If I use you as my accountant, will I be foisted off on a junior? Find out more by watching our latest video now or read about it below.

If I use you as my accountant, will I be foisted

off on a junior?

What dominates our approach at Jon Davies Accountants is to always do the best thing for you, as our client.

What that means is that, at different times, different people will do different pieces of work for you.

The last thing you want is to have the Senior Partner spending an hour filling in an HMRC form for you. It’s not cost effective, and would be a really dumb thing to happen!

Any accountant who promises to do every task for you is, to be frank, a little bit bonkers.

At Jon Davies Accountants, you’ll be assigned a Client Manager who will be your constant point of contact. They’ll be available to answer all of your questions and make sure that everything gets done on your account, and that the best person does each piece of work. The Client Manager will then send that work to you.

I focus heavily on building a quality team with the same ethics and values that I have. All of them are highly skilled. Some are qualified accountants, some are part-qualified, and others look after the admin on your account. We make sure that, every time, the right person with the right skills does the piece of work for you.

I’ll always be available to email, speak, or meet with you if you need me. I’ll also be doing some of the work. I’ll certainly be making sure that the quality of the service is what you’d expect and want of a quality accountant.

So, you’ll never be foisted off on a junior. You’ll always have the best person for the service you want or need.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Do you want to work with an accountant who specialises in working with consultancy businesses? Find out more now by watching out latest video or read about it below.

Hi – I’m Jon Davies. I’m going to tell you how

you can do just that.

You might be an IT consultant or an Architect. A Quantity Surveyor or a Business Coach, or any other type of consultant.

What you have in common with all consultants is that you’re selling time and expertise, not products. This leads to different issues than other businesses – issues we understand very well.

So, what are the issues you’re facing?

• Are you sure you have the right business structure for your business? Sole trader, Partnership, LLP, Limited Company – the list goes on. There are many different structures available to consultancy businesses. Getting it wrong could be costing you thousands of pounds.
• Do you have enough clients? You might be an expert in what you do, but you need to someone to pay the bills.
• Are you charging the right fee or hourly rate? Is it too low or too high? Are you making the right profit?
• Are you using the right VAT scheme for your business? There are a number of schemes available – choosing the wrong one can cost you a lot of money. Even if you don’t need to register for VAT, you may save a lot of money by doing so.
• Do you know all of the expenses and tax reliefs you can claim? And what reliefs are available when you’re ready to close the business?
• And do you know your profits last year? Or last month? Or last week? What about next week, month or year?

That’s why it helps to have outside help to look after the financial side of your business – your clients know that it makes sense to get your expert advice, and you also need expert advice on accounts and tax.

How can we help you?

We specialise in helping consultants with their business numbers – we really do understand the issues you’re facing right now. After all, we’re a consultancy business too!

We work with you, not for you. We don’t want to just work with you at the year-end as a deadline closes in – we want to help you keep on top of your cash and your tax bills at all times. After all, do you only advise your clients when they’re in a mess, or do you help them plan in advance?

We can help you find, and keep, more clients – the most important things for any business owner. And work with you on your pricing – there are loads of strategies and we can help you choose the best one for your business.

We provide cutting edge online software – Xero and Receipt Bank – which allows you to be on top of your numbers at any time, any place. And, as it’s online, we can look at the same screen as you and answer any queries you might have.

We’ll talk to you regularly so we understand your business and provide advice throughout the year, helping you before you make key financial decisions to increase your sales and profit, and then take your cash out as tax-efficiently as possible.

By understanding your goals, we sometimes plan years in advance with you to maximise profits and reduce tax. After all, why would you want to hear our advice after the event?!?

All in all, we can work with you to help your consultancy business become more successful and put more cash in your bank account.

If you want to know more, take a look around the website and download one of our handy business guides, or sign up to our email newsletter that’s full of tips to boost your consultancy business.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

What does an accountant do? Find out now by watching our latest video or reading about it below.

At its core, an accountant will help a business owner to undertake the preparation of the set of accounts and the tax

returns for the business. These are legal requirements.

If you’re a limited company, you need to do these once each year – you need to file a set of accounts at Companies House and a Corporation Tax return with HMRC within nine months of your year end.

If you’re a sole trader, the accounts and tax return are filed each year for the year ended 5 April and you get until the following 31 January to file them and pay any taxes.

So, at its simplest, an accountant helps you do just that.

However, an accountant can do so much more.

A good accountant will be there for you when you need them – for financial advice, to help you grow your business, and to help to keep your tax bill as low as legally possible.

Many accountants will offer many different services, and it’s up to you to choose which are most appropriate for you and your business.

Compliance Services

When you start out, it may be that you do want just the basics – what some accountants call Compliance Services – these would be a set of accounts, a tax return, VAT returns (if you are registered for VAT), and also running a payroll. Often this would also include your personal tax return, either as the sole trader or as the director of a limited company.

These services keep you legally compliant.

Launching Your Business

An accountant can help you launch your start up. There’s a lot of administration around that.

An accountant can help you set the business up, form a limited company, introduce you to a bank for a bank account, and also just make sure you have a solid foundation.

Bookkeeping

Accountants can also help with the bookkeeping. The bookkeeping is actually taking your financial records and turning that into a set of accounts. So you might have, for example, paper purchase invoices, bank statements, and sales invoices. Your accountant can process them and turn them into a set of accounts.

These days, much of this is done using cloud software. So, rather than typing in purchase invoices, you’ll take a photo or scan an email of the invoice and the software will process it. Similarly, cloud software can talk to your bank account and pull the bank statements in directly without the need for any paper. You can raise your sales invoices in the software and email them to your debtors, and also chase them for payment as and when you need.

Saving Tax

A good accountant will always help you save tax. Often this comes by meeting you regularly and planning – by understanding your circumstances and talking to you because, although some tax reductions can be done after the fact, many need to be done in advance.

Management Accounts

As you grow, you might need much more than that and find it very, very useful.

A lot of business owners find it useful to have management accounts throughout the year. These are prepared on a regular basis, and actually give you a small set of accounts at regular intervals, so you can track your business and see how it’s doing.

Many management accounts will also include non-financial key performance indicators as well. That might be the number of customers, the number of new sales, your reviews or customer satisfaction – all of the figures that are important to you to help keep your business on track and make sure you’re getting your business to where you want it to be – to help you meet your business and personal goals.

Budgets and Forecasts

Some of the other services that accountants can provide include budgets and forecasts.

When you start your business, you want a business plan. An accountant can help you with that and also help with the numbers to support it. But then it’s useful to keep preparing budgets each year.

What are your budgets for the year? What are you forecasting your business to do? Again, so that you know your goals and you can track yourself to see whether you get them.

Cash Flow

A really important thing is actually looking at your cash flow and, as well as preparing cash flow forecasts, this means actually working with you on how best to manage your cash.

Whether it’s over the speed you pay your creditors, or many ways of helping you get paid quicker by your customers, an accountant knows these – they do this all the time and they can work with you to help you put more cash in your bank account.

Support

A lot of my clients say to me that, sometimes, it’s just the fact we’re there to listen and to support them. A client of mine used to say that having me there was like speaking to a counsellor because it can be a lonely place running a business. If your friends and family don’t run businesses, they don’t understand what it actually means and what it entails. So, having someone to talk to who gets it can be really important. An accountant gives you that.

So, an accountant can help with so many things from the core functions of keeping you legally compliant, making sure your accounts are done correctly and on time, to saving you tax, to supporting you, to helping your business grow, and making sure you meet all of your business and personal goals.

There’s a lot to it!

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Do you want a Liverpool Accountant? Watch the video here or read about it below.

Many people think most Liverpool accountants are boring. And, you know what? Many are!

That’s a bit harsh but, more importantly, too many accountants are still

just doing the minimum legal requirements – a set of accounts and a tax return. There is a value in that – everyone needs to be compliant. But are they making your business and life better?

I spent over 12 years working in global accountancy firms. Hitting a deadline and getting the figures “correct” was a given. With Jon Davies Accountants, I wanted to do something extra.

Therefore, my team and I like to understand our clients and what matters to you. We can then work together to achieve it.

We look forward, not backwards. That’s one of the problems with traditional business accountants – everything is about looking at last year’s figures. We know that you want to look more at the present, and at the future, so that’s what we focus on.

We’re tech savvy – we use Cloud software to make your life easier and give you access to your business numbers anywhere and anytime. And we’re doing our best to get rid of having paper records everywhere – these days you can take photos of your receipts and automatically upload them into our software.

We use lots of tools to give you far more relevant numbers than a legal set of accounts – for example, our management accounts can include your website data as our software speaks directly to Google. And we can present the figures for your business in graphs and diagrams to make them easier to understand and to see the trends over time. When did you last see that in a set of accounts?

We also like to challenge the way things are done – in our business and in yours. For example, we’re always looking at new software and systems that help us do our job, and help your business too. We’ll challenge you too – we’ll sometimes ask tricky questions that will change the way you think about your business!

We also don’t want to ever, ever be thought of as stuffy and boring. We want you to look forward to coming to see us – it should be fun. (Well, almost!) We do believe that you’ll get a warm, friendly greeting and, after any meeting with us, you should leave feeling pleased that we’ve really helped you with your business.

Would you like to meet?

If you think we sound like the right Liverpool business accountant for you, we’d love to meet up.

If you’d like to chat, please give us a ring on 0151 380 8081 or email us at growth@jondaviesaccountants.co.uk.

Does My Accountant Work For Me Or HMRC? Watch our latest video to find out now or read our blog below.

This is a question I’ve been asked quite a few times over the years because some people think that

an accountant represents HMRC and is basically working on their behalf to make sure that you, the client, pays tax on time and pays as much tax as possible.

In reality, though, an accountant works for you. You pay the accountant. An accountant is there to help you.

So, what does that actually mean? As a director or shareholder of your business, you have a responsibility to your business to make sure it’s as profitable as possible, but also that it keeps as much of its income and cash as possible.

This, therefore, means paying as little tax as legally possible. And that’s the key word there, legally possible.

HMRC, on the other hand, have a responsibility to the government to collect as much tax as possible.

Therefore, on the face of it, you and HMRC have opposite objectives.

You want to reduce your tax bill. HMRC wants to increase it.

What does your accountant do?

Your accountant is there to help you, to help you reduce that tax bill and pay as little tax as legally possible.

Often, that involves knowing what you can and can’t claim as an expense to reduce your profit. It involves knowing the reliefs that are available. Perhaps you were unaware that you could claim a research and development credit or some of the capital allowances that are available. Or even, as a small business, just the rules about working from home.

As an accountant, we help you reduce that tax, while knowing precisely the rules that HMRC have. We make sure that we are using those rules to your advantage.

We are not breaking the rules. We are simply applying the rules that are there. And these are rules that you, as a business owner may not know about. To be honest, it’s not your job to know about them. You’re busy running your business.

Why is my accountant an agent for HMRC?

When we deal with HMRC, we’re dealing with them on your behalf.

Your accountant will usually ask you to sign a form, or get an online code, so they can act as your agent for HMRC.

Sometimes people think that means that we’re an agent working on behalf of HMRC but no, we’re not.

We’re an agent working on your behalf.

What the form does is authorise us to speak to HMRC on your behalf. After all, you and HMRC don’t want just anyone to be able to ring up and ask about your tax affairs.

The benefit to you ise that we can get any information from HMRC that we might need about your tax affairs. If you do need to speak to HMRC, we can do it on your behalf, saving you the stress, and also the time of doing it.

What if I have an HMRC investigation?

Every now and then, HMRC will investigate businesses. This might be for a specific reason. Often, before there is a large tax rebate, they’ll want to investigate you before writing the cheque. If you think about it, that’s quite reasonable. Perhaps you’ve submitted returns, or paid, late. Often, it’s purely random. They do genuinely pick businesses randomly to look at.

If you are investigated is the case, your accountant will actually represent you in the investigation. Your accountant will work for you, and liaise with HMRC to make sure that everything is correct – all the expenses you’ve claimed are allowable, whether that be for corporation tax or VAT, and have been accounted for correctly.

If there are any changes to be made, your accountant will liaise with HMRC to minimise the impact on you.

Ultimately, an accountant’s job is to help you, the client, pay as little tax as legally possible, but to do this within the rules allowed by HMRC.

Therefore, we do speak and liaise with HMRC to make sure we’re on top of those rules and that, if they ever investigate you, you’re absolutely clean, and that there is no additional tax owed.

One of my clients said to me a little while ago when he moved his business to us, “I didn’t know an accountant could work for me. I thought they all worked for HMRC,” because he felt with his previous accountant was actually pushing his tax bill up all the time. We’ve worked with him to bring his tax bill down, but we’ve done that by using the rules and the reliefs as allowed, and just understanding his business and knowing exactly what can be applied.

The problem with the previous accountant, really, was not that they were trying to increase his tax bill. They just didn’t understand his business and some of the reliefs he could claim to reduce that tax bill.

So, there you go. To be absolutely clear, your accountant works for you, not HMRC. They’re there to help you, and protect you from HMRC, and make sure you’re doing everything correctly to keep that tax bill down.

If you have any queries, please do get in touch with us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

What is the difference between an Accountant and a Bookkeeper? Watch our video now to find out or read the blog below.

 

As you can imagine, there’s a lot of overlap between the two areas.

Bookkeeping

is about accurately recording the financial data in a business. An accountant then picks up that financial data and actually reports on it, and interprets it, and often then tries to make it better.

What does a bookkeeper do?

At its simplest, bookkeeping involves taking all of the records of the business and processing them into some financial software.

So, for example, a bookkeeper would ordinarily raise the sales invoices for a company, and process any purchase invoices or expenses.

A bookkeeper would then chase the debts, make sure that payments are made to suppliers, and often complete the payroll.

And, by recording all those transactions, they would put together the fundamental core of a set of accounts.

There will be a General Ledger. There would be a list of all the debtors and amounts outstanding. A list all the suppliers and amounts outstanding.

These are the figures needed to then prepare a set of accounts.

What does an accountant do?  

An accountant would pick up those figures and put them into a set of accounts.

Step one would be to take the bookkeeper’s figures and actually prepare some adjusting entries that aren’t involved in the bookkeeping. These might be accounting transactions, or things where there wasn’t actually a cash movement but need recording in the set of accounts.

An accountant will take the figures and put them into actual financial statements – a detailed Balance Sheet, Profit and Loss, and a Cash Flow.

And then the accountant will analyse them – they’ll talk to the business owner about what those numbers mean and how could they be made better.

An accountant will prepare the statutory financial statements and the tax returns.

And, again, we’ll look at those to say “how can we make things better?”

An accountant will work with the business owner to fully understand the impact of all of their numbers.

Is there any crossover?

There can be a lot of crossover between the work of a bookkeeper and an accountant.

A lot of accountants do bookkeeping. And a lot of bookkeepers will prepare some of the accounts and returns.

Both are incredibly important to any business.

What we find is that a number of our clients can do the basic bookkeeping themselves, particularly with some of the software that’s out there now, like the Cloud based software.

We use a software called Xero, which is really for bookkeeping – it takes a lot of the technical side away and makes it as simple as possible for a business owner to do. You can take photos of purchase invoices to put them into accounts. If you raise the sales in Xero, you can just click go and send an email to your debtors to chase those figures. It’s absolutely great.

Where we often come in as accountants, is to pick those figures up and turn them into detailed reports, and of course, ask “what if?”. “How can we make them better?”

So that’s the difference between accountants and bookkeepers.

Of course, the other thing to note about bookkeepers is that, it is the only word in the English language with three consecutive double letters. So there you go. That’s your really interesting fact for the day.

Unfortunately, there’s nothing interesting about accountants!

If you’d like any advice, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

What details do I need to include on a Sales Invoice? Find out now by watching our latest video or read about it below.

You must clearly display the word ‘invoice’ on the document.

You must include:
• a unique identification number
•

your company name, address and contact information
• the company name and address of the customer you’re invoicing
• a clear description of what you’re charging for
• the date the goods or service were provided (supply date)
• the date of the invoice
• the amount(s) being charged
• VAT amount if applicable
• the total amount owed

Sole trader invoices
If you’re a sole trader, the invoice must also include:

• your name and any business name being used
• an address where any legal documents can be delivered to you if you are using a business name

Limited company invoices
If your company is a limited company, you must include the full company name as it appears on the certificate of incorporation.
If you decide to put names of your directors on your invoices, you must include the names of all directors.

VAT invoices
You must use VAT invoices if you and your customer are VAT registered.

The extra information needed is:
• Price per item excluding VAT
• Quantity of each item
• Total amount excluding VAT
• Total amount of VAT
• Total amount including VAT

If you need any help, just get in touch and we will do everything we can to help.

What qualifications should my accountant have? To find out now then please watch our video or read about it below.

Believe it or not, you can call yourself an accountant and set up an accounting practice without having any qualifications

at all.

It’s not like being a doctor or a solicitor, where legally, you need to have the correct qualifications to do so. Generally, anybody can set up an accounting practice tomorrow.

That means, though, when you’re picking your accountant, you want to be confident they really know what they’re doing. There are some perfectly good accountants out there who have never actually sat the exams, but they’ve been doing it for years and years and have all the experience to actually do a good job.

But generally speaking, an accountant with the correct qualifications will give you more comfort. They’ll do a better job, and also their accounting body will give you somewhere to go to if anything goes wrong.

So, what are the main accounting qualifications? The main thing to look out for when picking an accountant, is that they’re a member of one of the following bodies.

The first would be the AAT. This stands for the Association of Accounting Technicians. It’s a UK qualification. Often it’s done by people when they first get into the accounting profession. It’s kind of the stepping stone. It’s very much around the bookkeeping and the first steps, so a really good qualification to get as a grounding.

After that, many accountants then move onto one of the higher professional qualifications, and the three main ones would be CIMA – Chartered Institute of Management Accountants.

This is a great qualification to have for actually working in business and preparing management accounts. CIMA accountants have a really good idea of how businesses work.

Then there is the ACCA, which is the Association of Chartered Certified Accountants. That’s a global body, and certified accountants often start off in practise, ie working at an accounting firm. Before they go out and work within a business.

Then there is the ICAEW, the Institute of Chartered Accountants in England and Wales, which is, I guess, the oldest, most traditional qualification. Some would say most prestigious. To be called a Chartered Accountant, you must be a member of this Institute.
However these days, to be perfectly honest, there isn’t a huge difference between the different qualifications. And I say that as a Chartered Accountant myself!

They all have a different slant. They do things slightly differently, but at its core, if your accountant’s a member of any of those bodies, it can give you comfort they’ll do a good job.

And as I say, it means they’ve sat through the exams, they’ve done the qualifications, they have the accreditation
And it is important that there is a body behind them. Firstly, that body helps your accountant in keeping up to date with what’s going on, any change in legislation, change in tax.

But also, if anything goes wrong, you do have a body to go to, to take your complaint.

So those are the qualifications you should look for. It is worth taking a look when picking your accountant.
Hope that was useful if you need any more information, then please just get in touch.

A good accountant does a lot more than just crunch the numbers.

To find out more, you can either watch Jon explain it on our video here or read about it below.

Crunching the numbers can be a starting point. Generally,

this would be called bookkeeping.

Bookkeeping is processing and recording the financial data of the business, so raising sales invoices, processing purchase invoices, making sure that supplies are paid and customers pay you.

Then the next step is actually taking those numbers and turning them into a set of accounts.

Traditionally, this is where accountants are seen as crunching the numbers. You give them some numbers. They pick them up, manipulate them slightly and put them into statutory format.

These days that’s not everything. That’s just the bare minimum.

For some businesses, to be honest, that is enough. That’s all they need.

But a really good accountant will then take those numbers, and they will interpret them. They will analyse them, and they will give you advice of what the numbers mean because as a business owner you should always understand what the numbers in your business mean.

You should own those numbers – they are yours. They’re the difference between you having a successful business and a failure.

A good accountant will explain them to you, make sure you know what they mean and will then give you advice to make those numbers better.

By making those numbers better, you’ll have bigger profits. You’ll reduce your tax bill and ultimately, you’ll have more money in your bank account.

A good accountant does that. They help you put more money in your bank account and help you meet your business and personal goals.

It’s so much more than just crunching the numbers.

If you found this useful, please share it using the icons at the side of the page, or leave a comment below.

Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant

• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk

To find out more, you can either  watch our video or read about it below.

You may need an accountant to help you with your legal requirements in terms of preparing and submitting accounts and tax returns. If you own

a limited company, you must legally submit a set of accounts to Companies House each year, and a Corporation Tax return to HMRC.

If you’re a sole trader, you need to prepare a self-assessment tax return that includes the accounts for your business, and calculates the tax. These need to be submitted to HMRC each year. You may need an accountant to help you do those.

Is it a legal requirement?

You don’t legally need to use an accountant – it’s more about whether you’re able to do it yourself…..or want to.

I often use the analogy that it’s like painting and decorating. If I have a small room to paint at home, I might do it myself. I painted my girls’ bedrooms because they’re small rooms. I also kind of wanted to because they’re my little girls, and to be honest, it wasn’t too difficult. When it came to a big job, like the lounge, I paid someone to come and do it – I knew that was it was a lot of work and it was quite tricky. I also was aware that people would be seeing it everyday and would see if I made any mistakes!

If your business is simple, you might decide to do your accounts yourself. But, as your business grows you might decide you don’t want to do it yourself. You want to pay somebody – an expert – to do it.

There are all the advantages of paying an expert to do it. Firstly, it saves you time that you could use to do something else that either you enjoy or helps you grow the business.

Also, you do have that comfort it will be done right. An accountant, of course, knows all of the tax reliefs available that you might miss out on. An accountant will, therefore, help you reduce your tax bill.

It’s their job to do that – they do it all day, everyday.

That’s why I liken it to the painting and decorating. The painter and decorator will do my room quicker and a with better quality than I can do, leaving me free to do what I want to be doing in my spare time.

Why else should I use an accountant?

There are also many other reasons you might want an accountant. A good accountant will save you tax, but they could also help you grow.

Accountants work with lots of businesses and, therefore, have lots of experience and see lots of examples, both good and bad, in business. They can help you use the best examples to grow your business and make it more successful. And help you avoid the bad ones!

You might want an accountant to sit down with you to do an independent review on your business on a regular basis. It is easy to get caught up in your business and be doing the day-to-day work without actually standing back and taking a look.

Meeting your accountant regularly to look at the numbers in your business and see how you’re doing -comparing them to your budgets and to your goals, can be a really useful exercise.

Also, your accountant’s there for you to pick their brain and to help you on any of the financial aspects in your business.

So, there are some reasons why you might need an accountant but, more importantly, there are a lot of reasons you might want an accountant.

We hope you have found this useful. If you have any queries, please get in touch. We’d love to help.

If you would like to watch our video, follow this link.

Who are the best accountants in Liverpool? Find out in our video, or read about it below.

Well this is a hard one to answer because it’s hard to define the “best”.

For example, think about cars. If you were to

ask an expert what the best car in the world is, they may say a Ferrari. But, if you use your car every day to drive around three kids and a dog, a Ferrari’s no good for you. And then you might not be able to afford it either.

It’s the same with accountants – the “best” will mean different things to different people.

I’ve actually got a separate video about how to choose the right accountant for you, and it’s worth just recapping a couple things from that video now.

For example, one of the first things you should be looking for when you’re picking the right accountant for you, and the best accountant for you, is the size of the firm. You should also be looking for relative experience to you and your sector, and looking at the fees and whether they’re right for you and your budget.

If you think about it, if you’re a huge global firm like Apple, you’re not going to use a one-man band in Liverpool to do your accounts. But, similarly, if you’re a one-person business based in Liverpool, you’re not going to use PwC, a global firm of accountants with 100,000 staff.

Therefore, in picking the best accountants in Liverpool. I’m going to talk about a few of them that could be relevant to you. And, basically, when I’m looking at the best accountants in Liverpool I’m looking at accountants that provide accountancy services for small to medium size businesses.

And, for each one of them it will depend on you, because a good firm will offer the services you need at the time you need them.

Accountants for larger businesses

I’m going to start with a largish firm – a firm that is part of a global network. A firm called RSM.

We actually use RSM to outsource some work for our clients when there’s some complex tax international work – we bring them in to help with us on jobs so, when I recommend them, I’m recommending them as someone who has used them.

One of the big strengths of RSM is they can handle pretty much anything, and also advise you if you have overseas operations. They have offices all around the world as part of their network.

They are a really good firm aimed at larger businesses. They can give you that all-in service and they do it well. They’ve got a good Liverpool office with lovely views if you go and visit them – you can look down on the Liver Building but, I’m recommending them for the service rather than the view!

Accountants for medium-sized businesses

If you’re a medium-sized business, a firm I think is very good is BWM. Until recently, they were called BW McFarlane.

They’re a Liverpool firm based in the city centre. They’ve been trading for the best part of 100 years now.

I’ve got to give a mention to BWM because, I’ll admit, my wife actually uses them to do some accounts! My wife’s the Treasurer of a Trust, and they use BWM to do their accounts. They’ve always been very happy with the service. They’re a decent sized firm that’s based in Liverpool and has a good level of resource and expertise to service a medium-sized business.

Another firm in that middle tier would be Wilson Henry. Another good Liverpool firm based on Edge Lane who at small to medium business, and can give all services across the board. Again, they’re a firm I’ve had quite a lot to do with over the years and have spent some time in their office.

Small to medium businesses

There is the best part of 100 firms across Merseyside looking after small to medium businesses – businesses from start-up to annual turnover of, say, £5 million.

This is where “best” really does come down to what you’re looking for from your accountant.

A firm I really respect is Jonathan Ford & Co. They’re a very progressive firm of accountants – they’re really into cloud software and Xero, and have been at the forefront of these new technologies that really enhance the services they can provide to their clients.

As well as working for some global accountancy firms, Jonathan himself was FD of Mersey TV, so they do specialise in the creative sector. They’re a really good, really forward-thinking firm. They’ve got lots of experience – the firm’s been going for nearly 20 years – and a strong team of around 10 accountants. They can give you everything you need if you’re a smallish business and, particularly in that creative sector, they’d be an excellent choice.

Going slightly further afield, to the Wirral, is Woods Squared. They major on business growth and pride themselves on a 100% success rate in raising funding for clients. I first met Alan Woods as part of a network of accountants committed to providing more to their clients than just the standard stuff – really helping the clients to make their businesses better, and Alan really does believe in doing that. They’ve also won a lot of awards. Shame they’re on the wrong side of the water, but you can’t have everything!

Another firm I should mention, with perhaps a different expertise, is actually my ex-firm – MJF Accountancy. Where MJF are really, really good is providing straight-forward help and making sure all of the basics are done……and done very well. They’ll make sure you hit every deadline and don’t have to worry about the financial requirements of running a business.

They do give good advice on tax reduction, but in some ways it’s more of a no-frills service, but an excellent service at that. They’re absolutely reliable and, if you have a big pile of paper that needs sorting, they will fix it. They’ll sort it out, get it into a set of accounts, and then get you fixed going forwards.

Summary

I hope that gives you a feel for some of the best accountants in Liverpool. It really does depend on exactly what you’re looking for.

RSM are excellent if you’re a largish business and have a lot of complex transactions going on, perhaps tax-wise or R&D Credits. BWM and Wilson Henry are aimed at medium-sized firms, but with a good level of resource based in Liverpool.

And then the likes of Jonathan Ford, Woods Squared and MJF Accountancy are more aimed at smaller businesses and will give different levels of services depending on what sector you’re in and what you want from your accountant.

To summarise, though, it does depend on you and also the size of your business and the fees. As a general rule of thumb – the larger the firm, the larger the fees.

That’s not always the case – some of the small firms have real experts and are actually based on the value they provide – but it’s a decent rule of thumb.

And it does often make sense to look for a firm that, in terms of size is not dissimilar to yours, because they understand your business a bit better. It’s back to that thing – Apple wouldn’t use a one-man band, but neither would a small business in Liverpool want to use a global firm. They don’t really understand you and your numbers.

I hope you found that useful. If, you have any queries, please do get in touch. It’d be great to hear from you. Thank you.

If you found this useful, please share it using the icons at the side of the page, or leave a comment below.

Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant

• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk

How do you choose the best accountant for your business? Take a look at our video, or read about it below.

A good accountant should be a vital part of your business if you want to be successful. They should

help you fully understand all of the numbers so that you can make decisions to help your business grow.

They should be available throughout the year to work with you and give you advice before you make any big financial decision.

And that’s on top of the basic stuff, ie making sure you meet all your HMRC requirements and don’t get fined for being late. They should take away all the worries of the financial requirements so that you can get on with running your business.

So, how do you choose an accountant? Here are my top 5 tips.

1. Size of firm

There are all sizes of accountancy firms, serving all sizes of business. I’ve worked for global firms, medium firms and now have my own. Often, it makes sense to work with a firm that’s a similar size to yours……and understands businesses that are a similar size to yours.

But you do have to ask “can they grow with me?”. A large firm may have higher fees, but they may also have additional expertise. But then a small firm will give you more time with the partners/owners.

There’s no right or wrong – it will depend on what you want and need

2. Relevant Experience

Do they understand your sector? You’ll get far more from your accountant if they understand your business. There are lots of common factors across different business sectors, but it can be a real advantage if they understand what you do, and know any specific rules about what you do. For example, a building firm has some different tax rules to a restaurant.

How do you check this out?

• Look at their website, either for specific pages or in the testimonials. Do they have clients like you?
• Ask them!

3. Fees

What are you going to have to pay?

Now, the cheapest isn’t usually the best – it’s well worth paying for quality advice, and to get proactive advice throughout the year. But you should have absolute clarity on what you’re getting so that you can assess the value.

For example, are you getting charged for phone calls and ad hoc advice? Is the personal tax return included?

Rather than charge by the hour, most accountants will agree a fixed fee for a task, or even the annual service.

Ultimately, you should pick the accountant who gives you everything you want. The price should be secondary as a good accountant is an investment in the growth of your business

4. Qualifications

Setting up an accountancy firm isn’t like setting up a doctors or a solicitors. Anyone can actually call themselves an accountant – you don’t legally need any knowledge or qualifications to do so.

Therefore, it’s worth checking that they do actually have an accountancy qualification so that you’re confident that they can do the job. The main bodies are the ICAEW, ACCA and CIMA.

As well as the comfort of knowing your accountant has the relevant qualifications, membership of these institutes gives you somewhere to go if you do have any problems.

5. Recommendations

If anyone you know has used them, ask. If not, check out testimonials or reviews.

Or ask them to put you in touch with a client, preferably one with a business similar to yours.

And, as a bonus tip….

6. Can you work with them?

This is key. You should have a close relationship with your accountant, so you do need to get on with them. You don’t have to be best friends, but there has to be a rapport there. This also makes it important to be clear on who you’re dealing with. It’s no use having a great relationship with the partner……if you end up dealing with someone else

So, there are my top tips on how to choose an accountant. I hope you found them useful.

If you found this useful, please share it using the icons at the side of the page, or leave a comment below.

Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant

• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk

6 Ways to tell your accountant is costing you money? Find out now by watching our video or read about it below.

Every business needs a good accountant. The problem is that most business owners

don’t realise what a good accountant looks like – that’s because they’ve never had one.

“You don’t know what you don’t know.”

If you have got a good accountant, you’re in a very small minority.

If you’ve got a bad accountant, you’re also in a minority.

The problem is that the majority of business owners have a mediocre accountant. And that’s why they’re costing you money. They don’t mean to. But, by being mediocre, they’re making you miss out on extra profits and extra tax savings.

Some are even taking money from your pocket through their mediocrity.

Too many accountants are still just doing the minimum legal requirements – a set of accounts and a tax return. There is a value in that – everyone needs to be compliant. But are they making your business better? Or making your life better?

Working with a really good accountant is like having a Non-Executive Director for your business. Having a sounding board for you and your ideas. Having a source of wisdom, guidance and experience – all designed to improve your business and your profits.

Someone to work alongside you throughout the year. Someone to understand your goals and help you achieve them. Someone to provide regular input and information to help you get to where you want to be.

My next door neighbour recently bought a new car. He replaced an 11-year old car with a nice new Audi. He couldn’t believe the difference – power steering, cruise control, and full air con.

And then there’s the sat nav, the iPod doc, and the hands-free phone. And he’s getting used to having a nice, big storage unit where the handbrake used to be – it’s now just a small button.

He was quite happy with the old car. But now he can’t believe what he’s been missing out on.

And that’s what it’s like switching to a good accountant. And a progressive 21st Century Accountant.

A standard accountant does a perfectly decent job…..until you see what you can get by upgrading.

So, how can you spot if your accountant is costing you money? Here are six indicators.

YOU CAN DOWNLOAD THE 6 WAYS TO TELL YOUR ACCOUNTANT IS COSTING YOU MONEY HERE

I hope you find them useful.

If you found this useful, please share it using the icons at the side of the page, or leave a comment below.

Any questions?

If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant

•  You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk

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How do I avoid an HMRC investigation? Find out now by watching our latest video or read about it below.

Nobody wants an HMRC investigation. But they’re getting more and more common as HMRC looks to clamp down on tax

avoiders.

As well as being bad news for Jimmy Carr and Take That, this also has an impact for ordinary tax payers and business owners like you and us. After all, we haven’t got the money for a fancy lawyer to defend us.

I’m Jon Davies and I’m going to help you avoid having HMRC turn up to look at your accounts.

The best way to avoid an investigation is to understand what HMRC looks at. To help you, we’ve listed our top 5 causes for investigations below.

1. Private expenses – HMRC doesn’t allow private expenses to be claimed by a business. The expense must be “wholly and exclusively” for the benefit of the business.
2. Private proportions – linked to the above, HMRC looks closely when you’ve allocated a proportion of a cost to the business, for example motor vehicle costs or household bills. It’s safer to use the HMRC approved flat-rate for household bills if you do work from home.
3. Travel costs – HMRC want to see detailed records of any travel expenses. Make sure that any mileage is logged with detail of the trip, and receipts are kept for any other travel expenses, eg rail tickets. And make sure that the dates agree to your calendar!
4. Employment status – are you a business, or are you an employee? This is particularly relevant for contractors and consultants – HMRC would prefer you to be classed as an employee as it leads to National Insurance contributions. Therefore, they will look to argue that contractors/consultants who work for one client for long periods are actually employees. The rules on this (the “IR35” legislation) are being constantly updated, so it’s worth checking your status.
5. Loan accounts – do you have an overdrawn Director’s loan? Have you taken more cash from the business than is available, ie profits after tax? Were dividends correctly paid? If not, HMRC can treat the cash as a salary, and ask for PAYE/NI.

As you can imagine, there’s a lot of detail to be considered for each of these, so please get in touch if you have any queries.

We’ll do everything we can to keep your tax bill down……legally. We know the rules and keep your bill down by using  the tax allowances, efficiencies, and planning in advance.

If you’d like more business tips, please do subscribe to our YouTube channel.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Can I get tax relief for food, travel and accommodation? Find out more now by watching our latest video or read about it below.

If you travel for business, you can claim tax relief on the expenses. Usually, you would

keep the receipts to prove expenditure but, to make things easier, you can claim a fixed amount that’s been agreed by HMRC.

What are the rules?

At its simplest, you can claim tax relief on any expenses that are incurred wholly and exclusively for business purposes.

If you’re travelling, this can include:

• Business mileage or fuel
• Road/tunnel/bridge tolls and congestion charges
• Parking costs
• Public transport
• Taxi fares
• Food and drink
• Hotel or other accommodation for overnight journeys
• Incidental costs such as business phone calls

You should keep receipts to prove the expenditure for all of these.

Can I claim for all journeys?

To claim tax relief, the journey must be for business purposes and can’t be to your permanent place of work (ie the daily commute). It must be a journey to a meeting, appointment, or a temporary place of work.

Business mileage or fuel?

If the car is owned by the business, you can claim relief on the cost of fuel – petrol, diesel or electricity.

If the car is owned privately, you can claim relief on the HMRC-approved mileage rates. For cars and vans, these are currently:

• 45p per mile for the first 10,000 business miles in the tax year
• 25p for each additional mile

If you travel by bike, you can claim using the following rates:

• Motorbikes – 24p per mile
• Bicycles – 20p per mile

You calculate the expense by multiplying the number of miles by the appropriate rate, and then claim tax relief on this expense.

Flat Rates for subsistence

For the past couple of years, there have been new rules on claiming fixed amounts for food and drink on journeys away from home. These fixed amounts are approved by HMRC and can be used instead of using exact amounts.

The rates depend on the time spent away from home on the journey and are as follows:

• Journeys over 5 hours – £5
• Journeys over 10 hours – £10
• Journeys over 5 hours and ending after 8pm – £15
• Journeys over 10 hours and ending after 8pm – £20
• Journeys over 15 hours and ending after 8pm – £25

The benchmark rates can only be used if the qualifying conditions are met:

• You must be away from your normal workplace or home for at least five ten hours
• You must have incurred expenditure on a meal and also kept a receipt.

The advantages of using the flat rates are:

1. It’s easier!
2. You can claim the flat rate even if you spent less
3. If you spent more than the flat rate, you can simply claim the larger amount

How do I claim the tax relief?

As a business owner, you simply include the expenses in your accounts to reduce your taxable profit.

Your tax bill will then be reduced at the appropriate rate.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

What tax relief can I claim on expenses I use for business and personal use? Find out now by watching our latest video or read about it in the blog below.

Everyone loves a trier……except HMRC. Some people will try

to claim for everything and anything in their tax returns. We’ve seen a few crackers ourselves. However, every now and then HMRC reveal some of the worst expenses claims in Tax Returns.

In recent years, these have included:

1. A 3-piece suite for a business owner’s wife to sit on while he was doing his tax return
2. A very generous business owner bought posh watches for Christmas for all of the staff……..despite not having any employees
3. Armani jeans – claimed to be “protective” clothing by a decorator
4. Flights abroad to get dental treatment as they had to look good for business meetings
5. Pet food for a guard dog. Sounds OK…..until it turned out the dog was a Shih Tzu, which could only frighten away very small burglars.
6. Underwear – OK if you’re in the Full Monty but not for the rest of us.
7. A garden shed plus the cost of the part of the garden it sits on

As you can imagine, none of these were accepted.

What expenses can you claim?

The phrase that HMRC have traditionally used is that the expense must be “wholly and exclusively” for the purposes of your business to be allowable for tax relief. But, what does this mean?

At its simplest, ask yourself “Would I be spending this if I didn’t have the business?”. If the answer is “No”, then it’s likely to be an allowable expense. Examples would include:

• Stock – the items you’re buying to sell on, or to use to make your products.
• Premises costs – rent and then the costs of light, heat, etc for the business premises. Also any repairs
• Staff costs – wages, salaries and costs of subcontractors
• General office costs – stationery, tea/coffee
• Travel costs – travel to and from meetings and appointments
• IT costs – website, computers and software
• Advertising costs – networking, leaflets, etc
• Business assets – the method of claiming the tax may be different, but any assets you buy get tax relief – vans, furniture, machinery

But then there are also the “grey” areas where you have costs that you may have spent without the business, but you can now claim. HMRC are pretty sensible on these – for example, you can claim for a mobile phone.

What if I use things for business and personal use?

Often assets within businesses are used for both personal and business purposes. What can you claim tax relief on?

It is only the proportion of business use of these assets that can be deducted as an allowable expense.

Example

Julie is a self-employed beautician. She uses her mobile phone for both private use and business related calls to contact clients. For the tax year, Julie’s phone bill was £520. 60% of these calls were used for contact with clients and 40% were personal.

When calculating allowable expenses, Julie can claim £312 (60% of £520) for business use.

Capital allowances

Capital allowances may also be available on assets used in the business. Again only the proportion of the asset that is used for business can be claimed.

Example

Daniel is a self-employed electrician. In his first year of trading he purchased a brand new car costing £15,000 with CO2 emissions of 110g/km. The car is used 75% for business and 25% for personal use.

The car will need to be placed into a single asset pool as it has dual purpose usage. Capital allowances for the car are 18% so, in the first year, capital allowances are £2,700. Only 75% of this is allowed as 25% is for private use. Therefore capital allowances in year one are £2,025 (75% of £2,700).

Working from home

If you operate your business from home, you can deduct certain expenses that relate to business use. These expenses can include telephone, internet, electricity, gas, council tax and cleaning costs. All costs must be apportioned into business use at a reasonable rate.

Simplified expenses

Simplified expenses allow you to claim deductions on expenses used at home for work purposes and mileage costs at a flat rate, ie instead of keeping the receipts and working out proportions.

However, this is only if capital allowances have not been claimed. This saves you having to keep detailed records of expenses and estimating business usage.

Common sense

In summary, it comes down to common sense. Is it really for the business?

Some of the ridiculous claims could actually be OK……if they were genuinely for the business. For example, it’s OK to buy gifts for the team….if you have a team.

If in doubt, ask an expert – it’s what we’re here for! Now, I’m just off for a meeting with HMRC….in Hawaii.

Can I claim tax relief on business entertaining? find out now by watching the video now or reading about it below.

Can I claim tax relief on Business Entertaining?

The answer to this question depends on who the business is entertaining.

What

if I am entertaining Employees?

If you are entertaining an employee of the business the answer is yes. You can reclaim the VAT and claim tax relief on the expense. The reclaiming of VAT only applies if your business is VAT registered.
HMRC has strict rules on who is an employee. Former employees don’t qualify, nor do subcontractors or shareholders who don’t work in the business. As a guide HMRC are looking for an employee to be on the business payroll and being paid a salary.

You can reclaim the VAT and claim tax relief on an annual staff entertainment event such as a Christmas party if all staff are invited and the cost per head doesn’t exceed £150.
If a number of small events are held during the tax year and the total staff entertainment costs more than £150 per head, you can still claim the VAT and tax relief. The functions totalling less than £150 are non taxable but any other functions will be assessed for income tax on the employee as a benefit in kind and they may have additional tax to pay.

What if I am entertaining anyone else?

If you are entertaining a client, customer, supplier or anyone else the answer is no. You can record the expense in your accounts as business entertaining, but you can’t reclaim the VAT element or claim tax relief on the expense.

What happens if my business has only directors and no other employees?

HMRC state that if the entertainment is only for directors then it doesn’t qualify for tax relief or a VAT deduction. The only time meals for directors qualify for tax relief and a VAT reclaim is if they take place when the director is travelling on business away from their normal place of work. The same rules apply to tax relief for sole traders and partnerships.

I hope you found that useful. If you have any queries, please get in touch with us. We’d love to help.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

What is the Most Tax Efficient Salary in 2018/19? Watch our latest video to find out more or read about it below.

One of the main priorities for you and your limited company should be working out the most efficient

way to draw down income from your company. This blog will guide you through what your optimum salary in 2018/19 is.

Limited Company Directors

Having flexibility over when and how much you are going to pay yourself is one of the advantages of being a limited company director.

Most limited company owners take income in the form of dividends and a small salary. Taking dividends has a huge benefit as you do not pay any National Insurance Contributions (NIC), whereas on a salary you do. As a result of this, an average limited company owner might save a lot of money each year.

What is the optimum directors’ salary level for 2018/19?

Here are two options to choose from when working out your optimum salary level, and possibly that of your spouse if applicable:

Option 1 – £8,424 per annum

If you are entitled to the full personal allowance and your salary doesn’t cross the threshold, you will not pay any income tax. You will also only start to pay Employee’s and Employer’s National Insurance Contributions if your salary reaches the £8,424, meaning that this is the most tax efficient salary to draw.

There are no legal requirements to pay yourself the national minimum wage, unless you have a contract of employment with your own company that states otherwise, although this is very uncommon. This salary is also above the Lower Earnings Limit for National Insurance required in order to qualify for the state benefits.

You need to make sure that you include any other possible income you have already received in the year.

Option 2 – £11,850 per annum

A tax efficient way to pay yourself more than the £8,424 is to claim the Employment Allowance. This is only applicable if you are not the sole director/employee of your company earning over the Secondary Threshold.

If this is the case, you can pay yourself up to £11,850.

First introduced in April 2014, the Employment Allowance will refund any employees NICs your company pays, up to £3,000. You will be able to check if you are eligible through your accountant.

Paying yourself this amount during the current tax year means that you will pay no income tax at all. The salary is deducted against your company’s corporation bill , and you’ll pay £411.12 in Employees’ NICs and this will be refunded through the Employment Allowance scheme.

Overall, you will be around £250 better off per year as a result of Corporate and personal tax savings meaning you are better off paying yourself an £11,850 salary during 2018/19, if you are eligible.

How do I take the rest of the cash?

You want to earn more than this minimum salary. And, hopefully, your company has more cash it can pay you. You will take this as a dividend.

A dividend is a sum of money that is paid by a company, to its shareholders, out of its profits or reserves. There is now also a dividend allowance, which allows you to take the first £2,000 of dividends tax free each year.

So, the optimum way to take cash out of your business is to take a salary of £8,424, and then take the rest as dividends. If you’re not the sole director or employee, your able to take a salary of £11,850 by claiming Employers Allowance and then the rest as dividends again.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

When will I pay my first tax bill? Watch our video to find out now or read about it below.

When starting up your own business, you want to make sure that you pay all your taxes on time.

When it

comes to paying your first tax bill, the date will depend on:
• Your chosen format of the business
• The accounting date of the business
• What your profitability is like
• And any capital expenditure you have purchased, such as your office equipment

Paying tax as a Sole Trader or Partnership

If you have started your business up as a Sole Trader or as a Partnership, you will declare your revenue, all your expenses, your profits, and your capital expenditure on your Self-Assessment Tax Return each year.

For a Sole Trader or Partnership, your year will always run from 6 April to 5 April.

You will then have until 31 January the following year to submit your tax return online and pay your liability.

If you want to submit your return by paper, you will only have until 31 October following the year end to file the return. So it’s best to do it online!

So, how does that work in practice? For example, if you started trading on 1 May 2018, your first year of trading would run until 5 April 2019. You will then have until 31 January 2020 to submit your return online and pay your liability.

Paying tax as a Limited Company

For companies, the annual accounts are submitted to Companies House and the Corporation Tax return is submitted to HMRC.

If you have taxable profits over £1.5 million you must normally pay your Corporation Tax for that period electronically in instalments.

If you have taxable profits of up to £1.5 million the deadline for your tax return is 12 months after the end of the accounting period it covers. There is a separate deadline to pay your corporation tax bill and it is usually 9 months and 1 day after the end of the accounting period.

The only exception to this is in your first year of trading, when you may have two accounting periods, if the accounting period is longer than 12 months.

For example, if you set up your business on 1 May 2018 your year end would usually be 31 May 2019. The first accounting period is a 12 month period of 1 May 2018 to 30 April 2019, and a second shorter accounting period of 1 May 2019 to 31 May 2019. Then, going forward, the accounting periods will run from 1 June to 31 May.

In the first year of trading your accounts are due 1 year and 9 months after the incorporation of the company.

Using the example above, the first year accounts cover two accounting periods from 1 May 2018 to 31 May 2019. The accounts and corporation tax are due 1 year and 9 months after the incorporation, so 1 February 2020.

When you file your tax return you work out your profit or loss for corporation tax and corporation tax bill. You can either get an accountant to prepare and file your tax return or do it yourself.

File your returns as soon as possible

Whether you have set up as a sole trader or a limited company, it is always best to prepare your accounts as soon as you possibly can after the end of your financial year, so you can prepare for any liabilities.

In summary, you want to be prepared with your tax returns as early as possible to avoid any fines. You should save these submission deadlines in a calendar and make sure you are aware of any additional expenses you can claim for tax relief.

If in doubt, ask an accountant – it is what they do on a daily basis.

If you’d like some advice or a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

How Often Should I Take Dividends and When are Dividends Taxed? Watch our video to find out now or read the blog below.

Since the 2016 dividend tax increase, many limited company owners have been interested in keeping their tax

as low as possible. The timing of the dividend declaration is a very important part of this strategy.

When I declare dividends, are they taxed at the date they are declared or when they are actually paid?

They actually are not taxed at either point! A dividend will be included on your tax return according to the date that it was declared and become payable, regardless of the date that it was actually paid.

For example, if you declared a dividend on 1^st April 2018, payable on the 7^th April 2018, this will be included as income in your 2018/19 tax year because the 7 April is in that year. If for any reason the dividend was paid on the 4^th April, then it would be regarded as a loan until the 7^th April. It wouldn’t change the tax year of the dividend.

You should keep all the copies of the dividend vouchers and minutes that support the dividend just in case HMRC investigate – you’ll have something for proof. Your accountant may be able to provide you with a template to use, or complete them for you.

For tax planning opportunities, you can declare a dividend immediately payable with the intention of taking the cash at a later date. You can do this if you don’t want to pay yourself a dividend at a set point in time, but you have some of your basic rate tax band remaining and the company has sufficient profits. This will ensure that the dividend falls into an earlier tax year and then will allow you to fully utilise your tax allowances.

Currently, you can receive £2,000 of dividends tax free each year and, therefore, it is advantageous to take at least £2,000 in the tax year, no matter what tax rate band you fall into.

How often should I pay myself dividends?

We recommend paying yourself dividend monthly or quarterly, although you can actually pay yourself whenever you like.

Having all the correct paper work, including the dividend vouchers and the minutes, and proof that the company has the sufficient profits to cover the distributions means you are safe from HMRC arguing that the dividends are a salary. You don’t want HMRC to think that your dividends are a salary as this won’t be tax efficient to you.

Overall, there are great advantages to paying yourself dividends such as them being tax free up to £2,000. As long as your business has the available profits to issue the dividends, you can pay yourself dividends whenever you want.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

How do you beat the SATR deadline? Find out now by watching our latest video here or by reading about it below.

 

How do you beat the SATR deadline?

You may be getting anxious if the Self-Assessment deadline is fast approaching

and you still haven’t submitted yours. You may be thinking you don’t have enough time to complete everything in time but don’t despair.

Here are 5 easy ways to ensure that you are able to get your Self-Assessment Tax Return in on time every year.

Don’t Panic

It may feel like you have a lot to prepare and a lot to do, but in fact you don’t. There is no need to rush as you have from April until January to file it so the earlier you start doing it, the easier and better it will be for you.

And if you are organised and follow the rest of our steps, it’s not that difficult.

Register as soon as possible

If this is your first year of filing, then you must register with HMRC before you start the process of the SATR. To do this you are going to need your activation PIN and your Unique Tax Reference (UTR) to complete and submit the return.

HMRC are not able to give you this information over the phone, they will only send it out by post. This means you if you haven’t already done this yet then you need to do it as soon as possible as it can potentially take a week or more for them to do.

Double check your data

When you are completing each section, make sure that you are inputting all the information correctly. Leave yourself plenty of time to be able to go back through and double check all the information before you submit it. Making a simple mistake such or omission, such as missing a check box, could result in your application being rejected and possibly receiving a fine.

If you’re not feeling 100% comfortable with submitting your own tax return, the it might be a good idea to hire an accountant to do it for you. They will be able to file your SATR quickly and efficiently, ensuring that everything is double checked for errors.

Don’t leave anything out

You have to include all information about any money that you have received or earnt from anywhere during that tax year. This will include:

• Your P60 which will show your salary and your tax for the previous tax year.
• If your employer gave you a P11D, showing any expenses or benefits that you received, you’ll need this too.
• Any interest you have received on any of your bank accounts as well as how much tax was taken off.
• However, this does not include any ISAs you may have as the interest on them are free. Although, this means that you also will not be able to claim tax relief on bank interest you had to pay on a non-business bank account.
• If you are a director of a limited company, make sure that you do not put any interest on the company’s bank account into your own tax return.
• If you are a sole trader or a partnership, you will need to know your businesses income and expenses.
• Any dividend income on any shares that you own, whether they be in your company or another.

Don’t break any rules!

Make sure you are up to speed with all the rules and regulations for your business tax before you start as these can be complicated.

Be especially careful if you are a sole trader or a partnership, when you are adding all your income and expenses up as, unless you are on the cash basis, you will have to count any income depending on when you did the work, not when the customer paid you.

Make sure that you also understand all the rules and regulations around your business expenses, making sure you are clear on what you can reclaim and cannot reclaim. This especially applies to food and drink, entertainment, travel, accommodation, clothing and the business use of your home.

You can do this simply by checking your proposed expenses against the information on HMRCs website.

Still if you are unsure about any of this information, then it may be worth wiles getting in touch with an accountant who will be able to guide you through the process, making sure everything is correct.

Overall, making sure that you submit your SATR on time is nothing to worry about. By following these easy steps, getting all your information together and submitting it before the deadline will be easier than ever.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

How do I register a Limited Company? Watch our latest video here or read about it below.

This is something you can simply do online through several websites but the easiest is to use Companies House as they’re the government

body that monitors all Limited Companies.

To set your company up, you’ll need to think of a few details first:

1. A company name – Something simple, could be your initials or just something memorable.
2. A company address – what address do you want to be on the public records?
3. Director’s details – have you decided who the directors are going to be?

If your setting up the business on your own, then this will just be you and therefore you’ll just need to fill out all your own personal details (date of birth, nationality, etc.)

4. Shareholders – you want the company to be limited by share capital so that you can take out the profits tax-efficiently. The shareholders own the company and receive dividends. As with the director, you can start with you as the sole shareholder and you can chose the number of shares that you want. If it’s just you, one £1 ordinary share is enough.
5. A credit card – it costs £12 to register the company on Companies House.

After you have done all this, Companies House will process the application. This can take a few days and then they’ll send you your Incorporation Certificate, which your clients may need to see before signing a contract.

You will also receive a 6-digit authentication code through the post – keep hold of this. You will need this code whenever you want to sign into Companies House in the future.

HMRC will then automatically be notified of your new company. They will write to you with your company’s Unique Taxpayer Reference which you will need to be able to file a tax return next year as well as for some of the steps we will take today.

If you would like any more information, then we would be happy to help.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

When do I pay tax as a sole trader? To find out more watch our latest video here or read about it in the blog below.

If you have started your business up as a Sole Trader or as a

Partnership, you will declare your revenue, all your expenses, your profits, and your capital expenditure on your Self-Assessment Tax Return each year.

For a Sole Trader or Partnership, your year will always run from 6 April to 5 April.

You will then have until 31 January the following year to submit your tax return online and pay your liability.

If you want to submit your return by paper, you will only have until 31 October following the year end to file the return. So it’s best to do it online!

So, how does that work in practice? For example, if you started trading on 1 May 2018, your first year of trading would run until 5 April 2019. You will then have until 31 January 2020 to submit your return online and pay your liability.

If you’d like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Can I claim Tax Relief on our work Christmas Party? Watch our latest video now, which explains all about it or read the blog below.

With December always fast approaching, getting organised for Christmas is always top priority; especially when

it comes to the Christmas party. The question is, can I get tax relief on the Christmas party and is it tax free for guests as well? Basically yes! The costs of the staff party are eligible for tax relief and tax-free for all the staff!

However, there is a limit on how much you can spend. The cost per head is £150 which is actually very generous. You do have to be careful, though, not to go over the £150, even by a penny. If you do, none of the cost will get tax relief ie you even lose the tax relief on the first £150.

How is the cost per head calculated?

At its simplest, it’s the total cost divided by the number of guests. There is, though, just two things that are worth taking note on this:

• The total costs include all the costs ie this must include the function itself, plus any travel, accommodation and any other costs.
• The number of guests isn’t restricted to the staff. If you have ten members of staff and each of them bring a partner, then there will be twenty guests meaning you can spend three thousand pounds.

Can I have more than one party?

Yes, you can. As long as the total cost per person is £150 per year. The £150 can be spread across however many parties you wish to have, up until the limit is reached.

As an example, you could have three parties costing £70, £70 and £60. The first two are OK as they total £140.

However, the third isn’t allowable for tax as it goes through the £150 limit. For each event, it’s all or nothing – the £60 event is entirely disallowed. You can’t claim the first £10 and disallow the rest!

One more rule

One last thing – to be allowable, the event must be open to all staff (or at least all at a specific location).

What happens if I go over the £150 limit?

If you do go over the limit, the staff can be taxed on the value as if it’s part of their salary. Alternatively, you, as the employer, can choose to pick up the tab.

I hope you found this useful. If you would like to know more, please get in touch using the details below.

You can contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Can I get Tax Relief on Christmas Presents? Watch our latest video here which explains all about it or read below.

 

Can I get tax relief on Christmas presents?

Christmas is on its way and I’m sure you have already started

shopping for presents. The question is, can you ask the taxman to help buy any of them? The answer is, yes you can. You can get tax relief on presents for your customers, team members and even for you and your family.

Can I give gifts to customers?

As a general rule you can’t claim tax relief on gifts as they are classed as Entertaining. This isn’t allowable for tax purposes. However, there is an exception if the gift ticks these three boxes.

• The gift has a conspicuous advert for your business
• The gift isn’t food, drink, tobacco or vouchers
• You don’t give gifts worth more than £50 per person per year

Can I give gifts to employees?

You cannot claim tax relief on a gift to an employee if it is not deemed to be a ‘Trivial Benefit’ this means it has to fit these criteria:

• The gift cost less that £50 per person
• It isn’t cash or a cash voucher
• It cannot be a reward for their work or performance
• It isn’t in the terms of their contract

Can I give gifts to me and my family?

The good news is that if you are a director of a Limited Company and if your family members are employees, you are eligible for up to £300 per person per year.

Each individual gift must be worth less than £50 and is subject to the same rules as gifts to staff. However, you can give a number of gifts during the year, adding up to no more than £300 per person. This means your business gets tax relief and you don’t pay any tax personally.

These rules extend to:

• Directors
• Office holders for example, a company secretary
• Family members of those directors and officers just as long as they’re an employee of the company

You will need to keep a record of the gifts to each person to prove you’re sticking to the rules.

Its also worth mentioning that this is all in addition to the Christmas party!

If you’d like to know more, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Does a Limited Company Director need to file a tax return? Watch our video to find out or read about it in the blog below.

The HMRC guidance on Directors’ responsibilities states that a director must register for Self-Assessment and

submit a personal Self-Assessment Tax return every year.

HMRC also state under the Self Assessment rules that if you were a company director in the last year then you must submit a tax return. Unless it was for a non-profit organisation and you didn’t get any pay or benefits, for example, a company car.

This can be seen as quite misleading, and here is why:

What does the Law say?

A director doesn’t legally have to register for Self-Assessment. However, they must notify HMRC if they have a higher rate tax liability. This is highlighted in Section 7 of the Taxes Management Act 1970. If a director has been issued with a notice to file a return under section 8 of the Act then they must submit their Self-Assessment.

A director whose only income has been taxed under PAYE, or has no taxable income at all, is not required to register or submit a Self-Assessment Tax Return.

Here’s an example

In a real life example, a director of a property company received no pay and no dividends and they didn’t register for Self-Assessment. HMRC registered them for Self-Assessment in December 2014 and stated that they sent them a notice to file a Self-Assessment for 2014/15 on 6 April 2015.

The director declared that they did not receive the notice to file the return and that it was unexpected due to all of their income being subject to PAYE. The director incurred late filings penalties totaling £1,200. The outcome was that the court was not convinced that HMRC sent the notice to file a return to the correct address, hence the penalties were overturned.

In this case, HMRC were relying on guidance rather than the law and due to outdated records, a penalty was given unnecessarily.

Conclusion

The law states that, if you had no untaxed income, you do not need to submit a personal tax return. This is despite HMRC stating you do. However, to be safe, and to avoid the hassle of appealing, it’s probably worth doing one. It’s quick and easy, and will save you time in the long run.

If you’d like to know more information, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

How do I take profits out of my business tax efficiently? Watch our video to find out more or read about it below.

People run businesses for a variety of reasons, but making a living is high up the list

for most people.

How do you go about drawing profit from your business in a tax efficient way?

If your business operates as a partnership or sole trader, you are taxed on the profits it makes, adjusted for any expenses which aren’t tax deductible.

It makes no difference to your tax bill whether the profits are held in the business or extracted for your personal use.

When you work through a limited company, the total tax paid by the company and the shareholders will depend on the methods used to extract profits, and the amount withdrawn.

The tax rates and thresholds used in the following examples apply to the two thousand and eighteen/nineteen tax year.

Paying yourself a salary

Paying yourself an annual salary of between six thousand and thirty two pounds and eight thousand four hundred and twenty four pounds counts towards the state pension and other state benefits, but neither you or your company have to pay any national insurance contributions (NICs).

Any salary above eight thousand four hundred and twenty four pounds would result in employer’s NICs being payable at thirteen point eight percent.

Employees’ NICs would also be payable above this amount at twelve percent up to a limit of forty six thousand three hundred and eighty four pounds. Above this threshold the rate of employees’ NICs payable falls to two percent.

Your employer’s NICs liability can be set against the three thousand pounds employment allowance, if your company employs more than just you as the sole director and pays each of those additional employees more than eight thousand four hundred and twenty four pounds.

Employing a family member

This can be a good way to spread the income from the business around the family, and use all available personal allowances and lower rate tax bands.

However, the wage paid to a family member must represent a market rate for the work performed – for example you shouldn’t pay your son a senior executive’s salary if he’s working on reception.

Paying Dividends

The company must have sufficient reserves before the directors authorise a dividend to be paid.

If there are insufficient reserves available, any dividends paid may be re-categorised as loans to the recipients.

Each individual is entitled to an annual tax free dividend allowance of two thousand pounds.

Dividends received above this limit are taxed according to the tax band the income falls into:

These tax bands can be expanded if you make pension contributions or gift aid donations out of net income.

Spreading dividend income among your family members can allow them to use their two thousand pounds tax free dividend allowance. However, those family members need to first hold shares in the business which entitles them to receive the dividends.

Dividend income is taxed at the following rates

For Basic-rate taxpayers the rate is seven and a half percent

For Higher-rate taxpayers it is thirty two and a half percent and

Additional-rate taxpayers pay tax at thirty eight point one percent.

You can give away shares to your spouse or civil partner with minimal tax implications, but do seek advice before doing this.

To be effective for tax planning purposes the shares should carry a full quota of rights, including the right to vote, receive a variable dividend and share in the capital of the business on a winding up.

Shares given to employees can be subject to income tax as employment-related securities, but there’s a general exemption from that legislation for gifts made as part of a family relationship.

As an alternative to giving shares, family members could subscribe directly for new shares to be issued by the business.

Pension contributions

Where the business pays pension contributions as your employer, those payments are tax deductible for the business, so long as your total remuneration package is reasonable for the work you perform for the company.

Where the total pension contributions paid by you or on your behalf lie within your annual allowance, usually forty thousand pounds a year, there is no tax charge when the contributions are paid.

If you’ve already taken some pension benefits, or your annual income is one hundred and fifty thousand pounds or more, you may have a restricted annual allowance.

Seek expert advice before investing in a pension scheme.

Benefits-in-kind

You can take advantage of tax-free benefits up to the following limits:

• non-cash gifts up to fifty pounds per item
• one mobile phone per employee
• loans worth up to ten thousand pounds per person and
• employer-provided training on which there is no monetary limit.

The non-cash gifts can be items such as wine, flowers, chocolates, vouchers or a gift card, but it must not be given as a reward for services or be in any way contractual. Vouchers and gift cards must not be exchangeable for cash.

Company directors and their family members can receive up to three hundred pounds of tax-free gifts from the company in total per tax year.

Loans from the company

You can borrow money from your company, if this is permitted by the company’s articles and by company law, but there are tax implications to consider.

Where the loan exceeds ten thousand pounds at any point in the tax year, you will be taxed on deemed interest calculated at three percent of the total loan, less any interest you actually pay. The company will also pay thirteen point eight percent NICs on that net deemed interest.

A loan of any value will generate a corporation tax charge at thirty two point five percent on any amount still outstanding more than nine months after the end of the accounting period in which the loan was advanced.

This tax is payable by the company, but it can be reclaimed once the loan is repaid subject to certain rules.

Where the loan repayments are made out of taxed income, the loan is not treated as a continuous loan.

Be aware that loans to an employee through a third party, such as an employment trust, may be categorised as disguised remuneration and be subject to PAYE and NICs as if the loan was salary.

Lending to the company

If your company owes you money, perhaps as undrawn dividends or salary, it can pay you interest on those funds at a commercial rate. Such interest is tax deductible for the company, if it uses the funds for business purposes.

You should draw up an agreement between yourself and the company to formalise the payment of interest, which sets the interest rate and terms for the loan repayment.

The downside is the company must deduct twenty percent tax from the regular interest payments, and report and pay those deductions to HMRC on form CT61 each quarter.

Where the total interest you receive in a year is less than your saving allowance of one thousand pounds (or five hundred pounds for higher-paid individuals), you can reclaim the tax deducted through your tax return.

If your annual income exceeds one hundred and fifty thousand pounds you are not entitled to a savings allowance.

In addition to the savings allowance, there’s the starting savings rate which owner-managed businesses can take advantage of. In the two thousand and eighteen/nineteen tax year this allows another five thousand pounds of tax free interest if you earn less than eleven thousand eight hundred and fifty pounds.

Rent

If you own a property which is used by the company for its trade, the company can pay you rent. The property can be anything from a factory to part of your own home and in every case, the terms of the arrangement should be set out in a lease or licence agreement.

Always seek legal advice on land-related agreements, and be careful not to give the company exclusive use of any part of your home, as this could restrict your capital gains tax exemption relating to that property.

The rent paid is tax-deductible for the company, and it does not attract NICs for you or the company.

You need to declare the rent on your tax return alongside any relevant expenses, such as insurance or mortgage interest. The one thousand pound property income allowance cannot be set against rent received from your own company.

In the long-term, receiving rent for a commercial property can restrict the availability of entrepreneurs’ relief on gains made on the eventual sale of that property.

We hope you found that useful. If you have any questions please get in touch with us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Can I Benefit From Employment Allowance? Find out now by watching our video or read about it below.

How does it work?

As an employer you could potentially reduce your National Insurance bill by £3,000 each year. This means employers with

a liability below £3,000 would have no liability to pay and employers with a liability over £3,000 would have a reduced National Insurance bill.

This allowance applies only to the Employers National Insurance bill. You do still have to pay the Employees National Insurance.

For example, if your contribution in one month is £750, you would pay nothing, and the balance carried forward would be £2,250. This cycle will continue until the allowance has been used up and then the liability must be paid in full for the rest of the year. If the balance is not used up in any year it is lost and cannot be carried forward into the following year.

Who qualifies?

Not all businesses are entitled to the employment allowance. This includes one-person companies where the sole employee is the director.

The allowance is also not available to employers who employ people for personal or domestic work such as gardeners and child minders.

How do you claim employment allowance?

If you are eligible you can just claim through your payroll software. You only need to claim for Employment allowance once. It will continue until you stop it. However, do make sure you are claiming as it is not automatic.

I hope you found this useful. If you would like to know anymore information then please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

What are the best tax savings for businesses? Watch our video to find out now or read our blog below.
As a business owner your tax bill at the end of the year can sometimes be daunting, but it doesn’t

always have to be.

Here are a few simple things that you can do to keep your tax bill as low as possible.

Buying Gifts for the Directors

Each year, HMRC allows up to £300 worth of gifts to be bought for the directors of each company, and calls them ‘Trivial Gifts’. The whole amount of the tax is deductible, and the VAT can also be fully reclaimed. You can also spend £300 on any family members as long as they are an employee.

However, just remember that HMRC always like to have proof of everything so whenever you buy anything, make sure that you keep accounting records that clearly show the £300 exempt amount has not been exceeded.

Buying Gifts for Staff and Customers

Buying gifts for both staff and customers is tax deductible as long as you meet the certain criteria for them both.

For Staff Members:

• The amount spent per employee has to be less than £50 each.
• The gift is not allowed to be either cash or vouchers.

For Customers:

• The Amount spent per Customer is £50 or less.
• The Gift is not allowed to be alcohol, tobacco or food.
• Your company name is clearly visible on the gift itself.

Staff Entertaining

Throughout the year, you are able to spend up to £150 per person for your employees and the whole of the amount is tax deductible. You can also reclaim the VAT. The amount is not just limited to one event either, such as the Xmas Party. You can have as many parties and nights out as you want, as long as the total amount for the year doesn’t exceed £150.

Use a Tax Software

By using an Accounting software, it is able to prepare and file your returns online whilst also backing up the filing with accuracy. This enables you to to relax that all your tax is being calculated right and protecting you with the proof. This may relieve the stress and the pressure of working it all out yourself, giving you more time to work on the things that you are good at and that you enjoy.

Putting your children on the payroll

In small businesses especially, there are always little jobs that need to be done. These can will be carried out by family members and their children. If they are ages 13 or older you can save tax by adding them to the payroll.

Use of home as office

If you work from home, then you’re eligible to claim a tax deduction to cover part of your home running costs. HMRC allows a £4 a week allowance without asking for any evidence, however if you think this should be higher for you, depending on the amount of time you spend working at home, then you are able make a bigger claim. As always though, make sure that you are able to prove it.

Claiming Mileage

By running your own vehicle costs and then claiming back the mileage using HMRC’s mileage allowance you are able to save more rather than just claiming back the petrol you have paid. If you are a limited company, this will also help you avoid higher tax on company cars. The rate is 45 pence per mile for the first 10,000 miles each year and then 25 pence after that. What a lot of people don’t know is that you can also claim VAT on this!

All in all, there are a lot of savings. And, as an accountant its our job to make sure you get them all.

I hope you found this useful. If you would like a chat, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Can I transfer my Marriage Allowance? Find out now by watching our latest video or read about it below.

There are more than 4 million married couples and 15,000 civil partners are eligible to a tax break worth up to

£238 in 2018/19. It is designed for couples where one partner pays the basic rate of income tax and the other partner pays none.

Millions of couples are entitled to the tax break but not many people know about it. Here is a breakdown of everything you need to know on Marriage Allowance ensuring you claim if you are eligible.

Marriage Allowance entitlement

Whichever person doesn’t pay tax is eligible to reduce their personal allowance by £1,190 and then able to transfer it over to their husband, wife or civil partner. This therefore enables the tax paying spouse to increase their tax-free personal allowance to £13,040.

You may benefit from the Marriage Allowance if:

• You partner has chosen to reduce their personal allowance and transfer it to you
• You’re a basic rate taxpayer in 2018/19
• You meet the residence requirements and have the right to claim personal allowance
• Neither you nor your partner submits a claim to the married couples allowance in      2018/19

However, you can only benefit from one tax reduction in any tax year.

Personal Allowance

You can choose to reduce your personal allowance as long as you have been married or in a civil partnership with the same person for the whole or part of the tax year at the time the claim is made.

You only have 4 years to elect to use the marriage allowance, after the end of the tax year, and it will remain there until you give notice to have it withdrawn. But remember, an election made after the end of the tax year only applies to the year of election. This is the easiest way for your allowance to be operated as it can be made when your tax return is prepared.

Separation and Divorce

There is a slight chance that you will lose you eligibility if you and your spouse or civil partner separate between the end of the tax year and the date that your return is due.

Cancelling the marriage allowance will usually take effect from the next tax year unless the marriage or civil partnership has come to an end through:

• Divorce
• Order of judicial separation
• Decree of nullity
• In the case of a civil partnership, a dissolution order. Order of nullity or order of separation

The marriage allowance can be backdated to the start of the tax year in these circumstances.

Death of a Partner

It is possible to make a backdated claim for the marriage allowance if a spouse or civil partner dies. This would be providing that the deceased spouse or civil partner was eligible for it when they were alive.

A claim can be made for any tax year in which you were both alive, including the tax year of death, although no claim can be made thereafter.

How does it work?

Will is on an annual salary of £16,000 a year and is married to Amy who works part time and earns £5,000 a year.

Amy has elected to reduce her personal allowance, which is then transferred when Will claims the marriage allowance. The benefit is 10% of the personal allowance rounded up to the next £10.

The transferable amount is then £1,190 giving them tax savings of £238 and this transfer will not impact on Will’s national insurance contributions.

I hope you found this useful. If you would like to know more, then please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

Can I get Tax Relief on Training Costs? To find out more information please watch our latest video now or read the blog below.

Tax on training Costs to businesses can vary a great deal. It can depend on whether

the costs are being incurred personally by the employer or the employee and whether you are trading as a sole trader or a company.

Training paid by the Employer
You can get tax relief on training which enables the employees to do better at their jobs. The employees are not taxed on the value of their training, as long as it relates to their work. This will even include general training, which might not always have an immediate impact on their work.

Training paid for by the Employee
Tax relief will not usually be given to the employee if they pay for the training themselves, even if it is to help them improve their jobs.
If the training is ‘wholly, exclusively and necessary incurred’ tax relief will be given. For example, if the training was carried out as part of their job not just to prepare them to do the job.
It is possible for the employee to be reimbursed by the employer for the cost. However, this will be counted as a ‘benefit in kind’ which will then be taxable.

If you are Self Employed
The tax situation is again different for self-employed workers. The training costs are currently classified as either a capital expense or a revenue expense. A revenue expense relates to the individual topping up their already existing skills. This is tax deductible from your income.
A capital expense relates to when the individual is training in learning new skills, outside of their current occupation. This is not tax deductible from your income.

I hope you found this useful. If you would like to know more, please contact us on growth@jondaviesaccountants.co.uk or by phone on 0151 380 8081.

You can find out everything that you need to know about your Self-Assessment Tax Return by watching the video or reading the blog below.

You may need to submit a Self-Assessment Tax Return if you have self-employed earnings, income from

property or untaxed income such as tips or commission.

It is better to finish your return early to avoid the last-minute rush at the end of January. The thought of sorting through your old receipts and working through confusing tax calculations can completely put you off, but were here to help.

What is a Self-Assessment Tax Return?

For most employees, tax is automatically deducted through your PAYE but when you are self employed it is up to you to notify HMRC. Through your Self-Assessment Tax Return you’ll let HMRC know what you have earned in the year and the tax you owe.

You will need to submit a self-assessment if you had:

• Income from self-employment that’s more than £1,000
• More than £2,500 income from rental property
• More than £2,500 on other untaxed income, such as tips or commission
• Income from savings or investments of £10,000 or more
• Income from dividends from shares of £10,000 or more
• Profits liable to capital gains tax

You’ll also need to complete a return if:

• You were a company director; or
• If you claimed child benefit, and you or your partner’s income was more than £50,000.

What do you need to do?

Step 1 is to register with HMRC

When you have registered, you’ll receive a unique tax payer reference number which you will use to sign up to HMRC for their online services. HMRC will then send you a pin shortly after in the post, which you can use to access the online services and file your return.

Completing your return

Each personal tax return year ends on the 5 April.

The deadline for paper returns each year is 31 October following the year-end, and online returns must be filed by 31 January, ie nearly ten months after the year end.

If you are registered as self-employed, you’ll need the following records:

• All your business expenses
• Records of any sales or income
• PAYE records if applicable
• VAT records if applicable
• Records of your personal income

If your employed or a company director for a limited company then you may also need:

• P45, P60 and P11D forms
• Certificates from a taxed award scheme
• Information about any redundancy or termination payments
• Information about income and benefits of your job

When do I pay my bill?

This will include your first payment on account towards the following year, if applicable, and any tax that you might owe from the previous tax year.

The deadline for the payment is the same deadline for submitting the return, by midnight on the 31 January.

What are the penalties if your late?

You will be fined if you submit late, even if you are only one minute after the deadline at midnight on the 31 January.

The initial penalty is £100 if you are up to three months late, but this will then increase the longer you leave it.

After three months, ie from 1 May – you will receive additional penalties of £10 per day, with a maximum of £900.

After six months – a further penalty of 5% of the tax due, or £300 charge. Whichever is higher.

After twelve months – another 5% or £300 charge, again depending on which is higher.

If you pay your tax bill late then you could face additional penalties of 5% of the unpaid tax at 30 days, six months and twelve months.

However, if you filed your tax return late but you do have good reason, then you’re able to appeal the penalty. The circumstances can include:

• If a partner or close relative passed away prior to the deadline
• Serious illness
• Emergency hospital stay
• Unexpected delay in post
• An IT, hardware or software failure
• External causes such as fire, flood or theft preventing you from completing the return
• Issues with HMRC

It has to be a genuine, serious reason. You can’t just claim the dog ate it.

What are the common mistakes?

Here are some of the common mistakes that people make when filing their return and ways to avoid them.

1. Missing out on tax relief

Remember to make sure that you are claiming back tax relief where you are eligible for it. This includes charitable donations that you have made, pension contributions and work expenses.

2. Not declaring all your income

All of your taxable income needs to be deaired on your self-assessment, including:

• Earnings
• Dividends
• Pension payments
• Interest on your bank account
• Capital gains
• Rent from a buy-to-let property

3. Late or incorrect filings

Rushing through your numbers last minute increases the chances of you either overlooking something or putting something in wrong. If you have realised that you have made a mistake then you can amend your tax return within the first year of the 31 January deadline.

There is still a chance that you could face penalties if HMRC decide that you did not take reasonable care in providing the right information.

Alternatively, to avoid any of these issues from the very start, speak to an accountant to ensure that it is all completed accurately and on time.

I hope you found this useful. If you would like to know more, please get in touch using the details below.

Do you know how much tax you should be paying on your dividends? You can find out by watching our video or reading about it below.

How much tax do I pay on my dividends?
If you are an owner of

a limited company, the most tax efficient way to pay yourself is through a small salary, with the rest in dividends.

What are the tax rules for the 2018/19 tax year?

The dividend allowance is £2,000. This means that the first £2,000 of dividends that you extract are tax free.

The personal allowance is £11,850. If any of this allowance has not been used it can be allocated against your dividend income.

What rate will my dividends be taxed at?

Dividends in the basic tax band which is up to £46,350 of income will be taxed at 7.5%

Dividends in the higher tax band which is between £46,350 and £150,000 of income will be taxed at 32.5%

Dividends in the higher tax band which exceeds £150,000 of income will be taxed at 38.1%.

What do you need to consider?

If you have any other income such as employment or property income, you need to remember that dividends are taxed last. This means you will have to factor in your other income first before you work out which tax band your dividends fall in to.

I hope you found this useful. If you would like to know more, please get in touch using the details below.

• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk

What does my Tax Code mean? To find out more watch our video now or read below.

What does my tax code mean?
The letters that you have in your tax code relate to how much you are entitled to, or

not, as an annual tax free personal allowance. Your tax codes are updated annually and they keep employers up to date on how much tax to deduct from your employees pay packets.

What Tax codes are there and what do they mean?
L – you get the basic rate of personal allowance if you are born after 5 April 1948.

In 2018/2019 the most common tax code is 1185L. The number in your code reflects how much tax free allowance you get, ie 1185L shows a personal allowance of £11,850.

OT – with this code you are given no personal allowance. This can happen when you don’t provide your employer with your P45, you don’t give them enough details for them to work out your tax code, or you have used up all of your personal allowance in a previous income.

BR or DO – all your pay on this code will be taxed at either the basic rate if you have BR or at the higher rate if you have DO. This may be because all your allowances have been used up which may happen if you have a second job or receive a pension whilst working.

D1 – all of your pay will be taxed at the additional rate which is 45%. This will be because you have used all of your allowance already – for instance you may have another job.

K – Your total benefits in kind exceed your allowance. For example, if you have a company car with a deemed benefit more than your personal tax free allowance. To get the tax, HMRC add an amount onto your salary before calculating it. You will be given a K code to ensure you pay tax on the excess.

M – this means that you are benefitting from the Marriage Allowance.

N – you have elected to use your marriage allowance, transferring 10% of unused personal allowance to your partner or civil partner.

NT – No tax is payed on this income.

S – You live in Scotland and you pay the Scottish Rate of Income Tax

T – this one is used when the tax office needs to review your tax code. For example, if your tax affairs are complex, or your estimated income is more than £100,000, which could affect your personal allowance.

W1 or M1 – These are emergency tax codes, standing for one week or one month depending on whether you are paid weekly or monthly. This indicates that you are not being taxed cumulatively, but just on the amount that you have earned in that particular pay slip.

Checking your Tax Code
It is always important to check your tax code to ensure the correct information is being used as HMRC can occasionally get it wrong.
If you have been on the wrong code then you can notify HMRC and they will amend it for you. You will be refunded if you have been over paying or may need to pay more if you have been underpaying.

If you found this useful, please share it using the icons at the side of the page, or leave a comment below.
Any questions?
If you’d like a meeting or a Skype call to discuss this, please get in touch with your favourite Liverpool accountant
• You can ring us on 0151 380 8080
• You can email us at growth@jondaviesaccountants.co.uk  

Are company cars tax-efficient? To find out watch our latest video or continue reading below.

One of the most common questions we get asked is whether or not to put a car through the business. Is it tax efficient? Well,

the answer depends on a few things.

The key drivers are:

• Whether to lease or buy
• The CO2 emissions of the car and
• Your personal tax rate.

Let’s take a look at how the tax is calculated, starting with the company.

COMPANY TAX

Your limited company can claim tax relief on a car – it’s just a question of how much. Let’s look at the two main scenarios:

Purchased cars

The standard rule for cars is that you can claim a taxable expense each year called the writing down allowance. This is claimed as a percentage of the cost of the car.

The writing down allowance depends on the CO2 emissions of the car. If these are over seventy five grams per kilometre, the rate is eighteen percent. Over one hundred and thirty grams per kilometre and the rate is eight percent.

If you buy a low or zero emission car, you can claim the full cost of the car as an expense in the year that it’s bought. To qualify, the car must have CO2 emissions of seventy five grams per kilometre or less, and must be a new car.

The company can claim corporation tax relief on the writing down allowance.

You claim VAT on the purchase of a car.

LEASED CARS

If your company leases a car, it can claim corporation tax relief on the full annual lease payment.

The company can reclaim fifty percent of the VAT on the lease payments.

The expense for corporation tax is the lease payment net of VAT.

For example:

Your Limited Company leases a car for five hundred pounds plus VAT per month, which is six thousand pounds plus VAT each year.

The Company can reclaim fifty percent of the VAT for the year which is six hundred pounds.

The Company can also claim corporation tax relief on the lease payment of six thousand pounds. At the Corporation Tax rate of nineteen percent, this reduces the Companies tax bill by one thousand one hundred and forty pounds each year.

PERSONAL TAX

As an entrepreneur, you’re the business owner and the employee. Your business has had tax relief on the car, but what about you?

Unless the car is only used for business trips and is left at the business premises every night, you will be taxed as having a “benefit in kind” for the private use of the car.

For personal tax, it’s irrelevant whether the car has been leased or purchased. It’s also irrelevant how much private use there is – it’s all or nothing!

The value of the benefit is based on a percentage of the list price of the car. Importantly, this is the list price of the car when it was new. The actual price you paid, or the fact you bought it second hand, will not affect this list price.

The percentage then depends on the CO2 emissions of the car. The percentage is low for an electric car, and high for a fuel guzzler. The range is from seven percent to thirty seven percent.

For example:

If you are a higher rate taxpayer you will pay tax at forty percent on the list price of your car multiplied by the CO2 emissions percentage. If you buy a car with a list price of thirty thousand pounds and CO2 emissions of one hundred and twenty grams per kilometre your tax bill will be three thousand pounds.

So, if your personal tax bill is significantly higher than the tax saving made on the car purchase by the company then you’re better off buying the car yourself.

HOW ABOUT FUEL?

If the company pays for fuel, it can reclaim VAT and claim corporation tax relief on the net cost of the fuel.

However, you’re taxed on the fuel benefit. This is calculated using the same CO2 percentage as the car benefit in kind. HMRC sets a standard value for fuel, called the fuel multiplier, that the CO2 percentage is applied to. In the tax year two thousand and eighteen/nineteen, the value is twenty three thousand four hundred pounds. As with the car benefit, the number of private miles you actually drive is irrelevant – it’s all or nothing.

For example:

If your company pays for all of your fuel, the car has CO2 emissions of one hundred and twenty grams per kilometre and you’re a higher rate taxpayer your tax bill for fuel will be two thousand three hundred and forty pounds for the year.

Even allowing for claiming the VAT back, the company’s gross fuel bill would have to be at least seven thousand two hundred pounds to get tax relief of two thousand three hundred and forty pounds. So unless you’re doing a lot of miles, it’s likely the personal tax bill will be greater than the company tax saving.

SHOULD THE COMPANY BUY/LEASE THE CAR?

It does all come down to specifics – whether you lease or buy, the CO2 emissions, and your personal tax rate.

However, it is often more tax efficient to simply purchase the car yourself. You can then charge the company for business mileage at forty five pence mile (dropping to twenty five pence per mile after ten thousand miles each year). This is tax deductible for the company…..and tax-free for you.

ARE THERE ANY EXCEPTIONS?

The obvious exceptions are low emission cars. As an example, if you have an electric car the benefit in kind rate is only seven percent…..and there’s no fuel benefit.

We recently looked at a Tesla for one of our clients. The list price was sixty thousand pounds and the company would get tax relief on the full amount in the first year, ie it would cut the corporation tax bill by eleven thousand four hundred pounds.

As the benefit in kind rate is only seven percent, the personal tax for the higher rate taxpayer was one thousand six hundred and eighty pounds. In this case, it was very tax-efficient to purchase the car through the company.

SUMMARY

Tax on company cars is complex, so it’s always worth asking an expert before you buy.

I hope you found this useful. If you have any questions please get in touch with us at Jon Davies Accountants.

How are company cars taxed? To find out more watch our video or read about it below.

A company car can be a really good benefit to give to your team members. But how is it taxed?

So, you’re travelling a

lot with work and your employer has given you a car to use. That’s great isn’t it? Yes it is, as long as you’re aware of the fact that you might have to pay some tax.

You see, using the car for work is OK. But, if you do any personal mileage in the car, HMRC will look at the use of the car as a form of salary…..so they’ll want some tax on the “benefit in kind”. And that’s even if you only drive one mile all year!

What is a benefit in kind?

A benefit in kind tax charge arises when a company car is also available for private use. The amount of private use is irrelevant – the car either is or isn’t available.

The value of the benefit in kind is based on a percentage of the list price of the car. Importantly, this is the list price of the car when it was new. The actual price you paid, or the fact you bought it second hand, will not affect this list price.

The percentage then depends on the CO2 emissions of the car. The percentage is low for an electric car, and high for a fuel guzzler. The range is from seven percent to thirty seven percent.

How am I taxed?

You’ll pay tax on the benefit in kind at your highest rate of tax. So, the tax you pay will be:
The List Price times the CO2 percentage times your Tax Rate

For example a higher rate taxpayer using a company car with a list price of thirty thousand pounds and CO2 emissions of one hundred and twenty grams per kilometre would pay tax at forty percent times thirty thousand pounds times twenty five percent which is the appropriate percentage for the CO2 emissions. Their tax bill would be three thousand pounds for the year.

What happens if I get fuel paid for?

If your employer pays for your fuel, you’ll also be taxed on that.

The fuel benefit is calculated using the same CO2 percentage as the car, applied to the fuel multiplier, which is a standard value for fuel set by HMRC. In the tax year two thousand and eighteen/nineteen, the value is twenty three thousand four hundred pounds. Like the car benefit, the number of private miles you actually drive is irrelevant – it’s all or nothing.

The tax you pay will be:

The Fuel multiplier times the CO2 percentage times Your Tax Rate

For example a higher rate taxpayer using a car with CO2 emissions of one hundred and twenty grams per kilometre who has all their fuel paid for by the company would have tax to pay of two thousand three hundred and forty pounds. Which is twenty three thousand four hundred pounds times twenty five percent times forty percent tax.

So, is it worth it?

Well….it depends. If you have a new company car and do a lot of private miles in it – yes. If your company car is getting on a bit and you only drive a few miles away from work, perhaps not. It comes down to your personal circumstances.

As an example, I was recently speaking to a client who has a company car. The car was bought second hand and, living in London, he hardly uses it for private use. Using the figures in my example, is it worth a tax bill of five thousand three hundred and forty pounds?

In his case, he is now going to have the company car but no private fuel – instead he’ll pay for all fuel and claim a tax-free allowance per mile to cover the work journeys. This ranges from four pence to twenty two pence per mile depending on the fuel type and engine size of the car. He now has to pay for his petrol for personal use….but avoids a two thousand three hundred and forty pounds tax bill, which would cover a lot of petrol!

I hope you found this useful. If you have any questions please get in touch with us at Jon Davies Accountants.

If you travel for business, you can claim tax relief on the expenses. Find our how by watching our video or read about it below. 

Usually, you would keep the receipts to prove expenditure but,

to make things easier, you can claim a fixed amount that’s been agreed by HMRC.

Read below to find out more.

What are the rules?

At its simplest, you can claim tax relief on any expenses that are incurred wholly and exclusively for business purposes.

If you’re travelling, this can include:

• Business mileage or fuel
• Road/tunnel/bridge tolls and congestion charges
• Parking costs
• Public transport
• Taxi fares
• Food and drink
• Hotel or other accommodation for overnight journeys
• Incidental costs such as business phone calls

You should keep receipts to prove the expenditure for all of these.

Can I claim for all journeys?

To claim tax relief, the journey must be for business purposes and can’t be to your permanent place of work (ie the daily commute). It must be a journey to a meeting, appointment, or a temporary place of work.

Business mileage or fuel?

If the car is owned by the business, you can claim relief on the cost of fuel – petrol, diesel or electricity.

If the car is owned privately, you can claim relief on the HMRC-approved mileage rates. For cars and vans, these are currently:

• 45p per mile for the first 10,000 business miles in the tax year
• 25p for each additional mile

If you travel by bike, you can claim using the following rates:

• Motorbikes – 24p per mile
• Bicycles – 20p per mile

You calculate the expense by multiplying the number of miles by the appropriate rate, and then claim tax relief on this expense.

Flat Rates for subsistence

For the past couple of years, there have been new rules on claiming fixed amounts for food and drink on journeys away from home. These fixed amounts are approved by HMRC and can be used instead of using exact amounts.

The rates depend on the time spent away from home on the journey and are as follows:

• Journeys over 5 hours – £5
• Journeys over 10 hours – £10
• Journeys over 5 hours and ending after 8pm – £15
• Journeys over 10 hours and ending after 8pm – £20
• Journeys over 15 hours and ending after 8pm – £25

The benchmark rates can only be used if the qualifying conditions are met:

• You must be away from your normal workplace or home for at least five ten hours
• You must have incurred expenditure on a meal and also kept a receipt.

The advantages of using the flat rates are:

1. It’s easier!
2. You can claim the flat rate even if you spent less
3. If you spent more than the flat rate, you can simply claim the larger amount

How do I claim the tax relief?

As a business owner, you simply include the expenses in your accounts to reduce your taxable profit.

Your tax bill will then be reduced at the appropriate rate.

We hope you have found this useful. If you have any queries, please get in touch, we’d love to help.

Do you pay a professional subscription? If you do, you may be able to claim tax relief on it! Watch our video to find out more or read about it below.