Artwork by Sara Regal

A non-profit organisation has aims other than profit, such as social, cultural, philanthropic welfare. They do not possess external shareholders who provide capital, they source finance through charitable donations. If you are a member of a non-profit organisation, then you must be aware that it will be eligible for tax exemptions.

Accounting

Accounting for non-profit organisations must take place when there are any monetary transactions. This needs to be recorded as non-profit organisations are answerable to society for such money collected and spent by them.

Why should non-profit organisations maintain accounts?

·      To avoid malpractice and misappropriation

·      Have control over monetary transactions

·      To comply with provisions of laws applicable

·      To know the net worth of the organisation

·      To know the source of incomes and heads of expenditure

·      To know the surplus or deficit of the organisation during a particular period

Financial statements for non-profit organisations

Income and Expenditure:

This account records any income and expenditure, whether it is received or not. The result of the Income and Expenditure account will be a surplus (if income is greater than expenses) or deficit (if expenditures exceed income) rather than profit or loss.

If surplus, this will be carried forward as capital into the organisation, used for the welfare of the society.

Balance Sheet:

Similarly, to a for-profit organisation, a non-profit organisation will require a balance sheet, displaying the assets and liabilities of the organisation.

However, as there are no owners of the organisation, there will be no owner’s equity, and therefore the accounting equation for a non-profit organisation is as follows:

Net Assets= Assets-Liabilities 

A non-profit organisation balance sheet has capital fund (amount contributed by its members) rather than the owner’s capital. Other funds may be found on the balance sheet, such as charity fund, prize fund etc.

Receipts and Payments Account:

This is a summary of all cash and bank transactions. It records all receipt revenue and capital receipts.

Capital Receipts and Expenditure

Capital Receipts and Expenditures are non-recurring and do not form part of the regular flow of the organisation. These are expenses and revenues which occur rarely and are long-term. For non-profit organisations, these may include

·      Life membership fees

·      Donations

·      Sale of fixed assets

·      Purchase of assets

·      Investments made

Revenue Receipts and Expenditure

Revenue receipts and expenditures are recurring and are part of the regular flow of the organisation. These occur regularly and are usually short term. For a non-profit organisation, these may include:

·      Subscriptions received

·      Rent received

·      Interest on investment received

·      Wages and salaries

·      Electricity expenses etc.

Trustees' Annual Report

As a non-profit organisation, you must file a trustees’ annual report. This contains information about the charity, how it is run, its achievements and activities and helps to explain the numbers in the corresponding accounts.

The sole purpose of the trustees’ annual report is to ensure that the charity is accountable to stakeholders for any funds received and spent.

The trustees’ annual report explains its outputs, outcomes and its impacts and benefits.

You will need to complete a trustees’ annual report if the charity’s income is below £500,000[3]. The report should include:

·      Charity name, registration, address, and names of trustees

·      Structure of the organisation and how it is managed

·      Activities and objectives in the year

·      Achievements and performance in the year (including reporting on its public benefit)

·      Financial review including any debts, details of reserves policy (if necessary)

·      Details of any fund held as a custodian trustee

For a large charity, income above £500,000, a full report needs to be prepared, following the Statement of Recommended Practice (SORP).

Tax for non-profit organisations

Your non-profit organisation may have to pay tax if you have received income that does not qualify for tax relief and/or income has been spent on non-charitable purposes. Therefore, non-profit organisations pay tax on:

·      Dividends received from UK companies

·      Profits from developing property

·      Purchases (VAT rules for non-profit organisations apply)

·      Business rates in non-domestic buildings (80% discount applies)

Tax exemptions for non-profit organisations

As a non-profit organisation, you do not need to pay tax on your charitable expenditure – the income and gains you utilise for charitable purposes. This includes:

·      Donations (Gift Aid)

·      Profits from trading (if applicable)

·      Rental or investment income (bank interest)

·      Profits when you sell an asset (property)

·      When you buy property

VAT for non-profit organisations

As a non-profit organisation, registering for VAT is the same as a for-profit organisation; you must register for VAT if your taxable turnover is above the threshold (£85,000).

To claim VAT relief as a non-profit organisation, you must give your supplier evidence that you are not for profit, for example, your Charity Commission Registration Number

If you are VAT registered, you are required to send a return every three months.

As a non-profit organisation, you will pay VAT on goods and services bought from a VAT registered business. VAT registered businesses can sell particular goods and services at reduced or the zero VAT rate.

We hope this article has helped you gain an understanding of accounting for your non-profit organisation, tax exemptions and VAT.

Aerial Embroidery artworks by @victoriaroserichards

Check out more of Victoria’s work on her instagram and Etsy

Bookkeeping is the recording of all financial transactions of a business. It is recommended that you keep a record of all expenses and revenues of your online business.

It is also recommended that you use accounting software, specifically one that tailors to e-commerce businesses. The best option will depend on your business and preferences; it will track sales, costs, and inventory. Xero and QuickBooks are popular accounting software.

Cash Flow

You should watch your cash flow, which is the money coming in and coming out of your business. Here is a basic example of a cash flow statement for an eCommerce business for the first quarter:

A cash flow statement is considered the most important document you can have as an eCommerce entrepreneur. When you know how much cash is flowing in and out of your online business, you can sustain a positive profit margin. On the other hand, if you experience a loss, your cash flow reflects where you need to budget or where you are overspending.

Balance Sheet

A balance sheet consists of assets and liabilities of the business. Both columns should be balanced. The purpose of a balance sheet is to measure the overall position of your business.

The balances must follow the accounting equation:

Assets = Liabilities + Owner’s Equity

(Owner’s equity is the money invested in the business by the owner.)

Income statement

The income statement includes all money brought in over a period. In the basic example above, this shows over a quarter. It shows operating and non-operating income, for example, your inventory sales, and equipment sales, therefore your primary income is your inventory sales.

VAT Threshold for E-commerce

The threshold for eCommerce businesses and selling from a physical store is the same. If you reach the turnover threshold of £85,000 per annum, you will need to register for VAT and charge tax on your goods sold to customers (20%). Therefore, you may need to increase your prices by 20% in order to maintain profit margins, but this may have the effect of customers being sensitive to the price change.

Potential E-commerce sales and delivery tax

The UK HM Treasury is considering applying a 2% sales tax for eCommerce businesses, as well as the 20% standard VAT rate. This is to level out the competition between high street businesses, who face higher operating costs, and online sales.

In addition to this, there could possibly be a delivery tax implemented in order to reduce pollution. This has the aim of influencing consumer behaviour and encouraging customers to environmentally friendly businesses.

Claimable expenses for E-commerce business

Allowable or claimable expenses are costs that are wholly and exclusively involved with the day to day running a business. This, therefore, excludes any costs incurred that are involved with your personal use.  As an eCommerce business, you can take advantage of multiple tax deductions on multiple claimable expenses.

Claimable expenses for eCommerce businesses may include:

·      Advertising and promotion - costs of promotion of your e-commerce business: Marketing (social media advertisements, sponsored advertisements, sponsored content fees by influencers, email marketing software) and Website related content (hosting, domain names, website subscriptions)

·      Banks fees

·      Cost of Goods Sold – the expense you pay as an online seller for manufacturing or selling a product: Materials, Labour (people involved in the production, not those hired for sales), Inventory (goods purchased for resale)

·      Use of home office expenses – must not include personal use, therefore you must proportion your business use and personal use of your home.

Capital Expenses

A capital expense is usually a large cost incurred in order to purchase an asset that you are expecting to have long use of life and benefit your e-commerce business. In this case, your capital expenses would be computers purchased and the website, as most websites provide customers with a system where they can purchase goods or services and contact your business. These are functions and qualify for capital allowances, as they fall into the ‘plant and machinery’ category:

·      Domain name

·      Hardware relating to the website

·      Operating software relating to the website

(You can also claim these as start-up costs for your e-commerce business)

This differs from a revenue expense as this is an amount that is expensed immediately and are used more in the day to day life of the business and is replaced more regularly, such as office stationery.

How to claim expenses for E-commerce businesses

If you are self-employed or a sole trader, employed or a partner at an e-commerce business, you can claim your allowable expenses through the HMRC Self-Assessment Tax Return. You can either file your tax return online or send a paper form, before the tax deadline.

You must have registered for the Self-Assessment Tax Return by the 5 October 2020, and pay the tax you owe by 31 January 2021

If you are filing your tax return online, you must send this by the 31 January 2021.

If you are filing a paper return, you must send this by 31 October 2020.

WE HOPE THIS ARTICLE HAS HELPED YOU UNDERSTAND WHAT BOOKKEEPING IS, HOW IT APPLIES TO E-COMMERCE BUSINESSES, WHEN AND WHAT ALLOWABLE EXPENSES YOU CAN CLAIM.

Contact us for support on your taxes

Embroidery Artwork by Inge Jacobsen, Giclee print of Cross-Stitched White Magazine Cover, 2011- currently on sale

Article by Ben Dunster, Tax Associate

Bookkeeping is the record-keeping of financial transactions, whether that be as a sole trader, a business, or simply an individual who needs to keep tabs of their income and outgoings. Bookkeeping is not just helpful in terms of organisation, it is also a legal requirement for businesses to keep financial records for their annual trading period.

The benefits of bookkeeping

Bookkeeping isn’t just a way of record-keeping, it comes with many benefits beyond that - The first and most obvious benefit to bookkeeping is the organisation element. Having well kept and detailed record of your transaction history for the year makes looking for information a breeze, this is extremely useful when information on your business is requested by approved parties, which leads well onto the next benefit, Tax preparation.

Your tax preparation for a financial year can be sped up drastically by keeping detailed records for your year, this is not just a time benefit but also a financial benefit. If you submit unkept records to a tax accountant for a return, you will also be charged for the time taken on preparing your books. Thus, keeping good, detailed records for the year not only saves time but also money.

Decision making and planning is also made a lot easier with bookkeeping. If you want to see how certain aspects of your business are running in order to plan for the future, having records to inspect and look back on is detrimental. This also goes for investors, anyone who is looking into adding capital will want to see some form of records in order to calculate their investment. Don’t miss out on opportunities by overlooking the importance of bookkeeping.

Bookkeeping legal Compliance

In the UK, companies are required to keep records of their yearly income and outgoings, you have free-reign on how you decide to do this and what software, etc, but it is mandatory to keep these records.

Once you have recorded these transactions for the year, you are required to keep them for a minimum of 6 years from the end of the year date.

How records can be kept

Traditional bookkeeping was done in physical books, however as we move forward into a more digital age, more and more things can be done digitally, bookkeeping is no exception. The two main systems of bookkeeping are ‘Single-entry bookkeeping’ and ‘Double-entry bookkeeping’. These two systems are still prevalent and used in digital bookkeeping, but it is considered much simpler to do your books digitally. If you wish, you can still opt to keep physical books!

The Single Entry System - This system is a simplified version of bookkeeping and suits businesses or individuals with fewer transactions or uncomplicated transactions. Simply put, the Single Entry System is a record of all expenses or income, recorded on the day that they are incurred. This system means that all entries do not come with an entry in a corresponding account. For example, you will note a sale that is made but will not make an entry in your cash account to show the money coming in. This can make it difficult to trace certain transactions if needs be.

The Double Entry System - This system is best suited to businesses or individuals who have more complex transactions regularly. For example, businesses that generate some of their income through accounts receivable, these types of transactions benefit from having entries with corresponding accounts as it makes it a lot easier to trace and reconcile. This system posts the entries of income and expenditure much like the single entry system, but each entry will also need another entry in the corresponding account, hence the name, Double Entry. An example of this would be recording your rent expenditure in your rent account, you would then create the double entry in either your cash account or bank account, depending on the payment method.

Recording expenses for sole traders

When recording expenses, it can make a lot of sense to sort your expenses into categories that you’re allowed to claim for rather than just leaving it as a list of expenses. This helps save time and keep you organises for future reference. The categories include;

●     Travel Expenses

●     Office Equipment

●     Subscriptions

●     Training

●     Legal Costs

●     Staff Costs

●     Advertisement

●     Clothing

ANY QUESTIONS?

We are very happy to help with any tax questions on moving to the UK and we can run through how to file your UK self-assessment tax return.

Our friendly team of qualified tax advisers and accountants have specialised tax preparation experience to help international clients, non-domiciled and dual resident individuals in London, across the UK and will walk you through what the next steps are – contact us today.

The Government announced this week that the Self-Employment Income Support Scheme Grant will be doubled from 20% to 40%.

The increase to the grant will start from 1 November 2020, covering the 3 month period to 31 January 2021.

The original grant was announced at 20% of monthly profits - this has now been increased to 40% of monthly profits. The payment will be capped at a maximum of £3,750 in total for the 3 months to 31 January 2021.

There will also be a second grant to cover the period 1 February to 30 April 2021. The Government will review the state of the economy closer the February 2021 and decide at that point on the level of the grant.

To be eligible for the financial support, individuals will need to be self-employed or a member of a partnership. They will also need to confirm that they will continue to be self-employed and their business profits have been reduced because of the pandemic.

The payments will be taxable and will be reported through the self-assessment tax returns for 2020-21 and 2021-22. There will also be National Insurance due on the grants, again collected through the personal tax returns.

Moved to The UK Or Not Resident In the UK

For individuals who have moved to the UK in the last 7 tax years and are claiming the remittance basis or for those living overseas with UK self-employed income, they may be able to claim the Self-Employment Income Support Scheme Grant.

To claim, they will need to meet one of the three conditions:

1 - Self-employed profits from the UK in the 2018-19 tax year were £50,000 or less and the UK profits were at least 50% of total worldwide income.

2 - If you were self-employed for 2016-17, 2017-18 and 2018-19 tax years, your UK profits were £50,000 or less and the UK profits were at least 50% of total worldwide income.

3 - If you were only self-employed in the UK for 2017-18 and 2018-19 tax years, your UK profits were £50,000 or less and the UK profits were at least 50% of total worldwide income.

Next Steps For Self-Employed

The 2019-20 tax return, covering the period 6 April 2019 to 5 April 2020, is due to be filed by 31 January 2021. Previous grants and support for self-employed individuals has been based on the UK tax return being filed on time and by the deadline.

For those individuals who do want to claim the self-employed grants, they can file their tax return now to ensure they will be eligible for any future financial support.

Artwork by mindofsabrina.com. Instagram: @mindofsabrina

Written by Molly Smith, Tax Associate

This article aims to inform self-employed professionals about VAT tax filing obligations, how and when to file, as well as how to register for VAT.

The information given is largely generalisable to all tax filers.

Below is a summary of the questions we will be answering- if there is anything we have not answered contact us.

What is VAT?

Who charges VAT?

When to register for VAT

How much is VAT?

What is VAT?

VAT (Value Added Tax) is a tax levied upon most goods and services that VAT-registered businesses provide in the UK. VAT is charged on about everything you buy VAT can also be charged on imported goods and services from the European Union.

Who charges VAT?

VAT can be charged by any VAT registered business; this is known as a ‘taxable person’.

If you are a taxable person you are required to be VAT registered to charge for VAT. Therefore, if you are an individual, partnership, company, club, association, or charity then you need to register.

You must check if your taxable turnover (the total value of taxable supplies made by a person if the course of business, excluding VAT) is above the threshold, if it is above the threshold then you must register for VAT. Until you exceed the threshold for VAT, registration for VAT is optional.

When to register for VAT:

 ·      You register for VAT when your taxable turnover exceeds the VAT registration threshold in the previous 12 month period or less, therefore you need to monitor your taxable turnover during the 12 month period, not just the current tax year from April 6 to April 5.

·      You also need to register for VAT if you expect that your taxable turnover is going to exceed the threshold within the next 30 days.

·      If you are not VAT registered, then you will not be eligible to reclaim VAT (unless you are an overseas visitor).

·      Not every self-employed business is required to be registered for VAT unless it exceeds the taxable turnover threshold:

The taxable turnover threshold for the 2020/21 tax year is £85,000.

·      Businesses pay VAT every three months, quarterly, but filling in a VAT Return*.

·      However, for self-employed people, such as sole traders or limited companies, this requires them, or their bookkeeper to maintain their accounts and make certain that their accounts are up to date quarterly.

·      The self-employed often mistakenly believe that the threshold solely applies to companies and that they are exempt. HMRC is clear that the self-employed must take into account the VAT on everything they sell. 

How much is VAT?

Goods and services charged at a standard, reduced or zero rates of VAT are known as ‘taxable supplies’. These are

·      Standard - 20%

·      Reduced - 5%

·      Zero - 0%

How does VAT work?

·      The VAT you charge to customers on your sales is known as ‘output tax’. This is because your sales go out of the business.

·      The VAT that you have paid on your expenses, for example, your stock and equipment, to make your taxable supplies is known as ‘input tax’. This is because your purchases and expenses are going into your business.

·      If you are VAT registered, your customers must pay you VAT and once paid you send it to HMRC, after you take away any input tax you can claim.

STANDARD VAT ACCOUNTING

Output tax – Input tax = tax overpaid or tax overdue

If your output tax is more than your input tax:

·      Then you will have to send the remaining value to HMRC.

If your input tax is more than your output tax:

·      Then you have overpaid VAT and will therefore have to send a VAT return* to HMRC to reclaim the VAT.

You cannot reclaim VAT that you have paid upon exempt goods and services.

What is a VAT Tax Return?

·      You send your VAT tax returns to HMRC if you are VAT registered, normally every 3 months.

·      You show HMRC your sales and the VAT you have charged your customers.

·      You also need to show your purchases and the VAT you are claiming for that period of the return.

Making Tax Digital (MTD) for VAT

Businesses with a taxable turnover that exceeds the 20/21 threshold of £85,000 need to sign up to Making Tax Digital keep digital VAT records and send HMRC returns using compatible software.

Making Tax Digital was put in place as the government plans to make the tax system more effective, efficient, and easier for customers to get their returns correct.

Sole traders (the self-employed) and landlords may choose to join MTD for income tax as this provides an alternative to the self-assessment tax return (system HMRC uses to collect Income Tax).

We hope this article has helped you understand what VAT is, how it applies to the self-employed and when to register for VAT if required.

If you have any questions contact us. We are a chartered accountancy firm based in Covent Garden and London

Figures released by HMRC, show for the last tax year there were 5 million individuals with self-employed income.

Although 238,000 people have returned to employment during the pandemic, there are significant tax savings for remaining self-employed.

Claim expenses

One of the main tax advantages of working for yourself versus being employed is being able to claim expenses against your income.

These expenses include:

Travel costs - fuel, parking, train, bus, Uber and taxis

Office costs - stationery, printing

Financial costs - interest on loans used for business purposes, bank charges

Advertising and marketing - website costs, Google ads, social media ads

Training - courses to refresh your knowledge

Staff costs - salaries for employees, subcontractor costs

Phone costs - phone bills for a dedicated work phone, a proportion of the phone costs if you use the phone personally and for business

Equipment - you can claim tax allowances for up to £1 million of equipment purchases

Actors have their own unique expenses that can be claimed - including clothing, hair and make up, cosmetic and medical expenses

Working from home tax allowance

If you work from home, or your home is your office or used for storage, you may be able to claim a proportion of your costs.

Mortgage interest or rent

Gas, electricity and water

Council tax

Internet and phone costs

To find the use of home tax allowance you can use the number of rooms in the property or the area of the property.

If you have 5 rooms in the property and you use one as your office, you can claim 1/5 (20%) of all the home costs.

Expenses for bikes, motorcycles, cars and vans

Bikes - 20p per mile

Motorcycles - 24p per mile

Cars and vans - 45p per mile up to 10,000 miles, then 25p per mile

You can either claim the expenses above or the actual running costs of the vehicle (but not both).

Consider alternative business structure

Partnership - if you are working as a group you may be a partnership already. Alternatively, if you involve your partner in the business, you can then share your tax allowances by forming a partnership. It will also allow you to share tax bands to further minimize the tax bill for the year.

Company - once your profits are at a suitable level, you can consider incorporating the business and taking advantage of the lower corporation tax rates (19%) and reduced National Insurance costs.

Pension tax relief and contributions from the government

You can contribute to a private pension, up to 100% of your profit, and claim tax relief through the tax return.

The government will add 25% of your contributions direct to your pension - if you contribute £400, the government will add £100.

If you're a higher rate taxpayer (40%) you can claim an additional 20% tax relief through the return.

If you're an additional rate taxpayer (45%) you can claim an additional 25% tax relief through the return.

Marriage allowance

If your profits are under £50,000 and you are married, or in a civil partnership, and your partner's income is £12,500 or less, you can claim the marriage allowance.

The marriage allowance lets you claim £1,250 of your husband's, wife's or civil partner's personal allowance.

Next steps

We are very happy to help with any tax questions and we can run through how to file your self-employed tax return.

Our friendly team of qualified tax advisers and accountants have specialised self-assessment tax preparation experience to help and can walk you through what the next steps are – contact us today.

Chancellor Rishi Sunak has announced the government's plan to help support the self-employed and businesses over the coming months.

After announcing that restrictions for the pandemic may be in place for the next 6 months, the government is introducing a package of measures to support businesses and also extend the Self-Employed Income Support Scheme.

Self-Employed Income Support Scheme (SEISS)

The government will extend the Self-Employed Income Support Scheme for a further 6 months, from November 2020 to April 2021.

The grant can be claimed by self-employed individuals who are currently eligible for the SEISS and who are working as self-employed.

There will be two taxable grants:

• The first grant will cover a 3 month period from November 2020 to January 2021 and will be for 20% of average monthly profits. The grant will be paid in a single payment and will be capped at a total of £1,875.

• The second grant will cover the 3 month period from February to April 2021 - the amount of the grant has yet to be decided by the government and they will set this in the coming months.

Extended Time To Pay Self-Assessment

All self-employed taxpayers will now have more time to pay their taxes due in January 2021.

This extension is in addition to the deferral provided in July 2020 - and that deferral can now be deferred again.

Self-employed individuals with up to £30,000 in UK taxes due will be able to use HMRC's Time To Pay service to pay that amount over a 12 month period.

This means that any taxes due by 31 January 2021 can now be deferred over 12 months to 31 January 2022.

You can apply online or contact the HMRC helpline:

Self Assessment Payment Helpline

Telephone: 0300 200 3822

Monday to Friday, 8am to 4pm

If you defer the payment, interest will still run on the amounts due to HMRC.

As UK debt has risen above £2 trillion, Chancellor Rishi Sunak is being advised by the Treasury to raise the top rate of UK capital gains tax to 40%.

The Chancellor is expected to deliver his next budget this autumn - normally held in October or November, but a second wave may push it back.

Current UK capital gains rates:

• Basic rate taxpayers (total income up to £50,000) is 10% for gains (but 18% on residential property).

• Higher rate taxpayers (income above £50,000) is 20% for gains (28% on residential property).

Under the proposed changes, capital gains tax rates would be raised to match income tax rates.

Capital gains tax (CGT) on asset sales would double from 10% to 20% for basic rate taxpayers, and from 18% to 20% for gains on property sales.

For higher rate and additional rate taxpayers, CGT could double from 20% to 40% on asset sales and 28% to 40% on property sales.

In addition, the Treasury has also held discussions over scrapping the various reliefs applied to CGT.

Those tax reliefs include:

• Capital Gains tax-free allowance of £12,300 per person, per year (the CGT allowance is in addition to the UK personal income tax allowance)

• Business Asset Disposal Relief (Entrepreneurs' Relief) - CGT is reduced to 10% for shareholders selling shares (when you own at least 5% of the business) and to business owners selling business assets, capped at a lifetime allowance of £1 million 

• Individual Savings Accounts (ISAs) - any capital gains on shares or funds held in an ISA are free from UK CGT

• Pension tax relief - investment growth of the assets held within registered pension schemes is exempt from income and capital gains tax

Other potential tax increases being considered are:

• Reducing pensions tax relief - potentially capped to 20 per cent so higher taxpayers will lose half the tax relief

• Increase in petrol and other duties

• A tax on online shopping

• Reviewing inheritance tax, with a view that additional taxes can be claimed

The guide, found here, covers:

· Explanation of how employment income is taxed when you move to the U.K.

· Tax relief if you have workdays and trips outside the U.K.

· Claiming travel, accommodation and food expenses for the first 2 years

· How self-employed income is taxed when you have work and clients overseas

· Excluding foreign income from U.K. taxes for the first 7 years using the remittance basis

Many people who come to live and work in the U.K. do not realize that there are expenses that can be claimed and other tax reliefs to reduce their U.K. tax. 

The U.K. tax guide covers claiming tax relief for expenses for travel, accommodation and food (subsistence) for the first 2 years you move to the U.K.. 

Often, employees will travel outside the U.K and for the first 3 years, any workdays outside the U.K. can be excluded from U.K. tax and will give a repayment of tax.

The tax guide also explains how self-employed work is taxed when you move to the U.K. and what happens when you travel for work overseas, have clients outside the U.K. and are paid outside the U.K.

For foreign income when you move to the U.K., there is also a relief for the first 7 years to stop U.K. tax on that income - the "remittance basis" is covered by the guide and the conditions that need to be met.

The guide also looks at using double taxation agreements to help with U.K. tax when you move to the U.K. and also for short work trips to the U.K.

Finally, the concept of your tax home is explained and how this impacts U.K. tax and reporting your worldwide income in the U.K. - even if you are reporting that income and paying taxes overseas.

The August 2020 report from the Office for National Statistics, shows a record fall of self-employed people.

• 238,000 fewer self-employed individuals in the latest quarter (April to June 2020 compared to January to March 2020)

• 4.8% fall - 4.76 million in the current quarter, compared to 5 million in the previous quarter

The decrease in the self-employed over the quarter was driven by construction (down 57,000, or 6.2%, to 862,000), professional, scientific and technical services (down 55,000, or 8.3%, to 610,000) and administrative and support services (down 55,000, or 14.3%, to 333,000).

The number of self-employed people changing employment status to employees is at a record high

The number of people who changed from reporting themselves as self-employed to an employee increased by 48,000 on the quarter and 81,000 on the year to a record high of 253,000.

Looking for job security

Many freelancers are returning to employment for job security.

During the last few months, new and other self-employed individuals found that they were excluded from the self-employed grant scheme from HMRC.

A report from The Institute for Fiscal Studies, estimates that two million freelancers were excluded from support.

• 1.3 million who had self-employed income, but were ineligible because they received less than half of their income from self- employment. Only 39% of this group also had employed income - a large proportion of the group are drawing a pension while continuing to work.

• 225,000 will be ineligible because their self-employment profits were more than £50,000 a year.

• 650,000 will be ineligible because they entered self-employment in the past year.

The three groups overlap, the estimate is that in total around 2 million people with some self-employment income (38% of all self-employed individuals) were not eligible for the grant.

Changes to Taxes for Self-Employed

Self-employed individuals have historically benefited from lower taxes as compensation for lack of sick pay, holiday pay, other benefits and job security.

Recent reductions to tax allowances for setting up your own company and the anticipation that National Insurance is due to be increased for self-employed individuals has pushed many freelancers back into employment.

The Government have launched 1.47bn emergency support package to help protect Britains' creative industry. The investment follows several weeks of pressure from industry leaders, warning that many venues and jobs will be lost if no action is taken.

The relief comes at a pivotal time, as Britains creative industries are marked as one of the worst-hit by Covid-19. The industry is projected to take a turnover loss of £74 billion over the course of 2020. There has been a projected employment drop of 119,000 in the creative industries.

The projections are opposite to that of the Creative Industries contribution to the UK economy in 2019. In 2018 the CI's grew at 5x the rate of the wider British economy and contributed £111.7 billion to the economy.

“I understand the grave challenges the arts face and we must protect and preserve all we can for future generations.”

-Culture secretary, Oliver Dowden 

How the arts emergency fund will work

There has not yet been full disclosure of how the investment and grants will be distributed. It has been stated that decisions on how the fund is awarded will be made alongside expert independent figures from the sector, including the Arts Council of England and BFI.

The list of organisations that are stated to be eligible to include:

• Performing arts

• Theatres

• Heritage

• Historic Palaces

• Museums

• Galleries

• Live Music

• Independent Cinema

There has not yet been any statement issued to confirm if this is a comprehensive list.

"From iconic theatre and musicals, mesmerising exhibitions at our world-class galleries to gigs performed in local basement venues, the UK’s cultural industry is the beating heart of this country."

-Prime Minister, Boris Johnson

A vague distribution of funds has been issued on the Gov.uk site. The £1.15 billion is made up of £880million in grants and £270million in repayable loans. A further £100million will be committed to national cultural institutions such as the English Heritage Trust.

The new funding will also allow an extra £188 million for the devolved administrations in Northern Ireland, Scotland and Wales.

The return of the creative industry

Alongside the welcoming of the fund, industry figureheads are pushing for more clarity on when the entertainment industry will be able to open back up for business.

Cinemas were allowed to reopen from thee 4th July this month and the cultural secretary has said that outdoor performances may commence in the near future.

This is an ongoing area of development and we are committed to keeping our clients up to date.

Lucia Rossetti Imagery

Socio-economic experts have said that financial planning and pensions are becoming increasingly important for future generations as life expectancy consistently rises every year.

A pension is a long-term savings plan which you contribute to over your working life that you can them live off later in life. Responding to the increasing importance of pensions, The Government and The Pension Regulators have introduced a number of incentives that can help individuals increase their pension savings.

This article will focus on informing employers about all of the need to know facts about pension tax relief schemes for employees.

WHO ARE THE PENSIONS REGULATORS?

CHOOSING THE PENSION SCHEME FOR YOUR STAFF

If you have further questions contact us

Who are the pension regulators?

The Pension Regulators (TPR) is the UK regulator of workplace pension schemes. They therefore are a focused pension organisation that ensures employed individuals pensions are protected. 

The pensions regulators are responsible for:

·      Ensuring employers enrol their staff into a pension scheme (automatic enrolment)

·      Protecting employee savings in workplace pensions

·      Improving workplace pension schemes

·      Reduce the risk of pension schemes ending up in the Pension Protection Fund

·      Helping employers balance the needs of their pension schemes with business growth.

Choosing the pension scheme for your staff

 There are a number of different pension schemes you can choose from as an employer for your staff. When choosing a pension scheme employers must consider which scheme is most beneficial to the employees. 

Below is further information about what employers need to consider when choosing a pension scheme.

DOES THE PENSION SCHEME INCLUDE AUTOMATIC ENROLMENT?

 Automatic enrolment means that staff will not be required to do anything to join the scheme, nor choose their own investments. Some schemes only accept employers with a minimum number of staff, or employees who earn a certain amount. 

It is important to check if the scheme is regulated by the Financial  Conduct Authority.

HOW MUCH THE SCHEME WILL COST THE BUSINESS AND EMPLOYEES?

 Different pension scheme providers have different fees. Some providers will charge monthly and others will charge a one-off up-front charge for the life of the pension scheme. There can also be exit fees for employers who decide to change pension schemes.

As pension scheme members, employee’s contributions should pay the charges to cover the cost of managing their savings. Some schemes may have different charges for different members, depending on income. It is important to weigh up the cost and charges against the level of service that the scheme will provide.

WHAT TAX RELIEFS WILL MOST BENEFIT EMPLOYEES? 

There are two methods that can be used to allow employees to have access to tax relief on what they pay into their pensions:

·      Relief at source

·      Net pay arrangements

A pension scheme can only use one method for all staff. Which method is used can affect lower and higher paid staff differently. Neither method is usually judged as superior to the other, but it can be good to be aware of what the implication of each method is.

Tax relief will only be available to employees who do not pay income tax if there is a scheme that uses relief at the source. Such schemes may have lower member charges. 

The staff that pays income tax will have access to tax relief through either the relief at source or net pay arrangement methods. However, if the relief is at source, higher rate taxpayers and additional rate taxpayers will have to claim the tax relief by completing a self-assessment.

RELIEF AT SOURCE TAX RELIEF SCHEME MODELS

Below we have summarised the different tax relief schemes that us relief at source:

National employment Savings Trust (NEST)

The Peoples Pension

True Potential Investments

Standard Life Workplace Pension

NET PAY ARRANGEMENT TAX RELIEF SCHEME MODELS

The Bluesky Pension Scheme

Creative Pension Trust

NOW: Pensions

Smarter Pension Master Trust

The Lewis Workplace Pension Trust

Workers Pension Trust

For information on minimum contributions, maximum contributions and other personal pension matters visit the links below.

CONTACT OUR COMPANY ACCOUNTANTS FOR TAX SUPPORT

Lucia Rossetti

In recent years there have been a number of government pension schemes and incentives introduced to help people save towards retirement. Experts have said that financial planning for retirement is becoming increasingly important as the UK population lives longer and longer. 

The benefits to saving into a pension run long and wide. Pension schemes allow savings to grow much faster than through other means. This not only allows people to retire earlier, but also can enable cash injections when required later on in life. 

Below is the the questions answered in this article surrounding retirement income and pension tax relief

The different types of pensions

How pension tax relief can increase pension savings

The lifetime allowance

How to find out your pension balance

The Maximum Pension Contributions

How much to save into your pension plan

Can you pay into a spouse's pension?

The benefits to making maximum contributions

If you have further questions contact us

The different types of pensions

There are three main types of pension: 

The State Pension

The State Pension is a retirement fund paid out by the government when individuals reach the state pension age. You can find out what your state retirement age is via the Gov.uk checker. You build up your entitlement to the State Pension by making National Insurance Contributions throughout your working life. If you are employed this is usually done automatically through PAYE.

How much is the state pension?

The state pension is currently set at £175.20 per week. However it can be higher depending on your National Insurance records and if you choose to delay taking your state pension. 

Defined benefit pension

If you have ever worked for the public sector or large company, it is likely you have a defined benefit pension. 

How much is the defined benefit pension?

The total amount you receive is based off of your income and how long you have been part of the scheme. 

Defined Contribution Pension 

Defined contribution pensions can be a combination of personal and workplace pension schemes, as well as stakeholder pension schemes. The Defined Contribution Pension built up through contributions by yourself and your employer. The final balance of your DC pension will depend on the below: 

• How much money you paid into your pension

• How much money your employer paid into your pension

• How much tax relief you received 

• How your investments have performed over time. 

You can access your defined contribution pension fund from the age of 55. Many use this pension savings to tide them by until they have access to their other pension funds later in life. 

How pension tax relief can increase pension savings

When money is paid into your pension some of the money that would have gone to the government as tax goes into your pension also. 

Claiming pension tax relief on workplace pensions

There are two ways you can receive tax relief on your workplace pension: Relief at the Source or Net pay arrangements. Which pension scheme your work uses is generally decided by the business owner. 

Claiming pension tax relief on Relief at the Source arrangements

Under the Relief at the source arrangement, your employer deducts tax from you taxable earnings as normal. They can then deduct 80% of your pension contributions from your net pay and send this to your pension provider. Your pension provider will then claim the other 20% in tax relief directly from the government. 

Higher and additional rate taxpayers do not automatically receive the tax relief under the relief at the source arrangement. They must claim the extra 20% in a self assessment tax return.

Claiming pension tax relief on Net pay arrangements

Under the Net pay arrangement, your employer deducts the full amount of your pension contribution from your gross pay. You will pay tax on your earnings minus your pension contributions. As a result your tax bill will be lower. 

All taxpayers will receive the tax relief automatically under this arrangement. However, no tax relief is available to people who do not pay tax under the arrangement. 

The Lifetime allowance

Lifetime Allowances (LTA) are a cap on the amount of tax-free savings that can be made within a pension fund. For the 2020-21 tax year, the lifetime allowance is set at £1,073,100. This means that the maximum amount someone can save into their pension tax-free is £1,073,100.

If you exceed the lifetime allowance there could be a tax charge, the excess can be paid as a lump sum, subject to a 55% tax charge. You can also opt to keep the money in you pension pot and be charged a 25% tax on the excess. 

How to find out your pension balance

Checking Personal, workplace and self employment pensions

Your pension provider will typically send you a breakdown of your total retirement savings in an annual pension statement. If you have a defined contribution pension, which most workplace and personal pensions are, your annual pension statement will include a calculation of the level of income you can expect to receive in retirement. 

What is the maximum contribution that can be made to your pension?

After establishing the major tax perk of putting long-term savings into your pension, many clients follow up with questions regarding the minimum contributions and maximum contributions that can be made each year. For the 2020/21 tax year, the annual limit is 100% of your salary or £40,000 (Whichever is lower). This included both contributions paid by you and employer contributions. 

Tapered annual allowance 

How much to saving into your pension savings

The tapered annual allowance is lower than the standard annual allowance and mainly affects those with income over £240,000. For every £2 of adjusted income over £240,000, the individuals allowance will be reduced by £1. 

Exceeding the pension contribution limit

If you exceed the pension contribution limit, there will be a tax charge on any amount over the contribution limit. This is called an ‘annual allowance charge’.

Figures released by the government show that around 10.4 million people contributed to their personal pension during the 2017-18 tax year. The average gross annual contribution for the 2017-18 tax year was £226 per month. This figure considers both the employer and personal contributions.

The average annual contributions tend to differ considerably depending on salary bracket. It is generally advised that people make the maximum contribution that they can each year, without impairing their regular cash flow.

Can you pay into a spouses pension?

If you have met maximum contributions to your own pension for the tax year, you may be considering contributing your spouses. It is possible to make pension contributions to your spouses pension. In this case your spouse will receive the benefits of the pension tax relief. 

The Benefits to maximum contributions

Unlike the majority of other saving schemes and products, pension plans can by boosted by contributions and money from the government in the form of tax relief. 

Below are some of the key benefits to pension savings

Employer contributions

When you make a contribution to your workplace pension, your employer will also contribute to your pension plan. This means that your will receive extra money that does not come from your salary.

Tax relief

For every £100 paid into a pension by a basic rate taxpayer, the government will contrite £25. If you are a higher rate taxpayer you can claim a further 25% top up through your annual tax return.

No inheritance tax

If you were to die before the age of 75, your pension can usually be passed on as one lump sum without inheritance tax.

Contact us to for support claiming pension tax relief

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Every year thousands of individuals and families leave the UK to further their career in America. The increased opportunity is very attractive for a wide range of different careers; however, the differences in tax regulation can be tedious and difficult to navigate for those who have taken the step to move abroad.

We aim to aid expats in their exciting new journey and alleviate some of the stress and pressure that comes with moving to America by providing free tax advice.

We are a team of American and British Accountants who are expert in all areas surrounding cross border taxation.

Contact us for support in your UK and US Taxes

How Different is the American Tax System? 

The American tax system, when compared to the United Kingdoms tax system, is widely considered to be much more complicated and difficult to understand. According to the BBC a ‘typical company’ will spend around 110 hours to comply to the UK tax code, this is substantially less than the 175 hours that American companies spend with the US tax code. Below are some key differences

What British Expats need to know about the IRS

 It is important to know the regulatory body for the American tax system is the IRS. Like the HMRC (UK’s regulatory body) they are responsible for the collection of tax and enforcement of tax laws. This includes, auditing households and individuals, providing the yearly tax brackets, providing tax aid, collecting tax, etc.

The Taxation of Households rather than individuals

The US tax code allows couples to file under one household, this doubles the tax bracket and is generally favored over opting to file separately. This is because it provides a tax break to households with one high-income earner, as the tax bracket will essentially double.

State Taxes

 Different states have different State Taxes. For example, Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no state income tax at all; whereas, a state such as Utah has a flat income tax rate of 4.95%.

Better Rates for High Income Earners

Despite the more complicated nature of the American tax system there can be substantial benefits in regards to the money you come away with for the wealthier portion of the population. This is because of the lower tax percentage for higher earners. Where in UK the income tax brackets can go as high as 45% in the US federal income tax is capped at 37%.

How to know if I need to submit a US Tax Return?

According to the IRS any individual can be considered a “United States resident for tax purposes if you meet the substantial presence test for the calendar year”.

The Substantial Presence Test is a means of measuring the amount of time an individual has spent in the USA for work purposes. To fit the requirements you must either be “physically present” for 31 days of the current year and 183 days over a 3 year period (this period being the current year and the 2 years prior).

For queries regarding your tax the IRS has an interactive tax assistant. This online database contains answers to frequently asked questions to help individuals and households with tax problems.

The income tax due date is normally the 15th of April; However, due to the current coronavirus pandemic, the due date for income tax return 2018/19 has been deferred 3 months to July 15th.

Tax Advice for Actor Expats in America

The USA has one of the biggest entertainment industries on the planet. Every year thousands of budding actors from all across the globe make the move to America to further their career. We have compiled brief tax advice for an actor who has moved to America.

The Forms 

British expats who are employed by a US employer must fill out form W-4, which lets their employer know how much tax to withhold from their pay check, based on their circumstances.

The US tax return form is called form 1040, and it can be e-filed online. The American tax year is the same as the calendar year, and the filing deadline is 15th April following the end of the tax year. It’s important not to miss this deadline, as fines for late filing are much higher than those in the UK.

There is a vast array of forms all with different uses. For a comprehensive list of each form and what each one is for, visit irs.gov/forms-instructions. Failing that you should contact a tax professional to assist you with your tax return.

More information on tax forms

Deductions

 Tax-deductible expenses function to reduce an individual/ household’s taxable liability. For example, if a household’s net income is $40,000, and they have $5,000 in tax-deductible expenses, said household will only have to pay tax on $35,000 of their income.

Some common deductible expenses include:

·     Travel - Any transportation, accommodation, Airfare that occur as a direct result of your work. You can also include 50% of Meals within this category

·     Agent Fees

·     Manager Fees

·     Equipment - Film Camera, Lights, etc.

·     Headshots

·     Office Expenses

·     Education

·     Promotional Expenses - Photos, Videos, Websites, Advertisements in trade publications, Business cards and other promotional expense

·     Makeup and Wardrobe - Deductible only when incurred through business use directly, i.e. not for a pair of Jeans you have used on stage but also wear day-to-day outside of Acting

·     Subscriptions: Magazines, Newsletters and other Subscriptions relevant to your business

·     Legal and Professional Fees

Receipts 

It is very important that you keep your receipts organized and filed. If the IRS were to conduct an audit on your account, and were to query a deduction claimed, it would be your responsibility to provide the receipt for said deduction. Failure to do so would lead to a re-evaluation in tax owed and, depending on the severity of the circumstance, could lead to fines and maybe even legal action.

Tax Legislation for Expats

Specific legislation has been formed to provide financial aids for expats. It is important to be aware of the various legislations as they can allow for maximum savings on your tax bill.

Double Tax Treaty

Double tax treaties (also known as double tax agreements) are created between two countries, which define the tax rules when it comes to a tax resident of both countries. These agreements often aid in the reduction of overall tax liability for individuals who have to submit tax returns in two countries. Double tax treaties are complex and often require a tax professional’s assistance to make sure you are claiming correctly and taking full advantage of the legislation. 

The Totalisation Agreement

The Totalisation Agreement is designed to ensure that UK expats living in America (and Americans living in the UK) only pay social security tax (i.e. National Insurance tax) contributions in one of the two countries rather than both, with the contributions counting towards state pension entitlement in both.

Aid for Expats

Navigating the murky waters of US tax legislation is the last thing you will want to do when making the exciting move to further your career. We understand this and want to help. Please do not hesitate to contact us for expert advice on any and all of your tax needs.

Bambridge Accountants London and New York aims makes tax simpler for self-employed professionals worldwide.

Our team of highly trained US and UK accountants are expert in tax for all sectors within the creative industry. We have worked with self employed actors, photographer, graphic designers, architects, directors, creative directors and so much more. We have prepared thousands of UK tax returns and US tax returns for self employed professionals and learn't so much along the way.

Contact us for expert entertainment industry tax support

Many of our clients have income sourced from countries several countries throughout the world. Our accountants are expert on cross border taxation.

If you are a British Payer and receive income from a source outside of the United Kingdom, the income may be subject to UK Income Tax. 

Do you need to pay UK Income tax on your foreign income?

 Whether you are required to pay UK income tax on your foreign income will depend on your residency status. If you are not classed as a UK resident you will not have to pay UK tax on foreign income.  If you are a UK resident, you will typically have to pay tax on your foreign income.

Statutory Residency Test Explained

The Statutory Residency Test (SRT) is a test that allows you to work out your residency status for the tax year.

 The SRT takes into account:

·       the amount of time you spend and, where relevant, work in the UK

·       the connections you have with the UK

It is split into the following parts:

·       automatic overseas tests

·       automatic UK tests

·       sufficient ties test

·       application of the SRT to deceased persons

·       split years

If you’ve been in the UK for 183 or more days you’ll be a UK resident. There is no need to consider any other tests.

You’ll be resident in the UK for a tax year and at all times in that tax year if:

·       you do not meet any of the automatic overseas tests

·       you meet one of the automatic UK tests or the sufficient ties test

Reporting foreign income 

For those who are required to pay tax on foreign income, you usually will report the income on a Self Assessment Tax Return. However, there are some sources of foreign income that will be taxed differently.

Foreign income that is taxed differently

While most foreign income will be taxes in the same way that UK income is, there are special rules for: 

• Pensions

• Rent from property

• Certain types of employment income

Pensions

If you are a currently a resident or if you were a resident in any of the 5 previous tax years, you are required to pay tax on your pensions. You also pay tax on any foreign pension payments, including unauthorised payments like early payments and lump sums.

Rent from property 

If you earn rental income off of  more than one overseas property, you can offset losses from one overseas property against the other.

Certain employment income

Generally, employment income is reported on your self-assessment. However, there are special tax rules for those who work:

·      on a ship or in the offshore gas or oil industry

·      for the EU or government, or as a volunteer development worker

If your income is taxed in more than one country

If you are being taxed twice on foreign income you can apply for tax relief. This is valid for income:

-exempt from foreign tax but taxed in the UK

-made from a company that has a double-taxation treaty with the UK

Contact us for expert tax advice for UK residents with foreign income 

The Covid-19 Pandemic has had a huge impact on the photography industry. Over 90% of working photographers have reported upcoming jobs either being rescheduled or cancelled. As a result, many self-employed photographers have been left with a large income deficit.

We have been working around the clock to ensure our clients are supported in every way possible through this difficult time.

Contact us for expert tax advice for photographers

Below, we have compiled a list of some of the different reliefs and aids available. If you have any questions just get in touch.

Mortgage Holiday and Eviction Protection

At the early stages of the UK Covid-19 outbreak the government announced ‘Mortgage Holidays’ and ‘Eviction Protection’, which is available to anyone who has been financially affected by the Covid-19 outbreak. This will not only work to protect homes from being lost, but also bring down the overall monthly outgoings so there is less demand for a higher income.

Many self-employed photographers have reviewed the scheme as ‘extremely helpful’.

Tax payment delay

The government has delayed tax payments through the self-employed assessment system by six months. This will help lessen monthly outgoings further.  Currently the next income tax bill will be due in July 2020 until January 2021. It is likely in the scenario that the Covid-19 pandemic continues to thrive and affect income into the July period; the start date will be further pushed back.

Business Insurance

It may be possible to claim some loss of income back on business insurance. Successful Covid-19-related claims will depend on the detailed outlined in your insurance policy, and the claim itself.

Below is a list of some of the most common policies that may cover Covid-19 related claims:

·      Business Interruption Insurance

·      Public Liability Insurance

·      Employers’ Liability Insurance

It is important to note that even if a self-employed photographer has one of the insurance policies listed above, Covid-19 related issues still might not be covered. This is due to:

·      Some insurance policies list the specific diseases that can be claimed on. The recent emergence of Covid-19 means that most- if not all of these policies will not list Covid-19 as a claimable illness.

·      Other insurance policies may allow a Covid-19 claim, but in order for the claim to be successful there must have been a outbreak of the illness at the business premises or within a proximity of the business premises.

Most insurance companies are not allowing Covid-19 cover to be added to insurance policies going forward.

Universal Credit

Universal Credit is a Government Funded payment towards your living costs. The amount is usually available to those who have low income or are out of work. This is often the first port-of-call for self-employed photographers that have lost work and are in need of financial support.

Universal credit can now be applied for online and/or by telephone.

Employment and Support Allowance (ESA) 

ESA is a financial aid for those with a disability or health condition that affects how much you can work. ‘New Style’ ESA may be claimable for self-employed photographers who have paid enough National Insurance Contributions (NIC) in the last 2 to three years.

If you have a private pension worth more than £85 per week the amount of ESA you can receive may be affected. 

Self-employed Income Support Scheme (SEISS) 

The SEISS is available to those who are self-employed or a member of a partnership and have lost income due to Covid-19.  In order to receive the amount self-employed photographers must have:

·      Filed a 2018-19 tax return

·      Annual profits below £50,000 on average over the last 3 years.

·      Still be registered as self-employed

·      More than half total income come from being self-employed

The maximum amount claimable is £2,500 per person, per month. The grant will be fully taxable and so will be included on the 2020-21 income as income. A working example of this in practice shows that, if a person is to receive £2,500, of the credit, per month for 3 months, the total taxable income would be £7,500.

Statutory Sick Pay relief

For photography business owners, it may be an option to claim SSP relief. This is available to businesses with less than 250 employees and allows businesses paying its employees Statutory Sick Pay to be refunded 2 weeks of SSP per eligible employee.

Benefits Calculator

The Charity ‘Turn2Us’ offers a benefits calculator on their website to help work out some of the benefits you may be entitled to. This does not take into account non-means tested benefits and contributor benefits.

Arts Council Emergency Fund

The Arts Council has released an emergency fund of £20million, which is available to individuals working in the cultural sector, including ‘visual artists’. The grant itself will range up to £2,500. The final date to apply for this grant is the 30th April 2020.

Ways photographers are adapting their work to social isolation

Loss of upcoming income being said, there are many photographers demonstrating the amazing creativity and perseverance of the photography community. Below are to name a few:

Isolation Portraits

Miles Fortune, a freelance photographer, participated in Jackie Russo’s call for isolation portraits. Photograph: Jackie Russo

““There is one thing the photograph must contain, the humanity of the moment.”
— Robert Frank”

Many photographers have been documenting the history of the pandemic by showcasing the unique circumstance of social isolation. An example above, is a Miles Fortune portrait of journalist Jackie Russo in social isolation. Since mid-March, Fortune has photographed people from all over the world, working to capture ‘what this particular brand of social isolation feels like, and how different people approach and react to it’. The project has received attention from the masses.

Elsa Mitsoglou

Age 40
Brooklyn, New York

Elsa experienced a company mandate to work from home for two days, after which her office had planned to close for one full week and reassess.

Josh Ruben and Lauren Sick

Ages 36 and 35
Los Angeles

Josh and Lauren are practicing social distancing at home in Los Angeles. Sick has had four jobs cancelled so far. Ruben just wrapped a feature film shoot in upstate New York a few days before Los Angeles began implementing social distancing measures.

View our “Creative Industry reacts to Covid-19” articles for more ways creative professionals are adapting

The current crisis has many UK expats returning home to be with family and loved ones. For others, they may just have been planning a short trip to their home country and have been unable to fly out due to flight restrictions.

Expat taxes when you leave the UK

When you leave the UK to move abroad, the UK tax year is split into 2 - you will be UK tax resident up to the date you leave and then non-resident for UK tax for the remainder of the tax year.

You will complete a UK self-assessment tax return, claiming split-year treatment.

You will also need to be out of the UK for a full tax year to claim the split year treatment.

UK residence and taxes

Your UK residence status impacts how you pay tax in the UK.

UK tax residents report worldwide income in the UK and are liable for UK tax. There are exclusions if your permanent tax home (tax domicile) is overseas.

Non-residents only pay UK tax on their UK source income, foreign income is excluded.

Tax issues for UK expats returning home

For British expats returning home early, you may now be deemed UK tax resident and will be liable for UK tax on your worldwide income.

If you were planning to be outside the UK to claim split-year treatment and you have come back early, you may not qualify for that tax status.

Now you are living in the UK, your UK tax return may need to be adjusted to report worldwide income for the entire time you were away.

The UK will give relief for double taxation, by recognizing foreign tax credits on foreign-sourced income. If the UK has a tax treaty with the other country, there may be further tax relief.

Returning to the UK within 5 years

While you are overseas, if you sell or otherwise dispose of assets you held before you left the UK, you may be liable for UK capital gains tax if you return within 5 years of leaving the United Kingdom.

The UK tax will be charged in the year you return to the UK, the tax due date being 31 January following the end of the tax year.

UK tax returns once you move back

Once you arrive back in the UK, if you have foreign taxable income, were outside the UK for less than a whole UK tax year, or you are working for yourself you may need to register with HMRC for self-assessment.

Exceptional circumstances

If you have been unable to leave the UK due to the current travel restrictions, and based on the number of days you have spent in the UK you would deem to be non-tax resident, HMRC will grant 60 additional days in the UK to keep your non-residency tax status.

As an expat explore the number of days you have spent in the UK so far this year - HMRC are trying to assist expats meaning you may still be able to claim non-residency for tax.

Summary

As an expat accountant, we specialize in expat tax UK reporting and also US expat taxes. If you need assistance, feel free to contact us here.

Tapestry by Charlotte Edey

In this article we will be covering the need-to-know information about the yearly, as announced by Rishi Sunak on 11th March 2020.  

As expected can be expected , the Covid-19 pandemic plays a major part in this years budget. A large section of the budget has been put aside for financial aid and support to the many financially affected by Covid-19.

CORONAVIRUS EMERGENCY FUNDING

NHS Emergency funding

An emergency fund of £5billion will be injected into the NHS to help aid the influx of patients during the Covid-19 outbreak. This is through the virtue of a 3% increase in investment, which equates to a total of £129.9 billion in 2020.

Emergency Financial Relief for Businesses and Self-Employed Workers

The budget has made financial relief available for businesses, self-employed individuals, and people who will not be able to work during the COVID-19 pandemic. Below we have listed some of the reliefs mentioned in the 2020 Budget.

 Coronavirus Job Retention Scheme  

Announced after the official budget, this scheme was set up to enable companies to keep their workers on the payroll, thus lowering the levels of unemployment that would have been a direct result of the coronavirus pandemic. It offers PAYE employees 80% of their pay through the means of government-backed loans. Initially this is only for a period of 3 months but may be extended depending on how the pandemic progresses.

Self-Employed Offered 80% of Earnings

In a similar move to the Coronavirus Job Retention Scheme (CJRS), the aid offered to self-employed individuals equates to 80% of monthly earnings worth up to £2,500 a month. A key difference in the legislation lies within the payment schedule. Where the CJRS encourages employers to pay their workers on a regular basis, self-employed individuals will receive one lump sum payment in June 2020. This leaves 3 months where a self-employed individual could technically have no source of income.

Time to Pay

Self-employed workers and business owners may be able to delay some tax payments. We have listed them below:

·     You May Defer VAT payments due before 30th June 2020 until 31st March 2021

·     You May Defer your Self-Assessment Payment (Income Tax) due in July 2020 to January 31st, 2021

The HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties contacting HMRC or paying taxes due to COVID-19. 

Business Rates Reliefs

The government has increased the Business Rates Retail Discount[4] from 50% to 100% for 2020-21. This relief has also been expanded to the leisure and hospitality sectors[5] 

Small Business Grant Funding

Small businesses that pay little to no business rates also fall under the broad umbrella of government aid. To support businesses that are claiming Small Business Rates Relief(SBRR) or Rural Rate Relief, the government has committed to providing £3,000 grants to all that are currently eligible. This £2.2 Billion funding is said to compensate around 700,000 businesses facing financial crisis at this time.

Coronavirus Business Interruption Loan Scheme

The government will launch a new, temporary Coronavirus Business Interruption Loan Scheme. This scheme will support SME’s to access loans, overdrafts, invoice finance and assets finance. The government will provide lenders with a guarantee of 80% on each loan (subject to a per lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The Scheme will support loans of up to £1.2 million in value. 

Statutory Sick Pay (SSP) from the first day of sickness

Prior to the coronavirus pandemic businesses could not claim SSP until a worker had been self-isolating for 4 days. This legislation has temporarily altered this rule; with the aim of making sure individuals can take precautionary measures (self-isolating), without losing all financial income.

 ‘New style’ Employment and Support Allowance

The government altered ESA to make the relief more accessible, to a wider percentage of the general public. This is to accommodate for the increased amount of people facing financial crises during the pandemic. Details on the changes include:

• People will be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 (or self-isolating), without the current requirement to attend a job centre

• For the duration of the outbreak, the requirements of the minimum income floor in Universal Credit will be temporarily relaxed for those directly affected by COVID-19 or self-isolating according to government advice for the duration of the outbreak.

The Hardship Fund

A £500 Million fund has been set up to provide ‘council tax relief to vulnerable people and households to help those affected most by coronavirus’. This fund will go to local authorities in England, and will reduce council tax bills for working-age people receiving local council tax support.

OUTSIDE OF CORONAVIRUS

Although the Coronavirus played a major role in the budget, it was by no means the only topic spoken at length on. Other discussions included:

Raising the National Living Wage

The National Living Wage (NLW) has risen from £8.21 to £8.72. This is alongside the chancellor's announcement that the government is planning to raise the NLW to £10.50 by 2024. Also the government plan on reducing the qualifying age for NLW from April 2021, the age drop will be from 25 to 23.  

National Insurance Contributions Threshold Raised

The threshold for NI contributions has risen to £9,500 from £8,632. This will save the typical employee £104 a year, or a typical self-employed person will get a boost of £78.

Income Tax Allowance Unchanged

The Income Tax allowance for 2020-21 is set to stay at £12,500.

Entrepreneurs Relief Cut

Business Asset Disposal Relief , aka The Entrepreneurs’ Relief, lifetime allowance was slashed from £10m to £1m, reducing the tax saving to £100,000.

Change to Pension Tax Regulations for High Earners

The income threshold at which tax relief on pension contributions starts to shrink is set to rise from £110,000 to £200,000. Whilst this increase in threshold will provide further tax relief for some high earners; for people earning above £300,000, the minimum floor for the relief has now been reduced from £10,000 to £4,000.

Tampon Tax Scrapped

The notorious 5% VAT on women's sanitary products, known as the tampon tax, is to be scrapped

Support For the Self-Employed

The government states that “it will improve access to finance and credit for self-employed people, by extending funding for the Start-Up Loans program as above and by exploring how to improve the guidance available for self-employed people applying for a mortgage.

Societal Investments and Predictions

 The government also announced a plethora of investments in public health, infrastructure, and culture alongside forecasts for the economy by the Office for Budget Responsibility (OBR).

 Funding the NHS

Within the budget, the government has stated that its 'number one spending priority ' is the NHS. This is with the aim of a £34 billion increase in funds directed to the NHS by 2024. However; The Kings Fund have commented that the “long-term funding deal… excludes important areas of the Department of Health and Social Care budgets such as capital investment, public health and the education and training of NHS staff”. 

Greener Economy

The government pledged investment into the electric-vehicle charging infrastructure, which will ensure drivers are never further than 30 miles from a charging station. This was alongside providing consumer incentives for ultra-low emissions vehicles and reducing tax for zero-emissions vehicles. The Plastic Packaging Tax is also slated to come into fruition from April 2022. 

Research and Development Tax Relief

There was an emphasis put on investment in Research and Development (R&D). This investment planned is the largest and fastest ever expansion in support of researchers and innovative businesses, taking direct support for R&D to 0.8% of GDP and placing the UK among the top quarter of OECD nations – ahead of the USA, Japan, France, and China.

Schools

The budget pledges £29 million per year increase 2023-24 to support primary school PE teaching and help schools make the best use of their sports facilities. This is as well as £90 million per year to introduce an Arts Premium from September 2021 to help schools provide high-quality arts programs and extracurricular activities for pupils.

£250 million Cultural Investment Fund

The government has announced a Cultural Investment Fund for cultural projects, libraries, museums and the creative industries. The Arts Council England commented on the fund stating that it allows “cities and towns to invest in creative, cultural and heritage initiatives that lead to culture-led economic growth and productivity”. The £250 million investment will be delivered by DCMS, with Arts Council England having a key role in distributing the fund.

Youth Investment Fund

The Budget has committed £500 million into a Youth Investment Fund to build new youth centers, refurbish existing youth facilities and provide high-quality services for young people across the country. The government expects that at least 800,000 young people will benefit from new or upgraded youth facilities.

National Museum Maintenance

£27 million has been allocated for the critical maintenance work on the National Museums’. The National Museum Directors Council has stated that the news is ‘really promising’ as museums in the country have been in “desperate need of investment”. This comes on top of 2019’s announcement of a £44 million investment, with the same allocation.

Economic Predictions by the OBR

The OBR has predicted that economic growth will be down this year compared to last year as a result of the COVID-19 outbreak. They are predicting growth of 3.0% compared to 2019’s 3.6%. “This includes an assumption that the outbreak would be "relatively limited", it is already clear that this is not the case, thus it can be assumed growth is likely to be less than predicted.

What’s Next?

The autumn budget is will likely be in November or December 2020, and will probably focus heavily on the government’s outlines for an economic recovery process from the COVID-19 outbreak. We aim to keep you up to date with any developments in the coming months.

We will be releasing further articles going further into depth on each of the points made in this article.

AS CHOSEN BY AMERICANS AND CREATIVE INDUSTRY PROFESSIONALS WORLDWIDE

We are a boutique accountancy firm that specialises in US and UK taxation. Set up over 10 years ago, Bambridge Accountants London was founded with the goal to simplify and optimise the tax filing process for creative professionals and US expatriates.

We have since become the leading American Accountancy firm for US Expatriates and gained a reputation within the creative industry for our 'outstanding' service and 'specialist understanding of the unique tax complexities for creative self-employed workers.'

 

GET IN TOUCH WITH OUR ONLINE ACCOUNTANTS

The Government has announced new legislation regarding the financial aid of self-employed workers during the coronavirus pandemic. They have confirmed that their will be relief provided to eligible self-employed workers, with a taxable grant to aid with financial losses due to the coronavirus (COVID-19) pandemic.

Many of our self employed clients have reported losing much, if not all, work due to Covid-19. As a firm, we are pulling together to support our clients in every which way we can. This article goes over the current information on the Covid-19 relief grant for self-employed professionals.

Our online accountants service is running as usual. Feel free to get in touch via phone or email and we can assist you on any of your tax matters.

Contents covered in tis article:

 ·    What Can I Receive

·     What is the difference between a grant and a loan

·     Who is Eligible for this Grant

·     How do I apply

·     How will this change self-assessments in the future

I AM A SOLE TRADER THAT HAS LOST INCOME DUE TO COVID-19. WHAT CAN FINANCIAL AID AM ENTITLED TO?

Essentially, if you meet the criteria you can receive 80% of your monthly income via a taxable, government-backed grant. The amount any self-employed worker may receive is capped at £2,500 a month, matching the recent coronavirus job retention scheme that has been brought in for employed workers.

WHATS THE DIFFERENCE BETWEEN A GRANT AND A LOAN

The main difference between a grant and a loan is in the repayment.

A loan requires you to repay what you are given by the bank or loaner often with added interest. 

A grant, on the other hand, does not require repayment. It is essentially a gift, or on the case of the recent government grant, a taxable gift.

AM I ELIGIBLE FOR THE COVID-19 SELF-EMPLOYED GRANT

Alongside the announcement of this grant, the government issued details of who will be eligible. The HMRC has published these details on their website regarding this matter:

·     A self-employed worker must have submitted your Income Tax Self Assessment tax return for the tax year 2018-19

     - Anyone who missed the filing deadline has four weeks from now to get it done and still qualify

·     You must have traded in the tax year 2019-20

·     You are continuing effort to trade at the time of application

·     You intend to continue to trade in the tax year 2020-21

·     You have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000, and more than half of your income must be from your self-employment. This is determined by at least one of the following conditions being true:

• Having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income

• Having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

 This scheme will not apply to those who pay themselves a salary and dividends through their own company. They instead can have 80% of their salary reimbursed by the Coronavirus Job Retention Scheme if operating through PAYE.

The financial times also suggested that other gaps in the scheme “involve self-employed people’s companies which have had to shut but are not eligible for business rates relief and those with recent start-ups who do not have any tax returns to demonstrate proof of income.”

It is worth reiterating a few key points about this grant that could easily be overlooked. This scheme does not cover people who only became self-employed very recently, i.e. those having setup since April 2019. Also, this is a taxable grant, thus it will have to be accounted for on your self-assessment due for 2020-21.

HOW DO I APPLY

Thus far the HMRC does not wish you to contact them on the matter. The HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational.

WHEN WILL I RECEIVE THE MONEY

This payment will initially be available for 3 months and will be given in One Lump-Sum Payment. These payments are said to be starting at the beginning of June. This still leaves many self-employed workers with the prospect of 2 - 3 months before financial respite will occur.

In the meantime, self-employed workers will still be entitled to get help via financial aid systems such as universal credit, and unlike the Coronavirus Job Retention Scheme for employed workers; self-employed individuals are still enabled to take any work given to them, whilst still receiving the maximum grant.

WHAT WILL THIS CHANGE IN THE FUTURE

The current changes to the financial climate are creating uncertainty over the future of the benefits self-employed workers are accustomed to receiving. Rishi Sunak (Chancellor on the Exchequer) has recently suggested ‘tax breaks for the self-employed, such as lower national insurance may end in the future’.

Although the future remains unclear, we remain committed to keeping you up-to-date on developments in the coming weeks and months.

Contact us for expert online accounting advice

Much of the creative industry activities have been brought to a standstill by the Coronavirus outbreak. Popular productions such as the BBC’s EastEnders and Holby, and Channel 4’s Hollyoaks, have either been paused or scaled down. The filming of the upcoming films like James Bond and Mulan film has been postponed until 2021.

Much of the TV and Film entertainment impact will not be felt until next year, as filming of hit returning drama series including the BBC’s Peaky Blinders and Netflix’s The Crown and Stranger Things, have all halted, in addition to all major movie productions.

The creative industry keeps moving

The creative industry faces some clear setbacks and restrictions over the next few months. This article offers just some of the ways the creative industry is rising to the challenge, with self-employed professionals adapting services and utilising skills to make he creative industry accessible from the safety of clients homes.

This is not only an article to offer inspiration to our self-employed clients, but also offer the public ideas of things to do in self isolation.

Internet Streaming: The Modern way to promote a creative business? 

Internet streaming has been having a pandemic of its own over the last 5 years, with online TV streaming overtaking paid television in the UK during 2018. The Conoravirus pandemic is likely to be the final push needed to send the US and UK into a fully migrated streaming culture. Streaming companies such as Netflix and YouTube etc. are already experiencing an influx of usage. The CEO of a leading cloud provider, Tom Leighton of Akamai, recently confirmed this to Business Insider. He reported that they are experiencing a ‘50% increase in traffic' each day with usage during Q1 of 2020 already ‘double compared’ with the same period of 2019. A recent Nielsen report (A market research company) also ‘suggests that the crisis could lead to a 60% increase in content streamed’. 

Putting their increased profits to good use, Netflix is said to be ‘establishing a $100 million relief fund’ intending to provide financial aid people across the television and film industries effected by the current pandemic. 

How small creative businesses are using streaming to their advantage during self isolation?

Online Performance

 The Metropolitan Opera of New York are streaming full performances by the cast. In return, they have added an emergency campaign asking for donations from members of the public to recoup some of the losses they are going to incur at present Online Performance

Community groups like choirs are offering their services in the cyberspace. ‘Rock Choir’, a subscription-based community choir, spread across multiple locations in the UK has recently started offering daily ‘sing-alongs’ via ‘Facebook live. These are not only to its members but also to the general public, which will, in time, likely expand their reach and potential client base.

Singers including Rufus Wainwright have been posting solo performances recorded at home for fans, and on Friday the London Symphony Orchestra released details of Always Playing, a digital programme of concerts which will be streamed free on the LSO YouTube channel this month and next, replacing its scheduled performances at the Barbican in London. The Royal Opera House has also unveiled a selection of free ballets and operas available on its Facebook and YouTube channels.

Virtual Exhibitions

Though streaming services embody a large portion of the way creative individuals and businesses are adapting, the access to information and social groups are also proving to be a valuable lifeline for The Creative Industries.

 Museums such as the Art Institute of Chicago are ‘making the most of existing technologies’ by offering virtual access to their contents via their websites, again with regular links suggesting users become a member of their society or to donate.

The digital platform, Google Arts & Culture, has partnered with more than 2,000 cultural institutions from 80 countries, including the Museum of Modern Art in New York City, the Musée d’Orsay in Paris and the Uffizi Gallery in Florence, Italy. Exhibitions feature works like Vincent Van Gogh’s “Terrace of a Café at Night,” from the Kröller-Müller Museum in the Netherlands, to modern art collections from the Galleria d’Arte Moderna in Milan.

Irvin Lippman, executive director of the Boca Raton Museum of Art has just started a series of free online programs for children called “Keep Kids Smart with ART” to help families who can’t travel but want to foster creativity at home.

Virtual Karaoke, Bingo and Trivia

The six-year old Gaythering hotel in Miami has taken its weekly karaoke, bingo and trivia nights online.

The drag queen Karla Croqueta hosted a virtual karaoke night on Instagram on Monday, March 16 from 8 to 10 p.m., which drew 485 viewers. “We sang Britney Spears’ ‘Toxic’ and Salt-N-Pepa’s ‘Shoop’ and we could have kept going,” the co-owner Alex Guerra said. Virtual Trivia nights are on Wednesdays at 8 p.m., and Bingo nights are on Thursdays at 9 p.m., on the property’s social media channels.

Online tutoring  

Many self-employed musicians, personal trainers, cooks and artists are offering online tutoring. You only have to check your Facebook, Twitter or Instagram feed to see a plethora of self-employed individuals offering their services via the use of streaming services such as Skype, Facebook Live or Instagram live, to name a few.

Online music tutoring

World renowned Jazz Guitarist Julian Lage offering online one to one guitar lessons, via online tutoring platform Guitar Study

Online Dance Lessons

A Kent- based dance academy, Xtreme Dance Academy, has announced that they will be offering free online classes every day during the coronavirus outbreak, stating

"Now that dance schools are closed and children aren't getting access to dance and physical activities, and at a time when people are losing their jobs, we've decided to put all my dance classes online for free – anyone and everyone can get involved."

Online Yoga Lessons

The holistic-minded Soul Community Planet’s 49-room property in Redmond, Ore., typically offers weekly yoga and meditation classes in partnership with Namaspa Yoga & Massage; these have transitioned online through the Zoom app or Facebook live and are posted on the hotel’s Facebook timeline for everyone to use.

A Leeds-based yoga teacher is 'helping Leeds keep a positive head' with her free online yoga classes during the coronavirus, released everyday on Facebook.

Online culinary lessons and wine tasting

Silvia Grossi, executive chef of the 44-room villa, Il Salviatino, in Fiesole, near Florence, Italy, has taken to social media to host cooking lessons from her own kitchen.

She said that these are “easy recipes that can be created with ingredients most people already have in their homes — flour, spices, canned foods and eggs, for example.” Her Instagram stories are conducted in Italian and have had an “uplifting response,” she said. “It’s incredible how connected we are, even when apart.”

The wine educator Caroline Conner, who works with tourists in Lyon, France, is hosting free virtual wine tastings that meet through the Zoom app, for six people at a time. “I’ll talk them through how to write a tasting note, we’ll compare our wines and hopefully have a fun, distracting and social experience,” she said. Participants can sign up and see the complete schedule here.

Streaming is not the only way

Social media has also proved a powerful tool for creatives in recent days. This was seen when various illustrators have used their social voice to form ‘ private slack channels’ in which they can pool recourses, share information and network to build future communities for the industry.

Adaptation in the face of Adversity 

 Whilst the COVID-19 pandemic has thrown the creative industries into a state of turbulence, few industries could adapt to this new world as quickly as a creative business/ individual has. Though the uncertainty it is likely new ideas will emerge, and new businesses formed.

Contact us for expert Tax Advice tailored to your work.