Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Aug 26, 2022 | Making Tax Digital, VAT

Are you a VAT registered business not yet signed up to Making Tax Digital (MTD) – Your deadline is 31st October 2022

Photograph of Sue Haynes bookkeeper

 

There is no getting away from it, Marking Tax Digital (MTD) for VAT is fast approaching. All VAT registered businesses, regardless of whether they are under or over the £85,000 threshold, will no longer be able to use their existing VAT online account to file their quarterly or monthly returns after 31𝙨𝙩 𝙊𝙘𝙩𝙤𝙗𝙚𝙧 2022.

 For businesses that file yearly returns, they will no longer be able to use their existing VAT online account after 15𝙩𝙝 𝙈𝙖𝙮 2023.

 By law, if they have not already done so, all VAT-registered business must now sign up to Making Tax Digital (MTD) and use MTD-compatible software to keep their VAT records and file their VAT returns.

 

Using MTD software to keep digital records and file VAT returns

is not enough, you MUST sign up to MTD for VAT before

you file your next return.

  

Not yet signed up for MTD, check out the steps below to become MTD compliant and avoid possible penalties that may be levied 

  • Chose MTD-compatible software that is right for you and your business. Here at Cactus Bookkeeping we use FreeAgent, QuickBooks, Sage and Xero, however HMRC’s website has a huge list of MTD compliant software which can be found at https://bit.ly/MTDCompatibleSoftware

 It’s important to find software that is right for you and your business and if you are in any doubt about which one is right for you, speak to a bookkeeper or accountant who can offer an unbiased view based on you and your business requirements. 

  • Sign up for MTD at https://bit.ly/SignUpForMTD Remember, just using MTD compliant software is not enough, you must sign up for MTD. 

To sign up for MTD you will need the following:

  • your business email address
  • a Government Gateway ID, if you do not have one, you can create this when you use the service
  • your VAT registration number and latest VAT return

You will also need:

  • your National Insurance number if you are a sole trader
  • your company registration number and Unique Taxpayer Reference if you are a limited company or registered society
  • your Unique Taxpayer Reference and the postcode where you are registered for Self-Assessment if you are a general partnership
  • your Unique Taxpayer Reference, the postcode where you are registered for Self-Assessment and your company’s registration number if you are a limited partnership 
  • Keep digital records for your current and future VAT returns. Nothing has changed in this regard, you need to keep paperwork relating to everything you buy and sell (including zero-rated, reduced and VAT exempt items). Also keeping bank statements, cash books, cheque stubs, paying-in slips and till rolls. 

You must keep some VAT records digitally, unless you are MTD exempt, and these can be found at https://bit.ly/DigitalRecordKeeping

  How to apply for an exemption from using software

 If you are already exempt from filing VAT returns online or if your business is subject to an insolvency procedure, you are automatically exempt.

 You can check if you can apply for an exemption at https://bit.ly/ExemptionfromMTD if it is not reasonable or practical for you to use computers, software of the internet. HMRC will consider each application on a case-by-case basis.

 

 If MTD for VAT is filling you with dread, please get in touch for a chat to see how we can help.

 

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

When should you register for VAT?

When should you register for VAT?

May 20, 2022 | All Categories, VAT

When should you register for VAT?

You are required to register your business for VAT with HM Revenue and Customs (HMRC) if: 

  • your total VAT taxable turnover (your sales) over the last 12 months was over £85,000, the current threshold for 2022/23 tax year 
  • you expect your turnover to go over £85,000 in the next 30 days

 You have 30 days from the end of the month you go over the threshold to register for VAT.

 Your effective date of registration is the first day of the second month after you go over the threshold.

 From your effective date of registration, you must: 

  • Charge the right amount of VAT
  • Pay any VAT due to HMRC
  • Submit VAT Returns
  • Keep VAT records and a VAT account

 ___________________________________________________________

 Value Added Tax (VAT) is charged on the majority of goods and services provided by VAT-registered businesses in the UK. It also applies to certain goods and services imported into the UK from the EU and non-EU countries.

As a business owner it is your responsibility to keep track of your turnover (sales) over a consecutive 12-month period, not over the 12 months of your financial year. Remember, if you are getting close to the VAT threshold you must register within 30 days of reaching the current threshold of £85,000 (2022/23 tax year).

When making this calculation any sales which are zero rated need to be included in your calculation to identify if you have reached the threshold for VAT registration. The only rate of VAT you ignore are VAT exempt sales.

When you register for VAT, it is your responsibility as the business owner to apply the correct rate of VAT on the sales you make. For the majority of businesses, it will be 20% (the standard rate at 2022-23). However, for example, in the hospitality industry the rate of VAT to be charged varies depending on what is being sold and where it is to be eaten, (eat in or takeaway, hot and cold food). It is therefore vital for business owners in this industry to fully understand the VAT rates for the food and drink they sell.

HMRC have provided guidance on VAT rates for different goods and services, and this can be found using the following link: VAT rates on different goods and services – GOV.UK (www.gov.uk)

Many small businesses with a turnover below the VAT threshold volunteer to register for VAT as they deem it to be advantageous:

  • VAT can be reclaimed on goods and services purchased from other businesses.
  • If their customers are VAT registered, they will be able to reclaim the VAT, which may give them an advantage over a non-VAT registered business
  • Voluntary registration can be backdated by up to four years, which will allow VAT to be claimed back on equipment and set up costs if you still have those items and can provide the invoices/receipts.

Late Registration

If you register late, you must:

  • pay VAT on the sales you have made since the date you should have registered AND
  • you may need to pay a penalty depending on how much you and how late your registration is.

VAT is not a one size fits all and there are too many variables to cover in this blog.

The most important thing to do if you are not VAT registered, is keep track of your sales over the last 12 months and if you are creeping up on the VAT threshold, take advice from a qualified bookkeeper or accountant.

 

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Minimum Wage, Statutory Pay and Deduction Thresholds 2022-23

Minimum Wage, Statutory Pay and Deduction Thresholds 2022-23

Apr 2, 2022 | All Categories, National Minimum Wage, Payroll

Minimum Wage, Statutory Pay and Deduction Thresholds 2022-23

Computer screen and keyboard

Minimum Wage Rates

 The rates change on 1st April each year and the hourly rate for the minimum wage depends on your age and whether you are an apprentice.

You must be at least:

  • school leaving age to get the National Minimum Wage
  • aged 23 to get the National Living Wage – the minimum wage will still apply for workers aged 22 and under

 

✻ National Living Wage (aged 23 and over) has increased 6.60% to £9.50 per hour

✻ 21 to 22 will receive a 9.80% rise to £9.18 per hour

✻ 18 to 20 will receive a 4.10% rise to £6.83 per hour

✻ Under 18’s will receive a 4.10% increase to £4.81 per hour

✻ Apprentices will receive a 11.90% rise to £4.81 per hour**

 

Apprentices are entitled to the apprentice rate if they are:

  • aged under 19
  • aged 19 or over and in the first year of their apprenticeship

Example – An apprentice aged 21 in the first year of their apprenticeship is entitled to a minimum hourly rate of £4.81.

Apprentices are entitled to the minimum wage for their age if they both:

  • are aged 19 or over
  • have completed the first year of their apprenticeship

Example – An apprentice aged 21 who has completed the first year of their apprenticeship is entitled to a minimum hourly rate of £9.18.

 

Statutory Pay Rates

Statutory Sick Pay (SSP) is £99.35 per week, with the amount due based on the number of working days in the week.

Statutory Maternity Pay (SMP) and Statutory Adoption Pay (SAP) remains the same at 90% of the employee’s average weekly earnings (AWE) for the first 6 weeks. The statutory weekly rate for all weeks after this will be the lower of 90% of AWE or £156.66.

Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (ShPP) and Statutory Parental Bereavement Pay (SPBP) all have the same weekly rate of £156.66 or 90% of AWE, whichever is lower.

 

PAYE Rates

Personal Allowance is £12,570 for the year. Employees can earn £1,048 monthly or £242 weekly free of tax

The standard tax code is 1257L

20% tax is due on earnings between £12,571 and £37,700 per year

40% tax is due on earnings between £37,701 and £150,000 per year

45% tax is due on earnings in excess of £150,000 per year

NIC Rates

Employer National Insurance contributions at 15.05% (including 1.25% increase for social care) are due on employee’s earnings over £9,100 per annum, £758 per month or £175 per week

No Employer NI contributions are due on earnings of apprentices under 25, employees aged under 21, or veterans of the Armed Forces in the first 12 months of their civilian employment

Employee National Insurance contributions at 13.25% (including 1.25% increase for social care) are due on their earnings over £9,880 per annum, £823 per month or £190 per week

 

 

If you require any further assistance with payroll and compliance, please get in touch via https://www.cactusbookkeeping.uk/contact/

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

Mar 3, 2022 | All Categories, Making Tax Digital, VAT

Making Tax Digital (MTD) for VAT- 1st April 2022 deadline

There is no hiding from it, MTD for VAT becomes mandatory for all VAT registered businesses from April 2022, even if you are VAT registered but under the £85,00 VAT threshold.  What does this mean for your business?

 

 

  • You will now be required to file your VAT returns directly from the accounting software you use to record your day-to-day transactions.

 

Accounting software can be specific software such as FreeAgent, QuickBooks, Sage or one of the other 549 compatible software providers listed on HMRC website (https://bit.ly/3HwfQve), or, if you use  spreadsheets to calculate your VAT figures, you will need to use bridging software to report these figures to HMRC.

Records you must keep include:

  • your business name, address, and VAT registration number
  • any VAT accounting schemes you use
  • copies of all invoices/credit notes you issue
  • copies of all invoices/credit notes you received (originals or electronic copies)
  • name, address, and VAT number of any self-billing suppliers
  • import and export records
  • records of any items you cannot reclaim VAT on – e.g., business entertainment
  • records of all zero-rated items, reduced or VAT exempt items you buy or sell
  • a VAT account
  • any adjustments you make to a return

 

If you are not already using software, now is a great time to check into this.  Accounting software would be a positive move forward as you have the ability to download bank transaction into the software and attach your documents to the transactions in your software, this means everything is stored in one place.  The software will then calculate your VAT and link direct to HMRC to file the return.

 

If you bank with NatWest, RBS or Mettle business banking, you can use FreeAgent software for free.

 

Please remember your account transactions are only as accurate as the information entered and the knowledge or the person recording the transactions.  If you are unsure of what is required to comply with MTD or require assistance with choosing software, please get in touch and book a discovery call.

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call

 

 

 

Accountant v Bookkeeper

Accountant v Bookkeeper

Feb 10, 2022 | All Categories, Bookkeeping

Accountant v Bookkeeper

Laptop on a desk

In the accounting world bookkeepers and accountants are to some extent intertwined as bookkeeping is part of accountancy.  Bookkeeping (keeping books) is the first step of the accounting process; an accountant will complete the process by analysing the information prepared by the bookkeeper.

What will a Bookkeeper do for my Business?

Bookkeepers play a vital role in the efficient running of a business, keeping an accurate and complete record of the financial transactions of the business, helping to maintain compliance, and ensuring the financial information is kept up to date.

By nature, most businesses generate a whole lot of paperwork, such as purchase invoices, receipts, and expense claims.  A bookkeeper will transform that bundle of paperwork into something orderly and accurate that will reflect the current position of the business.  They will help keep the business running smoothly by maintaining a general ledger, process supplier payments, raise customer invoices, credit control your customers, undertake bank reconciliation, record inventory and complete VAT returns and payroll.

Depending on the business requirements, bookkeeping can be undertaken more regularly on a weekly, fortnightly or monthly basis.  Completing the paperwork more regularly will allow the bookkeeper to provide more up to date information on the current position of the business.

What will an Accountant do for my Business?

Accountants look at the big picture, they will use the financial information prepared by the bookkeeper and provide insights and financial advice based on that information.

Accountants have an in-depth understanding of the taxation system and requirements.  They will perform audits, prepare tax returns, financial forecasting, and tax filing.

Depending on the business an accountant will generally work less frequently on the business accounts.  Accountants may only look at the business books once a year when completing the annual accounts or they may work on quarterly vat returns or when dealing with cashflow forecasting.

The following list provides a comparison of some of the services offered but is in no way a definitive list as bookkeepers/accountants services may vary.

Bookkeeper Accountant
Process invoices, receipts, payments Prepare adjusting entries
Produce sales invoices & credit control Prepare financial statements
Bank transactions & reconciliation Tax returns & filing
Maintain and balance ledgers Management reporting
VAT Returns Financial analysis and strategy
Payroll Tax advice and planning
Cash Flow & Reporting Auditing

Does a business need a bookkeeper and an accountant?

This will depend on the preference of the business owner and the size and complexity of the business itself.

A bookkeeper will keep a business well organised and deal with the day-to-day business transactions through to year end, along with helping to maintain compliance.

An accountant will ensure that the business meets its tax obligations and assist the business with financial management to help drive it forward.

Both bookkeepers and accountants have their place in any business which is why so many businesses rely on both.

 

Thinking of outsourcing?

If you are looking to outsource your bookkeeping, make sure you choose a qualified bookkeeper.  Sue Haynes MICB PM.Dip of Cactus Bookkeeping is a member of the Institute of Certified Bookkeepers (ICB), the world’s leading bookkeeping organisation.  Undertaking continuous professional development supported by the ICB, enables me to update my knowledge and expertise to help and support my clients.   Get in touch to book your Discovery Call to chat through your requirements.

 

Book a discovery call

ABOUT SUE

Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)

Book a discovery call