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Re: "Dear prime minister..." - 50 word letters from UK entrepreneurs

Emily Coltman — Wed, 13 Feb 2013 07:03:18 -0000

Make the tax system radically simpler so that small businesses don't have to worry about what they can or can't claim on expenses. The simplifications due out in April don't go nearly far enough. Why not a simple banded tax rate on sales instead?

Re: Skype’s mission to become a ‘billion users’ company

Emily Coltman — Fri, 05 Apr 2013 11:01:40 -0000

Skype is a fantastic tool. I use it regularly to communicate with friends and family in the UK and abroad.

I would though challenge the claim: "our strategy has always been user-centric. It has been really refreshing for us to see the scale on which Microsoft can add value in this respect – enabling us to provide our users with even better support and ask questions like ‘what else would users like us to do?"

If I can give only one example, hundreds of customers on this thread http://community.skype.com/... and others have requested the facility to set lists in Skype so that you can be online to some contacts and offline to others. I have also sent this request privately to Skype, and have heard nothing back, nor have Microsoft/Skype responded on the community forum.

It would be so useful to be able to be, for example, online to colleagues and offline to family during working hours, and the opposite outside of working hours, with a few special contacts (e.g. spouse) able to contact me at any time.

Could Microsoft/Skype please let all of us who have requested this feature know if/when we might expect to see it?

Re: Can i claim food and drink while travelling? - FreeAgent

Emily Coltman — Tue, 28 May 2013 09:27:16 -0000

Hi there. You wouldn't be able to claim tax relief on any costs relating to entertaining anyone who's not a current employee of your business. That means that the costs of food and drinks for customers / prospects must go to Business Entertaining in your accounts. This will then not be taken off your profit when you're working out your tax, and you also can't reclaim VAT on that cost. As for your travel to visit clients in London, that's a bit of a grey area - HMRC might argue that London is a base of operations for your business and that this travel is to enable you to live away from your base of operations. I would advise you to check this with your own accountant.

Re: My Apostasy Story: Paul Beaumont | Rationalist Association

Emily Coltman — Mon, 03 Jun 2013 08:28:00 -0000

This comment talks to me, Jules, as does Paul's article. I grew up Church of England (by choice), and then encountered a wave of welcome from the evangelical students at university, which to someone struggling to find their feet is extremely tempting. I had reservations from the first, though - the Christian Union felt very much like a cult. After one or two very uncomfortable meetings and conversations, I found my way to Quaker Meeting, where for the first time I felt as though I was accepted for exactly who I am. I made the decision to walk away from the Church of England and I'm now a Quaker and very happy there - but I now feel uncomfortable describing myself as a Christian, because of the behaviour I encountered from some Christians at university. If anyone asks me if I'm a Christian, I'll say no. (And you don't have to be a Christian to be a Quaker - there are Christian Quakers, atheist Quakers, agnostic Quakers, you name it. And this honestly wasn't meant to be a plug for Quakers.)

Re: Autumn Statement: what's in it for small businesses?

Emily Coltman — Fri, 06 Dec 2013 08:36:04 -0000

UPDATE: Luke - you are right! HMRC have clarified that this relates to Agency legislation and not to IR35. - Emily

Re: Capital assets and capital allowances

Emily Coltman — Fri, 06 Dec 2013 10:36:38 -0000

Hi Rilew! Do double check with your accountant but I would say yes!

Re: Charging and reclaiming VAT

Emily Coltman — Fri, 13 Dec 2013 05:49:05 -0000

Hello, Diana. If you're paying more to a subcontractor, this could well include more input VAT (reclaimable VAT on purchases) which would increase box 4 of your VAT return. Output VAT relates to sales you make to your customers rather than to purchases you make from your suppliers. I hope that helps. - Emily

Re: Buying clothing for your business? Make sure you know what expenses you can claim.

Emily Coltman — Mon, 16 Dec 2013 03:10:35 -0000

Hi Ben - I'd suggest you set up a new category, like this http://www.freeagent.com/su...

Re: Capital assets and capital allowances

Emily Coltman — Sun, 05 Jan 2014 05:14:59 -0000

Hello Pete,
What you'd need to do is to bring the tools into the business at their market value at the time when you started the business, and you can claim capital allowances on part of that value - because these are second-hand assets as far as the business is concerned. The allowances you can claim are called "writing down allowances". There is more information about these here http://www.hmrc.gov.uk/capi... but it is quite complicated so I would advise chatting this through with your accountant.

Re: Considering home expenses for your tax return

Emily Coltman — Sun, 05 Jan 2014 05:17:35 -0000

Hello Jane! Because you are under PAYE your situation is different - your employer may reimburse you for expenses you incurred working at home, but these may be a taxable benefit if you don't have to work at home and could be office-based. There's some information from HMRC here http://www.hmrc.gov.uk/paye... but I would advise talking to your employer about what they repay you, and to your accountant about what you can claim tax relief on - because you are not self-employed, your situation is different. I hope that helps!

Re: Entertaining for your business? Make sure you know what expenses you can claim.

Emily Coltman — Sun, 05 Jan 2014 05:19:31 -0000

Hello Nad. There are a lot of factors involved here for your grocery bill. If you work at home on your own, you can't claim the cost of groceries because we must all eat to live. If you have an office and are providing tea and coffee for staff, this would be a cost that's allowable for tax. Clothing for normal office wear is not usually allowable for tax relief so I wouldn't include this in your accounts and don't have the company pay for it - pay for it yourself, otherwise you might find yourself incurring extra tax. I hope that's useful!

Re: Capital assets and capital allowances

Emily Coltman — Mon, 06 Jan 2014 04:16:57 -0000

Hello Jake. Here's how to record a capital asset in FreeAgent assuming you bought it after your FreeAgent start date http://www.freeagent.com/su... I hope that helps!

Re: Entertaining for your business? Make sure you know what expenses you can claim.

Emily Coltman — Mon, 06 Jan 2014 05:48:27 -0000

Hello Clive. Thank you for your comments and I'm delighted that you like FreeAgent so much! Can I please ask whether the meals you are referring to are just for yourself, or whether you buy dinner etc for prospective clients, networking partners, or indeed anyone else?

Re: Capital assets and capital allowances

Emily Coltman — Tue, 07 Jan 2014 04:26:54 -0000

Hi Jenny. Did you buy these assets before you actually started your business, please (i.e. before the date you've entered into FreeAgent as your company start date), or was it after you started your business but before you began using FreeAgent?
If the first applies then here's how you should treat them http://www.freeagent.com/su...
And if the second applies then you do it this way http://www.freeagent.com/su...
If you're a sole trader and you're going to use the asset for private as well as business purposes, make sure to read this as well http://www.freeagent.com/su...
Does that help, please?

Re: Entertaining for your business? Make sure you know what expenses you can claim.

Emily Coltman — Tue, 07 Jan 2014 08:31:24 -0000

Strictly speaking, Clive, if you are paying for others who are not your employees then HMRC would say that is business entertaining and deny you tax relief! I know it sounds harsh! And your own food, if you are self-employed, can only be claimed if you are away from your normal base of work overnight, or if your business is by nature itinerant (e.g. you are a jobbing gardener visiting different sites), or you are making a journey that's outside the normal pattern of your business. Sorry about that - this is one area where I think the rules need changing!

Re: Entertaining for your business? Make sure you know what expenses you can claim.

Emily Coltman — Wed, 08 Jan 2014 08:42:40 -0000

I agree, Clive. It's a classic case of where the tax system has not kept pace with modern ways of working! My pleasure to help.

Re: Capital assets and capital allowances

Emily Coltman — Tue, 14 Jan 2014 04:18:04 -0000

Hello, Liam. Assets are treated differently for accounts and tax. For tax you would be entitled to the annual investment allowance as you've described. For accounts, your accountant has to show depreciation each year you use the van, as a way of spreading the value of the van over the number of years it'll be useful to you - but you can't use that depreciation to reduce the amount of profit you pay tax on, because you've already had tax relief on the cost of the van through the annual investment allowance. Does that make sense, please?

Re: Capital assets and capital allowances

Emily Coltman — Wed, 15 Jan 2014 05:11:50 -0000

Hello Liam,
It's not that the depreciation is taxable as such - it's that it's a cost to your business from an accounting point of view, but you can't use it to reduce your tax bill, because you've already used the full cost of the asset to reduce an earlier tax bill.
Over time, yes, they work out the same - for tax you get 100% tax relief up front, and from an accounting point of view, 20% each year shows as a cost to your business.
It is correct (promise) but it's not an easy concept to get your brain round!
If you're still stuck please do ask again!
Emily

Re: Working from home? Make sure you claim for the business use of your home

Emily Coltman — Wed, 15 Jan 2014 07:58:51 -0000

Hi James. If you record this under Expenses as a Payment and choose category Use of Home then it will appear there.

Re: Capital assets and capital allowances

Emily Coltman — Wed, 15 Jan 2014 09:04:21 -0000

Hello Sam. The limit depends on when your year end is, versus when the limit changed. If you buy assets that qualify for annual investment allowance, and stay under the limit, then yes, you get 100% tax relief on the cost of the assets - so the amount of profit you pay tax on will reduce by the amount of the allowance. Say you've spent £10,000 on qualifying assets, and your profit was £50,000 before that, you will pay tax on £40,000. Does that make sense please?

Re: Working from home? Make sure you claim for the business use of your home

Emily Coltman — Wed, 15 Jan 2014 15:20:44 -0000

Hello Liliana. Unfortunately the "recurring expense" feature in FreeAgent will only work at the moment if you create the first expense dated today or in the future - not in the past. So you will need to add each month manually I'm afraid. Sorry about that! - Emily

Re: Capital assets and capital allowances

Emily Coltman — Thu, 23 Jan 2014 06:47:41 -0000

Hello, Dionne. You get a new annual investment allowance each year, not just your first year of trading, so please don't worry, your investments in the second year are still eligible, subject to what the assets are (for example cars are not eligible) and subject to not breaking the AIA limit that was in force at the time. You can't carry forward unused AIA from an earlier year but you get a fresh AIA for each year. Does that help, please?

Re: Capital assets and capital allowances

Emily Coltman — Thu, 23 Jan 2014 06:53:02 -0000

My pleasure!

Re: Capital assets and capital allowances

Emily Coltman — Thu, 23 Jan 2014 10:40:00 -0000

Hello Jack! You can claim capital allowances for assets you bought before you began to trade. If you didn't use them for anything else before you started to trade, then you would almost certainly get 100% annual investment allowance on these assets (though the limit for this would be pro-rataed given you have a short year, so you would be able to claim 100% of the cost of eligible assets up to a limit of £250,000 / 12 = £20,833. If, though, you did use those assets for something else before you began to trade, you can't claim annual investment allowance, and instead you would get writing-down allowance. There's more information about capital allowances here http://www.hmrc.gov.uk/capi... On your second point, HMRC don't set a de minimis amount for what is a capital asset and what isn't - personally I would probably include these as running costs rather than assets, but do double-check that with your accountant!

Re: Capital assets and capital allowances

Emily Coltman — Fri, 24 Jan 2014 04:22:56 -0000

Hello Jack! It is a fuzzy area, tax nearly always is :) I have checked out HMRC's staff manuals and if you buy a business asset before you begin to trade, you do still get full capital allowances on that. Does that help, please?