Oct 19, 2021
From April 2024, the government’s flagship system which aims to make accounting easier and reduce tax losses, will become obligatory for all those who complete a self-assessment (SA) tax return and have personal income above £10,000.
The new regulations apply to all individuals who are subject to income tax on the profits of their trade, profession, vocation, or property business. MTD for SA was due to be implemented in April 2023, but the government has recently pushed this back due to the challenges of the pandemic. General partnerships are brought in from April 2025.
The main changes include the directive to keep all records in a digital format, keep records on a transactional basis (or daily basis for retail businesses) and submit quarterly returns to HMRC via compatible software, instead of annual self-assessment returns. At the end of the tax year, a final return will be submitted, and balancing payments by 31 January after the tax period (and payments on account during the year) are expected to remain.
Whilst 2024 may seem a way off, taxpayers may need to make a number of significant changes in order to fulfil the HMRC requirements on time. In order to make the transition easier, HMRC has set up a digital tax returns pilot scheme. The voluntary scheme guides users to sign up and understand MTD for Income Tax and advises on compatible software for tax update submissions. The scheme is intended to encourage business owners to move to more regular digital recording, and it will help HMRC test its systems and processes. It is estimated that a third of eligible businesses have signed up so far.
Furthermore, HMRC has suggested that a change in the basis period (the period on which you are charged tax in a particular tax year, or the accounting year end of businesses run by the self-employed) may be introduced to make record keeping easier. Currently, many businesses run their accounting year from January to December, although HMRC self-assessments cover the year from 6th April to 5th April. Small business owners are concerned that this could lead to larger tax bills in the year they transition to MTD, if tax is assessed on a period of greater than twelve months. Where the basis period is not changed, the taxpayer will need to estimate results for the months between their accounting year end and the tax year end of 5th April or 31st March.
Michael Fotheringham, partner at James Milne Chartered Accountants commented:
“Making Tax Digital, which began with MTD for VAT, has been rolled out fairly slowly, allowing businesses time to gather the correct information and transition to digital record keeping.
Across our offices in Aberdeen, Inverurie and Banchory, most clients have made the changes fairly smoothly and the longer-term benefit of digital, real-time accounts is useful, especially when it comes to accessing timely accounting information.
“Changing an individual or business’s year end may have long term benefits, especially as the collection of taxes becomes more automated. Making the adjustment to the taxation basis period could be challenging during the changeover period, but digital record keeping, and tax advice will smooth the transition period.
“The important message is to speak with your accountant for advice and be ready for the change when it comes by commencing digital record-keeping as soon as possible.”
Sep 1, 2021
With the health and safety of our staff and clients at the front of our minds, the James Milne offices are now open again.
Over the past few weeks, staff members have been coming back to working in the office on a phased basis, and each office has social distancing measures in place including screens and more spacious working areas. We now look forward to meeting in person with clients, as previously, on an appointment basis. For the coming months, we will continue to trial hybrid working with some members of staff working from home where suitable.
The offices in Aberdeen, Banchory and Inverurie are once again staffed five days per week, 9am-5pm, so please feel free to drop off any documents as required.
We thank you for your patience during the past 18 months and look forward to continuing to provide a safe, professional and personal accountancy service.
Should you have any queries, please contact your local James Milne office at Aberdeen 01224 584458, Banchory 01330 828500 or Inverurie 01467 623311.
Jul 14, 2021
If you have to work at home because of the COVID-19 pandemic, you can claim tax relief on any additional household costs you have incurred. Staying in your slippers all day can be cosy, but working from your home office, kitchen or bedroom can mean increased gas and electricity costs, higher (metered) water usage and extra telephone/broadband expenses.
You cannot claim for all your household bills, just the additional costs you have incurred. You can also claim tax relief on any equipment you have had to purchase such as laptops, chairs etc which have not been funded by your employer.
You can either claim tax relief on:
· £6/week backdated to 6 April 2020, with no evidence of extra costs necessary, or
· The exact amount of the extra costs involved, giving evidence such as receipts bills or contracts.
If you complete a self-assessment tax return, you can claim tax relief when you next submit your tax return, but otherwise you apply online via a simple HMRC form here https://www.gov.uk/tax-relief-for-employees/working-at-home.
Jul 8, 2021
Tarves born Claire Murray has joined James Milne’s Inverurie team as Business Services Assistant. Joining Gail Soutar and her team, Claire will be providing payroll and bookkeeping services to clients, as well as assisting with year end accounts.
Claire has recently completed a two-year HND in Accounting and Finance and has a host of experience in working in finance in a variety of industries including oil and gas. Claire has also held financial roles in smaller businesses and including her father’s agricultural engineering business.
Having been recruited and started her new position during the pandemic, Claire is yet to meet many of her James Milne colleagues in person, so is looking forward to getting into the Inverurie office once guidelines allow.
Claire said: “It has been strange starting a new job during the pandemic, but luckily the whole team has been really welcoming. Even though we have mostly only met up through video conferencing and telephone calls, I have really settled in well.
“My current office colleagues are my two chihuahuas who can be a little noisy, so I eagerly anticipate the day when we can get back to the office.”
Partner Michael Fotheringham commented: “Claire is a valuable addition to the Business Services Department and brings with her a wealth of experience across different industries.
“It has been a busy time for James Milne as we support businesses facing challenging times. Our staff members have all been working at home, and we understand that that can be difficult for many, and so we truly value their dedication, professionalism and efficiency.
“We all look forward to welcoming Claire to the Inverurie office again in person, when we can all safely get back together.”
Jul 6, 2021
For many, setting up their own business is a dream come true. Whether you are formalising a lifelong hobby, or starting out on a new business proposition, there are several steps which need to be taken to ensure you comply with all UK business regulations.
One of the first decisions to be made is what type of business you want to run. You may be a sole trader, entering into a partnership, setting up a franchise or starting a limited company. Depending on how you want to proceed, the taxation and legal requirements differ. A limited company must be registered at Companies House, and if a taxable turnover of more than £85,000 is expected, the business should register for VAT, whereas everyone must also self-employed be aware of the recent changes to IR35 regulations.
It is important to investigate what licenses or permits are required for your industry, and also what types of insurance policies are necessary. All small businesses which employ people must have Employers’ Liability Insurance, to cover the business should any staff members claim they have suffered an illness or injury at work. And if you or your employees come into contact with other people, you will need Public Liability Insurance. You may also wish to protect your business by gaining intellectual property rights. Copyrights, patents and trade marks can keep your business idea safe, and you can also protect your designs or digital intellectual property. Getting this right in the beginning will help ensure nobody else uses your ideas and that you don’t infringe the rights of others as you go about your business.
Where you decide to work has an implication on your taxation as well. There are grants and tax relief opportunities if you work at home, and if your business has an office or manufacturing site, you will need to pay business rates.
If you decide to employ people, it might be beneficial to ask a third party to manage your payroll, taking care of PAYE, national insurance and pension payments.
Keeping records of your income and expenditure is vital and should be done properly from the very beginning. You can choose a bookkeeping service to make sure your finances are recorded and reported currently, or work with an accounting team to help form and manage your business strategy going forward. A qualified accountant can help you make important business decisions during good times and when things are more challenging.
An important prerequisite for all businesses today is digital record keeping which is now mandated by HMRC. Recording your income and expenditure properly from day one will make a big difference as you go forward, no matter how big or small the transaction.
Getting it right in the beginning is key to long-term success. From planning to budgeting, from tax to pensions, James Milne has been helping businesses get started for over 100 years. Contact us now with to make your new business dream come true.
Jul 5, 2021
HMRC realises that in these challenging times things change, particularly when it comes to our business finances.
Therefore, individuals who believe, or have been told, they have received a grant overpayment, are being asked to pay that money back.
Self employed people who accessed the SEISS grants will be contacted by HMRC if it is deemed that they were not entitled to the grant after their circumstances changed. There have been five rounds of grants under the scheme to support those who are self-employed or a member of a partnership and have lost income due to the COVID-19 pandemic.
Businesses who cease trading after receiving a grant, or who find that their income was much higher than expected, may be asked to repay the grant.
People who have received grants they were not entitled to should inform HMRC within a stipulated time, currently set at 90 days of payment of the grant. Penalties can be charged up to 100% on the amount of the grant overpaid, however repayment is not expected immediately.
Contact us to find out if you believe you may be required to repay a grant.
