Replace and renew?

Are you a residential landlord?  Do you rent out your property, unfurnished/partly furnished or fully furnished?

First consideration is what exactly are all these 'furnished' categories?

•  Unfurnished - no furnishings except kitchen appliances; fridge, freezer, washing machine, carpets, curtains.
  
• Part furnished - as above with some other basic furnishings.
• Fully furnished - tenant can move in as though it were a holiday self-catering property.

 
Tax allowable expenses related to residential rental properties re furnishings has changed.

From 6 April 2013, the sole relief available to residential landlords is the 10% wear and tear allowance and, because this can only be claimed in connection with fully furnished properties, it follows that landlords of unfurnished (or partly furnished) residential accommodation cannot claim relief for the cost of replacing items such as cookers, fridges, dishwashers, curtains, carpets and so on.

•  Fully furnished - 10% wear & tear allowance available - this allowance can be claimed on fully furnished properties only. Other expenses relating to renewing anything not integral to the building cannot be claimed in addition to the 10% allowance.
  
• Un or part furnished - no 10% wear & tear allowance
• Un, part or fully furnished - renew and replace allowance is no longer available

 
If the cooker, dishwasher, fridge, etc is built in and is classed as integral to the building any 'like for like' replacement can be treated as a 'repair' and is therefore an allowable expense.  If replacement is an 'upgrade' to the item being replaced this is then a capital expense and not claimable as a repair.

The above is written from the view point of an individual landlord and not a rental company; it is a simplified overview of allowable expenses for individual landlords. 

Tolley, part of LexisNexis, have recently reported that in a recent survey carried out by the Residential Landlords Association where they were asked to survey their members it was found that over 75% landlords surveyed were not aware of the removal of the renewals basis allowance by HMRC.  Of the  Landlords who replied to the survey 74% provided white goods, 98% provided carpets and 79% provided curtains.

It would appear that the new expenses allowance rules may in most cases have an effect on the frequency items are replaced in the future - of course if you have a non-fully furnished let you could change it to be fully furnished and claim 10% wear & tear!

For more information on this subject please contact Cecile Hunt. 

Cecile is licensed to practice in accountancy and has run her own business for ten years, she has a wealth of experience in advising and assisting start-ups, micro and small businesses in running their business' plus advising on, and dealing with, taxation issues, including  VAT, of sole-traders, limited companies, partnerships and personal tax.

Understanding Changes to Collection.

There is some confusion as to how changes to the payment and collection of Class 2 NIC will affect the self employed person.  The changes have already started to be implemented by HMRC.


Class 2, is and will continue to be, payable by self-employed. 

Collection of Class 2 NIC, and it is only Class 2 NIC that is effected, will change from 2015/16 tax year onwards.  The liability to pay Class 2 is altering from a weekly basis to a yearly liability- the amount due will be payable at the same time as your income tax and Class 4 NIC.

Existing six monthly bills and direct debit payments will both cease automatically during 2015, with the last payments being collected as follows:

·         Last monthly direct debit payment collected 10 July 2015

·         Last quarterly direct debit payment collected 10 July 2015

·         Last 6 monthly bill due 10 July 2015.

HMRC will automatically cancel direct debit arrangements - so do not cancel any payments.

 Going forward:

Class 2 NICs will be calculated based on number of weeks self-employment in the year.

Calculation of Class 2 NIC due will be at the same time as Income Tax and Class 4 NIC are calculated.

Class 2 liability will no longer be automatic; the liability, from 2015-16 onwards will be reported through the self-employed self assessment (SA).

If you report a profit below the new Small Profits Threshold (SPT), currently £5885, you will not be liable for Class 2 NICs - you will, however, be given the option to pay it voluntarily to protect your entitlement to contributory benefits.  If you choose to not pay Class 2, as your profit falls below the SPT, HMRC should inform you of the potential impact of not paying voluntarily.

If you have low profits, or profits below SPT, and do not wish to pay Class 2 NIC, the change means that, from 2015-16 onwards, you will no longer have to apply for a Self-employed Exception Certificate (SEE).

If you are self-employed and on PAYE you will no longer have to apply for Deferment of Class 2 NICs - as the liability will not be assessed until after the end of the relevant tax year

Budget Payment Plan: HMRC have also announced that a Budget Payment Plan (BPP) will be available to all SA customers providing they are up to date with their payments. The customer can set up a BPP at any time. 

You can set up a ‘budget payment plan’ to make regular payments in advance. The payment plan lets you:

• Decide how much to pay each week or month 
• Stop paying for up to 6 months

You can set up your plan using your HMRC online account - you must be up to date with your payments and pay by Direct Debit. If the total you’ve paid during the year doesn’t cover your bill in full, you’ll have to pay the difference by the payment deadlines.

For more information on this subject please contact Cecile Hunt. 

Cecile is licensed to practice in accountancy and has run her own business for ten years, she has a wealth of experience in advising and assisting start-ups, micro and small businesses in running their business' plus advising on, and dealing with, taxation issues, including  VAT, of sole-traders, limited companies, partnerships and personal tax.

Cecile Hunt MAAT
"Guiding Businesses to Success"
45 Allaston Road, Lydney, Gloucestershire, GL15 5SS
Tel: 01594 842164 Mob: 07963 892 439  Email: [email protected]

Get yourself sorted from the start, admin wise!

Here I am, three years down the line from when I was getting serious about turning my making-some-pin-money silver jewellery hobby into a business. Things are getting quite busy now, and I am finding myself in a bit of a muddle with my admin. At last I have spreadsheets for customers, suppliers, stock, etc on my lap top, only wishing I'd done this right from the start. But being an 'arty' creative sort of person, these things all seemed so boring!

To go back to the way things were three years ago, admin didn't appear to be necessary, there were not many invoices to print, lists of materials and stock to make, customers details to be recorded, and the way I thought was .... once I get busy I will get this all done - BIG mistake!

Once you get busy there won't be any time for this. If you have not got yourself into a habit of entering your records every week, it is so much more tricky to do this when there are commissions to see to, materials to order, workshops to plan and advertise (in my case).

So hear it from someone who has been there, done it wrongly and learn - I will have to spend a lot of my 'holiday' time entering details into my spreadsheets, because the next 5 months are going to be quite hectic, if last year's experience is anything to go by. 

Wave Accounting in our opinion has really turned the world of web based accounting on its head, this is a truly fantastic application for small businesses that require a complete accounting application.
The internet is awash with invoicing services and trying to find one that fits your needs can be very difficult, do you want to subscribe to a service?, host the application yourself?, do you need to tie it into your banking system? Or do you just need a very basic way of issuing invoices?

In the last few years services such as Xero and Freeagent have made a massive impact on the way small businesses work, and to be honest I didn’t think that this model would change until I saw Wave Accounting.

What’s different about Wave, is that this service is completely Free, no subscription charge, no trial periods, no limits on the amount of invoices or customers you can create per month, it is truly free to use! The service was always designed to be free from the start and paid for by advertising other business services, these adverts are really unobtrusive and do not in any way hinder the use of the service.

Wave Accounting may not have the VAT and other tax advantages that Freeagent has, but it has all the features that small business needs, you can track payments into and out of your accounts, produce great reports that your accountant can work with, the service also links to your bank account and imports all your transactions automatically making reconciliation of your accounts really easy to do.

As the user base grows and people’s confidence in this business model increase then who knows, perhaps in a few months this may be the one that all competing applications and services will have to follow.

Would we recommend this to our customers? Absolutely, the only issue that we can see is the issue of trust!, will this service have the customer base to survive? and if not what happens to all customers data?, but there again this is a question that should be asked of all hosted services free or otherwise.

Wave Accounting in our opinion has really turned the world of web based accounting on its head, this is a truly fantastic application for small businesses that require a complete accounting application.

The internet is awash with invoicing services and trying to find one that fits your needs can be very difficult, do you want to subscribe to a service?, host the application yourself?, do you need to tie it into your banking system? or do you just need a very basic way of issuing invoices?

In the last few years services such as Xero and Freeagent have made a massive impact on the way small businesses work, and to be honest I didn't think that this model would change until I saw Wave Accounting.

What's different about Wave, is that this service is completely Free, no subscription charge, no trial periods, no limits on the amount of invoices or customers you can create per month, it is truly free to use! The service was always designed to be free from the start and paid for by advertising other business services, these adverts are really unobtrusive and do not in any way hinder the use of the service.

Wave Accounting may not have the VAT and other tax advantages that Freeagent has, but it has all the features that small business needs, you can track payments into and out of your accounts, produce great reports that your accountant can work with, the service also links to your bank account and imports all your transactions automatically making reconciliation of your accounts really easy to do.

As the user base grows and people’s confidence in this business model increase then who knows, perhaps in a few months this may be the way that all competing applications and services will have to follow.

Would we recommend this to our customers? absolutely, the only issue that we can see is the issue of trust!, will this service have the customer base to survive? and if not what happens to all customers data?, but there again this is a question that should be asked of all hosted services free or otherwise.