Sherad Dewedi, Author at Shenward

Broadly speaking, accounting is the quantification and communication of both financial and non-financial information concerning economic organisations, such as corporations.

More specifically and in terms of business, accounting is primarily the process of tracking and recording finances in order to keep track of money coming in to, and going out of a company. This allows companies to gain a deeper insight and understanding into their spending, as well as where their money is going.

Accountants themselves are professionals who carry out all these procedures and are also responsible for other tasks such as ensuring that financial data is recorded correctly and generating reports to represent this data in a way that makes it clearer for businesses to understand and interpret.

What do accountants actually do?

Whether the business is big or small, the role accountants play within the business tends to be extremely significant and carries a lot of responsibility.

An accountant will typically work with individual clients or larger businesses and organisations and bear responsibility for a range of finance-related tasks, such as explaining invoices and accounting policies to the client (or various facets of the business), determining payroll requirements, analyzing revenue and expenditure trends, and ensuring that the books are balanced correctly.

Other duties might include preparing and reviewing budgets, monitoring spending so the client can avoid unnecessary expenses, and even business planning.

What role would an accountant play in my business?

In addition to all the typical responsibilities we just discussed, an accountant helps businesses with financial management by recording, tracking, and quantifying data, and using it to calculate how much money they make and spend each month. This includes recording transactions such as invoices, receipts, and payments. They also keep records of assets and liabilities and stay continuously aware of finances in order to ensure that a company has enough money to, for example, pay its bills

Why should I hire an accountant?

No matter the size of your business, hiring a qualified accountant or outsourcing to an accountancy firm is important in order to make sure you are able to stay on top of the company finances, and all other financial affairs. A qualified accountant will be able to help out with reviewing the financial aspects of a business plan, explaining legal business structures, and correctly preparing tax documents, which is likely to save you both money and time.

If you’re running a small business, accounting on your own can quickly become overwhelming, especially when you have other aspects of the business to keep an eye on. Hiring an accountant in this instance can help to almost immediately alleviate some of the pressure you might be feeling. They’ll also be able to assist in areas such as calculating business metrics, which will help you run your business as efficiently as possible.

Equally, you may feel a little bit hesitant to hand over any control of the business you’ve worked so hard on, even though it can be stressful at times. As your business grows, delegating at least some parts may become increasingly inevitable, if only to allow you some time to rest. Choosing to delegate financial affairs can be a good place to start – going with the right accountant will mean you’re able to feel confident that your company’s finances are being well looked after by someone more even experienced than you are and allow you to concentrate on other aspects of your business.

Another reason you might consider hiring an accountant is if you plan to start a new business, or further expand your current one. In fact, accountants can also assist in handling growth transitions, such as hiring employees or deciding to acquire more office space.

Whether you’re a huge corporation or a small startup, the range of services an accountant can offer, along with their high level of expertise and professionalism, means that many of the most critical company responsibilities will be taken care of, completely hassle-free.

Types of accountants

The two primary types of accountants are non-chartered accountants (NCAs) and chartered accountants (CAs). Non-chartered accountants are not required to take exams but do still undergo education and training. Chartered accountants are required to train for up to five years, study intensely and pass a rigorous set of examinations.

Whilst both are permitted to practice as accountants, the key difference between the two is that chartered accountants are typically more qualified and experienced, and may also be a member of a professional body, such as the Association of Chartered Certified Accountants (ACCA).

Beyond these two initial categories, there are many different possible accountancy specialties, such as public accountants, management accountants and government accountants.

How much does it cost to hire an accountant?

It is most common for accountants to charge a fixed fee, and costs really depend on the level of services required, as well as the area in which you need assistance. Just like we’ve outlined, there are different types of accounts, and different types of accountants, so it’s important you choose one you feel is right for you.

Whilst many businesses prefer to pay a monthly fee to their accountant, it is absolutely possible to pay by the hour, or for individual services. You can also mix and match if that suits you. This is another reason why considering which accountant is best for your business is really important.

An initial consultation may be a good place to start. These are usually free and will help to outline the areas that you may want an accountant for.

Looking for an accountant?

Shenward is an established and highly respected family-run chartered accountancy firm, dedicated to providing exceptional client service. We are always happy to help out with any personal or business inquires you may have. Please do get in touch at hello@shenward.com.

HMRC recently announced that to ensure all claims made on research and development (R&D) tax are legitimate, and to prevent abuse of R&D tax credit payments, it will be strengthening its extensive compliance checks.

In this article, we explore why.

Background

£7.4bn is the estimated total amount of R&D tax relief support claimed for the year ending March 2020, an increase of 19% from the previous year. This corresponds to £47.5bn of R&D expenditure, which is 15% higher than the previous year. These newly implemented checks will not only seek to scrutinize any and all claims, but also aid in a better understanding of the scale and nature of errors and fraud associated with these particular reliefs.

Despite allocation of extra resources, including the hiring of 100 supplementary compliance officers, these additional checks mean HMRC’s standard processing time will increase significantly. In lieu of this fact, HMRC has also noted that it is seeking to return to standard processing time as quickly as possible.

What is Research & Development Tax?

Research and Development reliefs are tax credit payments designed to encourage investment in innovation from UK companies. It can be claimed by a wide variety of different companies, regardless of size, who are working on innovative projects that seek to research or develop an advance in their field or resolve a particular uncertainty.

For the work to qualify, it is essential for it to be part of a specific project aiming to make advances in the spheres of science or technology. However, this only applies to the project itself, not to to the company as a whole. The tax credit allows a company’s R&D spend to be recovered, either as a reduction in Corporation Tax or a cash repayment. It is also possible to claim for projects that were ultimately unsuccessful.

What costs can I claim?

Starting from the date you began working on the project or resolving the uncertainty, you can claim a range of costs right up until you discover or develop an advance, or the project comes to an end.

Costs that qualify for R&D tax credits include:

Staff – employee costs including salaries, pension contributions and employer’s National Insurance contributions.
Subcontractor/freelancer costs (up to 65%).
Some types of software, including software license fees.
Payments to volunteers who took part in any clinical tests or trials.

You cannot claim for the costs of rent, capital expenditure, production and distribution of goods and services, or the cost of land, patents or trademarks.

How do I claim R&D Tax Relief?

You can make a claim for R&D tax credit payments up to two years after the end of the accounting period that it relates to.

Essentially, to claim the relief, you need to submit your enhanced expenditure into the full Company Tax Return form (CT600). Following this, you should use the online service to support your claim.

To calculate enhanced expenditure, start by working out costs directly attributed to research and development – remember to reduce any subcontractor or freelancer payments to 65% of the original cost. Add all costs together and multiply the result by 130% – this gives you the additional deduction to put into your tax calculations. Add this figure to the original R&D expenditure cost to get the figure for enhanced expenditure. This is what you must enter into your tax return.

Whilst there is no legal obligation to do so, it’s a good idea to produce an R&D technical report that not only justifies the advancements/uncertainties of the work, but also sets out the eligible expenditure being claimed on a project-by-project basis. The report should also include a short summary explaining the project, the start and end dates of the relevant accounting period, and your 10-digit company unique tax reference number. It may be helpful to speak to an R&D tax specialist when compiling any supporting documents to ensure they cover all necessary ground and to maximise your claim.

What does the ramp up in investigation mean for businesses?

The main consequence of the enhanced investigations is longer processing time for tax credit payments. Despite the standard processing time being 28 days, HMRC currently aims to pay the tax credit within 40 days. This means businesses should be prepared to wait significantly longer to either receive payment or be contacted regarding a claim.

The additional compliance officers working to implement these checks also means an increased level of scrutiny when inspecting R&D relief claims. However, this is unlikely to cause any problems, particularly if the claim has been checked by a qualified and experienced accountant or tax specialist, and all procedures outlined below have been properly considered.

What procedures to follow

It’s important to follow correct procedures when submitting a claim for R&D tax relief to ensure your application goes as smoothly as possible, particularly given the added level of scrupulousness that HMRC is currently fostering.

When putting together your claim, there are several points to consider in order to ensure it will meet the required standard. Make sure all entries are completed on the R&D section of the corporation tax return (CT600 form) and stay up to date with the latest guidance on completing the CT600 form on gov.uk.

Submitting any and all additional information to support the claim, including the R&D report, will help HMRC process the claim quicker, reducing any potential additional processing time. And finally, be aware that if a claim is submitted that is incorrect, inflated, or fraudulent then you may be liable to a penalty.

Get in touch

Compiling tax relief claims can be overwhelming. If you need to discuss any aspect of the claims process for R&D tax relief, or anything specifically regarding your claim, please do not hesitate to reach out to us at hello@shenward.com.

In a post-covid world, where working remotely and ditching the physical office has become something of the norm, many are asking whether using a virtual office for their registered business is the next step.

In our view, using a virtual office is the final piece in the remote working jigsaw.

Why? Well, it removes the need for a costly physical office space for a start – and as we are constantly faced with the increased cost of living, keeping overheads low is a priority.

Furthermore, using a virtual office allows you to maintain professionalism and manage people’s perceptions of your company size because you’re provided with an actual business address, not a residential one.

Of course, there’s more to it than meets the eye. But, if you’re interested in finding out more about using a virtual office for your registered business, read on as we guide you through it.

What is a virtual office service?

A virtual office is basically what it says on the tin. An office which exists virtually. That means you get the office address, the telephone line, and office related services, without the need of having to pay for a physical office.

How does a virtual office service work?

A virtual office service is usually offered by a company which exists to provide a mailing address and registered office location for businesses who don’t have a physical office.

It’s usually a company which owns its own building and offers the address out legally for businesses who want to have a registered address.

You usually pay a small monthly fee to the company and in return, benefit from the use of the address, mail hub and sometimes even a telephone line. You are then legally allowed to register your business at that address with Companies House and across all your socials and website.

Beyond this, some companies even offer professional meeting spaces for virtual office customers – this is mostly provided by coworking spaces who have a virtual office service.

What are the benefits of using a virtual office service?

The biggest benefit, as we’ve already alluded to, is the cost reduction. No more large office overheads. No more large electricity and internet bills. It’s a no brainer.

However, there are also many other lesser-known benefits to using a virtual office service.

Professional image

Despite remote working becoming the norm, having a physical office address that isn’t residential still holds weight in the business world.

It’s perhaps something which may change over time, but right now, businesses looking to do business with other businesses still perceive those with actual office addresses to be more credible and trustworthy.

It’s a point for debate as to whether this should be the case, but we can’t ignore the fact that it’s a perception many hold. With a virtual office service, you’re given an official business address rather than a residential, but without the cost.

On hand receptionist

When running a business, you already wear multiple hats. Why also take on the role of a receptionist?

Most virtual office services offer call and mail handling. This means, you can focus on other areas of the business with the peace of mind that a professional is answering your calls and dealing with important mail.

It supports SEO

An often-forgotten key advantage of using a virtual office is the address – as the registered address of the business is an ‘SEO geolocation’.

This may seem obscure, and tech nerdy, but it is important. Because many online services still benefit from the ‘near me’ feature in internet search engines. Therefore, this allows prospective clients or business partners to seek out targets based on where they are located.

So, with a virtual office location, a business will appear to be located in a particular address, surrounded in turn, by potential clients. As all forms of business are becoming increasingly digital, the value a well-placed SEO geolocator pin brings should not be overlooked.

Professional meeting space

When meeting new clients, you are unlikely to want to hold a meeting at your home. Yet meeting up at a Starbucks or Pret is not always attractive either. In some virtual office situations, you can access formal meeting spaces, where clients will feel comfortable and relaxed. And it gives you the opportunity to get out of the house into a change of scenery.

Virtual Office Service for Overseas Businesses

Virtual office services are popular amongst business outside of the UK who wish to do business in the UK without purchasing an office.

You see, it’s a legal requirement to have a registered business address in the UK if you wish to do business in the country. This must be displayed on Companies House.

The reason virtual office services are popular therefore, is because foreign businesses can pay for a UK address without having to invest in and open a physical office space.

Shenward Virtual Office Service

When it comes to choosing the right virtual office package for your business, there is much to consider It’s important you understand what services and facilities your company needs to support day-to-day operations. For example, a manned reception desk to handle any administrative tasks, such as signing for mail or answering phone calls.

Here at Shenward, we meet the challenge companies face by offering a unique provision, extending our Company Secretarial Service to offer a virtual office service. This means, in short, offering businesses the opportunity to reduce business costs permanently through a professional virtual office service. It is a clear win-win proposition.

Our virtual office service comprises of a smart and professional UK office address, a local telephone number and a personal receptionist to handle calls and take messages and mail handling. Local telephone numbers with any UK area code and even international can also be arranged.

And, if you are an overseas business looking for further support to remain compliant, you can choose to benefit from a full finance function: this includes a dedicated bookkeeper to take care of the management accounts and tax, as well as a virtual company secretary to ensure the legal requirements of the Companies Act are met. Virtual working may well be the future of work and with a virtual office the future of business could be even brighter.

The non-domicile status entered the spotlight last month when it was revealed that Rishi Sunak’s wife had claimed non-domicile status.

However, despite the headlines and controversy surrounding her claim of non-domicile status, the truth is that is not a tax avoidance scheme.

Claiming non-domicile status is in fact something that should be considered if you are eligible. It is perfectly legitimate for those who meet the criteria, and with proper and optimal structures in place, has great benefits to the economy. Should the eligible non-dom person bring business to the UK, they are providing more employment, and with that comes more income tax paying citizens, thus helping the national economy, rather than deceiving it.

With that cleared up, here is all you need to know about the non-domicile status.

What is non-domicile status?

Non-domicile, or non-dom as it’s often referred to, is a tax status that allows people who were born in another country to only pay tax on their UK income.

The person is a UK resident, however, their permanent home – or domicile – is outside of the UK. With this comes the allowance to only pay UK tax on money that is earned in the UK, with any earnings made in different countries not being taxed within the UK – unless it enters a UK bank account.

There are two ways a person can become a non-dom.

If you are domicile of origin, meaning you were born outside of the UK, or if your father came from outside of the UK.

If you are a domicile of choice, meaning you are over 16 and choose to leave the UK and live in another country indefinitely.

What are the rules for non-dom status?

You do not have to pay UK tax on your foreign income and gains if they are less than £2,000 per tax year, and if you do not bring them into a UK bank account.

If those two clauses apply, you do not have to do anything, and can freely have a non-dom status.

However, if your foreign income and gains exceed £2,000 per year, you can either pay UK tax, and sometimes be able to claim it back, or claim the ‘remittance basis’. This means that you only pay UK tax on the income you bring to the UK, but you lose your tax-free allowances for income and capital gains tax and must pay an annual charge if you have been a UK resident for a prolonged period.

If you have been in the UK for at least 7 of the last 9 years you must pay £30,000.

If you have been in the UK for at least 12 of the last 14 years, you must pay £60,000.

This can be a very complicated claim, and it is imperative to receive proper financial advice from your accountant before making your claim to ensure you are both compliant with UK tax laws, and that you are choosing the right option for your personal circumstances.

What if I work abroad and in the UK?

If you work both in the UK and abroad, there are different rules to adhere to.

If you receive the foreign worker exemption, you do not have to pay tax on foreign income. To qualify for the foreign worker exemption, your foreign income from an overseas job earns you less than £10,000, with your other foreign income, for example, bank interest less than £100. Furthermore, your UK and foreign income will combine to be within the basic rate income tax band, and all of your foreign income will be subject to foreign tax.

If you qualify for the foreign worker exemption, you do not need to make an application to claim, so long as your incomes fall within the above remit.

Non-domicile Tax Planning

Non-domicile status is complicated, making it difficult for tax planning if you are unfamiliar with the details and laws in depth.

Planning the right route for your non-domiciled status in the UK can help you achieve significant tax savings whilst still remaining fully compliant with UK tax laws.

However, because the advantages are so clear, some bad apples do try to slip through the net, which is why it is imperative you take time and consideration to make sure you are doing everything right.

It is important to keep up with the laws and compliance, as your status may be subject to change year to year, especially the longer you take up continued residence within the UK.

Non-domicile status and Inheritance Tax

Of course, the issue of foreign income naturally arises questions of inheritance and how it may be taxed.

Ultimately, your foreign wealth is not subject to Inheritance Tax until you are domiciled within the UK.

People are advised to place their foreign wealth into a trust before they become domiciled to stop their wealth from being subject to inheritance tax. Once assets are placed in a trust, they are ring-fenced from Inheritance Tax.

Consult a non-domicile expert

We cannot emphasise enough how imperative it is that you consult a financial expert when looking at claiming non-domicile status.

Incorrect dealings with non-dom status’ can lead you to face severe repercussions, such as hefty fines or even a prison sentence, if HMRC deems your status to be fraudulent.

Experts are on hand to make sure you are handing over the right details about your status and making the correct payments based on your residential status and level of income.

We are happy to advise on your domicile status, get in touch today to see how we can help at hello@shenward.com.

The cost of energy has risen significantly in recent months and whilst there’s a heavy focus on how individuals will cope, business owners are also in need of answers as to how to manage rising energy bills.

As a business, you cannot just ‘switch off’ to reduce your bills. You have a responsibility to create a comfortable working environment for both employees and customers. So, you need an alternative way to manage rising energy bills.

The good news is, there are options for businesses looking to manage rising energy bills, meaning you may in fact be able to alleviate some of that financial pressure.

Let’s explore.

Check-in with your current energy provider

With prices rising, many providers are finding ways to work with their customers to retain their loyalty through this difficult period. You may be able to arrange an alternative payment plan to spread out the cost of your energy bills over an extended period.

Also, some providers do offer schemes or grants to help businesses facing hardship, so it’s definitely worth picking up the phone and seeing what your provider can do to help you.

Shop around for lower prices

Whilst prices are rising for all providers, it could be smart to shop around and see if you can reduce your energy bills by switching providers.

The commercial sector doesn’t offer price caps like seen in domestic energy, but because many providers offer perks to new customers such as newcomer discounts, it may still be worth shopping around to see what offers are out there.

Price comparison websites offer a comprehensive list of suppliers and their prices, but they are subject to change, so it is worthwhile checking different comparison websites.

Improve energy efficiency in your business

Improving your business’s energy efficiency isn’t only great for the environment, but the more energy efficient your business is, the less you will spend on your energy bills.

There are larger and more timely investments you can make to strive toward energy efficiency and lower your carbon emissions, which we will move on to, but in the meantime, there are quick and easy measures you can take to immediately alter your energy efficiency:

Reduce your thermostat by 1C: Reducing your thermostat by as little as 1C, can drastically improve your energy bill. Many buildings run at a higher temperature than necessary to work in a comfortable environment, and overheating is costly. The Carbon Trust found that increasing your thermostat by just 1C can in fact increase your bill by 8%!

Switch light bulbs: Old filament light bulbs are notoriously less energy efficient, but unfortunately many people are unaware of this. Particularly for businesses, where people may operate in buildings at all hours, lighting is a large proportion of your energy consumption. Making a simple move to LEDs or halogen light bulbs is much more energy-efficient, and lasts longer too, making them more cost-effective.

As well as considering switching light bulbs, it’s also important to switch off lights. Not all rooms need to be lit all the time. Bathrooms and utility rooms, for example, may only be used for a minimal portion of the day, meaning having them turned on is a huge waste.

Installing sensors is a great idea, or simply encouraging people to turn off the light when they leave a room will help reduce your business’s energy consumption.

No more standby: It’s easy to place equipment on standby when they are not in use. For example, putting computers on standby in the office overnight – but doing so is costly. Making sure everything is turned off after use is a good way to ensure no energy is being wasted. To put it into perspective, keeping a computer on overnight can cost a business £11 a year per computer, which for a larger office is a huge expense.

Seek Government support

Of course, we have already addressed that the government has not offered any immediate support to help with rising energy prices, but other grants and schemes are available that can in fact help fund energy.

Regularly check what grants are available in your area, to find out what additional support your business is eligible for. There are currently grants and schemes available across different regions to help with energy efficiency. For example, many regions such as the West Midlands, Suffolk, and Tynes Valley regions currently have respective grants available of between £20,000 and £100,000 to fund energy efficiency audits, as well as grants for the installation and purchase of works to aid in lowering emissions and energy consumptions.

New grants and schemes are added regularly, so checking to see what is available in your region could drastically help your business not only save money on energy bills but become more sustainable.

Visit the government website to search for options near you.

Lower carbon emissions

Energy efficiency is intrinsically linked to reducing carbon emissions. Though it is a long process in working to become a zero-emission business, it is something we should all be working towards collectively.

The government is actively incentivising businesses to reduce their carbon footprint in line with the UK’s goals to be net-zero by 2050. To help businesses work towards this goal, there is government assistance available. For example, many businesses can claim capital allowance when purchasing equipment which will help your business lower their carbon emissions.

This will not only help the environment, but they will seek to lower your energy bill as well as being more tax efficient.

We can help you too

We know that managing your energy bill is a stressful task, particularly because of rising costs across the board.

But as you can see above, there are many options you can take to help manage and lower your energy bill both immediately and in the future with investment.

At Shenward, we are always here to help, whether it’s to discuss overheads or to find eligible grants. Contact us today at hello@shenward.com to receive dedicated support.

Last week, Chancellor Rishi Sunak delivered the Spring Budget 2022 to the commons and as expected, it’s been widely reported on.

Amid rising inflation and cost of living, some of the points highlighted in his statement were highly anticipated – many had already speculated what Sunak would announce and hoped for good news to alleviate some of the financial burden put upon the British public.

But was everything announced really that supportive? And what does it really mean for businesses?

Let’s take a look.

National Insurance Contributions… To rise or not to rise?

There have been many calls for the chancellor to scrap the increase in National Insurance and Dividend Tax that was planned to be implemented from April 2022.

However, in the Spring Budget 2022, Sunak actually announced that the plan to increase both taxes by 1.25% points will still go ahead. And, it’s on track to become the norm as The Health and Social Care Levy at some point in 2023.

National Insurance wasn’t completely left out of the statement though, with Sunak announcing that the threshold for Class 1 and 4 National Insurance will increase from April 2022.
This means that the threshold for National Insurance Contributions will be £12,570, in line with the Income Tax Threshold – a slight improvement for employees.

Fuel Crisis help

Sunak acknowledged the rising cost of fuel in the Spring Budget 2022 and announced that the fuel duty will be cut by 5p per litre until March 2023.

Whilst this has been announced to help alleviate the cost of fuel that is ever rising, experts have warned that this will only help the British public if gas retailers do not use it as an opportunity to make more profit on the fuel – keeping costs high. We for one would like to see some regulations in place to ensure this doesn’t happen.

VAT for energy efficient equipment

Perhaps the most talked about announcement following the budget; homeowners installing energy efficiency materials such as solar panels, heat pumps, or insulation will see VAT cut on these items from 5% to zero for the next five years.

Support for businesses

Much of the statement focused on the cost of living and therefore was more relevant to personal income as opposed to businesses. However, Sunak gave certain insights into his plan for continuing to help businesses out of the unprecedented times they have faced.

The Chancellor announced that the employment allowance will be increased to £5,000 from April, up from £4,000. This will help businesses and sole traders with one or more employees who are liable for Class 1 National Insurance Contributions, in the hope of alleviating business owners’ rising liabilities. We’d certainly have appreciated additional measures being introduced for our clients. But perhaps the future holds further announcements?

Looking to the future

The Spring Budget 2022 put a greater emphasis on deferred plans set to take effect from Autumn, as opposed to this April. This suggests we must keep looking forward and hope that further opportunities and support will arise for businesses.

In other positive news, Sunak did announce his plan to cut income tax by 2024. The plan would cut the basic rate income tax to 19%, down from 20%. Whilst this appears to be a minimum cut, it could benefit 30 million people who could each save £175.

Furthermore, Sunak announced his intention to overhaul the Research and Development credits to help create a “new culture of enterprise”. The plans will seek to help incentivise UK businesses to innovate in a more globally appealing manner. Moving forward, data, cloud computing and pure maths will be eligible within the schemes. Again, this change is most likely to come into effect following the Autumn Budget.

Our reaction

As expected, the NI hike from April 2022 will be implemented however the impact will be largely offset by the increase in the NI threshold. This will mean that anyone earning less than £35k per year will pay less NI – which is around 70% of workers.

Those who earn more will see a tax rise, albeit smaller than expected. Employees earning £20k per year will see an NI cut of £180 instead of an increase of £90, which is positive.

Unfortunately, this relief does not extend to employers, whose payroll costs will increase by 1.25% of all salaries over £9,100 at a time when they are already struggling with labour shortages and wage inflation, raw material price inflation and the escalating cost of energy.

The 1% reduction in the basic rate of income tax before the end of Parliament, in our view, is largely political. There are several variables that need to land safely before this will be substantively enacted.

There will be significant additional spend on HMRC compliance activity, targeted in particular towards large and medium sized businesses. This is projected to raise £3 billion in extra tax over a 5-year period. However, under the badge of simplification and fairness, a review will be undertaken of tax reliefs and allowances – the implication being that some of these may be abolished. As a firm, we were not expecting any changes to the capital gains tax regime, but we were aware that a number of people were concerned about it. Fortunately, the 20% capital gains tax rate and the £1m Business Asset Disposal Relief limit remain intact for now, although this could be one of the reliefs that is ‘reformed’ to pay for the income tax cut in 2024.

Final thoughts

We know the immense pressure that businesses are under right now, especially amid the ongoing and upcoming changes.

The Spring Statement may not have been delivered with the business owner in mind, but with Sunak’s future plans outlined, we can continue to plan for the future with hope that support is on the horizon.

As always, if you require any support with these upcoming changes, do not hesitate to contact us at hello@shenward.com.

In honour of International Women’s Day, we spoke to Simone Lewis, a wonderful accountant at our Leeds office.

Simone shares her thoughts on what International Women’s day means to her.

“To me personally, International Women’s Day is a day that celebrates women who have overcome prejudice and achieved their ambitions, whilst also bringing into the open these issues on a wider platform – both inside and outside of the workplace.”

What are your career ambitions?

I have wanted to be an accountant since I was 14 years old. The thing is, as I grew up and told people of my ambitions, they always looked at me in surprise. What is most surprising is that people still look at me like that now. Although it does not happen as often, I have always wondered whether it’s due to my gender.

How did you overcome barriers to get into accounting?

I did not take the ‘traditional’ path into accounting. I have worked within the profession since I was 16 years old – although for a while away from practice – but it was not until I was 31 years old, that I had the courage to start working towards my goals. By this time, I was married and had two children – the youngest being 10 months old. I worked full time and went to college after work twice a week to study.

It was very difficult at times, trying to juggle everything. But, because it’s what I wanted to do, I kept pushing and studying – knowing that it would all be worth it.

There were many times people told me to give up. How can a mother have the time to work, look after children, AND study? Would they have said the same if I was a man? I honestly don’t think they would have. I qualified in 2005, proud not only of my achievements but that I rose above those who doubted me and followed my dream rather than their poor advice.

How is it for you now?

It was all about finding the right company. Shenward is genuinely the best place that I have ever worked – I promise I have not been paid to say that!

When I started at Shenward, I was responsible for basic bookkeeping and accounts, and since then I have progressed massively within the company.

Unfortunately, many women are still overlooked when it comes to promotion, despite being ideal for the role. There is a particular stereotype in the financial industry: that it is a man’s game, but this could not be further from the truth.

I am lucky to work for a company that credits hard work and expertise. Since 2019 I’ve been the lead on self-assessments at our Leeds office. In 2022, Shenward supported me with my financial advisor studies and then in 2023 I was promoted to Senior Accountant. This year, I am being supported with additional courses and subsequent exams. The truth is, in many other workplaces I may not have been promoted or been given the opportunities I have at Shenward, not because of my lack of experience, but because of my gender.

I have worked for companies where I was never given the chance to progress, and what’s worse is that given my age in many other companies I certainly would be overlooked now. I am a woman of a certain age, but that does not mean I cannot exceed expectations! My age is a testament to my experience, not a ticking clock. Shenward recognises talent for what it is. I know when anyone is offered a role or promotion, it is because they are brilliant at what they do. That is a credit to our leadership, who help and encourage employees at all levels to reach their potential and progress in their field.

What message would you give to others?

The fact that I have progressed so much in this profession is an achievement in itself, and proof not only that hard work pays off, but that hard work will be recognised for what it is – by the right people.

There is one thing I would like to get across to all women, no matter their career, or path: No matter what your ambition is, never give up. I know how difficult it can be, but you can achieve your aims if you surround yourself with the right people.

Making Tax Digital might seem like just a buzzword, but with the shift to mandatory digital accounting coming in April 2022 for all VAT-registered businesses, the doors are closing in fast. Now is the time to ensure you’re fully equipped with the right software.

Why the rush? If your business fails to comply within the required time, penalties will be put in place, such as:

Having a default recorded which is also included when missing a filing.
Entering a surcharge period for 12 months if you fault again.
A point system in which we later discuss if further faults occur within the twelve months.
Lastly to which the points translate into an increased percentage of surcharges for each accumulated default. (Starting from 2% – 15%)

There is still time to get prepared, however, and we’re here to guide you through what you need to know about Making Tax Digital and how to find the right software for your business.

What is Making Tax Digital?

Making Tax Digital (MTD) is a regulation brought in in April 2019 and is a key focus of the Government’s plan to make it easier for businesses – as well as individuals – to keep track of their affairs and taxes.

Currently, the regulation states that all VAT-registered businesses who have a turnover of £85,000 or more are required to keep all VAT and business records digitally and by law have to submit their tax returns via a software which is MTD compliant.

However, changes are coming. As of April 2022, all VAT-registered businesses, regardless of their turnover, will be required to follow the same rules under MTD for their first return. That’s why any VAT-registered business needs to get ahead and choose the right MTD compliant software before this date.

The Importance of Choosing the Right Software

There is a whole host of accountancy software to choose from, each which provides different features. Aside from the cost implication of choosing the wrong one, choosing the right software is vital when trying to get your head around a new process like this.

When exploring, you need to properly assess and evaluate the software to understand which meets your business needs and still meets the MTD requirements.

HMRC won’t allow for just any software to be used, so it’s better to find out as soon as possible whether the software you’re considering is MTD Compliant.

Here are the compliance regulations the software needs to meet in order to meet MTD regulations:

The software needs to be able to record your business’ details and all your VAT-related transactions for up to six years.
The software also needs to include the date and additional information regarding any VAT paid or withheld for each transaction.
It also needs to calculate what VAT you owe based on your incomings and outgoings.
Lastly the software needs to be able to submit your VAT return directly to HMRC via an API also known as an application programming interface.

HMRC has also created a list of MTD compliant software which is worth a read.

Key factors to consider when evaluating MTD software

Flexibility & Adaptability

Both factors are vital when it comes to the software you choose for your business as it can affect how your business functions.

You should always consider how the product can adapt to your business and how it meets the needs of your businesses tax requirements both now and in the future.

Consider also any global transactions and whether the software would meet international criteria. Rules surrounding this change from time to time and you need software which can quickly adapt.

Implementation Speed

As the deadline is creeping up, you need to be looking at what the turnaround time for implementation is. How quickly can your solution to MTD be deployed and integrated within your current business infrastructure?

Many businesses tend to have their own unique process already in place and when looking into new software you’ll need to make sure that the software vendor you are going with has the expertise to ensure the transition goes smoothly.

User Experience

Choosing a software that is easy to grasp and navigate shouldn’t become a major barrier for your business. That’s why when it comes to choosing any software for your business, always question if the software is easy enough for not only you to understand but also the employees that will be utilising it.

A good way to look into the user experience of software is to see how customisable it is to your business and how well it can integrate into the existing software you use.

With tax technology the main idea is to simplify your role as much as possible whilst still meeting legislative requirements. Due to the pandemic many of us still work from home or have a hybrid work style which means that the software should be able to offer the same experience and functionality from home as it does from the office. This is where cloud technology and its security come into play.

Maintenance

When dealing with software there are always small bugs or issues that may appear at some point later down the line, and so before committing to any software you should always look and assess at how much IT support it will require during and after the implementation.

In order to do this effectively, it’s best that you inform your IT department and ask for their guidance on software which doesn’t require a mass amount of work or money to maintain.

Support

With software vendors, support is vital. If there is lack of support or no support provided, it could potentially cost your business a substantial amount of time and money if anything was to go wrong.

In order to get the best support, especially when dealing with tax software, it’s best to audit the vendor. Due to the complexity of tax it’s good to see if their team is a balance of software engineers and tax experts. If their employees are mainly all software engineers, do they work in partnership with tax experts to provide the support needed for your business? The better support the vendor has the better it is for your business in the long run.

Does KashFlow fit your MTD needs?

If you are in the current process of looking for a fast, efficient and reliable solution for Making Tax Digital then why not check out our software KashFlow.

KashFlow is a Making Tax Digital compliant accounting software that is designed for small businesses and is developed here in the UK.

Its simple layout makes it easier for your employees to use, saves time and reduces training costs, thus allowing your accounting to run as smoothly and efficiently as possible.

From generating VAT returns quickly to generating email invoices, it provides the flexibility many businesses need. It even has a mobile app for iOS and Android for on-the-go management.

Speak to us at hello@shenward.com for more information.

2022 is set to be a year of financial changes, particularly where tax and national insurance is involved.

As always, we want you to be as prepared as possible and have instant access to digestible information. Below, you’ll find a list of all upcoming changes planned this year, with insight into how it may impact you.

National Insurance Changes

From April 2022, the National Insurance threshold and rates are due to change. This is in line with the government’s plan to introduce a health and social care levy – an effort to help tackle the NHS and social care crisis.

This means that the increase will be included in National Insurance from 2022, but the government plans to make it a separate payment as of 2023.

National Insurance Contributions (NIC) rates are set to rise an extra 1.25% from 6 April 2022. Thresholds are also set to change, with the lower earnings limit increasing 3.1% in line with inflation (at the time of the Autumn Budget).

See the table below to see how this change will affect you.

Dividend Tax Rates

The dividend is subject to a similar increase as National Insurance. Dividends will also be increased by an extra 1.25% from April of this year. If you are subject to dividend tax, see below how the changes may affect you.

Income tax band	2021/22 rates	2022/23 rates
Basic	7.5%	8.75%
Higher	32.5%	33.75%
Additional	38.1%	39.35%

Inheritance tax changes

At the start of the year, new rules came into force for reporting inheritance tax.

The rules around what can be classed as an excepted estate have changed for the estates of those who have passed away on or after 1 January 2022.

The new rules aim to reduce the reporting that excepted estates are required to do, extending the definition of an excepted estate.

The new rules include:

Raising the threshold value to £3million, up from £1million.
Raising the limit of specified lifetime transfers to £250,000, up from £150,000
Raising the time limit for HMRC to request additional information from personal representatives to 60 days.
Allowing cases where available IHT threshold was used when the first partner in a marriage or civil partnership passed away first, being able to claim for the unused percentage to be made available with the current estate.

Vehicle Excise Duty (VED) changes

Vehicle Excise Duty, more commonly known as road or car tax, is set to rise from April 2022 in line with inflation.

The cost of this tax is dependent upon your vehicle, such as its age and how environmentally friendly it is.

Vehicle Co2 emissions produced per KM	Current rates	Rates from April 2022
Over 255g /KM	£2,245	£2,365
Between 226g – 255g /KM	£1,910	£2,015
Between 76g and 90g / KM	£115	£120

Remember some vehicles are not subject to the charge of VED. This includes vehicles that produce zero emissions, cars registered between March 2001 and March 2017 with Co2 emissions of 100g/Km or less, and cars that are over 40 years old. It is important to note that these vehicles still have to keep paperwork up to date every year, just minus the charge.

Capital gains tax changes

This change actually came into effect following the Autumn Budget in October 2021.

The new rule is in regard to the reporting of capital gains tax. With properties sold on or after 27^th October 2021, those who make a capital gain after selling a second home, or a buy-to-let property will now have 60 days to submit a residential property return to HMRC of the gain. Previously, the allotted time to submit the return was within 30 days of the gain being made.

The change to 60 days was announced following the recommendation made by the Office of Tax Simplification who warned many people were not aware of the reporting requirement until after their property had sold, meaning many were acquiring unfair fines. Doubling the allotted time allows for people to have an appropriate amount of time to submit their return.

Be Prepared

It’s always important to stay aware of upcoming changes so you have plenty of time to prepare for any increase in your liabilities.

If any of these upcoming changes affect you, it is important to ensure you have the right kind of cash reserves in place to feel less of an impact when that time comes.

If you need to discuss these changes in further detail, or have any further questions, do not hesitate to contact hello@shenward.com. We are always happy to provide support.

Managing a business means you probably have 101 things on your to-do list every day, and organising your business finances usually takes a back seat until there is a need to.

Running a business is hard and staying organised can be difficult, but organising your business finances can actually take the pressure off, making other areas of your business run a lot smoother.

Why? The correct management of your money is what ultimately secures your business’ success, and that’s why we’re giving you eight tips designed to get you started with organisation today.

Separate business and personal bank accounts

This is the number one priority when it comes to business finance. Keeping organised is difficult anyway, but when your business transactions are mixed with your personal ones, you’re making things more difficult than they have to be.

Having a separate bank account for your business makes it easier when it comes to working out your taxes. Not only that, but the monthly bank statements you receive from your separate business account will enable you to get a clearer picture of cash flow.

Track your income

Tracking your income means keeping a note of all incoming business related revenue – that’s received and due to be received income. Knowing how much money you will have coming in will allow you to understand the limitations and opportunities of your budget, as well as supporting forecasting.

Many smaller businesses begin tracking their income on spreadsheets, but with the advancements of cloud accounting software, there are many apps that can make your life much easier (and organised!).

Apps such as Xero and Quickbooks, or our own app KashFlow, allow you to view your income and cash flow over different periods. These apps can also be useful as your accountant (should you have one), can be granted access to your accounts.

Track your expenses

It’s never a bad idea to keep a track on where your money is going. If you are not aware of your outgoings, it’s very easy to become disorganised and overspend.

Tracking your expenses isn’t only an organisational tactic, but a money-saving one too. Some of your expenses will be tax-deductible, such as travel expenses, so it’s always a good idea to have a clear structure for expenses organisation.

You can track your expenses with all the apps previously mentioned, so it doesn’t have to be a manual process.

Be strategic with how you receive payments

Ultimately your business, beyond your overall purpose, was set up to generate revenue for either a cause or for yourself.

That’s why deciding on the most efficient way to receive payments can help to ensure revenue continues to come in as expected.

If you sell a service, for example, it is important to sort out how often you will invoice your clients, and what methods of payments they can use. Direct debit payments for regular clients are a fantastic idea and can help keep you on track with your forecast.

Set aside money

We’re sure you’re aware of the importance of budgeting when it comes to organising your finances, but are you aware of the various tools you can use to set aside money for various outgoings?

Banks like Starling have created spaces within your account where you can separate money from your general balance to account for things like VAT, Tax, and even bonuses for your team at the end of the year.

If you don’t bank with Starling, that doesn’t mean you don’t have options. Check with your bank to see what’s available – you may just be surprised.

Make time to organise

The problem with running a business is that there is always something more important to be doing, and setting aside time to do admin is a mean feat.

However, setting aside even a small amount of time each week to get on top of your finances will work out better in the long run.

Spending half an hour to an hour every week sorting out receipts and invoices means you won’t become overwhelmed.

Not great with planning time? Try time blocking https://todoist.com/productivity-methods/time-blocking.

Go digital

Having loose papers everywhere can put even the most organised of people at risk of becoming disorganised.

Digitising your financial records and accounts makes it much easier to access and organise your documents, and reduces the risk of things slipping by the way.

We understand many business owners like to keep hard copies in case of emergency or fault, but unless it’s vital, it’s just an additional thing to manage. If it is vital to keep copies, make sure these are filed strategically and stored in a safe place.

Seek Help

Sometimes, the best way to stay organised is to seek the support of an expert who lives and breathes organisation.

Consulting with an accountant, financial advisor or a VA for example will not only save time and money in the long run, but it will also help you to develop the right level of organisation specific to your financial needs and concerns. As always, if you require our assistance here at Shenward, do not hesitate to get in touch. Email hello@shenward.com