The UK tax system can seem complex, but understanding its fundamentals is essential for individuals and businesses alike. Whether you are a resident taxpayer, a business owner, or someone moving to the UK, knowing how taxes work can help you manage your financial obligations efficiently. This guide provides an overview of the key aspects of the UK tax system, including types of taxes, tax rates, and compliance requirements. 

The Structure of the UK Tax System: 

The UK tax system is overseen by His Majesty’s Revenue and Customs (HMRC), the government body responsible for tax collection and enforcement. Taxes are broadly divided into direct and indirect taxes: 

• Direct Taxes: These are levied on income, profits, and gains, such as Income Tax and Corporation Tax. 

• Indirect Taxes: These are applied to goods and services, such as Value Added Tax (VAT) and Excise Duties. 

It operates on a progressive principle, meaning those with higher incomes generally pay a higher percentage in tax. The system encompasses various taxes, including: 

• Income Tax: Levied on individuals’ earnings from employment, self-employment, pensions, and other sources. 

• Corporation Tax: Charged on the profits of limited companies. 

• Value Added Tax (VAT): A consumption tax charged on most goods and services. 

• Capital Gains Tax (CGT): Tax on profits made from selling assets like property or shares. 

• Inheritance Tax (IHT): Tax on the value of an estate when someone dies. 

• Council Tax: A local tax levied on residential properties to fund local services. 

• Stamp Duty Land Tax (SDLT): Tax paid on the purchase of property. 

 

1. Income Tax

Income Tax is a major component of the UK tax system and is levied on individuals based on their earnings. It applies to: 

• Employment income 

• Self-employed profits 

• Rental income 

• Dividends and savings interest 

Income Tax Rates 2023/24 

• Personal Allowance: £12,570 (tax-free income) 

• Basic Rate (20%): £12,571 – £50,270 

• Higher Rate (40%): £50,271 – £125,140 

• Additional Rate (45%): Above £125,140 

2. National Insurance Contributions (NICs)

NICs are payments made to fund state benefits, including the National Health Service (NHS) and state pensions. Both employees and self-employed individuals contribute to NICs. 

NICs Rates: 

Employees: 

• No contributions on earnings below £184 per week. 

• 12% on earnings between £184 and £967 per week. 

• 2% on earnings above £967 per week. 

Self-Employed: 

• No contributions on profits below £6,515. 

• 9% on profits between £6,515 and £9,568. 

• 2% on profits above £9,568. 

3. Corporation Tax

Corporation Tax is charged on the profits of limited companies and some other organizations. The main rate for the 2023/24 tax year is 25% for profits above £250,000, while a small profits rate of 19% applies to profits up to £50,000. Companies must file annual tax returns with HMRC and make payments accordingly. 

4. Value Added Tax (VAT)

VAT is a consumption tax added to most goods and services. The standard rate is 20%, with reduced rates of 5% for certain goods like home energy and 0% for essential items like food and children’s clothing. Businesses with a turnover above £85,000 must register for VAT and file periodic returns. 

5. Capital Gains Tax (CGT)

CGT applies to profits from the sale of assets such as property (excluding a primary residence) and investments. For individuals, the CGT rates in 2023/24 are: 

• 10% for basic rate taxpayers 

• 20% for higher/additional rate taxpayers 

• 18% and 28% for residential property sales 

The annual exemption amount is £6,000 for individuals and £3,000 for trusts. 

6. Inheritance Tax (IHT)

IHT is levied on estates valued above £325,000 at a rate of 40%. However, exemptions and reliefs, such as the residence nil-rate band (£175,000), can reduce the taxable amount. 

7. Tax Compliance and Deadlines

Individuals and businesses must meet specific deadlines to avoid penalties: 

• Self-Assessment Tax Returns: Due by 31 January each year (for online filing) 

• Corporation Tax Returns: Due 9 months after the company’s accounting period  

• VAT Returns: Usually filed quarterly 

Employers also have obligations to deduct Income Tax and NICs under the PAYE (Pay As You Earn) system. 

 

Conclusion: 

Understanding the UK tax system is essential for individuals and businesses to manage their finances effectively and comply with the law. While the system can be complex, breaking it down into its key components can make it more manageable. Remember, seeking professional advice is always recommended for specific tax situations. 

Let CBM Accounting be your trusted accounting partner!

To know more about UK tax system, visit https://cbmaccounting.co.uk/ . 

Please contact us for more assistance at: 020 300 20436   

Navigating the UK tax system can feel like wading through treacle, but it doesn’t have to be that way. This guide aims to simplify the basics for individuals, helping you understand your obligations and potentially save some hard-earned cash.

Understanding the Basics:

The tax year in the UK is from April 6th to April 5th. The majority of people pay income tax via the PAYE (Pay as You Earn) system. This involves your employer taking tax off your pay before you get it. Even so, you may still have to submit a Self-Assessment tax return if you have other sources of income.

1.  Income Tax:

• Personal Allowance: This is the amount of income you can earn before paying any income tax. For the current tax year, it’s typically £12,570. This allowance can be reduced depending on your income. 
• Tax Bands: Income above your Personal Allowance is taxed at different rates depending on which tax band it falls into:  
• Basic Rate (20%): Applies to income within a certain threshold. 
• Higher Rate (40%): Applies to income above the basic rate threshold. Additional Rate (45%): Applies to very high incomes.
•  National Insurance: This is a separate tax that contributes to social security benefits like pensions and unemployment support. It’s also deducted from your earnings. 

2. National Insurance Contributions (NICs):

NICs pay for state benefits, such as the State Pension. They are charged on employment status and income level:

a) Class 1: Employee and employer
b) Class 2 & 4: Self-employed

c) Class 3: Optional contributions to make up gaps in NI records 

3. Value Added Tax (VAT): 

VAT is a tax on goods and services, usually included in the price. The standard VAT rate is 20%, with reduced rates of 5% and 0% for specific items such as energy bills and essential food items. 

4. Capital Gains Tax (CGT): 

CGT applies when you sell assets like property (excluding your main home), shares, or valuable items at a profit. The tax-free allowance for 2023/24 is £6,000, with tax rates of 10% (basic rate taxpayers) and 20% (higher rate taxpayers) for most assets.

5. Inheritance Tax (IHT): 

IHT is charged at 40% on estates worth more than £325,000. However, allowances such as the Residence Nil Rate Band (RNRB) can reduce liability. 

6. Tax Allowances and Reliefs: 

Individuals can reduce tax liability using allowances such as: 

Marriage Allowance (£1,260 transferable allowance) 

Dividend Allowance (£1,000 tax-free dividends) 

Savings Allowance (£1,000 for basic rate taxpayers, £500 for higher rate taxpayers) 

7. Self-Assessment and Tax Returns: 

Self-employed individuals, landlords, and those with additional income may need to file a Self-Assessment tax return. The deadline for online submissions is 31 January each year. 

Do You Need to File a Self-Assessment Tax Return? 

You’ll likely need to complete a Self-Assessment tax return if any of the following apply: 

• You’re self-employed. 

• You have income from sources other than your salary (e.g., rental income, interest from savings, dividends). 

• You’ve received untaxed income. 

• You’re a company director. 

• Your income is over £100,000. 

How to File a Self-Assessment Tax Return: 

The easiest way is online through the HMRC (Her Majesty’s Revenue and Customs) website. You’ll need to create a Government Gateway account and follow the instructions. You can also file by paper, but it’s generally more complex. 

Key Deadlines: 

• Online Self-Assessment: The deadline is usually January 31st following the end of the tax year. 

• Paper Self-Assessment: The deadline is usually October 31st following the end of the tax year. 

 

Tips for Managing Your Taxes: 

• Keep Accurate Records: Maintain organized records of all your income and expenses throughout the year. This will make filing your tax return much easier. 

• Understand Allowances and Deductions: Familiarize yourself with the various tax allowances and deductions available to you. You might be surprised at what you can claim! 

• Don’t Delay: File your tax return on time to avoid penalties. 

• Seek Professional Help: If you’re unsure about anything, don’t hesitate to seek advice from a qualified accountant or tax advisor. They can provide personalized guidance and ensure you’re paying the correct amount of tax. 

Contact CBM Accounting today to know more! 

020 300 20436 

[email protected] 

In this guide, we’ll provide a breakdown of important tax year start and end dates, key Self-Assessment deadlines, corporation tax payments, and more to keep your business on track. If you feel overwhelmed, CBM Accounting offers expert services to simplify tax management. 

What is the UK Tax Year? 

The UK tax year runs from 6 April to 5 April the following year. This period, known as the fiscal year, is essential for both businesses and individuals to understand, as it dictates when tax returns and payments must be made. Knowing when the tax year starts and ends can help you prepare your finances and meet deadlines easily. 

• When does the UK tax year start? The tax year begins on 6 April each year. 

• When does the UK tax year end? The tax year ends on 5 April of the following year. 

Example: 

• The tax year 22/23 ran from 6 April 2022 to 5 April 2023. 

• The tax year 23/24 is currently running from 6 April 2023 to 5 April 2024. 

• The tax year 2024/25 will start on 6 April 2024 and end on 5 April 2025. 

Key Tax Year Deadlines to Remember 

To make sure you comply with HMRC rules and avoid penalties, it’s important to mark the following key tax year dates on your calendar. Here are the important deadlines for Self-Assessment, corporation tax, and other reporting requirements: 

1. April 5th: End of the Tax Year This is the final day of the UK tax year. Ensure all financial records for the year are in order, and any pending tasks (like payroll or benefits) are completed before this date. 
2. 31st January: Self-Assessment Deadline This is the last day to submit your Self-Assessment tax return online for the previous tax year and pay any tax owed. For example, for the 22/23 tax year, your Self-Assessment must be filed by 31st January 2024. For assistance, check our Self-Assessment services. 
3. 31st July: Second Payment on Account If you’re self-employed or pay tax through Self-Assessment, you may need to make a second payment towards the next year’s tax bill by this date. Find more about our tax planning services. 
4. 31st October: Paper Tax Return Deadline If you prefer to file a paper tax return, this is the deadline for submitting it to HMRC for the previous tax year. 
5. 5th October: Register for Self-Assessment If you’re new to Self-Assessment or have become self-employed, you must register with HMRC by this date after the end of the tax year you need to report. 

By keeping track of these dates, you can avoid unnecessary penalties. However, if you need help managing your tax obligations, CBM Accounting offers expert assistance to ensure you never miss a deadline. 

Why Knowing These Dates is Important 

Understanding the key tax year dates isn’t just about filing on time—it helps you make smart decisions that can save you money, avoid penalties, and improve your business’s financial performance. For example: 

• End of the Tax Year: This is a great time to review your finances and make last-minute adjustments to reduce your tax liability. 

• Self-Assessment Deadline: Missing this deadline will result in penalties starting at £100, which increase the longer you delay. 

• Corporation Tax Deadlines: Ensure you have enough cash flow to meet your corporation tax payments, which are due 9 months and 1 day after your financial year ends. 

To avoid being caught off guard by these deadlines, consider partnering with a professional accounting firm like CBM Accounting. We offer automated reminders and proactive tax efficiency reviews to help you manage your financial responsibilities. 

Key Dates for Different Types of Businesses 

The key accounting and tax year dates vary depending on your business structure—whether you are a limited company, sole trader, partnership, or LLP. Here’s a breakdown of the key dates for each: 

1.Limited Companies: 

Corporation Tax: Payable within 9 months and 1 day of your financial year end. 

Annual Accounts: Must be submitted to Companies House within 9 months of your financial year end. Learn more about our limited company services. 

2.Sole Traders: 

Self-Assessment: Submit online by 31st January following the end of the tax year. 

Payments on Account: Two payments due each year (31st January and 31st July). 

3.Partnerships and LLPs: 

Partnership Tax Returns: Must be filed by 31st January following the end of the tax year. 

Corporation Tax for LLPs: Deadlines are the same as those for limited companies. 

Each business structure has its own tax obligations and deadlines, so it’s important to stay on top of the requirements that apply to you. If you’re unsure where to start, CBM Accounting can provide personalized advice based on your business type. 

What Happens if You Miss a Tax Deadline? 

Missing a tax deadline can lead to penalties and extra interest on unpaid tax. For example: 

• Self-Assessment Penalties: You’ll incur a £100 fine if your return is late by even a day. After 3 months, this fine increases to £10 per day, up to a maximum of £900. 

• Corporation Tax Penalties: Late payments lead to interest charges, and repeated delays can result in significant fines. 

If you think you can’t meet a deadline, it’s crucial to contact HMRC right away. You might be able to negotiate a Time to Pay agreement, which allows you to spread payments over a longer period. 

How Can CBM Accounting Help You Stay Compliant? 

At CBM Accounting, we understand that keeping track of tax deadlines can be stressful. Our team offers tailored services to help you manage all your accounting and tax year obligations, ensuring you’re always compliant with HMRC. 

• Automated reminders for upcoming deadlines 

• Annual tax efficiency reviews to help reduce your tax liabilities 

• Self-assessment support and guidance 

• Corporation tax filing and support 

With our help, you can focus on growing your business while we take care of the financial side. From filing your tax returns to managing your accounts, we’re here to provide hassle-free accounting services. 

  

What Happens if You Miss a Tax Deadline? 

Missing a tax deadline can result in penalties and additional interest on unpaid tax. For example: 

• Self-Assessment Penalties: You’ll be fined £100 if your return is late by even a day. After 3 months, this fine increases to £10 per day, up to a maximum of £900. 

• Corporation Tax Penalties: Late payments result in interest charges, and repeated delays can lead to significant fines. 

If you believe you can’t meet a deadline, it’s essential to contact HMRC immediately. You may be able to negotiate a Time to Pay agreement, which allows you to spread payments over a longer period. 

  

How Can CBM Accounting Help You Stay Compliant? 

At CBM Accounting, we understand that keeping track of tax deadlines can be stressful. Our team offers tailored services to help you manage all your accounting and tax year obligations, ensuring you’re always compliant with HMRC. 

• Automated reminders for upcoming deadlines 

• Annual tax efficiency reviews to help reduce your tax liabilities 

• Self-Assessment support and guidance 

• Corporation tax filing and support 

With our help, you can focus on growing your business while we take care of the financial side. From filing your tax returns to managing your accounts, we’re here to provide hassle-free accounting services. 

  

Frequently Asked Questions (FAQs) 

1. When does the UK tax year start and end? The UK tax year starts on 6 April and ends on 5 April the following year. 
2. What is the deadline for Self-Assessment tax returns? The deadline for online submission is 31st January following the end of the tax year. 
3. When are corporation tax payments due? Corporation tax must be paid within 9 months and 1 day of your financial year-end. 
4. What happens if I miss the tax year deadlines? Missing deadlines can result in penalties and interest charges. It’s always advisable to file and pay on time to avoid these issues. 

For more information on tax compliance and efficient financial management, check out the HMRC guidelines. 

Research and Development (R&D) Tax Credits in the UK are a government incentive aimed at encouraging companies to invest in innovation and research. The program allows companies to claim back a portion of the costs associated with eligible R&D activities. The UK government recognizes the importance of innovation and research in driving economic growth and has implemented R&D Tax Credits as a way to support and incentivize companies to invest in these activities. 

Eligibility for R&D Tax Credits in the UK: 

1. The company must be a UK-based business and must be liable for corporation tax. 

1. The R&D project must be related to the company’s trade and must be intended to make an advance in science or technology. 

1. The R&D project must involve uncertainty, meaning that the outcome of the project was not readily apparent or predictable. 

The amount of the R&D Tax Credit a company can claim will depend on the company’s size, the type of R&D activities that were conducted, and the company’s expenditure on R&D. In general, companies can claim a percentage of their eligible R&D expenditure as a tax credit, which can then be offset against their corporation tax liability. 

The R&D Tax Credit scheme in the UK is divided into two categories: the Small and Medium-sized Enterprise (SME) scheme and the Research and Development Expenditure Credit (RDEC) scheme. The SME scheme is for companies with fewer than 500 employees and an annual turnover of less than €100 million. Under the SME scheme, companies can claim back up to 230% of their eligible R&D expenditure. The RDEC scheme is for larger companies or those that are subcontracted by larger companies to carry out R&D work. Under the RDEC scheme, companies can claim back up to 12% of their eligible R&D expenditure. 

To make an R&D Tax Credit claim, companies must provide detailed information about their R&D activities, including project reports, financial records, staff records, technical reports, and evidence of attempts to overcome uncertainty. The information provided must be clear and concise, and written in a technical language that is appropriate for the field. The claim should also include any relevant diagrams, schematics, or technical drawings that support the R&D claim. 

In conclusion, R&D Tax Credits in the UK are a valuable tool for companies that are investing in innovation and research. The program provides a financial incentive for companies to invest in R&D activities, which can help to drive economic growth and increase competitiveness. Companies that are eligible for R&D Tax Credits should take advantage of this opportunity and work with a tax advisor to ensure that they are maximizing their benefits under the program. 

 

Managing payroll can be stressful for small businesses. Our Employer Payroll Services make the process simple and efficient. We help small businesses stay compliant with tax regulations and avoid penalties. 

With our online payroll services, you’ll never have to worry about tax deadlines or errors in your payroll calculations again. Our team ensures everything is done right, so you can focus on growing your business. Learn more about our accounting services tailored to small businesses. 

Key Benefits of Our Employer Payroll Services: 

• Full Payroll Compliance: We handle federal, state, and local payroll taxes to ensure your business follows all regulations. For official payroll tax guidelines, check IRS Payroll Tax Requirements. 

• Easy Payroll Tax Filing: We file tax returns electronically, helping you avoid late fees and penalties. 

• Accurate Payroll Calculations: We ensure the correct amount is withheld for federal income taxes, Social Security, and Medicare. 

• Online Payroll Management: Our platform allows you to manage payroll online, access pay stubs, and track your tax payments easily. 

  

 Affordable, Stress-Free Accounting Services for Small Businesses 

We know small business owners have specific needs. That’s why our services are tailored to make payroll and accounting easy. Our affordable, stress-free accounting services give you the tools and support to handle payroll with ease. 

Why Choose Our Payroll Services? 

• Automated Payroll: Our system makes payroll tax calculations quick and easy. Need to know more about automating payroll for small businesses? 

• Timely Tax Filing: We ensure timely filing of all IRS forms, including W-2s, W-4s, and 1099-NEC. Visit the IRS official site for more details. 

• Real-Time Updates: Get automatic updates on tax rates and laws to avoid compliance issues. You can learn more about current rates at FICA Tax Rates. 

• Cost Savings: Our affordable services help you avoid penalties, saving your business time and money. 

  

Why Payroll Compliance Is Essential for Small Businesses 

Payroll compliance is critical for avoiding fines and legal problems. With our Employer Payroll Services, you can ensure your business stays compliant with all tax laws. 

How We Help with Payroll Compliance: 

• Accurate Tax Withholding: We make sure federal and state taxes, including FICA, are withheld correctly. For more information, visit How to Calculate Payroll Taxes. 

• Timely Tax Payments: Avoid late payments with our system that files taxes on time, every time. 

• Transparency: Track all payroll transactions and access important documents online through our easy-to-use platform. 

  

 Additional Payroll Services for Small Business Owners 

Our services are designed to help small businesses manage payroll efficiently. We provide full support for federal and state payroll taxes and offer easy online payroll management tools. 

Our Employer Payroll Services Include: 

• FICA Tax Management: We handle Social Security and Medicare taxes to ensure compliance. Learn more about FICA compliance for small businesses. 

• Unemployment Tax Support: We manage federal and state unemployment taxes. 

• Online Payroll Tools: Access real-time payroll management, automated calculations, and secure document storage through our online payroll portal. 

  

Why Us? 

Our Expert Small Business Accountants provide hassle-free tax returns and payroll services. We offer affordable, stress-free accounting to help small businesses succeed. Focus on what matters—growing your business—while we handle the rest. 

Talking to an online accountant with a tax return may be a fantastic method to ensure that you complete your return with precision. 

Many individuals find tax returns complex and convoluted, but it may be very straightforward to get around with the correct assistance. 

Table of Contents 

Why should I utilize an online accountant for tax returns? 

1. Unnecessary and costly errors are avoided 1.
2. Save the hazard for you
3. Moreover, it’s going to save you money!

Is it not possible for me to do it myself? 

Why should I utilize an online accountant for tax returns? 

The usage of an accounting service has numerous purposes. The tax world can be terrible. And when it comes to submitting your self-assessment, so many are seeking expert assistance. The problem is either with filling out the form incorrectly, or computing the tax that is due incorrectly. 

But why shouldn’t you use a standard online tax return account? 

1. Unnecessary and costly errors are avoided 

By employing a competent online accountant, you will make sure that your tax return is proper and completed on time, so there are no bad fines! Were you aware that HMRC may charge you: 

• Send your self-evaluation late 

• Incorrect submission of your return 

• Your tax payment late… 

• And top interest! And top interest! 

We heard many of the horror stories of accounting companies at CBM Accounting, which had rubbed down tax returns for their customers. They will sort everything out for yourself, ensure that your self-assessment tax return is proper, accurate and filled in in time if you opt to utilize an on-line accounting service (like us). 

2. Save the hazard for you

The time, worry and trouble we all detest to complete a tax return. A tax return accountant for your self-assessment is a lot quicker and more simplified approach. 

For instance, take CBM Accounting. 

Our online service will link you in minutes and promptly refund your taxes with a professional tax accountant. Our method is divided into basic and easily understood questions – and complex questions are out of hand after form! 

If you have all your income and expenditure records, we’ll start the complete procedure in minutes. And as we are a fully-online tax preparation system, you can even snap an image and directly email your papers from your phone! 

3. Moreover, it’s going to save you money!

The best of all worlds is an online accountant. It reduces any additional charges with traditional accounts with anything online. 

Traditional accounting companies can charge services that may not even be necessary. You can hire one, particularly if you simply have to do your tax return and nothing else. A typical accountant’s tax return assistance can cost you between £150 and £250, and it’s often an hourly charge. 

By contrast, the online tax service for CBM Accounting costs only £119. You’ll get a genuine, human accountant competent online tax guidance. And we do not impose any hidden fees or extra charges in the spring, unlike typical accounting companies. 

Is it not possible for me to do it myself? 

Naturally, your tax return can be completed on your own… You want to, however?! 

Are you willing, never sure what it all means, to be able to see all pages of the HMRC online? Do not forget that you have to report by 31st January of the year after the tax year you pay for, as you are – and great respect to you if you do. This is the day when you pay too. 

You will incur certain punishments if you miss this deadline. Use how expensive an error in your tax return may be to see our late tax return calculator! 

Contact CBM Accounting today to know more! 

020 300 20436 

[email protected] 

Global emergencies, which transcend national borders according to the United Nations, is climate change. It requires coordinated solutions and international cooperation at all levels in order to assist countries shift to a low-carbon economy. It’s time for companies to plan to fight climate change. It is vital to investigate company prospects through internal analysis to obtain greater profit. These analyses would contribute to the assessment of the options and the probable reduction of carbon emissions by attaining the objective of decreasing all greenhouse gas emissions to null by 2050. 

It decreases not only greenhouse gas emissions but also enhances business model efficiency by increasing profit with less resources as each new resource might add additional costs to the end product / service. 

Businesses should create an infrastructure that lasts for years and that can only happen if you take the risks of climate change into your business plan. Ensure that all processes appropriately handle current climate changes while increasing profit is a sustainable business. 

Companies may have to educate their business customers on possible financial implications by increasing resource productivity and encouraging new goods and less carbon-dependent services for movement to a low carbon economy. 

By integrating their understanding of the strategy, risk profile and operational imperatives of the company into its decision-making, companies are able to use a three-level approach to add value. 

Table of Contents 

Level Motivation 

Plan and implement measures 

Performance evaluation 

Level Motivation 

At this point, accountants and management can help to identify dangers and possibilities for a company to take action. To obtain the detailed matrix, meet the analytical team and the senior management to discuss the crucial issue of business impacts on climate change. 

Plan and implement measures 

Now is the time for the evaluation of possible alternatives after a comprehensive study of risks and opportunities. Different costs are involved in several efforts to reverse climate change. Cost estimates can contribute to streamlining operations by budgeting items and services that may be influenced by climate change. To update the backend small, a step-by-step approach must be made. For example, if financial sector companies are using a great deal of paper in terms of contracts, changes or so on, the introduction of digitalization may assist to reduce the use of paper, Use dual-sided pressing if printing is necessary and attempt finally inserting QR code, which any user may scan and read on his or her devices. It is also recommended that you educate your customers on action plans on climate change. 

Performance evaluation 

It is very crucial after installation to evaluate progress and performance. Companies can establish many measures including design, administration of data, and control of internal processes. For every firm, setting objectives and evaluating performance using metrics will be straightforward. Your accountant and management’s internal and external audits can provide a full photograph of performance data and financial reporting in the context of the action plan on climate change. 

CBM Accounting is an Accounts & Tax Outsourcing Company in the UK which provides UK accounting companies with sustainable development and profitability. Since over a decade, we have supported UK accounting companies as a trustworthy accounting outsourcing partners and not just as an accountant, but go beyond this to provide them with sustainable development and profitability. 

We have the necessary expertise and experience to offer complicated business solutions to the UK’s accountancy, taxation and payroll services. Contact us now for fast, efficient and inexpensive UK accounts. 

UK organizations should conduct intelligent tax planning and know how companies can pay the appropriate amount of tax they owe. Companies can at the same time follow these easy guidelines to decrease corporate tax. 

Table of Contents 

1. Claim all costs
2. Mobile phone company
3. Salary Director
4. Home benefits work
5. R&D Relief Tax Claim
6. Travel Kilometer Claim

 

1. Claim all costs

Try to claim all the costs you make for business. In the company, even £1 important. Record the little cost your customers are paying for their job to assist lower your corporate tax and therefore minimize stresses. Small expenses such as £3 bus tickets or a £2 paper pad might be a hassle, but these items will be added up over the year and paid up later on in the company tax.

2. Mobile phone company

With the present working environment, it essentially took precedence to remain linked from home. Companies contemplate providing their staff with corporate mobile phones for calling consumers and customers. But the costs of your customers’ mobile devices are tax deduction, which can contribute to reducing corporate income tax. There are several requirements that must be met if a mobile phone is to be made available to the child without benefit (BIK). 

First of all, the telephone must be owned by the company and not by the employee. This implies, when you leave the organization, you must return to the firm. 

Only one functional phone is available for each employee. The director of the company does not matter what the employee is. 

Unable to trade telephone for greater wages. 

Finally, any contract for a mobile device employee should be entered into under the name of the company, payment being made by the firm. It will thus be a good idea to ensure that all workers realize that the contractual limit for phone use must not be exceeded.

3.  Salary Director

Business managers earn salary and dividends payments. A paycheck may be an effective means of reducing corporation tax. As a tax-deductible corporate expenditure to workers, the HMRC recognizes compensation. Dividends should also be paid exclusively from the company’s income and not from tax deductible.

4. Home benefits work

HMRC enables companies to claim certain costs in order to minimize corporation tax for utilizing their personal area as a tax deduction expenditure. 

For work from home allowances there are two options: 

Claim for a flat rate of £6 per week (for the year 2020/21 and £208 for the preceding year, a maximum of £312 per year). 

Rent your limited firm a room at your customers’ personal residence. 

On the personal tax returns of your customers your customers must record their income as rent from the limited business.

5. R&D Relief Tax Claim

We trust you will not lack the tax reduction for the developments made by your customers. 

If your customers produce new or improving processes, product or software, then for every £100 000 spent on innovation it is probable that you may save your corporate tax by around £25,000. Tax savings for research and development benefits may also be available when you have paid for research equipment. 

If the firm is qualified to claim R&D tax credits, it will not only cut the corporation tax bill but also part of it will be returned in the form of tax credits, for example, for certain typical tax-deductible business costs such as wages, supplies, software, and so on. It depends entirely on the size of the firm and on the profit or loss of the company.

6. Travel Kilometer Claim

You can claim your miles to decrease but to a limit your company tax. You can claim your miles. You can encourage your customers to operate their personal automobiles for business travel and can reimburse them a firm set amount of mileage costs if their customers are a small, limited business with few workers. The use of a pool automobile, a business car or a corporate van can also provide the firm some tax savings through capital allowances, but may incur additional BIK taxes to both employees and companies. 

If workers or administrators are using their own private vehicles for commercial purposes, a set fee of 45p/mile is up to 10,000 miles per year. The fixed prices fall to 25 pp per mile after that limit. 

Note: Mileage can be claimed only for business purposes and mileage cannot be claimed for daily travel to your place of work. 

CBM Accounting is an Accounts & Tax Outsourcing Company in the UK which provides UK accounting companies with sustainable development and profitability. Since over a decade, we have supported UK accounting companies as a trustworthy accounting outsourcing partners and not just as an accountant, but go beyond this to provide them with sustainable development and profitability. 

We have the necessary expertise and experience to offer complicated business solutions to the UK’s accountancy, taxation and payroll services. Contact us now for fast, efficient and inexpensive UK accounts. 

Outsourcing is a common notion for many entrepreneurs that employ other companies to deal with labor typically handled within a company. Small businesses regularly outsource payroll management, accountability, distribution, etc., since they have no other alternative. Many major enterprises are outsourced to reduce expenses. Entire industries have emerged to satisfy the outsourcing requirements of corporations. 

However, not many companies are fully aware of the benefits of externalization. Outsourcing is really able to save money, but that’s not the only reason, or even the most significant. As many companies found during the “mania” outsourcing in the 1990s, too much outsourcing may be an even worse error than outsourcing jobs. Many firms were driven into enormous layoffs by the flat economy and were then outsourced to better keep functions inside them. However, smart outsourcing may offer some long-term advantages: 

Costs may not be the main reason for outsourcing, but this is certainly a significant issue. Outsourcing translates fixed costs into variable costs, distributes investments to other locations in your company and prevents big expenses at the start of a firm. Outsourcing can make your company more attractive to investors since you can immediately pour more cash into income-generating operations.

1. Efficiency improvement:

   The research, development, marketing and distribution expenditures of the companies that do these things themselves are significantly greater and must all be passed on to customers. Your company can gain an essential competitive advantage from an external cost structure and economical scalability. 

2. Labor cost reduction:

   Employment and education personnel may be highly expensive in short-term and/or ongoing initiatives, and temporary staff do not always match your expectations. Outsourcing allows you to focus your staff where you most need it. 

3. Rapidly start new initiatives:

   A reputable outsourcing company can begin a project immediately. It may take weeks or months to handle the same project in-house, to recruit, train and offer assistance for the suitable personnel. And if a business involves significant investments in cash (such as establishing a chain of distribution facilities), it might be more harder to start up. 

4. Concentrate on your key business:

   Each company has limited resources and each management has limited time. Outsourcing may assist your organization go from outsourcing to work that serves the client and can enable management to define their objectives more clearly. 

5. Play field level:

   Most small organizations simply cannot afford to match their in-house support services. Externalization may allow small organizations to behave “big” by providing small businesses with access to the same economies of scale, efficiency and knowledge as big business. 

6. Risk reduction:

   A certain level of risk lies in any corporate venture. Markets, competition, public legislation, financial and technological circumstances all change extremely rapidly. Outsourcing providers take and manage this risk in your area of expertise and typically decide far better how to prevent danger. 

Contact CBM Accounting today to know more! 

020 300 20436 

[email protected] 

During bookkeeping and accounting, internal and external providers offer distinct procedures. While we realize that external accounting is not suitable for each organization, it frequently costs less and gives more skill than a typical in-house accounting staff provided it meets the demands of your firm. 

Below we describe some distinctions between what your company may offer in-house and outsourced bookkeeping and accounting. 

Table of Contents 

In-house and external bookkeeping quality and training 

In-house and outsourced accounting internal controls 

Done in-house vs. outsourced financial reporting process 

In-house and external bookkeeping and accounting difference in costs 

How should your business choose the bookkeeping and accounts service? 

In-house and external bookkeeping quality and training 

You want to seek experience and established track records at other companies when you hire in-house bookkeepers and accountants. Screening is crucial when you hire an accountant and bookkeeper, because you might get a self-educated staff. It’s not necessarily a negative thing, but you could be more likely to receive par processing and month-end reporting below. 

Bookkeeping outsourced and accounting services can give better quality and know-how. Experts who receive ongoing training in accounting and technology are normally outsourced service personnel. 

Whether you pick in-house or outsourced staff, ensuring that they are continuously educated helps guarantee that you have accurate, timely financial information. 

In-house and outsourced accounting internal controls 

Proper internal checks guarantee an accurate, timely and properly categorized flow of information into the accounts system throughout the appropriate timeframe. It offers a number of checks and balances which assist to limit the danger of ribbing. 

Your firm has a larger risk of fraud if only one or two people handle your books. The person who pays the bills may be the one who reconciles your bank account and you merely gave them the key for the bank since there is no duty separation. You can steal and hide your path. And until it’s too late, you won’t find out. 

Outsourcing helps to decrease the risks of fraud related to accounts in your organization since tasks are separated and the company’s financial statements are rigorous in taking actions. Most outsourced firms have two eyes, which examine each step in a single account with different personnel levels. There are measures used to verify that there are no inconsistencies or mistakes between one employee and the other. 

Done in-house vs. outsourced financial reporting process 

The financial reporting procedure will rely on particular requirements, the amount of transactions each month, considerations for the industry and many other aspects, for each company. In-house bookkeepers, accountants or controllers can report to your company, but you must guarantee they have the appropriate education, training and training sets to deliver a good month end reporting that is complete and correct. 

Bookkeepers and accountants in the company sometimes have additional duties, such as personnel, that might deprive themselves of their primary accountability time. Collections and financial reports might be rejected if this is done, because it is a priority to enter data, record factors and pay bills. These reports are essential for the cash flow of a CEO or owner and assist make choices which affect the company. 

Outsourcing your accounting can help to reduce your reporting time, inaccuracy, and meaninglessness. You may choose exactly what you need for your organization when you opt to outsource. You typically don’t have to fire them if you have a bookkeeper in your house. 

Indeed, working with an externalized service may frequently increase the effectiveness of current workers by streamlining procedures and educating them in best-in-class policy. You can then report to an outsourced controller who offers supervision and reports your firm needs financially. Financial reporting will be accurate and timely when externalizing because staff are trained, experienced and focus exclusively on their core job descriptions. 

In-house and external bookkeeping and accounting difference in costs 

Cost in the selection of a bookkeeping and accounting service for many small and medium-sized companies is an important element. A total yearly compensation of a full-time in-house bookkeeper is about $45,000 and the full-time pay of a bookkeeper is $60,000. Two employees together cost more than $100,000, which does not take overhead costs into consideration. 

Overhead expenditures add 20 percent more than the basic wage of an employee and include: 

• Taxes Payroll 

• Medical/Benefits 

• Removal Plans 

• Holidays/Healthy days 

• Advertising, screening, testing and training of staff 

When employing an outsourced service, your company will not incur overhead fees. Outsourced bookkeeping and controller services cost SMEs, depending on the services you need, between $2,500 – $5,000 each month. Even in the top spot, at $5,000 a month, your firm would cost $60,000 per annum, far less than the bookkeeper and the bookkeeper. 

How should your business choose the bookkeeping and accounts service? 

It is up to you to choose a bookkeeping service and accounting service that most supports your business’s demands. Bookkeeping and accounting in-house may be correct for some companies, but many firms find it easier and cost-effective to outsource their financial requirements. 

In contrast to most outsourced firms, CBM Accounting is located in the United Kingdom, offering you the experience you need to run a booking officer, a staff accountant and an accounting manager. We have rigorous rules to ensure no fraud risk and our personnel are continuously trained to update them on best practices in accounting. 

CBM Accounting provides operational financial services for our customers on which they can rely. We are specialists in bookkeeping, accounting and control, and provide companies with accurate and timely financial accounts from a staff that you can rely on. 

Contact CBM Accounting today to know more! 

020 300 20436 

[email protected]