Articles

Lockdown Part 2

Winter Economy Plan

Rishi Sunak announced his Winter Economy Plan on Thursday 24th September. Rishi’s support was based on the outlook that 'People want to see us focused on the here and now'. Two key updates for the self-employed are outlined below.
 
SEISS Grant

The SEISS grant will be extended with two additional grants, the first covering the period November to January and the second covering February to April. The grant will be based on 20% of your profit and to qualify for the grants your must have qualified for the previous grants. Also, you must be trading but be facing reduced demand due to Covid-19. 

Paying HMRC

Previously, the Treasury had given anyone with a July 2020 Payment on Account a 6-month extension, allowing this payment to be made in January 2021. The Chancellor has also announced a further extension for all individuals due to pay HMRC in January 2021 (including the above payment on Account). It appears this extension will be in the way of a 12-month payment plan with HMRC, running from February 2021 to January 2022. To qualify you must owe HMRC less than £30,000. Unlike the previous extension an individual will have to apply for this extension, however, no guidance has been issued on how to make the application yet.

Further updates and advice will be issued as we know more. 

CHANGE IS THE ONLY CONSTANT THING IN LIFE

There is no doubting that the last few months have been extremely tough, and as we move through the restart and recovery there will be more changes to come. Hopefully, you are back in the passenger seat, raring to go and let’s hope we move through the rest of 2020 in a more positive way.

The lockdown saw the driver training industry come to a halt and home-schooling became a reality for many, as did the growth in Tik Tok challenges and baking banana bread! Many took to keeping themselves busy and it was also great to hear about driving instructors putting their skills to great use, I mean there is no one better than a driving instructor to take on a driving role for a supermarket, courier or the NHS.

With the mix of getting back to your day job and making lessons as safe as possible, we know you will have a lot to think about now. We wanted to make sure you have not missed any support that is available to you, especially as things are ever-changing. We do know a lot of self-employed fell through the cracks of the Government support and the mini Budget on the 8^th July was the last chance saloon for some freelance sectors. There has been a lot to take in over recent months so here are a few areas to recap:

SEISS SECOND GRANT

• Based on 70% of your trading profits
• Your business must have been adversely affected from 14th July
• Applications for the second and final grant are due to go live on the 17th August
• If parents and those who adopted, took time out of trading to care for children within the first 12 months of birth or 12 months of an adoption placement they will now be able to use either their 2017/2018 or both 2016/2017 and 2017/2018 self-assessments for the basis of their SEISS eligibility. All other eligibility criteria remain the same.

DEFER TAX PAYMENTS

• HMRC automatically deferred the July payments that were due
• You must pay by the 31st Jan 2021 if you deferred your July tax payment
• Remember your tax bill for the 2019/2020 tax year is also due 31st Jan 2021

BOUNCE BACK LOAN

• Provides access to borrowing that is between £2,000 and up to 25% of your turnover (up to a maximum of £50,000).
• No repayments for 12 months
• Make sure you have your 2019/2020 tax return done so the latest figures are included
• Always seek financial advice prior to borrowing

TAX TIPS

You might not have done your 19/20 tax return just yet (don’t worry, you have until the 31st Jan 21 to file online) but we wanted to highlight a few things ahead of your 20/21 return and to help you give your business that self-care that it needs.

Making Tax Digital (MTD) is still on the horizon, MTD is HMRCs plan to mandate digital record keeping. COVID-19 and the support provided by HMRC has been priority over recent months, but we are monitoring Making Tax Digital updates. Small changes now will mean it is an easier transition when the time comes. If you are not used to keeping digital records or operating through software it is best to get comfortable ahead of the change. A bookkeeping routine is important, yes you will likely prefer to watch the latest Netflix release, but it will help you to understand your businesses cashflow. It is one of the most important financial management tasks so that you know the income and outgoings of your business. This way you know if you have any cash reserves, vitally important when you see a period of reduced income. The best way to put it: 

Both SEISS grants are taxable and need to be recorded as income on the 20/21 tax return, make sure you record the amounts you received on the dates you received them.

Do not forget to include all PPE expenses, that relate to your business, in your tax returns. You are unlikely to have ever purchased such items for your business before, but the costs of such items will quickly add up.

We always advise clients to have separate business and personal bank accounts, it will make your life easier in the long run. Especially when looking for transactions or if an HMRC investigation ever pops up. You might also want another account to set aside your savings for your tax liabilities, out of sight and out of mind hopefully means it is easier to keep that pot of funds available. 

There is no one size fits all approach to this recovery, do what is best for you and your business. Reach out for help when you need it, stay safe, be aware of scams and most importantly try not to panic. 

Self-Employment Income Support Scheme (SEISS)

The online service is now available for the SEISS. You will need to apply through your Government Gateway ID. HMRC have said if you cannot claim online, there will be an alternative way to claim, as yet we don’t know what this will be. If you are eligible, HMRC will give you a date from which you can complete your claim. We would advise you to use the Government Gateway to do this, using this online service is beneficial to access other tools such as pension forecasts and National Insurance contributions

As soon as you complete your claim you will be advised if it has been approved and you should receive your payment within 6 working days.
 
If you haven’t already checked your eligibility you can do so via this link https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
 
To complete your claim, you will need the following information:

• Self-Assessment UTR 
• National Insurance number 
• Government Gateway user ID and password - if you do not have a user ID, you can create one when you check your eligibility online via the above link
• bank account number and sort code you want the grant to be paid into 

You will also have to confirm to HMRC that your business has been adversely affected by coronavirus.
 
As always be vigilant, if you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam. You should email it to phishing@hmrc.gov.uk and then delete it.
 
This process and the guidelines surrounding it are new and constantly evolving, we will continue to share relevant updates with you as information is released.

COVID-19: SUPPORT FOR THE SELF-EMPLOYED

Budget 2020

The Chancellor of the Exchequer presented his Budget on the 11^th March 2020. Said to be a ‘people’s budget for the people’s government’ there was a key topic throughout, COVID–19. Mr Sunak stated the NHS will get ‘whatever it needs, whatever the cost’.

COVID – 19

The Budget announcements bring numerous temporary measures which are set to assist with the current worldwide pandemic. The measures have been put in place to help support those affected by COVID-19, whether that be as an individual or a business.

The chancellor also commented on those advised to self-isolate, even if they do not show symptoms, they are to receive statutory sick pay (SSP) if eligible.

Those who are not eligible for SSP, such as self-employed individuals, will see Employment Support Allowance (ESA) paid quicker with the qualifying number of sick days reduced from 8 to 1. This means that once you have got your sick note from 111 you can then contact the Department of Work & Pensions and begin the process of claiming ESA. Click here to find out more about ESA.

ESA is paid to those who are too sick to work, provided they meet certain conditions. It is worth £73.10 a week, or £57.90 for the under-25s.

If you do find yourself in a position where you need to access such benefits, we would always advise taking the medical advice from 111 and contacting the Department for Work & Pensions who can advise you fully on the processes you need to follow.

A 100% reduction in Business Rates for Small business’s was also introduced in the Budget, more interesting for a lot of very small business was a £3,000 grant which appears to be aimed at all small businesses. There is very little guidance available on this at the moment, we will follow up on this once information on who can apply and how to apply has been issued.

Finally, HMRC have been asked to assist taxpayers with payments to them, to that end a new team to deal with Time to Pay arrangements for business’s affected by Coronavirus has been set up. If you find your capital reserves are running low and you are worried about paying your next bill, we strongly recommend you call them on 0800 015 9559.

As Mr Sunak stated, ‘the current situation is temporary’, ‘life will return to normal’. However, ‘for a period, it is going to be tough’.

Will we see more money in our pockets?

The honest answer, probably not but the following are factors that provide an element of positivity. 

• From the 1^st April the National Insurance threshold is increasing from £8,632 to £9,500, meaning you can earn more profit before paying Class 4 National Insurance.
• Fuel Duty will be frozen for the 10^th consecutive year and there will also be a freeze in duty rates for beer, ciders and spirts. 
• Another tax to be cut is VAT on digital books, newspapers and magazines.
• The 5% rate of VAT on sanitary products - referred to as the "tampon tax" - will be abolished from January. 
• People can put a lot more into tax-free savings for children. The allowance for Junior ISA’s (Individual Savings Accounts) and Child Trust Funds will be increased from £4,368 to £9,000 in April. However, the typical amount saved is only about £1,000. 

The personal allowance will remain at £12,500 and there will be no changes to the tax rates. Additionally, for the self-employed there will be a slight increase in Class 2 payments, from £3.00 per week to £3.05.

Once thing we won’t need to brace ourselves for is the mammoth number of potholes in our roads. A massive £2.5bn is set to be invested within our local roads. Let’s see how that one pans out!

So, from supporting businesses, highlighting green priorities and supporting those in need it was a budget delivered in challenging times and one that saw some substantial spending commitments.

FBTC Accountancy Services receives Feefo Platinum Trusted Service Award 2020

FBTC Accountancy Services are thrilled to have won the Feefo Platinum Trusted Service award. This is an independent seal of excellence that recognises businesses for delivering exceptional experiences, as rated by real customers. Feefo have given the Platinum Trusted Service award to FBTC as they have achieved Gold standard for three consecutive years.
 
Alan Gott, FBTC Manager, commented: ‘We greatly appreciate clients taking the time to leave us feedback. Here at FBTC we take pride in supporting clients to the best of our ability’.

Congratulating FBTC on winning this year’s award, Steph Heasman, Director of Customer Success at Feefo, commented: “The Trusted Service award has always been about recognising companies that go way beyond the norm in customer experience and generate great feedback from happy customers.  

Well done team!

Another positive year ahead for the Driver Training Industry

FBTC are excited to share another year’s analysis on the Driver Training Industry. The report focuses on the key areas of Driving Instructors’ workload, earnings and levels of job satisfaction. A continued trend from last year is the presence of a smarter working week and high levels of job satisfaction.  

The overall findings of this year’s survey show another positive year;

Read the full 2020 Driving Instructor Review here 2020 Annual UK Driving Instructor Review.pdf (401KB)

THE FINAL COUNTDOWN

With 70 days go to file your 2018/2019 tax return, what are you waiting for? With plenty of fun and games to be had between now and the end of January don’t delay your tax return any more. You never know what could happen between now and the tax return filing deadline. Such as unforeseen circumstances to technical difficulties, to realising you don’t have all the required information or just getting caught up in the festivities! 
Last year 750,000 self-employed people missed the filing deadline and instantly received £100 penalty. HMRC received this massive amount of income from penalties and I am sure you would rather get some bargains in the January sales than pay for an unnecessary fine.
 
From those that missed the filing deadline there were some, let’s say creative, reasons reported to HMRC, which included;

• My mother-in-law is a witch and put a curse on me
•  I’m too short to reach the post box
•  I was just too busy – my first maid left, my second maid stole from me, and my third maid was very slow to learn
• Our junior member of staff registered our client in Self-Assessment by mistake because they were not wearing their glasses
•  My boiler had broken, and my fingers were too cold to typo

Having all the information is one thing, completing the return, using your allowances and paying the correct amount of tax is another. 
Angela MacDonald, HMRC Director General of Customer Services, said: “Help will always be provided for those who have a genuine excuse for not submitting their return on time but it’s unfair to the majority of honest taxpayers when others make bogus claims."

So, what do you need to complete your tax return, aside from a little less procrastination:
It is always good to check your options and instructing an accountant to support you with your tax affairs isn’t a bad thing! Yes, you will have to pay for the service, but it is an allowable business expense. which is included within your total outgoings and deducted from your total income.
Did you know 2,616 taxpayers submitted their tax return on Christmas Day last year! Don’t be included in this figure this year, spend more time listening for sleigh bells and less time on your self-assessment. 

About FBTC Accountancy Services 
Covering the whole of the UK, FBTC provides service to more than 2,000 clients. Wrapped up in one £30 monthly fee, FBTC will: 

• Self-employment registration 
• Compilation of annual accounts 
• Annual tax returns 
• All communications with HM Revenue & Customs 
• Access to making tax digital compliant software  
• Tax and accountancy advice 
  

To contact the team for a no obligation chat click here and complete the enquiry form to the right.

FBTC will keep you OnBalance

FBTC Accountancy Services have now released their new bookkeeping software, which is included as part of the all-inclusive £30 monthly fee. All FBTC clients will be provided with the Making Tax Digital (MTD) compliant software, that will make bookkeeping easy!

The MTD compliant software allows you to add income and expenses with a click of a button, scan your receipts and submit business records directly to FBTC.

The accounting software is perfect for small businesses and FBTC have taken time to ensure it is right for their clients. Alan Gott, FBTC Manager is thrilled with the new software, ‘We have just started rolling the new software out to clients and it is great to receive such positive feedback already, it is definitely the highlight of 2019 for the team and our clients’.

The secure access system called OnBalance, is an extremely accessible system that allows users to access data anytime and anywhere. As it is cloud based software all you need is an internet connection to log in. Perfect when you are out and about running your business. You can keep records on a real time basis which will mean you save time when it comes to record keeping and juggling your work life balance.

As FBTC will take care of maintaining, updating and continuous improvement of the system you will always be running the latest and greatest version.

The further benefit of the software is that you can easily separate your transactions, for example if you have multiple trades and/or property income. Before FBTC invite you to start using the software they will set it up to include each of your trades meaning you can simply register, login and start recording transactions within minutes. Once you have entered transactions the handy dashboard will give you some of the key performance indicators of your business such as total turnover and expenses.

So, what else would make the completion of your tax return easier, other than a great accountant and first-class bookkeeping software? We think quick submission to your accountant is vitally important. With a click of a button you can send FBTC your data instantly. Using OnBalance with FBTC, will also give you MTD compliance as you are keeping digital records and using software to submit your records.

MTD, for those that are non-VAT registered, isn’t now set to be mandated until April 2021 at the earliest and HMRC do need to confirm an exact roadmap of how it will be enforced but FBTC are keeping abreast of the MTD updates as they are published and will keep you fully informed.

If you would like to know more about the software or joining FBTC Accountancy Services complete the ‘Send us an enquiry’ form to your right or call us on 0344 984 2515.

Save your Valentine tax this year

Love is in the air, roses, wine and chocolates are everywhere and yet some of us are still thinking about tax. Although we would never give dating advice (trust me you really wouldn’t benefit), when it comes to tax, we really know our stuff. The Marriage Allowance is a little tax saving gift definitely worth having, a simple election could help you save around £238 in 2018/19, and while this may not seem like a lot, have you seen the price of roses, so every little helps.

I know we have made light of it here but please don’t read the above and think we are not serious, the days of huge tax savings are gone, so making as much of the little savings as you can is the best way to try and reduce you tax bill. If you or your partner aren’t making full use of your Personal Allowance, £11,850 in 2018/19, then this is something we would strongly recommend. The link below will take you to a HM Revenue and Customs website where you can make the election:

https://www.gov.uk/apply-marriage-allowance

If you are not sure about the election or would like to talk it over with someone please do call us, the team are here to help. 

FBTC Accountancy Services receives Feefo Gold Trusted Service Award 2019

For the third year running, FBTC have won the Feefo Gold Trusted Service award. The award is an independent seal of excellence that recognises businesses for delivering exceptional experiences, as rated by real clients.

Created by Feefo, Trusted Service is awarded only to those businesses that use Feefo to collect genuine reviews and insights. Those that meet the high standard, based on the number of reviews they have collected, and their average rating, receive the award. FBTC achieved a Feefo service rating of 4.8/5 throughout 2018.

As all reviews are verified as genuine, the accreditation is a true reflection of a business’ commitment to outstanding service.

Alan Gott, FBTC Manager commented: “At FBTC we want to be more than just a voice on the phone, we care about the people we talk to. For our clients to have picked up on this and for them to take the time to give us such great reviews is really appreciated by us all. Feefo enabled us to consistently improve throughout 2018 and now we’re looking forward to another successful year ahead.”

Congratulating FBTC Accountancy Services on winning this year’s award, Matt West, CEO at Feefo, commented: “The Trusted Service award has always been about recognising those companies that excel beyond the norm. I’m looking forward to the continual success of the businesses that work in partnership with us throughout 2019.”

About FBTC Accountancy Services

Established over 20 years ago, FBTC is a specialist accountancy service for Driving Instructors and the self-employed. Covering the whole of the UK, FBTC provides service to more than 2,000 clients. FBTC provide a totally comprehensive service:

•   Self-employment registration

•   Compilation of annual accounts

•   Annual tax returns

•   All communications with HM Revenue & Customs

•   Access to members only area of FBTC website

•   Tax and accountancy advice

•   Free online cashbook

All for an affordable monthly fee.

For further information:

0344 984 2515

info@fbtc.co.uk

UK Driver Training Industry - Workload, earnings and job satisfaction

As an Accountancy Service that supports over 2,000 UK Driver Training professionals, FBTC are in a unique position to be able to comment on the health of the industry through the FBTC Annual UK Driving Instructor Review 2019.

This year’s study provides further insight into Driving Instructors’ workload, earnings and levels of job satisfaction in what is clearly a dynamic and evolving marketplace.

Read our full report to learn more about the inflation busting increase in the instructor's average hourly rate and remarkably high levels of job satisfaction. 

Click here for the full report 2019 Annual UK Driving Instructor.pdf (515KB)

Take a chance on yourself, You will love it...

FBTC client Sue, from www.HealingHandsInUk.com, is an alternative therapist - a Reiki Master, Teacher and Practitioner! Sue has shared her experience of self-employment; “It's a tough market and there are quite a few people in my business, like any other, who are very competitive in advertising”. 

What Sue loves the most about self-employment is being able to own and take pride in her hard work and achievements. Sue comments, “It feels very satisfying to take full credit and responsibility for my progress and success”. This is evidence for Sue as she has recently been voted into "The Top Three Therapists". This was done by an independent reviewer.

Sue continued with “Of course being my own boss and being able to choose my working hours is a massive bonus. I truly thrive on the challenges of being able to make a difference in people's lives by what I do. “It's tremendously motivating to see people feel healthier and being able to enjoy their lives by overcoming their most debilitating conditions such as stress, anxiety and depression or get rid of their addictions to smoking, alcohol or drugs”. 

Initially, Sue did face some challenges, “The hardest part for me was to manage my accounting and knowing what I can or can't do. Thank goodness for FBTC's speciality with advising and managing my accounts. It was also tricky to finance and find an affordable and suitable premise to work from at first". 

Sue’s advice to anyone starting a business is to not fear hard work and challenges. Have a vision, believe in your abilities and follow your dreams.

Eat local, spend local, enjoy local!

Small Business Saturday takes place each year on the first Saturday of December, it is all about shopping locally, supporting small businesses and contributing towards their success. In 2017, £748 million was reportedly spent with small businesses in the UK, many actively participating by offering promotions and discounts to acknowledge the day.

Kelly Tolhurst, Small Business Minister commented: “With more than 1,000 starting up every day, the UK’s small businesses are the backbone of our economy and at the heart of our modern Industrial Strategy”.

Café Lush, owners Louisa and Sharon have been trading since April 2018 and stated; “We wanted to be able to work around our families, making the work life balance easier! We now have the flexibility and control over how we want to run our business and the rewards make it so worthwhile”.

Here at FBTC Accountancy Services we support a range of small businesses and sole traders, so we didn’t want to miss out on the opportunity to highlight this day. We wanted to send a virtual high 5 and well done to all those small businesses out there. Keep up the good work and remember the reasons why you decided to take the leap into self-employment in the first place.

We have decided to bring you a daily dose of small business motivation over the next 5 days. This will include comments from our clients, a bit about their business and why they became self-employed. 

Income Tax on Rental Properties

If you receive rental income from land or property, you will most likely have to pay tax on the profits made. Your profit is the amount left once you have added together your rental income from all sources in the tax year and deducted any allowable expenses or allowances. Tax relief on mortgage interest has changed significantly in recent years, the relief is moving from a deduction from profit to a general tax relief. The overall result should be the same for basic rate taxpayers, however, higher and additional rate taxpayers will see their tax increase. 

Rental income is the rent you receive from individuals, businesses, local authorities, national agency etc. It can also include lease premiums and the income element of leases granted, and this must be considered when granting a lease to anyone.

When preparing your return, income and expenditure from similar types of property are combined, the typical types are, residential, commercial, UK holiday let and overseas property. When calculating the tax, different tax laws may have to be followed.

A £1,000 allowance exists which means that if your rental income totals less than £1,000 per tax year you are now exempt from completing a Tax Return.  If you’re total rental income from UK property is less than £10,000 and your rental profit is less than £2,500 then you do not have to complete a tax return, however, you must notify HMRC of the profit figure every year so that the tax due can be calculated and collected through your PAYE code. Anything over this means you have to complete a tax return for as long as you own the property. 

The same tax rates apply; 0%, 20%, 40% or 45% dependent upon which band you fall into. Whether you have two business and a rental property, just one rental property or are thinking of buying your first property to rent the important element is to ensure you are compliant with HMRC, this is so that you avoid any unnecessarily penalties.

Having an accountant support you with your rental affairs is beneficial as they can advise on elements like carrying losses forward and if you come to sell the property, Capital Gains Tax. Watch out for our blog on Capital Gains Tax coming soon.

What about my tax?

By far, the most common question we get asked by new self-employed individuals is how much should I put aside for my tax bill. Unfortunately, this isn’t the easiest question to answer as every taxpayer is different and any answer must be very general. To try to give an answer is full of perils as we don’t want a client to put too much or worse, too little a side and get a very nasty shock in January. Years of experience tells us that between 15% - 20% of turnover should cover the Tax, National Insurance and a possible payment on account. However, it’s unusual for a first-year business to make an outright profit, initial set up costs can be high.

So, what is the best advice. The best advice anyone can give you is to get your accounts in early. The quicker we can prepare your accounts the sooner you find out what is due by the following 31^st January but putting aside 15% - 20% isn’t the worst idea either.

 What happens if I can’t pay?

The best thing to do is let HM Revenue and Customs know as soon as you realise you’re going to struggle to pay your tax. HMRC understand that sometimes businesses have up and down periods and will normally try to create a payment plan that’s works for both sides. You can contact HMRC’s payment support team on 0300 200 3835. 

If you have any concerns about your tax bill or paying HMRC please do contact us on 0344 984 4445.

Pay your tax liabilities

The following link is the quickest and easiest way for you to pay your tax liabilities;

https://www.tax.service.gov.uk/pay-online/self-assessment

You will need your UTR to hand to pay using the link. 

Why Class 2 is Important

Many clients ask us why they should volunteer to pay Class 2 National Insurance and we always give the same answer: “Class 2 is the only National Insurance Contributions a self-employed person pays that counts towards their State Pension and other State Benefits”. To get a full state pension a person must have 30 years’ worth of contribution, for employees this is Class 1, for Sole Traders or Partners this is Class 2. Class 2 is currently based on a weekly amount of £2.95 a week, which is calculated and collected through the individuals’ tax return.  
 
As you approach retirement age it is wise to request a state pension forecast which shows how many years contributions you have and any shortfall. To fill the shortfall an individual has to pay Class 3 National Insurance which is currently £14.65 a week. This is obviously a very significant difference which shows why it’s in your best interest to volunteer to pay Cass 2.

Capital Allowances and in particular the Annual Investment Allowance

Capital Allowances are available on the tangible assets held by the business. This is mainly Plant and Machinery, such as cars, dual controls, computers, laptops, printers and sat navs, tractors, vans, ovens etc. Depending on the type of asset you acquire, you can claim Capital Allowances at either 18% or 8% each year based on the original cost of the asset.

In the first year though there is currently a special allowance available called the Annual Investment Allowance (AIA) which states that you can claim up to 100% of the cost of an specific assets in the year you buy them.

Annual Investment Allowance gives 100% writing down allowances on the first £200,000 of investment in plant and machinery in each year. 

If you do not need the whole of the allowance to reduce your tax liability, in the year you buy the asset, any unused balance will be carried forward to subsequent years where you will be entitled to capital allowances on the remaining amount carried forward each year. 

When the asset is sold or taken out of the business a balancing adjustment may be needed, this can result in either a balancing allowance or balancing charge.

Example

You can claim up to 100% of the cost of a car with dual controls, (please note that AIA’s are not normally available on cars), against your profits for the year. In subsequent years you claim 18% on any remaining amount which has not been claimed in the first year.

e.g. You buy a car with dual controls for £18,000 in 2017/18 and claim AIA’s of £12,500. In 2018/19 you can claim Capital Allowances at 18% on the remaining £5,500 giving tax relief on £990.

Don't worry we will calculate this for you. 

It is important to be aware of AIA as it will affect the allowances you have in subsequent years and advice should be sought before making a purchase on which you intend to claim AIA’s or disposing of an assets on which AIA’s have been claimed.