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Paying a Value Added Tax (VAT) liability can be a large burden for small businesses. This article is aimed at owners of small businesses in the UK and focuses upon how their VAT burden can be successfully managed.
Ten tips on managing your VAT liability:
1.If you do not need to compulsory register for VAT, calculate if it would be worthwhile to de-register for VAT.
2.If you are not registered ensure that you review your requirement to register on a monthly basis, as there are financial penalties for late registration.
3.Make sure that you are calculating your VAT liability correctly. Many business pay VAT on items they shouldn’t and don’t reclaim all the VAT that they are entitled to.
4.Keep up to date with VAT legislation changes that effect your business. It may be worth considering retaining an accountant to keep an eye on this for you.
5.File all VAT returns on time and make sure that VAT payments are made prior to deadlines. There are financial penalties for not meeting VAT deadlines.
6.If you are experiencing cash flow difficulties and can not make your VAT payment on time, then contact HMRC to negotiate payment terms.
7.Calculate if using the flat rate VAT scheme would save you money. This is for businesses with a turnover under £150,000. It saves administration and could be financially beneficial.
8.Consider if you would benefit from cash accounting for VAT purposes. If your taxable turnover is under £1,350,000 a year this method allows you to account for VAT on the basis of cash received and paid, rather than the invoice date or time of supply.
9.Would you benefit from using the annual accounting method. If your turnover is under £1,350,000 under this scheme you make only one VAT return per year.
10.Should you be using a retail scheme. These schemes are for retailers and they are an alternative if it’s not practical to issue invoices for a large number of supplies direct to the public.
VAT is a complex and specialist area of taxation if you are in any doubt over how it applies to you or your business then it is recommended that you contact an accountant or VAT specialist with expertise in this area. You can also contact HMRC direct for advice.
This article is an introduction to certain aspects of VAT legislation only and it is not intended to be comprehensive.
The author does not guarantee the accuracy of any information provided in this article and recommends that you do not take any action, whatsoever, based on the information provided. By the fullest extent permitted by law, the author does not accept any responsibility for any actions you may or may not take based on information contained in this article. This article contains general information and is not a substitute for specific independent professional advice. In addition it is emphasised that much of the information provided in this article is time sensitive and the rates and legislation associated with VAT will change.
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Tags: VAT
Posted in Taxes · August 21st, 2010 · Comments (0)
National Insurance contributions (NICs) are paid to build up a person’s entitlement to certain state benefits, including the State Retirement Pension. The amount that an individual is liable to pay depends on their own personal circumstances.
Who pays National Insurance?
National Insurance is payable by all UK individuals aged over 16 that are either employed or self-employed and their earning are above a certain level. If you are an employee and reach the state retirement age you are no longer required to make NICs. Similarly if you are self-employed and reach the state retirement age you immediately are no longer required to make class 2 NICs, and from the tax year following the year you reached the state retirement age you are no longer required to make class 4 contributions.
The various classes of National Insurance contributions are detailed below:
Class 1 – paid by employees, sometimes politicians have referred to this as “an employment tax” or “a tax on Jobs”. Two elements to class 1 contributions which are employee’s contributions are deducted from an employees pay. Employer’s contributions are paid by employers when they pay employees.
Class 2 – this paid by self employed people. It is a flat rate regardless of earning (provided that the self-employed person has earning over a certain level, if earnings are lower than this level then a “small earning exemption” may be applied for). These are normally paid either quarterly via a bill from HMRC or monthly by direct debit.
Class 3 – These are voluntary National Insurance Contributions, in certain circumstances some people may wish to make these. For example, but not limited to, you have not made sufficient contributions in the year or perhaps you are living abroad but want to maintain your potential UK state benefits. It is highly recommended that you speak to an experienced professional prior to making such contributions.
Class 4 – These are payable by self-employed people in addition to Class 2 contributions, if their income is above a certain level. The level of these contributions are dependent on earnings. Class 4 National Insurance contributions are normally payable with income tax calculated on an individual’s Self-assessment tax return.
If you have any concerns about your National Insurance payments or record we suggest you contact a suitably qualified and experienced professional such as a South Wales Chartered Accountant.
If you found this article useful you may find this blog useful too Cardiff Accountants!
The author does not guarantee the accuracy of any information provided in this article and recommends that you do not take any action, whatsoever, based on the information provided. By the fullest extent permitted by law, the author does not accept any responsibility for any actions you may or may not take based on information contained in this article. This article contains general information and is not a substitute for specific independent professional advice.
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Tags: Accountants
Posted in Taxes · July 26th, 2010 · Comments (0)