Marriage Tax Allowance

If you’re married, you may be entitled to receive £1,150 from HMRC! Over 2.4 million qualifying couples miss out on this – check below to see if you are eligible.

This works by allowing you to transfer £1,250 of your personal allowance (the amount you can earn tax-free each tax year) to your spouse, if they’re a basic rate taxpayer.
Eligibility:

• One of you must be a basic-rate taxpayer (earn less than £50,000/year) and the other a non-taxpayer (earn less than £12,500/year).
• You must be married or in a civil partnership.
• You both must be born after 6 April 1935.

 

 

These are the maximum amounts you could receive for each tax year:

• 2015/2016 – £212 (deadline 5 April 2020)
• 2016/2017 – £220
• 2017/2018 – £230
• 2018/2019 – £238
• 2019/2020 – £250

 

Deadline: Time is running out to claim the marriage tax allowance for 2015/16.

To benefit from claiming for the last 4 years, you must apply before the 5th of April 2020 to potentially receive the full £1,150.

 

Do It Yourself!

Applying for the marriage tax allowance is simple and most importantly FREE. We advise that you only apply through the HMRC website to avoid paying unnecessary fees. However, if your accountants do your tax return for you, they can also do this for you.

 

How to apply:

Use the following link to apply. The application is to be done by the non-taxpayer. https://www.gov.uk/apply-marriage-allowance

 

Free confidential, no obligation meeting with a Chartered Management Accountant- to find out how the Marriage Tax Allowance works, or for your own business, please do not hesitate to contact us.

 

Almost 1 million people were late in filing their tax return this year, and 26,562 people filed in the last hour!

 

Although over 11.1 million taxpayers managed to file theirs on time, it is estimated that the total fines could be over £10,000,000 this year due to late filers.  On the other hand, less people missed the deadline this year than last year, where over one million did.

Late filing immediately incurs a £100 penalty, and if your tax return is more than 3 months late, you will also be charged £10 per day until it is received by HMRC, up to a maximum fine of £1200.

A record of 10.4 million people filed their return electronically.  Those who filed a paper return had an earlier deadline of 31 October.

The director general for customer services at HM Revenue and Customs (HMRC), Angela MacDonald, said: “Customers who have missed the deadline should contact HMRC.

“The department will treat those with genuine excuses leniently, as it focuses penalties on those who persistently fail to complete their tax returns and deliberate tax evaders. The excuse must be genuine and HMRC may ask for evidence.”

The most stress-free way to file a tax return is to have somebody else do it for you. An accountant can deal with sifting through your paperwork and making sure nothing has been missed and you can relax knowing that your taxes are in the hands of an expert.

Although accountants will charge for this service, many will be able to use their professional skills and knowledge to in fact save tax by including costs not considered by taxpayers and utilising relevant allowance and tax reliefs.

For more information on any of your accounting needs, don’t hesitate to contact us for a free meeting.

How To Get Your Invoices Paid Sooner

If you have strong sales but still find yourself with cash flow pressures, a solution could be shortening the amount of time it takes to collect your outstanding invoices. This can be achieved by:

1. CREATE AN A/R AGEING REPORT

The first step to reduce your accounts receivable days (the amount of days that it takes to get paid for invoices issued) is to print off an aged accounts receivable report. This is done by creating an accounts receivable (A/R) ageing report, which you can do through most accounting software. This will track and measure the payment status of all your customers. Accounts are segmented into the number of days since the invoice was issued (such as 0-30 days, 31-60, 61-90 days, and beyond 90 days) and the amounts due. This way, you can spot potential collection problems early, before accounts become significantly late and focus your collection efforts more efficiently.

1. SPEED UP YOUR INVOICES

If you find you delay things till the end of the month (such as invoicing), you are also delaying the time in which you could have been paid. By completing invoices upon delivery, it ensures faster payments. Be sure to thoroughly check for errors in completing any invoices, otherwise this can also cause delays. You should be able to automatically generate this from your orders.

2. BE PROACTIVE IN YOUR COLLECTION EFFORTS

A few days before payment is due, have someone in your accounting department contact your customers to make sure they have everything needed to pay — especially if the invoice is a sizeable one. You should never feel uncomfortable about asking for payment. Maintain a regular schedule for emailing or mailing invoices.  If you find that you pay your suppliers before you have been paid it can create cash flow problems especially towards the end of the month, and changing these credit terms could save you some stress.

3. EXTENDING CREDIT

This isn’t always a bad thing.  However, tread carefully, as extending credit is delaying your receipts. Don’t extend credit just to increase sales- a sale isn’t a sale until you’re paid! You should have a defined approval process with deposit amounts and credit limits based on the financial situation of each individual customer.
You also could offer a discount for paying early.  This will depend on the invoice amount and the client. While there is a cost to your business in offering such a discount, the potential cash flow boost it provides could make it worthwhile.

For more information on the above, or any of your accounting needs, don’t hesitate to contact us for a free meeting.

Tax Return Deadline

 

Are you stressing about the tax return deadline? These four tips could make things easier for you.

New year, new me. New year’s resolutions are how we try to change for the better, so our year doesn’t seem so bleak. Resolutions like, to lose weight, live life to the fullest, be more organised…making sure you do your tax returns early (Hint Hint). Shohaib Shafiq, principal accountant at Integrity Accountancy Services Limited says, “The people who leave it to last minute usually end up missing things, getting calculations wrong, and making error on the tax return just to get it submitted in time”.

Yes, it’s not the most looked forward to resolution but we at Integrity Accountancy say that by preparing your tax return early, in a relaxed manner, you are likely to end up paying less tax. This is because you are less stressed, and more focused with your calculations and the deadline- January 31^st. However, if you have an accountant the only stress you have is getting any information sent over, which can simply be done online at any point after the end of the tax year.

If your dreading the thought of where to begin completing your tax return, here are some tips to help, so you don’t end up paying more than you have to.

 

EARLY PREPARATION

In recent years a growing number of self-employed individuals have filed their tax returns online. To submit tax return online, a unique identification code and password are required. Problems can arise from this however, as if you do not have access to this information, the process of HMRC resending this information to you can cause further delays in the completion of your tax return. It is crucial that you complete your self assessment before January, as this is when their self-assessment helpline is the busiest. Also, if you complete your tax return early during the year and it shows you are due a tax refund, this will be paid before 31 January deadline, unlike your tax owed due by this date.

 

BE THOROUGH WITH YOUR EXPENSES

Most commonly forgotten expenses are mileage and professional subscriptions. These small expenses can add up and reduce your tax bill considerably. If you use your car for business and your employer pays you less than the HMRC maximum approved mileage rate (45p for the first 10,000 and 25p above this), you can claim the excess but often this is forgotten have misplaced the paper work.  This all comes down to your organisation, sorting your expenses in date order making sure you have the VAT receipt and it is applicable for your tax return, which can be over whelming and time consuming.  That’s why having Integrity accountancy services is helpful by getting your bookkeeping records to us promptly, enables us to do the hard work for you. This gives you peace of mind, everything has been accounted for on your tax return.

 

BECOME MORE ORGANISED

Organisation is hard to achieve when you don’t always know what to organise. Nothing is more frustrating when you start to fill an online form, only to find you are missing half the information required. Start off by gathering relevant forms which will include your P60/P45/P11D also PAYE coding notices and tax certificates for investment, self employed income will also mean you need any relevant bank statements and sale invoices.  If you received income from letting property, you need letting agreements, mortgage interest statements and bills for expenses and management fees. Having a folder with this information might be a handy way to keep track of all the paperwork.

 

GET SOME HELP AND GUIDANCE

HMRC website is a great way to find out crucial information and advice, navigating through it all can be a little overwhelming so if you prefer the visuals there is always YouTube. There are a lot of videos offering tips to save you time and money but not all are specific to your tax return so be careful to know what you can and can’t include in your tax return. If that seems to technical and advanced, then you know its time to call Integrity Accountancy Services.  You will need to act sooner, rather than later.

What is the Right Company Structure for my Business?

Choosing the right company structure for your business can be a confusing decision to make as a startup. The choice you make can have lasting legal and tax implications for your business, so it is important that you have all the knowledge and advice you need to help you to make the best-informed decision for you.

There are several different company structures to choose from: Sole Trader, Partnership, Limited Liability Partnership, Community Interest Company and Limited Company, to name but a few. Each structure has its own benefits and disadvantages, so it’s all about finding the right structure to suit your needs.

Sole Traders and Partnerships
A sole trader is someone who works for themselves and is the exclusive owner of a business, entitled to keep all profits after tax. Sole traders do not have a separate legal existence from their owner – in effect, you are your business. Partnerships are similar to Sole Traders, only they have more than one owner. Some advantages of setting up in this way are:
• Exemption from filing Companies House forms
There are no registration fees as there is no need to register with Companies House – all a Sole Trader needs to do is register as self-employed with HMRC.
• Profit Retention
Sole Traders keep all the profits they make, and personally own all of the business’ assets, rather than having to leave them in the business. Also, owners are able to withdraw cash from the business without tax effect (as if it is a personal bank account).
• Simplified accounting
While a Sole Trader must complete an annual Self-Assessment, there is no requirement for formal annual accounts, or a Corporation Tax Return.
Fewer accounting obligations means lower accountancy costs

There are some important disadvantages that also need to be considered such as:
• High personal financial risk:
An important disadvantage to be aware of when choosing to set-up as a Sole Trader is that the owner is personally liable for business debt. In the worst case, this may mean they risk their home, personal savings and any other business or personal assets.
• Can be harder to expand
Sole traders often struggle with expanding their business because there is less information available in the public domain about their business.
• More difficult to sell
Because it is difficult to separate the business from its owner, Sole Traders can be more difficult to sell.

 

Limited Companies
A Limited Company is a separate legal entity to the business owner and has its own responsibilities, with its finances separate to its owner’s personal finances. Limited Companies also come with a whole host of benefits including:
• Lower personal financial risk:
Because the business is a separate legal entity, the owners are protected from the threat of personal financial losses if things go wrong
• Higher take-home pay
Tax efficiencies surrounding Limited Companies may mean you can take home more pay than other structures
• Tax planning
Various tax planning opportunities exist which can be tailored to your circumstances where applicable, to deliver significant tax savings

Setting up a Limited Company also has some disadvantages:
• Administration
There are greater statutory obligations, such as submission of Annual Accounts, Corporation Tax Returns and VAT Returns. And the company must be registered with Companies House.
• Costs
Because of the range of statutory obligations, there are usually higher accountancy costs if you don’t get things right, higher financial penalties

 

Limited Liability Partnerships (LLPs)
In an LLP, business profits are shared between partners, and each partner pays tax on their share of the profits. Members are protected and are not personally liable for any of the business’ debts. Advantages include:
• Less Liability
Liability is spread over the partners, and each limited partner is only liable up to the amount the initially invested in the business.

• Tax Benefits
While each individual partner must file taxes, the business itself doesn’t have to, which provides great tax breaks for the company.

• Great Flexibility
Each partner in the business can decide how much they want to contribute and how much of a partner they truly want to be in the business. There are no requirements for board or general meetings or decision-making by resolution.

Some disadvantages are:
• Member Restrictions
An LLP is required to have at least two members. If a member decides to leave the partnership the LLP may have to be dissolved.

• Disclosure to Companies House
Annual accounts must be submitted to Companies House for the public record.

 

Community Interest Companies (CICs)
A Community Interest Company (CIC) is a limited company designed to benefit a community rather than private shareholders. Business assets are “locked” and can only be used for the community purpose. Some advantages of CICs are:
• Less Regulation
Unlike charities, CICs do not have to have their accounts audited (unless the company’s annual turnover exceeds £5.6m). This makes it perfect for companies that want to identify themselves as ‘not for profit’ to attract funding, but want to start small.

• Limited Liability
Like Limited Companies and LLPs, CICs benefit from limited liability, so directors are protected from personal financial losses.

Disadvantages of a CIC structure are:
• No Tax Benefits
Unlike with charities, there are no tax concessions for CICs.

• Restrictive
The assets in the CIC can only be used for the community’s benefit, which can be restrictive.

 

We hope this article has shed some light on some of the different structure options available for your business. If you would like more information, and a recommendation of the right business structure for you personally, contact us for a free, no obligation meeting. We can talk you through the intricate details of the different structures, and help you to compare the tax efficiencies and legal benefits of each, so that we can help you to find the perfect solution for you.