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Specialist accountants for UK contractors and freelancers

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By PaperRocket Accounting, Oct 16 2018 01:10PM

One of the great things about having your own business is the ability to be able to put a number of company expenses through your business books. This not only means that those expenses aren’t coming out of your personal pocket, but also will help to reduce your corporation tax.



The Golden Rule


When it comes to deciding whether or not you can go ahead and claim an expense through your company, it is vital that you always remember the golden rule- that an expense can be claimed only if it is wholly, exclusively and necessarily for the purpose of the business. This means that if an expense is both necessary for the running of your business, and is solely going to be used by the business (i.e. not used personally as well), then it is an allowable expense.



The most common expenses that can be claimed


The types of expenditure you can claim for through your limited company is largely dependent on the type of sector you are working in, builders for example are likely to have far more varied expenditure than say a management consultant who mainly works behind a desk all day. Below, we have listed the most common business expenses for a service company (such as an IT contractor).


• Travel to and from your temporary place of work (if you are there for less than 24 months)


• Travel to meet clients for business meetings


• Mileage claims of 45 pence per mile for the first 10,000 miles of the year (25 pence thereafter)


• Company insurances such as professional indemnity insurance


• Hotel stays and subsistence for overnight business travel


• Telephone and broadband costs


• Stationery and postage


• Computer equipment such as laptops, printers, software licences


• Professional subscriptions such as IPSE membership


• An allowance for using your home as your office


• Childcare vouchers


• Accountancy fees and legal costs


• Entertaining clients (n.b. this expense can be put through the company but will not receive corporation tax relief)


• Entertaining staff (check with your accountant for details on this allowance)


• Paying into a personal pension


• Training courses and seminars


• We have also covered some of the more unusual expenses that can (and cannot) be claimed in this previous blog


This is not an exhaustive list by far but is a general guide most contractors can use. If you are unsure if you can claim specific items through your limited company it is always best to run these past your accountant who will be able to give specific advice.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.



By PaperRocket Accounting, Oct 10 2018 08:01PM

Daytime TV presenter Eamonn Holmes is the latest high profile personality to be defending their personal income from a PSC (personal service company) in a legal battle with HMRC.


As we covered in a previous blog, HMRC have a long history of targeting celebrities over their personal tax affairs, and in some cases, notably the case against Christa Ackroyd, this has ended up costly for the celebrity involved. Over the weekend, This Morning and Talk Radio host Eamonn Holmes has revealed that he is the latest to be investigated, with HMRC claiming he owes around £2million.


Once again, as with Christa Ackroyd’s case, HMRC are taking issue with that fact that he receives income from ITV via his own limited company, resulting in him paying less tax. HMRC insist that under IR35, these workers are in fact, employees of their end client, meaning they should be receiving a (higher taxed) salary direct from the end client.



HMRC’s investigation


Whilst Holmes has been trading through this particular limited company since April 2001, HMRC are only allowed to investigate back as far as the last 7 years. Therefore, even if he is found in breach of IR35 legislations, it would only be this period that HMRC would be able to claim for.


If HMRC were to be successful in this challenge, Holmes would face a bill including additional tax (the difference between what he would have paid if the income were received as salary, and what he did pay), national insurance, interest and possibly penalties. For BBC presenter Christa Ackroyd, this totalled £419,151, but industry experts are estimating Holmes could owe as much as £2million!



What has been said


Eamonn Holmes has been extremely vocal about the case, saying “The country is broke and they are coming to get us. I’ve been freelance for 28 years and that’s been okay. Now they’re saying it’s not okay. They have reinvented the rules in the past couple of years. If they win against me that will go after everyone else, everyone”.


HMRC has defended their stance, saying “It is clear that most TV presenters will fall into the category of being employees based on the nature of their work, and the policy that sets this out has been the same for years. HMRC has a responsibility to ensure everyone pays the right amount of tax at the right time”.


ITV has said “When ITV engages a presenter through a personal service company, that company is entirely responsible for any income tax and national insurance liabilities”.



It’s clear to see that when it comes to IR35 investigations, it’s not just BBC workers that HMRC have their eyes on. The question is, who’s next?




PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Oct 4 2018 10:07AM

If you are either a contractor working through a limited company, or a sole trader, chances are that you do a lot of work from home. Whether that be fulfilling your admin duties (such as raising invoices, doing bookkeeping etc), or even the main bulk of your day to day work for your client. So, with that in mind, are you claiming everything that you are entitled to for using your home as an office? If you work from home and use a designated space/room as your office, then you are able to claim expenses in relation to use of home.


The rules are slightly different for contractors working through a limited company (PSC), and for self traders, so below we take a look at the different allowances available.



Use of home for PSCs


There are two options when it comes to claiming for a ‘use of home’ allowance through a limited company:


1) The first is claiming the HMRC guideline rate of (currently) £4 per week, or £18 per month. This can be paid to an employee working regularly from home without the employer having to justify the amount paid, and no records need to be kept to demonstrate the additional expenditure.


2) Alternatively, if you believe that working from home costs you more than the £4/week, you can instead calculate a more accurate figure to determine how much it truly costs you to work from home. This will only usually end up more beneficially than the guideline allowance if you work a significant amount from home and if your related costs have increased substantially because of it. In this calculation, you would need to work out the incremental cost of working from home and then reasonably apportion it between business and personal use (usually taking into account time spent working from home and area of floor space utilised). You are not able to include rent, insurance or council tax unless any have increased as a result of you working from home.


It is also worth mentioning that anything incurred that is specifically business related, for example, business calls on your home landline, can be claimed as any normal business expense.



Use of home for sole traders


Claiming for a use of home allowance is slightly different if you are a sole trader. Once again, there are two options:


1) If you work from home for 25 hours a month or more, you can use HMRC ‘Simplified Expenses’ which allow you to claim a flat rate amount per month based on the number of hours you work from home. These are:


• 25 to 50 hours - £10/month

• 51 to 100 hours - £18/month

• 101 hours plus - £26


With this option, you again don’t need to retain receipts. This flat rate also doesn’t include internet or telephone expenses, so you are still able to claim the actual business proportion of these bills.



2) However, if you mainly work from home, or have a reasonable home office space, it could be more beneficial for you to use the proportion of home method. This is much more complicated as it involves looking back at yearly bills and performing calculations, but could well be a worthwhile annual task.


To calculate this, you will need to:


- Work out your home office costs (to include; heating, electricity, council tax, rent/mortgage interest (interest element only), home insurance and water).


- Work out the proportion of your home that is used as your office, this can either be done on floor area or by taking the number of rooms (not including kitchen, toilets or bathrooms) and working out the office space as a percentage.


- Work out the proportion of time that you spend working from home over a 7 day week as a percentage.



You should then take the home office costs and first multiply them by the percentage of home used, and then multiply that figure by the percentage of time worked from home. This will then give you your final use of home expenses figure.


As you can see with all the options above, claiming anything other than the guideline allowance or simplified expense allowance can get rather complicated, so it is always a good idea to check any use of home claims with your accountant before including them.



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Sep 25 2018 12:26PM

If you have never run your own company before, then the variety of different taxes and their corresponding deadlines may feel like a lot to get your head around. With this in mind, below we have compiled a detailed list of the various different taxes and their relevant deadlines to help ensure that you never get on the wrong side of HMRC!



Corporation tax


What is it?


Your corporation tax is calculated as (currently) 19% of your annual company profit. This is the company income less any allowable expenses.



How often is it calculated?


Annually. Each year, you are required to prepare company accounts and corporation tax return(s) to declare your company profits for that company year. It is when these accounts/returns are prepared that you will be in a position to calculate your company corporation tax liability for the year.



When is the deadline?


9 months and 1 day after your company year end date.



VAT


What is it?


If you are VAT registered, you will need to add 20% VAT onto all vatable invoices. This needs to be collected and paid over to HMRC, less any VAT that you have incurred on business expenses.



How often is it calculated?


Quarterly. When you register for VAT you will be told which quarters you will need to submit returns for. Each quarter, you will need to calculate the amount of VAT you have charged on invoices for that quarter, less the VAT on any allowable expenses for that quarter.



When is the deadline?


1 month and 1 week after your VAT quarter end date.




PAYE/NI


What is it?


If you have employees that you are paying a salary that attracts tax and/or national insurance, you will need to deduct any tax/employees national insurance at source on behalf of your employee, and pay that over to HMRC together with any employers NI that may be due.



How often is it calculated?


Every time you pay a salary, the tax/ni on it will need to be calculated. Most salaries are paid monthly, so this will usually be calculated each month. However, if the total amount of tax/ni due to HMRC is less than £1,500 per month, then you only need to pay this over quarterly (if more than £1,500, it will need to be paid monthly).



When is the deadline?


If paying electronically, the 22nd of the month following the end of relevant quarter, or month if paying monthly (the 19th if paying by cheque).



P11d


What is it?


If you provide ‘benefits in kind’ to your employees, then these will need to be declared on a P11d form and the employee will be required to pay tax on this, with the employer also having to pay additional employers NI.



How often is it calculated?


Annually. Each year a P11d will have to be completed to declare any benefits for the previous tax year.



When is the deadline?


22nd July for any employers NI due (if paying electronically). The P11d itself needs to be filed by 6th July. Any additional tax on benefits payable by the employee will be paid via an adjustment to their tax code.




Self Assessment



What is it?


If you are a limited company director, or if you have any income that is not taxed at source, then you are required to complete a self assessment tax return to HMRC, declaring all income for the personal tax year.



How often is it calculated?


Annually. For any year that you are a company director, or receiving untaxed income, you must complete a self assessment tax return. The personal tax year runs from 6th April to the 5th April, and this is the same for everyone, unlike company accounting years.



When is the deadline?


31st January of the following year. This is the deadline for the return and any balancing tax liabilities. However, in certain situations, you may have to make payments on account which are due twice a year, by 31st July and 31st January.




PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


By PaperRocket Accounting, Sep 18 2018 02:15PM

Today is a very exciting day for PaperRocket as not just one, but two of our Senior Accountants have been shortlisted in the newly launched and inaugural IRIS Customer Awards which recognise the leading individuals and firms delivering outstanding service and results for their clients.


Both Sarah Solo and Nikki Norman have been shortlisted alongside each other as finalists in the highly regarded category of ‘Accountant of the Year 2018’ with the awards ceremony being held in Twickenham on the evening of the 9th October.


Sarah Solo, Senior Accountant and Director of PaperRocket commented, “It is an absolute honour for both myself and my fellow Senior Accountant, Nikki Norman, to be recognised for all the hard work we put into providing the highest level of service possible to our client base. Having both members of the team shortlisted together is testament to the dedication we put into our roles and reflective of the team spirit within the PaperRocket practice. It has been an amazing year for PaperRocket which just continues to grow from strength to strength thanks to the exceptional team of staff we have in place and the brilliant clients that we work with”



PaperRocket Accounting provide accounting and tax services to professional limited company contractors and freelancers working in the UK.


We offer our clients a choice of four all-inclusive fixed fee monthly packages which cover all of their accounting and tax needs (so no hidden costs or surprise bills!). All of our accounting packages include a monthly subscription for a cloud accounting software subscription provided by the awarding winning FreeAgent.


Each of our clients is given their own dedicated qualified accountant with unlimited access in person, telephone, or by email.


We pride ourselves on our client satisfaction and customer service and were shortlisted as 'Welwyn Hatfield Business of the Year 2018' in the SME Hertfordshire awards, 'Small Practice of the Year 2016' in the AccountingWEB practice excellence awards, as well as FSB Hertfordshire Service Excellence finalists in 2015 and 2016.


To find out how we can help you please get in touch now.


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