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August 2018

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To August’s Tax Tips & MYOB News.

We hope you are enjoying this wonderful warm weather!

Summer Parties
Don’t forget that HMRC allows your company to spend up to £150 (in total) per staff member on annual parties. This could be, for example, split between a summer Barbeque or Day at the Races and a Christmas Party.

Personal Tax Returns 2017-18
If you haven’t done so yet please send us details of all your income for your personal tax return.  Use our online form and email us copies of your P60s and pension statements. 

August 2018
· Acclivity AccountEdge 2018
· Beware the Risks of Unproven Self-employment
· Rent a Room Relief
· Payroll Service
· August questions and answers
· August key tax dates
Acclivity AccountEdge 2018
We are happy to upgrade all our business companion clients to the latest version of the Acclivity AccountEdge software, without extra charge.  Would you like to consider if your business deserves to take advantage of the improvements that have been made?

The improvements are summarised in these two videos:

Top Three Improvements

1) Registers faster and more comprehensive:
There is faster, and more advanced filtering. You can now search the Bank Register and the Sales and Purchases Registers using a wider variety of names and search fields.  You can also search more freely in the inquiry fields, for example, when you are looking for a payee in the spend money field.

2) Redesigned Jobs menu:

More advanced data recording.  Links to transactions, and reclaims.  More transparent jobs budgeting.  Filter your job reports to span fiscal years.
Include financial information on job reports from the previous, current, or next fiscal year. Simply choose your date range, even if it includes two fiscal years.  Allocate an amount to multiple jobs on a single transaction line. Allocate across multiple jobs by amount or percent. 

3) Improved Bank Statement Import:

Importing and reconciling bank statements is more streamlined and intuitive with the new Bank Statement Import. The new “worksheet” acts as a middle-man between import and reconciliation to improve the workflow of dealing with bank statements. Rules can be created more easily to look for and match transactions.

  • Kits: a new way of aggregating several products into a combined sale.
  • Create Copy: Create a template based on an existing sale or quote with the details from the original by choosing “Create Copy.”
  • Historical Reports: Start building seven years of Profit and Loss reports and Balance Sheets. A new Multi-Year Spreadsheet report displays year–over–year comparisons in columns.
  • Profitability: New Profitability reports show the profitability of items, customers and activities.
  • New Fields & Filters: The Card Summary and Card Detail Report include custom fields for Customer/Vendor/Lead Since, Lead Status and Lead Source. Filter by Customer/Vendor/Lead Since depending on the Card Type selected.
  • Hide Inactives: You now have the option to Hide Inactive on various lists including Cards, Items, Retainers and Jobs List.
  • Invoice & Purchase PDF Naming: When emailing sales and purchases, PDF attachment file names will now reference the invoice and purchase numbers (instead of eSale.pdf).
  • Document Management: Attach files to records in AccountEdge, including documents, images and scans. Bookkeepers can scan bills and invoices from vendors and attach to purchases or expense transactions. Salespeople might attach a signed service agreement to an invoice.
  • Change Orders: Make changes on an estimate and include change order notes to the estimate to provide to the client. Change Orders will track changes to quantities, price, discounts, descriptions, and new lines added to an estimate.
  • Updated Financial Statements: Financial statements – including Profit & Loss and Balance Sheet reports – have been redesigned to make them cleaner and easier to read. stakeholder
Beware the Risks of Unproven Self-Employment top
‘Rent a Room’ Relief top
Pimlico Plumbers status decision:

The Supreme Court has upheld earlier decisions confirming an individual’s claim that he was a “worker” and not self-employed. What are the tax and NI consequences of this ruling?

Employment status.
The long-running battle between Gary Smith (GS) and a well known plumbing firm (Pimlico Plumbers Ltd and another v Smith 2018) about his employment status finally came to an end on 13 June 2018 when the Supreme Court ruled that he was a “worker” and not self-employed, as Pimlico claimed.

Worker or employee. The worker status is a little short of being an employee, but conveys many employment rights such as the minimum wage, holiday and sick pay. The worker status has been around for quite a while, but has come to the fore recently because of the growing concern over workers in the so-called “gig economy”, such as Uber drivers.

Tax and NI. The difference between a worker and an employee is significant for PAYE tax and Class 1 NI purposes. The legislation specifically refers to income of “employees” and “employed earners” and not “workers”. This means that as the law stands HMRC can’t go after businesses which use the services of individuals under worker contracts.

Worker status?
Like employee status, a worker is an individual who personally carries out work, i.e. not via a company or other intermediary.
The same status tests of control, i.e. the right to send a substitute worker, and the obligation of the employer to provide work and the individual to do it, apply. If the last condition isn’t met, but the others are, the individual probably won’t be an employee, but is likely to be a worker.

Gig contracts.
The Pimlico decision has resulted in fresh calls for the government to step in with legislation to make employment status clearer.
However, in our view this is unlikely to happen any time soon given that the 2017 Taylor report recommended precisely that, but the government decided not to follow through. Tip. The best way to avoid challenges over employment status is for your contracts and working practices to impose as little control over those who work for you as possible.

Worker status isn’t relevant to PAYE tax and NI; that only applies to employees. To reduce the risk of HMRC asserting that a worker is also an employee, limit the control you place on freelancers as far as possible

Credit: From Indicator magazine reproduced with permission. 
Taking a lodger? Don’t forget to claim ‘Rent a Room’ Relief

HMRC have been carrying out a review of rent a room relief to discover whether the scheme, introduced back in 1992 provides the right incentives for the rental market. The current scheme exempts from tax, gross rents up to £7,500 where rooms within the taxpayer’s main residence are rented out.

Most accountants that responded to the call for evidence were keen for the relief to continue as it encourages taxpayers to let out spare rooms and provides them with additional income.

Note that where the gross rental income exceeds £7,500, say £12,000, the excess of £4,500 would be taxable. Alternatively the taxpayer may deduct costs of providing the living accommodation such as a proportion of mortgage interest and light and heat. If these allowable expenses amounted to £9,000 then it would be more appropriate to be taxed on the net rental profit of £3,000.

Note also that the current scheme only provides relief where the rooms let are in the taxpayer’s main residence and if the property is jointly owned, the relief would be £3,750 each. Where the lettings are in another property, the new £1,000 property allowance could be set against the gross rental income, however this allowance applies to each taxpayer.

Our Payroll Service
Last month we announced that Lorraine Cybaniak and Jennifer Byrom will now be processing your payrolls.  We are happy that the July payroll seems to have gone well – but always welcome any feedback from you.

Payroll email:
Telephone: 01422 847500

With the holiday season now upon us, we would appreciate it if you could send your August payroll details to us by 20th August if at all possible.  Of course, we do recognise that this will not be possible for everyone, but if we get some of the simpler ones early it will make it easier for us during this month.  
August questions and answers top
August key tax dates top
Q. As a landlord with several rental properties, is there anything I should be considering to help mitigate the impact of the restrictions on mortgage interest relief? Answer

Q. I am considering buying an all-electric vehicle, which I would use to travel to and from work. If my employer installs a charging point at work, will this be a benefit-in-kind for tax purposes? Answer

Q. My company borrowed money from another private company, but the loan has now been written off because the lender company has been dissolved. What are the tax implications of this write-off? Answer
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/8/2018
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Acclivity, Mamut, Solar Accounts, Quickbooks or Clearbooks.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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