regulations Archives - A4Accountants

Category Archives for regulations

Clothing Allowance and Laundry Allowance for Employees UK

Many self-employed people and those in employment are failing to claim their clothing allowance. And that is because most have no idea they can claim for both clothing and laundry costs by using an HMRC allowance for their work uniform.

Clothing Allowance Claimants:

  • Police Officers
  • Agricultural workers
  • Pilots and Cabin Crew
  • Metal Workers (aluminium, brass, iron etc.)
  • Armed Forces
  • Engineers (electrical, motor, and many more)
  • Public Services (fire, nursing, prison officers etc.)
  • Industrial (shipyard workers, seamen, pipe fitters etc.)

The rates vary wildly from £60 to £185, and further to the above, there are many many more whose rates are fixed at £60.

These are annual allowances, and are worth from £12 a year in reduced tax to £37 (for ambulance staff on active service).

The above is a snapshot of just how complicated the UK tax system is.

If you’re in the armed services, you don’t need to worry as these are already claimed on your behalf by MoD from 2013/14.

But for everyone else, you may be missing out on your legally allowed claim against tax.

You can normally backdate your claim up to 4 years if you’ve not claimed before.

Make sure you claim these in your self-assessment form to take advantage of your extra allowance.

Self-Employed?

You can also claim for certain clothing used in your business, eg. protective clothing or uniforms.

This can either be done through normal expenses by keeping your receipts or through the basic allowance of £60 if you qualify.

Read more about that on HMRC’s official site here:

https://www.gov.uk/tax-relief-for-employees/uniforms-work-clothing-and-tools

If you would like us to do it all for you at more than competitive rates, call us on 01945 588105 during normal office hours and we will be delighted to help.

Personal Service Companies Clampdown Due (IR35)

The government is expected to crack down soon on the use of personal service companies (PSC) that use the IR35 scheme to reduce costs.

These company structures are popular for entertainers, IT contractors and business consultants. However, the government feels the system is being abused, leading  to a review of personal services companies. We are likely to see related changes that will affect business owners and contractors in the next budget.

What Is A Personal Service Company?

Personal service companies are referred to as business structure, such as a limited company, that a majority of contractors rely on to create the necessary professional image and to manage their finances in the most tax-efficient way.

The use of personal service companies has increased dramatically since the recession. With companies looking to reduce their headcount and associated costs. Whilst former employees enjoy lower tax and NI bills.

Why Are The Government Clamping Down?

There are now more than 200,000  personal service companies in the UK that the government looks set to target. The reasons are two-fold; first there is a fear that companies are exploiting a loophole to avoid benefit and pension obligations to contractors who are employees in all but name.

This is a legitimate concern; however, sceptics may point to the estimated lost revenue that is the real reason. The use of personal service companies costs the treasury £400m each year . Tax avoidance/efficiency has been a controversial political issue. Personal service companies are low hanging fruit for the government without directly increasing taxes.

The revelations that there are members of the BBC and the public sector using the structure to lower tax thresholds has added fuel to the fire. Adding social acceptance to the pursuit of reform to the IR35 scheme rules.

The UK has a new chancellor and the autumn statement is only a few months away. An announcement on personal service companies and the IR35 scheme is expected to be included.

Potentially signalling a huge shift in the way personal service companies work. Changes to enforcement could have a huge impact on the accountancy sector and small business owners.

Tax structures should not be abused by companies to reduce costs and disguise employees. This must be balanced with a need to protect the 5m businesses in the UK, particularly those that legitimately use contractors.

Hopefully changes will keep the right balance between rewarding entrepreneurship and enforcing the rules of the system fairly.

If you are unsure how IR35 and personal service companies affect you then give our team a call 01945 588105

HMRC Registered Accountancy Service Provider

Any organisation or individual who provides accountancy services to other businesses needs to be registered with HMRC under the Money Laundering Regulations (MLR), and if so, and they become registered, they can use the term “HMRC Registered Accountancy Service Provider”.

That means if you are looking for a firm or individual to help you with your bookkeeping and/or year end accounts, then you’re going to need to do your own due diligence and choose a registered bookkeeping or accounting service.

The key terminology determined by HMRC is “by way of business”. So the only exceptions to this are, and here’s a typical example: partners of business owners who do their bookkeeping for free.

HMRC define “by way of business” as:

  • Advertise or publicise your business activity, or receive referrals from other businesses
  • Aim to make a profit when you carry out this activity
  • Carry out the activity with reasonable or recognisable continuity

You will need to register if you carry out all the above, however, if you only carry out some of the above, then you should still check with HMRC whether you should be registered under MLR.

They also state that if you do NONE of the above, then you are OK, so if you have a friend who is happy to do your bookkeeping for you for free on an adhoc basis, then there is no need to hire a professional bookkeeper.

The downside of using a non-professional is they will most likely not be up to date with the latest regulations.

You can read more about the designation “HMRC Registered Accountancy Service Provider” here on HMRC’s site.