FAQs

Yes, if you feel confident using the bookkeeping software. Otherwise, a member of our team will complete this for you at £35.00+VAT per hour – timings vary depending on the transactions.

Yes, you can do so via Companies House if you feel confident. Some clients find it easier to complete this in-house, but we are always happy to help.

Yes, you can do so via Companies House if you feel confident enough. However, we do not recommend this as clients often miss crucial information and tick the wrong boxes.

Unfortunately, not. Every company is required to file the accounts by the filing deadline, failure to do so will result in late filing penalties from Companies House and HMRC.

Yes, as long as the full amount is paid by the deadline. If you cannot pay by the deadline, we recommend you contact HMRC at least a month before the deadline to arrange a payment plan.

Ensuring that you have claimed all possible business expenses and allowances will help to reduce your corporation tax bill. We are happy to review accounts to ensure you have claimed all that you potentially can.

We’ll need to know some more about your circumstances and the company’s profitability before we can advise on the most tax-efficient salary level for you – get in touch with a member of our team.

At the end of every month, you will receive a payslip from us if we’re preparing your payroll. Once this is received, transfer the next salary from the business account to your personal account on payday as indicated on the payslip.

You are still required to file either a dormant account or a full account with Companies House. As for the corporation tax, this needs to be filed too. Alternatively, you can call HMRC to inform them that the company is dormant and they will update their records.

Our fee is based on the level of expertise and work required to complete the accounts, as such, it is a fair fee. However, if you think it’s higher we would be happy to review this for you.

We’ll need to know some more about your circumstances and the number of employees in your business before we can advise on the most tax-efficient salary level for you – get in touch with a member of our team.

This is the same as the corporation tax due date, nine months from the year-end date. However, during the first year, this is nine months from the 12 months after incorporation. We will remind you of the due date after each year’s end date.

The deadline to pay the corporation tax is nine months from the year-end date. However, during the first year, this is nine months from the 12 months following incorporation. We will remind you of the due date for corporation tax annually after filing your accounts.

We find Xero and FreeAgent most user-friendly; however, we do work with other bookkeeping software such as QuickBooks and Sage.

Accounting profits are often different to taxable profits; refer to the tax calculation for more details on adjustments made to accounting profits to arrive at the taxable profits. Certain accounting profit items are not allowable for tax purposes such as client entertainment.

At the very least, we recommend you examine these reports monthly via your accounting software. However, an accountant will be able to interpret the figures, advising and providing an external, expert pair of eyes.

Absolutely – in our experience companies that produce regular management accounts are much more profitable than those that don’t.

It is good practice to vary them monthly, but for many businesses quarterly is fine.

Yes – a balance sheet evidences the stability and liquidity of your business. As a result, more data can be drawn from a balance sheet than from a profit and loss.

It’s always good to have something to aim for and then you can compare your actual figures with your predicted figures – ‘what gets measured gets done!’

Nearly every business owner says this. The fact is, budgets and forecasts will never be entirely accurate but they will help you maintain focus and enable you to make changes based on various scenarios.

Management accounts are regular non-statutory reports showing your financial position at various points in the year.

Often these differ, which can be confusing. The following items may affect these figures:

• Money spent on assets
• Debtors (these have been invoiced so show as income but are not yet cash)
• Creditors (you’ve had an invoice but not yet paid)

Management accounts demonstrate how well your business is performing, enabling you to identify areas for improvement, plan for tax and encourage overall business growth.

Under the Pensions Act 2008, every employer in the UK must put staff into a workplace pension scheme and contribute towards it.

Once you’ve decided on your pension provider and opted for our fully managed payroll service, we’ll set up and manage all day-to-day operations, including enrolling workers, processing deductions and managing opt-outs. Our expert accountants are proficient in using a variety of pension schemes.

We can take on new payroll clients at any time during the tax year. We’ll guide you through the requirements and confirm timescales with you – some of our clients have even described their transition to Solutions as ‘life-changing’!

If you employ staff with varied hours, fluctuating pay, or on a temporary, seasonal or short-term contract, the legal duties regarding pension schemes still apply to you. At Solutions, we take the time to understand your situation, advising you on your legal responsibilities and the implementation of postponement.

Specific rules/criteria must apply for a gift to an employee to be considered a trivial benefit and in turn, not be liable for tax. Our specialists will be able to check whether these are met and advise accordingly.

Please kindly notify us as soon as possible should any changes be required. Once we receive the information, we will process the required adjustments and notify you of any changes to your HMRC payments.

Benefits in kind are perks that employees or directors receive from a company in addition to their wages or salary. Examples include private health insurance, company cars or business expenses.

Not all benefits in kind are treated the same and we will be able to advise you on whether tax is payable or not based on your circumstances.

Employment Allowance allows eligible employers to reduce their annual National Insurance bill (by up to £5,000 in the tax year 2022/23), meaning they pay less employer’s National Insurance every time a payroll is run until the allowance is spent or the tax year ends (whichever is sooner).

At Solutions, we will assess your company’s eligibility when setting up your payroll and monitor it each year.

The National Living Wage applies to workers aged 23 and over and the National Minimum Wage applies to those aged 22 and under, and both are set by the government. The rates usually change on the 1^st of April each year and you will receive a timely reminder from us when a change is due to take place. There are specific rules that apply to apprentices and we will help you apply these.

At Solutions, we provide an efficient, reliable managed payroll service including setting up and administering your payroll function, awarding you the valuable time to grow your business. This includes key features such as understanding your company, data entry, calculations, providing payslips and managing pensions.

We take the time to get to know your company and understand your payroll requirements, answering any queries you may have. You will receive a timely reminder to submit any relevant changes depending on your payroll calendar and we will clearly state when and what payments are due to HMRC.

In short, no. Property losses can not be used to reduce tax on other income that is not related. However, by keeping accurate records these losses can be carried forward and used against future profits.

If the company is registered correctly with SEIS, there is an opportunity to invest up to £100,000 with 50% tax relief (proposed £200,000 from 6th April).

Unfortunately, this is incorrect. Your sole trader income must be declared, and you must sign up for self-assessment with HMRC to determine whether you earn more than £1,000 through self-employment.

If this is the only income based on the standard annual tax allowance of £12,570, there would also be the ‘savings starting rate’ allowance of £5,000, and a further personal savings allowance of £1,000. With this, there’s a potential £18,570 tax-free income from savings interest received.

The ‘savings starting rate’ is only applicable if non-savings income does not exceed £5,000. Every £1 of other income above your allowance reduces your starting rate for savings by £1.

The rent-a-room scheme is available when part of your main residence is currently £7,500 tax-free. If it is a separate property, this is not applicable, but there is a potential £1,000 additional tax allowance available.

No capital gains due from property should be declared within 60 days of completion as penalties and interest may apply. We also advise adding the potential allowances available to reduce CGT due.

No, most returns have to be submitted (online) by 31st January for the prior period finishing 5th April. Paper returns are still accepted (for now) and the submission deadline for these is the 31st of October for the prior period finishing the 5th of April.

In this case, providing your income exceeds £12,571 you can transfer up to £1,260 of the unused allowance to benefit from – a potential saving of £252.

You could potentially make a pension contribution of £10,000, you would then receive a 40% relief on the £10,000 which will also reinstate the personal allowance. We would just check that your annual pension contribution does not exceed £40,000 made up of personal/employer or other.

All pensions are taxable in the usual income tax manner dependent on personal circumstances and any other income received.

Not at the moment, as there is a £2,000 dividend allowance until April 2023, but this will be reduced to £1,000 from April this year to be further reduced to £500 from April 2024.

No, you will have an allowance (nil rate band) of £325,000 each. We would be happy to examine the details for you because if there’s personal property within the estate, that could potentially increase the NRB and leave a lower tax (if any) to pay.

The short answer to this is no. Separating a business to avoid the VAT threshold is known as disaggregation, and it is something HMRC are well aware of. They have rules in place, allowing them to collect VAT and penalties if they think a business has been split for this reason.

There can be circumstances in which a business is split legitimately and for genuine reasons, but this is a risky area so we would advise you to consult a professional in these cases.

Yes, you may be able to reclaim VAT on purchases made up to six months before you became registered. You can also reclaim VAT on goods you bought up to four years before you become VAT registered, as long as you still own them.

Many people charge their business mileage at 45p per mile however, VAT can only be claimed on a small portion of this. The 45p per mile rate is intended to cover many costs related to running a vehicle – i.e. fuel, insurance, repairs, maintenance etc. In this case, VAT can only be claimed on the fuel portion of this.

HMRC has a table showing fuel rates, which can be found here: https://www.gov.uk/guidance/advisory-fuel-rates. These change often, so it is always worth checking.

For example, if the advisory fuel rate for your vehicle is 13p, you can only reclaim VAT on 13p per mile, even if you are charging the business 45p per mile.

In most cases, there is nothing to worry about because you can simply adjust your next VAT return. As long as the net amount of the error is less than £10,000, and it was not done deliberately, HMRC is happy for you to make corrections this way. If the error is more than this or was done deliberately, you will need to notify HMRC via an online form.

Although the standard VAT rate is 20%, and most of your purchases will likely have VAT charged at this rate, you still need to check every receipt and invoice to make sure you are claiming the correct amount. Some items can be exempt from VAT, some may be chargeable at a reduced rate of 5%, and some may be purchased from a non-VAT registered supplier.

You will need to start accounting for VAT on all your transactions. That means every transaction is distilled into net amounts and VAT amounts.

Accounting software can make this significantly easier. You will also need to submit VAT returns to HMRC. Typically these are done every quarter. The deadline for submission and payment is one month and seven days after the end of the quarter. For example, if your quarter ends on 31 January, the VAT return will be due by the 7th of March. Then your next quarter end would be 30 April, and this would be due by the 7th of June.

If you are below the VAT threshold, you can still choose to register for VAT voluntarily. There is no ‘one-size-fits-all’ solution, but frequent things to consider include:

• Are your customers VAT registered? If they are, they can reclaim any VAT you charge, so it won’t make much difference to them if you register. However, if your customers are not VAT registered, the VAT you charge is an extra cost for them.
• Do you make a significant amount of purchases which include VAT? If so, the amount of VAT available to reclaim could be significant. However, some businesses purchase very little, and most of their costs come from wages (on which no VAT can be claimed), so this would be much less beneficial.
• How are your organisation and admin? There is more admin required when you are VAT registered, and there are more deadlines to manage, so this is also worth considering.

HMRC have recently introduced a new penalty regime. Businesses that submit VAT returns late will incur penalty points. When a certain number of penalty points are reached, HMRC will begin to charge penalties.

Each time a filing is late, the business will incur one point. Businesses that submit VAT returns quarterly, will receive a £200 penalty when they reach four points. Each subsequent point will also incur a penalty.

Penalty points will be reset if the business completes a period of good compliance. For a business submitting returns quarterly, this period would be 12 months.

Late payments can also incur penalties which are a % of the outstanding amount based on how late the payment was. These penalties can be avoided if a time-to-pay arrangement is made with HMRC.

Cash accounting is a different way of calculating when VAT falls due. You can use cash accounting if your turnover is less than £1.35 million.

Usually, VAT is calculated based on invoice dates. However, under cash accounting, VAT is instead calculated based on when money is paid or received. You will only have to pay out VAT on sales when the money is received from customers, but you will also only be able to reclaim VAT on purchases when you pay your suppliers.

This can be very beneficial for businesses finding it difficult to manage cash flow, especially if customers take a long time to pay.

The Flat Rate Scheme can significantly reduce the admin required to complete your VAT returns, and in some cases, allow you to pay less VAT overall. To join the Flat Rate Scheme, you need to apply to HMRC, and your net turnover must be less than £150,000.

Under the flat rate scheme, you cannot reclaim VAT on your purchases (except for capital assets over £2,000).

However, in return, instead of paying 20% VAT on your sales, you pay HMRC a fixed percentage of your gross sales. The fixed percentage depends on the industry your business resides in, but it will always be less than 20%. The scheme can be very beneficial if you exceed the VAT threshold but make very few purchases to reclaim VAT. You can check the flat rate for your business at https://www.gov.uk/vat-flat-rate-scheme/how-much-you-pay.

For example, the flat rate for a management consultant is 14%. If they invoice a client £10,000, the VAT amount on this invoice is £2,000.

However, under the flat rate scheme, they only have to pay HMRC (£12,000 x 14%) = £1,680.

You must register for VAT if your taxable turnover exceeds the VAT threshold within 12 months. The threshold is currently £85,000, yet this can change. It is also worth noting that while most products and services are taxable for VAT, some are exempt, such as certain types of financial services, education, training, medical treatments, and sport. Exempt items do not count towards the threshold.