year end – Account-ant – we're strong in numbers

Champage Problems – What is that and How do I get it?

Hitting the VAT threshold where you must charge VAT on sales and reclaim VAT on purchases is a point in time that strikes fear and dread into a lot of business owners (particularly those serving the public)…. But, it should be something to celebrate (at least momentarily). First let me give you a bit of background.

Businesses in the UK are required to register for VAT purposes once they reach a TURNOVER of £85,000. Some industries can hit the threshold quickly i.e. Sam is a builder based in Keighley. He started up mid 2020 and has completed about 30 projects in that time. Some tiny and some as big as lifting the roof off 😅. Material prices are sky rocketing, and as an industry, they charge materials and labour to the customer. But that means his turnover has now reached threshold. There are ways of delaying the enviable but its quite a lot of faff and ultimately not really worth the hassle if it is inevitable.

However in the instance of Keith, a self employed delivery driver based in Bradford who deals mostly with domestic customers (i.e. people, not businesses), he will need to add VAT onto his prices from the date of VAT registration. If he takes the 20% increase and hands it straight onto his customer, it instantly makes him 20% more expensive than his non VAT registered competitors.

So why in the heck should I celebrate?! I hear you asking…..

Hitting a turnover of £85,000 per year is a BIG deal. It most likely means what you are doing is a success and you deserve to celebrate your hard work and success.

If you reframe your thoughts about VAT then you’ll be a lot happier.

Don’t treat your VAT like a fine, treat it as a sign that you are doing the right thing. If your taxes are increasing then so is your profit.

Let’s go back to the issue of being 20% (or whatever rate your industry needs to use – I’ll speak to you about that individually, if needed) higher than your competitor….Let’s have a think. If you are Keith the delivery driver then you can reclaim the VAT on your fuel so you shouldn’t need to add the full 20% onto the customer quotes just because you’ve become VAT registered. You should be able to work out your profit margin with and without VAT and then uplift your customer prices to reflect a deficit, if, in fact, there is one….again I can help you with this if you need it.

And what about Sam the builder? Well Sam, were you savvy enough to increase the cost including VAT to your customer invoices before becoming VAT registered? If so, then you’ll be in a happy place. You’ve just gained the VAT on your PURCHASES back! Yay!

If you are not sure when you will hit the VAT threshold just add up the last 12 month’s Sales, take off the sales from the first month and add on what you think you’ll do next month. If that number is over £83,000 then register for VAT.

You can register for VAT by yourself or you can ask an Accountant for assistance. When you go into your Business Tax Account there are lots of options. If you find this in any way overwhelming then shout for help rather than potentially get it all wrong.

So you see, VAT is not something you should be overly worried about. Get the champers out instead to toast your success.

I really hope this short post has helped you. If you have any questions at all, please shout now!

February 18, 2022 By Rachel

0 In Stories from an Accountant

Do you want to build a Snowman? Or a Sustainable Business

The inspiration for this blog post came whilst building a snowman on our front lawn with my little one. Up here in Denholme it’s known to be “two coats colder” so we get the opportunity at least once a year to hone our Snowman building skills.

We tried a couple of methods but ultimately a solid foundation of compact snow was the winner….it’s the same in business.

You must start with a solid foundation or risk a collapse at the first sight of adverse conditions (or a car tyre hurtling towards you at speed…but that’s definitely a story for another day 😊)

So what do I mean by that? You need a really good idea of what you want to achieve. Is this a side hustle or is it going to become your life for a number of years until you retire or potentially sell your business?

In both cases you’ll need to register as self employed, limited or partnership with HMRC. The time to do this is either before you start your business or within a few weeks of starting. Not in December when your first (self employed) tax year is closing or even almost a year since you set up.

How do you know that your business is turning a profit? Spreadsheets (I mean, I’m an Accountant, I love a good spreadsheet…..) are all well and good, but you do need to set some time aside to actually input all your receipts and sales into said spreadsheet.

Then there’s the problem with making sure you keep all your receipts so you can backup your expenses. I bet some of you, like me, forget to check your pockets before your pants go in the wash…. Bye bye receipt, nice knowing you 😅

“So how can I do that?” I hear you yelling at your phone screen? Software is key. In 2024 HMRC are bringing in MTD ITSA…. because they love a confusing acronym or two (Do not get me started 😂😂😂). It actually stands for “Making Tax Digital for Income Tax Self Assessment”

If you earn more than £10k in TURNOVER (ie Money In) you will be required to use software to submit your returns. I bet you’ve noticed all the Quickbooks, Xero and Sage adverts on TV, Radio and Social. I see or hear them every single day… But maybe I’m wired that way, like when you see your first Tesla driving down the road then all you can see is Teslas 😂.

Now the software mentioned above can be used by anyone, but my experience is that unless you have some basic accounting knowledge, you will mess it up. I’m not saying that because I want to sell you bookkeeping services, honestly. It’s just my experience so far. The software people make it sound easy and they are user friendly but do you know how to categorise your costs or post your assets so your Accountant can easily process your return at year end? Then there’s payroll which is a very emotive subject for most. You don’t want to muck it up.

Plus most Accountants charge a larger fee for tidying up work because they have you over a barrel. Not me by the way, I do charge a catch up/set up, but it’s not going to give you a heart attack… You’ve got enough surprises on this roller-coaster we call life.

So my advice is speak to an Accountant..

Your chosen provider can be anywhere in the world now that cloud accounting and meeting software is widely used. However, some people find some comfort in knowing their accountant is close by. So start by doing a search for “Accountant near me”, “Accountant Bradford”, “Accountant Haworth” (you get the gist) and have a look at their Google My Business page, reviews, social media, website. Really get a feel for them and whether you think you’ll get on. This person will be part of your business, providing key information in a timely manner, so you need to at least like the person!

Speak to them about your particular circumstances and they’ll recommend a course of action, their preferred software provider and of course a fee proposal.

Set up and tidy up can take 6-8 weeks at least, but from then on in you’ll have regular information you can act upon. For instance how are your Sales comparing to prior months? Are your costs spiralling?

When you have this, you can then forecast your future earnings using actual data rather than a daydream.

Other things to consider are:-
What’s your message? Your personality? Who do you want to attract.
Website optimisation
Google My Business
Social pages that are active (you can automate posts to save time)
Calender software
Card payment options
Other automation (such as Zapier)
Meeting software
Networking events
PR opportunities

There’s a lot to consider but there is also a lot of help out there for start up businesses, particularly in the business to business sector. I personally have had some great experiences with Leeds Ad:Venture for free training, mentoring and grants. If you are not in Leeds then there will be one in your local town and its usually related to the local Council.

Also, I’m always here for a chat if you need. Having business buddies and networks are going to be a great asset. So make sure, even if you are introverted like me, you push yourself to try!

Good luck with bossing your year! Let me know how it goes!

January 21, 2022 By Rachel

0 In Stories from an Accountant

Bob The Builder (A CIS Story)

Bob The Builder, can he fix it? Bob the Builder….. Yes he can.

Bob is a Sole trader builder based in Bradford. He mainly building houses and extensions, one house at a time for individuals. Sometimes he employs Wendy to do a spot of bricklaying, cash in hand…..

“Hold your horses there Bob my friend” says Rachel from Account-ant. You could be sailing right into a fine from HMRC.

You see, HMRC wanted to tighten up the controls over taxation in the Construction Industry because it has been notorious for tax dodging, cash in hand jobs, for many years. They wanted to reclaim that lost tax income… so made some changes!

In Summary the changes are to how Sub-Contractors are paid by main Contractors. How the VAT on subcontractors materials invoices is treated has also changed.

Bob’s heard the confusing term “reverse charge VAT” and doesn’t have a Scooby Doo what it means! “Well, Bob” says Rachel from Account-ant “from March 2021 Contractors must pay VAT over to HMRC on behalf of a VAT registered subbie”

Another change that HMRC made was that Contractors must pay 20% per month for registered subcontractors and 30% for non registered subcontractors straight to HMRC via their PAYE.

HMRC keep all these on record and then match them up to subcontractors returns when they submit their yearly tax return.

This is why it’s super important to keep all your records, as any discrepancies could be picked up and potentially lead to fines being levied against them.

From a Contractors point of view too, as paying HMRC the 20% / 30% you must fill in a return even if you’ve had no subcontractors. If you fail to do this then you’ll receive £100 fine for every month missed.

You can dispute the charges but let’s try to not even be in that situation in the first place eh?!

So in summary:-

Contractors deduct 20% or 30% from their subcontractors payments and pay it straight over to HMRC.

Contractors deduct VAT from subcontractor payments and pay it over to HMRC.

Subcontractor register with HMRC, you receive 20% less than you’d expect, but it reduces your overall tax bill to pay at the end of the year.

I hope this helps you all. If you need to have a chat and a piece of my bottomless cake, give me a call.

November 7, 2021 By Rachel

0 In Stories from an Accountant

Holiday, (on the business) Celebrate?!

As the October Half term approaches your thoughts may be turning towards a little getaway with friends and family. Be that jetting off for some Autumn sunshine (Vitamin D is very important!), staycation or just little day trips.

Our happy place is Scotland, the Highlands to be exact. So much so that we got married there and the retirement dream is to run a small “The Shining”-esk hotel. We ALMOST took the leap a few years back, but that’s another story.

As a self employed person you may dread holidays to some degree. After all, who’s going to pick up the slack and you don’t get paid holidays like your employed friends.

Your mind starts whirring and, ding, a light blub moment hits you…. Surely my holiday can be a “Business” Trip (and therefore tax deductible).

Well…. Hold your horses there matey. Although we would all LOVE for that to be the case, it’s not.

However, there are some instances where you can team up business with pleasure and save yourself a little cash.

For instance, say you need to fly abroad for business but your family are bugging you for a holiday. They can tag along. The business can pay for your tickets BUT not your family’s fares.

But what about connecting flights? For instance, you have business in China and you and your family have always wanted to go to Australia. You could claim your flight to China and the equivalent cost of a return flight from China. However you would most definitely need to keep evidence of what the return leg would have cost at the time of booking your outward journey.

Now you might think this is an extreme example for most “ordinary” folk but I do know people who have taken advantage of this opportunity.

“How about day trips?” I hear you say. You would need to keep proof of a genuine business reason for the trip.

For instance, you are a Carpet Fitter based in Halifax. Your family is going to Flamingoland for a day trip so you tee it up with some quotes near Malton. Well that’s fine but is it realistic? Are you really going to take a small job on such a distance from your home? If yes, then you could claim your travel cost, but if you’re just doing it to get around a loophole, don’t bother. If you get an inspection from HMRC, it will be disallowed AND trigger a more in depth look into your affairs.

OK, last example for you. You’re a Mortgage Broker in Thornton who regularly travels for work. Hotel stays are a regular occurrence. Could someone tag along on a trip and stay in your room? Yes. As long as having that person along with you did not change the ordinary costs of the trip.

For instance, you usually stay in a Premier Inn and get a breakfast on your business trips but your companion suggests something a little more upmarket. Well you would only be able to claim the Premier Inn equivalent as tax deductible and keep evidence of this!

I hope this Blog has cleared up some of your questions! Still got questions? Well count me in! No questions too big, no questions too small! Please do get in touch should you need any help at all.

October 19, 2021 By Rachel

0 In Stories from an Accountant

Here In My Car

Anyone that knows me, knows I’m not precious in the slightest about my car. It gets me from A to B. I NEVER, ever buy new. Maybe it’s an Accountant thing but I cannot BEAR the idea of the depreciation on a new car the second you drive it off the forecourt.

My main requirement in a car is lots of boot space and to feel safe (hence the title, I’m channelling Gary Numan Ft. Fear Factory).

One day I may even tell you about when we were being cheap and slept a few hours in Glencoe Visitors Centre carpark (or at least one of us did and it wasn’t me hahaha)

I only replace a car once its dead or close to death.

Recently my car started to show signs of heading to the great scrap yard in the sky. So as I waved it off on a tow truck it gave me inspiration for a blog post.

“You see, good things do come from bad”

This quote is actually a line from one of our Toddler’s bedtime stories, but, it’s actually very wise.

You’re probably thinking, get to the point Rachel and stop waffling about your cars!

As a self employed person you may be wondering what you can claim in terms of your transport.

There are many rules to consider so an in depth conversation on your particular circumstances will be needed but below are some instances that seem to cover most eventualities.

If you have your own car, it’s pretty simple. You can claim 45p per mile for BUSINESS use for the first 10,000 miles and 25p for any subsequent miles in a Financial Year.

You may think this is a bit stingy as it covers fuel, MOT, servicing and wear and tear on your car but hey, them’s the rules.

But just, if think you do 15,000 miles what’ll you’ll claim is £0.45 x 10,000 + £0.25 x 5,000 = £4500 + £1,250 = £5,750 x 20% = £1,150 is the amount by which your tax would reduce.

If you are a Limited Company, you can choose to pay yourself a higher amount BUT your Limited Company will need to produce a P11D and you’ll need to pay tax on the excess amount. Plus extra time for your Accountant to process the requirements with HMRC etc.

The mileage expenses paid reduces your Corporation Tax liability as it is an expense.

If your business owns the vehicle then it’s a company asset so the company claims capital allowances on the vehicle.

The company can pay for your fuel for business use but again, you will pay tax and NI on your private use which is calculated and reported through the PAYE or Self Assessment system and will update your Tax Code.

If your business leases then it depends on what lease you have. Are your handing it back at the end of the term? If yes, it’s an Operating Lease. If the emissions are under 110kg/m then you can claim 100% of the lease as an expense for a van and 50% for a car (i.e. the lease costs £100 and you’ll pay your tax rate on the expense, i.e. 20%).

If you are VAT registered then you can claim back 50% of the VAT in your quarterly returns.

So what’s better? own or lease? Depends if you want a newish car I suppose.

If you have an old banger (like me!), say it cost you £8,000 and it lasted 3 years. You needed to pay tax, service, mot and insurance personally so you’re looking at around £1000 for those expenses per year, top end.

It starts to play up so you sell it to webuyanycar (or similar) and get £1400 back.

That car has cost you £11,000 – £1400 = £9,600 whilst you’ve had it. So £3,200 per year. You claim 15,000 miles per the above calculation so you’re tax would reduce your cost per year by £900 = £2,100.

A lease will cost you £250 (estimate) x 12 x 3 = £9,000, maybe your maintenance package costs £1,000 per year = £10,000 for 3 years – £3,333 per year which is 50% deductible as it’s a car. £3,333 x 50% = £1,666 x 20% (tax relief) = £333

The Grand Total that you would pay for the use of the car for each of the 3 years would be £3,000. £900 more expensive than owning. However, you need to be careful of balloon payments and excess wear and tear costs on return.

The upside to a lease car is that you get a relatively new car which generally will mean it’s more reliable and therefore you don’t have a surprise bill when your car breaks down.

I hope this has helped you understand a little more about transport costs and related taxes. If you need any further information or a personalised calculation, let me know! I’ll be on hand with my customary brew and cake!

September 28, 2021 By Rachel

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Good Times Never Felt So Good

As the saying goes, there are no rainbows without some rain. It’s so true. In 2011, my family and I had a horrendous year. My mum was diagnosed with Lung Cancer, 2 weeks later my 19 year old brother died from pneumonia. Mum battled hard, but succumbed within 3 months.

Our world was turned upside down and I was also sitting my CIMA finals.

That left just Dad and myself from our surprisingly small Irish family (if you know, you know 😉).

My Manager at the time had the audacity to point out that these events affected my work…. Well no doubt! In place of judgement, he might have suggested to go see the doctor for coping with my grief!

However, this experience taught me a few things.

I would NEVER be that kind of Manager

Life is too short.
Everyone needs a “community”.

To always have a plan.

To never, ever let go of what really matters to you.

So this blog post is actually about Goals and Horizons.

It’s important to have goals. In life and in business. I think it’s an evolutionary throwback to if you stood still, you’d die…. Rundown by a Mammoth or disease.

I like to have plans for our holidays. You’ll find me buying a Lonely Planet book whilst still on holiday. Getting excited about our next big Adventure (true story…. In Iceland, I ordered “Romania Lonely Planet”, inspired by What We Do In The Shadows…. If you have not seen this genius film, I would highly recommend 😂)

But I only had clear Business Goals once I made the leap from side hustling to setting up Account-ant with a name, a brand design, and a website (many thanks to my multi-talented hubster, James 😉), and an idea of how I’m different from the big accountants with high Street presence etc.

Do you have goals, have you written them down?

I keep mine on Google Keep. It sets out what I want to achieve in terms of client numbers, what I want to give those clients in return for their faith in me, (if you’re already my client, you know I love you 😘) and a point in time that I want to achieve each goal by.

Admittedly, it feels awesome when you look back and realise you are on track. But equally it could be upsetting you missed your goals.

So rather than boring you to death with explaining SMART goals et al (you probably know what they are anyway!) We’re going to talk about…..Horizons.

You can set your goals, and you’ll have an idea of where you want to be when x goal is achieved – you’ll see it far off…. in the Horizon. When you get to that goal, you’ll realise there’s something else that needs to be achieved. Again, you’ll see it off on the Horizon as you sail towards it, smashing tasks and missing some goals as you go.

It could easily be disheartening if you think at the beginning of any project that your end goal is in sight, only to find there are a few more hurdles. But as I have said before, there cannot be rainbows without rain, so steadfast my friend. You’ll get through it. You WILL smash your goals.

I find it’s important to have a Community. Especially if you work solo. Peers and people you can talk to that are in the same boat. I’ve found there are a few Facebook Groups for my profession that really help me. There’s also Networking groups etc, but they can be hit and miss.

When we had our Son it was super important to me to find some mummy friends and baby friends for our little one. That’s why I brought him to the local toddler group from 7 weeks old. Admittedly I arrived around half way through the session, but, the point here is that I ARRIVED. I showed up, no matter how late. I made some friends and connections in the village where I live. Connections that have helped my business and myself.

You might just be starting out on your self employment journey, or you may be years into it. You decided to make this leap (rather than being employed) for a reason. It must matter to you, otherwise you wouldn’t be doing it!

My life goal is to spend at least the 6 weeks holiday as a family, rather than having to worry about childcare and rushing our time together. That’s what matters to me. I also like to think that my Mum would be super proud of what I’ve achieved in a relatively short time.

What matters to you? Are your going to hold on tight and make sure you get what you want? Life is too short. Live your life, do what makes you feel alive. Because in the immortal words of Neil Diamond (my mum’s favourite singer) “Good Times Never Felt So Good”.

I’m cheering you on!

Do you need some help sifting through your goals and making sure all your ducks are in a row for your business? Give me a call and we’ll have a chat over coffee and the ever present cake!

September 21, 2021 By Rachel

0 In Stories from an Accountant

Show Me The Money

“Hi, I’m Adam, Prince of Eternia and Defender of The Secrets of Castle Greyskull….Fabulous Secret Powers were revealed to me the day I held aloft my magic sword and said “By the Power of Greyskull, I have the POWER!!!!!!!””

Prince Adam and He-man were the same person, BUT also totally separate people. This is kind of what it’s like to be a Sole Trader who is now the Director of a Limited Company.

When you were a Sole Trader, you’d make your money, you’d spend your money (and claim tax allowance on what is deductible) and the rest… well that’s yours…..

There are loads of reasons why a Sole Trader would want to become Limited, but there is a time, a place and a blog post for everything 😉

Now that you are a Director, you still have THE POWER!!!!! But maybe you’re more Adam than He-man now (or maybe Man at Arms, he’s still double hard)

One reason for Incorporating your business as Limited is…..Tax Efficiency….But what in the heck does that mean to anyone?

I’ll try to make it simple for you. As your business is now Limited, the assets of the business (i.e. cash in the bank) belong to the business. Therefore you can’t just pay yourself out of the bank/till etc without jumping through some hoops (or getting your Accountant to do this for you).

So how do I get paid? I hear you yelling at your screen!

There are two main reasons why as a director of a limited company you should pay yourself a salary.

Firstly, it’s counted as an allowable business expense, which means it lowers the amount of Corporation Tax.

The second is that if the salary is above the Lower Earnings Limit (which is £6,240 in 2021/2022 tax year), you will accrue qualifying years towards your state pension.

Although I think Pensions might be a guest blog at some point……Let’s face it, State Pension is unlikely to cover your living costs once retired!

Once you have decided to pay yourself a salary, you need to decide at what level, be that lower or higher salary.

What are the advantages and disadvantages of both?

Low Salary:

The aim is to set your salary at a level that is above the Lower Earnings limit in order to obtain the benefits of qualifying for a state pension, but below the level that you need to pay either employee or employer’s NI.

The threshold before Income Tax is payable for the 2021/22 tax year is £12,750. There are also National Insurance thresholds that you should be aware of, which are currently lower than the personal allowance, and are important when setting your salary.

Be careful if you have converted from “employed” to Limited as you will be likely to hit the NI threshold immediately, and the tax threshold shortly after.

The Disadvantages:

If your salary is at a low level, or if you do not take a salary at all, there are disadvantages such as:

· Reduced maternity benefits, technically to qualify for maternity benefits, you need to be employed, and thus compliant with National Minimal wage regulations. Which is currently approximately £145 per week profit.

· You could miss out on part of your annual tax-free personal allowance if your salary is paid at the NIC threshold, and you have no other sources of income.

· Reduced cover under permanent health, Critical illness, personal accident, or similar policies where pay-outs are calculated based on your earnings.

· When applying for a loan, or mortgage, you may need to meet certain criteria which are unsympathetic to a low salary. However, this is best discussed with a mortgage broker (I know some fab ones if you want a referral)

Tax implications of taking a salary.

As with regular employees, all salaries will be subject to tax via Pay-as-you-earn (PAYE). With three separate PAYE ‘taxes’, the benefit of reducing your corporation tax liability by taking a higher salary can soon be outweighed by the additional tax paid.

Income tax

Income tax is cumulative on all employment earnings and other sources of income in a tax year. For example, if you have already earned £10,000 from any employment in a given tax year, your tax-free personal allowance would be reduced by this amount.

For instance if you’ve gone from working for a company to working for your own Limited company, you need to factor in the earnings already made in the tax year before deciding what your self employed salary will be.

Dividends

Fingers crossed, you have made a profit. If so, you have two options.

Reinvest

Keep it in the business. For instance if you were planning on making a big purchase in the next year that would potentially lead to your business being loss making next year.

Pay a Dividend

Pay shareholders by issuing a dividend. “Shareholder” means “Owners” and you can pay yourself a dividend.

This could be a tax efficient way to take money out of your own company, due to the lower personal tax paid on dividend, the rates for this year are 7.5% / 32.5% / 38.1%.

Also with dividends you receive an allowance of £2000 per year at 0% tax rate.

Through combining dividends payments with a salary, you can make sure that you are at optimum tax efficiency.

For instance, you’d pay approximately £8000 salary and £2000 dividends and have no tax or NI to pay.

Employee National Insurance Contributions

Employee National Insurance Contributions (NICs) are not cumulative. This means each new employment has a separate earnings threshold before NICs are due.

However: For employees who are Higher Rate taxpayers, there is a maximum limit on the amount of NICs to be paid. So if your last job was well paid, you need to review this with your Accountant before deciding on your self employed salary.

Directors have an annual threshold, which is 52 times the weekly threshold amount. When salary starts to go over this, they pay NICs.

In Summary

Congratulations on your Limited Company. Be that a totally new venture (exciting times ahead) or your business is going from strength to strength (again, super exciting).

You CANNOT take money out of limited company without someone running a payroll for you or it going on your Director’s Loan Account (this is only useful if you have large set up costs to pay back).

You can manage your pay to reduce your tax liability.

You can process life/health insurance through your limited company and even with the P11D requirement you will be saving some pennies.

If you want to discuss a personalised illustration of the above, give me a call and we’ll go through it step by step.

September 16, 2021 By Rachel

0 In Stories from an Accountant

What Not to Wear

This one might show my age a bit but what the hey!

I remember when I was a kid watching The Clothes Show on a Sunday night (at least I think it was a Sunday), and marvelling at the fashion. My absolute favourite presenter was Caryn Franklin because I loved her hair and the way she talked. I was also very fond of Jeff Banks.

I still remember the theme tune – I just YouTube’d it and had a little couch dance whilst writing this blog. James very rightly pointed out that it’s Pet Shop Boys.

Fast forward a few years and I’m an avid watcher of “What Not To Wear”… Trinny & Susannah were a bit posh and blunt, and I found it very entertaining.

Now as any teenage girl growing up in the 90s and 00s will tell you, it was ALL about girl power, pedal pushers and scousers (and I don’t mean the people from Liverpool, haha).

Despite watching endless fashion shows, I admit I have never really had my finger on that pulse… I’m mostly found in skinny jeans, a side parting and a black t-shirt, which apparently according to Gen Z is sooooooo old school (and not in a good way).

So as I meet new clients and consciously make an effort, I cannot help but think about how this might be treated in someone’s accounts or tax return (yes, I am that nerdy, but hopefully in a good way 😉).

When you are self employed, you may be thinking you need some clothing for work, maybe some glasses or contact lenses, a new pair of shoes?

It’s all about personal branding at the moment, and looking good and making a good impression is important, right?!

Well hold on a minute… it’s not tax deductible unless it’s “wholly and exclusively for use in your business”.

A good example would be: a hairdresser wears clothing to their salon that will most likely end up being destroyed by hair dye. But, their clothes could be worn for leisure purposes too, so HMRC will not allow these expenses as tax deductible.

The only items that are clearly tax deductible are overalls (i.e. if you are a painter and decorator), items with your logo/name on, safety googles / shoes or a uniform.

Contact lenses are also a big no no, BUT if you have two pairs of glasses and one stays at work, that point can be argued, as that pair is wholly and exclusively used for work purposes.

You can also claim for repairs or cleaning of the allowable items.

So, before you get excited and buy yourself tons of clothes for work… just be aware that you will be paying 100% of the cost and not 80%!

Sorry to burst your bubble, but your bank account may thank me!

August 26, 2021 By Rachel

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Oh Baby, But I’m Self Employed!

Trigger Warning: This Blog is about Maternity Leave and Self Employment.

Maternity can be a tough subject for some people and I sincerely do not wish to upset or distress anyone.

I’ve been asked about Maternity Cover, Childcare and how to get Leave whilst Self employed a few times recently, so I thought it was about time to pop it in a blog post.

So in my usual style…..Meet Katie.

Katie and her partner wanted a child for a long time and decided to take a break from family planning for a while.

Katie is a florist who worked for a chain of florists, and was an employee.

About 6 months ago an amazing opportunity came up to buy a business.

Obviously, the initial set up costs were large (making a sizeable dent in the savings), but her shop is in a great location and she should recoup quickly.

2 months ago Katie had a rough day, she was feeling a bit off and thought she might just be a bit run down…

Days turned into a week, the week turned into a month….SURPRISE!

What Katie had been waiting for, for so long, was now about to happen! Time to Celebrate…..

But wait… Katie is self employed now…

How on Earth does she take Maternity Leave? Does it even Exist? What about childcare?

Katie and her partner asked me to look into everything, in order to dot the I’s and cross the T’s before the arrival of their bundle of joy.

Firstly… congratulations and secondly… this is a bit sexist, however…

If you are female and carrying the baby, then you can apply for Maternity Allowance.

If you are Male or Female, your partner is pregnant, and you are self employed, you DO NOT get Paternity Leave (bummer!).

Maternity Allowance

This payment comes straight from the Government and what you can gets depends on how long you have been self employed.

You MUST:

Have been self employed for 26 weeks of the 66 weeks before the due date
AND earned at least £30 per week for 13 of the 26 weeks.
AND you must be paying Class 2 for at least 13 weeks of your pregnancy

Read that again and let it sink in.

You will need to submit a form called CA5601 which can be found here: –

https://www.gov.uk/government/publications/national-insurance-application-to-pay-self-employed-national-insurance-contributions-by-direct-debit-ca5601

Your other option would be to wait for your self assessment and pay NIC then. However, with the birth looming, it’s best to apply and get those payments rolling. Then you’re way more likely to receive Maternity Allowance.

How Much?

You can get lots more detail on the gov.uk website, but in essence you’ll get £151.97 per week or 90% of your average weekly earnings – whichever is lower for 39 weeks.

Applying for Maternity

Once you’ve reached 26 weeks you need to apply for maternity allowance.

Go to https://www.gov.uk/maternity-allowance/how-to-claim and fill in an MA1 claim.

You’ll need

Proof of income (your SA302 tax self assessment print out)
MATB1 Certificate from your Midwife (showing proof of due date)

Once submitted it will take a few weeks to receive a yay or nay. You can appeal if it’s not a desired response.

Argh – I don’t have an SA302!

Katie started her business 6 months ago (so in the last tax year), so will need to complete her self assessment BEFORE applying for Maternity Allowance.

If you’re reading this and you started your business in THIS tax year (i.e. after 6^th April 2021), you’ll need records of your expenses and income from the start of your business to date.

Child Benefit

You are entitled to £21.15 per week for your first child and £14 per week for any subsequent kiddos.

If you don’t have children yet, this may seem like a lot, but disposable nappies and 3am spending sprees cost a lot… I personally remember buying cool baby grows at 3am, whilst watching Glow (Glamourous Ladies of Wrestling) on Netflix, when our child was a week old 😊.

Childcare

You’ll have heard that childcare is REALLY expensive, but it doesn’t really register until after you’ve had your first child, and start to look around at options.

At the time of writing, it was roughly £50 per day, before any tax benefits are taken off.

If you earn more than minimum wage through employment or self employment, you will be entitled to tax free childcare, but, if you have a partner, they must be employed or self employed and earning more than minimum wage, OR be a student.

If only one of you is working or earning less than minimum wage, then you will not get tax free childcare.

You may be entitled to other benefits, but Account-ant is in no way an expert in this matter.

When your child turns 3, your free hours kick in for the term after their birthday. At the time of writing, this was 15 hours if one person is employed (and earning more than min wage) or 30 hours if both partners are working for more than minimum wage.

Parents living apart would need to look at the government website or Citizens Advice Bureau for more information.

I really hope this blog has waylaid some of the worries that may come from being self employed and about to embark on one helluva rollercoaster (also known as parenthood). Enjoy every second. It is surprising how fast it can go!

As a Mother of a toddler myself, I understand how much work it can be, and I will always be there for anyone that needs a sounding board on work vs children. Give me a shout and we’ll have a cuppa!

August 20, 2021 By Rachel

0 In Stories from an Accountant

Denholme – Is it a Village? Is it a Town?

Denholme – Is it a Village? Is it a Town? Who knows!!! But it’s full of small independent Business owners!

I thought now was a good time to pay homage to the village we’ve called home since 2008… Denholme.

Denholme means “a flat in the hillside” in old Norse, which is very accurate. Some of the streets can be impassable in the winter but it’s so great being surrounded by the hills and the fields.

Denholme is a really small town… or is it a village?? Can’t quite put my finger on that one. So a Town / Village which, when you mention it to people, they either say “yeah, I know Denholme” (much to our surprise) or “Blimey, it’s a bit cold up there” 😊

And legend would suggest that it IS in fact, three coats colder! …

And it actually is! Officially!

Denholme originally had over 50…yes, 50! Commercial Properties – including 8 pubs…well after a hard day in the Mill, you need to unwind somehow.

I’ve also come to realise that West Yorkshire is extremely entrepreneurial and perhaps this stems from this history. All these small family run Businesses spawned generations of self employment go-getters and “doing it” for yourself is just in the DNA!

If you get chatting to someone from Denholme, 7/10 times it turns out that they’re self employed or at the very least, work for a small family run Business – huzzah!

So how did we end up in Denholme….a potted history!

When James and I met, way back in 2006 I was living in the big smoke (Manchester) and James was living in a little village near Harrogate.

We tore through tires and travelled many, many miles in the first few months. James introduced me to climbing stiles and wearing walking boots (which I called “country stuff”), whilst I introduced him to the mega busy Trafford Centre and multiple lane roundabouts.

It was a true Country Mouse meets City Mouse situation.

Fast forward to 2007 and we decided to move over the Pennines to Keighley… because it’s equal distances from our families.

We loved the fact that it was so green, despite being a town centre…hills for miles and lots of places and spaces to go.

We loved our time in Keighley and still visit a lot… mainly to the “Donnies” (aka McDonalds but that’s another story involving toddler nap times 😉), but also to visit Cliffe Castle. It’s an awesome park and museum and we enjoy it as much as our little one does.

We started looking for permanent bricks, and found a house in Denholme where the promotional picture for the house… was a single lamb… in a field… my brain worked overtime and imagined the house backing / facing a lush green space, filled with farm animals.

Ultimately, that wasn’t the case BUT….we did love Denholme.

Lots of green spaces and a handful of useful little shops and Businesses, we were sold.

Eventually we found our home and then our forever home in this tiny Town come Village.

Most peeps say hello when they walk past you in the park. If you’re lucky, at some point, you’ll end up with a flock of sheep in your garden or chickens tearing down your road (both happened and we have photos of the sheep).

There is even a Gala Day which is great fun for the kids with a parade, fair and performances. My claim to fame – in 2019 my son and I landed a picture in the local newspaper on one of the floats!!

I get a bit excited about Gala Day as it’s not something that happens in a big city….I can’t wait for it to return each year and it really brings everyone together.

It may be two coats colder and the winters ARE brutal, but the people are warm and friendly, and the air is so fresh our lilac tree grows lichen (which, according to the green thumbed, is a good thing).

Denholme, this one’s for you!

Oh, and if you are thinking of moving here, our top tip is buy a 4 wheel drive….you’ll need it when it snows!

p.s. Denholme is a Town…..it has a Town Council 😉

August 12, 2021 By Rachel

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