All posts by Calcutt Matthews

Award winning firm of Chartered Accountants, specialising in Business Growth and reducing your tax.

Research and Development

ARE YOU R & EA D Y?

What comes to mind when you hear the term research and development?

Men in white coats, with black spectacles, hovering over microscopes?

If that is the case you may be in for a surprise!

R & D is not limited to laboratories. If you run a business in the field of IT, food technology, construction, software, electronics or communications than you may maybe undertaking R & D without even being aware of it.

If you think that this is the case you are missing out on valuable source of tax relief.

The government is keen for entrepreneurs and business owners to “push the boundaries” and have subsequently laid out very generous tax reliefs.

For instance if you are an ‘SME’ (small medium enterprise – employing less than 500 people or a balance sheet of gross assets not exceeding £86m) than you could qualify for a reduction of 230% on certain costs incurred in research and develop.

Alternatively the HMRC allows you to surrender any losses to receive a tax refund of 14.5% (£33.35 for every £100) spent on qualifying expenditure.

Qualifying expenditure can include staff costs, consumables associated with the project, software and workers who may have to be drafted in.

Qualifying expenditure does not include capital expenditure, but this benefits from other tax reliefs.

Example 1

If you work in the food industry and have been inspired to create a new taste of alcohol or food and have had to develop the technology to do it.

Example 2

You own an IT company and need to construct a costing and processing system to measure the expenditure and progress of external client work.

Remember a project does not have to be a success to benefit from R & D tax relief!

If you want to be the next Richard Branson or James Dyson  – than remember the letters R & D and get in touch with us at Calcutt Matthews – we would be happy to advise you on the potential tax relief to your business.

The new ‘tax-free’ childcare system – will it help you?

In 2013 the government announced their plan to restrict employer based voucher systems of subsidised childcare. The new tax-free system has already come into effect, and you only have until April 2018 to decide which system to enrol in. So, what are the main points you need to know, and how can we help you to make the right choice for the future of your children?

The Previous System

The government’s previous system for assisting parents with the cost of childcare, involved employers setting up the use of childcare vouchers through a salary-sacrifice system. This was available only to employed parents, and enables each parent paying basic rate tax to receive up to £933 per annum for childcare for children up to age 16 (17 if disabled).

The New System

The new system provides parents with an account into which can be paid money for childcare. The government will top-up the account, so for every 80p you put in, you will receive an extra 20p from the government, up to a total of £2,000 (£4,000 if disabled). This means that for every £1 in the account, 20% of it is given to you by the government. The scheme is the equivalent of ‘tax free’ as you effectively aren’t paying the 20% VAT, thus it is more like a government subsidy than a tax-free programme. This scheme is open to both the employed and the self-employed with each parent’s earnings below £100,000, but will only be provided for children up to the age of 11.

What it Could Mean for You

This is a time-limited option as new entrants to the previous system will not be permitted after April 2018. Adopting the new tax-free system could save you a large amount on childcare costs. However, depending on your situation, it could be significantly more beneficial to remain with the voucher system.

How We Can Help

Our expertise will help you to comprehensively review your childcare situation. We are able to give you the best advice on which option will save you more money in the long term interests of care for your child. Please contact us if you would like further assistance.

Fed up with reconstructing mileage expenses?

So today we want to tell you all about this genius new app that we have been using to log everyone’s mileage…

Mile IQ – www.mileiq.com

It basically uses the GPS in a smart phone to automatically log the number of miles that have been traveled, meaning there’s zero chance of you ever forgetting a business trip again.

All you need to do is download the app, then when you get in your car, swipe left if you’re taking a personal trip and right if you want it recorded as a business trip, it’s as simple as that!

You can add notes to the journey, like perhaps the name of the client you are visiting, so that your memory is jogged when looking at it at a later date.

It’s cost effective at £4 per month, and will help provide strong evidence to HMRC of the genuine miles you have traveled – what’s not to love?!

 

Budget 2017 – what does it mean for you?

You may be wondering how the greatly talked about Spring 2017 budget could potentially impact your life in the future. Here we discuss the possible impact on your personal financial circumstances.

 

What if you are…

1. A Director or shareholder of a limited Company?

The dividend allowance is being reduced even further; from April 2018, only £2000 will be tax free, compared to the £5000 currently allowed.

Additionally, Corporation Tax is being reduced to 19%, from the current 20%.

2. An individual who pays National Insurance?

If you are employed, then there are no changes that will affect you. For the self-employed, however, Class 2 contributions are being scrapped. (This is the flat rate that many pay on a weekly or monthly basis). This would save the average self-employed person £146 per year.

Class 4 contributions, which are paid on any profits over £8060, are staying at 9%.

3. An employee?

The amount you can earn tax free from April 2018 will be £11 500. Additionally, the higher rate threshold (above which you are taxed at 40%) is increasing to £45 000.

4. Subject to business rates?

The government is providing extra support for those who are facing significant increases in their business rates. Those who are losing Small Business Rate Relief will have their new rates capped at the greater of £600 or the real terms transitional relief cap for small businesses. Additionally, the local government will be given extra funding to use at their discretion for those especially hit hard.

Pubs will receive an additional £1000 annual discount (for rates up to £100 000).

5. None of the above?

There are various other announcements that the government is hoping to achieve. For example, funding is being set aside to create a 5G mobile network, to increase coverage and internet speeds.

Also, an additional £2 billion is being sent to councils to provide adult social care services, and £100 million for investment in A&E services.

 

If you have any further questions about the impact of the Budget on your personal or corporate situation, please don’t hesitate to get in contact with us for tax planning or consultancy advice.

Xero to 100, Business made Easy

Why You Should use Xero


Calcutt Matthews loves Xero
.  Why you ask?  Firstly, it has changed the industry for accountants and been a true pioneer in the fin-tech field.  Secondly, it has changed the daily grind for business owners and sole traders everywhere, leaving competing software at the starting line.

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Why is Xero the top accounting software recommendation to all our clients?

  • Automated Bank Feeds. What is this you ask?  As long as you bank with one of the banks who already work with Xero (as of today’s date, these include NatWest, HSBC, Metro Bank, Royal Bank of Scotland, RBS International, Santander Corporate and Commercial and Silicon Valley Bank), you can apply to have all your bank transactions automatically downloaded, the day after they happen, into the Xero software.  What benefits? No inputting of data from the bank statement.
  • Easy bank reconciliation. Bank reconciliation has never been so easy.  Xero automatically matches transactions together based on amount, date and reference, which are then reconciled in one click and you can also set the software to recognise repeating bank transactions easily.  If you like your bank reconciliation done every day you are looking at 5 minutes each day for an average amount of transactions or less if you get really good at it.
  • Cloud Based accounting software. Being cloud based makes Xero very easy to access – you are no longer restricted to one computer and can access Xero on your mobile, tablet or desktop – wherever you have access to the internet.
  • No more software updates. This is such a relief to no longer have to do yearly updates to accounting software – a much loathed task in our office!  Xero takes care of all the updates.  You can benefit from this as a Xero Customer as Xero can apply brilliant ideas constantly to the software without having to wait a year to release an update.  In one year Xero made over 500 improvements to its software – without any hassle to users.  It’s an accountants dream.
  • Accountants wish list. When a client telephones our office with a query on a transaction entered on Xero there is nothing better for an accountant to see for themselves what the problem is.  Another benefit with using Xero is that accountants are given the ability to log in and see the exactly the same screen that the client is looking at and, if necessary, correct the problem in the same phone call too with a live update to the clients data.
  • How much I hear you ask? The fees are dreamy too! There are various modules to use depending on the size of your business.  You are looking at:

-Starter (for a 1 person business) – £4.50 per month

-Standard (for slightly larger than 1 person) – £10.00 per month

-Premium (for SME ) – £12.50 per month.

If you are a new or existing business and would like a demonstration or training about further Xero benefits then please call Calcutt Matthews on 01233 623300 (or email: enquiries@calcutt-m.co.uk) to book an appointment.  Calcutt Matthews are registered Xero certified advisors.

Helpful Links: https://www.xero.com/uk/

Turnover is vanity-Business Growth school 101!

Some years ago, back in business school 101, this was the first lesson I learnt…
I was 25, worked for Deloitte and I couldn’t believe my eyes. I had been sent to visit a family construction group whose turnover for the previous year was £10 million, but this year it was £2 million. After 10 minutes onsite I called my manager, worried that these people were going into administration and asking if I should come back to the office – were we going to get paid?!

This is when I learnt one of the most valuable business lessons: “turnover is vanity profit is sanity”. My manager calmly asked me to check the profit. Sure enough, although the turnover had gone down from £10-£2 million, last years profit on £10 million was £500,000 but this years profit on £2 million was £800,000!

After the initial panic and then letting my brain fry for five minutes, I got it. The family had realised that turnover was just vanity. All those construction projects were going wrong on site and there was nothing they could do to halt it. So they moved out of the building side of things and concentrated on the design and land dealing. They found the key in a different product with a higher margin and immediately started to make more money.

So what is the lesson here? It is dependent on the price elasticity of whatever you sell, but if price is elastic then there is always an opportunity. Sit up and change what you’re doing right now if you are not already making millions!

There are some areas that this isn’t always possible. If you own a sweet shop for example, there’s not much you can do about your margin – everybody sells Mars bars at the same price! In this case it is just about turnover, the more customers …the more profit. However the sweet shop example really only applies to about 10% of businesses. For the rest of us we can choose what we sell, be it service or product. So if we shift to a higher margin product or service, we can change our lives within weeks.

So that’s all I want to say today, to share with you the main secret of Business Growth. After a decade of helping businesses grow and winning major awards for doing so, I can tell you that this works every time. If you want to get my opinion on what your business can achieve, please get in touch. After all that’s what this blog is all about – free information to really grow your business.

So what are you waiting for? Get to it right now everyone!
Nick