Beam Accountancy

Keeping your skills and knowledge up to date is important but the cost of professional training can add up. If you are self-employed some training costs may be claimed as allowable business expenses.

Training costs can usually be claimed where the course helps you improve skills or knowledge that you already use in your business. This includes keeping up to date with changes in your industry, learning about new technology used in your work, or developing new skills that support your business operations, such as administration or management skills.

For example, a graphic designer taking a course on updated design software, or a tradesperson learning about new industry standards, may be able to claim the cost as a business expense.

However, tax relief is not available for every type of training. You cannot claim the cost of courses that help you start a new business or expand into a completely new area of business activity that is not directly related to your industry.

To support a claim, you should keep records of the training course, including invoices and details of how it relates to your business activities. If you are unsure whether a particular course qualifies, HMRC’s guidance at https://www.gov.uk/guidance/check-if-the-cost-of-training-could-be-an-allowable-business-expense includes some useful examples or we would of course be happy to help.

Receiving money from a family member can be a welcome source of financial support, but many people are unsure whether they need to pay tax on it. In most cases, the person receiving a gift does not pay Income Tax on money given by family. However, the gift could have Inheritance Tax implications for the person making the gift.

Inheritance Tax may become an issue if the person giving the money dies within seven years of making the gift. Gifts made during this period may be included when calculating the value of their estate, depending on the amount given, who received it and when it was made.

Gifts can include money, property, land, personal possessions and shares. If someone sells an asset to a family member for less than its market value, the difference may also count as a gift.

There are several exemptions and allowances that allow people to give money without it becoming liable for Inheritance Tax. Each tax year, an individual can give away up to £3,000 known as the annual exemption. They can also make unlimited gifts of up to £250 per person, provided another exemption has not been used for the same recipient.

Certain wedding gifts are also exempt, including gifts of up to £5,000 to a child, £2,500 to a grandchild or great-grandchild, and £1,000 to other individuals.

Regular financial support may also be exempt if it is paid from normal income and the person giving the money can still afford their usual living costs. This could include helping with rent, supporting an elderly relative or contributing into a savings account for a child under 18.

Anyone making significant gifts should ensure they keep records showing what was given, to whom, the value and the date of the gift as this may have Inheritance Tax implications in the future.

Most people are aware that cash donations to a charity can qualify for tax relief. However, it is less well known that gifts of land, property and qualifying shares can also provide valuable tax advantages.

If you donate land, property or shares to a UK charity, or sell them to a charity for less than their market value, you may be entitled to both Income Tax and Capital Gains Tax (CGT) relief. However, Income Tax relief is not available for gifts to Community Amateur Sports Clubs (CASCs).

Income Tax relief is claimed by deducting the value of the qualifying donation from your total taxable income for the tax year in which the gift or sale is made. If you complete a self-assessment tax return, the claim is made in the ‘Charitable giving’ section. Those who do not file a tax return can contact HMRC directly to claim the relief, either as a repayment or through an adjustment to their tax code.

There is also no CGT to pay on qualifying gifts of land, property or shares made to charity. Where an asset is sold to a charity for less than its market value, any gain is calculated using the actual amount paid by the charity rather than the asset’s market value.

To support any claim, it is important to retain records showing that the gift or sale was made and accepted by the charity. If the charity asks you to sell the asset on its behalf before donating the proceeds, keep evidence of both the gift and the charity’s request, as this will help preserve your entitlement to tax relief and avoid any unnecessary tax liability.

Your State Pension forecast can help you plan for retirement by showing how much State Pension you could be entitled to, when you can claim it and whether there are ways to increase your entitlement. 

The online forecast service https://www.gov.uk/check-state-pension allows you to check how much State Pension you could receive, when you are eligible to claim it and whether you can increase your entitlement. As the State Pension age is regularly reviewed, the results of your forecast may change in the future.

You cannot use the online service if you are already receiving your State Pension or if you have delayed or ‘deferred’ claiming it. To access the forecast service, you need to sign in and may be asked to confirm your identity using photo ID, such as a passport or driving licence.

The quickest way to get a forecast is online, but you can also check by using the HMRC app. If your State Pension age is more than 30 days away, you can also complete the BR19 application form and send it by post, or contact the Future Pension Centre, which will send you a forecast.

If you are already receiving your State Pension or have deferred claiming it, contact the Pension Service if you are in the UK or the International Pension Centre if you live abroad. Reviewing your forecast regularly can help you make informed decisions about your retirement planning.

A Full Payment Submission (FPS) is a payroll report that employers must send to HMRC every time they pay employees. Using payroll software, employers use an FPS to report payments made, deductions from pay and National Insurance information, ensuring HMRC has an up-to-date record of their payroll obligations.

This submission should include all everyone you pay, even if their weekly earnings are less than £96. You must send the FPS on or before your employees' payday, regardless of whether you pay HMRC monthly or quarterly. When reporting, always enter the usual payday, even if you pay employees earlier, for instance, due to a Bank Holiday.

You can send an FPS before the regular payday, for example, if your payroll staff are on holiday, but avoid reporting too early. This is because changes, such as an employee leaving or a tax code change, may require a corrected FPS. Reports for the new tax year cannot be sent before March.

Your FPS must contain essential information, including employer details, employee information, pay and deductions, and National Insurance contributions. After submission, you can view how much tax and National Insurance you owe in your HMRC online account from the 10th of the next tax month. Claim any reductions, like statutory pay, by sending an Employer Payment Summary (EPS) by the 19th. The balance is due to HMRC by the 22nd, or 19th if paying by post. Correct any errors by sending a corrected FPS as soon as possible.

You should always send your FPS on or before payday and ensure all required information is included. It is also important to correct any errors as soon as possible. You need to report extra information when there are new employees, an employee leaves, you are filing the last report of the tax year or when you start paying someone a workplace pension.

Employment costs continue to rise, and many small businesses are feeling the impact. Higher wage bills, increased employment related costs and the expense of recruiting and retaining skilled employees are causing many owners to think more carefully about their growth plans.

Recent business surveys suggest that employment costs have become one of the most significant barriers to expansion. Rather than recruiting additional staff, many businesses are looking for ways to improve productivity and make better use of their existing workforce. This does not necessarily mean delaying growth. Instead, it encourages business owners to examine how work is organised, whether technology can reduce administration and whether routine processes can be completed more efficiently.

Training existing employees, improving workflow and investing in appropriate software may provide a better return than immediately increasing headcount. Flexible working arrangements and outsourcing specialist tasks can also help businesses control costs while maintaining high levels of service.

Regular financial reviews are becoming increasingly important. Understanding the true cost of employing staff, including wages, National Insurance contributions, pensions, training and other benefits, allows better budgeting and more informed business decisions. Many businesses also benefit from preparing regular management accounts that highlight trends in payroll costs, gross profit and overall profitability. This enables owners to identify emerging issues before they become serious financial problems.

Although employment costs are unlikely to fall in the near future, businesses that plan ahead are often better placed to remain competitive. Careful budgeting, regular performance reviews and informed decision-making can help offset rising costs and support sustainable growth.

If rising employment costs are affecting your business, we can help. Together we can review your financial performance, identify opportunities to improve efficiency and develop practical strategies that support your long-term profitability.

Late payments remains one of the biggest challenges facing small businesses across the UK. Even companies that are profitable on paper can find themselves under financial pressure if customers fail to pay their invoices on time.

Recent reports suggest that thousands of smaller businesses continue to experience delayed payments, leaving many owners struggling to meet their own commitments. Wages, supplier invoices, rent and loan repayments all have to be paid regardless of whether customers have settled their accounts.

For many businesses, the problem is not a lack of sales but a lack of cash. A growing order book is of little value if money is not arriving in the bank when it is needed.

There are several practical steps that can help improve cash flow. Invoices should be issued promptly and contain clear payment terms. Payment reminders should be sent before invoices become overdue, and overdue accounts should be followed up without unnecessary delay. Businesses should also consider requesting deposits or staged payments for larger projects to reduce the amount of money tied up in unpaid work.

Regularly reviewing customer creditworthiness can also reduce the risk of bad debts. Where payment problems become persistent, it may be sensible to reconsider the credit terms offered or require payment in advance.

Good cash flow management is just as important as generating sales. A business that keeps tight control over debtor balances is generally in a much stronger position to invest, grow and cope with unexpected costs.

If you are concerned about slow-paying customers or would like to improve your cash flow forecasting, please contact us. We can help you review your credit control procedures, identify areas for improvement and develop practical strategies that keep more cash flowing through your business.

If you are self-employed, you may be able to claim tax relief on certain business insurance costs as an allowable expense. This means the cost can be deducted when calculating your taxable profits, reducing the amount of tax you may need to pay.

The insurance must relate to your business activities and be incurred wholly and exclusively for business purposes. For example, professional indemnity insurance premiums can be claimed as an allowable business expense where they protect you against claims arising from your work. Other professional costs, such as fees paid to accountants, solicitors, surveyors and architects, may also qualify where they relate to business activities.

You cannot claim relief for costs that are personal in nature or unrelated to your trade. It is important to keep invoices, receipts and other records to support any claims made.

Keeping accurate records of business insurance and professional costs will help support your claim and ensure that you only claim expenses that are allowable. If you are unsure whether a particular cost qualifies for tax relief, you should check HMRC’s guidance or seek professional advice.

Small businesses have several VAT schemes available that can simplify VAT administration and may help with cash flow. However, as a business grows or its circumstances change, it is important to review whether the VAT scheme being used is still the best for your business. 

The main VAT special schemes available to small businesses are the flat rate scheme, the annual accounting scheme and the cash accounting scheme. The turnover limits for joining and leaving each scheme vary, so businesses should check that they continue to meet the relevant conditions.

The flat rate scheme is available to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000, excluding VAT. Businesses already using the scheme can continue until their turnover exceeds the exit total income threshold of £230,000, including VAT. The scheme simplifies VAT reporting by allowing businesses to pay a fixed percentage of their VAT-inclusive turnover to HMRC, with the percentage depending on the type of business. However, businesses should check whether using the scheme is financially beneficial before applying.

The annual accounting scheme allows eligible businesses to submit one VAT return each year instead of quarterly returns. It can be used alongside the flat rate scheme or with standard VAT accounting. The scheme is available to businesses with taxable turnover of up to £1.35 million and can continue until turnover exceeds £1.6 million.

The cash accounting scheme can improve cash flow by allowing businesses to pay VAT to HMRC when customers have paid them rather than when sales invoices are raised. It is available where estimated VAT taxable turnover is no more than £1.35 million and can continue until turnover exceeds £1.6 million.

Reviewing your VAT arrangements regularly can help ensure you are using the scheme that best fits your business needs.

It is important to know if HMRC is holding money that belongs to you. For example, if you have paid too much tax to HMRC, you may be able to claim a tax refund (also known as a tax rebate). Overpayments can happen for a number of reasons, including changes in your employment, paying tax using the wrong startegy or not claiming eligible expenses.

The process for claiming a refund depends on your circumstances, including whether you complete a self-assessment tax return and the type of income or expense involved. HMRC provides an online service to help you find out what you need to do if you have overpaid tax.

You may be able to claim a refund if you have paid too much tax on income from a job, job-related expenses such as working from home, fuel, work clothing or tools, a pension, overpayments revealed by a  self-assessment tax return or a redundancy payment. Refunds may also be available for UK income taxed while living abroad, interest from savings or payment protection insurance (PPI), income from a life or pension annuity, foreign income, or UK income earned before leaving the UK.

HMRC offers an online service at www.gov.uk/claim-tax-refund/y that allows you to check whether you are eligible and, in many cases, submit a claim.

If you have already claimed a tax refund, you can use HMRC’s guidance to check when you should expect a response.