Posted by Stuart Christy on 03 Apr 2014

Five Reasons to Review Your Business Model

Ahead of the new UK tax year this month there are a number of recent updates to tax legislation and accounting standards that make it a good time to review your business structure and plans. The changes coming into effect represent a combination of new incentives together with rule relaxations to encourage new and small businesses by offering tax savings and regulatory simplification. Depending on your current business format, the new tax and accounting environment encourages assessment of a business structure that works for you, for example potentially incorporating your business to be operated by a company.

Here is an overview of five key reasons why you may find it worthwhile rethinking your business model:

Employer’s National Insurance Reduction 

For the 2014/15 tax year all UK employers will be entitled to £2,000 off their national insurance bill. This is great news for businesses employing staff and will provide an immediate working capital boost with the reduction set against national insurance contributions as they arise.

We can help if you would like support with establishing an effective payroll service tailored to your needs which ensures this tax incentive is secured, allowing you to reinvest in your business.

If you are considering taking on your first employee we can assist you with the registrations that will be needed and can review with you whether your current business provides an appropriate structure.

New Pension Rules

Perhaps the biggest surprise in the 2014 budget. The announcement by the Chancellor is being seen by many as the most fundamental change to pensions in a generation and will bring about a significant pensions approach rethink for a large number of businesses. Wider flexibility with drawdowns in future may make pension contributions through your business an effective planning tool, depending on your personal circumstances. We have the specialist knowledge across both business and personal taxes to help you determine an effective contributions strategy.

Small Company Accounting Rules Relaxation 

Effective for accounting periods ending on or after 30 September 2013, the smallest companies are now eligible to prepare their annual accounts under a simplified reporting regime. This releases them from applying the same framework as larger businesses and makes company compliance obligations easier to deal with by freeing up more productive time for small business owners.The new rules may not be right for

The new rules may not be right for everyone though, as there could be a risk of diminished ability for a business owner to evaluate financial performance effectively. In addition many investors and lenders will still want to see detailed financial information. Care and guidance is therefore needed before deciding on any changes to ensure you get the most from your business’ financial reporting.

Corporation Tax Investment Allowance Increase 

Known formally as the Annual Investment Allowance, over the tax year 2014/15 this is being increased to £500,000. If you are considering making an investment in assets to support and grow your business, the timing could have a big impact on the associated tax treatment. We have the knowledge and skills to work with you on your investment plans to take advantage of available allowances.

VAT Threshold Increased 

The new turnover limit which requires a business to register for VAT has increased to £81,000, removing the VAT requirement from more small businesses. However, VAT should not necessarily be seen as a business burden; we can work with you to provide accounting processes to deal with VAT efficiently. If you are not VAT registered you may be losing out on claiming money back which can hurt cash flow. With our

The new turnover limit which requires a business to register for VAT has increased to £81,000, removing the VAT requirement from more small businesses. However, VAT should not necessarily be seen as a business burden; we can work with you to provide accounting processes to deal with VAT efficiently. If you are not VAT registered you may be losing out on claiming money back which can hurt cashflow. With our experience, we are able to help you decide if VAT registration is right for your business and guide you through the application procedure.

 If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or customerservice@taxinnovations.com.