Author Archives: corlettcolin

Claiming tax relief on a computer

You can claim tax relief on equipment which you buy for your employment or self employment. A computer, printer, scanner and associated equipment falls into this category.

Step 1. Do you have a receipt? That is ideal but not essential. A payment entry on a bank statement or credit card will often suffice.

Step 2. You need to write down the reasons why you need the computer for work. There has to be some business use.

Step 3. Ideally you will then apportion the cost between business and private use. There was a time when this was probably 50/50 or more towards private use. However these days people tend to use mobiles or tablets for Facebook and photos so an estimate of between 80% and 90% might be reasonable.

A general link is here

More detailed ones are here














Tax and travel within the NHS

Notes which i recently prepared for one of our clients in the medical world.

Travel expenses – what can be claimed and how it works. Reference within the NHS

Travel to a temporary workplace is allowable and you can claim

45p a mile up to 10000 miles

25p a mile thereafter.

Also ancillary costs such as parking.

The question is what is a temporary workplace.

Key test 1. Place of employment where you expect to work for 24 months or less
Key test 2. Or it takes up less than 40% of your working time. E.g. Say one day a week.

What it is not

It cannot be your only place of work. So for instance if you accepted a 6 month contract at another hospital then that is a new place of work and a new contract – this is not temporary for tax.It is a permanent workplace which only lasts for 6 months.

Examples within the NHS which are relevant.

  1. Employed at one hospital on a permanent basis and then asked to cover 6 months at a satellite hospital whilst remaining in the same employment. This 6 month period should be classed as temporary.
  2. If there was a new contract with a new employer for the satellite site then this is not classed as temporary. This is why a lot of trainee GPs cannot recover their rotation travel.
  3. It cannot apply to travel incentives to take up a new position however short.
  4. It cannot work for bank work at another hospital if that means you have a second employer. So for instance you are employed at Kings but do bank work at Royal Surrey. In this case you would have 2 employers one is full time, one is part time but neither are temporary.
  5. However in example 4 if the bank work was at a satellite site for Kings ie you were paid for both jobs on the same payslip or two payslips but the same employer reference then the bank work would be temporary.


How will your employer treat the travel?

It depends. Some will recognise that the travel is allowable and will either not tax the payments when they reimburse the mileage or they will tax the excess over 45p a mile. You then have the opportunity to reclaim the element which they have not paid you. For instance they pay 24p a mile then you can reclaim another 21p a mile to make up the full 45p. With these payments they often show with the code TASNT on the payslip.

Sometimes the hospital will wither say they think it is not allowable or they do not want the risk of getting it wrong. So they tax all the payment and leave it to you to claim the fulle 45p a mile. These often show with the NP coding.

The core legislation. Here

And whilst the legislation has just a couple of pages the HMRC booklet (basically their views) has some 77 pages.





Subbies and tax refunds

Are you a subcontractor in the construction industry?

Do you understand the tax rules and why you have tax deducted from your pay? Do you understand how you can reclaim some or all of the tax?
These Q&As will help guide you through the world of CIS deductions.

1. What is CIS?
Basically the government was worried about construction industry workers not paying their taxes. Their answer was to require any payments to anyone other than a company or someone in employment to have deducted before the monies are paid.
You are paid for the work you do less tax. There is a very good chance that you will be able to reclaim a large percentage of this tax.

2. What percentage is deducted?
There are three rates which could be used:
30% if you are not registered with the tax man as a subbie.
20% if you are registered.
0% if you are an established subbie and meet certain requirements.

3.Why are there usually refunds?
The 20% or 30% deductions are made to all payments which you receive. Even those which cover materials you may have bought for your work. Every person is entitled to a personal tax allowance. Let’s say this is £10,000 ( 2014/15). In this case you are likely to have overpaid by £3,000 ( 30% tax deducted ) or £2000 if 20%.
If you spend £1000 on materials,clothing and other allowable expenses then there will be another £200 to £300 due back.

4.How do i claim my tax refund? 
The easiest way is to complete your tax return as soon as the tax year is ended ( after 5th April).
This can be done online.

5.How much does this cost if i ask an Accountant to do it?
The basic cost should be just over £100 for a simple return done early in the tax year (basically accountants don’t like everyone asking for their returns to be done in January the last month before penalties start to be charged). However you do need to be careful as some accountants will charge a percentage of the refund or maybe ask an unusually high fee. We see prominent online services asking £300 plus for the basic return.

Subbie refund summary

Register with the tax man – this means you will have 20% deducted and not 30%.

Keep all the payment advices as they will back up your claim for a refund.

Make sure any tax deductible expenses such as materials,safety wear and appropriate travel is claimed.

Complete your tax return as soon after 5th April as possible. No point in delaying.

Autumn colours in the Eden Valley

Now that the days are drawing in i can start to look forward to some of the most beautiful autumn colours as the trees lose their leaves. The Eden Valley so verdant during the long hot summer this year will be a lovely place to walk and explore.

Autumn colours coming down to Armathwaite

Autumn colours coming down to Armathwaite


If you live near Penrith and would like book keeping or tax advice then
please call me on 075 1391 7997


Direct v Indirect taxes

Many times you come across references to direct and indirect taxes. But what is the distinction?

Direct taxes
Income tax
Capital gains tax
Corporation tax
Student loans
and so on.

Indirect taxes
Mainly VAT but also a long list including
Bingo duty
Alcohol levies
Customs duty
and so on

Statutory residence tests

There has always been a degree of uncertainty around whether or not some people are resident in the UK for tax purposes. The recent changes to the rules are meant
to improve this situation. Why is this important? Well if you are resident for tax purposes then you are liabel on worldwide income and capital gains.
If you are not resident then foreign income and gains should usually escape the UK tax man.

This is a very brief simplification of the rules

You are non resident for a tax year if

1) You spend less than 16 days in the UK; or
2) You were non-resident in all of the previous 3 tax years and this year you spend less than 46 days in the UK; or
3) You are working full time abroad.

If none of the three points above apply then you will be resident in the UK if either

1) You spend 183 days or more in the UK; or
2) You have your only or main home in the UK; or
3) You work full time in the UK.

If none of the above six tests apply then we look at a combination of the number of days spent in the UK along with the strength of your ties to the UK.The more
ties you have then the fewer days you can spend here if you want to escape the UK tax regime for foreign earnings and gains.

Travel expenses & Samadian

The Upper Tier Tribunal has upheld the rulings in the Dr Samadian case.

The main point seems to be that travel between a home base and anywhere which is a regular place of business will now be disallowed under duality of purpose.

This is potentially very significant and claims for business mileage should now be reviewed.

Do you live in Carlisle? Would you like tax advice? Please give me a call.


Private residence relief changes

When houses became harder to sell the government brought in a relief for owners who basically had to buy a new house without selling their old one.

They allowed you 3 years to sell the old house without any reduction in the private residence relief for the capital gain on sale.

From April 2014 this period will be reduced to 18 months.

So if you own 2 or more houses and they are both potentially your residence then you might need to reassess which is your main one and let the tax man know.

Tax advice and bookkeeping in Cumbria? – Give me a call on 075 1391 7997

£2,000 NIC relief

The £2000 employers NIC relief will kick in from April

Basically it is

  • Available to all sizes of business, with certain exceptions.
  • Claimed via the payroll software.
  • From 6 April 2014 onwards.
  • This measure was announced in the 2013 Budget

So for instance

  • a single employee a salary of £22,448, or
  • two part-timers on salaries of £15,202, or
  • three part-timers on £12,786, or
  • four part-timers on £11,579 per annum and
  • pay no ER’s NICs at all.

From 2015/16  there will also be exemption for any employee under 21 and earning less than £813 a week.

Do you live and work around Carlisle? Why not give me a call for free a consultation.

Capital gains tax on a granny flat

The recent first tier tribunal decision in the Wagstaff case brings welcome news for anyone who has come to a financial arrangement with an parent or in law in regard to their house.

The old lady sold her house to her daughter and son in law on the condition that she could continue to live there. When the house came to be sold it was accepted that an implied trust had been created and therefore private residence relief was available.

More details here

If you live in Cumbria and have a tax question then please give me a call on 075 1391 7997

FHLs and BPR

Holiday cottages ( or furnished holiday lets ) are a funny creature. For NIC purposes they are not a business but for some really important reliefs they have always been regarded as a business.

One of these reliefs, business property relief, means that traditionally there would be no inheritance tax to pay on a holiday cottage. With IHT rates as high as 40% this was a valuable concession.

However the recent Pawson case looks as if all this has been overturned.

Basically the executors of the estate will need to show that the business activities have been much more than maintenance and taking bookings. You have to look to what a hotel or B&B would provide as an idea. So these might include

1. Cooking and provision of meals ( think a courtyard of cottages and maybe a tea room attached)

2. Activities on site such as organised trips.

3.On site services such as massages or baby sitting.

To me it looks like this level of service would be tricky for single cottages and ones which are remote or isolated.

If you have a number of houses close to many attractions and you or a manager live on site or nearby then there is a chance for you but otherwise?


What is entrepreneurs relief?

When you come to sell your business there will hopefully be a capital gain to pay. In most cases this will be charged to tax at 28%. However Entrepreneurs relief can offer you the opportunity to only pay 10% capital gains tax. The relief applies to partnership disposals as well as certain land and building sales where they were used in a qualifying business. There is a lot of small print but essentially this is a good relief for business owners.

What is the best structure for your business

There are basically 3 possible structures:

1. Sole trader.
2. Partnerships including LLPs.
3.Limited companies.

The majority of people start off as a sole trader. There is less paperwork, legal costs are lower and it is a much easier regime to work within. However there are usually two main drawbacks

1. The tax regime can be more punitive for sole traders compared to that which applies to a limited company. There are fewer opportunities to delay the taxing of profits. In a nutshell a limited company allows you to build up profits within a company which have been taxed at a lower rate. When you come to sell the company the gains can, if planned well, also be taxed at a lower or non existant rate.

2.The word “limited” means that the your liability if things go wrong is restricted. This of course won’t apply if you have given a personal guarantee but it means that there is a way to place your personal assets outside the reach of any business creditors.

A limited company will bring additional obligations.Each year you have a set of accounts to file and an annual return to make. You also have a second tax return, not just your own but one for the company as well. These and many more points can add maybe a £1000 or more to the costs of your business.

A partnership is like a sole trader but with a partner. You share liabilities and are equally responsible for the business debts.

Registering as self employed

So you have decided that you would like to be self employed as opposed to conducting your business through a company. Well this is what you now need to do.

1. Set up a business bank account.Longer term it is better not to mix up private and business expenses and income. This is better for your accountant and better when dealing with the tax man.You will need to keep the statements for 6 years.

2. You have to notify HMRC within 3 months of starting. If you fail to do this there is a £100 penalty.

3. Contact HMRC to register for national insurance and income tax. They will supply you with a 10 digit unique tax reference number (UTR).

4.Once you have a UTR you can then register to use the online service. As part of this process they will send you an activation code so you can complete the process.

5.If you expect your sales to be in excess of £79000 pa then you have to register for VAT.They will issue you with a VAT registration number and as for income tax you can administer this online.

6.You need to decide to what date you would like to complete your trading year. We recommend 31st March each year to coincide with the tax year. Technically it is the 5th April but the 5 day difference is ignored by HMRC in most cases.

7.You should budget for any income tax payable. This is due on 31st January in the tax year and 31st July after the tax year.These two payments are always estimates.The balance is paid 31st January the year after the tax year.This means each January you have two payments to budget for. Half of what you think you will need to pay this tax year plus any under/overpayment for the previous year.

Setting up a limited company

One of the key decisions you will need to make for any new business is whether to operate as a sole trader or through a limited company. We will discuss the pros and cons of each in more detail separately but for this article we are going to look at what you need to do to set up a limited company.

Step 1. Incorporate a limited company. The usual route is to purchase an existing shell company, one which has been created just for this purpose and which has not yet traded.
You would then file a change of name ( assuming you didn’t want to keep the existing name ) as well as change of registered address,members and directors. Alternatively you can start from scratch and create the company from the ground upwards. Costs should be between £100 to £150 to have an accountant do this for you.

Step 2. Open a business bank account.It is much easier to separate your business and private affairs this way. Bank statements will need to be kept for 6 years.

Step 3.Companies house will notify HMRC on incorporation. You will be issued with a CT41G which basically asks what the business does, when did it start trading and who are the Directors.It will also provide you with a URN or unique reference number for all tax correspondence.

Step 4. You now need to register with HMRC to use their services online.Once they have received the application they will issue an activation code. Let your new tax advisor have this code so that he can notify HMRC that he will act for you. You will receive a second activation code which should be passed to your tax agent.

Step 5. VAT. If your sales are £79,000 or more then you must register. See here.
The rules are slightly more complex when you start to approach the limit so do check the reference or seek advice. If you are dealing mainly with VAT registered businesses then it might well be worth registering even though you are below the limit.

Step 6. Drawing money out. Hopefully you will make profits and generate funds to allow you to take money out either as a salary or as dividends. The salary route requires the operation of PAYE  and you should register for a PAYE scheme. There is software available to simplify this.

Long Meg and Penrith

Long Meg and her seven sisters. An atmospheric and interesting stone circle just to the east of Penrith and a little higher up towards the Pennines.

If you have a small business around the Penrith area and would like to talk about good quality bookkeeping then please give me a call on 01228 562667

xmas 2006 017

Long Meg

Jockey Shield

The Gelt river rises above the small hill village of Castle Carrock. Here you will find Jockey Shield and the RSPB bird reserve of Upper Geltsdale. There is a short walk down to the valley floor from the car park but you then have miles of walking and exploration ahead of you.

A short way upstream is a small waterfall and deep pool known to the locals as the swimming hole and very welcome it can be on a hot summer day.

If you have a business in the Eden Valley and are looking for a good bookkeeper then please give us a call on 01228 562667


Lambley and the Viaduct

The Lambley viaduct is a reminder of the Victorian era when large engineering features projects were a source of great pride. The small rural railway line between Haltwhistle and Alston was a vital link to bring mined ores down to the Tyne Valley and the Carlisle to Newcastle railway line.

Do you have a small business in the Lambley or Featherstone area? If so and you would like great bookkeeping and solid advice then please give us a call on 01228 562667


Lanercost – two bridges

Lanercost, nestling in the Irthing Valley is a lovely location to explore. From the Abbey and tea room through to the beautiful walks along the river and then up to the Roman Wall there is plenty to see and do.

Interestingly there are still 2 bridges over the Irthing…the original and the new one.


Lanercost is just a short distance to the north of the market town of Brampton. If you are looking for bookkeeping in or near to Brampton then please do give us a call on 01228 562667.


Haltwhistle burn

In the 18th and 19th centuries Haltwhistle was a substantial industrial town with mining forming the backbone of its success.There was an open face coal mine up at Cawburn up close to Hadrian’s Wall and from there a small guauge railway line ran down into the town. Nowadays the Haltwhistle burn through which it ran is a nature trail with some lovely sections to explore.

If you live and work in or around Haltwhistle and are looking for top quality bookkeeping and accounting advice please do call us on 01228 562667.


Faces in the rocks

Starting out in your new business

It can be a tremendously exciting time when you start working for yourself. You have customers to look after and a business to build. But behind all this you really do need to make sure that you have the a sound foundation for your accounts, tax and administration.

Here are some tips to help you through these early days. Please note that these tips assume that you are starting business as a sole trader. If you are planning to start up with your own limited company then there are is a separate list of key points.

1. Your accounts. A lot of people leave their accounts until after their first year end. However this means that you can’t really know how successful you have been until it is too late for those important financial decisions which you will need to make.  The usual alternative is to prepare accounts on a monthly basis and this is what your bank manager will normally ask for. However you could also prepare accounts quarterly or based around particular activities or seasonally. The important this is to know how you are progressing during the year and not just after it is finished.

2. VAT. If your sales are more than £79,000 per year then you must register for VAT. This total needs to be checked monthly and not just once a year. You can also decide to register for VAT if your sales are less than this. Take care though as you need to look at

How this impacts your customers ( can they reclaim the vat?).
Will it save you money? Are you buying goods and services with VAT included?
Will you be able to handle the extra administration and avoid the stringent rules and penalties that come with being registered?

3. National Insurance. You will be liable for class 2 NIC and depending upon your profits class 4 as well. You should register with NICO.

4. Income tax.  You will need to advise the tax man that you are trading and ensure that you set aside enough money to pay him.

5. Your bank account. You will eventually need a separate bank account just for your business.Whilst it is technically possible to run your business through your private account you have to ask if you really want your accountant and possibly the tax man checking through your private life.

6.Accounting software. Do you need accounting software? And if so which package should you buy? We live in an age when it is expected that you will use a computer for everything. However your accounts can still be kept well on just a simple cash book. If you want to take the step up to buying an accounting package then do taker advice before you choose. Once you have made your choice it can be quite costly and time consuming if you decide that you want to change later. Sage is the market leader but it is expensive and there are lower cost equally good packages available.

7.Will you employ people? What usually happens is that you start off by having part time help or maybe you pay someone for the odd job now and then. But you need to be careful as both these examples could land you into a world of regulations and unexpected costs. Best to take advice at the start.

8. Legal obligations. Simple things like public liability insurance and registering with your local council if you are in one of the trades where they keep a record such as animal breeding establishments, taxi drivers and licensed premises.

9. Your website and optimising for Google. There will come a time when your customers will expect to see you on the internet. It might be just a Facebook account or for business to business they will probably look for you on Linked in. Whatever business sector you are in it will pay to start early. There are some fairly simple rules to get established.

10. Budgets and the bank manager. Very few new business owners will start out with a budget. It doesn’t need to be overly complex but we think it best to have one at the start.There will probably come a time when you need to discuss your finances with a bank manager and being able to refer back to a budget and show that you monitor your progress will be invaluable.

Whatever business you are in there are many small points to consider when you start trading. Don’t leave it until it is too late.

Would you like a free consultation to discuss these issues and many more? Why not call me on 01228 562667 for a no cost/no obligation discussion?

What expenses can you claim against tax

This is one of the most frequently asked questions…what expenses to claim to offset against sales and to reduce the tax bill.

Well if you are an employee the answer is somewhat limited to wholly, exclusively and necessarily incurred costs. But if you are a sole trader then the definition is more widely drawn as just wholly and exclusively.

Staff costs. The costs associated with your employees should be fully recoverable. The pay, benefits, pensions and their travel on work related business.

Rent and rates. All the premises costs should be allowable unless there is a private use element.If you use your home as an office then the Inland Revenue allow a nominal amount. You can claim more but you will need to justify the claim.

Telephone costs. Mobiles and landlines.Should be fully allowable but there are cases where an estimate of private use might be excluded.

Repairs and renewals.Fully allowable but you need to be able to distinguish between a repair and a capital addition.

Professional fees. Usually allowed eg accountants fees. Some costs might be capital and you will only get relief when the asset is sold and then as an increase in the base cost for capital gains tax.Examples being legal fees and any expense to protect your right to the asset.

Printing, postage and stationery. As long as incurred for the business these are allowable.

Entertaining...these are not allowable.

Travel costs – generally are allowed but exceptions cover instances where excess luxury or personal involvement are in play.

Motor costs. Largely allowable but care is needed to identify any capital costs such as depreciation.

Training costs are generally always allowed but there are restrictions for sole traders training for new skills.

You are welcome to contact us for free advice. Wherever you are, Carlisle, Brampton, Penrith or indeed anywhere in Cumbria do call us for advice on tax and bookkeeping.

RTI relaxation for small business

The introduction of RTI must be one of the most fundamental changes in payroll for small businesses in many a year. Fortunately HMRC seem to be starting to recognise some of the issues and they have announced the following. Taken from here.

HMRC has extended the temporary relaxation of real time information (RTI) reporting rules for small businesses for a further six months to April 2014.

The relaxation applies to businesses with less than 50 employees and was originally set to run until October 2013.

According to HMRC:

These transitional arrangements only apply to small employers who pay their staff manually, for example, weekly or fortnightly and then take their records to their payroll provider monthly to process the payroll for the month. These arrangements do not apply to small employers who can run their payrolls weekly or fortnightly and can report payroll information at the time of payment.

Writing to the tax man

HMRC have published guidance on headings which should be used when writing to them. This will help speed up replies…all to the good.

Their advice is here

and the details are here

Primary level headings Secondary level headings
  • Agent no longer acting
  • Allowances and reliefs
  • Calculation queries
  • Cessation of a source of income
  • Complaints
  • Deceased case/bereavement
  • Employer correspondence
  • Employer penalty appeal
  • ESCA19 request or employer error
  • Information requests
  • Insolvency/bankruptcy
  • Loss claims
  • New source of income
  • PAYE coding query/amendment
  • Progress chasing correspondence/repayments
  • Self Assessment appeal
  • Self Assessment/PAYE repayment claim
  • Self Assessment set up or close record
  • Self Assessment statement query
  • Self Assessment tax return amendment
  • Self Assessment tax return request
  • Appeals – penalty appeals
  • Appeals – surcharge appeals
  • Capital allowances
  • Capital gains (inc Principal Private Residence Elections and quoted shares)
  • Chargeable events
  • Discovery assessments
  • Double Taxation Relief
  • Film losses
  • Foreign income (Foreign Tax Credit)
  • Investment club
  • Trading losses
  • Overpayment relief under Schedule 1AB
  • S33 trading losses
  • Scholarships /grants
  • Share schemes
  • Special assessments
  • Venture Capital Trust/Enterprise Investment Scheme


Bookkeeping intro

Bookkeeping is, at its simplest, the recording of financial transactions.

Typically these are made into the day books or journals. For instance the cash book.

At the end of each month the totals are then posted into the books of account to produce a trial balance.

By splitting the transactions into many individual day books it becomes easier to track back and find errors as well as resolving any other questions.

The accountancy world has many abbreviations, here are just a few

  • A/C – Account
  • Acc – Account
  • A/R – Accounts receivable
  • A/P – Accounts payable
  • B/S – Balance sheet
  • c/d – Carried down
  • b/d – Brought down
  • c/f – Carried forward
  • b/f – Brought forward
  • Dr – Debit
  • Cr – Credit
  • G/L – General ledger; (or N/L – nominal ledger)
  • P&L – Profit and loss; (or I/S – income statement)
  • P/R – Payroll
  • PP&E – Property, plant and equipment
  • TB – Trial Balance
  • GST – Goods and services tax
  • VAT – Value added tax
  • CST – Central sale tax
  • TDS – Tax deducted at source
  • AMT – Alternate minimum tax
  • EBITDA – Earnings before interest, taxes, depreciation and amortisation
  • EBDTA – Earnings before depreciation, taxes and amortisation
  • EBT – Earnings before tax
  • EAT – Earnings after tax
  • PAT – Profit after tax
  • PBT – Profit before tax
  • Depr – Depreciation
  • Dep – Depreciation
  • CPO – Cash paid out

Anti-avoidance GAAR

The UK is, at last, getting a legal framework for anti avoidance….a general anti avoidance rule or GAAR.

The new rules are contained in the Finance Bill 2013 and should receive Royal Assent in July this year.

Essentially this combats schemes which aim to save tax in away which was not anticipated by parliament when the relevant tax law was written AND also where the course of action cannot be argued as reasonable.

Schemes caught by this net will be assessed by three members chosen from an advisory panel.

Not really something most small Cumbrian businessmen will need to worry about. But in an age where the big tax avoiders seem to take all the headlines maybe a step in the right direction.

References: Taxline June 2013