated with Stripe
Offline payments
Record cash payments in any currency.
Client self-service portal
Subscription metrics
Access over 40 essential business reports.
24/5 Email support

Basic

£39 per month

500 Customers
3 Users
3 Automated Workflows/Module
Hosted payment pages
Create secure, PCI-compliant payment pages effortlessly.
Multi-currency support
Bill customers in their local currency.
Dunning for automatic payments
Send payment reminders & retry failed transactions to reduce involuntary churn.
Multiple payment gateways
Enable your customers to pay with their preferred payment gateway.
Offline payments
Record cash payments in any currency.
Client self-service portal
REST API & Webhooks
Subscription metrics
Access over 40 essential business reports.
24/5 Email and Phone support

Standard

£79 per month

2000 Customers
5 Users
10 Automated Workflows/Module
Hosted payment pages
Create secure, PCI-compliant payment pages effortlessly.
Multi-currency support
Bill customers in their local currency.
Dunning for automatic payments
Send payment reminders & retry failed transactions to reduce involuntary churn.
Multiple payment gateways
Enable your customers to pay with their preferred payment gateway.
Offline payments
Record cash payments in any currency.
Client self-service portal
REST API & Webhooks
Subscription metrics
Access over 40 essential business reports.
Web tabs
Embed web pages and applications to access them right from Zoho Subscriptions.
Customer portal single sign-on
Log in effortlessly using your preferred identity provider.
Domain branding
Use your domain names for customer portals and payment pages.
Custom buttons
Use custom buttons to trigger a predetermined set of actions.
24/5 Email and Phone support

Professional

£199 per month

5000 Customers
10 Users
10 Automated Workflows/Module
Hosted payment pages
Create secure, PCI-compliant payment pages effortlessly.
Multi-currency support
Bill customers in their local currency.
Dunning for automatic payments
Send payment reminders & retry failed transactions to reduce involuntary churn.
Multiple payment gateways
Enable your customers to pay with their preferred payment gateway.
Offline payments
Record cash payments in any currency.
Client self-service portal
REST API & Webhooks
Subscription metrics
Access over 40 essential business reports.
Web tabs
Embed web pages and applications to access them right from Zoho Subscriptions.
Customer portal single sign-on
Log in effortlessly using your preferred identity provider.
Domain branding
Use your domain names for customer portals and payment pages.
Custom buttons
Use custom buttons to trigger a predetermined set of actions.
Custom Schedulers
Schedule your frequent tasks to be executed automatically.
Twilio integration
24/5 Email and Phone support

ZOHO NOTABLE FEATURES

Zoho is a powerful system with a ton of additional features that can be added including but not limited to:

ZOHO CRM (LEADS ACQUISITION AND CONVERSION)

Zoho’s CRM feature allows you to accurately track, convert and stay up to date with business analytics. It offers flexibility for small and large businesses to create a seamless sales process for sales staff.

ZOHO CAMPAIGNS (EMAIL MARKETING)

Another perk of Zoho is the dynamic email campaign module. This allows you to create multiple automation emails, once-off update emails and an unlimited number of mailing lists. While it can be slightly challenging, you can integrate your Zoho CRM and Zoho Campaigns to automatically start sending emails to potential customers by using the tags system.

INTEGRATION WITH OTHER PLATFORMS

Last but not least is the platform’s ability to track where leads are coming from, whether it is from Google Ads, Facebook, your website etc. It is much more than an accounting and bookkeeping system. The system is built to b a one-stop solution for all SME needs.

Crunch Online Accounting Software

Crunch is quickly making its way as one of the most-used free accounting platforms in the UK since Wave Accounting became obsolete in the United Kingdom.

Crunch Pricing

Crunch accounting has three plans starting from £0 a month for sole traders and freelancers, to £121.50 a month for well established and small businesses.

Crunch Free

£0 per month

Invoicing
Expenses
Banking
Tax
Support

Limited Company Pro

£79.50 + VAT per month

Great for new ltd companies
Perfect for over £35K earners
Includes company formation

Limited Company Premium

£121.50 + VAT per month

Includes accountancy health check
Perfect for over £35K earners
Includes 2x Self Assessments

Small Business

£159.50 + VAT per month

Payroll for up to 15 employees
Bookkeeping and dedicated accountant
Includes 2x Self Assessments

Crunch Notable Features

Crunch is ideal for small businesses that do not need advanced accounting software.

Ideal for Small Businesses & Sole Traders

Crunch allows you to customise your plans with add-ons which is ideal for companies that are just starting out. It allows you to add services as and when you need them.

FRESHBOOKS

Freshbooks hit the accounting market around 19 years ago and they are still going strong!

Freshbooks Pricing

Sage accounting has three plans starting from £11.00 a month for sole traders and freelancers, to £30.00 a month for well established and small businesses.

Lite

£11 per month

Send unlimited invoices to up to 5 clients
Track unlimited expenses
Send unlimited estimates
Get paid with credit cards and Direct Debit
Track sales tax & see reports
Access anywhere on iOS and Android
VAT return filing for HMRC Making Tax Digital

Plus

£19 per month

Send unlimited invoices to up to 50 clients
Automatically track expenses
Automatically capture receipt data
Send unlimited estimates and proposals
Get paid with credit cards and Direct Debit
Set up recurring billing and client retainers
Run business health reports
Double-entry accounting reports
Invite your accountant
Access anywhere on iOS and Android
Mobile mileage tracking
VAT return filing for HMRC Making Tax Digital

Premium

£30 per month

Send unlimited invoices to an unlimited amount of clients
Track Bills, Bill Payments & Vendors with Accounts Payable
Track project profitability
Customize email templates with dynamic fields
Customize email signatures
Automatically track expenses
Automatically capture bills and receipt data
Automatically send late payment reminders and bill late fees
Send unlimited estimates and proposals
Get paid with credit cards and Direct Debit
Get paid with checkout links
Set up recurring billing and client retainers
Run business health reports
Run financial and accounting reports
Invite your accountant
Access anywhere on iOS and Android
Mobile mileage tracking
VAT return filing for HMRC Making Tax Digital

Freshbooks Notable Features

Freshbooks has some powerful email automation systems in place to help business owners get paid. Another perk with Freshbooks is that your accounting software grows with the business with optional add-ons. Some of the other notable features include:

Unlimited Billable Clients

Freshbooks has unlimited billable clients on their Premium plan. This is fantastic for businesses planning on growing infinitely in the future.

Add Team Members for Fee

While most accounting software limit the number of users, freshbooks has taken a unique path. They allow you to add users (including your accountant) as and when needed for an additional fee (currently £7.00) per person, per month.

Need Assistance with your accounting needs?

Making Tax Digital for Self-Assessment

15/12/202206/03/2023 by cigma, posted in Blogs, Business, Income Tax, Latest News

The introduction of Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) is set to commence from April 2024. This means that clients who have not yet prepared for the change have less than 18 months to choose and begin using approved software.

What is the Making Tax Digital for income tax self-assessment?

MTD for ITSA is a new initiative by the HMRC to digitise the process of submitting property and self-employed tax. In order to register for MDT, you need to be making use of accounting software that can store and send digital records to the HMRC. Not using any accounting software at the moment? Check out our post on the top 6 accounting software available in the UK.

Why is the HMRC implementing the MTD for income tax?

How will MTD for income tax work?

MTD for ITSA will fundamentally change the way businesses, the self-employed and landlords, interact with HMRC. The regime will require businesses and individuals to register, file, pay and update their information using an online tax account. The rules will initially apply to taxpayers who file Income Tax Self-Assessment tax returns with business or property income over £10,000 annually.

General partnerships will not be required to join MTD for ITSA until a year later, in April 2025. The date other types of partnerships will be required to join will be confirmed in the future. A new system of penalties for the late filing and late payment of tax for ITSA will be aligned with the introduction of MTD for ITSA.

The MTD regime started in April 2019 for VAT purposes when businesses with a turnover above the VAT threshold were mandated to keep their records digitally and provide their VAT return information to HMRC using MTD compatible software. Since April 2022, MTD has been extended to all VAT registered businesses with turnover below the VAT threshold of £85,000.

3 Tips for Companies with Year-End on 31 December

15/12/202206/03/2023 by cigma, posted in Blogs, Business, Capital allowances

With the festive season approaching, many companies are closing for the holidays. But for some companies 31 December marks their annual year-end date. So in preparation, we want to give companies with a year-end date a few tips!

Tip 1 : Super-deduction Capital Allowance

The super-deduction and special rate first year allowance (SR allowance) temporarily increase reliefs for companies on qualifying expenditure on plant or machinery from 1 April 2021 to 31 March 2023. You can qualify for super-deduction capital allowance if:

HMRC has launched an interactive tool for you to check whether you can qualify for the super deduction capital allowance. This would allow you to write off 130% of cost against your profits for 2022 if the purchase was completed before 31 December 2022.

Tip 2: Investigate Optimal Year-End dates

If you are expecting profits to reduce in the first quarter of 2023, perhaps making a loss in this period, would it reduce your corporation tax bill if you extended your accounting date to 31 March 2023, and use the first quarter losses earlier? This is something important to consider for all companies to manage their finances optimally.

Tip 3: Get Ready For 2023

Being a business owner comes with a lot of responsibility. This includes taking a holistic look at the year that has passed. A good way to look at your financials include

Which months brought in the most profits?
Which area or services of the business made the most profits?
What went wrong this year?
What did the company do right this year?
Did we stay within budget this year?

These questions will help you tailor a better budget and plan for the business moving forward. Identifying areas for growth as well as areas that are performing optimally can help you make more informed decisions in 2023.

2023 is likely to be a challenging year with a projected recession, continuing high inflation and upward pressure on interest rates.

If you are unsure which strategies to put in place to manage your financials effectively, feel free to contact us:

UK Corporation Tax Changes 2023

15/12/202206/03/2023 by cigma, posted in Blogs, Business, Corporation Tax, Income Tax

The HMRC recently announced that the previously planned UK Corporation Tax increase of 25% will go ahead as of April 2023.

Currently corporation tax in the UK was levied on a standard rate of 19% regardless of profit.

However, the HMRC has announced a new “Small Profits Rate” to ensure that small businesses are not adversely affected by this corporate tax change. The Small Profits rate of 19% will be applicable on all companies with profits of up to £50,000.

The new Corporation tax main rate for companies with profits over £250,000 will be set to 25% as of 1 April 2023.

Where a company has profits between £50,000 and £250,000 a marginal rate of Corporation Tax will apply that bridges the gap between the lower and upper limits. The lower and upper limits will be proportionately reduced for short accounting periods of less than 12 months and where there are associated companies.

The effect of marginal relief is that the effective rate of Corporation Tax gradually increases from 19% where profits exceed £50,000 to 25% where profits are more than £250,000.

The amount of Corporation Tax to pay will be found by multiplying your profits by the main rate of 25% and deducting marginal relief. For the fiscal year 2023, the marginal relief fraction will be 3/200.
For some businesses, it may be prudent to reconsider associated company relationships before April 2023 to avoid partial loss of the lower 19% rate or marginal tapering relief.

Do I need an Accountant or a Bookkeeper?

Accountant or Bookkeeper: What do I need?

15/12/202206/03/2023 by cigma, posted in Blogs, Business, General

Differences between Accountants and Bookkeepers

In this article we will explore the difference between an accountant and a bookkeeper. Know which one you are looking for and what each can contribute to your business. Let’s jump right into it:

Protected Terms in The United Kingdom

A protected term in the United Kingdom is a term that may legally only be used by professionals with relevant experience and qualifications. In the UK, the terms accountant and bookkeeper are not protected terms. Therefore, it is up to you as a consumer to ensure that your accountant or bookkeeper has the qualifications and experience you are looking for.

Accountant

Accountants can be an in-house employee or the accounting duties can be outsourced to UK based companies. Let’s take a deep dive into what an accountant is and what accountants do.

What Does an Accountant Do?

An accountant, otherwise known as a chartered accountant, is responsible for providing trustworthy and sound advice to business owners and individuals about their financial well being. Some of the day to day duties of an accountant are listed below:

Audit accounts
Detailed Financial reporting
Detailed Financial Analysis (Examples: Actual vs Budget, Actual vs Forecast or like for like period analysis)
Tax planning and advising
Financial Risk Assessment
Business Recovery and Insolvency
Manage accounting systems and processes

Note that this is a basic overview of some of the functions that an Accountant can perform. However, some accountants may have additional experience and qualifications. This may expand their capabilities and expertise to other areas in addition to accounting.

Furthermore, there are a few different types of accountants.

Types of Accountants

In the UK accountancy can be subdivided into four different sectors:

Corporate Accounting

In corporate accounting the accountant’s main function is to keep the business financials up to date and in line with current legislation. This financial data is most often used for external reporting as well as tax compliance. A corporate accountant’s duties may also include an in-depth analysis of the financials and advising corporates to make informed decisions.

Public Accounting

Public accountants work with external clients. This can include individuals, corporations or small companies. In essence, any agency that takes on accounting clients can be considered a public accountant. Due to having a wide variety of clients, public accountants are usually flexible and are up-to-date with all current legislation regardless of whether they are working with individuals, small businesses or corporations.

Government Accounting

Accountants employed in the UK government work within the different governmental spheres namely local, state, or federal government agencies. Governmental accountants usually have a higher vetting process due to the nature of the data that they work with. Some governmental data may be confidential.

Forensic accounting

Forensic accountants can be seen as the investigators of the financial sector. Their main duties are to collect, recover, and reconstruct financial data when it is difficult or impossible to obtain. Forensic accountants can work within the corporate, public or governmental spheres to assist in identifying commercial crimes like fraud, corruption and money laundering.

What Qualifications Does an Accountant have?

As previously mentioned, the term accountant is not a protected term. So how do you know whether your accountant is certified and capable of their duties?

Check their membership with regulatory bodies such as:

It is not a requirement to belong to a regulatory body in order to practise as an accountant in the UK. However, it is strongly advised that you ask about an accountant’s membership with any one of the UK’s regulatory boards.

Most of the regulatory boards have requirements for qualifications and experience to register with them. The goal is to uphold industry standards.

Bookkeeper

Bookkeepers are usually employed in-house providing accurate, up-to-date financial information about a business.

What Does a Bookkeeper Do?

They are hands-on when it comes to the day to day affairs of the business. Some of their daily duties include:

Recording financial transactions
Handling accounts payable and receivable
Completing tax forms
Handling client invoices by recording and approving or denying the payments
Appropriately coding payables to prepare them for the accountant’s input later
Distributing money appropriately to various departments within the company
Invoicing deliveries and paying vendors for their goods and services
Maintaining office supplies by keeping an inventory and ordering new supplies as needed
Monitoring debt levels and ensuring compliance with debt covenants
Recording cash receipts and handling bank deposits
Maintaining petty cash
Preparing information for auditors
Keeping an annual company budget
Preparing purchase orders in accordance with requests for materials
Handling subsidiary accounts
Filing historical records and retrieving necessary documents as needed for others
Managing profit and loss statements and balance sheets
Paying regular bills for the company
Maintaining company ledgers
Researching and complying with federal, state, and local requirements as they pertain to the company’s operations and financial activities

All of these duties are expected from a bookkeeper, however, companies may require a bookkeeper to have additional administrative functions in the business.

What Qualifications Does a Bookkeeper have?

Bookkeepers are not required by law to have a professional qualification. However, a good indication of a bookkeeper’s expertise is their membership with regulatory bodies such as:

The Association of Accounting Technicians (AAT)
Institute of Chartered Bookkeepers (ICB)

Accountant vs. Bookkeeper

Bookkeepers are hands-on in creating financial statements and handling the day-to-day activities of the business. It is their duty to ensure that all financial statements are organised and ready for any external reporting like taxation.

However, an accountant has a more in-depth view of the business’ financial well-being. An accountant is able to create detailed reports and analysis on where the business is doing well, where it can do better and identify financial risks moving forward. Furthermore, accountants can offer valuable insight into financial forecasts and comparing fiscal year records to identify areas for improvement within the company.

Can a Bookkeeper be an Accountant

Technically speaking, a bookkeeper cannot be an accountant, but an accountant can perform the duties of a bookkeeper. Imagine a bookkeeper as being the first step toward being an accountant. Being an accountant you need to have a thorough grasp of all the functions of a bookkeeper, however, as an accountant you take it one step further to do in depth analysis.

Now that you have this information, you can go out there and make an informed decision on whether you are currently looking for an accountant or a bookkeeper.

If you are looking for a UK based accountancy firm, you can contact CIGMA accounting for all your accounting needs

Need Accounting Services? Get in contact...

Post-cessation receipts and expenses

15/12/202206/03/2023 by cigma, posted in Business

Tax relief may be available for post-cessation expenses of a trade. In order to be an allowable post-cessation expense, the trade must have ceased, and the expense must have been deductible in calculating the trading profits.

This means that the expense still has to meet the wholly and exclusively test and be revenue, not capital, expenditure. The expenditure can be apportioned if necessary. The way in which post-cessation expenses can be relieved depends on the person incurring the expenditure and the type of expenditure incurred.

The following are examples of expenses that would likely be categorised as post-cessation expenses:

remedying defective work done, goods supplied, or services rendered while the business was continuing or as damages in respect of such defective work, goods or services whether awarded by a Court or agreed during negotiations on a claim;
paying legal or other professional expenses incurred in connection with the costs above;
insuring against liabilities arising out of any such claim or against the incurring of such expenses; and
collecting, or seeking to collect, debts which were considered in computing the profits of the trade before discontinuance.

An expense specifically relating to the cessation itself is not an allowable expense.

Source:HM Revenue & Customs| 12-12-2022

Basis of assessment changing

17/11/202211/01/2023 by cigma, posted in Business

Forthcoming ‘basis of assessment’ reforms will change the way trading income is allocated to tax years for the self-employed. The changes will affect sole traders and partnerships that use an accounting date between 6 April and 30 March. There is no change to the rule for companies.

The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’. Under the current rules there can be overlapping basis periods, which charge tax on profits twice and generate corresponding ‘overlap relief’ which is usually given on cessation of the business. The new method of using a ‘tax year basis’ will remove the basis period rules and prevents the creation of further overlap relief.

The new rules will come into effect in the 2024-25 tax year with 2023-24 being a transitional year. During the transitional year, all businesses’ basis periods will be aligned to the tax year and all outstanding overlap relief can be used against profits for that tax year.

Affected businesses in 2023-24 will be assessed on the tax for profits for the:

12-month accounting period they have previously been using; and
for the rest of the 2023-24 tax year — minus any overlap relief that may be due — spread over the next 5 tax years.

The changes do not affect sole traders and partnerships who already draw up annual accounts to a date between 31 March and 5 April.

Affected businesses should ensure they are prepared for the changes as there may be cashflow implications.

Source:HM Revenue & Customs| 14-11-2022

Farming – using the herd basis

01/09/202206/03/2023 by cigma, posted in Business

There are special rules which can apply to farmers and market gardeners that prepare their accounts on accruals basis. This includes special rules for farmers’ averaging relief, dealing with losses and the treatment of compensation for compulsory slaughter.

The special rules also refer to the use of the herd basis. The herd basis is a special method of calculating profits or losses which may be used by farmers who keep production livestock. Usually, farm animals are treated as trading stock. However, under the herd basis a herd or flock of production animals is excluded from trading stock and treated, in most but not all circumstances, like a capital asset.

Any farmer that wishes to use the herd basis must elect to do so. Where a herd basis election is in force, the treatment for calculating farming profits of the herd or herds covered by the election is governed by special rules. The herd basis rule can also apply where animals are jointly owned, for example, in some share-farming arrangements.

From the farmer’s point of view, the main benefits are likely to be that:

the cost of maintaining the herd can be charged against tax; and
any profit on its eventual disposal will be tax-free.

Note, that these special rules do not apply to farmers and market gardeners who calculate their profits using the cash basis.

Source:HM Revenue & Customs| 30-08-2022

Navigating the UK Construction Industry Scheme (CIS)

What is the Construction Industry Scheme (CIS)?

Who Does the Construction Industry Scheme Apply to?

Require accounting services?

What are the Reporting Obligations under C.I.S.?

Changes in VAT Rules under the c.i.s.

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

Accountant near Me

Advantages of Accountant Near You

In-Person meetings

Region-specific knowledge on taxes and business

Disadvantages of Accountant Near You

Expertise

Bad reviews / Turnaround times

Remote Accountants

Advantages of Remote Accountant

Find the right fit

Flexible Times

Efficiency

Competitive pricing

Nationwide knowledge on taxes in different regions

Disadvantages of Remote Accountant

Lack of In-person Meetings

Cyber Security Concerns

How To Choose the Best Accountant for you and your business

Location, location, location…

Ensure certification

How to check Certification?

Reviews and Feedback

Experience and Expertise

Ask basic accounting questions in the vetting process

Find someone that’s passionate about what they do

To incorporate or not?

Company formation agents

Unincorporated businesses

Sole Trader

Unincorporated Association

Partnership

Limited Partnership

Trust

Incorporated businesses

Limited Company

Limited Liability Partnership

Community Interest Company

WHAT DO YOU NEED TO INCORPORATE YOUR BUSINESS?

is a company registration number the same as a VAT number?

What is a company registration number?

What is a vat registration number?

Need Assistance from an Accountant?

What is VAT Recovery and When Can Businesses Reclaim Input VAT?

Defining Business Entertainment VAT

Require accounting services?

Can you recover business entertainment VAT?

VAT on entertainment expenses for Overseas Customers

Can you reclaim VAT on entertainment expenses for employees?

Related Blog Posts:

Can you reclaim VAT on entertainment expenses for directors and partners?

Can you reclaim VAT on entertainment expenses when employees host clients?

Business Entertainment VAT events including Employees and Non-Employees

Need Assistance from an Accountant?

Wimbledon Accountant

Farringdon Accountant

what qualifies for tax relief?

Allowable expenses

Stationery and goods

Rents, power and insurance

Car and travel expenses

Staff expenses

Legal costs and financial charges

Marketing and entertainment

Capital allowances

Is there a limit to this tax relief?

Need Assistance from an Accountant?

Limited company obligations

company records

1. Registered office

2. Confirmation statement

3. Directors