Learning Ecommerce Accounting: Guide for UK Businesses

Ecommerce Accounting: Introduction for UK Businesses

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

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

Understanding Ecommerce Accounting

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

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

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

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

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

Require accounting services?

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

Ecommerce Tax Management

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

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

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

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

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

Partner with CIGMA for Ecommerce Success

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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

Handling late filing penalties from HMRC

How should you handle late filing penalties?

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

Consequences of Missing the Filing Deadline

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

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

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

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

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

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

Require accounting services?

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What can you do?

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

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

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

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

Why Choose CIGMA Accounting?

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

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

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

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

Take Action Today

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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

A Guide to Carer’s Credit from CIGMA Accounting

Unlocking Financial Support: A Guide to Carer's Credit

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

What is carer's credit?

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

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

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

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Eligibility Criteria for carer's credit

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

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

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

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

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

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

Breaks in Caring and Eligibility

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

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

 

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

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

Need Assistance from an Accountant?

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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

Make VAT Efficient: Understand Flat Rate VAT

Maximizing VAT Efficiency: Understanding the VAT Flat Rate Scheme

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

What is the VAT Flat Rate Scheme?

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

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



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Eligibility Criteria

To join the VAT Flat Rate Scheme, businesses must:

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

Joining and leaving the scheme

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

Calculate your flat rate

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

CIGMA Accounting’s Expert Insights

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

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

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

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

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

Need Assistance from an Accountant?

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

UK tax diary for october and november 2023, farringdon accountant

Key UK tax dates for October and November 2023

How to claim work from home tax relief in the UK

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

October 2023

1st October 2023

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

19th October 2023

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

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

31st October 2023

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

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November 2023

1st November 2023

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

19th November 2023

Mark this date for several important submissions:

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

Need Assistance from an Accountant?

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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.

Need Assistance from an Accountant?

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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

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

Change to Self Assessment Threshold: Are you affected?

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

Increased Threshold for Self-Assessment from 2023-24

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

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

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Impact on 2022-23 Tax Returns

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

Criteria for 2023-24 and Beyond

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

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

Act Promptly!

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

Need Assistance?

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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

The Best and Worst Banks in Great Britain Revealed

BEST AND WORST BANKS IN GREAT BRITAIN

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

Top-Ranked Personal Current Account Providers

1. Monzo

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

2. Starling Bank

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

3. First Direct

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

Require accounting services?

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Bottom-Ranked Personal Current Account Providers

Virgin Money, Royal Bank of Scotland

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

TSB

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

Top-Ranked Business Current Account Providers

Monzo, Starling Bank

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

Handelsbanken

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

Bottom-Ranked Business Current Account Providers

HSBC UK

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

The Co-operative Bank, Virgin Money

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

Need Assistance from an Accountant?

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

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

How to Navigate VAT Recovery When Leasing Business Vehicles

How to claim work from home tax relief in the UK

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

What You Need to Know About VAT and Leasing Vehicles

Leasing Company’s Perspective:

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

Business Leasing a Car:

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

Require accounting services?

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Special Cases: Taxis and Driving Schools

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

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

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

Self-Drive Hire and Daily Rental

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

Key Takeaways

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

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

Need Assistance from an Accountant?

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

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


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

EC1R 3DA

Connected persons for tax purposes

Breaking Down Connected Persons for UK Capital Gains Tax

When it comes to Capital Gains Tax (CGT) in the UK, understanding the concept of “connected persons” is essential. However, navigating the statutory definition set out in Section 286 of the Taxation of Chargeable Gains Act (TCGA) 1992 can be complex.

In this article, we’ll provide a clear and comprehensive guide to connected persons for CGT purposes, including insights from HMRC’s internal guidance. If you’re a taxpayer or an investor, it’s crucial to grasp this concept to ensure compliance with the tax regulations and make informed financial decisions.

What are Connected Persons for Capital Gains Tax?

According to Section 286 of the TCGA 1992, a person is considered connected with an individual for CGT purposes if they fall under any of the following categories:

  1. Spouse or Civil Partner: Any person who is legally married to the individual or in a registered civil partnership with them is automatically considered connected.

  2. Relatives: Connection also extends to relatives, including brothers, sisters, ancestors (parents, grandparents, etc.), or lineal descendants (children, grandchildren, etc.) and their respective spouses or civil partners.

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Notable Exceptions for connected persons

It’s important to note that the term “relative” does not encompass all family relationships. Specifically, nephews, nieces, uncles, and aunts are not considered connected persons for CGT purposes.

Furthermore, there are certain scenarios where individuals are excluded from being connected persons, as outlined in HMRC’s internal guidance:

  1. Widows/Widowers and Surviving Civil Partners: Unless a connection can be established by means not involving the deceased spouse or civil partner, widows, widowers, and surviving civil partners of deceased persons are not considered connected for CGT.

  2. Dissolution of Civil Partnership or Divorce: Following the dissolution of a civil partnership or a divorce, individuals in addition to the former civil partner or spouse may cease to be connected for CGT purposes.

Need Assistance from an Accountant?

Being aware of who is considered a connected person can impact various transactions, such as property transfers, gifts, or sales, and may result in different tax treatment. To ensure compliance with the tax regulations and make informed financial decisions, seeking guidance from a reputable UK accounting firm with expertise in CGT matters is highly recommended.

If you require professional assistance with understanding connected persons or any other tax-related queries, our team of experienced accountants at CIGMA Accounting is here to help. Contact us today for expert advice tailored to your specific needs.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

London

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South Yorkshire first UK Investment Zone

South Yorkshire Paves the Way as UK's First Investment Zone

In an effort to stimulate economic growth and create new job opportunities, the UK government announced in its Spring Budget 2023 the establishment of twelve Investment Zones throughout the country. Taking the lead in this groundbreaking initiative, South Yorkshire has been declared the first UK Investment Zone.

As a business in the UK, it’s essential to understand what this significant development means for you, especially if you’re in or around South Yorkshire. This transformative venture is designed to spur investment, generate new economic activities, and support growth and jobs.

Investment Zones: The Gateway to Business Prosperity

Investment Zones are strategically designed to fuel business investment and speed up development. Businesses operating within these zones will benefit from more relaxed planning frameworks and lower taxes, ultimately catalysing growth and promoting innovation.

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South Yorkshire Investment Zone: A Hub for Advanced Manufacturing

The inaugural Investment Zone in South Yorkshire will specifically target Advanced Manufacturing, a sector with strong roots and potential in the region. If your business operates in or relates to this sector, this presents a golden opportunity.

Cities within South Yorkshire, including Sheffield, Rotherham, Doncaster, and Barnsley, are expected to reap significant benefits. By 2030, it is projected that this Investment Zone will deliver an estimated 8,000 new jobs and £1.2 billion of private funding.

Notable partners such as Boeing, Spirit AeroSystems, Loop Technology, and the University of Sheffield Advanced Manufacturing Research Centre (AMRC) have already pledged support for the initiative, with an initial investment exceeding £80 million.

Looking Ahead: Investment Zones Across the UK

This new economic venture will also extend its reach beyond England. The government is collaborating with devolved administrations and local partners to drive local growth in Scotland, Wales, and Northern Ireland.

If your business is situated in or connected to these regions, keep an eye out for more information on prospective Investment Zones. Glasgow City Region and North East Scotland are reportedly the front-runners for hosting Investment Zones in Scotland.

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Selling overseas property

UK CAPITAL GAINS TAX WHEN SELLING OVERSEAS PROPERTY

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

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

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

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Capital gains rates and double taxation

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

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

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

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

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


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

Private Residence Relief: minimise tax when selling your home

Private Residence Relief: minimising tax when selling your home

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

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

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What is Capital Gains Tax (CGT)?

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

What is Private Residence Relief?

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

Who Qualifies for Private Residence Relief?

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

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

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

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

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

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

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

Final Period Exemption

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

Private Residence Relief for Married Couples and Civil Partners

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

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

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


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HMRC’s Self-Assessment line summer closure

HMRC Self-Assessment Helpline closes for the summer

In a surprising move, the UK’s HM Revenue & Customs (HMRC) announced the summer closure of its Self-Assessment helpline from 12 June to 4 September 2023. This action forms part of a trial to encourage the redirection of Self-Assessment queries to HMRC’s robust digital services including online guidance, a digital assistant, and webchat services.

Scheduled during a quieter period for Self-Assessment inquiries, the helpline will reopen on 4 September 2023, five months before the Self-Assessment deadline on 31 January 2024. Historically, the volume of calls decreases by about 50% during the summer months compared to the period between January and April.

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However, this closure is expected to cause some disruption for taxpayers. The Chair of the Treasury Committee is seeking clarification that HMRC has thoroughly evaluated the costs and benefits of this decision. The short notice of the closure is also a point of concern, emphasising the need for transparency from HMRC in decision-making processes that impact numerous individuals.

In defense of the closure, HMRC highlights that this trial will reallocate 350 advisers (full-time equivalent) to handle urgent calls on other lines and respond to customer correspondence. Furthermore, HMRC points out that a significant 97% of Self-Assessment taxpayers prefer using its online services, with the same percentage filing their assessments online.

Need Assistance from an Accountant?

The change will undoubtedly influence how taxpayers interact with HMRC over the summer. If you are one of the affected individuals with Self-Assessment queries, don’t hesitate to reach out. We remain ready and happy to assist you during this transitional period.

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