Accountancy Blog

Limited companies – what you need to know

Audits may be a thing of the past, but certain annual reports still apply.

If you’re a business owner, you may be familiar with the process of submitting your accounts for official inspection by an independent body. This is known as an audit.

You may also breathe a sigh of relief as most small businesses are no longer required to get their financial statements audited after the exemption thresholds were increased for financial years that begin on or after 1 January 2016.

However, shareholders can still request your accounts be subjected to an external audit if they own at least a 10% stake in your business. More…

Autumn Budget mentions

A range of measures designed to boost business and productivity were announced in Autumn Budget 2017.

Amid a background of discontent surrounding business rates, chancellor Philip Hammond revealed future increases will be determined by the Consumer Prices Index measure of inflation from April 2018.

The measure comes into effect two years earlier than originally planned and will replace the Retail Prices Index, which determined the controversial 3.9% rise announced in October 2017. More…

R&D Tax credit claims hits new high

Research and development (R&D) tax credit claims by small businesses climbed to £1.345 billion in 2015/16, according to HMRC.

The revenue recently released R&D data for the previous financial year that shows claims increased from £1 billion in 2014/15 to hit another record high last year.

The total number of claims for R&D credits in 2015/16 also rose to 26,225, with SMEs accounting for 21,865 of that figure – up 22% on 2014/15.

R&D tax relief enables businesses carrying out qualifying R&D in their sector to claim an extra corporation tax deduction for certain qualifying expenditure. More…

Class 2 NI – update

Chancellor Philip Hammond has delayed the decision to abolish class 2 national insurance contributions (NICs) by 12 months.

The policy, which was first announced by Hammond’s predecessor George Osborne in 2016, would have seen class 2 NICs incorporated in reformed class 4 NICs from April 2018.

Self-employed workers earning less than £6,025 in 2017/18 can protect their state entitlements, including the state pension, by paying voluntary class 2 NICs at a flat rate of £2.85 a week.

The changes, which form the basis of the National Insurance Contributions Bill, will not come into force until April 2019. More…

VAT threshhold frozen to 2020

Small businesses breathed a collective sigh of relief when chancellor Philip Hammond resisted calls to lower the VAT registration threshold in Autumn Budget 2017.

The Office of Tax Simplification (OTS) made eight core recommendations for the government to clarify the VAT system ahead of the chancellor’s speech on 22 November 2017.

It called the current VAT registration threshold of £85,000 the most pressing issue in its Routes to Simplification report. More…

How is your business performing? – measures to use.

What are the best ways to assess your firm’s performance?

Changing market conditions make it more important than ever to measure your business’ performance on a regular basis.

The impact caused by recent events, such as the vote to leave the EU in June 2016 and the snap general election, have added to the uncertainty felt by business owners around the UK.

Knowing your business’ strengths and weaknesses will help you manage your business efficiently.

There are various tools and techniques out there to help you assess the performance of your market, but knowing where to start can be the trickiest obstacle of all. More…

Reducing corporation tax on patent income

Reducing corporation tax due on patent income.

The patent box regime applies a reduced rate of corporation tax to profits attributable to qualifying patents and similar intellectual property (IP). Unincorporated businesses can’t qualify for the patent box.

The patent box tax rate has gradually been reduced to 10% since the introduction of the regime in 2013 (see table).

To benefit from this reduced rate, your company must:

  • hold a qualifying patent or other qualifying IP
  • receive income relating to that patent or IP
  • elect into the regime.

More…

Apprenticeship levy – offsetting the cost

Almost a quarter (23%) of businesses paying the apprenticeship levy has no understanding of how it works – six months after its introduction.

56% of more than 1,400 firms surveyed by the British Chambers of Commerce (BCC) did not expect to recover their payment, despite receiving an annual allowance to offset against the bill.

As of 6 April 2017, employers with an annual wage bill of more than £3 million must pay the levy towards apprenticeship funding. This levy is charged at 0.5% of the annual wage bill. More…

Investment and Brexit

Businesses are in no rush to make investments amid the ongoing uncertainty of Brexit, according to the Institute of Chartered Accountants in England and Wales (ICAEW).

More than one in four businesses are delaying investment decisions as the government continues negotiations with the EU.

As a result of their collective cautiousness, 61% of those firms surveyed reported a cash surplus in 2016/17 with 64% anticipating similar results from 2017/18.

37% have no plans to invest their cash reserves in the next 12 months, with 49% of those wanting to remain flexible, 32% braced for further uncertainty and 30% citing no investment opportunities. More…

Late payments and cash flow

Two-thirds (66%) of small businesses are feeling the effects of clients who fail to pay their bills on time, research shows.

Banking group Close Brothers polled 900 small business owners and found the problem was particularly serious for 87% of SMEs in Northern Ireland, 73% in London and 72% in the South West.

Late payments have the potential to damage a business’ reputation and harm its credit ratings, which can affect a firm’s chance of securing future funding.

Government figures claim SMEs are collectively owed more than £26 billion in overdue payments. More…