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TAXTools 5 Update: Small Biz Basics for the DIY Accountant

There are a gazillion reasons why contractors hire accountants to take care of their finances. Most have enough keeping up with change in their own industry, let alone any ‘helpful’ modifications HMRC makes to UK taxation laws.

But not all self-employed people see the value in outsourcing this element of running their business.

They’d much rather paw through their own expenses, receipts and time sheets. Having their comings and goings laid out across the dining room helps them visualise how their business is doing.

And depending upon their hourly rate (if it’s low enough), this method may even save them a few bob each month in the process. And that’s fine.

A little knowledge can be dangerous (that’s a good thing)

Today’s post is predominantly for those who prefer to do their own accounts.

But even those who value their free time above their paperwork may find some useful tax-saving hints, too. It doesn’t hurt to keep abreast of what you can and can’t claim against:

  • expenses;
  • NICs relief
  • CGT;
  • and income tax.

You could even take your own contractor accountant to task by knowing the tax relief basics. If you don’t feel they’re claiming everything they should on your behalf, there’s no harm in asking the question.

Just don’t tell them I put the idea in your noggin, right? Deal.

TAXTools: ICAEW‘s helping hand for small business

The ICAEW has long provided an invaluable resource for small businesses: TAXTools. In five complete sections relating to working with HMRC, they are:

  • contact information;
  • bespoke toolkits;
  • making payments;
  • lodging complaints;
    • and the one we’re talking about today:
  •  rates, allowances and reliefs.

Whilst items 1-thru-4 may change upon different administration, it’s item 5 that’s the most dynamic. With every budget, what businesses can and can’t claim seems to change. In line with George Osborne’s recent budget, ICAEW has updated that document.

TAXTools 5: updated for 2014/15 & 2015/16

Rather than catalogue the changes verbatim here, here’s the jump to the information TAXTools 5 for tax years 2014/15 and 2015/16. The link will open in a page and you can download your own copy of the document or bookmark the page.

TAXTools 5 in itself is split into five comprehensive categories; namely:

  • Business Tax;
    • this includes everything from vehicle benefits to Corporation Tax, Capital Allowances (not “Gains” – see below) to R & D relief, and more;
  • Indirect Taxes;
    • Stamp Duty and VAT;
  • National Insurance;
    • what you should be paying and what you can claim;
  • Personal Tax;
    • The most extensive coverage, listing Capital Gains to Child Benefit, Income Tax to Inheritance Tax, Pensions to Venture Capital trusts – you get the picture…
  • HMRC & ICAEW data;
    • Useful HMRC web pages and further illustration of how ICAEW can help you, including their contact info.

Why post this info? Isn’t it self-defeating?

Many may question why I’ve popped this information here. Especially when it seems to contradict the purpose of the website. Why offer accountancy services and provide a link enabling contractors to do it all themselves?

icaew taxtools wordcloudWell, I talk from experience.

Most contractors will take one look at all of the information contained herein and switch off.

It either doesn’t interest them and/or it’s beyond their remit.

But quite frankly, it’s often neither of those that’s the real reason they’re not interested.

They’ve got better things to with their time and money they’ve worked so hard to earn than crunch numbers. Especially ones that, if they get wrong, could land them in all sorts of bother with the taxman.

Try and figure all of this information out and try to implement it on top of the day-to-day running of their business? “No thank you, sir” is their rebuff.

That’s why they leave it to accountants who know their contracting business inside out. Perhaps you should consider their lead, too. Just sayin’ :).

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