Accountants Newcastle | London

❓ FAQ of the Week: Should you consider incorporating your self‑employed business? 🧑‍💼📊

If you’re running your business as a sole trader you might be wondering whether moving to a limited company makes sense any more. Yes, it can still be beneficial, but the maths are tighter now and it very much depends on your profits and personal circumstances.

👥 Who might benefit from incorporation?

Incorporation tends to work better if your profits are high enough that the difference between income tax + National Insurance (for a sole trader) and corporation tax + dividend tax (for a company) becomes meaningful. It’s also more attractive if you don’t intend to withdraw all the profits immediately and you want to build in flexibility.

📌 What has shifted recently?

Recent changes mean the advantages are less clear cut. Corporation tax has risen for many companies, dividend allowances have been cut, dividend tax rates have gone up and some National Insurance reliefs for self‑employed have been removed or reduced. That means starting a company isn’t automatically the better tax route.

🧮 What should you compare?

You’ll want to compare:

✅ If you stay self‑employed: your income tax + Class 4 National Insurance on profits.

✅ If you incorporate: your corporation tax on company profits + tax on dividends and salary when you extract money.

Then weigh that against extra costs (company admin, payroll, accounting) and the flexibility you lose or gain. Tax Insider

📉 When might incorporation not be worthwhile?

If your profits are modest, you extract nearly all profits each year, or you prefer simplicity and fewer annual formalities, staying as a sole trader might be the better route. The gains from incorporation may be minimal or outweighed by extra paperwork and compliance.

👋 How we can help

We’ll run the numbers specific to your business, compare your current sole‑trader model with a company structure, look at profit extraction options, cost of compliance and the long‑term strategy. That way you’ll make an informed decision rather than guess.

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This Week’s Tax Tip 🌟: File Your Tax Return by 30 December to Pay via Your Tax Code 🧾💡

If you submit your Self Assessment tax return by 30 December 2025, HMRC may be able to collect any tax you owe (up to £3,000) through your PAYE tax code instead of requiring a lump-sum payment on 31 January 2026.

✅ Smooth cash flow

Rather than paying your entire bill in January, HMRC will spread the liability over the following tax year, deducting it in small amounts from your salary or pension.

✅ Eligibility

You must already pay tax through PAYE, have less than £3,000 due after deducting payments on account, and submit your return online by 30 December 2025.

✅ Automatic adjustment

HMRC will automatically code out the balance if you qualify no extra form needed.

✅ Avoid January stress

Filing early gives peace of mind and avoids last-minute errors, penalties or system crashes close to the 31 January deadline.

Submitting your return early doesn’t mean paying early. It means more control, easier budgeting, and one less thing to worry about in January.

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This Week’s Tax Tip 🌟: Tax Breaks for Commercial Property Landlords 💼🏢

If you’re investing in commercial property, there are valuable tax reliefs that can significantly reduce your overall tax bill, especially if you’re moving from residential buy-to-let into commercial property.

✅ Capital Allowances

You can claim tax relief on certain elements within the building, such as air conditioning, heating, lifts and lighting systems. These qualify as “plant and machinery” and can reduce your taxable profits.

✅ Structures and Buildings Allowance (SBA)

For construction or renovation costs on commercial property, you may be able to claim relief at 3% per year on eligible expenditure, including legal and professional fees linked to the build.

✅ Repairs vs Improvements

Routine repairs and maintenance are usually deductible in full, while improvement costs are capital in nature and may qualify for allowances. Keeping detailed records helps ensure you maximise your claims.

✅ VAT and SDLT

Commercial properties have different VAT and stamp duty rules to residential investments. Planning ahead and considering whether to “opt to tax” can make a big difference to cash flow and future liabilities.

🔍 The takeaway

If you own or are planning to buy commercial property, review how the purchase and fit-out are structured. Identifying qualifying expenditure early can unlock substantial tax savings and improve long-term returns.

#TaxTip #CommercialProperty #LandlordPlanning 🧾 ... See MoreSee Less

This Week’s Tax Tip 🌟: Claim Your Share of Fixed Home Costs When Working from Home (Carefully) 🏠💡

If you run a business from home, you can’t just claim all your household bills. But you can deduct a fair proportion of fixed costs (rent, mortgage interest, insurance, council tax, general repairs) when part of your home is used for business.

Here’s how to do it right:

✅ Only claim costs apportioned to the business use, typically by reference to floor area, number of rooms or actual time used.

✅ If a room is used exclusively for business, any gain on that portion may result in the loss of your full private residence relief on disposal, watch out for capital gains tax exposure.

✅ For self-employed taxpayers, HMRC also allows simplified expenses: a flat rate based on hours worked (e.g. £10 a month for 25–50 hours, £18 for 51–100 hours, £26 for 101+ hours) rather than calculating all actual costs.

✅ Directors of a limited company can claim the flat £6 per week “use of home as office” allowance for corporation tax purposes.

✅ Running costs (electricity, heating, cleaning) should also be apportioned by business usage, you can’t just grab the full bill.

🧠 Tip: Always document your method of apportionment, keep bills and usage records, and be conservative in claims unless you have solid evidence. Overclaiming could trigger HMRC scrutiny or reduce your capital gains relief later.

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❓ FAQ of the Week: What are the hidden risks of deregistering for VAT? ⚠️💼

Many small businesses find their turnover has dipped and begin to think that deregistering from VAT will simplify their operations and save costs. But there are several traps that can turn what seems like a sensible decision into a nasty surprise.

📋 When can a business deregister for VAT?
You can voluntarily deregister if your taxable turnover falls below the threshold (currently £88,000) or if you expect your turnover to remain under that level.

💰 The VAT on remaining assets and stock (“exit VAT”)
If you claimed VAT when acquiring stock or equipment, you’ll need to account for VAT on their market value at deregistration. If that VAT liability is over £1,000 you must pay it.

🏢 Property and the opting‑to‑tax issue
If your business owns commercial property and previously opted to tax it (or claimed VAT on its purchase), you may have to treat it as a deemed supply and account for VAT on its open market value when you deregister.

🔄 Capital Goods Scheme (CGS) clawbacks
For large assets (costing over £250,000 excluding VAT) where VAT was reclaimed, deregistration within ten years may trigger a repay­ment or adjustment via the CGS.

📉 Losing the right to reclaim input VAT post‑deregistration
Once deregistered you can no longer reclaim VAT on ongoing purchases. That means your margin or costs may worsen.

🔒 Formal process & continued obligations
You must submit a final VAT return, include the output tax on assets, and you must still retain VAT records for at least six years.

🧮 Pricing trap
If you don’t reduce your prices when you deregister, your expected turnover including the “VAT element” may still exceed the threshold, preventing deregistration.

👋 How we can help
If you’re considering deregistration or want to understand the full implications, we support you by modelling different scenarios, advising on the VAT on assets and CGS adjustments, and guiding you through the deregistration process so you avoid unwelcome tax bills or compliance issues.

#VAT #smallbusiness #taxplanning ... See MoreSee Less

❓ FAQ of the Week: What are the hidden risks of deregistering for VAT? ⚠️💼

Many small businesses find their turnover has dipped and begin to think that deregistering from VAT will simplify their operations and save costs. But there are several traps that can turn what seems like a sensible decision into a nasty surprise.

📋 When can a business deregister for VAT?
You can voluntarily deregister if your taxable turnover falls below the threshold (currently £88,000) or if you expect your turnover to remain under that level.

💰 The VAT on remaining assets and stock (“exit VAT”)
If you claimed VAT when acquiring stock or equipment, you’ll need to account for VAT on their market value at deregistration. If that VAT liability is over £1,000 you must pay it.

🏢 Property and the opting‑to‑tax issue
If your business owns commercial property and previously opted to tax it (or claimed VAT on its purchase), you may have to treat it as a deemed supply and account for VAT on its open market value when you deregister.

🔄 Capital Goods Scheme (CGS) clawbacks
For large assets (costing over £250,000 excluding VAT) where VAT was reclaimed, deregistration within ten years may trigger a repay­ment or adjustment via the CGS.

📉 Losing the right to reclaim input VAT post‑deregistration
Once deregistered you can no longer reclaim VAT on ongoing purchases. That means your margin or costs may worsen.

🔒 Formal process & continued obligations
You must submit a final VAT return, include the output tax on assets, and you must still retain VAT records for at least six years.

🧮 Pricing trap
If you don’t reduce your prices when you deregister, your expected turnover including the “VAT element” may still exceed the threshold, preventing deregistration.

👋 How we can help
If you’re considering deregistration or want to understand the full implications, we support you by modelling different scenarios, advising on the VAT on assets and CGS adjustments, and guiding you through the deregistration process so you avoid unwelcome tax bills or compliance issues.

#VAT #smallbusiness #taxplanning ... See MoreSee Less