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Company car tax: The basics explained (and recent changes you need to know)
The tax implications of providing a company car can be complex-and made even more confusing by HMRC's tax changes.
To help you along, we've put together an article that will guide you through the essentials.
We'll start with the basics, explaining who pays for company car tax and how it is calculated, before we run you through a quick summary of tax rates changes that were announced in July 2019.
Our article will likely answer the key questions that you have surrounding company car tax, but bear in mind that it isn't a substitute for professional advice. If you have further questions about tax and how it affects your business, do reach out our accountants at Forma for personalised advice.
How do I plan cashflow?
Here are a few strategies to better cash flow management:
Be rigorous about updating your cash flow: It can be helpful to update your cash flow whenever there is new information-such as when you've made a payment, or when a client informs you that a payment is coming in late. You'll need to have a system for managing your cash flow, whether that's a spreadsheet or cash flow management tool.
Carry out an in-depth analysis on a regular basis: Carve out a block of time each quarter to carry out an in-depth review of your cash flow. You'll want to assess your overall financial position, and look ahead at your cash flow projection for the next quarter.
Implement milestone payments for extended projects: If you're working on an extended project, consider structuring your payments by milestones-rather than receiving a single payment at the end of the project.
Contractor Accounting Services
We pride ourselves on providing an unparalleled level of support that will make you feel valued, eliminate your admin and ensure you're being as tax efficient as possible.
VAT registration & filing
We'll registered your company for VAT, and ensure VAT is always filed well ahead of the deadline. We will ask you to confirm that you're happy for us to automatically file your VAT without having to approve it which will ensure that we can get this filed as soon as possible.
We'll also help you get setup with a Direct Debit for HMRC so that you can make your VATpayments automatically without having to manually do this every quarter. This saves you time and the stress of ensuring you've paid on time, and importantly will make sure you don't have to pay a penalty for a missed deadline.
We aim to complete your annual accounts well ahead of schedule to ensure you have complete financial records.
You should never have to guess how much corporation tax is due. We'll make sure you know how much is due and when it's due.
We'll make sure to keep your Companies House account up to date and ensure your confirmation statement is filed on time.
We include a Self Assessment with our operate and grow packages and this is also available as an additional £99+VAT one-off charge.
From your salary, dividends, pension, investments and company expenses, we'll help you optimise your tax.
Creating your business budget
Running a business involves catering for many aspects of the business that can bog you down.
You can even forget crucial roles, such as monitoring your small business finances. Although budgeting may not be the best and most exciting part of running an enterprise, it is fundamental for success.
When starting a new business, a budget is a vital part of your business plan. Once the business is open and operational, then budgeting becomes an essential exercise that takes place annually or quarterly.
A budget comprises of fixed and variable costs accompanied by the allocation of monies to reflect business objectives.
How does tax change as a contractor?
The biggest change when working as a contractor compared with say working as an employee is that you will become a lot more aware of the taxes you are paying. This because contractors have a lot more control over their finances and taxes with the added responsibility of making sure this is paid correctly and on time.
How do I receive trading and property income allowance?
"According to HMRC, you can claim trading allowance if you have trading income from:
- Casual services
- Hiring personal equipment
You can claim the property allowance if you have income from land or property.
You won't be able to claim the allowances if you have trade or property income from:
- A business that you or an individual connected to you owns or controls
- A partnership where you or individuals connected to you are partners
- Your employer, or your spouse's or civil partner's employer
You can't claim the property allowance if claim:
- Claim the tax reducer for finance costs such as mortgage interest for a residential property
- Deduct expenses from income from letting a room in your own home, instead of using the Rent a Room Scheme"
How do I find an accountant?
In today's times, you can find an accountant pretty much anywhere you go whether that's walking down the high street or browsing the internet. Take a look at our guide on choosing an accountant to get some tips on what to look out for when choosing an accountant.
How do I pay Scottish income tax?
When you fill in your Self Assessment tax return online, you can check the tick box to inform HMRC that you pay Scottish income tax.
If you're employed or get a pension, your tax code will start with an ‚ÄòS'. This is an indication for your employer or pension provider to deduct tax at the Scottish rate.
See HMRC's resource for more information on Scottish income tax.
How to find an accountant
If you have a company, or are starting one, then you will need an accountant.
Though you could do all your accounts yourself, in practice few business owners have the time.
An accountant also checks that you are doing everything correctly, and is a useful reference for both HMRC and financial institutions should you ever need to apply for a loan.
The trouble is that finding the accountant who is right for you is never easy.
You do not want to pay more than you have to, but are low-cost, self-service, internet-based accountancy packages really the best fit for your business needs?
In this article we shall break down that option and its alternatives for you, as we answer the key questions that are occupying your mind right now:
- Do I need an accountant?
- What should I look for in an accountant?
- How do I find the best accountant for me?
The purpose of this article is to give you the context and background you need to ask the right questions-especially when you may not yet know what those questions are.
What are National Insurance numbers?
The National Insurance number is a number used in the administration of the National Insurance or social security system. It is unique to each individual, and helps ensure that the National Insurance contributions and tax you pay are properly recorded against your name.
What can accountants help contractors with?
The goals for accountant's is to help businesses with tax and compliance duties whilst providing strategic advice to save money and time, allowing the business to focus on it's core activities.
Everyone knows that accountants will complete tax returns and accounts but the very best accountants will go one step further in ensuring the very best for the business.
Bookkeeping vs Accounting Differences
As a small business owner, having a good grasp of your business financials is key-even if you've hired an accountant.
While you can delegate your accounting tasks, understanding the basics will place you in a better position when it comes to discussing your business finances with your team members, financial professionals or potential investors.
Previously, we've explained about the top accounting terms and concepts you need to know. In today's post, we'll explain the differences between bookkeeping and accounting. While these two terms are often used interchangeably, they refer to two vastly distinct functions and roles.
How do I submit a tax refund?
As a self-employed person, you're not required to make a separate claim for a tax refund, as you can claim it through your Self Assessment tax return.
If you've overpaid your payments on account, you can request a refund by completing form SA303.
How do I receive tax free childcare?
To get tax-free childcare, you need to:
What are Capital Allowances?
Capital allowance is an expenditure you can claim on assets you purchase for use in your business.
In addition to the purchase of business assets, you can also claim capital allowances for renovating business premises in disadvantaged areas in the UK, extracting minerals, research and development, patents and more. Further information can be found on the HMRC website.
When Should I Hire a Small Business Accountant?
If you're a self-employed person or small business owner, you might have already asked yourself the question, "Do I really need an accountant?"
When people ask that, they usually mean, "Can I justify the cost of an accountant?"
It seems simple: Hiring an accountant might seem like something you could do without, and if you handle the accounting yourself, you save money.
But that isn't the best way to think about it. The reality is that there are hidden costs associated with DIY accounting, and you don't want to come up short. So instead, ask yourself, "Will hiring an accountant add value to my business?"
The answer is yes.
Below, we'll cover the key cases when you should hire an accountant: