From 6 April 2013 you can use two "simplifications" to make accounting easier for your unincorporated businesses: the cash basis and fixed rate deductions. If your business falls within the size criteria you can use one or both of these simplifications, or neither, the choice is yours. To start to use the cash basis your business must have annual turnover of less than the VAT registration threshold (currently £81,000). There are slightly different rules if you also claim the Universal Credit benefit (successor to tax credits). You must stop using the cash basis if your turnover reaches double the VAT [...]

Companies (not unincorporated businesses), can claim enhanced deductions for qualifying costs they incur on research and development (R&D) projects. For small companies the deduction can be 225% of the qualifying costs, and since April 2012 there is no minimum spend required in an accounting period. The major barrier to claiming this tax relief is working out whether your project qualifies as R&D. To qualify it must push the boundaries of scientific or technical knowledge. Ask yourself: a) Has anyone else done what we are trying to achieve with this project? b) If another business has achieved that goal, have they [...]

Repairs or improvements? If you let out residential property you need to know whether you can receive a tax deduction for the cost of replacing or repairing furniture and fittings provided inside that property. The cost of equipment used to maintain the outside of a property, or used in the communal areas of a building containing multiple dwellings, is always deductible. When you fit something for the first time to a property, such as a fitted kitchen, that cost will form part of the capital cost of the building and will only be deductible when you sell the property. If [...]

Q. HMRC has reminded me to claim the employment allowance for 2014/15 worth £2000. My company doesn't pay any employers' NI on my very low salary, so I thought I couldn't claim the employment allowance. But the Government website referred to in the HMRC letter says I can get a refund of my VAT, PAYE or corporation tax as I haven't used the full employment allowance for the year. How do I get my hands on this money? A. Unfortunately the GOV.UK website is wrong. The employment allowance can only be set against employer's class 1 national insurance contributions due [...]

Summary The Chancellor of the Exchequer pulled out a few surprises in his Autumn Statement. The most eye-catching is the reform of stamp duty land tax (SDLT), which is payable by purchasers of land and property. The changes should reduce the SDLT payable on 98% of transactions which complete from 4 December 2014 onwards. Small businesses should be pleased with the £1,500 business rate discount for small high street shops, cafes, pubs and restaurants. All employers will benefit from the zero rate of employers' national insurance for workers aged under 21, which is to be extended to apprentices aged under [...]

Currently if you die before you have started to draw your pension, the value of your pension fund will not usually be subject to inheritance tax (IHT) at 40%, as it is excluded from your estate. However, there can be a 55% tax charge where your pension fund is passed to someone else under your will, especially if you die aged over 75. From 6 April 2015 the 55% tax charge will be abolished. If you die before you reach age 75 you will be able to pass on your pension fund on death to any one you choose without [...]

This sounds like a friendly retail outlet where you might buy a pint of milk on a Sunday evening. In fact it is short-hand for the online portal which UK businesses should use from 2015 to account for VAT they owe in respect of digital services provided to customers in other EU countries. We mentioned this new rule in our July 2014 newsletter. "Digital services" includes a multitude of products such as: music downloads; video on demand; electronic books; online games; anti-virus services; software purchased by download; charges by online auction sites; sales of data or images online; and automated [...]

Q. Last year I bought a run-down pub and converted it into a restaurant. I registered for VAT after the work was done, but before the restaurant opened. Can I reclaim any of the VAT paid on the costs of converting and fitting out the restaurant? A. It is easy to see with hindsight, but you should have registered for VAT at the point you started the conversion work. You can claim back VAT charged on services incurred in the six month period that ends with the date you registered for VAT, which might not cover all of the conversion [...]

We've had a couple of enquiries recently from people changing trades and hoping to use the losses from the old business against the profits from the new one. The rules are quite strict where losses from previous years are carried forward - in general they can only be used against the old trade. There are some useful ways of using losses in the early years of sole-trader businesses to claim back personal tax paid in previous years.