Category: Latest news

In recent news, it has been announced that HMRC will be granted additional powers when it comes to collecting crucial information. Specifically, the focus will be on the amount of dividend payments earned by owner-managed business directors, as well as the number of hours worked by individual employees. These new regulations are set to come into effect from April 2025, and it’s important for businesses and employees alike to understand the implications.

Dividend Disclosure and Self-Assessment

Enhancing Reporting on Employee Working Hours

Cracking Down on Tax Evasion and Keeping Compliance in Check

A Measured Approach to Data Collection

Looking Ahead

In the realm of small business, effective financial management is crucial for sustained success and stability. While revenue and profit are important, it is the smart management of cash flow that ultimately determines the long-term viability of a company. In this blog post, we will explore key practices for optimising cash flow and achieving financial stability, providing small business owners and aspiring entrepreneurs with the knowledge they need to make informed decisions.

Understanding the Movement of Money

Cash flow refers to the movement of funds into and out of a business over a specific period. It includes various inflows, such as revenue, investments, and loans, and outflows like expenses, salaries, and loan repayments. By analysing the sources and uses of funds, business owners gain insights into their financial standing, whether there is a cash surplus or deficit, and can align their strategies accordingly.

The Importance of Effective Management

While revenue and profit analysis is commonly prioritised, the critical role of cash flow management should not be overlooked. Even profitable businesses can face cash flow issues, making it essential to anticipate and address potential shortfalls. Smart cash flow management empowers entrepreneurs to adapt to market changes, pursue new opportunities, and ensure a healthy financial position.

Types of Cash Flows

Effectively managing cash flow involves comprehending three primary types: operations, investments, and financing. Operations cash flow encompasses day-to-day business activities like inventory purchases and utility payments. Investment cash flow relates to long-term assets such as equipment acquisitions or property sales. Financing cash flow involves debt and equity, encompassing interest payments, dividends, and loans.

Cash Flow vs. Profit

It is crucial to differentiate between cash flow and profit. Profit represents the balance between revenue and expenses calculated using accrual accounting methods. On the other hand, cash flow reflects the actual movement of money, considering the timing of inflows and outflows. Understanding this distinction allows business owners to make strategic decisions and avoid potential gaps in their finances.

The Impact on Small Businesses

Insufficient cash flow is a common reason behind small business failures. Even with strong revenue and profit figures, negative cash flow can cripple operations and lead to financial distress. By adopting proactive management strategies, small business owners can avoid cash flow gaps and ensure a sustainable financial future. These strategies may involve improving cash inflows, controlling expenses, and optimising payment timing.

The Significance of Liquidity

Liquidity refers to a business’s ability to meet short-term financial obligations promptly. Cash is the most liquid asset, followed by short-term receivables. In contrast, illiquid assets, such as equipment or buildings, cannot be easily converted to cash. Monitoring liquidity regularly is crucial to avoid insolvency and maintain the viability of a business.

Prioritizing Cash Flow Management

Cash flow management is a vital aspect of running a successful small business. By focusing on key practices, business owners can navigate financial challenges, seize growth opportunities, and safeguard the long-term viability of their companies. Understanding different cash flow types, differentiating between profit and cash flow, and implementing proactive optimization strategies are essential steps towards stability and sustained business growth.

In conclusion, small businesses must recognise the significance of cash flow and dedicate resources to its management. By emphasising smart cash flow practices, they can ensure a healthy financial position and foster long-term success in the competitive business landscape.

At Studholme-Bell, we specialise in helping small businesses optimise their financial management. Contact us today to learn how our expertise can assist you in achieving financial success and stability.

Running a small business can be challenging, especially when it comes to dealing with tax matters. The last thing any business owner wants is a letter from HMRC indicating an investigation. That’s why tax investigation insurance is crucial for small businesses. In this blog post, we will explore the importance of tax investigation insurance, its benefits, and how it can safeguard your business’s financial health. As trusted advisors, Studholme-Bell Accountants are here to guide you through the complexities of tax investigations.

What is Tax Investigation Insurance?

Tax Investigation Insurance is an incredibly valuable service that offers comprehensive protection against the potential financial burden associated with dealing with HMRC enquiries or disputes. With this insurance-backed shield, individuals and businesses can rest easy, knowing that accountancy fees and related expenses arising from such situations are fully covered. This ensures peace of mind and allows them to focus on their core activities without unnecessary stress or worry.

Reasons for Tax Investigation and the Need for Insurance

While the exact reasons for a tax investigation by HMRC can vary, it is crucial to be prepared and proactive in safeguarding your financial interests. Some common triggers for an investigation include late filing of tax returns, errors that demand correction, involvement with cash transactions, tips received by HMRC, or operating in a targeted business sector, among others. In today’s digital age, HMRC’s Connect system utilizes various data sources, such as banking records, Land Registry data, Visa and MasterCard transactions, DVLA records, council tax information, VAT registration documents, and even social media profiles, to detect potential discrepancies.

It is a common misconception to assume that mistakes have been made leading to an investigation. However, random and unexpected enquiries can and do occur. That’s why having tax investigation insurance is crucial for individuals and businesses alike, allowing them to navigate any HMRC enquiry without the worry of excessive accountancy costs.

Protection against Costly Expenses

A tax investigation can incur substantial costs for small businesses. On average, these investigations can range between £4,000 and £5,000, but costs may vary depending on the case. Even if you fully comply with tax regulations, the expenses associated with a lengthy enquiry can quickly add up. With tax investigation insurance, a key benefit of FSB membership, you can protect your business’s bottom line. This insurance covers defense costs and accountant fees, ensuring that your expenses are taken care of, subject to agreed terms.

Expertise and Guidance

During a tax investigation, having access to an experienced tax specialist is invaluable. With tax investigation insurance, you can rely on the expertise of a former tax inspector familiar with HMRC’s methodologies. This tax specialist knows what to look out for and can provide advice and guidance throughout the investigation process. At Studholme-Bell Accountants, our team of experts can represent you in a range of tax enquiries, including Corporation or Income Tax, PAYE (Employer Compliance), VAT, and IR35.

Saving Time for Your Business

Tax investigations can be time-consuming, diverting your attention from running your business. The duration of an investigation depends on various factors such as the amount of information being reviewed, the areas of taxation in question, and the size of your business. On average, full enquiries can last around 16 months, while aspect enquiries typically span three to six months. However, more complex cases and disputed valuations can prolong the investigation process significantly. By having tax investigation insurance, you can rely on a tax consultant to handle all correspondence, meet with HMRC as necessary, and liaise with your accountant. This saves you valuable time and allows you to focus on your business’s growth and success.

Tax investigation insurance is a vital resource that provides protection, expertise, and time-saving benefits for small businesses facing HMRC enquiries. By having insurance in place, you can safeguard your business’s financial well-being, relying on the guidance of experienced tax specialists. At Studholme-Bell Accountants, we understand the complexities of tax investigations and can offer the support and representation you need during these challenging times. Contact us today to learn more about our tax services and how tax investigation insurance can benefit your small business.

Remember, when it comes to tax matters, having the right support and protection is essential. Trust Studholme-Bell to be your reliable partner in navigating the complexities of tax investigations, we can offer expert guidance and valuable recommendations on tax investigation insurance providers, ensuring comprehensive coverage for your business.

If you’re looking for expert advice about , our team of experienced accountants is here to help. Contact us today to learn more about how we can support your business’s financial needs.

You can call us on 01257 241 111
Or email us at info@studholme-bell.com

In April 2023, the UK government unveiled a new capital allowance regime, introducing the successor to the Super Deduction called “Full Expensing.” This blog post explores the significant advantages that the Full Expensing regime offers to UK companies. From tax relief to accelerated write-offs, we delve into how this scheme encourages investment in qualifying plant and machinery, helping businesses thrive in a competitive landscape.

What is Full Expensing?

The Full Expensing regime, implemented from 1st April, replaces the Super Deduction tax relief. It allows UK companies subject to Corporation Tax to write off the complete cost of qualifying plant and machinery investments from their taxable profits. This scheme incentivises companies to invest in assets such as machines, office equipment, vehicles, warehousing equipment, tools, construction equipment, and certain fixtures.

Boosting Tax Relief and Accelerating Write-Offs

Under Full Expensing, UK companies can enjoy a three-year period of enhanced tax relief. By writing off the full cost of qualifying assets, businesses can minimise their taxable profits and lower their overall tax liability. This accelerated write-off provides a significant advantage, allowing companies to invest more funds back into their operations.

Eligibility and Qualifying Assets

To benefit from Full Expensing, companies must be subject to Corporation Tax. Qualifying assets include new and unused plant and machinery, excluding cars. From computers, printers, and lathes to office equipment, vehicles, and construction equipment, a wide range of assets fall within the scheme. Some fixtures, like kitchen and bathroom fittings, and fire alarm systems in non-residential property, also qualify.

The Impact of the Corporation Tax Hike

Earlier this year, Chancellor Jeremy Hunt raised Corporation Tax from 19% to 25%. This increase in tax rates aligns with the government’s goal of recouping funds used to support the private sector during the pandemic. Despite the hike, businesses can still benefit from FE and leverage the three-year period for accelerated write-offs.

First-Year Allowance (FYA) for “Special Rate” Expenditure

Companies investing in new special rate assets, including long-life assets, can claim a 50% first-year allowance until 31st March 2026. Although these assets don’t qualify for full expensing, the 50% FYA provides an additional incentive for businesses to invest in long-term assets. Specific conditions apply, and further guidance from HMRC is expected.

Unincorporated Businesses and the Annual Investment Allowance (AIA)

While unincorporated businesses cannot claim Full Expensing, they can still benefit from the Annual Investment Allowance (AIA). The AIA offers similar benefits, covering up to £1 million per year for qualifying capital investments. Second-hand assets and those bought for leasing purposes can also qualify for the AIA.

The Full Expensing regime marks a significant milestone for UK companies, offering a range of benefits to encourage investment in qualifying plant and machinery. From enhanced tax relief to accelerated write-offs, businesses can leverage this scheme to optimise their financial position. By embracing Full Expensing, companies can fuel growth, increase productivity, and stay competitive in today’s challenging business landscape.

Remember, the Full Expensing regime is set to end on 31st March 2026. However, the Chancellor has expressed a desire to make the scheme permanent when fiscal conditions allow. Not sure how to take full advantage of Full Expensing? Get in touch to stay ahead of the game and let us help you drive your business forward.
You can call us on 01257 241 111
Or email us at info@studholme-bell.com

Note: Please consult with a qualified accountant or tax advisor for personalised guidance on your specific circumstances.

As an employee using your own vehicle for work, understanding HMRC’s mileage allowance laws and how to apply them is crucial. In this blog post, we will delve into the key aspects of mileage allowance, rates, and taxation, providing clarity for both employees and employers.

At Studholme-Bell, we understand the importance of efficient mileage tracking. That’s why we offer an automated vehicle log book solution, allowing you to save time and focus on more engaging tasks while we take care of your mileage tracking needs.

If you are self-employed, we have a dedicated guide on mileage allowance specifically tailored for you. Feel free to check it out!

HMRC Mileage Allowance Rules: What You Need to Know

If you use your private vehicle for business purposes, you are eligible to receive Mileage Allowance Payments (MAPs) from your employer to cover your mileage expenses. These payments can be structured in various ways:

• Monthly payment based on a per-mile rate for your business mileage.
• Monthly payment based on a reasonable business mileage estimation.
• Monthly lump sum to cover vehicle costs, calculated based on reasonable estimates of your business mileage.
• Combination of the above, such as a monthly lump sum for vehicle expenses along with a fuel rate per mile at a lower reimbursement amount.

What is Covered by Mileage Allowance?

Allowance payments are designed to cover various vehicle expenses, including fuel, vehicle maintenance, depreciation, insurance, and road tax. However, it’s important to note that tolls, parking fees, congestion charges, and fines for road offences are not included in the mileage allowance.

Understanding HMRC Mileage Allowance Rates

HMRC provides Advisory MAP (AMAP) amounts for employers, which are not obligatory. The rate at which your employer chooses to reimburse you may vary, and this information is typically outlined in your employment contract.

Currently, the advisory allowance rates per mile are as follows:

• 45p for cars and vans for the first 10,000 miles. After 10,000 miles, the rate changes to 25p per mile.
• 24p for motorcycles, regardless of the number of miles driven.
• 20p for bicycles, regardless of the distance covered.

Mileage Allowance Relief

If you are paid the advisory rates set by HMRC, it is considered an “approved amount.” However, if your employer reimburses you at a lower rate, you may be entitled to Mileage Allowance Relief (MAR) and potential tax relief. MAR is a tax-free allowance for business travel, and it is based on the difference between the approved rate and your employer’s reimbursement rate.

Proving Business Mileage and Receiving MAP

To receive Mileage Allowance Payments (MAP), employees must provide evidence of business mileage to their employers. This can be accomplished by maintaining a detailed mileage log, which should include:

• Date and purpose of each trip
• Distance traveled
• Start and end addresses of work-related journeys (including postcodes)

Recording this information accurately is crucial, as it serves as evidence of the business mileage driven. By encouraging employees to maintain comprehensive mileage logs, you can ensure the accuracy of their claims.

Calculating the Mileage Allowance

The HMRC-approved allowance rates determine the reimbursement employees are entitled to. Typically, the reimbursement is calculated by multiplying the business miles driven by the employer’s mileage rate. For instance, if an employee has driven 500 miles in a month and the approved rate is 45p per mile, the reimbursement can be calculated as follows:

500 miles x £0.45 = £225

Tax Implications 

Understanding the tax implications of mileage allowance is crucial for both employers and employees. Here’s a breakdown of how it works:

• Mileage Allowance at Approved Amount: If employees are reimbursed precisely at the approved mileage amount, the sum is tax-free for both parties, and no declaration is required.
• Mileage Allowance Below the Approved Amount: When employees are reimbursed at a rate lower than the approved mileage amount, the remaining entitlement can be claimed as Mileage Allowance Relief (MAR). This allows employees to recoup the difference and reduce their taxable income.
• Mileage Allowance Above the Approved Amount: If employers choose to reimburse employees at a higher rate than the HMRC-approved mileage allowance, the excess amount is considered a personal benefit and is subject to income tax through PAYE.

National Insurance Scheme and Relevant Motoring Expenditures

In addition to tax considerations, accountants should be aware of the National Insurance (NI) scheme and relevant motoring expenditures (RMEs) associated with mileage allowance. RMEs include:

• Mileage Allowance Payments
• Payments made on behalf of employees for vehicle maintenance
• Other payments related to the business use of vehicles

The NI scheme imposes a “Qualifying Amount” that determines whether the RMEs are subject to Class 1 National Insurance contributions. The qualifying amounts for cars, vans, motorcycles, and bicycles are specified by HMRC.

Keeping Track of Your Mileage

There are a few options available to track your mileage, such as using a manual log book, a spreadsheet, or an automatic digital tracker. If you prefer the traditional approach, you can manually record your business trips on paper or a digital spreadsheet. However, this method can be time-consuming, particularly if you travel frequently for work. You can find paper logbooks at various newsagents and stores.

Alternatively, you can opt for automatic mileage tracking by using a mileage tracker app. There are several user-friendly options available for both iOS and Android devices. These apps utilise GPS technology to automatically track your mileage while you’re on the road. Our recommended app, Driversnote, not only helps you keep track of your business travel but also generates HMRC compliant mileage reports. By choosing an app, you can eliminate the hassle of manually inputting information and ensure that your records are accurate.

Managing mileage allowance is a crucial aspect of financial management for any business. By understanding the reimbursement options, knowing the applicable tax regulations, and utilising effective mileage tracking methods, you can optimise your mileage allowance and ensure compliance with HMRC guidelines.

If you’re looking for expert advice and assistance in managing your mileage allowance, our team of experienced accountants is here to help. Contact us today to learn more about how we can support your business’s financial needs.

You can call us on 01257 241 111
Or email us at info@studholme-bell.com

As we step into the month of September, it’s crucial for businesses and individuals alike to be aware of the upcoming tax deadlines. Being proactive and meeting these obligations on time ensures smooth financial operations and avoids unnecessary penalties. In this blog post, we’ll highlight the key tax deadlines for September, helping you navigate through them seamlessly.

September Breakdown

1st September 2023

For companies with year ends falling in September, mark your calendars for the 1st of the month. It’s the deadline for Corporation Tax payment, a crucial financial obligation that shouldn’t be overlooked. By promptly settling your Corporation Tax, you demonstrate your commitment to compliance and avoid any potential penalties.

Attention company car drivers! On the 1st of September, new advisory fuel rates are published. Keeping track of these rates ensures accurate reporting of fuel expenses, allowing you to claim the appropriate deductions and maximise your tax efficiency. Stay informed and make the most of available tax benefits.

7th September 2023

For those with VAT obligations, mark the 7th of September on your calendar. It’s the deadline for online VAT submission and payment for month or quarter-end 31st July 2023. By submitting your VAT return and making the necessary payment online, you streamline the process and mitigate any potential errors. Stay compliant and avoid unnecessary hassles.

19th September 2023

This is the deadline for non-electronic methods of payment to HMRC’s Accounts Office. Timely payment of PAYE and NICs on or before this date is essential to meet your obligations as an employer and avoid any penalties or legal issues.

22nd September 2023

This is the deadline for electronic methods of payment to HMRC’s Accounts Office. Make sure to submit your PAYE and NICs payment on or before this date to ensure compliance and avoid any potential consequences.

30th September 2023

Last but not least, the 30th of September marks the VAT tax return deadline. As a VAT-registered business, it’s crucial to complete and submit your VAT return within the specified timeframe. This ensures accurate reporting of your VAT liabilities and entitlements, helping you maintain compliance and avoid any potential penalties.

Navigate the Deadlines

By staying informed and meeting these September tax deadlines, you showcase your commitment to financial responsibility and compliance. Our team is here to support you in navigating through these obligations seamlessly.

For personalised assistance and expert advice, don’t hesitate to reach out to us, either by email at info@studholme-bell.com or ring us on 01257 241 111

Remember, being proactive and organised with your tax obligations is key to a successful financial journey. Stay tuned for more updates and insights on tax-related matters.