Blog 2

Do you sell online? If so, read on to find out if your sales information will be reported to HMRC.

New rules, which became effective from 1 January 2024, require digital platform operators in the UK to collect and verify information about sellers on their platforms. The first reports due under these new rules must be submitted by 31 January 2025. HMRC has released a press release to make it clear that the tax rules for sellers have not changed despite rumours to the contrary.

These new rules mean that if you are using online platforms to sell goods or services, any pertinent information collected about you between 1 January 2024 to 31 December 2024 will be reported to HMRC by 31 January 2025. The information will only be shared with HMRC if you sell 30 or more goods or earn approximately £1,700 (equivalent to €2,000) or more in a calendar year. The online sellers are also required to give you a copy of the reported information. This can help if you have to make tax returns.

HMRC‘s Second Permanent Secretary and Deputy Chief Executive Officer, said:

“If you are not trading and just occasionally sell unwanted items online – there is no tax due. As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for self-assessment.”

You may need to register for self-assessment and pay tax if you:

– buy goods for resale or make goods with the intention of selling them for a profit;

– offer a service through a digital platform – such as being a delivery driver or letting out a holiday home through a website;

– AND generate a total income from trading or providing services online of more than £1,000 before deducting expenses in any tax year.

Check your figures for 2024 and if you find that your side hustle exceeds HMRC’s figures, it’s time to get registered for self-assessment. If you’re unsure of what to do, you can always speak to an accountant to get advice.

Please contact us if you’d like to discuss your company’s  options  then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

 

HM Revenue and Customs (HMRC) has launched a digital tool to help businesses estimate what registering for VAT may mean for them.

 The VAT Registration Estimator has been developed after feedback from small businesses suggested an online tool would be helpful to show when their turnover could require businesses to register for VAT and its effect on profits.

A business must register for VAT if:

• their total VAT taxable turnover for the previous 12 months is more than £90,000 – known as the ‘VAT threshold’ – until 31 March 2024 this was £85,000.

• they expect their turnover to go over the £90,000 VAT threshold in the next 30 days.

• they are an overseas business not based in the UK and supply goods or services to the UK (or expect to in the next 30 days) – regardless of VAT taxable turnover.

A VAT-registered business must charge VAT on eligible sales and can usually reclaim it on eligible purchases. There are around 300,000 new VAT registrations each year.

The estimator can help any business to see what registering for VAT could mean, as well as linking to further information about the registration process. It is also a useful tool for businesses operating below the threshold and considering voluntary registration.

How to use the VAT Registration Estimator:

Before you start you will need information to hand about your business income and costs, and the VAT rates that apply to them.

• Read the information online about what the VAT Registration Estimator tool does and use the links to the guidance for more information.

• Input whether the business is, or will be, based in the UK.

• Input your approximate business income and business costs for the time period you wish to estimate, up to 12 months. You can also use this if you are setting up a new business.

• Use the guidance links provided to choose the VAT rate(s) for your business income and costs – as an estimated percentage of zero, reduced or standard rated, or VAT exempt, goods and services.

• Then input if you would prefer to add VAT to, or absorb VAT into, your current or estimated selling price.

• Check your answers and complete the form to review the results, which you can save and print. You can use the estimator whenever you like, it is free to use, and it should take around 20 minutes to complete on first use. The estimator is accessed through GOV.UK guidance pages, rather than the Government Gateway. HMRC will not record the details that you input.

The VAT Registration Estimator is a guidance tool designed to help you decide if VAT registration is right for your business and allows you to experiment with different inputs and outputs. It cannot provide bespoke business advice.

Please contact us if you’d like to discuss your VAT options  then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

 

Introduction

If you’re running a limited company, you’ve probably considered the idea of buying a company car. It’s a popular question many business owners face.

Is purchasing a car through your limited company the right move? 

While there are clear advantages, there are also some pitfalls to watch out for. 

In this blog post, we’ll walk you through the pros and cons, tax implications, and key considerations to help you make an informed decision.

Advantages of Purchasing a Company Car Through Your Limited Company

1. Corporation Tax Relief

When you purchase a car through your company, you can claim corporation tax relief on the cost. The amount of relief you can claim depends on the car’s CO2 emissions, and there are some substantial benefits for environmentally friendly vehicles. This is a great way to reduce your overall tax liability!

•Learn more about this: HMRC – Capital allowances for cars

2. VAT Reclaim Opportunities

For most businesses, justifying VAT recovery on the purchase of a car is difficult. It is not enough that the business expects to use the car predominantly for business journeys, the criteria is whether the car is “available” for private use.

• If the vehicle is purchased solely for business purposes, 100% of the VAT can be reclaimed. Examples of 100% business use include such as in car hire firms, taxis and driving schools.
• If the company car is leased from a supplier, and your business is VAT-registered, you may be able to reclaim up to 50% of the VAT on the lease payments if used for business and personal use.
• For electric cars, the rules for VAT recovery are the same as conventional vehicles.

•You can also reclaim the VAT on maintenance and servicing costs.

•More information: HMRC – VAT on vehicles

3. Tax Deductible Running Costs

Running costs such as fuel, insurance, servicing, and repairs can all be claimed as allowable business expenses. This means you’ll pay less corporation tax, and who doesn’t love that?

However, you must keep accurate records to differentiate between business and personal usage.

4. Electric and Low-Emission Vehicles Are More Tax Efficient

The government offers some fantastic tax incentives for electric or low-emission cars. These vehicles typically have a much lower benefit-in-kind (BIK) tax rate, making them a cost-effective option if you’re looking to go green.

More on electric cars: HMRC – Company cars

Disadvantages of Purchasing a Company Car Through Your Limited Company

1. Benefit-in-Kind (BIK) Tax

If you use the company car for personal purposes, it’s treated as a taxable benefit. The amount of BIK tax payable depends on the car’s CO2 emissions, list price, and your income tax rate (20%, 40%, or 45%).

Higher CO2 emission vehicles have a significantly higher BIK tax charge.

You can use the HMRC Company Car Tax Calculator to estimate your potential tax liability.

2. Reduced Personal Mileage Allowance Claims

Unlike personally owned cars, you cannot claim the mileage allowance (up to 45p per mile for the first 10,000 business miles and 25p per mile thereafter) when driving a company car for business purposes. 

The rate which you can claim back mileage on a company vehicle is different to the rate you would pay for your personal vehicle. This could reduce the tax efficiency compared to claiming mileage for a personally owned car.

3. Restrictions on VAT Reclaim

As mentioned earlier, VAT reclaims are usually prohibited on the purchase of cars, but a claim is possible if the company meets both of the following conditions: 

• If purchased under a leasing agreement, 50% VAT can be reclaimed if the car is used for both personal and business purposes and 100% if the use is strictly limited to business.

4. Depreciation Costs

Cars depreciate quickly, which means they lose value over time. While you can offset some of this loss against your profits through capital allowances, it’s still something to consider if you’re looking at the bigger financial picture.

Tax Treatment of Different Types of Company Cars

New Cars

The amount of corporation tax relief you can claim depends on CO2 emissions. 

From April 2021:

•0g/km CO2: 100% first-year allowance

•1-50g/km CO2: 18% Writing Down Allowance (WDA)

•Above 50g/km CO2: 8% WDA

Electric Cars

Electric cars have become the darlings of the tax world! With a benefit-in-kind rate of just 2% (as of 2024/2025), they’re extremely tax-efficient. Plus, you may be eligible for a government plug-in car grant.

More info on electric benefits: HMRC – Electric vehicle benefits

Second-Hand Cars

If you’re considering a second-hand car, it might still be tax-efficient. However, your capital allowances will still depend on the car’s CO2 emissions, so choose wisely. 

Should You Consider Other Options?

If buying a company car doesn’t seem right for your situation, there are other options available:

Frequently Asked Questions (FAQs)

Q1: Can my company pay for fuel expenses?

Yes, your company can pay for fuel, but this could result in an additional fuel benefit tax charge, which often outweighs the actual benefit.

Q2: What happens when I sell the company car?

If you sell the car, any profit or loss is reflected in your company accounts, and you may need to consider tax implications, such as capital gains adjustments.

Conclusion

Purchasing a company car through your limited company can be a fantastic option, particularly for those considering electric vehicles or low-emission models. However, the benefit-in-kind tax and other factors mean it’s not always the most cost-effective choice. Carefully weigh up your options and consult with your accountant to make the best decision.

For more information, check out the official HMRC website for the latest updates and guidance.

Please contact us if you’d like to discuss your company car options  then please contact us on 01386 366741 or email here and one of our advisers will be in contact.

As a business owner, managing expenses is key to maximising profitability and maintaining accurate financial records – but what happens when you’ve incurred a legitimate business expense but don’t have a valid receipt or proof of purchase? 

Can you still claim it?

Here’s what you need to know:

1. HMRC’s Requirements for Claiming Business Expenses

HMRC generally requires valid receipts or other forms of documentation for all business expenses to prove they were incurred “wholly and exclusively” for the purposes of your business. This means that having no receipt can make it more challenging to justify an expense in the event of a compliance check by HMRC.

2. Alternative Proofs of Purchase

While a receipt is the most straightforward proof, if you’ve lost one, there are alternative forms of documentation that HMRC may accept. These include:

•Bank or credit card statements showing the payment.

•Email confirmations or order summaries for online purchases.

•A detailed note confirming details of the transaction and the purpose.

However, the description on these records should clearly indicate the nature of the business expense.

3. Petty Cash & Minor Expenses

For smaller expenses, such as parking or small office supplies, which may not always have receipts, HMRC may be more lenient. To stay compliant, keep a petty cash log detailing:

•Date of the expense.

•Amount spent.

•Purpose of the expense.

This provides a record of the transaction, even in the absence of a receipt.

4. What to Do If Receipts Are Lost

If you’ve misplaced a receipt, try contacting the supplier to request a duplicate. Many businesses are able to provide copies of invoices or receipts if you’ve made the purchase recently.

5. The Risks of Claiming Without Proof

If you claim expenses without adequate proof, you could face issues if HMRC chooses to investigate your tax return. In the worst case, you could be penalised for inaccurate tax filings, and the claimed expenses may be disallowed, increasing your tax liability.

Final Thoughts

While it is possible to claim business expenses without a receipt, it’s always best to keep detailed records and seek alternative proof where necessary. As accountants, we advise clients to maintain a well-organised system for storing receipts, invoices and any related documentation.

Need help managing your business expenses or ensuring compliance with HMRC? Contact us for professional guidance to keep your records in check and your business running smoothly!

Please contact us if you’d like to discuss your personal or business tax planning then call us on 01386 366741 or email here and one of our advisers will be in contact.

It’s a WIN-WIN Giveaway!

To celebrate our 15th Anniversary, we are giving away a self-assessment tax return for FREE! We will then donate the value of the return (up to £250) to a local charity of the winner’s choice.

 

To apply, you must be newly self-employed and require a self-assessment tax return for the 2023-2024 tax year. So, for any newly self-employed people in and around the Evesham area, this is your chance to have your first return completed for you for FREE and give the value of your return to a charity of your choice in the local area.

Simply send your name and details of your self employment to us via our website before 19th September 2024. The winner will be announced on 23rd September 2024. Submit your details here: https://accountancyoffice.co.uk/contact/

 

This is a fantastic opportunity to give to charity as well as receiving free tax advice to go along with your tax return submission.

From everyone at The Accountancy Office, good luck and we look forward to announcing the winner!

Giveaway ends 19th September 2024. The winner will be announced on 23rd September 2024. Terms & Conditions will apply.

HMRC can enquire into any statutory return (or amendment of that return) or statutory claim to check if the return has been prepared correctly or if further information is required.

HMRC’s internal manuals state that there is no statutory definition of an enquiry, so it carries its normal dictionary meaning of `seeking information, asking, questioning’. In practice the nature and extent of enquiries will vary considerably.

HMRC has historically referred to ‘full enquiries’ covering a tax return as a whole, and ‘aspect enquiries’ dealing with one or more matter(s). However, the legislation does not distinguish between different types of enquiries. Therefore, all enquiries into tax returns are legally enquiries into the full return, even if in practice HMRC only need to check part of the return.

If HMRC make no enquiries within the period allowed, or if they have completed an enquiry, the return becomes final unless

• the taxpayer is still within time to amend their return;
• the taxpayer has carelessly or deliberately caused a loss of tax; or
• HMRC discover that the return was incorrect, and the taxpayer had not disclosed enough information to show this. This is known as a discovery assessment. If a discovery is made in such circumstances HMRC can make a discovery assessment up to 6 years (20 years if the taxpayer has failed to notify chargeability) after the end of the relevant accounting period.

 

We support our clients by making sure they pay themselves and their families as tax efficiently as possible whilst making the process easy for them. Of course, we take care of all the personal and company tax return side of things too. Please contact us if you’d like to discuss your personal or business tax planning then please contact us on 01386 366741 or email here and one of our advisers will be in contact.