GoSimpleTax is a cloud based self-assessment software that calculates and submits directly to HMRC.
GoSimpleTax – Self Assessment tax return calculator and submission tool.
AIA has teamed up with GoSimpleTax to provide AIA members with a cost effective easy to use solution. Leave the calculations to their HMRC recognised software which also provides hints and tips that could save you or your clients money on allowances and expenses that could have been missed. The software allows you to switch between clients and has the added functionality of multiple years.
GoSimpleTax offer 25% discount on all software (pay just £34.50), to all AIA Members with volume discounts available, for example pay £160 for 10 clients with just £1 per client thereafter.
Simply follow any of the above links or click here to register to receive your discount code, no payment required.
A UK based software company specialising in providing an online solution in the simplest form possible– the only one of its kind!
Our tax calculator is a simple HMRC registered web tool that allows Tax Records to be maintained.
These records can then be submitted direct to HMRC in-line with the current requirements under Self-Assessment and will continue through MTD
The company owners have worked in the software industry since 1985 producing tax compliance products for both individuals and accountants.
The last 5 years being focused on GoSimpleTax. This secure end to end encrypted App is a recognised HMRC supplier.
GoSimpleVAT is MTD compliant VAT bridging/filing software that imports a VAT report from any spreadsheet or PDF. Approved by HMRC and guaranteed to lead you to compliance. You can take advantage of our free 14-day trial (no credit card required) to see just how simple VAT filing through bridging software can be.
For just £240.00 per year (£60.00 per Qtr.) for unlimited clients and unlimited submission.
Discount to AIA Members
GoSimpleTax offer 25% discount on all software, to all AIA Members.
Simply follow any of the above links or click here to sign up to receive your discount code.
Whether you’re client is new or not to self-employment, record-keeping might sound like hard work to them – and certainly will be to you when they have days to spare for the deadline and cannot find ‘that receipt’. And while that may be true, it does come with its own reward – namely, that sole traders can claim back allowable expenses and pay less tax on their earnings.
HMRC has a number of rules about record-keeping though. Mostly, they relate to the storage of receipts and other documentation after you’ve filed your Self Assessment tax return for that tax year. By not adhering to them, your client can run the risk of losing out on any tax relief – or worse, being penalised by HMRC.
So, to ensure you get the tax-saving benefit of expenses, we’ve asked Mike Parkes from GoSimpleTax to set the record straight on record-keeping and provide guidance on how to help your clients claim.
What expenses can sole traders claim for?
There’s a whole host of expenses your client can claim as a sole trader, and they can potentially net them big savings if you utilise all that are available to you. Generally, people are aware that equipment purchases qualify as expenses, but there are many others.
They include:
Travel and accommodation
If your client is a sole trader they may have to cross up and down the country for long stints at a time, basing themselves near a site far from home. Luckily, HMRC considers hotel stays viable expenditure. The accommodation records (how long you’ve booked) should be as close as possible to the proposed timescale of the project you’re there to oversee.
You can also claim tax relief on mileage or travel bookings made over the year, as well as meals on overnight trips. To ensure you stay within the bounds of eligible allowances, it’s worth consulting the gov.uk website.
Legal and financial costs
Your services as an accountant to support their venture, you can claim on their behalf your total costs. This may also be the case for any other professional services they may need for business purposes. Likewise, you can claim against bank costs such as overdraft and credit card charges. Costs like professional indemnity insurance premiums and lease payments can be claimed back, although there are rules if you’re using cash basis accounting.
Marketing costs
As your client is using these services purely for the purpose of driving their business forward, HMRC will permit marketing exercises as eligible expenses. That’s great news for sole traders who use flyers to drum up work, for example, or need a website that advertises their services.
Clothing Expense
While your client operates as a self-employed individual, they may also represent certain authorities when they’re caring for patients or vulnerable people. As a result, it may be expected to purchase a uniform or your own PPE.
Fortunately, you’re able to claim for it as an allowable business expense. Provided that what you’re purchasing is either a uniform or necessary protective clothing needed for your work, you’ll qualify for tax relief.
What’s more, if you need to purchase any additional PPE for your role (say, gloves and face masks), this is also considered an allowable expense.
Rent for premises
If your client rents a space purely for business purposes, then that too can be classed as an allowable expense.
Utilities
If your client works from home, you’re entitled to claim a proportion of the gas, electric, water, broadband and telephone bills as allowable expenses. There’s no exact science to this, but generally you’d divide the bill by the number of rooms in your house and then divide that figure based on the amount of time you work from home. The GOV.UK website has a good example. If that sounds too complex, then you can claim simplified expenses.
Subscriptions
If your clients freelance work requires you to pay a membership fee or would benefit from the purchase of a trade publication, these costs can be claimed back on. However, this does not extend to political party subscriptions.
These are just some of the examples of expenditure that you can claim on, but they highlight the wealth of opportunities available to all sole traders – provided they keep the relevant records. Claiming these expenses through your clients Self Assessment tax return helps to further reduce their tax liability and maximise their take-home pay.
What records should be kept?
In order to qualify for tax relief, your clients need to be able to present receipts when asked by HMRC. But to be wholly compliant, expenses aren’t the only figures you’ll need to report. In fact, if you’re self-employed, you’re legally required to keep records of the following:
You won’t need to submit all of the above as part of the Self Assessment tax return. However, HMRC may ask you for them should they launch an investigation. Additionally, it helps you to work out your clients taxable income when filing.
If HMRC does launch an investigation, you’ll need to provide evidence of your clients finances. This will need to come in the form of:
Only with all of the above will you be able to safely claim any relevant expenses and stay on the right side of the taxman.
How long should records be kept?
Where businesses have to store receipts for six years, sole traders are only required to store theirs for five. That’s at least five years after the 31st January submission deadline of the relevant tax year.
This allows HMRC to investigate your clients accounts over a long period of time should they believe it necessary. Obviously, if you have claimed relief but misplaced the evidence, you may be penalised by HMRC all the same. So it’s best to tell your clients to invest in more than a wallet or a desk drawer for your receipts.
Where should records be stored?
Ideally, electronically. Train tickets and similar paper receipts are near impossible to keep in good quality for that length of time – especially if your client is lugging them around for up to five years in their coat pocket. You could have a physical filing system, but the amount of admin that would be required to keep it in order could quickly get exhausting.
Tax software, on the other hand, allows your clients to store certain documentation online. Some allow users to take photos of receipts from their phone, for instance. They can then upload the image to the app, keeping it secure in case you ever find yourself under investigation.
However, it’s worth bearing in mind that there are documents that HMRC will expect you to hold on to in their original form. Such documents usually show that you’ve had tax deducted. For example, if you’ve been an employee in that tax year, your P60 will prove your exemption.
Are you conscious you will not be able to use the government gateway for MTD for income tax?
GoSimpleTax software submits directly to HMRC and is the solution for accountants and sole traders alike to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.
AIA members receive a 25% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.
Further more, AIA members who sign up to try the software throughout September and October 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now www.gosimpletax.com/tax-aia.
The paper return deadline is this month, 31st October, therefore we thought it would be useful to invite Mike Parkes from GoSimpleTax to explain how best to prepare your clients for the Self-Assessment tax return submission and file with confidence.
If your clients are new comers to submitting Self-Assessment tax returns, they should understand it pays to know that there are three ways of filing. Firstly, you can submit via the HMRC site and receive instant acknowledgement post-submission. You can also use commercial software to do this for you. Or, you can send a paper tax return to HMRC in the post.
Whichever method they choose, it’s important to understand their exact responsibility. For those who are self-employed sole traders or Landlords letting out UK property, paper submissions can be complicated as they involve additional forms and documentation.
Should your client choose to file a paper tax return, don’t forget to file before the 31st October deadline. We would recommend sending their paper submission prior to the October deadline, either through recorded delivery or with some proof of posting in order to prove your compliancy.
If they miss the deadline for submitting their paper return, don’t be tempted to file it late – you have until 31st January to complete one online. Just don’t submit both. You will be charged penalties from the 1st February for any late submissions.
Remember, it isn’t enough to submit the main SA100 tax return. Your client needs to bundle it together with the rest of their documentation that references their property or self-employment income.
For any income as a landlord, all that’s required is to file an additional form (SA105) and submit it alongside their regular Self-Assessment tax return.
However, with self-employment, the additional sections required of your client could be either the SA103S or the SA103F. The difference between the two is that the former is for those who had an annual turnover below the VAT threshold for the tax year (£85,000 as of 2019/20), and the latter is for those who earn above the VAT threshold.
While your client may have historically always submitted their tax return by paper, the vast majority of tax returns are now submitted online. Improvements in technology and the extra three months to file are the main incentives to submit an online tax return.
Having an online account with HMRC allows you to not only extend your filing deadline but also check your details at any time to see how much tax is due and act accordingly.
If your client is happy to tweak the way in which they keep their records and adopt digital record-keeping, this will help minimise admin further, as well as enable you to submit their tax returns and automatically calculate the tax.
Going forward as of April 2023 your client will have to file their self-assessment digitally to HMRC providing updates every quarter via a digital platform.
Preparation is key, adopt the right approach now it could save both time and money, make the move to digital ahead of the deadline for MTD for Income Tax.
About GoSimpleTax
Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.
AIA members receive a 25% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.
Further more, AIA members who sign up to try the software throughout October 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now www.gosimpletax.com/tax-aia or contact leeanne.ogden@gosimpletax.co.uk
Just a month after the government announced support for sole traders in the form of the Self-Employment Income Support Scheme, or SEISS, 2 million claims were made, totaling £6.1 billion in government support.
Now, with a second grant opening in August 2020, a number of sole traders are set to benefit from further financial assistance. Is your client one of them?
Quick dates to remember
17 August 2020: Applications open
19 October 2020: Applications close.
We’ve asked Mike Parkes from AIA Partner, GoSimpleTax, to explain the terms and help you and your clients claim.
So how does the SEISS work?
To re-cap the scheme is available to all self-employed individuals that have been adversely affected by COVID-19. This is provided that they:
To determine whether or not your clients were affected by COVID-19, any of the following must apply:
The first grant ended on 13 July 2020, and claimants could receive either £7,500 or 80% of their average monthly profits over the 2016/17, 2017/18 and 2018/19 tax years (whichever is the lower amount).
Applications for the second grant will open on 17 August 2020, but you must have confirmed by 14 July 2020 that you have been adversely affected by COVID-19.
Why is there a phase two?
While the government set a three-month cap on the support, it has since been agreed that COVID-19 is still impacting the earnings of some sole traders. As a result, it is necessary for them to receive another grant in order to stay afloat.
It will also help to support those who may not have initially been affected by lockdown (and so did not claim the first grant) but have subsequently suffered a loss of business.
What’s the difference?
The differences between phase one and two are limited, although the second grant will be worth 70% of your average monthly trading profits. It’ll still be paid out in a single instalment that covers three months’ worth of profits, but will be capped at £6,750 total – almost £1,000 less than the phase one grant.
Additionally, your client can only claim the second grant if your business was adversely affected on or after 14th July.
Can clients continue working and still claim?
Yes, they can continue to work as long as they intend to continue trading in 2020/21 in the self-employed role they are claiming for. They can even take up other employment if necessary, provided that the SEISS payments still cover the majority of the income. HMRC will not penalise your clients for topping up their income with a little additional earnings to sustain their household.
Phase two will have a deadline of 19 October 2020. You can find out more about it on the GOV.UK site. If your clients are still losing out on income or opportunities to earn, we massively recommend they claim the second grant. This is unprecedented levels of government support and could make the difference between staying afloat or falling behind.
About GoSimpleTax
GoSimpleTax software submits directly to HMRC and is the solution for accountants and sole traders alike to log all their income and expenses. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Trial the software today for free - add up to five income and expense transactions per month and see your tax liability in real time at no cost to you. Pay only when you are ready to submit or use other key features such as receipt uploading.
AIA members receive a 25% discount – to get your discount code simply sign-up to try our software above and it will be emailed to you. Volume Discounts are available.
Furthermore, AIA members who sign up to try the software throughout August 2020 will be eligible for a free one to one session providing an insight to our software and answering any questions you may have – sign up now www.gosimpletax.com/tax-aia
Provided your clients are VAT-registered and have a taxable turnover above the threshold, you’ll be expected to assist in their MTD compliance. For the most part, you’ll need to help clients ensure that their VAT records are in a digital format. This will mean an end to any paper-based bookkeeping.
What VAT information must be stored digitally for MTD?
The VAT Notice 700/22 specifies that the following information must be kept, maintained and preserved in digital form:
The following information has more specific rules surrounding it:
HMRC will accept totals from supplier statements, rather than individual invoices - however their preference is the latter.
Regarding petty cash transactions, businesses can record these as a total value and total VAT. This applies to individual purchases of less than £50 - subject to a maximum of £500 (including VAT) per entry.
You only need to record the details once you receive the information from the agent. If this is sent as a summary, you can treat it as one invoice for record-keeping purposes.
When it comes to charity fundraising events, record-keeping can be hard. HMRC will accept all supplies made recorded as a single transaction. The same applies to supplies received.
If your software records reverse charge transactions, you are not required to submit separate entries for supply and purchase. If your software does not record reverse charge transactions, you will need to record these twice - once as a supply made and once as a supply received.
HMRC require the following summary data to be recorded:
If your client adjusts their VAT amount in line with existing VAT rules, they must log that adjustment within their chosen compatible software. There’s no obligation to log the calculations behind each adjustment, simply the total change to the VAT amount – however, storing calculations somewhere will assist against any future audits. The calculations you make using the HMRC tool can be stored however your client prefers.
You can correct errors that are not deliberate, below the reporting threshold of £10,000 or for an accounting period that concluded less than four years ago. However, it’s important to ensure that the correcting adjustment is recorded in the compatible software.
Everything not covered above can be stored either digitally or on paper. These include:
11.Margin Schemes - You are not required to keep the calculation of the marginal VAT charged digitally. However, you will need to keep a record of the adjustment made to the VAT calculation digitally. You are still required to keep the normal records associated with Margin Schemes.
What’s important is that your client has complete understanding that while not all of the above requires logging into their MTD compliance software, refusing to include certain calculations will harm them in the face of an investigation.
On the 25th March 2020, Chancellor Rishi Sunak announced the Self-Employment Income Support Scheme (SEISS). This allowed HMRC to calculate and provide an appropriate taxable grant to self-employed individuals ‘whose livelihoods are adversely affected by coronavirus’, based on their average income.
The news was well-received. There had been concern that the self-employed would need to wait on Universal Credit until their industries were able to operate again. Now, with the scheme being extended with a second grant, a large number of sole traders are able to come out of lockdown relatively unscathed.
However, accessing this scheme is no small feat. To ensure your clients qualify for the additional support through June, July and August, Mike Parkes from AIA partner, GoSimpleTax, explains the application process and your role within it.
What is the SEISS?
SEISS is a scheme set up to support self-employed workers unable to earn as a result of COVID-19. The scheme opened to applications of its first grant on the 13th May 2020 – covering income for March, April and May – with HMRC identifying eligible self-employed workers and inviting them to enter their bank details online.
The support is determined by the individual’s average profits from the past three tax years. HMRC adds up the total profit for the combined three years, divides it by three, and uses that to calculate the monthly amount – a useful method if the earnings in one of your three years was significantly different from the other two.
In the initial period (March-May), the grant you receive would be 80% of the determined average profit – much like employee furlough. There is a limit though. The grant is capped at £2,500 a month for those that are eligible, and it is taxable (meaning you must declare it on your Self Assessment tax return). From June to August, this percentage will drop to 70%. It’ll be paid as a single instalment that covers three months’ profits, and capped at £6,570 total.
The deadline for applying for the first grant is 13th July 2020. Applications for the second grant are due to open from 17th August 2020, but your client must confirm that their business has been adversely affected by COVID-19 either on or after 14th July 2020.
Who qualifies for SEISS?
Of course, this will allow some self-employed individuals to get support even without three years’ worth of tax returns. If that applies to your client, then averages will be taken using what history is available.
However, those without a single, full year’s Self Assessment history (those who have started self-employment in the 2019/20 tax year) won’t qualify. This is to prevent fraudulent claims.
Can my client keep working?
Yes, provided they intend to continue working as a self-employed individual in the 2020/21 tax year. They can even work at another job in order to support their household income while receiving payments. However, they will still need to prove that their payments represent the majority of their income (i.e. greater than 50%).
As the SEISS payment will constitute earned income, you should beware if your clients were on Universal Credit to supplement their income. This may stop, and they may need to re-apply for Universal Credit in July.
How do I help my client stay compliant with HMRC?
Provided they qualify for the SEISS and they submit their Self Assessment tax return with all the relevant information, they should stay on the right side of the taxman.
However, you and your clients should also bear in mind that the second payment on account deadline has been extended. Usually, some self-employed individuals are required to pay their second payment on account on 31st July. However, with COVID-19 causing a significant disruption to many sole traders’ cash flows, HMRC has decided to delay this deadline until 31st January 2021.
While this initially sounds beneficial, if your clients normally make a second payment on account, it could result in the perfect storm next year when all their tax responsibilities come at once – causing greater harm to their cash flow and potentially leaving your clients with little in the bank in January. It’ll pay to file your clients Self Assessment early, be aware of their tax bill, and put any plans in place to meet your clients obligations.
About GoSimpleTax and Your AIA Member Discount
With GoSimpleTax software you can avoid being caught off guard in January by working out your clients tax liability ahead of time.
Their award-winning platform lets you log your income and expenditure in real time, and uses this information to automatically calculate your tax bill.
AIA members visit www.gosimpletax.com/tax-aia to claim your 25% discount or check out the new freemium version of the software.