Changes to Companies House Fees

There have been a number of significant changes in Companies House fees. These changes took effect on 1 May 2024. The last significant change in fees occurred in April 2016. 

The new fees have been calculated on a ‘cost recovery’ basis meaning that the fees are calculated based on what it costs to provide the services in question. Companies House state that they do not make a profit on their fees. 

Companies House guidance entitled Companies House fees has been updated to reflect all the changes. Companies House have said that the new fees will help ensure adequate funding going forward to recover costs incurred as well as to help fund the cost of new powers introduced as part of The Economic Crime and Corporate Transparency (ECCT) Bill. 

Prices shown below are some of the main changes that took effect from 1 May 2024: 

Transaction

New fee

Old fee

Incorporation Digital

£50

£12

Incorporation (same day) Software

£78

£30

Incorporation Software

£50

£10

Incorporation Paper

£71

£40

Confirmation statement Digital

£34

£13

Confirmation statement Paper

£62

£40

Change of name Paper

£30

£10

Change of name (same day) Digital

£83

£30

Change of name Digital

£20

£8

Registration of a charge Paper

£24

£23

Registration of a charge Digital

£15

£15

Voluntary strike off Paper

£44

£10

Voluntary strike off Digital

£33

£8

Registration of an overseas entity Digital

£234

£100

The full list of changes can be found in the guidance mentioned above at https://www.gov.uk/government/publications/companies-house-fees/companies-house-fees

Source:Companies House | 20-05-2024

Closing a limited company

There are a number of reasons why you may need to close your limited company. This could be because the company structure no longer suits your needs, your business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down a company.

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example, if the sole director has died.

A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to keep a company name, brand or trademark. The costs of restarting a dormant company are typically less than forming a new company.

Source:Companies House | 13-05-2024

Register an overseas company

An overseas company must register with Companies House if they want to set up a place of business in the UK. This would mean that the overseas company has a physical presence in the UK through which it carries on business.

If an overseas company does not have a physical presence in the UK, they are not usually required to register with Companies House. For example, an independent agent who conducts business on behalf of an overseas company is not seen as the overseas company having a physical presence in the UK, neither is an occasional location such as a hotel where a director of an overseas company may conduct business during periodic visits to the UK.

If the overseas company is required to register, they must submit a completed OS IN01 form and pay a registration fee of £71 to Companies House. If the company is registering its first UK establishment, it must also send Companies House a certified copy of the company’s constitutional documents and a copy of the company’s latest set of accounts (with a certified translation in English if prepared in another language).

The overseas company can be registered using its corporate name (its name under the law of the country of incorporation), or an alternative name under which it proposes to carry on business in the UK.

Source:Companies House | 13-05-2024

Company names – new regulations

A recent post by Companies House confirmed that they are now using new powers to challenge the registration of certain company names.

Extracts from their recent blog post is reproduced below:

New powers to challenge company names  

These new measures build on existing controls on company names. Names cannot be the same as or too similar to an existing name, and certain terms are restricted, such as terms implying a connection to the UK government or using a sensitive word or expression.

Under the Economic Crime and Corporate Transparency Act, we can now also reject an application to register a name where we have reason to believe:

  • the name is intended to facilitate fraud
  • the name is comprised of or contains a computer code
  • the name is likely to give the false impression the company is connected to a foreign government or an international organisation whose members include two or more countries or territories (or their governments)

We can also direct companies to change their name in more circumstances, for example, where the name has been used, or is intended to be used, by the company to facilitate fraudulent activity.

If a company fails to change its name within 28 days, we can now determine a new name for the company, for example, changing the company name to its registered company number.

We also have the power to suppress a name from the register while a company responds to a direction to change its name.

Failure to comply is an offence

If a company does not respond to a direction to change their company name within 28 days, an offence is committed.

It’s also an offence to continue using a company name which we have directed to change.

Company Names Tribunal

The Company Names Tribunal continues to be responsible for considering objections to the use of a name which is:

  • the same as an existing name in which another person has goodwill
  • sufficiently similar to that name that it is likely to mislead

We're confident that, over time, these new powers will make a difference to the accuracy and integrity of the information on the register and will help to make sure the UK remains a great place to do business.”

Source:Other | 12-05-2024

Register of Overseas Entities

The Register of Overseas Entities came into force in the UK on 1 August 2022. The register is held by Companies House and requires overseas entities that own land or property in the UK to declare their beneficial owners and / or managing officers.

HMRC has recently published an updated list of the UK-regulated agents who have an agent assurance code and can complete verification checks on beneficial owners of an overseas entity. This is not a complete list nor does Companies House endorse or accept any liability for these agents or for any services they provide.

A UK-regulated agent must complete verification checks on all beneficial owners and managing officers of an overseas entity before it can be registered with Companies House.

They must be based in the UK and supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. They can be an individual or a corporate entity, such as a financial institution or legal professional.

After registering, an overseas entity will receive a unique Overseas Entity ID to give to the land registry when it buys, sells, transfers, leases or charges UK property or land. 

Source:Companies House | 11-03-2024

Company confirmation statement changes

As well as filing accounts with Companies House, there is an important requirement to check that the information Companies House has about your company is correct every year. This is facilitated by the filing of an annual company confirmation statement. Companies House can prosecute a company and its officers for failing to file a confirmation statement and the company can be struck off. 

Companies House guidance on the confirmation statement entitled Filing your company's confirmation statement has been updated with new measures introduced under the Economic Crime and Corporate Transparency Act.

A confirmation statement must usually be filed at Companies House once every 12 months and rather than resubmitting data every year the confirmation statement only needs to be updated if you have changes to report. If there are no changes then you just need to confirm the information is correct and submit the statement. The due date is usually a year after either the date your company incorporated or the date you filed your last annual fee was paid. You can file your confirmation statement up to 14 days after the due date. Any necessary updates such as to the statement of capital, shareholder information and SIC codes can be made when submitting the confirmation statement.

There are now 2 separate forms for completing a confirmation statement. The Confirmation Statement CS01 should be used if your confirmation date is 4 March 2024 or earlier, to confirm that the company's details are up to date. Confirmation Statement form CS01 (new version) should be used if your confirmation date is 5 March 2024 or later, to confirm that the company's details are up to date. Existing companies will need to give a registered email address when they file their next confirmation statement with a statement date from 5 March 2024. 

It currently costs £13 to file your confirmation statement online and £40 if you send Companies House a paper form. These fees are set to increase to £34 and £62 respectively from 1 May 2024.

Source:Companies House | 11-03-2024

Changing a company’s accounting year end

There are special rules which limit the ability to change your company’s accounting year end date. A company’s year end date is also known as its ‘accounting reference date’ and is historically set by reference to the date the company was incorporated. Under certain circumstances it is possible to make a change to the accounting year end and for some businesses this can have trading and / or tax benefits.

As a general rule, you can only change the year end for the current financial year or the one immediately before it. Making a change to a year end date will also change the deadline for filing accounts (except during a new company’s first financial year).

There is no limit to the number of times you can shorten a year end date but you can only extend the period to a maximum of 18 months once in every five years. The financial year can be extended more often under limited circumstances such as when the company has been put into administration.

A request for a change to an accounting reference date can be made online (preferred and quickest option) using the Companies House online service or by using a postal version of the Change of accounting reference date (AA01) form. No change can be made to a period for which accounts are overdue.

There is no overriding reason for using one date over another but there are a number of factors to take into account. The most common year end dates are usually 31 December (to coincide with the end of the calendar year) or 31 March (to coincide with the end of the tax year).

Source:Companies House | 11-03-2024

Companies House filing fees increase

Companies House has announced that some of their fees will be changing from 1 May 2024. The last change in fees was April 2016. 

The fees have been calculated on a ‘cost recovery’ basis meaning that the fees are calculated based on what it costs to provide the services in question. Companies House state that they do not make a profit on their fees. 

As The Economic Crime and Corporate Transparency (ECCT) Bill has moved through Parliament, concerns had been raised on the current fee structure. Companies House say that these changes to the fees charged will ensure adequate funding going forward to recover costs incurred as well as to help fund the cost of the new powers introduced as part of the ECCT Bill. 

Prices shown below are some of the main changes from 1 May 2024: 

Transaction New fee Current fee
Incorporation Digital £50 £12
Incorporation (same day) Software £78 £30
Incorporation Software £50 £10
Incorporation Paper £71 £40
Confirmation statement Digital £34 £13
Confirmation statement Paper £62 £40
Change of name Paper £30 £10
Change of name (same day) Digital £83 £30
Change of name Digital £20 £8
Registration of a charge Paper £24 £23
Registration of a charge Digital £15 £15
Voluntary strike off Paper £44 £10
Voluntary strike off Digital £33 £8
Registration of an overseas entity Digital £234 £100

The full list of changes can be found here:
https://changestoukcompanylaw.campaign.gov.uk/changes-to-companies-house-fees/

Source:Companies House | 24-02-2024

Advise HMRC if company is dormant

If a company has stopped trading and has no other income, then the company is usually classed as dormant for Corporation Tax purposes. 

A company is usually dormant for Corporation Tax if it:

  • has stopped trading and has no other income, for example investments;
  • is a new limited company that hasn’t started trading;
  • is an unincorporated association or club owing less than £100 Corporation Tax; or
  • is a flat management company.

There is a special online form that can be used to advise HMRC if a company is dormant. The form can be found at www.gov.uk/tell-hmrc-your-company-is-dormant-for-corporation-tax. In order to complete the form, you will need the company’s name, 10-digit Unique Taxpayer Reference (UTR) and the date the company ceased trading. It is also possible to notify HMRC by phone or by post if the online option is not available.

HMRC can also send a notification if they think a company is dormant. This notice will state that a company or association is dormant and is not required to pay Corporation Tax or file Company Tax Returns.

Limited companies are still required to file annual accounts and a confirmation statement even if the company is dormant for Corporation Tax purposes.

A company can stay dormant indefinitely, however, there are costs associated with this option. This might apply if a company is restructuring its operations or wants to retain use of a company name, brand or trademark. 

Source:HM Revenue & Customs | 24-02-2024

Types of limited companies

A limited company is a company ‘limited by shares’ or ‘limited by guarantee’.

Limited by shares

This is the most common limited company structure. A limited by shares company is a separate legal entity owned by its shareholders and managed by its directors. In smaller limited companies, shareholders and directors are the same persons. Directors are employed by their company; they are not self-employed. Limited companies are required to pay Corporation Tax on their profits, not Income Tax. 

Limited by shares companies are usually businesses that make a profit. This means the company:

  • is legally separate from the people who run it;
  • has separate finances from its shareholders personal ones;
  • has shares and shareholders; and
  • can keep any profits it makes after paying tax.

Limited by guarantee

In essence, a company limited by guarantee is a limited company with no shareholders. Instead, the persons who set up the company – its members – guarantee to pay a fixed amount into the company if required on the winding up of the company. Usually, these guarantees are for small amounts.

This type of company is typically used by not for profit organisations and charities rather than trading companies.

This means a limited by guarantee company:

  • is legally separate from the people who run it;
  • has separate finances from your personal ones;
  • has guarantors and a ‘guaranteed amount’; and
  • invests profits it makes back into the company. Profits are not distributed to the guarantors.
Source:Companies House | 18-02-2024
cigma accounting guide to employee change reporting for HMRc; london accountant; farringdon accountant

Guide to HMRC reporting: Employee Changes

Understanding HMRC Reporting: Essential Employee Changes for UK Businesses

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

Why Reporting Employee Changes Matters

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

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What Constitutes an Employee Change?

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

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

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

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

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

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

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

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

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

Managing Leave of Absence

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

Partner with CIGMA Accounting for Compliance and Efficiency

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


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Re-starting a dormant company

HMRC must be informed when a non-trading or dormant company starts trading again and thus becomes active for Corporation Tax purposes. Companies can use HMRC Online Services to supply the relevant information. 

When a company has previously traded and then ceases to trade it would normally be considered as dormant. A company can stay dormant indefinitely, however, there are costs associated with doing this and certain filings must still be made to Companies House. The costs of restarting a dormant company are typically less than forming a new company. 

The following steps are required:

  1. Tell HMRC that your business has restarted trading by re-registering for Corporation Tax.
  2. Send accounts to Companies House within 9 months of your company’s year-end.
  3. Pay any Corporation Tax due within 9 months and 1 day of your company’s year-end.
  4. Send a Company Tax Return – including full statutory accounts – to HMRC within 12 months of your company’s year-end.

Whilst reporting dates for annual returns and accounts should remain the same. The Corporation Tax accounting period is different and is set by reference to the date when the company restarts business activities.

Source:Companies House| 09-10-2023

Change to Company Accounts filing

The Economic Crime and Corporate Transparency Bill has completed its initial journey through the House of Commons and the House of Lords and is now at the stage known as, consideration of amendments. This is where the second House’s amendments are considered, and the Bill may go back and forth until both Houses agree on the Bill. The Bill is expected to receive full Royal Assent over the coming months. The new Act will be aimed at reducing the abuse of corporate structures and at the same time tackling economic crime.

As part of the measures that will be introduced, Companies House will be streamlining the accounts filing options available to small and micro companies. At present, small businesses are able to file what are known as filleted accounts with Companies House. This means that these small or micro companies can choose not to submit a profit & loss account and/or director’s report to Companies House. In this way, this information will not be made public. Filleted accounts can be submitted whether or not a company has prepared full or abridged accounts.

Companies House has now acted on various concerns that this minimal level of disclosure has the potential to appeal to fraudsters wishing to present a false image of the company.

Companies House will therefore introduce a new framework under which all small companies, including micro-entities, will be required to file their profit and loss accounts. The option for abridged accounts will also be removed. 

A small company is defined as a business with two of the following:

  • a turnover of £10.2 million or less
  • £5.1 million or less on its balance sheet
  • 50 employees or less

A micro-entity is defined as a business with two of the following:

  • a turnover under £632,000
  • £316,000 or less on its balance sheet
  • 10 employees or fewer.

No date has yet been announced for the implementation of these changes. However, it is important that those who currently submit filleted or abridged accounts familiarise themselves with the upcoming changes and how best to prepare for them. This represents a significant change for these businesses.

Source:Companies House| 18-09-2023

Closing a limited company

There are a number of reasons why you may consider closing your limited company. This could be because the limited company structure no longer suits your needs, your business is no longer active, or the company is insolvent. You will usually require the agreement of all the company’s directors and shareholders to close down the company.

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, that you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has passed away.

A company can also elect to become dormant. A company can stay dormant indefinitely. However, there are costs associated with this option. This might be contemplated if, for example, a company is restructuring its operations or wants to retain a company name, brand or trademark. The costs of restarting a dormant company are typically less than forming a new company.

Source:Companies House| 04-09-2023
file your company accounts early to avoid penalties; london accountant; farringdon accountant

Early company account filing can save you from penalties

Early company accounting filing can save you from penalties

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

Mandatory Requirement for All

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

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Directorial Responsibilities

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

Credit Scores & Financial Reputation

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

Consequences of Late Filing

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

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

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

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

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

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

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Companies urged to file accounts early

Companies House has issued a news update targeted at companies who are due to file accounts by the end of September 2023. Generally, this would be for accounts ending 31 December 2022.

In their update they said:

All limited companies, whether they trade or not, must deliver annual accounts to us each year. This includes dormant companies.

Running your own company can be exciting but also challenging. Directors have lots of responsibilities including keeping company records up-to-date and making sure they are filed on time. You need to understand your role as a director, the importance of remaining compliant and how late filing could affect your company.

Missing your filing deadline could affect your credit score or access to finance. It can affect how others view your company and whether they want to do business with you. There are also financial penalties and legal consequences – you could get a criminal record, a fine or disqualification.

If you file using Companies House online services, we will send you an email to confirm we have received your accounts. We will send you another email when we have registered your accounts.

The penalties for late filing are:

Length of period (measured from the date the accounts are due)

Penalty for a private company or LLP

 

Not more than 1 month

£150

 

More than 1 month but not more than 3 months

£375

 

More than 3 months but not more than 6 months

£750

 

More than 6 months

£1,500

 
Source:Other| 03-09-2023
hmrc deadlines july and august 2023; london accountant; wimbledon accountant

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

Key HMRC Deadlines for July and August 2023

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

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

 

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

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

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

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

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

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

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

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share scheme deadlines; london accountant

UK Share Scheme Filing Deadlines and Tax Advantages

UK Share Scheme Filing Deadlines and Tax Advantages

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

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What are the approved share schemes?

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

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

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

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

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

deadlines and penalties for share scheme filing

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

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

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Comparing company formations in the UK

Comparing company formations in the UK

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.

Contact us here or scroll to the end of this page to get a free quote.

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. 


entertaining a client; london accountant; entertainments for clients

Entertaining a client: Don’t forget your tax and reporting

As a business owner in the UK, it’s crucial to understand the tax, National Insurance, and reporting obligations associated with providing entertainment for clients through your employees. Whether it’s wining and dining a client or hosting social events, certain rules govern the financial aspects of these activities. In this article, we’ll explain what constitutes entertaining a client, differentiate between business and non-business entertainment, and outline how they can impact your tax, National Insurance, and reporting obligations.


What Qualifies as entertaining a client?

Entertainment includes various activities such as dining, drinking, and hospitality provided to clients. When your employees engage in such activities on behalf of your business, it becomes necessary to consider the tax and National Insurance implications and fulfil reporting requirements.

 

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Entertaining a client for business purposes

Business entertainment refers to instances where you entertain clients with the specific purpose of discussing a business project or establishing and nurturing business connections. The rules for business entertainment remain the same regardless of whether you directly arrange and pay for the entertainment, pay a supplier for entertainment arranged by your employee, or reimburse your employee’s entertainment expenses.

In all cases, you must report the cost of business entertainment on form P11D. However, you are not required to deduct or pay any tax or National Insurance on these expenses.

 

Non-Business Entertainment for clients

Non-business entertainment involves entertaining clients for social reasons or maintaining business acquaintances outside of specific projects. The tax, National Insurance, and reporting obligations for non-business entertainment differ based on who arranges and pays for the entertainment.

 

Entertainment for clients Arranged and Paid by Your Business

If your business arranges and pays for non-business entertainment, you must report the cost on form P11D and pay Class 1A National Insurance based on the value of the benefit provided.

 

entertaining a client; entertainment for clients; london accountant

Entertainment for clients Arranged by the Employee and Paid by Your Business

When your employee arranges non-business entertainment, and your business covers the expenses, you must report the cost on form P11D. Additionally, you need to add the full cost to the employee’s earnings and deduct Class 1 National Insurance (but not PAYE tax) through payroll.

 

Entertainment for clients Arranged and Paid by the Employee, with Reimbursement by Your Business

In the case where your employee arranges and pays for non-business entertainment, and your business reimburses the employee, the reimbursement amount is considered earnings. Consequently, you should add it to the employee’s other earnings and deduct PAYE tax and Class 1 National Insurance through payroll.

 

Completing form P11D

When completing form P11D, an entertainment-related tick-box helps HMRC determine whether your employee can claim a tax deduction for the entertainment expenses provided by your business. If you are completing the form for a charity or a tonnage tax company, you don’t need to enter anything in the box.

For other businesses, tick the box if the cost of the entertainment will be disallowed in your business’s tax calculations. Conversely, put a cross in the box if the cost won’t be disallowed.

 

want help from an expert?

CIGMA Accounting would 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. 


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Guide to Dividends, including UK tax rates and dividend allowances; London accountant

Guide to dividends: UK tax and allowances

Dividends are a way for limited companies to distribute profits to their shareholders. Dividends are a common way for businesses to reward their investors, and they are subject to certain regulations and different rates of tax.

When can dividends be paid out?

Dividends can only be paid out of a company’s profits, and only if the company’s directors decide to do so. Before any dividends are paid, the company must ensure that it has enough distributable profits to cover the payment. Distributable profits are the company’s accumulated profits that are available for distribution to shareholders after all of its liabilities have been accounted for.

It is important to note that if a company pays a dividend that is not covered by its distributable profits, it can lead to severe legal consequences for the company directors. Therefore, it is crucial that companies follow the rules surrounding the distribution of dividends.

How often can dividends be paid out?

There is no set schedule for paying dividends in the UK, and companies can pay them out at any time as long as they have enough distributable profits to cover the payment. Some companies pay dividends annually, while others pay them quarterly or bi-annually.

However, it is worth noting that a company must maintain a balance between retaining profits for growth and paying dividends to shareholders. A company must not pay excessive dividends at the expense of retaining sufficient funds to meet its future obligations.

Who decides how to calculate dividends?

When a limited company decides to pay dividends to its shareholders, the amount that each shareholder receives is based on the number of shares they hold in the company. For example, if a company has 1,000 shares in issue, and a shareholder owns 100 of those shares, they will receive 10% of the total dividend payment.

The amount paid out in dividends is typically decided by the company’s directors, who will consider a number of factors such as the company’s financial performance, cash reserves, and future growth plans. The directors will then propose a dividend payment to the company’s shareholders, who will need to vote on the proposal at a general meeting.

If the shareholders approve the proposal, the dividend payment will be made to each shareholder based on the number of shares they hold. It is worth noting that if a shareholder owns more than one class of shares in a company, they may be entitled to different dividend payments for each class of share they hold.

What is the tax-free dividend allowance?

Since 2016, there has been a tax-free dividend allowance, allowing you to earn up to the total allowance without paying any tax. Until this year, the tax-free dividend allowance had been £2,000 since 2019. However, this was lowered to £1,000 for the 2023/24 financial year and will fall again to £500 in 2024.

How are dividends taxed in the UK?

Dividends are subject to income tax, but the amount of tax payable depends on the amount of dividend income received and the individual’s total income.

Dividend income above the £1,000 tax-free allowance is then taxed according to your income tax band. Add your total dividend income to the rest of your taxable income to work out your tax band. You will then pay that rate of tax on your dividend income that exceeds the tax-free allowance.

Tax Band

Income Range

Income Tax Rate

Dividends Tax Rate

Personal Allowance

First £12,570

0

0

Basic Rate

£12,571 to £50,270

20%

8.75%

Higher Rate

£50,271 to £125,140

40%

33.75%

Additional Rate

Over £125,140

45%

39.35%

It is worth noting that the tax on dividends is paid through self-assessment, and the responsibility for paying the tax falls on the individual receiving the dividend income, not the company paying the dividend.

In addition to the amount paid out in dividends, shareholders may also benefit from an increase in the value of their shares if the company’s performance improves. This increase in value is known as a capital gain and is subject to capital gains tax if the shareholder sells their shares.

BOTTOM LINE

In summary, dividends are a way for limited companies in the UK to distribute profits to their shareholders. Companies can pay dividends at any time as long as they have enough distributable profits to cover the payment. Dividends are subject to income tax, and the tax payable depends on the amount of dividend income received and the individual’s total income.

As always, it is crucial to seek professional advice if you are unsure about the rules and regulations surrounding dividends. We at CIGMA Accounting would be happy to assist you or your business, wherever you may be located in the UK. Fill out the form below and a consultant will be in touch within one business day.

You can also find our telephone numbers here.


Get information about a company

There is a significant amount of information about companies that can be obtained from Companies House. Companies House is responsible for incorporating and dissolving limited companies, examining and storing company information and making company information available to the public.

Much of this information is freely available. This is in line with the government’s commitment to free data and means that all publicly available digital data held on the UK register of companies is accessible without a charge.

This includes:

  • company information, for example, registered address and date of incorporation;
  • current and resigned officers;
  • document images;
  • mortgage charge data;
  • previous company names; and
  • insolvency information.

There is also a service called WebCHeck that allows you to view a company's filing history and purchase copies of document images and a selection of company reports for a nominal fee. You can also elect to monitor a company and receive email alerts of any new documents filed at Companies House. This can be a useful resource to check your own company records at Companies House to ensure there no unexpected filings.

Source:Companies House| 06-03-2023
guide to compliance obligations for UK companies

Your guide to UK Compliance Obligations

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.

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. 


These businesses must register for money laundering supervision HMRC

Register for money laundering supervision

Money laundering is the process of hiding or obscuring the fact that money was obtained through illegal activity. This means making money that has come from things like drug trafficking or extortion look as though it was made by some legal business, like a restaurant.

Many businesses are monitored by the Financial Conduct Authority (FCA) or belong to professional bodies like the Law Society, which are meant to look out for money laundering. However, some sectors are supervised by HMRC, and businesses in those sectors must register with HMRC to avoid penalties.

Our CIMA-registered accountants can help you with this process. Contact us here for a free quote.

which businesses need to register for money laundering uk

Does my business have to register for money laundering supervision?

You must register for HMRC money laundering supervision if you run the following kinds of business:

  • Money Service Businesses not supervised by the FCA
  • High Value Dealers 
  • Trust or Company Service Providers not supervised by the FCA or a professional body
  • Accountancy Service Providers not supervised by a professional body
  • Estate Agency Businesses 
  • Bill payment service providers not supervised by the FCA
  • Telecommunications, digital and IT payment service providers not supervised by the FCA
  • Art market participants
  • Letting agency businesses

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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

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.

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how to register a company in the UK london

How to register a company in the UK

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 Company Name London

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.

Choose a Director for your Company London

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.

Get a physical 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. 

Contact us here to get a free quote for company formation in London and across the UK.

LISTING PEOPLE WITH SIGNIFICANT CONTROL (PSCS)

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.

LISTI PEOPLE WITH SIGNIFICANT CONTROL (PSCS)

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 Registration London

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 company RECORDS YOU NEED TO KEEP​

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 UK Conmpany

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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Farringdon Accountant

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What are statutory registers for companies in UK

What are statutory registers for companies?

Limited companies are a form of legal business where the company is a separate legal entity to the individuals who run it. All companies must keep records about the people who make decisions or are invested in the company. These are called ‘statutory registers’.

Where are statutory registers kept?

Before June 2016, companies had to keep their statutory registers either at their registered office, or a specific address available for inspection. Companies may now also choose to record their information on the public register at Companies House instead.

Information kept on the public register is available to anyone to read or make copies of. There are also special processes for getting onto the public register, which you can read about here.

What information must be recorded?

There are three statutory registers which must be kept: a register of members, a register of directors and their residential addresses, and a register of people with significant control. Before 2013, companies also had to keep a register of charges and debentures, related to their loans and securities.

Failing to create these registers and keep them up to date is a criminal offence.

Register of members

The register of members refers to a company’s shareholders. Companies ‘limited by guarantee’ are not required to submit this list of members. This register must include the following details:

  • Names and addresses
  • Number and type of shares owned
  • Amount paid for shares
  • Dates when people became / stopped being members

Register of directors

The register of directors needs to contain the following details about each director of the company:

  • Name and date of birth
  • Nationality
  • Country they usually live in
  • A service address
  • Business occupation

Register of directors’ usual residential addresses

On top of the register of directors, you are legally required to keep a register specifically for directors’ ‘usual residential addresses’.

PSC Register

The PSC register lists ‘people with significant control’ (PSC) over the company. A 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

 

The register must contain details about their:

  • Name
  • Service address
  • Nationality
  • Country they usually live in
  • Date of birth
  • Residential address
  • Date the person became a company member
  • The nature of the person’s control of the company (e.g. the percentage of shares they own)

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Closing a limited company

There are a number of reasons why you may look to close your limited company. This could be because the limited company structure no longer suits your needs, your business is no longer active, or the company is insolvent. You will usually need the agreement of all the company’s directors and shareholders to close down the company.

The method for closing down a limited company depends on whether it is solvent or insolvent. If the company is solvent, you can apply to get the company struck off the Register of Companies or start a members’ voluntary liquidation. The former method is usually the cheapest.

It is the responsibility of the company directors to ensure that all of a company’s assets and liabilities are dealt with before it is dissolved. For example, you have settled any outstanding bills and collected all debts owed to the business. Any assets or rights (but not liabilities) remaining in the company at the date of dissolution can pass to the Crown as ownerless property.

Where a company is insolvent, the creditors’ voluntary liquidation process must be used. There are also special rules where the company has no director, for example if the sole director has passed away.

A company can also elect to become dormant. A company can stay dormant indefinitely, however there are costs associated with this option. This might be done if for example a company is restructuring its operations or wants to retain a company name, brand or trademark. The costs of restarting a dormant company are typically less than starting with a new formation.

Source:Companies House| 13-02-2023
UK regulatory bodies for accountants

Regulatory Bodies for Accountants in UK

Some kind of regulation is important for all skilled professions. Someone must ensure that professionals have the qualification they say they do. And even more basically, someone must create the training standards for those qualifications to ensure that professionals can actually do their job well.

Training is not the end of the story either. Someone must oversee professionals to check that they are actually doing a good job. For self-regulated professions, such as accountancy, having an authority that can investigate customer complaints is essential for public trust.

CIGMA Accounting is registered with the Chartered Institute of Management Accountants (CIMA), which holds it’s members at an international standard of excellent work and ethical practice. Our accountants specialise in management accounts and personal tax returns.

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

Who regulates accountants?

At the highest level, accountancy in the UK is regulated by the Financial Reporting Council (FRC). Aside from overseeing the profession broadly, the FRC also works closely with the government to create corporate governance standards.

Unconnected to the government are the ‘professional accountancy bodies’. Unlike the FRC, which deals with the broad strokes of policy and planning, these bodies work with accountants directly. The FRC recognises six of these bodies as being responsible for overseeing chartered accountants, namely:

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.

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.

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.

CIMA training does not include audit, and members with only a CIMA qualification therefore cannot perform an audit.

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.

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.

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.

What do accountancy bodies do?

The professional bodies set out the training and exams which candidates must pass in order to work as chartered accountants. They each award their own specific qualifications which differ in the details, but all must also conform to international standards of accountancy.

As previously mentioned, the professional bodies must also investigate public complaints and ensure that their members are performing work to the highest standards. In addition, these bodies do important work providing support, life-long training, and advocacy for their accountants.

How do they compare?

All six of these accountancy bodies are well-respected in the UK and aim for the highest international standard. That said, they will still differ in terms of the areas they focus their training, their membership numbers, and which global organisations they partner with.

The most important difference is that only accountants from four of these six are legally authorised to perform audits. Accountants with only a CIMA or CIPFA qualification are not authorised to perform audits.

Below, we’ll compare them using statistics made available by the FRC in its 2021 Accountancy Profession Report.

Membership

As we can see from the graph below, ACCA has the most total members by a decent margin. However, this is for members all over the world. If we look at members in the UK and ROI, shown by the sections in yellow, ICAEW takes the lead. In addition, while CIMA falls far behind ACCA in global numbers, they come a close second for UK and ROI members.

These numbers suggest that the ACCA qualification is best for working overseas. This is a bit misleading though. The ACCA’s large global membership is likely more to do with the fact that ACCA trains accountants all over the world.

Meanwhile, CIPFA public finance training will be more specific to the UK, and likely makes working outside its borders harder.

Business Sectors

All of these qualifications train accountants in a broad range of skills. However, CIMA and CIPFA do focus on certain financial fields, which affects where their members end up working.

Unsurprisingly, CIPFA has the most members working in the public sector. Similarly, it makes sense to see that CIMA has the highest percent of members working in Industry & Commerce. It is less likely for CIMA accountants to work in their own practices as they are trained to work inside other businesses.

The other four qualifications have nearly identical membership numbers across sectors, split between Working in Practice and Industry & Commerce.

Global recognition

Most accountancy bodies strive towards internationally recognised standards. The more they conform to international standards, the more the public can trust that they train competent and ethical accountants.

All six of the UK bodies we have been discussing label themselves as ‘global’. But the best way to evaluate their standards is to check which umbrella organisations they are a part of.

The first relevant umbrella is the Consultative Committee of Accountancy Bodies (CCAB). This is a UK organisation which coordinates the major accountancy bodies in the UK. All six major bodies were a part of the CCAB until 2011 when CIMA left the organisation.

Another relevant umbrella is Chartered Accountants Worldwide (CAW), which brings together accountancy bodies from 13 countries. These include ISCA from Singapore and SAICA from South Africa.

But the leading global organisation pushing for excellent, international standards is the International Federation of Accountants (IFAC). IFAC represents 180 professional accountancy bodies across 135 countries. That totals more than 3 million accountants worldwide!

Membership to IFAC requires high standards of training and work, and is an indicator of a top-tier accountancy body.

How do I find out if my accountant is qualified?

Professional accountancy bodies often provide online databases listing registered members. If you’d like to verify an accountant’s qualification, you’ll need to ask them which body they are a part of.

You may be able to tell just from their title – Certified Chartered Accountants (CCA) are ACCA members, and Certified Global Management Accountants (CGMA) are CIMA members. However ICAS, ICAEW and CAI members all hold the title Chartered Accountant.

Here are links to each of the online directories, which you can search using your accountant’s name:

Where can I submit a complaint about my accountant?

  • The FRC stresses that you should always reach out to the accountant or their firm first. The firm employs the accountant, and it is primarily their responsibility to handle any misconduct. Professional bodies even provide standard forms online which you can use to submit your complaint to the accountant.

    But if the accountant or firm has not resolved your complaint in four weeks, their professional body will take up the case. The bodies will each have their complaint forms online, along with instructions on how to submit them. Here are links to the complaints web pages for each of the accounting oversight bodies:

    Please note that accountancy bodies can only investigate complaints that have to do with an individual’s actions while providing accounting-related services. They also cannot handle complaints regarding an Insolvency Practitioner. You must submit those complaints to the Insolvency Service via its online form.

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tax avoidance schemes uk penalties

UK Tax avoidance schemes and how to spot them

Tax avoidance schemes involve bending the tax rules to gain an advantage never intended by Parliament. This is usually done by making contrived and artificial transactions that serve little or no purpose except for reducing the amount of tax paid.

Often, these are umbrella companies or payment middlemen who promise that you will end up with more take-home pay by using their services.

HMRC has powers introduced in the Finance Act 2022 to name avoidance scheme promoters, publish details of the way they promote tax avoidance schemes and name the schemes they promote.

This allows HMRC to warn users and potential users of these schemes at the earliest possible stage, of the risks associated with use of the scheme, and to help those already involved to leave these avoidance arrangements.

 

What are your risks when joining tax avoidance schemes?

If you are found to be involved in a tax avoidance scheme, you could face various consequences, including:

  • Paying penalties, or interest on the tax paid late
  • Be required to pay all unpaid tax upfront and within 90 days
  • Be taken to court, where HMRC wins 9 out of 10 tax avoidance cases
  • Be treated as a high-risk taxpayer, meaning HMRC will closely inspect all your future tax affairs
 

How do I spot a tax avoidance scheme?

HMRC outlines things to look out for that hint at a scheme being aimed at tax avoidance. These are some of the warning signs:

  • It sounds too good to be true, such as promising to lower your tax bill for little to no cost.

  • Promising to put money in your pocket without having to pay tax. This can mean payment in the form of loans, grants, bonuses, and salary advances.

  • Promises of huge benefits

  • Payments that go around in circles, or transactions which seem to have no purpose

  • Misleading claims like ‘HMRC approved’, ‘Retain more of your earnings after tax’, or ‘Compliant tax efficient pay’. As you would probably expect, HMRC does not ‘approve’ schemes which aim to avoid tax

HMRC lists advice and warning signs specifically for dealing with umbrella companies and for contractors / agency workers.

 

Which companies are already labelled as tax avoidance schemes?

The latest list was published on 19 January 2023 and includes details of five newly added tax avoidance schemes.

Three of the schemes make use of complex company structures and directors’ loan accounts to extract profit, providing directors with income where Corporation Tax, Income Tax and National Insurance contributions were not correctly paid. The other two schemes make one payment to users that is close to National Minimum Wage and then another disguised payment, which the promoters claim is non-taxable and Income Tax and National Insurance are not correctly deducted.

 

This latest list of tax avoidance schemes contains these 32 companies and schemes:

 

  • Able Ltd
  • Absolute Outsourcing Limited
  • AML Tax (UK) Limited
  • Charteris Management Ltd
  • Contractor Central Accounting Ltd – see Able Ltd
  • Contractorcare Limited
  • Countrywide Partners Limited
  • Denmedical UK Limited – see AML Tax (UK) Limited
  • Focus Contractor Limited
  • Gateway Outsource Solutions Limited
  • Greenwich Contracts Ltd
  • Griffith Anderson Limited – see Umbrella Agency Limited and Charteris Management Ltd
  • Howe Consultancy Limited (Incorporated in Isle of Man) – see Charteris Management Ltd
  • Industria PAYE Limited
  • Integra Resourcing Limited (Incorporated in Malta) – see Greenwich Contracts Ltd and Charteris Management Ltd
  • Jeceris Limited – see Charteris Management Ltd
  • Nicely Paid Limited
  • Novus Consultants Limited (formerly Novus Limited) (Incorporated in Isle of Man) / Contractor Corner Accounting Limited
  • Ombros Solutions Limited – see Charteris Management Ltd
  • Omni Contractors PCC Limited (Incorporated in Isle of Man) – see Saxonside Limited – Saxonside Share Growth and Focus Contractor Limited – Share Growth
  • Paybox Umbrella Limited
  • PAYEme Limited
  • Peak PAYE Limited
  • Pure Invoicing Limited
  • Purple Pay Limited / Equity Participation Scheme
  • Saxonside Limited
  • T2 Outsourcing Limited
  • Tailored UK Services Ltd (trading as Tailored Resourcing)
  • Taurus Limited (Incorporated in Isle of Man) – see Charteris Management Ltd
  • U R Group Limited
  • The Umbrella Agency Limited
  • We PAYE Umbrella Limited


To get more information about these companies and why their schemes are considered tax avoidance, visit this page.

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