Accountants and taxation advisers for small business, start-ups & individuals based in the suburbs of South Birmingham covering Kings Heath, Hall Green, Moseley and surrounding areas.
We provide for all your necessary accountancy and taxation requirements including accounts preparation, management accounts, personal and company tax returns, VAT,
payroll including CIS, cash flow forecasts, reviewing and implementing accounting and management systems.
We provide a friendly and reliable service to meet all your compliance requirements on a cost effective basis. We also act proactively to assist your business and provide a range of personal and business tax planning opportunities.
The tax gap is the difference between the tax that should be paid to HMRC and the actual tax that has been paid. HMRC's latest figures show that the tax gap has reduced from 7.3% in 2005/06 to an estimated 5.7% in 2016/17 - worth £71 billion in tax revenues.
According to HMRC, small firms are responsible for 41% of the current tax gap, followed by large businesses at 21% and mid-sized firms at 12%. Criminals are responsible for 16% of the gap.
HMRC is working with small businesses to help them get their tax right first time around and that it aims to make sure the tax system assists businesses in setting up, operating and growing. Digital record keeping and an automated tax system - with the introduction of making Tax Digital - will help businesses get their tax affairs in order, says HMRC.
Whether you are self-employed or have your own company your periodic business tax payments will always be based on the yearly trading profits and other chargeable gains made, plus any capital profits.
If you run your business through a company, corporation tax payable on adjusted business profits (after allowances for capital purchases) is payable 9 months and one day after your year-end date. Accordingly, corporation tax due for the accounting year to 31 March 2018, will be due for payment 1 January 2019.
As a quick fix, you could transfer between 15% and 20% of your monthly profits to a deposit account to partly cover this liability.
If you are self-employed, your business profits will form part of your self-assessment tax return. The amount of tax you will pay is split into two instalments on account, and a balancing adjustment if necessary (payable 31 January and 31 July).
In order to reserve cash for your self-assessment tax payments, the math is more complex. Your best option is to deduct a £1,000 per month (being your approximate income tax personal allowance) for each business partner, from the trading profits you make and apply 30% to what’s left. Transfer this amount to a deposit account. However, this will only provide the funds to pay tax on your business profits. If you have other taxable income this will have to be factored in.
This is an area HMRC is taking a much closer look at because restricting travel expenses can raise a significant amount of additional tax as for many self-employed individuals travelling is a major cost.
The basic position is business travel is an allowable expense but just exactly what this is not as straight forward as you would expect and depends on where your main place of business is and how you perform your services.
If your main place of business is not your home then home to work travel is not going to be allowable. However, if for example you pick up goods from a warehouse on your way to work a proportion of the travel costs should be permitted.
Where home is the main base of the business and where your work involves travelling or is itinerant and the work radiates around your home than travel costs are deductible e.g. if you are a subcontractor living in Birmingham and you mainly work in the Midlands then your travel costs should be okay, however if most of your work is in London then the cost of travelling from Birmingham to London would not be allowed although once in London normal travel cost between sites would be acceptable.
Where home is a place of business but you regularly work at another location then home to work travel would not be allowable e.g. if you are a service engineer and you carry out your main duties at a couple of fixed locations.
This is becoming quite a complex area and your individual travelling arrangements need to be fully considered; please contact us for more information.
We are happy to help you with any of your questions
just e-mail us below (no cost or obligation)