‘Nothing can be said to be certain, except death and taxes’. Understand the rules and make sure that you don’t pay too much Inheritance Tax, with advice from Jones Harris Accountants Fleetwood
Do you own property that you rent out? Have you borrowed money to buy property – expecting that the rental income will cover the cost of borrowing? Then you need to read this article NOW.
Property business owners, particularly buy-to-let landlords, have been hit with a number of quite dramatic changes in their tax status.
One of the biggest problems to many landlords who have borrowed against rental income is the gradual disallowance of tax relief for finance payments that starts this April.
Biggest Impact on Borrowers
The changes in tax relief will have the most impact on landlords who have borrowed heavily to grow their property portfolio, with a possible two-fold, and negative impact on their property business.
Firstly, if their present claims for mortgage interest and other finance charges are reducing the amount of higher rate tax they are required to pay, once the present changes are fully implemented by 2020, tax bills will increase as tax relief will be limited to the basic rate.
Secondly, if their present claims for mortgage interest and other finance charges are reducing their taxable property income, such that they pay no higher rate tax, when these charges are disallowed their taxable income will increase – possibly into the higher rate bands – and for the first time they may become higher rate tax payers. They will still get some relief for finance charges paid but only at the basic rate.
In both cases, the amount of cash generated, after tax, will reduce. If landlord’s occupancy rates fall, the loss of cash flow will be exaggerated by increased tax bills and investors may face tough choices.
To Fail to Plan is to Plan to Fail…
Planning is absolutely key. If you feel you may be affected, and have not taken professional advice so far, please get in touch with us here at Jones Harris for a no-obligation chat.
We would be delighted to both quantify the effects on your property business cash flow and to offer strategic ideas to minimise the downside consequences.
Burying your head in the sand won’t make this particular issue go away…
When is a Hobby a Taxable Trade?
How to work out whether your hobby is in fact a business which generates taxable income
Many people have hobbies like car-booting, or crafting, or buying and selling on eBay – often you start out by attending events and then catch the bug and join in by making and doing things which could earn you a bit of extra cash.
It’s surprising how much this all can add up, especially if you are particularly good at it – you might have a fantastic eye for a bargain and a knack for making money!
At some point though, if you have got that knack for turning base metal into gold, your hobby will pass over the line from a ‘bit of pin money’ into a regular source of income and being classed as a ‘trade’ – which you should be declaring to HMRC and paying tax on.
How do you know when you’re running a business?
HMRC follows the guidelines below called “the badges of trade” which helps them to decide whether you’re running a part-time hobby that creates an income stream, or a business that needs to be declared on an annual tax return:
1. An intention to make a profit supports trading, but by itself is not conclusive.
2. Is the asset of such a type or amount that it can only be turned to advantage by a sale? Or did it yield an income or give ‘pride of possession’, for example, a picture for personal enjoyment?
3. Transactions that are similar to those of an existing trade may themselves be trading.
4. Was the asset repaired, modified or improved to make it more easily saleable or saleable at a greater profit?
5. Was the asset sold in a way that was typical of trading organisations? Or, did it have to be sold to raise cash for an emergency?
6. Was money borrowed to buy the asset? Could the funds only be repaid by selling the asset?
7. Assets that are the subject of trade will normally, but not always, be sold quickly. If the intention is to resell an item shortly after purchase that’s trading. Or if you’re going to keep it indefinitely, it’s much less likely.
8. An asset that is acquired by inheritance, or as a gift, is less likely to be the subject of trade.
These are some of the ways in which HMRC will decide whether or not you are running a business or passing your time on a Sunday.
One thing that will probably help you to decide whether your income should be declared is to know that from April 2017, the government is to introduce a new £1,000 allowance for property income and a £1,000 allowance for trading income.
If you’ve got property/rental income or your ‘hobby’ earns you an income below £1,000 you will no longer need to declare or pay tax on that income.
If your income is over £1000 then you do need to declare it. Don’t forget that your income is the amount of profit which you’ve made, so take off all your expenses and the cost of buying things which you then sell to find out just how much money you’ve made.
If you’d like some advice just get in touch with us here at Jones Harris for a no-obligation chat. We help all kinds of individuals and businesses large and small with their accounts and financial queries, and we’re sure to be able to help you.
A Minute with your Tax Code
We’ve published articles before, advising that people should check that their tax codes are correct, and with the revelation that around 3.2m are incorrect, you can see how it really could be you.
A report from the National Audit Office revealed that between April 14 and October 2015, 3.2m people were issued with an incorrect tax code – which a minute or two of checking could pick up. Some of these inaccuracies will mean that people have a nice surprise ahead in the form of a refund. However, if you are in the ‘nasty shock’ category after having paid too little tax, it’s best to know about it sooner rather than later and reduce the size of the back payment…
Don’t think you’ll get away with it if you owe HMRC money through a mistake which they’ve made in your tax code as it’s your legal responsibility to make sure that you pay the right amount of tax. If you owe them less than £50 they may write it off. An amount of less than £3000 would be collected via your pay packet with a tax code adjustment. If you are one of the really unlucky ones (or have had your head in the sand for a very long time) and you owe HMRC more than £3000 you should ask for a repayment plan.
Where you or your employees rarely change jobs and have steady personal circumstances, the tax code will tick along from year to year, requiring little more than a cursory glance to make sure that the figures are consistent.
However, errors can be common when people change jobs or maybe do more than one job, after retirement if some employment continues or where a personal pension is received, if there are other personal circumstances where additional payments are collected through your tax code, or even if someone has just typed in the wrong figures.
If you operate a payroll department, the accuracy of the deductions which you make are based on the accuracy of the employees tax code – so while you will have knowledge about who is in receipt of work based benefits like company cars, it’s also important that they check other aspects of their code which you wouldn’t have knowledge about. Otherwise, small errors in the digits of the tax code can lead to significant errors in the money which they pay.
The Money Saving Expert website has a free, handy online tax code checker which gives you an overview of whether your tax code is likely to be right for your age, earnings and personal circumstances. It’s worth having a look at your own, and sending out a reminder to employees to have a look at theirs.
One final word on our favourite subject about scams – HMRC will never send you an email to say that you are due a tax rebate, so any which you do receive will be a scam. Normal rules apply – whatever you do, don’t click on any attachments or links, and under no circumstances send a reply or any personal details.
Here at Jones Harris we like to make sure that you are kept up to speed with different kinds of business and financial advice. If you aren’t already a client and you’ve got a business, or maybe you are retired but have complicated financial affairs, in which case why don’t you get in touch for a no-obligation chat?
Did you really start a business because you wanted to keep accounts?
If the answer to that question is yes, your business has to be either in bookkeeping or accountancy!
However, if yours is one of the 4.1 million UK businesses which don’t employ people it’s likely that you started a business for freedom, flexibility, the ability to float your own boat, do things your way, work around the kids/granny/dog… but not to sit for hours on end each week, keeping accounts and doing paperwork!
Whether you want your business to grow at the speed of light, or whether you just want to earn enough to live, good bookkeeping and accounts are vital to making sure that you are actually on the right path and making a profit for your efforts.
Not only does good paperwork enable you to complete your year-end returns to the tax man efficiently, accurately and without penalty, it also allows you to follow and understand the health of your business, flagging up any timely adjustments to products/pricing/procedures which you need to make.
How much is your time worth?
You should know how much your time is worth when it comes to working out how much to charge your customers. Have you ever looked at how much time it takes you to do your books and worked out how much your time is costing you?
How much would you be willing to pay to release the time you spend doing your bookkeeping to get your evenings or weekends back? Or how much more could you earn if they were able to use the time released to concentrate on the parts of your business which generates income?
As much or as little help as you need
Here at Jones Harris we can provide a seamless bookkeeping-service from receipt to tax return and everything else in between.
How much support you choose to access is entirely up to you – with cloud based software that our bookkeepers are now using, you can still keep abreast of your bank balances, who you owe money to – and perhaps more importantly who owes money to you!
We can also remove the stress of VAT returns and payroll, all carried out under one roof with named individuals to speak to who are familiar with your business. It’s likely that you haven’t had such detailed information before, and it could make a significant difference to the health of your business.
Not as expensive as you might think
With online cloud based software starting from as little as £10 a month, and our Sole Trader Compliance service from just £35 a month (which includes calculating and submitting your self-assessment tax return) you’ll get the experience and ability of a large firm of accountants from Jones Harris without paying an eye watering price. And you can pay by monthly direct debit too and spread the cost.
Why don’t you get in touch for a no-obligation chat about Jones Harris could help your business? (If you do, please mention that you saw it on this website!)
Jones Harris were delighted to sponsor the Sustainable Tourism Award at the 2017 Lancashire Tourism Awards.
Jones Harris has a track record in the tourism sector spanning more than 40 years. In fact as the only CAA-registered ATOL auditor in Lancashire we’re delighted to be associated with the Lancashire Tourism Awards.
We provide cost-effective accountancy services to many of the county’s best known hotels, guest houses, restaurants, caravan parks, garden centres, tourist attractions and more, helping Lancashire’s tourism and leisure businesses to thrive.
As we ourselves operate a paperless office and have taken steps to operate our offices in Fleetwood in a more environmentally friendly way, it made sense that we should opt for this particular category. It’s designed to showcase applicants who can demonstrate excellence and commitment to sustainability best practice within their business.
Director Martin Wigley says ‘The Sustainability Award looked at businesses for their breadth of expertise and practical application. What they’ve already achieved, how they integrate sustainability into daily operations, how engaged they are in sharing the sustainability message and what their plans are for the future.”
Martin added “We have some excellent tourism businesses in Lancashire and we enjoyed the judging process, being involved in the awards and working with Marketing Lancashire.”
Bookkeeping Service at Jones Harris
Jones Harris now have an in-house, full book-keeping facility to supplement our core suite of accountancy and tax services.
Jones Harris Bookkeeping Team with Director Stewart Case
Make yourself more hours in a day
Let’s face it, you don’t start a business because you’re thrilled by the idea of ‘doing the books’. You start a business to earn a living, to use your skills and experience – and doing the books is a necessary part of that.
You could be the best mechanic/hairdresser/web designer/chef in the world, but if you can’t keep a track on your business finances then you aren’t going to survive for very long. It doesn’t matter whether you lack the ability, time or inclination, you can outsource all of your bookkeeping requirements to us here at Jones Harris.
We can create a tailored solution which best suits you and your business needs. We can continue to use your existing systems and software, or we can provide advice about better and more efficient methods, which might include cloud accounting. You can rest assured that it will be the best and simplest method for you!
Depending on the size of your business and your accountancy requirements you may need to send your paperwork to us once a quarter, or we can come to your own premises and work on site. We can provide an end-to-end service from receipt to tax return, and complete your VAT returns. Or you might want to do the bookkeeping yourself but need some advice as to what records you should keep and maybe some training.
Good bookkeeping doesn’t just make your life easier – it also highlights problems quickly and timely solutions can then be found. It also means that less time will be taken in preparing your year end accounts which means lower charges.
All your accounts looked after under one roof
Our Fleetwood based practice has brought in-house the bookkeeping function previously provided by North West Business Support Centre Ltd, to offer a fully streamlined accounting function for businesses of all shapes and sizes, all under one roof. It also provides an exciting opportunity to offer cloud-based accounting software options allowing you direct access to crucial information from within your business to help you with decision making.
As part of the reorganisation three new members of staff are welcomed to the Jones Harris team. Alison MacDonald, Lesley Thomson and Jemma Hill bring years of experience with them and are comfortable with all bookkeeping systems including the newer cloud based packages like Xero or Kashflow.
Director Stewart Case (pictured above) said “We’ve also taken the step of becoming a Xero Certified Practice because we recognise that the future of accountancy lies in the cloud. For over forty years Jones Harris has been known for the high quality of its advice and service when it comes to accountancy, tax and business matters. A business can only been successful for so long by adapting, and that’s exactly what we’re doing right now.”
For many owner operated businesses the pressure of running a business often means that bookkeeping, although vital, is the last task to be completed. That doesn’t help the health of the business and in fact can be a contributing factor to business failure. With 50% of new businesses reportedly failing in the first couple of years, it’s a problem that they can do without.
Stewart added “Good book-keeping is vitally important to business success, along with the information which monthly accounts provide, which is why we’ve taken this step to enable us to provide a better, more comprehensive service which will support the continuity, growth and success of businesses right here on the Fylde Coast.”
Would you like to know more? Then why not get in touch now (and please mention Visit Fylde Coast)
Best Accountants in the North West – and that’s Official!
Whether you’re already a client of Jones Harris or have heard about us in the press, you’ll have seen some of the things which we do to add value to our service to you and which set us apart from all the other accountants out there. Well now our claims have been endorsed with the news that we’ve won a prestigious award.
On Thursday 25 September all our efforts to go the extra mile for each and every one of our clients were rewarded when we scooped the prize for the Accountancy Firm of the Year with up to Five Partners at the North West Finance Awards.
Nominated by Lloyds Bank, our application joined a total of well over 100 nominations from a variety of sectors of industry and a geographical area spreading from Cumbria to Cheshire.
The application process asked for evidence based information from the business to provide evidence and demonstrate how we add value in a number of key areas, including:
- Innovative approaches to business generation and retention
- Working with clients to improve their business performance
- Going beyond the norm to exceed expectations
- Adding value to the wider financial community
- Training and development of staff
Our entry was scrutinised by a panel of nine professional industry experts drawn from leading private business and including all the finance industry governing bodies, so we were pleased to have made the final shortlist of seven and be invited to the glittering presentation evening at the Macron Stadium at Bolton.
Directors Charles Bryning, Martin Wigley and Stewart Case went along to the awards ceremony with Business Development Manager Jim Baker, and enjoyed an evening celebrating an illustrious roll-call of glittering careers including many different types of achievements from within the finance industry.
Much to our delight Jones Harris was declared the winners of the Accountancy Firm of the Year with up to Five Partners. Along with all the other winners on the night, we couldn’t have been more pleased with our own success, and the judges comment “This practice has worked hard over a period of years to adapt their systems to suit their clients’ needs first and foremost”
This Award is all about how we add value to clients. It demonstrates and endorses that we do what we say when we claim to go the extra mile – we’re not just saying it – we’ve now got the award to prove it. The judges voted unanimously for Jones Harris and our pitch was described as head and shoulders above the other nominees in our class.
This award is rightly for all members of the team and recognises how each of them make a vital contribution to delivering the service which our clients demand from us. The award goes some way to rewarding that dedication to service which we’ve always strived to deliver here at Jones Harris and it reflects how that work is recognised in the North West business community.
Finding the right accountants can seem daunting, but at Jones Harris we take the worry out of getting your personal and business finances in order.
You’ll find that a professional and friendly approach, coupled with a deep seated commitment to providing the best service possible and unique working practices differentiates Jones Harris from other firms of accountants.
Our expertise has made us the Fylde Coast Chartered Accountants of choice for all kinds of businesses. From our Fleetwood offices at St Peters Place, at Jones Harris we specialise in advising and helping to grow owner managed businesses and SME companies from existing businesses or start up situations.
What’s different about Jones Harris
In 2012, at Jones Harris we celebrate our 40th anniversary. Charles Bryning and Alan Newbold were the two founding partners who set out to do things differently when they created the company, and they can certainly look back and say that they did that.
Stewart Case (left) and Charles Bryning, Directors at Jones Harris
Charles and Alan started by offering a superior and more attentive level of service, by changing the behaviour that other firms found acceptable, in their quest to fulfil their ambition to become largest independent and premier accountancy firm on the Fylde Coast.
With experience in all sectors of business, the staff and Directors at Jones Harris really care about their clients, and we frequently go ‘the extra mile’ for everyone. For example, where else would you find access to your accountant on 365 days of the year, plus unlimited telephone support all through the year at no extra cost?
With the advent of sophisticated IT, our most fundamental point of difference came about when we built a unique and paperless job flow system. Not only has it ironed out the inherent inefficiencies of the accountancy industry, it’s also streamlined and speeded things up to the point that accounts are turned round in 28 days on average, which means that you quickly get to find out what position your company is in, and more importantly, what your liabilities are so that you can plan for paying them.
More importantly, at Jones Harris, the staff and Directors value you as an individual and not just a number on a balance sheet.
Services for your business
Whether you are an individual with complicated financial affairs, a small business, or a huge company, at Jones Harris we will offer you an excellent service with the best in advice and support. We see our role as one that extends past that of simply filling in statutory paperwork, and we are on hand to provide advice and review your situation to make the best of current legislation and financial rules.
Martin Wigley, Director at Jones Harris
Uniquely, with 1000 clients on our books, we also refer clients to each other and network them together. From a client list which is so large, there are always companies who can help each other, in many varied ways.
So if you like things to be done properly and value good service, and to know that you are in good and competent hands, then Jones Harris are for you.
Business advisors and taxation specialist. Proper accountants for proper businesses.
Jones Harris offer a full range of accountancy services.
- Company secretarial
- Preparation and audit of accounts
- Tax planning
- Tax investigation
- Financial Reporting
- Bookkeeping and payroll is offered through our sister company The North West Business Support Centre
Jones Harris Chartered Financial Planning is a joint venture between Jones Harris Chartered Accountants and True Bearing Chartered Financial Advisers – whose advisers are among the most qualified in the UK today.
Whether you are looking to review your current arrangements, or establish a new financial plan, we will be able to give you clear direction and peace of mind. We can help you to plan for your financial future in the most tax efficient ways possible.
For more information just get in touch. The contact details are all on this page.
On the Jones Harris website you’ll find much more information about the company and the people who work here and make it tick. Have a look at the News feed for regularly updated articles about what goes on inside the company, with stories about football sponsorship, events that we hold at Jones Harris, plus some financial hints and tips.
Find out More
Have a look at the Visit Fylde Coast website homepage for more of the latest updates.
If you love the Fylde Coast you ought to sign up for our weekly email newsletter. It’s packed full of interesting things and will arrive in your inbox all 52 weeks of the year.
Join us on Facebook at our Visit Fylde Coast Facebook Group
Don’t forget to follow us on Twitter @visitFyldeCoast