Category: Tax

hands with a car

Is the Jaguar i-Pace a good company car?

Posted on | by Jade Donno | Leave a Comment on Is the Jaguar i-Pace a good company car?

Is the Jaguar i-pace a good company car?

Here at 1 Accounts in Haverhill and Cambridge we are often asked can I buy a car within the company?  The answer is of course yes. However when benefit in kind tax and class 1A National Insurance is explained our clients most likely either buy the car privately or buy a Van.

Things may be about to change with Electric Cars.  One of our clients has just purchased a Jaguar i-Pace and Paul Donno our Director also has his eye on one for next year, although his wife Jenni still needs a little convincing!

There are of course other Electric cars on the market and the bigger luxury brands will be competing hard to get the company car market, with Audi and BMW starting to offer full electric.

Our Favourite 

The i-pace is our favourite at the moment and it is 2019 World Car of the year. Take a look

Our Calculations 

We are expecting a high increase in electric vehicles next year due to the new benefit in kind rates which are very attractive.

Our calculations are based on the advertised basic price of £64,495.

The rate for the tax year 6 April 2019 to 2020 is 16% and this is a Benefit in kind of £10,319.  If you are a basic rate taxpayer the tax payable is £2,064 and higher rate tax payer (40%) £4,128.  Your company will also pay 13.8% in Class 1A National Insurance of £8,900.

However the Benefit in Kind Charge for the tax year 6 April 2020 to 5 April 2021 is just 2% and this is a benefit in kind charge of £1,290.  The tax charge is £258 Basic rate and £516 Higher Rate with a class 1A payment of £178.

As you can see the saving is a huge £12,334 which includes the Class1A NI.

It is also worth considering the Work Place Charging Scheme allowing you to provide charging points for your workforce. Click here to find out more.

Capital Allowance 

The other real benefit is Capital Allowance. Electric cars qualify for First Year allowances which means that the entire purchase price is allowable against Corporation Tax. If you buy the vehicle after 1 April 2020 this rate is 17%.  Based on the Jaguar i-pace that is a Corporation Tax saving of £2,193. Click here to read more. 

Our Recommendation 

We recommend the electric car for your company vehicle from 6 April 2020, make sure that if fits your personal and business needs.  We would expect demand on the popular models to be high and waiting lists long therefore you may want to start looking very soon.

Be careful of any caveat relating to Brexit as we understand that some manufacturers are asking you to sign to accept an increase in duty especially if we have no deal.

We expect to see many electric cars around Haverhill next year. Paul is hopeful on persuading Jenni to have one (on the company of course).

Tax Building Blocks

Making Tax Digital – Are You Ready?

Posted on | by Jade Donno | Leave a Comment on Making Tax Digital – Are You Ready?

Making Tax Digital – Are You Ready?

July 2019 marks the period that you have to submit your VAT returns using HMRC’s new Making Tax Digital (MTD) regime. Already Accountants, VAT registered businesses and HMRC are struggling to cope.

Take a look at Accounting Web’s report on how HMRC’s systems were already struggling in May – Read report here

If you have not addressed MTD you need to do this NOW!

Your accountant should have been in touch to make sure your systems allows you to send HMRC compatible VAT returns. You may have been offered a bridging software to read from Excel (or other non-compliant accounting products) to then transfer to HMRC. In our opinion this is a sticky plaster over an open wound and not a long term solution. You have probably been given this type of software because your accountant does not understand or is overstretched.

Our recommendation is that you use Xero or SageOne to manage your businesses finances. Both pieces of software are fully compatible with MTD. 1 Accounts are Making Tax Digital certified and can help you transfer your business over to software that will not only be compliant but save you heaps of time to.

You should make sure your accountant can help you through the process of transitioning you to online software, registering you for MTD and maintaining your VAT returns. HMRC have some guidance on their website we recommend reading – Read article here.

If your VAT return (period ending 30th June 2019) is not filed by the 7th of August 2019 you may get a fine from HMRC. It is unknown to us if HMRC’s systems will be able to cope with this months filings. Our advice would be don’t leave it till the last minute.

 

2018 tax reuturns

1 Accounts 2018 Tax Returns

Posted on | by Jade Donno

2018 Tax Returns

A note from Paul

This year has been really strange for me in preparing for January and completing over 160 Tax Returns in one month.  A Challenge that I was prepared for and it was 60 less than last year!

Today is 25 January and we have 9 left to do which hopefully will be down to zero by the end of today!

Waking up this morning I thought how on earth did we achieve this and how am I so chilled about it, I have come up with four key reasons that we have achieved our goals.

Building blocks spelling Tax

Practice manager

We employed my daughter Jade as practice manager during this year and next to Jenni, she is probably one of the only people that can sort me out.  Jade said that I was not going to do all the returns on my own this year and that we have to spread them around the team.

Jade has also worked relentlessly on getting our systems into place and her devotion to getting Karbon into a great working tool has been second to none.

Jade split the returns and shared the work load with all of the team.

Jade has seen the stress in past years that I have put myself under and wasn’t going to let it happen this year.  She is also in charge of onboarding and will not let the last minute “don’t want to pay” person take up our time.  Filtering out the clients that just do not work for us has been a real challenge for me to say no, but Jade has done this so well.

Apprentices

Over two years ago we invested our time and faith in the apprentice scheme and  this month I have seen both of our apprentices shine.  They have both gained level 3 of their AAT and have worked hard and learnt a lot this last month.

The rest of our team have all stepped up as well and really worked hard to reach our targets whilst getting on with their normal work load, all managed by Jade using Karbon.

Apprentice Grace
Apprentice James

Systems

For anyone that knows me, whilst I preach about systemising your business and put robust systems in place for our clients, I am the best person to mess my own up and go outside the system.

Karbon has been such a great system for us and we can all see our own progress during the month with regards to our work load and Jade has already planned year end accounts to the end of July!

Four months ago we changed our Tax and accounts software and have really tested this new software to the limits, and it hasn’t let us down.

Some people said why not change this in February when demand is not high, however the decision to really use it in anger during our busiest period has worked very well.  It is amazing how quickly a problem gets sorted out and we move on.

Business Coach

Yes we are business advisors and we do coach our clients as well as make there lives easier with great systems because life is too short to do your books.

In my opinion all businesses need a coach and we are no exception, I will write another Blog on our use of coaches and what to look for later; I did not think we needed our latest coach and she also thought we were well sorted by our very public image in our industry, how wrong we both were!

I use Heather Townsend of Accountants Millionaires (I am not one yet!!) and she has guided me in many ways, that until now (6 months later) I hadn’t really appreciated, sorry Heather.

Heather recommended our change in Tax and Accounts software, huge saving In monthly fees over £800 per month!  Insistence of investing in a practice management solution (Karbon).  Guidance on the issues of employing your daughter who is as strong headed and stubborn as me.

The guidance from her team and the ability to allow me to focus and empower my team is exactly what a coach should do.

Now looking forward to growing the business in 2019 and building on our fantastic dedicated team.

What is MTD?

What Is Making Tax Digital?

Posted on | by Jade Donno

What is MTD?

Fact: 

All of our clients are Making Tax Digital (MTD) compliant because they use the latest online accounting software provided by the market leaders – Sage and Xero.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a government initiative which aims to transform the administration of tax to create a simpler, more effective and efficient tax regime that makes it easier for taxpayers to get their tax right.  (Let’s not forget to mention the estimated additional revenue of £610 million for HMRC as a result of the reduction in tax errors!)

Businesses that meet the criteria will be required to file their tax online, make online payments and keep digital records.

Quite simply, Making Tax Digital (MTD) is all about managing your accounts online.

Who is affected?

On 1st April 2019, all UK businesses that are VAT registered and operating above the £85,000 VAT threshold will be required to keep their records digitally and to submit VAT returns to HMRC using MTD compliant software.

Other areas of MTD, such as income tax and corporation tax, have been put on hold until 2020, at the earliest.

What do I need to do now?

If you are not VAT registered then you do not need to do anything at the moment. Just keep an eye on your turnover and if you think you are nearing the threshold give us a call on 01440 844 986. You should also be mindful of announcements from HMRC as to when income tax and corporation tax will be covered by MTD.

If you are already using MTD compliant accounting software then you do not need to take any further action.

If you are not using an MTD compliant accounting software, such as Xero or Sage Business Cloud, and you are above the £85,000 VAT threshold it’s time to call 1 Accounts!

Ditch the dinosaurs…

Many “traditional” accountants are panicking because they have not embraced the digital revolution. They have chosen to continue with desktop based systems, time sheets and outdated processes.  With the deadline for MTD looming they are now in danger of extinction!

This is the advice from the ICAEW (Institute of Chartered Accountants in England and Wales) for their members:-

Preparing your practice for MTD

Agents will need to take steps to prepare both their own practices and their clients for the disruption that Making Tax Digital and digitalisation will cause to the market for accounting and tax services.

 

Pick the pioneers…

1 Accounts was established in 2013 with the sole focus of moving businesses from the traditional accountancy model to online accounting with all its time and money saving benefits. The team at 1 Accounts are experts in cloud accounting, they did their learning on the “digitalisation of accounting services” years ago and have the accolades to prove it –  Sage UK’s Top Online Accountants, 2020 Innovation Awards 2016 most ‘Innovative Practice’ and a Xero Gold Champion Partner with a Making Tax Digital Ready classification.

The dinosaurs will be charging their clients for the privilege of learning about the “new ways” and converting clients from desk based systems to online systems. Just think – if they are operating time sheets, every hour has to be accounted for! Do you want to pay for them to catch up?