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January 2015

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Tax Tips & MYOB News
We’re sending out this extra issue of our Newsletter as there are a few special dates and reminders at this time – as well as lots more useful articles!

As you should know, online, personal tax returns are due by 31st January 2014. Any tax due also has to be paid by this date.
Special Note: We want to emphasise that the HMRC now expect you to include a K at the end of your payment reference (see article on paying Self Assessment Tax below).

Business Companion clients – if we have already sent you a draft tax return, please make sure you have emailed us back with your permission to file the return. 

Emergency Tax Return?
Have you got a tax return to put in at short notice?  Would you like us to help you complete it?  If so please use our online tax return service.  An emergency tax return will cost just £125 (+VAT) if submitted via this portal.  
January 19th 2015
·Traps with the Flat Rate VAT Scheme
· How much to charge your clients?
· Charitable donations
· Paying your Self assessment Tax
· January Key Tax dates
Traps with the Flat Rate VAT Scheme
The VAT flat rate scheme for small businesses is generally straight-forward to operate, but here are a few traps to watch out for.

Use the right rate
It is your firm’s obligation to pick the most suitable rate for its particular range of activities. The largest single trade in your firm’s activities determines the rate. The flat rates used by each of the trades in the flat rate scheme are available here.

Include all business income
You need to apply the flat rate for your business sector to all your business income, including income that is exempt from VAT such as rents. If you are self-employed and operate your VAT registered business in your own name, any income from property you let in your own name must also be subject to the flat rate scheme. This applies whether or not you consider the lettings to be part of the VAT registered business.

If you run your VAT registered business though a company and hold the let property in your own name, the flat rate scheme operated by the company will not include your rental income.

If you make exports as a part of your business activities those sales should be included in the turnover to which you apply the flat rate. However, where the exports go to regions outside the EU it is outside the scope of VAT and should not be included in the sum to which you apply the flat rate.
How much to charge your clients?
Charitable donations top
It is sometimes difficult to know how much you should charge for extra work you might do for a customer or client.  As small business people we often end up in positions where we wish to charge for a few days …. But have difficulty deciding the rate. How much we charge needs to include a percentage for holiday pay, a  percentage for sick pay, downtime, provision of a home office, insurance etc. 

Luckily someone has already done the calculations.  Therefore I suggest that you have a look at the following two webpages to get the relevant estimates.  If you intending to do work for a client at your own premises:

If you are going to do work for a client at their premises please use:

The upshot is that if you want to charge the equivalent of a salary of £24k pa you need to charge £216pd if you are onsite with the client or £274pd if you are providing your own office space.

If you want to charge the equivalent of £40k pa you need to charge £368pd if you are onsite with the client or £427 pd if you are providing your own office space.

Divide these numbers by seven and a half if you would like an hourly equivalent.
We were recently asked if it was better to pay a donation personally or through a company.  If your business gets nothing in return for the money it gives to charity then it’s a straightforward donation.

Companies – but not sole traders or partnerships – that give money to charity can deduct the value as a ‘qualifying charitable donation’ from their Corporation Tax profit. The charity receives the donation free of tax and so cannot claim gift aid. This method is still the most effective and simplest.

However if you are higher rate tax payer it is better to make the donation personally… as it reduces the income taxed at higher rate.  We put the donation on your tax return along with the charity number. Meanwhile the charity claims the basic rate element of the tax via gift aid.

If your company is VAT-registered, you’ll need to account for VAT on any items or services you give away.  However, you can apply zero VAT to the items if your company makes the donation specifically so that the charity can sell the items.  This means you can reclaim the VAT on the cost of the trading stock you donate for say a charitable raffle.  
Paying your Self Assessment Tax
January Key Tax dates
Paying Self Assessment Electronically

To pay
Self Assessment use the same HMRC Bank account details as PAYE/NI:
Sort Code: 08 32 10
Account number: 12001039
Account Name: HMRC Cumbernauld

However it is important to use the correct Payment Reference to identify what the payment is for.

Use your 10 digit Self Assessment number. This is sometimes referred to as a Unique Taxpayer Reference (UTR) for example 1234567890, then put a ‘K’ at the end to make an eleven digit reference (this bit is new!). Quote the reference number with no gaps between the characters.

Your payment needs to clear on 31/1/15 if you are to avoid a fine.

Read More
31 – Deadline for filing 2014 Self Assessment personal, partnership and trust Tax Returns – £100 first penalty for late filing even if no tax is due or tax due is paid on time
– Balancing self assessment payment due for 2013/14
– Capital gains tax payment due for 2013/14
– First self assessment payment on account due for 2014/15
– Interest accrues on all late payments
– Half yearly Class 2 NIC payment due
– Further penalty of 5% of tax due or £300, whichever is greater for personal tax returns still not filed for 2012/13
– 5% penalty for late payment of tax unpaid for 2012/13 self assessment. 
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, Yodlee, 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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