The FreeAgent Blog
Squeeze the most out of summer, and work from anywhere with the help of time tracking on FreeAgent Mobile.
We like to make the most of summer here in Scotland, which means getting out of the office as soon as the temperature manages to scrape into double digits. So whether you’re working from the garden or just on-site with a customer, you can now record your time on FreeAgent Mobile for iOS and Android.
How it works
The new Timeslips section shows all your recent recorded time, and there’s a handy week view so you can see which days you still need to add timeslips for if you forget to do it in the moment.
From here, or the Overview screen, you can quickly add a timeslip by selecting the project and task, and then the time worked. Timeslips default to the number of hours set on the project - making it even quicker to get those timesheets in if you’re working the entire day for the same customer!
So go forth and track time! Just remember the factor 50.
See you out there,
Roan and the team at FreeAgent
If you run your business through a limited company, make sure you plan carefully how the company will pay you for your services.
As from 6th April 2016, the rate of tax charged on loans to close company participators has risen from 25% to 32.5%. This is so that the rate of tax on these loans matches the increased rate of tax on dividends for higher-rate taxpayers.
Who counts as a participator in a close company?
A close company is a limited company with five or fewer 'participators', or a limited company of which all the 'participators' are also directors.
'Participators' are individuals who have a financial interest in a company, for example, they own shares in the company or have a right to receive shares when the company is wound up, or they have voting power in the company.
A “loan to a participator” means that the individual owes money to the company, for example if the individual has withdrawn more cash than the company owes to him/her.
Example of a loan to a participator
Jenny is a director-shareholder of her own company, Jar of Jam Ltd.
She uses her own credit card to buy a train ticket to visit her client. This costs her £50. It’s an out-of-pocket expense she’s incurred on the company’s behalf.
She’s also previously lent Jar of Jam Ltd £5,000 in start-up funds.
Jenny takes £6,000 out of Jar of Jam Ltd’s bank account. That’s £950 more than the company owes her.
Unless she decides to treat the £950 as a salary or a dividend and to pay tax on that accordingly, she’ll owe Jar of Jam Ltd £950.
What’s reason for the increased rate?
The new rate was introduced at the start of the 2016/17 tax year with the intention of preventing owners of close companies paying less tax through loans than they would by taking dividends or salaries, since at this date the higher rate of tax on dividends also rose to 32.5% and the higher rate of tax on salaries is 40%.
Had the rate of tax on loans to participators not been increased, then it would have become more attractive to participators to simply withdraw cash from the company, rather than taking a salary or dividend, since the loan would have been taxed at 25% as opposed to 32.5% or 40%.
The increase in this tax rate is part of the tax avoidance measures announced in the Summer Budget 2015.
If you’re not sure what the most tax-efficient way to extract money from a limited company is, speak to your accountant for specific advice relating to your situation.
If you’re planning on setting up a new limited company, from today you’ll need to provide Companies House with some additional information when you apply to incorporate your company. Here’s what you need to know:
You must provide details of the company’s PSCs
From 30th June onwards, companies will be required to to keep details of persons with significant control (PSCs) and make the information publicly available. A PSC is a person who has the right to exert significant influence, or control, over the business and management of a limited company.
Company directors must provide the following information when applying to incorporate the company:
- Assuming there is at least one PSC, the directors must disclose who the person is, stating their name, service address (where documents relating to their involvement with the company would be delivered), date of birth, and residential address. The last two pieces of information don’t go on the public record as they could put the PSC’s identity at risk of theft, but the first two items will be publicly available.
- The directors must disclose how each PSC has control, whether that is by:
- ownership of shares
- ownership of voting rights
- the right to appoint or remove a majority of the directors
- another right to exercise, or the actual exercise, of significant influence or control
- If a Relevant Legal Entity (RLE) has significant control over a company’s affairs, the directors need to disclose that entity’s name and address, legal form and governing law, and how it has control over the company’s affairs.
- If an Other Registrable Person (ORP), such as a government department, has significant control over a company’s affairs, the directors need to disclose that person’s name and address, legal form and governing law, and how it has control over the company’s affairs.
Any of these methods of control may be exercised by an individual who is either operating in their own right, or acting as a representative of a firm or trust that they control, but which is not in itself a legal entity. If the firm or trust is a legal entity, such as a limited company, it would be classed as an Relevant Legal Entity (RLE) rather than a PSC.
You must tell Companies House your company’s business activity
From 30th June onwards, you will have to provide at least one Standard Industry Classification (SIC) code to explain what business activity the new company will be carrying out. If the company will have more than one business activity, you must give a SIC code for each activity (you can provide a total of up to four SIC codes per company). If you can’t determine an appropriate SIC code, you must provide a written description of the company’s business activity.
Prior to 30th June 2016 directors did not have to tell Companies House what a new company would be doing and did not have to give an SIC code until they filed the company’s first annual return (which is set to be replaced by a new document called the confirmation statement on 30th June).
All of this means that if you are intending to form a limited company, you will have to give Companies House extra information if you form that company after 30th June. These changes won’t affect sole traders or partnerships, neither of which are required to register at Companies House.
Image credit: http://www.geekgirlauthority.com/wp-content/uploads/2016/04/3-B-S-braveandbold.jpg
You may have heard about an accountancy practice and software provider called Crunch - they’re based out of sunny Brighton and often appear in the news talking about the work that they do with UK small businesses. Oh, and they’re also one of our longstanding rivals.
For the longest time, FreeAgent and Crunch have been vying for the same prize of delivering awesome accounting services to freelancers and micro-businesses, but after years of hunkering down in the trenches and competing against each other, a strange thing started to happen. We found that we actually had a whole lot in common and, rather than staying engaged in bitter rivalry, we could be helping each other out to make things easier for freelancers.
So, like Batman and Superman, we cast aside our differences, joined forces and pledged a new dawn of justice for freelance workers. And this has led to the development of Crunch Sole Trader - a new service for (unsurprisingly) sole traders that combines Crunch’s accountancy expertise with FreeAgent’s award-winning cloud accounting software.
Our partnership means that Crunch’s sole trader clients will now get to manage their day-to-day bookkeeping with FreeAgent, while receiving expert accountancy advice and guidance from Crunch’s team of experts. A win-win for everyone and, hopefully, the start of a beautiful friendship that will help make a big difference for UK freelancers.
From here on, they’re the Maverick to our Iceman, minus the shirtless volleyball. Or, alternatively, the Apollo Creed to our Rocky Balboa, without the bromance and slow motion training montages.
(none of this, unfortunately)
It’s a superhero partnership that we’re really looking forward to building and strengthening in the years to come. FreeAgent and Crunch: Avengers for the UK’s sole traders.
Page 1 of 147
- Mobile time tracking is here!
- Directors' loans get more expensive
- Forming a limited company? From 30th June you’ll need to give Companies House this extra information
- When rivals join forces - FreeAgent and Crunch
- News for employers: forms P11D have changed