Naturally, the norms of tax and the basis of calculation of tax will be different from the regular properties. With the tax-related norms varying, the VAT on these mixes is also supposed to be different from the other ‘regular’ properties. It is the responsibility of the professional accountants in Reading or elsewhere in the UK to guide their clients on this subject. 

Payment of Tax on mixed properties

Supply of property, for instance, letting, is generally exempted from VAT. However, when you opt to tax the said property, that move will by default change the scenario. In other words, if you are the landlord, it is compulsory for you to charge VAT on the rent. More importantly, when seen from your perspective (i.e. the landlord’s perspective), it will allow you to reclaim the VAT that has been paid on the expenses that you have incurred in regards to the property. 

It is true that paying taxes and notifying HMRC about the same Is pretty simple and straightforward, but there are certain complications that may arise here and there. However, when you have professional accountants in Wokingham advising you, these problems should not bother you any longer. These professionals will help to go through the complications while filing the property tax and the subsequent complications wherein your property is being used for both non business as well as business purpose.  

Now there is a catch. The option of tax cannot be applicable to any part of your property that is used for dwelling or residential purpose. For instance, a living accommodation located just above the commercial section of property. In these cases, the property remains exempted, regardless of the treatment of VAT that is charged on the rent, if any.   

In these situations, the professional accountants in Reading will come in handy. These professionals would suggest that you notify the same to the tenant beforehand, and help them with the date the option is applicable from. Once that is done, your accountant would advise you to provide the tenants with the copy of the letter, which the HMRC will give you, acknowledging your option.

NO VAT Recovery

When you are not entitled to reclaim VAT that is paid on the expenses exclusively relating to the exempted portion of the property, for the expenses that relate to both the commercial and residential portions, i.e. maintenance and repairing of roof, and the likes, a certain quantity of the VAT can be reclaimed. This particular rule would permit you to work out the reclaimable VAT with the use of reasonable and fair methodology. Again, a professional tax advisor in Reading will help you in this. 

Thus you see, professional accountants and tax advisors of reputed firms like Biz Accounting Solutions Ltd will go all the way to help you out in these tricky situations. Call us at 07877 224964 or 01183 671854 during our business hours.

The post A Brief Account of VAT charged on a Mixed Property in the UK appeared first on BIZ Accounting Solutions.

• How the Private Residence Relief Works

To get private residence relief, you need to consider a few important factors.

Firstly, if you live in the house, it will be regarded as a ‘dwelling house’ and you are eligible for the relief. Also, if you have a garden or a garage, those will be counted. However, if you are living in the property for a few weeks only, you might not become eligible for the relief. But in these cases, the HMRC will assess whether you can apply for the PRR.

Apart from only ‘living’ in your property, you will need to cook, sleep and spend your time in leisure if you want it to be considered as a ‘dwelling house’ and get relief from CGT. On the other hand, if you use your property for business purposes, you will not be entitled to the relief. Also, if you have more than one property, you will need to notify the HMRC about the one that you consider to be your main residence. But if you are facing difficulties in the process, hiring a tax advisor in Reading & Wokingham in Berkshire County will be required to simplify it.

• PRR When You Are Married

If you are married, you and your spouse can only have one residential property if you want to become eligible for the PRR. However, if you and your spouse own individual properties and are still using them post-marriage, a joint nomination will be required to consider only one of these two properties to be eligible for the relief. But you and your partner can decide which of the properties should be considered for relief.

You will need to keep in mind that after the nomination, the other property will be liable for capital gains tax. To know more details on this topic, it’s best to consult a tax advisor in Hurst, in Berkshire County.

• Periods of Absence Considered When Calculating the Relief

If you are not residing in your property for a certain duration, you are still eligible for PRR.

When it comes to your absence in the property, it should not exceed three years. Also, you will not be eligible for the relief if you are employed outside of the UK. But if you are in the UK and need to move to a different country as required by your employer, it should not exceed four years.

However, if you are staying at your residence for the last 18 months, for instance, and want to sell it, you will be eligible for the PRR. Still, if you want to know more on the topic and stay in north Bedfordshire, you will need to hire a tax advisor in Riseley for detailed guidance.

• New rules when it comes to PRR

With effect from 6^th April, 2015 the PRR rules were amended and the new rules are applicable for both UK and non-UK residents.

Here, to get the tax relief, you have to be a tax resident and have to spend 90 nights on your property in the tax year. But there are other regulations too which a professional tax advisor can provide you with.

Qualified Accountants Ready to Assist You with PRR and CGT

If you are searching for chartered certified accountants in Reading and other areas of Berkshire County, Biz Accounting Solutions Ltd is here to meet your needs. So, call us if you want to book an appointment with our accountants.

The post How Private Residence Relief Can Exempt The Capital Gains Tax? appeared first on BIZ Accounting Solutions.

The Tax Exemptions on Company Car

Company tax does not apply on every company car. There are exceptions and when you hire us our accountants in Reading would guide you in this. As per HMRC rules, businesses enjoy exemption, if and when:

• They are one of the partners in  a partnership venture 
• They are a partner of any Limited Liability Partnership (LLP)
• They are the proprietor of their own business 
• The car has been adapted for mobility purpose 
• The car is NOT used for any personal purpose that has nothing to do with the business. 

In fact, when the company car is used exclusively for the purpose of business, the companies enjoy exemption from HMRC tax. In other words, if the car is left at the business premise overnight or during the weekends and is solely used for commuting for the purpose of meetings, business activities etc. tax is exempted. However, commuting for personal reasons is NOT exempted by the HMRC. 

Again, if the vehicle is a pool car, tax is exempted. Our tax advisor in Reading will explain that since such a pool car is shared by the employees for business purpose, and is retained at the business premise, tax is exempted.

The Clauses in regards to Vans

The HMRC tax exemption rules regarding vans are pretty much the same.. Tax is exempted if the van is used as a pool van and solely for business purposes. The use of the van for business purposes includes travelling to appointments and to temporary workplaces. However, the professional accounts in Wokingham have to notify their clients about a few more exemptions. In case of vans, tax is exempted in case of insignificant private journeys. In other words, minor detours for picking up a newspaper on the way to the business or a short stopover for a cup of coffee are exempted from the HMRC tax. 

How to minimise the tax on shared company cars? 

The HMRC tax rules for a company car, which is meant for more than a single employee for private use, are definitive. However, in case the business involves members of the same family, for example two siblings or husband and wife, things can get a bit tricky. Again, it is the responsibility of the professional accountants in Wokingham to guide their clients through these confusions. 

It is advisable that the car is made ‘available’ to both the partners in these cases, as it will reduce the tax to some extent and keep away from the attention of HMRC. 

Thus, when a company car is being ‘shared’ between two, the taxable amount will be divided in a reasonable and justified proportion between the two. 

Reducing the company car tax

As per the professional accountants in Woosehill, the easiest way of reducing company car tax is getting a low emission vehicle. The tax is calculated on the basis of the following: 

• The amount of CO2 emitted by the car 
• The P11d value
• The tax bracket

Thus, one has to get the P11 value as low as it can be and a low CO2  emission to reduce the tax. For those who are wondering what the P11 value is, it is: 

• The list price of the manufacturer including the factory option 
• VAT and delivery 
• Number plates and other options of expenses

Therefore you see, there are so many clauses in regards to HMRC company car tax and so many ways to reduce it. It is the responsibility of the professional accountants in Hurst to guide their clients all the way through. 

This is where we at Biz Accounting Solutions Ltd make the difference. Our expert accounts and tax advisors are there to guide you through. So dial 44 07877 224964 or 01183 671854 to fix an appointment. 

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Let us in this page discuss the efficacy of these new rules and the role of accountants in this. 

What do the new rules mean? 

The new pay off working rules are designed to ensure than individual who works as an employee but in his or her own limited company, (general a PCS or Public Service Company) or any other intermediary, has to pay the same Income Tax and the National Insurance Contribution (NIC) as any other employee. However this rule is not applicable for the self-employed individuals. Thus, here is where the professional accountants in Reading as anywhere else need to educate their clients about what they have needful to do and to explain why the rule is applicable, or why it is not. 

The needful to be done for the PSC or medium/large scape PCO

While it is the onus of the contractor to provide their services through the PSC on and from 6th April 2021, it is the responsibility of every large or medium sized PCO and voluntary sector organisations, as well as all the other public sector organisations to assess the employment status of the contractor for the purpose of tax payment. Now this is an area of work, which has to be taken care of and addressed by our experts who offer bookkeeping service in Reading or elsewhere.

Now this rule applies to every public sector clients as well as the private sector companies that fulfill the any two or all three following conditions:

• It enjoys an annual turnover of over £10.2 million
• It has a balance sheet total of in over £5.1 million
• It has in excess of 50 employees 

The role of the professional accountants in explaining the new rules

Few contractors are still not aware of the IR35 rules, which is essentially the tax avoidance legislation. A recent survey conducted by IR35 has shown that the majority of the in-work contractors (52%) has not yet assessed for the IR35. 86% of the contractors have not yet received important documentation, which is known as KID or Key Information Document. This is where our accountants in Wokingham have to be proactive in getting the KID for their clients and explaining the nitty-gritty of the rules to their clients. 

The main objective of these new rules is to define legally the status of a contractor in regards to employment characteristics – and how the contractors are from an actual employee. The rules also ensure that the employees are taxed properly and accurately. This is surely one area that has to be manned by our accountants in Hurst. 

Under these circumstances, it is the responsibility of our accountants in Calcot to..

• Take stock of the current workforce
• Discuss to the agencies and individuals in behalf of their clients and share the contact factsheet to help them understand how the new rules will influence them
• Determine whether the Off-Payroll working rules will apply 
• Determine who will operate the PAYE (‘Pay As You Earn)
• Settle the disagreements 
• Maintain the records 

Thus, you see, under the present scenario, professional accountants from quality firms working on the behalf of their clients will make a lot of difference in explaining things. That is the reason, you must put stakes in a quality accountant firm. What better name can you opt for, than Biz Accounting Solutions Ltd? For further details, call us at 01183 671854 or 07877 224964 during our business hours. 

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The impact and its intensity of the debacle on businesses

The first and the largest sect of businesses are those which are functioning in a triage mode at present – putting more emphasis on areas like crisis management, reduction of the workforce, and management & navigation of virtual work environment, digestion of the new legislation, and continuity of business to ensure survival in the face of this unprecedented global crisis.

The second group consists of those that are going through a sudden spike in the demand due to this pandemic and are having trying time to meet the demand. These fortunate businesses are deemed essential and include those dealing with medical products, food, and agri-products, telecom, cleaning products are so on.

The third cluster consists of those who are yet to suffer the full impact of this mayhem. A majority of these companies are currently having a backlog in their business, which is helping them to stay afloat. However, these companies must maintain a strict vigil on their cash flow to make sure that they remain strong enough to endure in case any situation arises, when they are not able to restock their pipeline when new businesses come in.

Irrespective of the group a business falls into, it needs to take certain rudimentary, yet critical actions, which will help it to weather this storm and thrive forward. This is where experienced and certified accountants in Wokingham of reputed firms like Biz Accounting Solutions Ltd come in handy. They assist their clients through this rough weather, upon being hired by these companies.

Means to weather this storm – communication is the key

The key to success in braving the storm striving forward is communication. Indeed, the success of businesses would evolve around this core factor.  Businesses must maintain close contact between their strategic partners, employees, and the end customers.

Businesses have to empathise with the customers, put themselves in the customers’ shoes, gauge things from their perspective, and put across the message to them, they are an extended family of the business. This is not rocket science and does not take much to make it happen. Simple steps like asking the customers about how they are doing, and what their needs are, make a lot of difference. This can be done through online forums or through other communicative channels like chat boxes on websites and dispatch of newsletters.

Going the virtual way

Besides taking to the virtual world for effective communication, a business also needs to ensure that its key finance and business process are always operational in a virtual environment.

The most critical component of this strategic transition is accessibility. Businesses should move their entire operating system to the cloud, as it will help them eliminate the requirement of on-site accessibility. It will also result in better and easier data usability, whether it is for financial accounting or for making better-informed and timely business decisions. Again, the experience of professional accountants in Wokingham belonging to a reputed accounting firm will come in handy.

Thus you see, the accounting firms like Biz Accounting Solutions Ltd have an extremely important role to play in this unprecedented rough economic weather and guide their clients through in their effort to stay afloat and strive forward. If you are looking forward to hiring us, call us now at 44 7877224964 during our business hours. However, if you are calling for the first time, you are free to call me anytime.

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As per the latest economic data, the economic activity in the UK shrunk by 20.4% in April, which is the steepest fall ever recorded since the second world war. Coupled with the decline in growth during the first quarter of 2020, the COVID 19 crisis has driven the UK economy down to the tune of 25% till April. However, following the easing of the lockdown on and from 15^th June, the economy is showing slight signs of rising. While 79% of the UK businesses have continued with their operation, further 9.3% has resumed the operation following the ease of the lockdown period.

However,  way back on 17^th March 2020, the Chancellor of the Exchequer, Mr. Rishi Sunak had announced a new COVID 19 Corporate Financing Facility (CCFF), designed to help the larger, the financially more sound companies that have suffered due to the economic disruption triggered by the spread of the epidemic.

Thus, it is the responsibility of the professional accountants in Grazeley who are working on the behalf of various financial institutions to explain to their clients the efficacy of this scheme and how the companies are going to benefit from this scheme. That is where we at Biz Accounting Solutions Ltd make the difference. Our highly competent accountants are more than ready to provide detailed inputs of this scheme to our clients.

The objective of this Scheme

Nevertheless, let us on this page, discuss the efficacy and effect of this scheme. The CCFF is designed to support businesses that are looking for market-based finance to boost their surging working capital and to meet various short needs, much due to the compressed cash flow resulting from the economic meltdown.

While further details about the scheme are still not out, the Bank of England has already set in broader terms, the way the scheme will work and the businesses that are eligible to get the support. Here again, it is the responsibility of the accountants in Reading to find out whether their clients are eligible for the scheme or not.

How will the CCFF Function?

The Bank of England has come up with the Corporate Financing Facility Limited (the Fund), which is designed to purchase the Commercial Paper (CP) maturity of up to one year, which are issued by firms. The Fund is supposed to purchase the newly issued CP on the primary market, through the dealers and after the issuance from the eligible counterparts of the secondary market. The purchases, however, will be financed by the central bank reserves.

What is the tenure of the availability of CCFF?

The CCFF is designed to be valid for a minimum period of 12 months and will continue to be in use until the cash flow pressure of the eligible companies does not ease out. However, a six-month notice period will be served to the companies, before the withdrawal of this facility.

Who will issue the CP?

The fund will purchase the CP that is issued by the companies, which make a material contribution to the UK economic activities, and used to enjoy a short or long term investment grade rating before the pandemic struck, or those who had a financial strength equal to the investment-grade rating.

The company eligible to issue the CP:

• Has to be a substantial employer in the UK
• Has to be headquartered in the UK
• Has to be incorporated in the UK
• Has to serve a substantial amount of revenue in and for the UK
• Serves customers of the UK
• Has multiple operating sites in the UK

Thus, you see, there are so many modalities to be realised by a business in regards to its eligibility to enjoy the CCFF scheme. This is where hiring Biz Accounting Solutions Ltd will make a difference. Our accountants in Earley will leave no stones unturned to explain the technicalities of CCFF and other aspects to our clients. For further details, call us at +44 7877224964/0118 367 1854.

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Personal allowance: £12,500 (for 2020-21) similar to 2019-20.

But this allowance was reduced by £1 for every £2 income from £100,000 to £125,000.

• Personal allowance income limit; £100,000 (consistent with 2019-20)
• Basic rate tax payer- £1000 (for 2020-21 & 2019-20)
• Higher rate tax payer -£500 (for 2020-21 & 2019-20)
• Additional-rate tax payer – £0 (for both)
• Dividend allowance- £2000 (for 2020/21 & 2019-20)
• Trading property allowance- £1000 (for both).

However, an important note here is that traders/landlords having gross income from all these sources in a sum amount exceeding £1000 have the right to deduct their allowance from their gross income mainly as one alternative to claim their expenses.

• Marriage partner transfer allowance-£1250 (for both years).

If there are unused personal allowances, they may be transferred to the civil partner or spouse. The person receiving the sum will not be entitled to any higher or extra rate tax.

• Married couple allowance- £9,075 (2020-21) in comparison to £8,915 (2019-20)

Minimum amount allowance for (2020-21) is £3,510 in contrast to £3,450 (in 2019-20). Also, the income limit saw a slight increase in (2020-21) with £30,200 as opposed to £29,600 (in 2019-20)

• Blind individual’s allowance- £2500 (for 2020-21) in comparison to £2450 (2019-20)
• Renting a room allowance-£7500 (for both years)

INCOME TAX BANDS & RATES (Comparison between 2019-20 & 2020-21)

• The starting rate of savings is up to £5000 for 2020-21 (similar to last year).

Note- the starting rate doesn’t hold if the taxable sum surpasses the starting rate limit.

• Basic rate band- £37,500 (for both years)
• Higher-rate band-£37,501 to £150,000 (both years)
• Additional-rate band- Exceeding £150,000 (both years)
• Basic rate-20% (no changes to last year)
• Higher-rate- 40% (similar to 2019-20)
• Additional-rate- 45% (consistent with 2019-20)
• Dividend basic rate- 7.5% (both years)
• Dividend higher-rate-32.5% (both years)
• Dividend additional rate-38.1% (both years)

LIMIT FOR INDIVIDUAL SAVINGS ACCOUNTS

• The entire investment limit offers an allowance of £20,000 (for 2020-21) which is consistent with last year’s overall limit.
• As for junior account investment limit, the allowance is £9,000 (for 2020-21) in comparison to last year which was £4,368

CAPITAL GAINS TAX SHEET (COMPARING 2020-21WITH 2019-20)

Starting with Main Taxes which include:

• Individual Basic-rates- 10% for both years
• Individual Over basic-rate- 20% for both years
• Estates and Trust- 20% for both years

• Surcharge for profits on chargeable housing property is 8% for 2020-21(similar to last year).
• Annual Exemption for Individuals (£12,300 for 2020-21 in comparison to £12,000 for 2019-20) and Trusts (£6,150 for 2020-21 showing a slight increase to £6,000 in 2019-20)
• Entrepreneur’s relief- lifetime limit (starting from 11.3.20) is (£1m for 2020-21 as opposed to £10m in 2019-20) and applicable rate (10% for 2020-21 is consistent with last year)
• Investor’s relief – lifetime limit is (£10m for 2020-21 consistent with 2019-20) and applicable rate (10% for 2020-21 also consistent with last year)

SELECTED RATES (Comparing 202021 with 2019-20)

• Basic State Pension Allowance – £134.25 (for 2020-21) as to £129.20 (for 2019-20)
• New State Pension Allowance – £175.20 (for 2020-21) in comparison to £168.60 for (2019-20)

Statutory Pay Standard Rate Allowance – Entailing the Average Weekly Yield [£120 (£118) or Over]

• Sick Pay- £ 85 (for 2020-21) as to £ 94.25 (for 2019-20)
• Shared Parental Pay – £ 20 (for 2020-21) in comparison to £148.68 (for 2019-20)
• Paternity Pay–£ 20 (for 2020-21) in comparison to £148.68 (for 2019-20)
• Adoption Allowance –£ 20 (for 2020-21) in comparison to £148.68 (for 2019-20)

PENSION ALLOWANCE (2020-21)

The lifetime allowance limit has increased slightly this year £1,073,100 in comparison to 2019-20 figures which was £1,055,000.

However, the annual allowance limit (£40,000) and the money purchase annual allowance limit (£4,000) for 2020-21 remains consistent with last year.

(DISCLAIMER)

These aforementioned rates are to be used for guidance only. Some figures are subjected to change due to different situations and individuals.

The wise choice would always be to consult with a professional and experienced tax advisor working in Wokingham before making any taxation decision.

BIZ ACCOUNTING SOLUTIONS LTD– consists of a diligent group of tax advisors and accountants working across Wokingham to help you out.

Our taxation specialists are up-to-date with the latest Tax Rate Sheet for 2020-21 and will help you with Corporation tax return, Inheritance tax, Capital Gains tax and even during preparing and filing accurate returns.

CALL US FOR OUR TAX RETURN SERVICES TODAY!

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