Although I did attend a couple of MBF meetings, for the most part I have been a quiet observer in this group. I would like to suggest a discussion topic for 2013, or at least provide some “food for thoughts”. I think that some of you might be interested, and I would love to hear your thoughts. Depending on the structure of your business (cash flow in particular), this may ; or may not ; reduce your income tax liability, in addition to simplifying your accounts.
HMRC is introducing a new “cash basis” accounting practice, which they name “Simpler income tax for the simplest small businesses”. This differs significantly from the conventional “accruals basis”, and as a matter of fact it may not be applicable to your business due to restrictive compliancy rules. For those of you who are eligible, this is an opt-in tax regime: it is your responsibility (or more likely, that of your accountant) to make a well-informed decision. The opt-in / opt-out switching rules allow for some flexibility, so I would suggest to do some basic homework (see links below) and to refer back to your accountant’s advice in order to work out what is best for you.
Note that I am *not* an accountant, but I do manage my own accounts. I can afford to do so because of the simple nature of my micro business: I am self-employed, a sole trader to be precise (software development and standards consultancy), and I operate mostly from home with limited overall expenditure (mixed business / private use of office space and equipment). I have worked out that I could potentially benefit from the new “simplified expenses allowances” available under the “cash basis” scheme, so this is worth investigating.
I have been talking (via other forums) to people who are in similar circumstances, and we are trying to understand the ins and outs of this scheme, which will take effect starting from fiscal year 2013/2014. Plenty of time to plan judiciously.
There is some interesting information in these articles (make sure to check the comments as well):
HMRC is running some useful free webminars at the moment (albeit designed primarily for new businesses):
Happy festivities to everyone, and enjoy filing your self-assessment tax return! 🙂 (deadline end of January 2013)
Kind regards, Daniel