Coronavius has impacted us all. Its estimated around 3.5 million people in the UK have become unemployed as a result.
While many businesses have ceased to trade because of the lockdown measures since March, many people have found themselves unemployed.
But this can also be a positive for new business.
As big corporations scale back, more room can open up to small business.
As an example, While many of us decide to work from home, instead of traveling in to large cities, trade in the retail and hospitality sectors have declined in those large cities, but we're starting to see a come back for the smaller retailers in local town centres.
This is likely to be the "new normal" for the foreseeable future. So now is the best time, to consider starting up your own small business, to take advantage.
At Courtier and Courtier, we can help you with starting up your new business. From helping to guide you with what you need to do to get your business off the ground, to making sure you comply with all your tax obligations.
Some new business start ups make the mistake of going at it alone, and considering appointing an accountant at a later stage. This can be costly in the long run.
An Accountant will advise you of a number of things such as, whether the business is likely to make a profit, explaining how to operate and maintain accurate records, and even planning exit strategies with minimal tax implications.
It may be that starting up a new business as self employed is the right or wrong choice, other income and circumstances play a major factor in deciding which type of business model is best suited for you.
Ask any accountant, and they will tell you, one of the first things you should do when considering a new business, is to appoint and accountant.
So why not get in touch with us today, for a free, no obligation consultation, to discuss what we can do for you.
From 6th April 2022, all VAT registered businesses will be required to switch to the new Making Tax Digital (MTD) regime. And from 6th April 2023, all unincorporated businesses, as well as landlords with a turnover above £10,000, will also be included.
around the beginning of 2018, HMRC introduced a new way of reporting VAT for businesses, landlords, and individuals who had a turnover above £85,000.
Called Making Tax Digital, the idea behind this was to create a digital link between the sales and receipts, right through to the submission of the VAT Return, with no human intervention allowed. VAT Registered businesses were mandated to keep a "digital Trail".
As VAT, for the most part, is a way of reporting quarterly details of income and expenses, it's believed that the same approach can be applied to income tax also.
Plans to increase the scope of MTD to all unincorporated businesses and landlords had been delayed a number of times during successive budget announcements since then, however now, it's looking likely to go ahead.
Where we're at now
The recent Corona Virus outbreak has highlighted the need to bring income tax into a digital era, with a more resilient, responsive, and flexible tax system that will allow HMRC to have more up to date information about businesses and their finances.
As we have seen with the recent SEISS (Self Employed Income Support Scheme) there were some taxpayers who either didn't receive what they genuinely felt they were entitled to, whilst some never received any support, due to how the eligibility criteria were set.
Its argued that had Making Tax Digital been implemented sooner, HMRC would have been able to calculate the SEISS payments based on more recent income data, instead of relying on Self Assessment submissions from 2017 to 2019. HMRC would have been able for example, to see how well the businesses were doing, 3 months prior to the Corona Virus Lockdown, and could have based their grant payments on those figures.
What does it mean for me?
From April 2022, if you're VAT Registered, but have a turnover below £85,000 you will need to switch to the new Making Tax Digital service, we will publish more details about how to switch over nearer the time.
Instead of filing your Tax Return by October for paper submissions, or the following January for online submissions each year, you will be required to submit quarterly, details of your income and expenses, with a final 5th submission for any adjustments such as capital allowances.
Although the pilot scheme for this service has been up and running for a while now, it's said that HMRC will ramp up the testing of this service from April 2021 in an attempt to iron out any bugs.
Opinion is divided
Many accountants and taxpayers have expressed concern with forcing businesses with such a small turnover into the new regime.
Some of the concerns are the cost of implementing new tax software to handle the process, the increased time accountants will spend chasing clients for the information, instead of perhaps allocating time twice a year to prepare a Self Assessment, time will now need to be allocated to each client, every three months. Clearly with that, comes added costs, which accountants will have no choice but to pass on to the taxpayer.
Will I still pay my tax in January and July of each year?
The detail has yet to be published, but it's more than likely, you will end up paying tax based on the last 3 months of data submitted to HMRC, so if you operate a seasonal business, you'll find yourself paying more tax in peak season, and waiting on tax refunds during the quieter periods. There will be no need for 1/2 Estimates on account though, and during the cross over period, there will need to be some adjustments for those who have already paid on account towards the tax year when Making Tax Digital starts.
Is there any way to opt-out?
In short, no. Once your turnover goes above £10,000 you will be required to join the new regime, and even if your turnover falls below this, you will still be required to continue to operate the new system. Much like Making Tax Digital for VAT is now. Once you're in, you're in.
There will be some, who will have a reasonable excuse and will be excluded, for example, under religious reasons, or having no access to the internet.
What about Ltd Companies?
There are currently no dates yet as to when incorporated businesses will be asked to join the Making Tax Digital regime, but the government will be planning a consultation on this for the autumn.
Making Tax Digital for Income tax is set to be one of the biggest changes to the tax system since Self Assessment first started back in the 1990s, there will be teething problems once it goes live, and as with most things, there will be some people who possibly can't cope with the new requirements. But as like most accountants, Courtier and Courtier will be there to help those who need it.
Once again, you will need the Government Gateway ID and Password, you created when claiming the first SEISS payment. If you have lost these details, there are options to recover them, failing that, you can create a new Gateway ID and start the process over again.
Finding a local tax accountant can be daunting, with so many to chose from how do you know which is best for you?
You may be a small business, requiring accounting services, and you may feel that big accountancy firms in Essex won't have your best interests at heart.
Courtier and Courtier are a Essex Accountant, situated in the heart of Brentwood town centre, who offer small business accounting services, and because we are a small family ran accountancy practice, we can offer that personal touch most other tax accountants cant provide.
From day one we work closely with you, to understand your business needs, and where you see your business going in the future, that way we can tailor our advice and services to suit you.
We offer all accounting services, depending on your needs, from Year End Accounts to Tax Return preparation and submission.
Although we are a local Brentwood Essex Acountant, we can also provide services to anyone anywhere in the country.
All of our services, are based on a fixed fee, so no surprising bills during the year, we don't charge for appointments, and are happy to answer any questions you may have during the year free of charge.
So if you are looking for a local Brentwood Accountant, why not contact us today, to discuss your needs and find how just how cost effective we can be.