Self-employment and Covid-19 support

In a time of unprecedented uncertainty across the world, many self-employed workers have been left in a state of uncertainty and anxiousness over their upcoming income. The UK have announced clear guidance for employed professionals, with he 80% Covid-19 salary cover. However, the protection for sole traders and small business owners is not currently so clear.

Many and most creative industry workers will be staying at home and out of work after last nights announcement from Boris Johnson. There have been many reports already of how the pandemic is crippling the creative industry. Many creative industry associations, such as Equity and The Creative Industry Federation, have released open letters and petitions to to the government demanding more support for creative industry workers.

Already, we have had clients that have reported total loss of future income due to Covid-19 for the foreseeable future. We are working around the clock to ensure that we are keeping our self-employed clients up to date with the latest news on what is to come over the upcoming days, weeks and even months.

I am self-employed and have lost all my upcoming work, What can I do?

We have compiled a brief account on some of the support currently available. This is an area with high pressure on the Government for more information. We will be monitoring all self-employment support developments and keeping our blog up to date.

The Government has prohibited gatherings of more than 2 people and the closure of non-essential business- you may be able to claim income lost if you have insurance. We recommend you contact your insurance company to discuss as soon as possible.

As many will already know the financial support that is available right now is Employment and Support Allowance (ESA) alongside Universal Credit. The charity “Turn2us” has created a calculator so that you can find out the benefits you might be entitled too.  

This is not the only support being offered. The government has recently declared that income tax payments due in July 2020 “will be deferred to January 2021”, stating that the process will be ‘automatic’ with ‘no applications required’. One of the major Covid-19 financial aid reliefs that self-employed workers can benefit from is the Mortgage Holiday and Eviction protection legislation

Small and medium businesses (businesses with ‘less than 250 employees’) can also access Statutory Sick Pay (SSP) relief. “This refund will cover up to 2 weeks SSP per eligible employee” off work due to COVID-19.

Many unions and societies are coming together to help self-employed people at this time. The ‘Musicians Union’ (MU) has invested £1 million to its new “Coronavirus Hardship Fund” for MU members. Offering in the way of financial support to members of the Music Union who apply.

 The ‘Arts Council’ also recently announced that their priority has shifted to helping support ‘people who work in arts, museums and libraries” through the means of refocusing grant programs to ‘compensate individual artists and freelancers for lost work.

Amongst this, the small steps should not be ignored. Things such as making sure you are up to date on your invoices and managing any savings to prepare for any financial losses you may experience in the coming months. The Times has published an informative article about this.

MOVING FORWARD

The most important piece of information to gain is the knowledge you are not alone. Self-employed individuals account for 15% of the workforce within the UK, which is a statistic the government will be fully aware of. As pressure builds from the various societies and unions the government it is likely more aid and clarity will be provided to self-employed individuals.

Contact us for tax advice for self-employed professionals

Advice from Bambridge Accountants London.

With the 2019-20 tax filing season fast approaching, now is the ideal time to start identifying what business expenses you have been overlooking or over claiming, in prior years, on your tax return. This article will focus on the key facts that you must know when looking to claim entertainment expenses on your UK tax return.

Entertainment expenses and the creative industry

As accountants to the creative industry, a large portion of our client base incurs high entertainment costs due to the high demand for industry networking. Business entertaining when you are self-employed or a small business can be crucial to business developments, helping professionals establish and grow business relationships. Unfortunately, the expense of entertainment is not the simplest area when looking to claim it back on your tax return.

Often in client meetings, we are faced with countless questions as to where the HMRC stands in terms of entertainments costs as a claimable expense.

Can I claim for meetings with clients at restaurants?

Are the drinks I paid for with my agent during a business meeting claimable?

I brought a prospective screen writer to a sporting event is that allowable?

There are a number of variables that will decide the answer to these questions.

Subsistence VS Entertaining

One of the common confusions we are often met with in our client consultations is when a client believes an expense serves the purpose of subsistence, but would actually be classed by the HMRC as entertainment.

To offer insight into entertainment expenses in practice, below are some examples:

1) Taking some clients out for lunch near your home base. As there is no allowable travel involved and therefore no demand for subsistence, the expense would be classed as entertainment.

2) Paying for a meal for yourself and a subcontractor who works for you while staying away on a work trip.

What this expense will be classed under depends on the purpose of the business trip. If the trips main purpose was for business, you can claim your own meal as a subsistence expense. However the subcontractor would be classed as entertaining and would not be allowable against tax.

If you are a sole trader you are not entitled to claim the costs of entertaining clients, suppliers or customer against tax

There are some cases where a limited company may, however, be able to claim entertainment as an expense.

Entertaining staff

The expenses incurred through entertaining payroll staff, as long as reasonable, are claimable against tax. In order for work events, such as Christmas party's, to be eligible to be claimed against tax, the events must be open to all employees within the company. The claimable spend limit per employee is £150 per in total throughout the tax year.

It must be noted that the £150 is a limit, not an allowance. If the company were to exceed £150 per person, the entire amount becomes a taxable benefit for employees.

A limited company director, on the payroll can claim expenses also if they have other non-director staff. Directors with no other employees and sole traders cannot entertain themselves, even at Christmas! Entertaining yourself is not allowed if you are a sole trader because you are not an employee of the business, you are the business.  

What is business entertainment?

According to the HMRC, business entertainment is the act of providing hospitality and entertainment to customers or potential customers. A common example of business entertainment is food and drink.

Below is are some more examples the HMRC offers:

• provision of accommodation (such as in hotels)

• provision of theatre and concert tickets

• entry to sporting events and facilities

• entry to clubs and nightclubs

• use of capital assets such as yachts and aircraft for the purpose of entertaining

Claiming business gifts as an expense

Lower value gifts such as Christmas cards can often be expensed. Small promotional gifts with a value below £50 are often allowable also. It is important to note, however, that the gifts must carry a clear advertisement for the business i.e. have the logo stamped on it. The gift itself must include this branding, not only the wrapping.

Gifts that are not allowable include:

• Alcohol

• Food

• Drink

• Tobacco

• Vouchers

If your business specialises in one of the products mentioned above, the tax ruling is likely to vary.

Contact us for expert advice on how to save money against tax

It is no secret that the road tax is on the rise. With the government pushing to get diesel cars off the road, high car tax tariffs have been introduced to dissuade drivers to buy diesel cars.

In hand with this incentive, the Government have recently revealed that electric vehicles will be tax-exempt. This is an effort to encourage businesses and individuals to make the move towards minimal emission living.

BIK are the extra benefits given to employees as part of a benefits package. These benefits are not included in salaries or wages. However, benefits such as company cars can still have an impact on tax liability.

Having a company car offers better security to you as an employee as you do not need to pay insurance, maintenance, and servicing costs. In this option, the employee is taxed on a theoretical value of the benefit, which is a blend of the list price of the vehicle, emissions of the car, and whether the employee pays for private fuel used or not.

According to data from HMRC in 2017, the number of employees paying company car tax reached a five-year high. With electric cars being exempt from this tax for 2020/21, this makes having a company car a much more tax-efficient choice for employees than it has previously been.

No matter the registration date, pure electric cars with zero tailpipe emissions and certain plug-in hybrid cars will be taxed by the following company car tax rates for the next three tax years

·       0% during 2020/21

·       1% during 2021/22

·       2% during 2022/23

Contact us for expert tax advice for uk professionals

Zohar Winner

The government and HMRC have introduced a number of tax reliefs to work as an incentive to entrepreneurs to keep their business’s growing and thriving. As a business owner or self-employed professional, you can experience huge benefits from understanding the different reliefs and credits you are entitled to. 

Understanding how the tax system can work in your favour could not be more important, especially as we move towards a post-Brexit economy.

What is the difference between tax credits and tax deductions?

Tax credits are often regarded as superior, in terms of tax savings, to deductions. Credits are deducted from income before gross before-tax income is determined. Deductions are taken in the next step of the tax process, reducing the net taxable income.

Business Tax Credit and Deductions for ‘Going Green’

The government have introduced many incentives to encourage energy efficiency and being environmentally friendly. In addition to tax credits, you may also be eligible for tax deductions for changes made to your business facilities.

 Examples of some ‘Going Green’ credits: Business Energy Tax Investment Credit

Research and Development Tax Credits

Research and Development tax credits have been introduced to encourage businesses to build and discover in their field. The PATH Act of 2015 includes some increased incentives- in the form of tax credits- for small businesses who use the R&D tax credit.

Alternative/Hybrid Vehicle Tax Credit

Individuals and businesses who buy and use a new hybrid or electric vehicle can take advantage of the Alternative Vehicle Tax Credit.  

Contact us for more advice and tips on the different tax credits that can be claimed

Campbell Addy Photography

There are a number of reasons why as a self-employed professional and tax filer you may not be able to pay your tax owed on time; from a miscalculation to an unexpected emergency. If you have realised you are not going to be able to make your tax payment on time, don’t panic. It is important to let the HMRC know that you are going to be unable to pay on time as soon as possible.

One of the most common options in the scenario where you are unable to pay your tax due on time is to set up an HMRC payment plan to pay in instalments. In order to set up an HMRC payment plan, you will need a Government Gateway user ID and password.

 Although it is likely you will have to pay interest by paying late, you can avoid penalties by contacting the HMRC as soon as you realise you will not be able to pay online.

Before you contact HMRC

You’ll need to know:

·       your reference number (for example, your 10-digit Unique Taxpayer Reference or VAT reference number)

·       the amount of the tax bill you’re finding it difficult to pay and the reasons why

·       what you’ve done to try to get the money to pay the bill

·       how much you can pay immediately and how long you may need to pay the rest

·       your bank account details

What happens when you contact HMRC

HM Revenue and Customs (HMRC) will ask you about:

·       your income and expenditure

·       your assets, like savings and investments

·       what you’re doing to get your tax payments back in order

The HMRC will then decide whether you should be able to pay immediately. If they determine not, they’ll decide whether you’ll be able to get your payments back on track with more time.

If you have been given more time to pay before they will ask more questions and may even ask for evidence.

Contact us for expert UK personal tax advice

 

Flower Week

Over the past 5 years the general UK population’s rise in concern and consciousness for the environment is undeniable. From youth climate change protests to the suggested conversion to veganism to help the environment; climate change activism can be seen in all walks of life in the UK.

This article will focus on how UK taxes are joining in on the effort to help the environment.

During 2014 Alone, UK environmental taxes raised £44.6billion; this equated to 7.5% of all revenue from taxes and social contributions in 2014. The main source of the sum was from the tax on Hydrocarbon oil (i.e. fuel tax), contributing 72.9% of all environmental taxes in 2014.

Another environmental tax is more directly on transport, for example Air Passenger Duty and Boat Licenses. This made up 23.7% of environmental tax revenue in 2014.

The final key category of environmental tax is pollution and resources taxes, such as Landfill tax, fishing licenses and aggregates levy.

The environmental taxes that have been purposed in the 2018 Budget include:

Plastic tax

A new tax on the production and importation of plastic packaging will be introduced in 2022. This aims to provide a financial incentive to manufacturers to produce more sustainable packaging and would in turn help combat issues such as water and sea life pollution.

Carbon emissions tax

 In FB 2018-19, the government will legislate a new carbon emissions tax to help meet the legally-binding carbon pricing commitment under the Climate Change act.

Company car tax and VED: carbon dioxide emission regime

The impact of the Worldwide harmonised Light-vehicles Test Procedure (WLTP) on the VED and company car tax systems is to be reviewed. Legislation will confirm that, for the purposes of VED and company car tax, the applicable CO2 figure for cars will be based upon WLTP. WLTP aims to provide a closer representation of ‘real-world’ fuel consumption and CO2 emissions.

For cars registered prior to 6 April 2020, HMRC will continue to use the current New European Driving Cycle (NEDC) test procedure for the purposes of collecting company car tax. Similarly, cars first registered prior to 1 April 2020 will maintain their current VED treatment.

Climate change levy rates

The rebalancing of the electricity and gas main rates of climate change levy (CCL) is to continue. The electricity rate will be lowered in 2020/21 and 2021/22, and the gas rate will increase in these years so that it reaches 60% of the electricity main rate by 2021/22. Other fuels such as coal will continue to align with the gas rate. The rate of CCL for liquefied petroleum gas will remain frozen at the 2019/20 level in both 2020/21 and 2021/22.

Carbon price support rates

The price of EU ETS allowances has risen significantly over recent months, raising the Total Carbon Price (currently made up of the EU ETS price and the carbon price support (CPS) rate). The CPS rate will be frozen at £18 per tonne of carbon dioxide emitted for 2020/21. From 2021/22, the government will seek to reduce the CPS rate if the Total Carbon Price remains high.

Aggregates levy rates 

The Aggregates Levy rate for 2019 to 2020 will be frozen, but it is the intention to return the Levy to index-linking in future. 

Landfill tax rates 

The standard and lower rates of landfill tax will be increased in line with RPI, rounded to the nearest 5p, for both 2019/20 and 2020/21.

www.billyglow.space 

aloha@billyglow.space

With 51% of businesses expressing desires to expand over the next year, UK unemployment levels have fallen to its lowest point since 1974. Below are some of the fastest growing sectors for employment.

Fintech

Fintech companies are one of the largest and fastest growing sectors currently. Since the general style of employment within the sector is generally contract work; there is a constant demand for work.

Construction

The construction industry has also demonstrated strong growth over the past year with 51st growth. There are many signs that this huge growth will continue. Although, since many of those employed in construction roles are from abroad, Brexit pays a significant threat to the construction industries ability to source skilled workers.

Information technology

The IT sector demonstrates monthly stable growth; with areas such as cyber security expanding masses over the past two years. The lack of skilled workers available has lead to heavy investment from both the government and IT companies to train and source IT professionals.

Contact us for expert tax advice for tech or construction professionals

Nationwide, it is becoming more and more difficult be granted an appropriate-sized mortgage. The number of people going self-employed within the UK is increasing every year, with self-employed workers now accounting for 15% of the working population (Jones, 2018).

There are a number of problems currently associated with being self-employed, i.e. the pension crisis and getting a mortgage. This article focuses on how to get a mortgage as a self-employed individual.  Research has shown that 30% of self-employed homeowners feel that the mortgage process is biased (McDowell, 2018).

 There is no such mass-market thing as a mortgage especially designed for the self-employed (currently), self-employed individuals are able to get the same- if not a higher- income than employed professionals and so are in the same pool as everyone else for mortgage brokers. However, the problem associated with self-employed individuals getting a mortgage is often the issue of proving their income.  

Proving you income to mortgage brokers

Generally speaking, the longer that you have been self-employed the better; this way you can show a steady ability to pay towards a mortgage. The majority of lenders insist that chartered accountants do the accounts. Feel free to contact us to see about getting your accounts done with the goal of getting a mortgage in the future. 

 You will also be expects to present the income you’ve reported to the HMRC and the tax paid, a SA302 is used to show this.

Planning towards getting a mortgage 

One thing that is overlooked by so many self-employed professional, when they go to enquire about getting a mortgage is the amount they are claiming in expenses. Yes, on the most part it is great to save money against tax. However, when it comes to getting a mortgage- not so great. In the spirit of being granted mortgage, you should consider not claiming the maximum and paying a little extra tax for a few years. If you are seeking to get a mortgage as soon as possible, but have previously claimed the maximum, feel free to contact us about backdating your tax returns.

Just gone self-employed

If you have just gone self-employed and want to get a mortgage, don’t lose hope. There are specialist lenders such as Precise Mortgages and Kensington that may consider applicants with only one year worth of accounts. It should be noted that this is likely to come at a higher rate.

Your self-employed status 

The status of your self-employment, whether it is sole trader, company director etc., is an important factor to your eligibility for a mortgage. Sole traders are assessed differently depending on whether their income has increased or decreased over recent years. While contracts who earn a day rate can have their rate multiplied by the number of working days in the year, as well as looking at their past income.

Contact us for expert tax support for self-employed professionals

Dinsaur Agency

As a self-employed consultant you are likely to have several running costs and expenses. Theses costs and expenses should be taken away from your business income to work out your profits. Not all expenses are allowable for tax purposes, it is therefore important to be aware of you what you are and aren’t allowed in order to save money against tax and avoid a HMRC enquiry.

What are allowable expenses? 

Allowable expenses include costs that you pay with the sole purpose of earning business profits. You’re not able to deduct costs:

·      For non-business or personal purposes

·      For buying or improving fixed assets or capital items which last for several years

·      Which are recoverable under an insurance policy

Below are some allowable expenses that you may be able to claim as a consultant:

Accountancy fees

Accountancy fees, like many other professional fees, are allowable expenses. This means that you can claim the cost of your tax returns against your taxable income.

Advertising

As a consultant it is likely that you have to market yourself to gain work. The money you spend on ad campaigns and creation is claimable against tax. This includes the costs of running a website.

Car Insurance

If you have brought a car for the purpose of work, traveling from one client to another, you can claim a portion of your car insurance against tax.

 Contact us for expert tax advice for consultants

Statutory accounts (commonly known as annual accounts) are financial reports that must be prepared and filed at the end of each financial year. For UK private limited companies statutory accounts are a compulsory part of the tax year.  

Statutory accounts are used to report financial activity and the performance of limited companies; as well as being used to calculate corporation tax.

Once your Statutory accounts have been prepared they should be sent to shareholders, Companies House and the HMRC.  

Limited companies must produce their annual accounts in line with either IFRS Standards or the New UK GAAP. Therefore they must include a balance sheet, a profit and loss statement and notes about the accounts.

Depending on the size of your company, you may also need to include a directors’ report and/or an auditors report.

I’m a small business owner. Do I need to file statutory accounts?

If you are the owner of a small business you may not be required to file full statutory accounts or supply chain reports.

Dormant companies, micro-entities and small companies are subject to different rules when it comes to statutory accounts.

 

Dormant companies and statutory accounts

If you are the owner of a dormant company you are not required to audit your company nor submit an audit report.

Micro-entities and statutory accounts

If you are the owner of a micro-entity, Companies House will accept simpler statutory accounts and balance sheets.

Small Companies and statutory accounts  

If you are the owner of a small company Companies House will accept ‘abridged’ accounts.  These contain much simpler balance sheets and make less information about your company publicly.

Contact us for support on your statutory accounts

Advertising work by Hatched for Cawston

As a business owner it is important to be aware of your companies tax obligations and liabilities. There are a number of taxes that small businesses are required to pay. Below is our breakdown of the taxes you should know about as a business owner:

Corporation tax 

If you are the owner of a limited company and your profit is above a set threshold it is likely that you are required to pay corporation tax.  Corporation tax is self assessed- meaning that the company is required to calculate how much Corporation tax they owe. This should be paid nine months after the businesses tax year-end. 

VAT  

If your business sells products and services, then- depending on your company’s income- you may be required to start charging clients Value Added Tax (VAT). VAT is chargeable on the majority of products and services sold in the UK. VAT is usually charged at a rate of 20% of the price of the product or service. 

National Insurance 

If you employ staff then you are required to pay National Insurance Contributions (NIC). These payments should  be made directly to the HMRC when you run payroll. 

Income tax 

If you are a sole trader, you are required to pay income tax based off of the income of your company. You must start paying income tax once your income exceeds the personal tax allowance.

Business rates

The business rates you are required to pay depend on the location of you company and the type of company you run. There work the same as council tax.

Contact us for expert tax advice for business owners

A confirmation statement is a form that was introduced to replace the annual return (AR01) in June 2016. The purpose of an annual confirmation statement is to verify important company data registered on Companies House to ensure it is correct and up to date.

Compared to the statements predecessor, the Companies House form AR01, a confirmation statement (CS01) is more straightforward as it is not necessary to enter previously filed information if there have been no changes in the past 12 months.  A confirmation statement gives you simple ‘check and confirms’ option that allows you to move last year’s details forward.

What is included on an annual confirmation statement?

Below we have put together some of the information that is included on a confirmation statement:

·       Company name and registration number

·       Registered office address

·       Single alternative inspection location (SAIL address)

·       Location of the company’s statutory registers (i.e. registered office or SAIL address)

·       Information about each director

·       Full name

·       Former names used for business purposes within the past 20 years

·       Usual residential address

·       Service address

·       Date of birth

·       Nationality

·       Occupation

·       Information about each company secretary (if applicable)

·       Name

·       Former names

·       Service address

·       Principal business activities (Standard Industrial Classification (SIC) codes)

·       Name of each shareholder

·       Shares held by each shareholder – class, quantity, and details of any transfers

·       Statement of capital

·       total number of shares of the company

·       aggregate nominal value of those shares

·       aggregate amount (if any) unpaid on those shares (whether on account of their nominal value or by way of premium)

·       For each class of shares, you’ll also need to provide the:

·       prescribed particulars of the rights attached to the shares

·       total number of shares of that class

·       aggregate nominal value of shares of that class

·       Trading status of shares

·       Information about people with significant control (PSCs)

·       Name

·       Month and year of birth

·       Nationality

·       Country, state or part of the UK where the PSC usually lives

·       Service address

·       Usual residential address (this must not be disclosed when making your register available for inspection or providing copies of the PSC register)

·       Date he or she became a PSC in relation to the company (for existing companies the 6 April 2016 should be used)

·       Which conditions for being a PSC are met

Confirmation statement deadline

Your confirmation statement deadline, otherwise known as a confirmation date, is due on the anniversary of your company’s formation. You can find out this date by accessing public records.

The HMRC’s Making Tax Digital movement for VAT is scheduled to come into play during April 2019. From April 2019, fundamental changes to the processes of submitting a VAT return should be expected. 

In order to ensure our clients are fully informed about all of the Making Tax Digital Movements, we will be running a series on our blog that includes all of the latest announcements and changes.

Failing to coordinate with the Making Tax Digital changes correctly can result in fines and unnecessary stress.

In the pursuit to become a world-leading digital tax authority, the HMRC plan to make Making Tax Digital to all VAT schemes and registrations. This will include annual, retail, flat rate, partial exemptions and all other areas of VAT.

Who has to comply to MTD for VAT in 2019?

Businesses with taxable income above the VAT registration threshold will be required to comply with the new guidelines, this will include having to:

·      Keep records digitally (for VAT purposes only)

·      Provide VAT returns information through MTD compatible software

For companies below the income threshold, it will not be compulsory to file in accordance to Making Tax Digital, however businesses may also opt to file their VAT returns under to regime.

Exemptions

Exemptions that are already applied to electronic VAT returns will be extended to cover digital recordkeeping requirements. This includes businesses:

·      Who the Commissioners are satisfied is practice members of religious society or order whose beliefs are incompatible with the use of electronic communications

·      For whom the commissioners are satisfied it is not reasonably practicable to make a return system for reasons of disability, age, remoteness of location or any other reason not required to make a return required by regulation 25 using an electronic return system.

How MTD will change how businesses file  a VAT return

Businesses who fall under categories required to comply with MTD must use ‘functional compatible software’ to meet the HMRC’s requirements. Software should allow the organization to maintain digital business records and relevant VAT information electronically.

The HMRC have not disclosed a full definition of what falls into ‘functional compatible software. 

Digital record keeping

Businesses will be required to keep and preserve VAT records digitally. For businesses within the scope of MTD, records that relate to the period between mandation and deregistration must be preserved digitally for up to 6 years.

Digital records should include:

·      Business names, principal place of business and VAT registration number

·      The VAT account that each VAT registered business must keep, by law- the VAT account is the link- the audit trail- between primary records and the VAT return

·      Information about supplied made and received

VAT will contain a lot more information

One of the most significant changes to filing VAT after April 2019 is the wider range of information you will be required to report.

Contact us for expert advice on your 2019 VAT tax return

If you are in the process of going through a divorce there are several routes you may take when it comes to your money and property. 

If you can agree

If both parties in the divorce can agree and cooperate, you can avoid all official paperwork declaring how to divide money and property. However, this agreement won’t be legally enforceable by the court.

In order to make your agreement legally binding you must have a solicitor draft a ‘consent order’ and ask the court to approve it.

A consent order is a document that confirms the agreement and includes details over how your assets are going to be divided up.

If you cannot agree

If both parties cannot come to an agreement over the dividing of their assets, after going through mediation, the court can be asked to make a ‘financial order’. The outcome of this can be:

·      A lump sum payment

·      Ownership of property

·      Regular maintenance payments to help children or living expenses

·      A share of your partner’s pension payments

The judge will decide how your assets should be divided according to you:

·      Ages

·      Ability to earn

·      Property and Money

·      Living expenses

·      Standard of Living

·      Standard of living

·      Role in the marriage or civil partnership

Tax on transferred assets

You are not typically required to pay Capital Gains Tax when transferring assets to your partner. In the instance of transferring assets to your ex-partner, you may be subject to paying capital gains tax.
The rules for working out your gains and loss are extremely complex.

For expert advice on Capital Gains Tax on Divorce contact us

Our Client Blaise Collangelo in Mumma Mia

Charitable Giving in the UK can come with several tax perks that most are unaware of. Below is a summary of just some of the tax perks of charitable donations.

Your donations will go to your chosen charity/ CASC untaxed.

The HMRC do not tax donations by individuals to charities/ CASCs. Therefore your donation will go to your chosen charity/ CASC in full. This can happen through the mean of Gift Aid, Payroll giving schemes, land/property/shares or in your will.

• These terms also apply to sole traders and partnerships. There are different tax ruling for limited companies (gift relief is seen through corporation tax).

You can deduct charitable donations off of your total taxable income.

Charitable donations within a set threshold are deductible off of your total taxable income. Donations will qualify for gift aid as long as they do not exceed four times of your paid tax on income or capital gains for that tax year. In order to deduct these donations, you must keep thorough records of your donations. 

• In order to ensure that charitable donation is beneficial for tax purposes, you should contact a tax professional to ensure the charities accountability and legitimacy is recognised by the HMRC.

Our 4 key Donation tax tips

4 Key Tips

§  Make sure to adopt a proactive donation strategy, that aligns with your own finances, and reflects types of causes you care about (don’t be lured in to the responding only to sudden requests such as after a natural disaster)

§  Always conduct research – don’t always trust charities recommended by a third party as you may find a charity that suits your specific desire to help, this also applies to schemes such as door-to-door giving, as they may not always be a reliable source

§  Try to give to charities that have a good track record of dealing with donations efficiently – either financial or physical items

§  Try not to diversify charitable donations too much, as to avoid unnecessary processing of expenses and receiving an overflow of appeals in your inbox

Contact us to find out how you can benefit from Charitable Donations for Tax Purposes

Set Design by Andrezj Goulding 

The UK’s decision to withdraw from the European Union will have ramifications for all people and organizations in one form or another; whether that be through the cost of material or shipping tariffs.

One industry that is likely to be massively affected by Brexit is the creative industry.

As one of the UK’s fastest growing sectors, the creative industry is generally more anti-Brexit than the rest of the country. Reasons for this include the concerns surrounding the free movement of talent, funding and Britain’s reputation throughout the world.

The likely limits to free-movement that will result from Brexit could cause problems for travelling creative professionals i.e. performers touring Europe. Visas may be required in the future which can be expensive and timely.

Already-established acts are likely to feel the brunt of the changes less, however, there are fears it will be counterproductive for up-and-coming creative professionals.

Michael Dugher, former Labor MP, has called on the government to introduce a ‘touring passport’ to get around any limitations to travel.

Foreign studios spent £1.7billion in the UK in 2017- almost double the amount spent four years previously. The majority of this money was sourced from the U.S.A., spurred on by the fall in the value of the pound after the vote to leave the EU, which made it more attractive for U.S. studios of film in the UK. If a wide-ranging free trade deal is established with the US, this trend would be likely to continue.

Contact us for more expert tax advice for creative industry professionals and companies in the UK

Rinat Ashenazi Motion Design https://www.behance.net/hrinat

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Written by Alistair Bambridge
Partner & Founder
About Alistair

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Updated: 24/08/2022

If you are considering withdrawing from your pension early it is important to understand the different components of your pension that may lead to hefty fines. 

A rise in 'Early Pension Release' offerings from companies have been found in recent years. Anybody considering taking advantage of this offering should do so with caution and seek the appropriate advise. Early Release Pensions, some times called 'Pension Unlocking' involves withdrawing money from your pension before the minimum age of 55 (57 from 2028). 

Although not illegal, Early Release Pensions, have often been employed by scammers and sadly many innocent people have lost their savings as a result. Unless you meet specific conditions, you’ll be charged a substantial amount of tax on your early pension withdrawal.

Pension providers may charge you up to 30% on the total sum you withdraw which is a considerable chunk of money to miss out on. Further to this, the pension provider is then required (by law) to notify HMRC that you have withdrawn money from your account. This will be followed by a hefty 55% tax on the remaining amount you're left with after the previous 30% cost was incurred. Whether you felt you were aware of the potential costs or not, HMRC will require you to pay up. You can offer to pay the money back into your pension fund if you are yet to spend it but under certain circumstances, you will not be allowed to do so. 

EXCEPTIONS WHERE YOU MAY AVOID FINES:

There are some early pension tax exceptions that the HMRC allows where you may be able to access your pension pot early. It is important that this be done through certified professionals to ensure that you are eligible and avoid unnecessary expenses. 

1) You are severely ill and need to retire early for health reasons. 

2) Your life expectancy is less than a year

3) you had previously declared a 'protected retirement date' which brought the date of withdrawal forward. This had to have been created before 06/04/2006. This pension privilege is reserved for those in professions that are unrealistic to be in until the standard retirement age. 

In both these cases, your money would be released to your directly from your pension provider. 

Pension release at 55 

Once you have reached the age of 55 you can release money from your personal or work pension. 

Up to 25% can be withdrawn from your pension pot tax-free. This can be done as a lump sum or in smaller instalments.  

For more information on pension tax planning contact us 

Bibliography

• HMRC Pension Exceptions

Retirement planning doesn't have to be complicated but can often be neglected because we like to prioritise our current spending. Failing to pay into a pension or disregarding retirement saving might make your bank account a little fuller in the short-term, but when you reach an age where generating an income isn't as easy as it once was, you'll find yourself high and dry if you don't plan ahead. According to a study by Which? the average household needs £18,000 a year to cover household essentials and this doesn't include costs of any bucket-list items you might have been saving for your wonder years - keep reading to find out if you're doing enough to save for your retirement.

You might want to start by finding out how much you already have saved. While household essentials came in under £20,000, the figure rises to an average of £26,000 when you take into consideration 'luxury' additions like leisure activities (what retirements are made for!). If you check up on your funds and they're underperforming, having a reshuffle and seeing what other plans are available will help maximise your assets.

According to the Bureau of Labor Statistics, the average worker will hold 10 different jobs before the age of 40 and this can make keeping up with your work pension schemes difficult. You may have funds saved you've forgotten about entirely and you wouldn't be alone - at the last count, there was £3 billion of unclaimed savings. Workplace pensions can be traced using 'Pension Tracing Service' and for Personal plans give 'The Pensions Advisory Service' a call. This will make sure you are getting all the funds you're entitled to. You may then wish to place all your funds under the same scheme to make keeping track of your savings easier. While this might not be possible with some savings due to penalties or complex clauses, modern schemes can often be cheaper and more tax-savvy, so explore all your options.

Pensions are tax-friendly so if you can afford to pay more each month into a retirement fund it can really pay off. You will tend to find increasing the amount you pay into a Workplace pension scheme will prompt your employer to match your contributions. With Personal pension plans, savings are from untaxed earnings resulting in a 25% increase on savings where you would have normally paid 20% income tax on any earnings. If you're a higher rate taxpayer, filing your annual tax return will enable you to claim back additional tax you paid on your contributions. 

If you haven't yet started paying into a pension plan, whether it be through work or a personal alternative, it's never too late to start. When taking into consideration tax breaks, even if you haven't accumulated much you'll have dropped into a lower tax band at retirement age and therefore pay less in taxes when you choose to cash out. By law, 25% of the money you take out upon retiring is tax free regardless. 

Contact us for expert tax advice

SO... What is it?

The Museum and Galleries tax relief was introduced in November 2017 as an opportunity to claim back money on the production of Exhibitions. 

The premise of the tax relief is to allow museums and galleries which are charities to claim back some of the cost they incurred to put on their exhibitions, which the government hopes will make promoting the work of creative industries more sustainable. 

Non-touring exhibitions rates of 20% and touring rates of 25% will be applied to the equivalent of £500,000 of qualifying expenditure per exhibition. Current calculations are based on 80% of qualifying expenditure but must be incurred on and after 1 April 2017 but before the 31st March 2022. 

Do I qualify?

Even if you don't currently pay corporation tax, you can apply for the relief as long as you claim through a company that could potentially pay corporation tax. HMRC will cover the tax relief for the company if they don't infect pay corporation tax. Claiming as an individual is not allowed unless you are constituted as a company.

Is my exhibition eligible?

Exhibitions are defined as any scientific, historic, cultural or artistically-related objects, works or artefacts that are displayed. They must be accessible to the general public, but there may not necessarily be a charge to see the items. Your exhibition will not qualify if it for competition purposes or if your main purpose is to sell the products displayed. 

The exhibitions should take place in a building such as a gallery or museum however libraries or exhibiting outside can also qualify. It should be planned, curated and there should be a clear understanding of what your exhibition is set out to achieve. 

Touring exhibitions will qualify is shown in two or more venues and at least 25% of the pieces are shown at every  subsequent venue after the first. A tour is also defined as a series of dates where you exhibit your work, and therefore the time gap between each location cannot exceed 6 months.

So how do I make a claim?

Incurring costs is inevitable when filing a claim due to the administration and resources used but it's important you seek advice prior to ensure you follow correct procedure. Claims go directly through the tax system so you will need to complete a full corporation tax return (CT600) as well as providing a breakdown of your exhibition costs. You will also be asked to provide accounts, tax computations and any evidence of other expenditure that you feel is relevant. You will not receive tax relief for marketing strategies, legal services, or running costs from the day of opening. 

Contact us for more expert creative industry tax advice

Gemma Pearce

Your tax code is a combination of letters and numbers that is used by your employer and pension providers to work out how much Income Tax should be taken from your pay or pension.

The numbers and letters in your tax code indicate to your employer or pension provider how much tax-free income you should receive per tax year.

What the letters mean

In order to read your tax code you will have to understand what the different letters mean

L

You’re entitled to the standard tax-free Personal Allowance

M

Marriage Allowance: you’ve received a transfer of 10% of your partner’s Personal Allowance

N

Marriage Allowance: you’ve transferred 10% of your Personal Allowance to your partner

S

Your income or pension is taxed using the rates in Scotland.

T

Your tax code includes other calculations to work out your Personal Allowance, for example it’s been reduced because your estimated annual income is more than £100,000

0T

Your Personal Allowance has been used up, or you’ve started a new job and your employer doesn’t have the details they need to give you a tax code

BR

All your income from this job or pension is taxed at the basic rate (usually used if you’ve got more than one job or pension)

D0

All your income from this job or pension is taxed at the higher rate (usually used if you’ve got more than one job or pension)

D1

All your income from this job or pension is taxed at the additional rate (usually used if you’ve got more than one job or pension)

NT

You’re not paying any tax on this income

Updating your tax code

There may be some instances where you are required to update your tax code; for instance if you start a new job and are put on an emergency tax code.

The HMRC will update your tax code once you have notified them of your employer details.

Contact us with any of your queries regarding your tax code