Month: January 2020

House with a heart

Have you received HMRC’s ‘love letter’?

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Have you received HMRC’s ‘love letter’?

Have you declared your rental income? 

Lately we have seen an increase in HMRC asking people if they have received rental income. This comes in the form of a ‘love letter’ from HMRC and results in more and more people having to declare their rental income.

Connect 

The reason for receiving this ‘love letter’ is HMRC’s computer system “connect”. Connect draws data from all departments and connects you to every government system. It also looks at our digital footprint, snooping on our social medias, Ebay accounts and even Airbnb bookings. Using Artificial Intelligence (AI) the computer will asses our profiles and see if we could afford rental properties by cross referencing with your declared income on your HMRC tax account.

Social boxes coming from computer

‘Love Letters’ 

Red envelope and hearts

The ‘love letters’ we refer to are a direct result of HMRC’s Connect talking to its mates at the Land Registry. From this data they form a list of people that have sold property. If it is not listed as your main residence HMRC will put two and two together and ask if you have sold a second home and/or rental property. This will then be subject to capital gains tax and more!

Have you declared? 

If the sold property was used as a rental property, HMRC will then look to see if you have declared the rental income. In a lot of cases this has not been done and can go back many years. In a recent case of ours, we had to declare 10 years of rental income for a Husband and Wife.

‘My Mate Down The Pub’ 

Getting tax advice down the pub is not always a good idea. In a few cases, taxpayers have been under the impression that because the mortgage payments covered the rental income they didn’t have to declare the rental income. In reality only the interest is deductible. For higher earners being able to offset the basic rate relief is being phased out, turning rental income into profit and therefore tax payable.

Beeng moved into her partner’s flat several years ago, and decided to rent out her own property rather than sell it. Being didn’t think she was making a profit which needed to be taxed, because the rental income just covered the mortgage payments.
When working out her rental profit. Being needs to be aware that the only allowable expense for her mortgage is the interest amount of her mortgage repayment.
The interest amount of mortgage payments is restricted to the basic rate of income tax, irrespective of which income tax rate Being normally pays for other income she may have

HMRC

Take a look at HMRC’s website for more examples.

Our Advice 

If you have a rental property and need a ‘health check’ we would be happy to discuss and give you the options to declare the income and profit that you have been missing off of your tax returns. Declaring the error before the ‘love letter’ arrives will help your negotiations with HMRC and reduce any high penalties. 

Laptop on the grass

How can your business become Eco-friendly?

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How to make your business more eco-Friendly.

Since the industrial revolution both carbon levels and global temperatures have increased dramatically. The carbon pollution stays in our atmosphere and consequently traps the heat from the sun. This can cause extreme weather such as intense flooding or droughts. 97% of climate scientists agree that man-made pollution is warming our climate. In May 2019 the UK declared a Climate Emergency with many local areas stating they want to become carbon- neutral by 2030. To do this we need to work together, making a few small changes to our businesses.

Reusable Plastic Bottles

Plastic convenience products have made a huge contribution towards climate change. However the sales of bottled water are still on the rise. Look around your office, are your employees drinking bottled water now? Plastic bottles take hundreds of years to decompose if they make their way to landfills. One of the simplest ways to make a difference is to get rid of the disposables and purchase a reusable water bottle for your team. You will spot in our 1 Accounts office that each of the team have pink bottles from Hyd8 m8.

Plastic Bottles

Reduce Paper Waste

Paper being thrown in the bin

Technology has come on leaps and bounds in the last 10 years. Whilst some businesses are embracing how technology can help, others are stuck still using paper processes. Moving to the cloud can not only help the environment but will help streamline your business processes too. Consumers are becoming increasingly aware of the environmental impact of human activity causing businesses with paper processes to be less efficient and under scrutiny from its customers.

Leave the car at home

Road transport contributes 22% of total UK emissions of CO2. Only 6% of the UK population are walking to work and only 3% are cycling. Walking & cycling can have great health benefits and can help reduce the carbon emissions that are caused by commuting to work. From the 1 Accounts team, Jade, Katie, Kerry & Paul all walk/wheel to the office. For some people walking or cycling to work will not be possible however encouragement to those who can cannot hurt. For those meetings where you have to drive a long distance or even fly, consider using a video call using software such as Skype or Zoom. You can also bring in a work from home policy, allowing you & your employees to work from home even if only on a part time basis. This will reduce the energy used in your office spaces each day both saving money and cutting your businesses carbon footprint.

Man riding a bike

Office Space

Small changes such as changing to LED Lightbulbs can conserve energy reducing your electricity bills and will help protect the environment. You can also improve the air quality of your office by investing in office plants. Plants will help to clean the air and specific plants such as peace lilies, rubber plants and snake plants can help to remove contaminants too.

Power Off

Many businesses unnecessarily waste energy by not turning off their computers or appliances. To help you both save money and conserve energy make it compulsory for your employees to turn off their computers. Then identify any electronics in your office that stay on overnight, such as the printer and assign someone to shut these off at the end of the day.

Power Button

Reduce, Reuse and Recycle

Recycle sign

The three rules of protecting the environment are reduce, reuse and recycle. Set up a recycling bin for your employees. This will help avoid any recycling going into the waste bin due to an absence of recycling bin in the office.

Making your business eco-friendly does not have to be a big chore, by just making a few small changes you can really make a difference.

Watch this space for our next blog on how your business being eco-friendly can help your business:

  • Save money
  • Attract customers
  • Utilise tax incentives
  • Increase employee retention
  • Build a good brand reputation and increase publicity
  • Keep up with competition
  • Expand revenue opportunities.

2019 piggy bank

What happened in 2019?

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2019

2019 was another great year for 1 Accounts Online. We have streamlined our processes, brought in more team members and continue to provide a great service to our clients. With new advancements in technology such as open banking and MTD it is an exciting time to be a part of a rapid changing industry.

Automation, Automation, Automation

ClickWe encourage all our clients to use technology and automation to help streamline their business. We have continued to increase our use of automation using our workflow system Karbon. The team used to spend a few hours (at least) chasing client information. With our new automated system they no longer need to do this, as the emails automatically send requesting the required information for tax returns, quarterly reviews and accounts. There have of course been a couple of hiccups along the way, but we have saved the team time so they can focus on helping our client’s businesses grow.

MTD

One of the big changes in 2019 was MTD. HMRC decided that VAT submissions will have to be submitted through online software. Luckily for us, all our clients were using Xero or Sage Business Cloud so we had the software down. Jade then signed each of our clients up for MTD at no additional cost to the client. After HMRC’s rocky start, MTD is now underway and we look forward to seeing all taxes made digital.

New Clients

We have had an influx of new and exciting clients from web design to construction. We love adding more clients to the 1 Accounts family and look forward to helping them grow. We have enjoyed helping our existing customers thrive, our passion is to help business grow and we have seen wonderful changes in many of our clients.

New Services

In 2019 we started to develop new services for our clients. These are, The Business Coaching Service and Social Media. Watch this space as both services will be up on our website soon! If you can’t wait, email jade@1accounts.co.uk for more information.

New Team Members

2019 we brought 3 new members to the team. Katie started in the middle of the year for 2 days a week to help Jade with the sales side of 1 Accounts. Although they are sisters, they work well together and have developed a new sales process for the new year. Katie has also made great progression with her walking, and now walks the length of the office with a frame. We then had Fran start to help Jade for 3 days a week. Fran is also a pet photographer and loves to be creative and take pictures. In the last week of December we hired a new Bookkeeper Katy who will start with us this month. We are very excited to welcome her to our team and look forward to watching our team grow even more in the new year..