The FreeAgent Blog
Today we’re launching Insights - an innovative new feature to help you understand and run your business more successfully.
Insights are actionable notifications of your business’s performance. They highlight opportunities, signal issues and enable you to make better decisions about your finances. If that sounds a bit complicated, then don’t worry - it’s actually really simple when you see them in action.
We’re launching two Insights to start with. The first is the top customers Insight, which lists your top five customers over the last six months, in terms of what’s been invoiced. You can click through from the Insight to our recently launched customer sales report, which lets you break down income from all your customers, over different time periods.
The second Insight is for VAT registered businesses and is related to upcoming VAT bills. If it looks like you don’t have enough money in your bank accounts to pay an upcoming VAT bill, you’ll see an Insight notification. This isn’t necessarily a cause for concern - your accounts might not be up-to-date, or you could have other money squirrelled away that we don’t know about.
You can find your Insights by clicking the Insights link at the top right of your FreeAgent account. If you’ve got a new notification you’ll see this highlighted here. Any new Insights will also be displayed on the Overview screen. We're rolling this feature out gradually over the next few weeks, so if you don't have it in your account today, don't worry, it will be there very soon!
We’re really interested to hear what you think about Insights, so please get in touch with any questions or ideas you might have. You can also read more about Insights over on our Knowledge Base.
Over the next few months we’ll roll out more Insights to help you run your business more effectively, so stay tuned.
All the best,
Roan and the team at FreeAgent
Posted on 5 April 2018 by Emily Coltman - Jump to comments
A new tax year starts on 6th April and that means a set of changes from previous budgets and statements will also come into effect. Here's a round up of what’s changing for small businesses:
Making Tax Digital: time to get ready!
Is your business registered for VAT and does it have to be registered because its sales are over the threshold? Making Tax Digital (MTD) reporting for VAT will become compulsory from 1st April 2019 for all businesses who are, and have to be, registered for VAT.
Why is this relevant now? If you prepare your accounts to 31st March every year and you’re not yet using digital software to keep your books, 1st April 2018 would be the best time to move across to a digital system so that you're ready and prepared for MTD to start, because an accounting year end is the easiest time to switch system. If you're trying to get to grips with a new bookkeeping system and a new filing method at the same time, it will make life harder for you, so we suggest you get ready early!
Dividend allowance falls
6th April 2018 sees the 0% tax allowance for dividends fall from £5,000 to £2,000 a year. That means if you are a sole director/shareholder of a limited company and you withdraw money from the company in a mixture of salary and dividends, your tax bill may go up. Do talk to your accountant about tax planning.
Pension contributions going up for the first time
There is an increase in the minimum contributions for automatic enrolment pensions, with the current combined minimum contribution of 2% rising to 5%. As before, the employer and the employee can choose to pay more than the minimum contributions if they want to.
|Date||Employer minimum contribution||Employee minimum contribution||Total minimum contribution|
|Before 5th April 2018||1%||1%||2%|
|6th April 2018 - 5th April 2019||2%||3%||5%|
|6th April 2019 onwards||3%||5%||8%|
VAT registration threshold stays the same
The VAT registration threshold usually rises every year at the beginning of April, but this year it's not going to. The Autumn Budget 2017 held the VAT registration threshold at £85,000 for a further 2 years, starting from 1st April 2018.
This represents a decrease in the threshold in real terms, since inflation is still rising.
Scottish rates of income tax changes
If you're a Scottish taxpayer, you'll suddenly be subject to several more rates of income tax than anyone in the rest of the UK.
Here are the new Scottish rates of income tax that will apply from 6th April 2018, for taxpayers who receive the standard UK Personal Allowance;
|£11,851 - £13,850||Starter rate||19%|
|£13,851 - £24,000||Basic rate||20%|
|£24,001 - £43,430||Intermediate rate||21%|
|£43,431 - £150,000||Higher rate||41%|
|£150,001 and over||Top rate||46%|
The Personal Allowance will reduce by £1 for every £2 of income above £100,000.
These rates and bands apply only to income which is neither dividend income nor savings income. So, for example, if you are a sole director of a limited company, and you're a Scottish taxpayer, you'll pay tax on your salary at Scottish rates, but on your dividend income, you'll pay tax at the rates applying to the rest of the UK.
HMRC have now said that marriage allowance will be given at 20% regardless of whether the spouses are Scottish taxpayers or based in the rest of the UK.
Increase in key rates and thresholds
Here's a brief summary of some of the rates and thresholds increases for 2018/19. All of these are for the full tax year unless otherwise stated:
|Employee’s and employer’s NI becomes due at||£8,424||£8,164|
|Higher rate tax becomes due at*||£46,350||£45,000|
|Class 2 NI becomes due when profits pass||£6,205||£6,025|
|Class 2 NI per week||£2.95||£2.85|
*Except in Scotland
You can keep up to date with current tax rates here; all listed rates, thresholds, limits and charges are updated every time a change is made so you’ll always know where you and your business stand with the taxman.
Twice a year we host a company-wide ‘hack days’ event, but this time we almost didn’t! Thanks to the Beast from the East it became more of a snow day than a hack day.
After a few of days of blizzards, we eventually managed to dig ourselves out of the snow and hike our way back in to our Edinburgh office. If you’re unfamiliar with the concept of hack days - also known as a hackathon - it’s when a whole company takes a couple of days off from its usual work, splits into teams, and works together to build and finish mini projects.
Our projects this season were as varied and fantastic as ever, despite the snow! Highlights included a prototype for recording a mileage claim in FreeAgent simply by chatting with your Alexa, some beautiful new space-themed animations for our customer onboarding journey, as well as first drafts of some really helpful new product videos from our support team. Down to business though, which projects scooped the prizes?
Founders' Award 🏅
'Making Tax Digital' Integration
The highly coveted founders' award went to Anup, Cedric, Dave, George and Tom for creating an integration with HMRC’S test Making Tax Digital APIs. If that’s left you scratching your head, then an API is just a way for one website to plug into another, and Making Tax Digital is HMRC’s plan to revolutionise and digitise the UK’s tax system! This integration would potentially allow a user to pull information from HMRC - such as their state pension income, employment income and, state benefits -into their FreeAgent account. Smart stuff!
Best Presentation 🏆
FreeAgent mobile app video ad
A short video ad for the FreeAgent mobile app scooped the best presentation award! Tom and Mete from our comms team showcased a punchy little short, which featured a tour of all the wild and wonderful places you could do your bookkeeping with our app! Expense tracking on a rollercoaster anyone? This presentation also scored very highly on the verified FreeAgent Applause-o-meter™, so well done Tom and Mete!
People’s Choice Award 🏅
Mobile invoicing app
Last but definitely not least, the audience’s favourite project for this round of hack days was Ioan’s mobile invoicing app prototype! This standalone app would let you create invoices on the go, and then easily customise them by tapping on the part of the invoice you’d like to edit. Once finished, you could save the invoice as a PDF, or export it wherever you please. Not bad for just a couple days work from a one-man team - congrats Ioan!
Snow-ver and out ⛄️
That’s all for this “spring” edition of hack days at FreeAgent (brrrr!). We’ll catch you again in October when hopefully the weather will be a lot kinder -let’s see what we can come up with then!
Posted on 2 April 2018 by Emily Coltman - Jump to comments
The end of the tax year is rapidly approaching, which means it’s the perfect time to get everything in order and prepare your business for success in the next 12 months.
So, if you run a business that prepares its accounts to 5th April each year, here's some top tips to help make preparing for the end of the tax year easier.
Speed up your spending - but be cautious!
Now is the time to be spending if you need extra day-to-day essentials, such as a new run of business cards, letterheads or envelopes. Even though items like these are intended to be used over a prolonged period of time, you are allowed to put the cost of them in the current tax year - so long as you purchase and start using them before the April deadline. So get ordering before 5th April 2018 in order to claim the tax relief a year earlier.
However, you'll need to be careful. If any costs relate to a specific time after 6th April 2018, then you'll have to carry them forward and claim tax relief on them at a later date.
For example, if you're attending a course in October 2018, and you pay for that bill before 5th April 2018 – you'll have to put the cost into the year ended 5th April 2019, because that's the tax year in which the event will be taking place. It doesn't matter that you actually paid for your ticket in the previous tax year.
Prepare for Making Tax Digital if you're VAT registered
Making Tax Digital (MTD) reporting for VAT will become compulsory from 1st April 2019 for all businesses who are, and have to be, registered for VAT. This means that if you're not already using a digital software to keep your books, 1st April 2018 would be the ideal time make the move!
This is because an accounting year end is the easiest time to switch to a new system, as you just need to carry over a few summary figures such as your accounting dates, how much your business owned and owed as at the end of the previous accounting year and your VAT registration number (if you’re VAT registered).
If you wait until April 2019 to switch you'll be grappling with a new bookkeeping system and a new tax return filing method at the same time, so it makes sense to take the opportunity to get ready early.
Don’t try to defer your business income
It might seem tempting to try and move your business's income into the next tax year, in order to pay the tax on this income a year later. But HMRC is wise to this trick! Income must be included in your accounts depending on when you did the work, not when you raised your invoices or when your customers paid you. So asking your customers to defer payment won't work, nor will dating all your invoices as 6th April 2018 instead of 1st April 2018.
Do your books and speak to your accountant
It’s a great idea to make sure your business's financial records are up to date and to also check in with your accountant, if you have one, before the end of the tax year. They may have other suggestions about how your business could be saving tax - but if you wait until after 5th April, you’ll have to wait until the next tax year to implement these.
For example, if you're a higher-rate taxpayer you could claim tax relief by putting money in a pension, or by making donations to charity. So, if you talk to your accountant before 5th April, you'll make it easier for them to help you.
By acting before the end of the tax year, you may find that you're able to help your business save tax legally and ethically.
- National Coworking Day 2018
- How FreeAgent can help you comply with GDPR
- Help us give small businesses a big voice
- Self Assessment filing for 2017/18 is live
- Introducing Insights!