7th June, 2022, Neil Gayton
Are you making the most of your allowances from your residential property income?
If you receive income from letting a room in your property or renting out another property permanently or as a holiday let, there are various reliefs and allowances that can be applied to your income to reduce your tax bill.
Neil Gayton, manager at our King’s Lynn office, examines the reliefs and allowances that you may need to consider when completing your tax return.
The Rent a Room Scheme
The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.
You can let out as much of your home as you want. The tax exemption is automatic if you earn less than £7,500. If you earn more than this you must complete a tax return, you can then opt into the scheme at any time if you are a resident landlord or run a bed and breakfast or guest house and claim your tax-free allowance on your tax return.
You can choose not to opt into the scheme and instead record your income and expenses on the property pages of your tax return.
You cannot use the scheme for homes converted into separate flats.
Property Income Allowance
If you are a landlord earning rental income from your property you can get up to £1,000 rental income tax-free each year from Property Income Allowance.
If you earn less than £1,000 from rental income, you don’t need to do anything. However, if you claim the Property Income Allowance, you cannot claim any other rental expenses.
If you own a property jointly with others (spouses, civil partners, etc.), you can each claim this £1,000 allowance – even though you divide the rental income between yourselves.
If you’re renting out a buy-to-let or a second property, usually your expenses are higher than £1,000 a year, so only use this allowance if you can’t find your receipts or if in one year you somehow have just a few expenses.
Residential Finance Costs
Relief for finance costs on residential properties is restricted to the basic rate of Income Tax. Finance costs include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan.
When completing a tax return for income from a residential property it is possible to bring forward losses from previous years.
There are many things to consider when using a residential property for income purposes. At Stephenson Smart we are experts in helping people fully understand their liabilities. Please get in touch if we can help you.
Profile: Neil Gayton
Related articles: Furnished Holiday Lettings
26th May, 2022, Melanie Harriss
There are four ways you can get financial support for SMEs, to help you invest and grow.
Claim up to £5,000 with the Employment Allowance
Employment Allowance is a tax relief which allows eligible businesses to reduce their National Insurance contributions (NICs) bills each year. You can claim this if you are a business, and your employer Class 1 National Insurance liabilities were less than £100,000 in the previous tax year.
Get a discount of up to £5,000 on software, with Help to Grow
Help to Grow: Digital is a UK-wide government-backed scheme that aims to help you choose, buy and adopt digital technologies that will help you grow your business.
Eligible businesses can receive a 50% discount on buying new software worth up to £5,000 per SME, alongside free impartial advice and guidance about what digital technology is best suited to boost your business performance.
The Help to Grow: Management scheme provides small businesses with access to world-class business expertise on everything from leadership and financial management to marketing and digital adoption. This is delivered through leading UK business schools, alongside one-on-one support from a business mentor – and is 90% funded by the government.
By the end of the programme, you will develop a business growth plan to help you lead and grow your business.
To be eligible, you must be a UK-based SME, actively trading for at least one year and have a total of between 5 and 249 employees.
Get up to half off your business rates
From April this year, small retail, hospitality, and leisure businesses can benefit from 50% off their business rates bills.
The business rates multiplier has also been frozen for another year. This is used to calculate how much business rates should be paid; it usually rises with inflation each year.
The business rates multipliers for 2022 to 2023 are 49.9 pence for the small business multiplier and 51.2 pence for the standard multiplier.
From April 2022 there will be no business rates due on a range of green technology, including solar panels and batteries, whilst eligible heat networks will also receive 100% relief.
Invest in your business with Super-deduction and Annual Investment Allowance
To spur business investment, the super-deduction allows companies to cut their tax bill by 25 pence for every £1 they invest in any qualifying machinery and equipment. This can include the purchase of computers, most commercial vehicles and office furniture.
The temporary £1 million limit for the Annual Investment Allowance has also been extended to the end of March 2023. This had been due to revert to £200,000 at the start of 2022. The Annual Investment Allowance allows businesses to spend up to £1 million on qualifying business equipment and deduct in-year its full cost before they calculate their taxable profits.
Both tax breaks remain available for firms to take advantage of until the end of March 2023, by incurring qualifying expenditure before then.
If you need help in accessing any of these schemes to help support your business, please get in touch.
Related articles: Super-deduction and Annual Investment Allowance
5th April, 2022, Melanie Harriss
During the Covid pandemic many people reconsidered their working life, and 2020 saw a record number of new business start up companies . One of these is Cambridgeshire Hair and Beauty in March.
Lauren Slipper, hair and beauty specialist and Sean Brown, family friend and entrepreneur, have transformed a property on Gaul Road, March, into Cambridgeshire Hair and Beauty, helping to realise a dream for former Centre Parcs Spa Manager, Lauren.
Since it opened in July 2020, the business has soared, with hairdresser Abbie Evans joining the team to meet the demand. Lauren is already offering a host of new services, with hopes to set up a training school in the future.
Lauren said the challenges faced didn’t put her off investing in her own business:
“I’ve always wanted to have my own salon and when Sean approached me with the opportunity of being his business partner, I just knew it was the right time.”
Sean added: “It was obviously a difficult time to open but we did it without fear and since then we have just expanded rapidly, it’s been absolutely bonkers.”
The pair renovated the building next door to another of Sean’s businesses, Cambridgeshire Medical Aesthetics, with space for a hairdressing salon, reception area and beauty room.
Sean said support from Chris Goad, partner at Stephenson Smart, had been vital with opening a business during the pandemic.
“Chris has been brilliant. I can literally send him a text with a quick question, and he is always so helpful.
“With each business start up I have worked on Chris has guided me through the process and helped me with the business model. He’s also been so supportive throughout Covid and the different claims available to me.
“I haven’t had the need to worry about anything because I know Chris is always at the end of the phone with an answer.”
Starting up a new business is both an exciting and a challenging task, which carries with it an element of risk. Key decisions need to be made, and there are many factors to consider.
Stephenson Smart are specialist business start up advisors. We can guide you through the decision-making processes, help you make the appropriate registrations, assist with cash flow forecasts and offer regular updates to enable you to monitor the performance of your business. Please get in touch if we can support you on your new business start up journey.
Related pages: Business Start Up Advice
13th January, 2022, Melanie Harriss
In response to restrictions imposed, the government have announced Omicron Business Support available to firms in the UK.
Omicron Business Support: Local Authority Grants
The first in a package of Omicron business support is for firms in the hospitality, leisure and accommodation sectors, many of which have seen a decline in footfall and increased cancellations due to the Omicron variant. These businesses are able to apply for one-off grants of up to £6,000 per premises depending on rateable value, via their local authority.
Further funds are also being given to local councils to support other businesses impacted by Omicron, such as those that supply the hospitality and leisure sectors as well as personal care services, these will be administered as Additional Restrictions Grants by local authorities.
Businesses eligible for Local Authority Grants are those that offer in-person services, where the main service and activity takes place in a fixed rate-paying premises, in the hospitality, leisure and accommodation sectors.
This includes businesses whose main function is providing a venue for the consumption and sale of food and drink, those that provide facilities linked to recreation and entertainment, as well as businesses whose main premise is used for holiday accommodation.
In the areas that our offices cover, these can be applied for with North Norfolk District Council, Fenland District Council, Borough Council of King’s Lynn and West Norfolk and Great Yarmouth Borough Council.
Omicron Business Support: Statutory Sick Pay Rebate Scheme
Further Omicron business support comes with the reintroduction of the Statutory Sick Pay Rebate Scheme for coronavirus-related absences for small and medium-sized employers.
Businesses could be eligible for support if they employed fewer than 250 employees on 30 November 2021, and have paid Statutory Sick Pay (SSP) to employees for coronavirus-related sickness absences.
Up to two weeks SSP can be claimed, if employees have been paid at the relevant standard weekly rate of £96.35, for any eligible periods of coronavirus-related sickness from 21 December 2021. This is a new claims period.
Businesses could claim to cover the costs for up to two weeks of SSP for an employee who takes time off because of coronavirus, regardless of whether they have claimed for that employee under the previous scheme.
Omicron Business Support: Culture Recovery Fund
Additional Omicron business support is a further £30 million of funding being made available through the Culture Recovery Fund. These grants support cultural organisations that have been affected by the Covid-19 crisis to stay afloat, providing them with support to ensure that they can survive and stay open.
The funding is accessed via Arts Council England.
Omicron Business Support: Time to Pay
HMRC still has its Time to Pay arrangement in place. This can be accessed if you are facing difficulty in making a tax payment; you can make an arrangement to pay what you owe in affordable instalments.
In order to access this support you need to contact HMRC, as arrangements are made on a case-by-case basis.
Related articles: Bounce Back Loan Repayment
6th January, 2022, Melanie Harriss
If your business is struggling to recruit, offering an apprenticeship or traineeship scheme might be the answer and could make someone’s New Year!
Part of the government’s Plan for Jobs to help the UK economy recover from the covid pandemic includes support for employers to take on trainees.
There are different schemes available:
The Kickstart Scheme, which has recently been extended to March 2022, aims to create 6-month job placements for young people who are currently on Universal Credit and at risk of long-term unemployment. The job placements are aimed at supporting the participants to develop the skills and experience they need to find permanent work after completing the scheme.
For each Kickstart job, the government will cover the cost of 25 hours a week at the relevant National Minimum Wage in addition to pension and National Insurance contributions for a period of 6 month. Employers will also receive £1,500 per placement to cover set-up costs and provide wraparound support for the young person.
Traineeships are skills development programme for people of all ages that includes a work experience placement and gets people ready for employment or an apprenticeship.
Traineeships can last from 6 weeks up to 1 year and may include individual support in various methods of securing employment.
Employers who provide opportunities through a registered traineeship can use the scheme to recruit new talent into the business or help develop the skills of exiting employees. A business can also benefit from an employer incentive of £1,000 when a work experience placement of over 70 hours has been completed. This incentive can be claimed for up to 10 learners per region and employers can decide how to use the money.
Apprenticeships employ people to do a real job while studying for a formal qualification – usually for one day a week either at a college or training centre. By the end of an apprenticeship, most people have gained the skills and knowledge needed to succeed in their chosen career.
There are two ways of accessing government funding to support an apprenticeship.
If an organisation’s wage bill is £3 million per annum or more, the organisation will pay a levy of 0.5% of the wage bill. Levy paying employers get a £15,000 allowance per annum to offset against the amount they have to pay.
If an organisation’s wage bill is under £3 million, you don’t have to pay the levy. Instead, the employer agrees a payment schedule with a registered training provider and pays 5% towards the cost of the apprenticeship training to them directly. The government will pay the remaining 95%.
At Stephenson Smart we believe in nurturing talent within our organisation and have an active apprenticeship scheme. We currently have 24 trainees working across our six offices.
One of our youngest trainees is Bethany Little, who is based at our King’s Lynn office.
Bethany came to Stephenson Smart straight from high school to embark on her accountancy career.
“I came for a week’s work experience while I was at school and really enjoyed it. I am now studying for a joint ACA/CTA qualification which will mean that I will not only be a chartered accountant but also a chartered tax advisor at the end of it.”
One of our newest trainees is Deborah Robinson, who is based at our March office.
Deborah, who grew up in Stevenage, moved over to train in accounting after a successful career in the equestrian industry running a riding school. Deborah said:
“I came to a bit of a crossroads and thought it would be good to try something else and after spending so long working outside an office with a roof over my head seemed quite appealing! I’m really enjoying it and everyone has been lovely and supportive, so I’m looking forward to learning and progressing.”
After successfully completing her AAT qualification, Deborah has now started the next stage of her study, ACA qualifications through the apprenticeship route.
Chris Goad, partner at Stephenson Smart’s March and Wisbech offices, commented:
“We have always had a strong apprenticeship scheme at Stephenson Smart and find great rewards in hiring new talent and nurturing them to become accounting professionals.”
“If your business, like many others, is struggling to recruit, offering a traineeship or apprenticeship scheme might be the answer.”
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