Tax Tip Round-up
BFCA have been releasing a weekly series of Tax Tips over the last year, aimed at freelancers and professional contractors.
There's lots of good information there but some things that may be of particular interest to FreeAgent users:
- VAT - The Flat VAT Scheme
There are several ways in which businesses can account for VAT, but for Professional Contractors and Freelancers that provide services with little business expenditure; choosing the Flat Rate scheme (FRS) may add money to your profits. The Flat Rate Scheme makes book keeping much easier as you only have to account for VAT on sales and you can even make some extra profit, sometimes as much as 3.5%, and if you are inside IR35 this is outside the deemed payment calculation.
- VAT on the supply of Cross-Border Services
If a VAT registered business in the UK supplies services to a foreign country; different rules apply when accounting for VAT. These are determined by a number of factors such as whether made to persons or businesses, classification of services and supplies made to either where the customer ‘belongs’ or where the supplier 'belongs.'
- Ensuring the expenses you deduct against profits are allowable
Every business has expenses it may deduct against corporation tax on profits, but are you certain that they are allowable?
- Is your broadband connection tax effective?
For Professional Contractors and Freelancers broadband is an essential business tool, but that does not make it tax deductible unless HMRC accept your circumstances as interpret for a tax deductible broadband connection.
- Mobile Phones and other Devices
Most Professional Contractors and Freelancers will use a mobile phone and/or other devices that are used for a combination of business and personal usage. It is important to know when these costs are tax deductible so that your company is paying its expenses in a compliant manner. Getting it right saves you tax too!
It's worthwhile taking the time to read these as you never know when you'll be able to save yourself some cash or make sure you're on the right side of the tax man.
- Video: an introduction to VAT by HMRC
- You deserve better: why you need to break up with your spreadsheet
- Simple ways to save yourself future Self Assessment stress
- Making Tax Digital consultation response published
- Not feeling (a) fine? You might have a ‘reasonable excuse’ for not completing your tax return