We always recommend that clients pay VAT by Direct Debit. This ensures that the payment isn’t forgotten and it also gives you a few extra days to pay.
If you want to pay your VAT by direct debit just let us know when we ask for approval to submit the VAT on your behalf.
Alternatively you can pay HMRC in a number of different ways. All options are listed here, but the most common methods are as follows:
In both cases you will need to use your company’s VAT number as a reference. You will be able to find this on the return that we send you after submitting.
Every company will have a different set of VAT reporting dates but they will nearly always be quarterly. So it could be one of the following:
December / March / June / September
January / April / July / October
February / May / August / November
It will say on your VAT certificate which periods you fall into. If you like we can always change these for you.
It normally makes sense to have your VAT reporting periods coincide with your company year end period. So if you have a June company year it would be best to have a December / March / June / September VAT reporting cycle.
For illustrative purposes we will talk about a return that covers the period of 1 October 2013 through to 31 December 2013, which falls into the December / March / June / September period.
Here are the important dates:
1 January 2014 – This is the point from which you are able to submit your VAT return for the period.
15 January 2014 – This isn’t an official date but it’s usually around this time that your dedicated Caprica Online accountant will be in touch with either a draft VAT return or giving you a gentle nudge to update your Xero account so that they can prepare your return.
7th February – Your VAT return must be submitted 1 month and 7 days after the VAT quarter end date. Payment will also be due on this date unless you pay by Direct Debit.
We would always encourage clients to pay their VAT by direct debit. This is partly to ensure that payments are made on time but also because you get a few days extra to pay.
The reason for getting extra days to pay is because HMRC need a few days after the submission deadline to queue up the direct debit payment.
Most Small Business owners and Contractors spend a fair amount of time working from home. In this post we explain the costs you can put through your Limited Company when doing this. Be warned the answers are generally disappointing.
For Limited Company employees (such as Company Directors) HMRC allows you to claim a modest tax deductible expense for the costs incurred from working at home. This rate is currently £4 per week (ie. £208 per year).
This is the most common expense but there are some other considerations:
If you buy some equipment for your office that is moveable and clearly identifiable as property of the Company (as opposed to property of you) then you can buy the equipment through your Limited Company. An example would be a desk or a filing cabinet for your office.
What you can’t charge to the Company is home improvements. If you convert a garage to an office you couldn’t put these costs through your company. If you did so you would be saying the office/garage is now an asset of the Company.
You can see clearly how this doesn’t really make any sense. If you sold your house, it would mean you would be trying to sell an asset you don’t own (because your company owns it) or if the company went bankrupt it’s creditors would have a right to take ownership of your office/garage. So keep such purchases to simple moveable items. If you were to start renting an office from a third party and would move these items into it then it’s probably fair to assume they are reasonable business assets.
If you can prove to HMRC that you have suffered additional costs as a result from working at home then these extra costs may also be claimed. Of course these claims only apply to costs incurred only as a result of working from home.
In practice proving costs like heating or electricity have increased due to working from home can be very difficult. You would have to prepare analysis showing the Kwh usage has increased before and after working from home. In most cases this is just not practical or worthwhile.
One final option is officially having a room in your house dedicated as an office during working hours and leasing out the room to the company. This would have to be done officially with a signed lease agreement and could breach the terms of your rental contract or mortgage terms.
You would have to pay a personal tax on the money you charge for leasing out the room to the company. However you can allocate a portion of your home costs to the room you lease out and claim those as expenses in this case. There is a special formula in place to calculate this cost (Water bills + Electricity + Gas + Council tax + Rent/Mortgage interest + Home Insurance) / Number of rooms in house.
A final theoretical side effect is If you own the house and then choose to sell it having rented out a room to a company could impact your right to the normal Capital Gains tax relief.
We would not recommend this option as it’s too fraught with issues though we are aware that Contractors sometimes do this so wanted to explain it as an option.
This option is unusual and generally it’s just not worth it for the risks outlined.
A pool car is a car made available for business use by all employees. If certain rules are followed there is no benefit in kind charge to the employee.
To avoid a benefit in kind pool cars can be used. Here the car is not provided to the employee but all employees. As the cars are not available for the personal use of the employee there is no tax consequence to the employee.
The classic use of pool cars is with estate agents. Typically estate agents will have a pool of branded cars that all staff can use as and when required.
There are a number of rules that must be followed to ensure this is a pool car not a standard company car. These are:
1. The car is made available to, and actually used by, more than one employee
2. The car is not ordinarily used by one employee to the exclusion of others
3. The car is not normally kept at or near employees’ homes
4. The car is only used for business journeys. Private journeys are allowed but only if it is merely incidental to a business journey, for example driving from work to home in order to leave early for a business journey the following morning.
If these rules aren’t followed then each employee using the car could face a benefit in kind. So it’s really important that the rules are followed.