Sollertia Blog

Claiming allowances is a relatively simple way to reduce a company’s gross profits, so that less tax is payable at year end. There’s a large number of allowances available, all with varying criteria, with some Read more

All limited companies pay Corporation Tax on their profits, which include trading revenues, chargeable gains and investment income. The Corporation Tax bill is generally due to be paid nine months and a day after the company year ends.

Although you have to pay Corporation Tax on the firm’s profits, you can Read more

National Insurance is another form of taxation, which is paid by most people at some time from the age of 16 to reaching the state retirement limit. The contributions collected by the Treasury are intended to pay for health care, unemployment, the state pension and other projects.

However, the rates of National Insurance Contributions (NIC) continue to Read more

VAT can be complex and time consuming, so for many SMEs it can become a burden, due to lack of resources or expertise. Not being fully aware or understanding the Read more

A reputable accountant can help your business at any stage, from the initial concept to your retirement. Although these professionals are often viewed as just being responsible for the tax return and payroll, they can do a lot more besides, including running a Read more

Most businesses want to pay as little tax on their profits as possible, providing it is done in a Read more

VAT is a complex area of tax, especially as you have three rates to use: zero, reduced and standard, which is a Read more

The complex legislation known as IR35, introduced in April 2000, is aimed at contractors who are working through a limited company as self-employed, but may be deemed to be Read more

If you are self-employed, you will have to register for self-assessment. Under this system, you will complete an annual tax return that provides HM Revenue & Customs (HMRC) with your income and expenditure for the year. You will also calculate your own Read more

Value Added Tax (VAT) is charged on most goods and services, which also includes the sale of business assets, commission and items sold to employees. Some items have VAT added at a reduced rate, while others are zero rated for VAT purposes. Business owners pay the VAT charged on most services and goods bought, while they also have to charge VAT at the appropriate rate on the merchandise and services they sell. Comprehensive VAT records must be kept and all VAT collected must be paid to HMRC, which is why accounting services for small business often incorporate management of VAT.

When do I need to register for VAT?

When the turnover of a business reaches a specified amount, the owner has to register for VAT. This amount usually differs each year, but it’s advisable to check the current threshold, which for this year is £82,000. Different thresholds apply for goods sold to and from other countries in the EU. Once turnover exceeds this amount or is expected to within the next 30 days, you must register. You can volunteer to register for VAT, which may provide some financial benefits. However, you must also complete VAT returns and pay the VAT over to HMRC, or risk being charged a penalty for failure to maintain deadlines.

Once I have registered, what do I need to do?

When you have registered for VAT, you will have to charge VAT on goods and services at the appropriate rates, which are either zero, 5% or 20%. Any VAT paid by you can be reclaimed from HMRC, while the VAT you have charged customers can also be reclaimed by them if they are registered for VAT. To simplify matters, you can deduct the amount of VAT you have paid on supplies purchased for business use and pay the balance to HMRC.

VAT records

Once registered you must keep detailed records of VAT, providing details of the amount you have charged clients and how much VAT you have paid on business supplies. There are a number of schemes available for VAT and your accountant will help you decide which one to implement.

Rates of VAT

Most goods will have VAT charged at the rate of 20%. Some items are entitled to be charged VAT at the reduced rate of 5%, like a child’s car seat. Children’s clothing and most food is charged no VAT.

For more details about VAT and how it affects your business, why not call us today?