Category: General Business

Yearend tax planning for employed (PAYE) individuals

  • Pension contributions 1 – for self, see our detailed blog on this topic.
  • Pension for children or non-working spouse pension. Government top ups contribution of £2,880 by £720 to gross up to £3,600.
  • ISAs – Self, children or life time.
  • Claim employment expenses like subscription, working from home £6 minimum
  • Marriage Allowance
  • Investments in VCT, SEIS or EIS. These are risky investments so beware.
  • Giving to charity via Gift Aid – among a married couple if one is basic and other higher rate payer. One with higher rate should make the donation. Further tax planning scenarios in case income is between £50k-£60k (child benefit) and £100k to £125k (personal allowance reduction).
  • Check your National Insurance record if gaps. See our detailed blog.
  • Premium Bonds
  • Pay off your loans. What you save is what you earn. Start with the one which charges highest interest rate usually credit cards.
  • Use Capital Gains – Annual Exemption limit.
  • Inheritance tax – give away £3k per annum.
  • Buying assets for capital appreciation in children’s name (Bare Trust)as Parental settlement rules are not applicable for CGT. See blogs from Aberdeen and Step Journal.

Slowdown, any action in haste will most likely be regretted.

Plan for next tax year.

Notes:

  1. Pension contribution lowers Income tax not National insurance contributions; unless it is via a Employer’s salary sacrifice scheme.

Do I need an accountant?

Why you need to hire a qualified accountant to handle your affairs

Tax rules are complex and handling tax matters can be a stressful experience.

Few reasons for hiring a qualified accountant:

  • A qualified practicing accountant has number of years of experience before starting his own practice.
  • He/she will know about many reliefs and rules available on various income and gains, lowering your tax bills.
  • If a mistake happens after taking advise from a qualified accountant, HMRC considers it an error after taking reasonable care, resulting in lower penalties
  • A qualified accountant will also ensure all tax calculations and procedures are properly followed.
  • A qualified accountant can take an independent view of the matter, as both tax payer and HMRC’s judgement can be skewed by their incentives.
  • A qualified agent is a good emotional barrier between you and HMRC.

Why you should hire us ?

Our commitments to you

  • We will provide information in a clear and understandable way.
  • We abide by the Golden Rule – we will treat you as we wish to be treated.
  • We will provide a high level of service.
  • We will endeavour to make our service flexible to meet your needs.

What we ask of you

  • We request you to be mindful of our time as that is our `Stock in trade`.
  • We request you to be forthright and succinct in your communication with us.

HMRC to be preferential Creditor

How are funds distributed among creditors in a restaurant insolvency ?

From 6 April 2020 HMRC will become preferential Creditor in UK insolvencies.

UK treasury has written an easy to read paper on this matter. Explaining the effects of this change and showing hierarchy of distribution of funds in insolvency.

It shows that unsecured creditors like suppliers usually recover 4% of their dues.

I think it’s a good move by the government to secure taxes for the public good.

Restaurant suppliers should make note and negotiate better credit terms.

Head winds – restaurant sector is facing

Current turmoil in restaurant trade and what to do about it.

  • Currency:
  1. Brexit vote has weakened the sterling resulting in higher cost of food and drinks.
  • Wages:
  1. Living wage has resulted in wages increasing faster than inflation and even faster than restaurants can increase their own prices.
  2. Many new entrants in the market have resulted in pushing wages higher.
  • Property
  1. Private equity players rushed in this sector in the last few years and offered higher rents resulting in pushing everyone’s rent up.
  2. Higher rents resulted in higher Business rates.
  • Online
  1. New service model like Deliveroo have emerged which increased competition and take a share of profits.
  • Competition
  1. Supply has expended ahead of demand – there are too many restaurants.
  2. So many choices have reduced the frequency of customer visits.

 

What to do?

Everyone tells me the problems but what are the solutions?

  • Very tight control of costs:

There are three main areas where costs can be controlled.

  1. Wage cost – reduce staff through natural turnover. Staff members also have a learning curve and longer one has been in a job better they can do it.
  2. Cost of goods – chefs should be encouraged to always look for new suppliers and go to the source of food directly like farms.
  3. Overheads – Every cost to be analysed and ways thought to reduce it.

 

  • Think and encourage everyone in the business to think
  1. How to evolve and improve the offering – quality, cost, presentation etc.
  2. Increase lunch trade by shorter menus.
  3. Food coming out quicker from the kitchen.
  4. Lighter food which is easy to digest.
  5. Improving beverage sales as they take less wage cost to prepare.
  6. Staff idea board can help. Management does not have monopoly on ideas.

 

Conclusion:

Things are going to get worse before they get better. Tighten your belts and better the product and sit tight to weather the storm.

Good Luck!

Laws for websites in UK

Recently one of my clients asked me about rules and regulations for a website in the UK.

 

I thought it was easy just be truthful about what product and services you sell.

 

But client asked me to check this out for him and to my surprise there are a host of rules and regulations governing e-commerce business.

 

Being an accountant I am no expert on this matter but main items that i found I thought should share with others:

 

1- As customers will be buying service via a website, rules in the link below apply:

It gives detailed information about what customers have to be informed before and after an order.

https://www.gov.uk/online-and-distance-selling-for-businesses/overview

2- Law on Computer Cookies

In simple terms, we must ask consent before installing cookies on their computers.

The link also gives an example and detailed information about this cookie consent.

http://ec.europa.eu/ipg/basics/legal/cookies/index_en.htm

 

3- Advertising rules:

These rules give information about telephone and direct marketing.

https://www.gov.uk/marketing-advertising-law/overview

Main important rules I see among them is telephone marketing and display of price.

 

4 – Data protection:

Organisation which handle personal data need to register , fee is £35 per year.

ico.org.uk

 

I think if a start-ups starts complying with all these rules on day one, it may make the whole project unviable. But every organisation should knows its responsibilities and must have a time bound compliance program as the business grows.