Post-pandemic Accountancy support and HMRC changes for 2022

Post-pandemic Accountancy support and HMRC changes for 2022

finance designated

Over the past few years, it has been difficult to keep up with the ever-changing landscape that is, business finance. There have been several schemes announced by the UK Government to support both businesses and their employees but staying on top of all the changes and keeping everybody informed hasn’t always been easy. There have been several changes that come into effect this year, from the end of the Coronavirus working from home tax concessions to the commencement of tax digital and an increase in HMRC’s late payments interest rates. Not to mention 2021 IR35 announcements. We have discussed some of these changes before but we thought as we are hitting a busy time of the year for accounting, it might be useful to share information and resources about these upcoming changes.

Coronavirus working from home tax concession to stop in April 2022
If you or your teams have spent some time working from home since the start of the pandemic, you probably already know about the Coronavirus working from home tax concessions. From April 6 2020 employees have been able to claim some tax relief if they have needed to work from home because of the pandemic. The tax relief is worth between £62 and £125 pa. This is based on 20% of £312 pa or 40% of £312, depending on whether the employee was a basic rate or higher rate taxpayer in the tax year. The allowance can be claimed in both tax years 2020-21 and 2021/22 if an employee was required to work from home at some point during each of the two tax years. By concession, whilst the amount is defined as £6 per week, it allows the full £312 pa to be claimed for the full tax even if the employee only spent a single day working from home. If an employee chooses voluntarily to work from home then they are not entitled to the concession allowance.

As the UK government are no longer recommending businesses to ask their staff to work from home, the scheme will be ending on 6 April 2022. After 5 April 2022, if an employee wishes to claim tax relief for employment-related expenses they will need to comply with the well-established strict traditional tax rules, and only if they have to work from home. Furthermore, claims can only be made for the actual time they have to work from home and the concession that even working from home for one day permits a whole year’s claim will stop.

HMRC says that to be able to claim tax relief, if applicable, an employee can only consider costs like gas and electricity, metered water business phone calls, including dial-up internet access etc.
HMRC say that you cannot claim for the whole bill, just the part that relates to your work i.e. the extra costs incurred by working from home and that you’ll need evidence, such as receipts, bills or contracts, to be able to claim tax relief.

Making Tax Digital for VAT affected companies
From 1st April 2022, all VAT-registered businesses will have to submit their financial accounts information via software that is compliant with the UK governments Making Tax Digital scheme. Since 2019 only businesses which exceeded the VAT threshold of £85,000 have needed to submit their tax details in this way. From next year, however, an additional 7,000 registered VAT businesses will be eligible.

To comply with the new HMRC Making Tax Digital rules, these businesses must have a cloud computer software package – one which is compliant with the government’s Application Programming Interface (API) system. It will no longer be possible for VAT-eligible businesses to submit via the HMRC website.

You are probably wondering whether the government is recommending a particular piece of software, they are not. But businesses that don’t have an accountant will be required to find their own third-party provider to provide the appropriate software and meet the new regulations. The majority of current desktop accounting software won’t be compatible with the government’s system and will likely need to be updated. The same applies to older accounting software packages. Cloud-based software packages should automatically update for HMRC’s Making Tax Digital system. At Designated Medical we are already helping our clients transition to Tax Digital. If you would like accountancy and compliance support, please don’t hesitate to get in touch with our friendly team at Designated Medical.

The changes to IR35 and how it could affect you or your employees
Not necessarily a change for 2022, however, it is something we are still being asked about and something people are still getting their heads around. IR35 is tax legislation that ensures that contractors who are knowingly or not working as ‘disguised employees’ pay the correct tax.
You may have applied for contract jobs in the past where the company said they wanted to pay you under an ‘umbrella company,’ i.e., an agency. This is because it is more tax-efficient for them to do so. You become what is termed a ‘disguised employee’, and the company doesn’t have to pay your National Insurance contributions, nor do they have to offer sick pay or holiday leave. That’s because the agency pays it.

Equally, when you’re a contractor working as a limited company, you can pay corporation tax at 20 per cent on your profits, claim business costs against your tax bill and avoid making National Insurance Contributions (NIC) by paying yourself through dividends.

Gordon Brown introduced IR35 back in 2000 when he was Chancellor of the Exchequer. That’s because when working as it should, HMRC IR35 tax can protect both the contractor and company. Crucially for the government, it also means HMRC won’t lose out on tax. This year though, changes to the rule have come into place.

When you are determining whether or not IR35 applies to you, you will either be found to be ‘inside IR35’ or ‘outside IR35’. These phrases are crucial to defining and understanding your status, and considering whether or not the legislation will impact your future contractual work.

At Designated Medical, our objective is to allow you to focus on growing your business whilst we provide the business support services you need. We offer a full range of services including Medical PA, marketing, accountancy HR and Recruitment.

We provide you with the expert financial support you need for your business, flexibly and cost-effectively, so that you can ensure you deliver the greatest client experience. Our team of Designated Medical Accountants are fully qualified and licenced and will take responsibility for the professional management of your finances. They will be supported daily by our team of qualified bookkeepers who will handle the day-to-day transactions.

If you would like to know more about our Accountancy services, please don’t hesitate to reach out to our friendly finance team who will be more than happy to answer any enquiries you may have.

 

How to complete a self-assessment tax return. Let’s talk taxes.

How to complete a self-assessment tax return. Let’s talk taxes.

Taxes Self Assessment

Before we can tuck into the Turkey, let’s talk taxes. Although many of us are about to wind down for Christmas, now is actually a perfect time to get ahead for the new year and start gathering everything we will need to prepare for HMRC’s self-assessment tax return.

If you have been wondering whether you need to complete a tax return, the following guide should give you all of the basic information you need. For further details please head to https://www.gov.uk/check-if-you-need-tax-return.


Do I need to complete a self-assessment tax return?

Most people are taxed at the source and do not need to worry about submitting a self-assessment tax return, “however, if in the last tax year (6 April to 5 April ) you have worked as self-employed or as a partner and/or earned more than £1,000 (before taking off anything you can claim tax relief on)then you must register as self-employed with HMRC.

It’s also worth noting that any directors of limited companies that wish to receive dividends must also be registered as self-employed to ensure they are correctly taxed.”

You will not usually need to send a return if your only income is from your wages or pension. But you may need to send one if you have any other untaxed income, such as:

  • money from renting out a property
  • tips and commission
  • income from savings, investments and dividends
  • foreign income

HMRC may contact you with a tax return to complete if:

  • You have untaxed income from investment, land or property, or from overseas.
  • You make capital gains above the annual exempt amount (£12,300 for 2020-21 and 2021-22). you were required to fill in a tax return last year.
  • You’re a pensioner who gets a reduced age-related allowance, though you may be sent a special short version that requires fewer details.

 

It is however your responsibility to make sure that you declare all taxable income, on time. If you receive a tax return, you must return it, regardless of whether you owe tax or not.

How to register and submit a tax return

If you’re looking to submit a tax return for the first time, you’ll need to register for self-assessment first. The steps are below.

Register with HMRC: The process will vary depending on whether you’re self-employed, registering a partnership or not self-employed – you should click on the option that applies to you. You can register online via HMRC.

Get your Unique Taxpayer Reference (UTR) number: HMRC will send this to you in a letter after you register. The letter will give instructions on how to set up your Government Gateway account.

Use your activation code for your Government Gateway account: Once this is done, you’ll be sent another letter in the post containing your activation code. You’ll need this to complete the set-up of your account – you should do this promptly as the code will expire.

Complete your account setup: It’s only once your Government Gateway account is up and running that you’ll be able to log in and submit your tax return.

HMRC warns that the whole process could take up to 20 working days, so make sure you don’t leave it until the last minute.

 

What are the deadlines for completing a tax return

The deadline for completing a self-assessment tax returns are:

5 October 2021: Deadline to register for self-assessment for the first time

31 October 2021: paper tax return deadline 31 January 2022: online tax return deadline (HMRC says you can submit up to 28 February 2021 without getting an instant penalty)

31 January 2022: tax payment deadline for 2020-21 tax owed, plus any outstanding tax from 2019-20 if you took out a payment arrangement with HMRC. If you pay your tax by payments on account you may have already made payments towards this bill.

HMRC has the power to charge increasingly expensive penalties if you miss the tax return deadline, which starts with a £100 fine from the first day your return is late.

If you need help completing your tax return, our experienced and professional Accountancy team can carry out the leg work for you, ensuring a smooth, simple and stress-free process. Contact Vicky by telephone 0207 952 1460 or via email at info@designatedgroup.com

 

The ultimate business hashtag list 2021

The ultimate business hashtag list 2021

Ultimate business hashtag listv designated

    What are hashtags and why should you consider using them for your social media marketing? What is the best business hashtag list to use for your business?

    A hashtag (#) is a label (or labels) attached to a social media post. It’s a simple way for people to search for common topics across social media platforms.

    You might be familiar with hashtags on Twitter, but they are used widely across LinkedIn, Facebook, Instagram, and Pinterest. You can follow hashtags you might be interested in on LinkedIn and Instagram, plus you can add them to Instagram and Facebook Stories.

    The key with hashtags is to fully understand your audience and ensure you use the most relevant hashtags for your content. We talk more about this in our recent blog post Why use hashtags in your social media posts

    So where can you start? We’ve done some initial research for you on the most popular business hashtags list, which can be used for many types of businesses. Don’t try to use them all at once! Experiment with these broad hashtags and see which ones work for you.

    Does this all seem like too much effort? Do you not have the time to do all the research needed to get the most effective list of hashtags for your business?  Why don’t you let our team at Designated look into a social media strategy for you and take care of all your hashtags at the same time!

     

    The Best Business Hashtag List for Instagram

    #businesscoach

    #digitalmarketing

    #digitalbusiness

    #business

    #investing

    #wealth

    #money

    #businesstips

    #startup

    #entrepreneur

     

    The Best Hashtags For Marketing for Instagram

    #adwords

    #mktdigital

    #inboundmarketing

    #googleadwords

    #marketingconsultant

    #facebookads

    #digitalagency

    #socialmedia

     

    The best hashtags for Medical for Instagram

    #heathcare

    #medstudent

    #nurses

    #healthcare

    #pharmacy

    #medicalstudents

    #clinical

    #nurse

    #medicallife

    #medicalcare

     

    The Best Hashtags For Restaurants for Instagram

    #chef

    #foodtruck

    #dinner

    #restaurant

    #familyrestaurant

    #finedine

    #instarestaurant

    #restaurantstyle

    #bestrestaurants

    #restaurantlife

     

    The Best Hashtags For Fitness for Instagram

    #fitsporation

    #fitnessmodel

    #fit

    #workout

    #instafitness

    #gymlife

    #getfit

    #fitnessaddict

    #gym

    #fitnessmotivation

     

    The Best Hashtags For Events for Instagram

    #specialevents

    #partyplanning

    #event

    #eventservices

    #corporateevent

    #eventpros

    #eventsplanning

    #venues

    #eventsplanner

    #eventmanager

     

    The Best Hashtags For Recruitment for Instagram

    #interviewtips

    #applynow

    #careergoals

    #employers

    #employer

    #careerdevelopment

    #jobinterview

    #recruitmentagency

    #jobsearching

    #recruiterlife

     

    Want to find out more about using social media to raise your brand awareness and drive sales, contact designated’s marketing director Michelle who would be happy to tell you all about our fab team: michelle.wheeler@designated.com

    IR35 Reforms – the story so far

    IR35 Reforms – the story so far

    IR35


    It’s been more than two months since the introduction of reforms to the IR35 rules and in that time, thousands of contractors have required contractual assessment and review. 

    JSA Group’s assessment platform, IR35 Complete™, has been used to assess contractors with over 750 hiring organisations across numerous industry sectors since the reforms were implemented.  Naturally, this scale of deployment leads to a healthy data set, offering interesting insight about what’s happening in the marketplace.

    To date, 18.9% of the off-payroll status determination assessments carried out through IR35 Complete™ have identified that the hiring organisation is in fact not responsible for producing an assessment due to them qualifying for the “small company exemption”. In such scenarios, the IR35 assessment responsibility continues to sit with the worker themselves. The IR35 Complete™ assessment process specifically screens hiring organisations based on their size to ensure that supply chains don’t become polluted with invalid Status Determination Statements produced by exempted hirers.

    “Inside” IR35 determinations account for just 28.2% of determinations made. This is interesting because of pre-April concerns that many more contractors were going to be officially classified as “inside” IR35. Of course, there is still some application of blanket “inside” IR35 decisions which isn’t reflected in this figure, but we believe this statistic speaks volumes about the value of carrying out genuine assessments. When roles are properly assessed, instances of “inside” IR35 are much less common, indicating the unfairness of large-scale blanket “inside” IR35 determinations.

    “Outside” IR35 determinations show up in 52.8% of cases. When we consider that in practice this number can most likely be combined with the 18.9% of cases where the worker remains responsible for their own IR35 determination, that effectively means that in nearly three quarters of cases, there is no change of IR35 status disruption injected into the supply chain; it’s effectively “business as usual”.

    All of this underlines the need for quality, timely and accurate IR35 assessments.

     

    Article originally posted on theglobalrecruiter.com, August 2021

    What is IR35 and what does it mean for you?

    What is IR35 and what does it mean for you?

    ir35

    Article originally posted here, written by Nick Green, financial journalist. 

    What is IR35 and how can you avoid being caught out by it? We explain what this controversial tax change means for contractors and the businesses that hire them, and how to take steps to reduce the risk of being sunk by the IR35 trap. 

    Small businesses and freelancers alike have been bracing themselves for an imminent change in a piece of tax-avoidance legislation. This has been pushed back thanks to the coronavirus, but it still means that from April 2021 private sector employers will have to follow the same rules as the public sector with regard to IR35. The Federation of Small Businesses has warned that both companies and contractors will feel the pinch. 

    What is IR35? 
    IR35 is also known as the ‘off-payroll working rules’. IR35 is designed to prevent workers from avoiding tax by operating as contractors, when really they are employees in all but name. So for example, if a contractor operates via their own limited company, but is otherwise treated the same as their client’s employees, they are considered to be ‘inside IR35’ and will need to make additional tax payments. 

    What is the new change concerning IR35?
    IR35 was originally introduced by Gordon Brown, to prevent employees from avoiding tax by being treated as contractors. However, since then the legislation has become notorious, sometimes implicating businesses that believed they were hiring contractors appropriately, only for HMRC to disagree. 

    Post-April 2021, private sector employers will be held responsible for determining whether IR35 applies to any contractor they hire – which would require them to treat the contractor as an employee for tax purposes. This is already the case in the public sector. 

    Private sector businesses will therefore face a tricky choice: continue to treat contractors as contractors and risk a hefty fine if HMRC takes a different view – or treat them as employees with the additional costs and responsibilities this involves. There is widespread concern that genuine contractors will be classed as employees, and so will either take an unfair tax hit, or lose their contracts altogether. 

    Are you inside or outside IR35? 
    IR35 was introduced because of the way employees are treated differently from contractors. With an employee, an employer must provide a workplace pension, paid holiday, sick pay, other benefits (perhaps) and pay employer’s National Insurance contributions. A contractor, on the other hand, is paid a flat fee and can be dismissed easily if there is no more work for them to do. 

    The vast majority of contractors operate as limited companies, either one-person companies or ‘umbrella’ companies. It’s rare for contractors to be sole traders, as unlimited liability make this risky for them, while companies are wary of hiring them in case HMRC thinks they are employees. Operating as a company also means the contractor can pay less tax. 

    However, operating as a company doesn’t prevent a contractor from being an employee in all but name – which is where IR35 comes in. Broadly, IR35 says, ‘If it looks like a duck and quacks like a duck, it’s a duck.’ In other words, if the contractor is working like an employee, with similar obligations, then they should be treated as one for tax purposes. HMRC therefore looks very closely at what it calls ‘personal service companies’. 

    What’s a personal service company? 
    Though the name may sound dubious, a personal service company (PSC) is merely a company through which a contractor operates in order to do their freelance work (because most businesses won’t hire a sole trader). The term isn’t defined in law – HMRC simply uses this label to describe companies that may be used as ‘cover’ by contractors who are really employees in all but name. 

    This creates a double problem, affecting both contractors and the businesses that want to use them. If a business is afraid that any contractor it hires might be considered an employee by HMRC, it may not risk hiring them at all. In this case, both the business and the contractor lose out. This is what many small business fear will happen post-April 2021. 

    Can I check my IR35 employment status? 
    HMRC offers an online tool, Check Employment Status for Tax (CEST) that you can use to give yourself a general guide to your status. However, industry bodies (including IPSE, the Association of Independent Professionals and the Self-Employed) fear it is still not fit for purpose. Contractors, recruitment agencies and end-clients therefore shouldn’t rely on it wholly when determining IR35 status. 

    The biggest problem with CEST: the MoO factor 
    One of the key deficiencies of the CEST tool is that it does not factor in ‘Mutuality of Obligation’ (MoO). Mutuality of Obligation is one of the defining characteristics of employment, in that the employee has certain obligations towards the employer, and vice versa. Many of these obligations do not apply to contractors (e.g. the contractor can choose where and how to deliver the work, and can delegate it to an associate if necessary; while the client is not obliged to offer the contractor more work). MoO has been a decisive factor in a number of recent IR35 tribunals, which is another reason why the CEST tool is still only a rough guide. 

    8 tips on how contractors and businesses can avoid IR35 

    Fears that the changes to IR35 will spell the death of freelancing are exaggerated. By taking the appropriate steps, both contractors and businesses can ensure that they do not fall foul of IR35. 

    Remember, IR35 is something that applies to a role, rather than an individual. So just because you were outside it on your last assignment, doesn’t mean that you won’t be inside it on your next one. For every assignment that you take on as a contractor, the most important thing is to be able to show that you are ‘in business on your own account’ and therefore not an employee. 

    Tips for proving you are ‘in business on your own account’ 

    If you are a contractor operating through a limited company (either your own or an umbrella company), HMRC may ask for evidence that you are genuinely freelance, and not just an employee of your client. Here are some ways that you could make your case. 

    1. Highlight the ways your work situation differs from employees’ 

    Genuine employees will have certain set working conditions, such as minimum hours, pension arrangements and other benefits, and perhaps subsidised services too. The employer also has a duty to provide work for them, which the employee has an obligation to do – and the employer can stipulate where and how the work is to be carried out. You should be able to show that little if any of this applies to you. 

    2. Keep client correspondence 

    If you have emails that clearly state you are not under the control of a manager at the business, but are simply contracted to provide a service, this can be useful too. 

    3. Don’t name your company after yourself 

    HMRC knows that a company named after a person may well be just that person, and this fits their profile of a PSC. But if your company has a more ‘business-like’ name, e.g. XYZ Design, it emphasises the fact that your company is distinct from you, and that you could delegate the work to another person if necessary. Employees cannot delegate in this way, so it marks you out as different. 

    4. Have your own marketing materials 

    You should be able to demonstrate that you market your contracting services actively. Have a listing on relevant services website, post adverts and print business cards, all of which help to indicate that you are in business on your own account. Never use a business card which includes your client’s branding! 

    5. Maintain your own office 

    A well-equipped office, even just in your own home, will strongly imply that your work activities extend well beyond your current client. If you also invest in your own software licences, trade literature and professional memberships, this can help a great deal too. 

    6. Take out your own business insurance 

    Having your own business insurance, such as professional indemnity insurance, is a great way of demonstrating that you’re not just an employee. 

    7. Invest in your professional development 

    Employees don’t pay for their own training, so if you pay for yours this will be another useful point of difference. Some professions may require you to take continued professional development (CPD) to remain qualified, so by paying for this you’re also reasserting your contractor status. 

    8. Try to have multiple clients at the same time 

    It’s not always possible to arrange, but if your time is split fairly evenly between two or more main clients, it’s much harder for HMRC to claim you’re an employee of any of them. However, having a very uneven split (e.g. 90 per cent of your income deriving from one client) may be less convincing. 

    The more of these strands of evidence you can call upon, the more likely it is that HMRC will accept you are in business on your own account. Having just one or two on their own may not be enough. 

    IR35 tips for businesses hiring contractors 

    If your business hires contractors, either from time to time or on an ongoing basis, then you should review your relationships with them to ensure they don’t fall inside IR35. 

    From April 2021 it will be your responsibility to determine whether a worker is an employee or a contractor for tax purposes. You will have to issue a Status Determination Statement to your contractors, which makes their IR35 status clear (inside or outside the rules) and explains why. As long as you support your decision with sufficient evidence and file the appropriate tax documents, you should avoid any penalties. 

    In summary, you should: 

    1. Review all your relationships with contractors and/or consultants 
    1. Make sure your terms of engagement are clear and accurate 
    1. Provide contractors with their Status Determination Statement 
    1. Consider changing some contractors into employees if they fall within IR35 and if this is a more practical solution for you both 

    Will I have to give my contractors employment rights? 

    Some contractors who fall within IR35 and are treated as employees for tax purposes may feel they are entitled to full employment status, with all the protections that go with it. There are many potential issues that can arise from this, such as claims for backdated holiday pay, which will have to be addressed on a case-by-case basis. 

    Ask your accountant to help you face up to IR35 with confidence. 

     

    What’s new in social media?

    What’s new in social media?

    Social Media

    With social media constantly evolving we look at some of the latest updates to some of the most commonly used social media platforms.

    Facebook introduces the rollout of Facebook Reels

    Earlier this month, Facebook announced that it will begin the rollout of Facebook Reels in the U.S. Select Facebook users are now able to create Reels within the Facebook app (on both iOS and Android), and share them to Facebook Groups and their News Feeds.  Facebook Reels, which will give Facebook users the ability to create and share short-form video content directly within the News Feed or within Facebook Groups.

    Find out more: https://techcrunch.com/2021/08/19/in-growing-battle-with-tiktok-facebook-to-test-facebook-reels-in-the-u-s/?utm_content=bufferdbe92&utm_medium=social&utm_source=twitter&utm_campaign=buffer

     

    Facebook and Instagram face criticism for Covid misinformation

    Social media companies came under fire after a report by the non-profit Center for Countering Digital Hate (CCDH) revealed that a group dubbed the “disinformation dozen” are responsible for 65% of online anti-vaccine content.

    https://blog.hootsuite.com/social-media-updates/facebook/instagram-facebook-criticized-for-covid-misinformation/

     

    Instagram Reels can now be 60 seconds long! (hurrah)

    In response to community feedback, Instagram will now allow Reels to be up to one minute in length. Reels first launched with a 15-second time limit in August 2020, and was doubled to 30 seconds a month later. https://blog.hootsuite.com/social-media-updates/instagram/reels-up-to-60-seconds-long/

     

    TikTok has announced new partnerships with both Vimeo and Canva to provide more ways for marketers to build better campaign creative in each respective app.

    The new integrations will facilitate direct connection between TikTok Ad Manager and each platform, making it easy to build TikTok creative, and upload it straight into your campaign. The creative options also align with key TikTok dimensions and creative flows, ensuring that your clips feel natural and in line with the rest of the platform – and not too polished and ad-like, which is a key consideration in your TikTok marketing approach.

    https://www.socialmediatoday.com/news/tiktok-announces-new-partnerships-with-vimeo-and-canva-to-streamline-conten/605080/

     

    We also thought you may find interesting, recent marketing statistics from the social media examiner industry report

    • Instagram is hot: Seventy-eight percent of marketers are using Instagram. It’s the second most important social platform for marketing (behind Facebook). A significant 64% of marketers plan on increasing their Instagram organic activities over the next 12 months. Instagram is the number-one platform marketers want to learn more about.
    • Stories video use is on the rise: Short-form video is growing. More than half of all marketers regularly use Instagram and Facebook for video-based stories.
    • YouTube interest is high: A significant 71% of marketers plan on increasing their use of YouTube video and 72% want to learn more about organic video marketing on the platform.
    • TikTok is ignored by most marketers: Only 9% of marketers are using TikTok. A significant 68% do not plan on using the platform in the next year; however, 32% are interested in learning more about TikTok.
    • Facebook dominance still strong: A very significant 93% of marketers use Facebook (followed by Instagram at 78%). Fifty-four percent of marketers claim Facebook is their most important social platform. Facebook Live is the leading live video platform used by 30% of marketers. Facebook ads are used by 75% of marketers and 61% find the Facebook ads platform the most important for ads.

     

    Their research also shows a significant 64% of marketers plan on increasing their Instagram organic activities over the next 12 months, making it the top platform where marketers plan on doing more.

    You can download the full report here:

    https://www.socialmediaexaminer.com/report/

    If you want to find out more about using social media to raise your brand awareness and drive sales, contact designated’s marketing director Michelle who would be happy to tell you all about our fab team: michelle.wheeler@designated.com

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