A Beginner’s Guide To Personal Tax Return’s

Self-assessment tax returns occur once a year and are known to cause a lot of aggravation amongst business owners, entrepreneurs and the self-employed. Below will tell you all about self-assessment tax returns and whether or not you need to file one. 

Self-assessment tax returns exist to make sure that individuals report their annual earnings and their sources to HMRC. In turn, this allows HMRC to be able to calculate how much tax you are liable to pay in the applicable tax year. It is the individual’s responsibility so you must understand if, how and when to file the paperwork.

Who must complete a tax return?

In the UK, a tax deduction system known as PAYE is used if you are an employee of a company. This type of system allows your employer to deduct a percentage of your wage depending on your tax code. If this method is used, it is not required of you to fill in a self-assessment unless you have a second income, such as running a personal business on the side.  

Self-assessment tax returns are frequently used by self-employed people, freelance contractors, small business owners and entrepreneurs being the main culprits. Furthermore, if you live in the UK but are developing money from abroad, additionally if you live abroad but are generating money from the UK tax must be paid. If you want to be entirely sure this applies to you, you can check online on the government website

You should provide the following information to the best of your ability: 

  • National insurance and employee reference number
  • P60 forms
  • P11D forms
  • A review of any personal profit or investments
  • Capital gain summaries
  • A list of taxable benefits received via your employer or the government

You must remember to meet the deadlines as you could face paying severe penalties. These are:

Day 1- £100

Upto 3 months- £10 a day, with a maximum of £900

Upto 6 months- £300 or 5% of the tax due, whichever is the higher amount.

If you are a UK resident submitting a self-employed self-assessment, it can be deferred by either post or online. However, if you are a non-resident, you cannot submit online it has to be by post, or you can get an accountant to do this on your behalf.

Will There Be A Fourth Self-employment Support Scheme Grant?

Covid-19 has wreaked havoc throughout the world. With the third lockdown now upon us, many self-employed workers are suffering from enormous losses to their income. The good news is help is available. The government’s new scheme, known as the Self-employment Income Support Scheme, was designed to help workers through the coronavirus crisis. 

The SEISS arrangement was first brought in last year in 2020, to provide grants to those whose income has been negatively impacted by the pandemic. From May 2020 self-employed workers were able to apply for the grant. However, applications for the first grant closed in July 2020. The second grant shortly followed, lasting between August-October and was worth up to £6,570. And finally, a third grant was brought into play to assist through the winter months. 

But is there going to be a fourth grant? 

The simple answer is yes, an economic update from the house of commons confirmed the scheme will be extended through February to March. 

A whopping three million people have already applied since the first grant release and over 20 billion pounds already handed out. 

So far the government has not given any indications to how much support you can get under the fourth grant but rest assured more information is due to be published shortly. 

Who can claim?

As the fourth grant covers February to April, it is time to get your applications in. Unfortunately, eligibility conditions have not changed. So if you were not eligible for the first three grants, you wouldn’t qualify for this grant either.

Here is what you need to know to apply:

  • You must show you are currently trading but have been impacted by reduced demand. 
  • You must declare you have been trading but are currently unable to do so due to the pandemic. 
  • You must show the impact put on your business at the time of the current grant.
  • If you filed a tax return for 2018/19 on or before April 2020, and provide proof, you were trading through that tax year. 
  • You must declare you intend to continue trading. 
  • Finally, you must declare you reasonably believe there will be a significant reduction to your trading profits at the time of your grant. 

Be wary, as there a few things that can affect your application, these being:

  • If your tax return was late, amended or under enquiry. 
  • You are a member of a partnership.
  • You have had a new child. 
  • You claim averaging relief. 
  • You have state aid. 
  • You are a military reservist. 
  • You have loans covered by the loan charge.
  • You are a non-resident or chose the remittance basis. 

To apply for the grant schemes, you must visit the Gov website before the end of April. Remember to make sure you have with you your unique taxpayer reference, national insurance number, government gateway user ID and password and your UK bank details. You will need these to begin your application process. 

5 Tips For Finding The Perfect Accountant For Your Small Business

There are numerous reasons why your small business may need to hire an accountant; from spending far too much time on bookkeeping to merely desiring to organise your business finances a little better. If this is the case, it would probably be beneficial to hire a business accountant-but where to begin? 

These five simple tips will set you on the right path to finding the perfect accountant suitable for your small business.

Understanding

You must understand every single piece of information your accountant feeds you; therefore, ensure that they speak plain English. You must remember it is still your business and you are still liable to the taxman and the rest of the authorities. If they talk too much jargon and struggle to explain things to you, do not hire them. 

Does your chosen accountant fit in?

You should choose an accountant who has experience in the size and sector you are operating. 

Above and beyond number-crunching

Provide yourself with the assurance that your accountant will be proactive and reactive. For instance, an accountant who will give advice on saving tax in legal and ethical ways and will be able to provide excellent software and lessons on how to use it! 

Check your accountant is qualified

Hiring a qualified accountant gives you access to their professional body were they to make a mistake. Look into accountants who mastered their profession through the institute of chartered accountants or association of chartered certified accountants. 

Choose an accountant who will act on your behalf

An accountant who will act as your agent can save you a lot of difficult conversations. An accountant acting on behalf of your business can negotiate discussions for you with HMRC and the taxman.

In conclusion, no matter your business’s size, there is an accountant out there ready and waiting to assist with your every need. As long as you follow the five tips above, you will be well on your way to finding someone to fit your business. If you’d like to contact Herridge Accountants about your business accounting, you can contact us here. And if you’re still undecided as to whether you actually need an accountant, take a look at our blog giving five reasons we think it’s a good idea to have an accountant.

Don’t Miss The January 2021 Tax Return Deadline

The time has come for millions needing to file a self-assessment tax return and pay the tax owed. All self-employed people are subject to have a deadline of 11:59pm on January 31st 2021, and there are still 5.4 million people left to file!

There are three separate issues to deal with:

  • First of all, qualified taxpayers must file an online self-assessment tax return to HMRC for the 2019/2020 tax year, ending on 5 April 2020. The deadline for this has not changed.
  • Next, if you were supposed to make an advance payment by the 31st July 2020, the government would have given you extra time to pay, which finishes on the above date. 
  • Finally, you will have to pay your balancing payment. This is any money owed from the 2019/2020 tax year unless a payment plan has been agreed. 

If your tax return is three months late, you can be fined up to £100; it will be more if any later or if you pay your tax bill late. As well as this, you will be charged interest on any late payments, below is what you need to know. 

Who needs to file a self-assessment tax return?

Most of the UK’s taxpayers have their taxes deducted straight from their pay, pension or savings. Therefore, they are not required to file a tax return. 

If any of the following applied to you in the 2019/2020 tax year, you would need to submit a tax return. 

  • You earned more than £100,000 in taxable income. 
  • Your income was more than £50,000, and you or your partner were claiming child benefit. 
  • You were earning income abroad, or lived abroad and had a UK income. 
  • You received income from a trust. 
  • You filed a self-assessment tax return last year, even though no tax was owed. 

If it is your first time filing, you can register online, and HMRC will send you a letter with an exclusive taxpayer reference after setting up your online account. If it is your first time, but you have already a unique code you may be able to skip this step. You must register as soon as possible as it can take up to 10 working days for your letter to arrive. You can find out more by visiting the HMRC website or by contacting us.

You can make payments on your account via bank transfer, debit card or cheque. If you have a paying-in slip, it is also possible to pay by bank or building society. HMRC will accept money under faster payment, this allows for cash to go through within a couple of hours; however, there may be a limit on how much you can send. 

Furthermore, those who owe tax of less than £30,000 may have been able to use HMRC’s repayment plan. To be eligible for this plan you need to have filed your tax return by 31st January, have no outstanding tax returns, tax debts or payment plans in place. It is possible to pay this back through direct debit over 12 months, through your online tax account or by calling HMRC. Keep in mind that the repayment plan system will pay interest of 2.6% a year. 

What if you cannot afford to pay?

If your bill is correct, but you cannot afford to pay you must contact HMRC as soon as possible, as you may be able to come to an arrangement in which you do not have to pay late penalties. You will need an exceptional explanation for not paying; it is usually something outside of your control that stops you from meeting your tax agreement. Such as: 

  • A death within your family
  • Unexpected hospital stay
  • A life-threatening illness
  • Computer or software failures
  • Difficulties with HMRC’s online portal 
  • A fire, flood or theft of property

The government can advise by providing help sheets and videos. You can also contact HMRC helpline for support in filing your tax return this January but note there are often long waiting times for assistance via phone. Your best option is to contact a local accountant such as ourselves for advice and help with your submission.

Is An Accountant Required To Submit Your Tax Return?

Most often, it is fair to say that most business owners are not confident when it comes to deciding which aspects of their tax duties they can deal with themselves and when they can be at an advantage from calling in a professional. Some would argue that giving the job to an accountant is a much easier option. However, there is now clever technology that can boost your confidence when organising your taxes on your own. 

How does self tax assessment work?

Self-assessment tax returns declare how much taxable income you have earned in that financial year and determines any expenses you may be qualified to claim. 

The digital tax initiative, which is slowly being introduced, means that annual returns will be replaced with quarterly reports. 

Tax returns depend upon close attention to detail, making sure to provide exact dates, figures and details of any marital and special relief privileges you might be eligible for. Business owners should always be willing to support their claims with sufficient evidence such as invoices or receipts if requested to do so. If you submit false information you may be charged with a hefty penalty, this would be the same if you were to miss a filing deadline. The longer you take to amend the complication, the more your fine is likely to grow. 

Other tax filing options

Sadly, some small businesses simply do not have the money to spare to hire an accountant; however, it’s essential to keep your returns free from errors. Human error is a genuine but leading issue in incorrect returns, and if they were to make a mistake, your business would be liable. Many people shy away from completing their tax returns due to the added pressure it brings.

An alternative method is to invest in a tax software (for example Quickbooks) that keeps track of your income and expenses throughout the financial year. Providing you input your figures carefully, the calculations should be error-free! On the other hand, spreadsheets, calculators and good book-keeping can help you be your own accountant. Although it may not be as simple as tax software, it is undoubtedly attainable if you have a good head for numbers!

How can a tax account be useful? 

Business accountants deal with numbers daily, therefore, are ideal for protecting your figures. More so, they know the conduct; what you are and are not entitled to claim and how you can cut your liabilities. Employing an accountant not only saves bundles of stress but also a lot of time, it is typically around £150 for a reputable firm, often a little less if you only require a basic service. The price may seem quite reasonable to a business who may on average spend several hours completing their own tax return. 

If you feel like you could benefit from having an accountant, don’t hesitate to get in contact!

How to Reduce Your Debt

According to an announcement from the National Audit Office, over 8 million people in the UK are currently struggling to pay their debts or meet their monthly household costs. Most homes are spending a substantial amount more than they are actually earning, with an extraordinary 8.1% more spending on credit cards within a year. It is crucial that people start to recognise the difference between essential and non-essential expenditure and borrowing in order to make significant changes towards lowering their total amount of debt. 

It is essential to realise that not all debt is the outcome of poor management; the amount of people requesting debt advice has increased in the past few years. TUC, general secretary, Francis O’Grady stated that: 

‘Years of austerity and wage stagnation has pushed millions of families deep into the red.’ 

Meaning that economic policies have increased taxes and decreased funding towards social services and a lack of wage growth. Following this, education costs are incredibly high; the average graduate from a three-year degree carries a whopping £50,000 worth of debt around with them. This does not even account for the exorbitant interest rates that go along with it. 

Diminishing credit card debt 

It is no secret that many families rely on credit cards to get by. It may seem impossible, but there are ways to reduce total debt. There are a variety of applications out there that offer users the opportunity to categorise and cut down on their spending, for example, Money Dashboard or Emma. They help reduce credit card debt by obtaining a repayment plan specifically targeting high-interest spending and comparing interest rates. Most banks offer refined programmes that identify fraudulent purchasing patterns; however, the purchase amount is often not large enough to alert the cardholder. Therefore, users must keep a close eye on establishing transactions made by fraudulent means. 

Debt management plans

Debt management plans can help guide people back onto the right track. They enable monthly payments to be made to the provider who communicates with creditors to negotiate supportive stipulations. A debt management plan is useful for those who have non-priority debts such as personal loans. Additional options include debt relief order suitable for those with low incomes, individual voluntary arrangements which often give several years in which the debt must be paid and bankruptcy which allows people relief from all debts. 

Those tackling finance problems should first try and cut down on unnecessary spending; however, if that does not solve any issues, financial planning may be mandatory in aiding those coping month to month.

All of the above solutions can be beneficial but should first be discussed with a financial advisor to ensure you are the right candidate for the plan picked out for you. 

6 Ways To Grow Your Business In 2021

Establishing and enforcing a strategy to grow a small business can be a difficult task; however, with some careful planning and a lot of research, a business plan can be a great way to create a better picture of what you would like to achieve and how you’ll achieve it.

In order to develop a small business while competing against the bigger players, you need to be able to think smarter and act quicker. This blog will provide a few tips to get you started! 

Get to know your consumers

By personalising your services and encouraging customers to leave feedback, you are more likely to gain their trust and obtain repeat custom. Furthermore, taking the time to understand your consumer’s needs and developing products that match those needs are bound to score you some big brownie points!

Give back

Giving back to your community boosts your company’s image. The more you help your community, the more likely they are to return the favour. 

Social media

Posting on social media platforms helps to connect with customers, showcase your products and show off the faces behind your brand. Moreover, it allows the provision of insight through social listening. This means you can keep track of what customers are saying about your business, observe customer behaviours and identify keywords and trends that will attract your target market. 

Offer fantastic customer service

Going the extra mile wherever possible is key to exceptional customer service. Your consumers will remember the service you provided and will, therefore be more likely to engage in repeat purchases. 

Remember: if your customers decide they are delighted with the level of service you provided, they are more likely to pass on the message through social media or even just word of mouth!

Host events

Presenting your own events can be a fantastic way to get to know your customers better and build relationships with current and future buyers. It is also a fantastic opportunity to show off what your company has to offer. Although hosting an event may seem like a lot of hard work and a time-consuming task, it’ll help you to stand out from your competitors and develop a deeper connection with your current customers. 

Measure and refine your approach as you go

Monitoring the whereabouts of your customers (in a digital sense) helps to measure whether or not your marketing activity has been successful. Make use of the abundance of tools available to track your digital activity (such as Google Analytics) and be sure to evaluate and update your marketing methods by focusing on what’s working and ditching what’s not.

If you are already the owner of a successful business and need any assistance with your accounting needs, don’t hesitate to contact me! I’ll gladly do my best to help.

A Brief History Of Louth

If you are not acquainted nor familiar with Louth, this blog post will give you an insight into the town and its history. Louth is a large market as well as an industrial town situated in East Lindsey, Lincolnshire. It is located very rurally in the East of Lincolnshire and contains attractions such as St James’ Church, Hubbard’s Hills, the market, many independent retailers, as well as the last remaining cattle market in Lincolnshire.

Louth started off as a Saxon village. Its name originated from the Saxon word meaning ‘loud’ due to the loud gushing of the river. A monastery was built in Louth in the late 7th century. In the 9th century, the Danes took over Lincolnshire and subsequently destroyed Louth’s monastery. However, they gave Louth many of its street names.

In the 10th and 11th centuries, Louth became a small market town. Peasants from surrounding villages would use the market to buy and sell goods. Eventually, in the Middle Ages Louth had a population of around 1,500.

A Cistercian Abbey was built in 1139 at Louth Park. The parish church of St James was also an integral part of life for the people who lived there.

Henry VIII closed down Louth’s Abbey in 1536. The King sent a man to list valuables in the parish church which outraged the people of Louth. The man agreed to go and find out what the King intended to do with the valuables before proceeding.

This event sparked anger and men from Louth started a rebellion, marching towards Lincoln but were blocked by royal troops. As a result, the uprising broke down, and ringleaders were executed.

Louth prospered in the 16th and 17th centuries and its population grew, despite plague outbreaks. One outbreak in particular killed 700 people in Louth in 1631, which was a large chunk of the overall population.

A school was built in Louth in the 13th century, but the Grammar School was not established until 1551. The 18th century saw Louth grow even more and develop a carpet-making industry. A canal was eventually opened in 1770 to make trade easier of goods.

1801 saw a population of 4,250. This doubled 50 years later. 1825 saw a parliament act that cleaned the streets and a year later, the streets were gaslit, despite many Louth residents living in slums.

A dispensary was formed in 1803 for poor people to get free medicine and in 1873 Louth’s hospital was built. 1848 saw the railway reaching Louth which improved business from the canal method previously.

In the 1920s and 30s, the first council houses were established, and electricity lit up the town.

A War Memorial was established in 1922 in memory of those who fell in WW1. In WW2 15 people in Louth died from German bombings.

The population continued to grow in Louth from the 1920s onwards with around 17,000 people inhabiting the town now.

Please read my blog about some of the top reasons to want to live and work in Louth.

Accountants Face Exceptional Challenges For The End Of 2020 And Beyond

With the COVID-19 pandemic causing more uncertainty and disruption, this has led to an increase in challenges in auditing financial statements for accountants. Not only this, but extra difficulties have come to light with regards to Brexit and the transition period finishing on 31st December 2020. Not only this, but climate change has become another important topic of 2020 as well as COVID-19 and Brexit.

These three key issues are predicted to alter areas of financial statements. This is because investors will want to gain information that will clearly explain how directors of businesses have responded to their implications. Transparency will be vital for this to occur.

Directors will also be obliged to review every area of every financial statement, which will be subject to judgement and estimation uncertainty. Furthermore, forecasting will also play a vital part in conducting impairment as well as concern reviews. The uncertainty of all this could require help from other sources.

Soon auditors will have to demonstrate levels of professional scepticism. This increased uncertainty amongst financial professionals will mean that they will need to take an approach that involves seeking good-quality corroborative evidence as well as evidence derived from different sources.

Those preparing annual reports are urged to commence the planning early due to the challenges in the upcoming reporting season. There must be a focus on transparency and engagement across organisations to gather information with auditors. It is also important to think about the reporting deadlines and making their scope as flexible as possible because of the extraordinary challenges that will be occurring for auditors and preparers. These challenges will not only be affecting their professional lives, but COVID-19, Brexit and the climate crisis will affect the personal lives of auditors too.

The key lessons that we can learn in preparation for this are to be as organised and flexible as possible to meet these deadlines. Preparing for the worst financial scenarios due to the three key challenges will also be important in ensuring no more challenges will arise from the ones already established.

The Institute of Chartered Accountants in England and Wales (ICAEW) provides lots of relevant resources and will be able to develop these resources to the changes which are occurring at the end of 2020. They offer technical support with regards to the COVID-19 situation with information for auditors and preparers free of charge.

Take a look at my blog here to see how some UK accountants are voicing their concerns about their environmental worries.

Top Reasons to Live And Work in Louth

Louth is a stunning town situated in the East of Lincolnshire. Here are the top reasons why you should live and work here.

The Location 

Louth’s stunning location is second to none. It is situated in the heart of the Lincolnshire Wolds. The Lincolnshire Wolds is renowned for being an Area of Outstanding Natural Beauty. Its calming hills and deep valleys are striking against the coastal landscape of marshes and dunes.

Being East Lincolnshire, it is very near the coast so perfect for those summer beach days or winter walks next to the sea. The Wolds is sparsely populated, so pollution is at a minimum. Therefore, expect to see the sky and stars at night in all their glory! 

Without a doubt, Louth is the perfect location to work from home!

Louth Market

Louth is a traditional town and with that comes a quaint market which trades on Wednesdays, Fridays and Saturdays. Although with the pandemic, these days might vary or be cancelled so best to do your research if you wish to venture to the Louth Market. Once it is up and running, you can see what the market has to offer, from delicious food to pretty crafts; the market has it all!

The Beautiful Parks

There are some beautiful parks to visit, walk-in, have picnics in and socially distance in too! These are Hubbard’s Hills and West Gate Fields. Hubbard’s Hill was established in the early 1900s. It is beautiful in the summer where children can paddle in the river and families are seen catching crawfish with nets.

Westgate Fields has lawns surrounded by lime trees, oaks and ashes and has a beautiful view of St James’ Church poking over the tops of the trees. There are four leaf sculptures to visit, these are carved from oak and are owned by Louth Art Trail.

The Attractions (when they open!)

The attractions are limitless in Louth! There is much to see and do in this lovely town. All of which to be frequented when the lockdown is lifted once again! Louth has its own Golf Club, taking advantage of the hilly terrain and acres of grass.

Louth Museum opened in 1910 and was modernised in the early 2000s by the Heritage Lottery Fund’s money. It contains the largest collection of Victorian woodcarver Thomas Wallis paraphernalia in the country as well as other historical artefacts.

St James’ Church is a sight for sore eyes and worth a visit for its history and photogenic-nature. It was a gathering point for the Lincolnshire Rising in 1536. This was organised by Catholics to protest the Monasteries dissolution. There is a cafe and souvenir shop too.

When theatres re-open, Louth Riverhead Theatre is THE place to visit! It is owned and run by a small number of volunteers. There are touring productions, musicians, tribute bands, musicals, poetry recitals, evenings with television personalities and comedians who perform there.

Lincolnshire Wolds Railway is another great attraction of Louth. It runs for 1.5 miles between two stations, Ludborough and North Thoresby.

Playhouse Cinema is the only cinema for 15 miles and contains three screens. It was a former chapel and became a movie theatre in the 1920s. It shows the latest releases, classic films, independent ones as well as live recordings from the Royal Ballet and Royal Shakespeare Company.

If you need any help with the accounting of your business in Louth, don’t hesitate to get in contact with me.