UK tax: Partnership Tax Return Guide

This is a guide for those who run a partnership PLC business. Please not the rules will vary for LLC’s and other business structures.

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Tax Deadlines for UK Partnerships

Paper tax returns are due in on the 31st October. While those who file online must do so by the 31st January.

If the HMRC gave you notice to make a Partnership Tax Return after the 31st July of the previous year, you may have longer to file your return.

What does a Partnership Tax return include?

A Partnership Tax Return will ask for the details of your partnership’s income and related information.

The first 8 pages of a Partnership Tax Return covers the income from trades and professions, and interest or alternative finance receipts from banks, building societies or deposit takers. There are also ‘supplementary’ pages covering the less common types of income and disposals of chargeable assets.

As the partner completing the Partnership Tax Return it is your responsibility to make sure that you fill in the correct supplementary pages.

Penalties for failing to file by the deadline

If you fail to file your Partnership Tax Return by the appropriate deadline, the HMRC will charge each partner who was a member of the partnership during the return period a £100 penalty.

As the delay continue, the penalty will increase for each member:

·      Over 3 months late- a penalty for each additional day of the Partnership Tax Return is late for a maximum of 90 days (£900)

·      Over 6 month late- a fixed £300 penalty

·      Over 12 months late- a further fixed £300 penalty

 

Changes in the membership of a partnership

For tax purposes, business carried on in a partnership is regarded as continuous, despite any changes to the members of the partnership, provided there is at least 1 partner who is a member of both sides of the change. It is important to confirm that, where a partner has only been a member of the partnership for a part of the period covered by the Partnership Tax Return this fact is correctly reflected in the partner details section and profit share information provided in the Partnership Statement.

 

Tax due on shares of partnership income

The information provided to the HMRC in your Partnership Tax Return will be used to check that the partners are paying the correct tax and Class 4 National Insurance Contributions (NICs) due on their share of the partnership profits. Each partner is liable only up to the tax due on his or her share of the partnership profit.

 

Types of partnerships

A partnership for the purposes of the Partnership Tax Return includes:

·      A partnership governed by the Partnership Act 1890

·      A limited partnership registered under the Limited Partnership Act 1907

·      A limited Partnership under the Limited Partnership Act 1907

·      A limited liability partnership (LLP) registered under the LLP Act 2000 unless the LLP

o   Does not carry on a business with a view to profit

o   Is being formally wounded up

In which instance the LLP may need to file a Corporation Tax Return.

Contact us for expert tax advice for partnerships

 

 

 

UK Tax: Jessica McKechnie award for EIS

Congratulations to our UK tax manager, Jessica Mckechnie, for being shortlisted for the Best Result in EIS diploma award, as sponsored by Tolley!

 
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The EIS Association Awards denote excellence in a number of EIS/SEIS fields. The Awards will be presented at the EIS Reception at the House of Lords on Tuesday 6th February 2018 to those individuals and companies in the EIS and SEIS industry that achieved outstanding performance during 2017. 

Contact us for UK tax support

Tax advice to a UK business expanding to the US

As a UK business considering expanding to the US it is essential that you understand that tax obligations and implications you will incur as a foreign business in the US. 

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EIN and Form 8832

Before any forms are completed, the firm must obtain an Employee Identification Number (EIN) from the IRS.  When this happens, the IRS will automatically designate the company as either a corporation, partnership, or disregarded entity with one owner.  From there, the foreign company should fill out form 8832 to either confirm this classification or elect a different one. 

W-8 Forms

The most important step in this process is filling out one of the W-8 forms.  This type of form acknowledges that the foreign company intends to take advantage of the tax treaty they have with the US, and therefore will see the 30% withholding tax reduced.  For UK businesses, this rate is reduced to 0%, so they should not have to pay any withholding taxes on payments received from US businesses.  This applies to a wide variety of income types, including interest, dividends, rents, royalties, premiums, annuities, and compensation for services.  In most cases, the company making the payment or the IRS will tell the firm which form to fill out.   Usually, foreign entities will fill out W-8BEN-E while partnerships will use W-8IMY. 

Setting a business up in a physical location of the US

If the UK company decides to set up a physical location in the US, they will be subject to US corporate tax.  The firm should file form 1120 and pay the tax to the IRS.  This income should also be reported on the UK tax return.  However, they may file for double tax relief under the UK/US tax treaty and reduce their UK tax liability by the amount of US tax paid.  If the company does not have a physical location in the US, they do not have to pay US Corporate Tax. 

Form 1065

Additionally, the IRS may request that a company entering the US provide records of their income and expenses for past years.  This is commonly done using Form 1065, and is strictly for reporting, not tax, purposes. 

By following these steps, any UK business can efficiently begin operating in the US while minimizing their tax burden and remain in accordance with all US tax laws.    

Contact us for expert US Corporation tax advice

Bambridge in the Times: How to boost your pension?

Take a read of our latest contributions to The Times, where we answer the dreaded question of how you go about increasing your pension income. 


The article features Martin Allen, a veteran Royal Navy Submariner. As a business owner, mortgage and investments, Martins tax case is not the simplest. 

View our answers at: https://www.thetimes.co.uk/article/i-want-to-boost-my-pension-income-now-nd3kxs6ms

Contact us for expert tax advice on how to increase your pension income that is relevant to you.

How the UK tax bitcoin and cryptocurrency activity

 ‘Cryptocurrency’ is a word often used in reference to ‘virtual currencies’. With the fast development of the world wide web and other technologies, cryptocurrency is becoming an increasingly popular method of transaction.

The value of some types of cryptocurrency has risen at such a rate that ‘bitcoin millionaires’ are becoming a norm. The surge in cryptocurrency income has been followed by an increased interest in how the virtual income is taxed.

 

Bitcoin is by far the most popular cryptocurrency, however there are over 1,000 alternative virtual currencies, such as Ethereum and Litecoins, which are becoming increasingly popular.

Salt and Pepper Creative 

Salt and Pepper Creative 

This article is used to define the current UK tax implications on Bitcoin activity and other crytocurrencies

Cryptocurrency is broadly treated as foreign currency for UK tax purposes. Where the value rises then that profit is deemed to be a foreign currency gain

From a legal perspective, Bitcoin/ cryptocurrency is not currently considered to be ‘money’ or ‘currency’.

Personal use


Largely speaking, where cryptocurrency is exists for personal use as a means of currency, (to buy goods and services), there are no gains on exchange gains or any allowable losses. This is the same as when you buy currency for your holiday. You do not pay tax on any exchange gains, and are not allowed any losses on, on the fluctuations in the currencies.

 

VAT and CGT

VAT is payable on any exchange of cryptocurrency for goods and services.

Holding Cryptocurrency as a personal investment:

HMRC guidance states that:

The relevant legislation and case law will be applied to determine the correct tax treatment. Therefore, depending on the facts, a transaction may be so highly speculative that it is not taxable or any losses relievable… For example gambling or betting wins are not taxable and gambling losses cannot be offset against other taxable profits.

Therefore whether your holding cryptocurrency for speculative (gambling) purposes or holding it as an investment with an intention of creating long-term appreciation determines if are subject to Capital Gains tax (CGT). If you are holding the cryptocurrency as an investment you  fall within the capital gains regime and therefore will be subject to Capital Gains Tax  for individuals and Trustees and corporation tax if a company.

Whether you are a speculative or investment cryptocurrency holder is determined by the HMRC case by case.

It can however my difficult to convince the HMRC that purchasing bitcoin was a ‘gamble’- even though the HMRC are not supposed to apply hindsight to their judgements.

 

Buying and selling Cryptocurrency

From a tax perspective, what constitutes a trading activity is an age-old issue, since there is no useful statutory definition. Whether a trade has happened or not may be judged off of case law.

The Badges of Trade was drawn together in 1955 y the Royal Commission of Taxation and Income based on previous case law decisions.  These may be used by accountants, tax advisers and lawyers to determine whether a trade has happened.

An individual is likely to only be subject to capital gains on any return, while a company ‘s holdings are likely to be subject to corporation tax.

Mining of Cryptocurrency

The mining of cryptocurrency refers to acting to release new cryptocurrency into circulation.

Whether or not the ‘profits’ are taxable will depend on the organisation of the operations.

If the ‘miner’ is an individual who makes profit from what may be identified as a hobby, the tax implications are likely to vary from that of an individual/organisation that work full-time professionally, with specialised equipment where a definite trade has been performed.

If activities are identified as a trade then any profits that arise to an unincorporated business will be subject to income tax. If the profit arises from a company, the profit will be subject to corporation tax.

Contact us for expert cryptocurrency/ bitcoin tax advice

What does GDPR mean for your business?

With penalties of up to 4% of annual turnover, the ramifications of not understanding the GDPR could be huge.

On the 25th May 2018, the GDPR legislation comes into play. This article is intended to prepare you and your business.

 

What is GDPR?

 

The General Data Protection Regulation (GDPR) is a new legislation that is aimed at strengthening data protection, by giving consumers greater control over how our personal data is stored and used.

The GDPR is the biggest change to data protection in this generation.

 

Why is it necessary?

Internet and cloud technologies have grown massively since the 1995 EU Data Protection Directive. With the developments, companies have gained new ways of using and sharing personal data. The new legislation has been introduced to regulate how businesses use, share and hold individuals data.

 

Does Brexit mean that GDPR doesn’t apply to UK businesses?

In short: ‘No’.

The UK will still be a recognised member of the EU on 25th May 2018. Therefore GDPR will automatically become part of domestic law and it is all most certain that it will continue to be part of UK law after we Brexit is complete.

GDPR will be relevant to all organisations that reside within the EU, provide goods or services to individuals within the EU or that process any EU citizen’s information.

 

What are the penalties?

There are fines of up to 4% of annual worldwide turnover or €29million- whichever is greater

 

 Below is a video from the Information Commissioner Elizabeth Denham breaking down the importance of GDPR.

 

 

Contact us for expert tax advice for businesses

Being a VAT registered company. What you need to know.


A TAILORED SERVICE MADE TO FIT YOUR BUSINESS PERFECTLY


We value our close relationships with clients. Over the past 10 years, we have worked with companies with every kinds of demand, hurdle, structure and goal. This experience has allowed us a wealth of knowledge that helps us reach our primary goal to deliver and please.

Photography by Asiko

Photography by Asiko

MANAGE YOUR VAT EFFECTIVELY: AVOID PENALTIES, IMPROVE CASHFLOW AND PROFITABILITY.

VAT affects a wide range of business functions, with a wide range of regulations depending on your business activities and sector.

VAT is a tax that can be charged on items such as:

·      Business sales

·      Hiring or loaning goods to someone

·      Selling Business assets

·      Commission

·      Items sold to staff

In order to register your company to charge VAT contact us.

 

Responsibilities:

VAT registered businesses must charge VAT on their goods and services. They may reclaim any VAT they’ve paid on business related goods or services.

If you’re a VAT-registered business you must report to the HMRC the amount of VAT you’ve charged and the amount of VAT you’ve paid. This is done on VAT return, which is usually filed every 3 months

Contact us to file a VAT tax return

 

Accounting for VAT

You must account for BAT on the full value of what you sell, even if you:

·      Receive goods or services instead of money

·      Have not charged any VAT to the customer, whatever price you charge is treated as including VAT.

If you charged more VAT than you’ve paid, you must pay the difference to the HMRC. If you have paid more VAT than you’ve charged you can reclaim the difference from the HMRC.

CONTACT US WITH ANY OF YOUR VAT QUERIES

Raise finance for your business through EIS


A TAILORED SERVICE MADE TO FIT YOUR BUSINESS PERFECTLY


We value our close relationships with clients. Over the past 10 years, we have worked with companies with every kinds of demand, hurdle, structure and goal. This experience has allowed us a wealth of knowledge that helps us reach our primary goal to deliver and please.

SET DESIGN WORK BY OUR COMPANY CLIENT, STUDIO RHODES, FOR KAYNE WEST MUSIC VIDEO

SET DESIGN WORK BY OUR COMPANY CLIENT, STUDIO RHODES, FOR KAYNE WEST MUSIC VIDEO


RAISE FINANCE FOR YOUR BUSINESS THROUGH EIS


BUSINESS LOOKING TO RAISE FINANCE FROM EXISTING OR NEW SHAREHOLDER?

n order to make your business as tax-efficient and attractive to shareholders you will have to ensure you are taking advantage of every tax break you are entitled to. 

For example the Enterprise Investment Scheme (EIS), which was developed to help small high-risk trading companies raise finance by offering tax reliefs to investors who subscribe for new shares.

 

WHAT IS EIS?


Enterprise Investment Scheme (EIS) is a scheme developed to help small high-risk trading companies raise finance by offering tax reliefs to investors who subscribe for new shares.

For companies to qualify for the scheme certain conditions need to be met for up to 3 years from the time of the investment as not doing so can end up in tax relief not being given to investors or if this has already occurred, withdrawal of the relief.

 

REQUIREMENTS


·       Shares must be unquoted at the time when they are issued and there must be no prearrangement for the shares to eventually become quoted on a recognised stock exchange.

·       Another company cannot control a company wishing to qualify and cannot control any subsidiaries it has. The value of gross assets should not exceed £15m before the share issue and £16m after. It must have at least 250 employees at the time of the share issue and 500 if it is a knowledge intensive company.

·       It must have a permanent establishment in the UK. Within 2 years of the share issue all money raised must be used by the company or by a 90% qualifying subsidiary solely for the purpose of a qualifying activity. It can carry on some excluded activities (for example dealing in land, commodities, financial instruments and goods other than in an ordinary trade of retail or wholesale distribution) however this can only be a maximum of 20% the company’s total activities. 

·       Qualifying companies and their subsidiaries cannot take more than £5m of EIS or other risk investment in a year. No more than £12m can be taken in total; this amount is £20m for a knowledge intensive company.

 

REQUIREMENTS FOR INVESTORS


·       An investor cannot have a connection with a company in order to claim relief. Having a financial interest in a company can make someone connected. If an investor holds more than 30% of the share capital or voting rights and is entitled to more than 30% of the assets in the occurrence of closing down the company then he/she will be deemed as having a connection by financial interest. This condition is for 2 years before and 3 years after the issuing of the shares, if not 3 years after the start of qualifying trade if this is later.

·       Investors cannot be partners, directors or employees of the company as this is deemed an employment connection. This limitation has the same time window as a connection through financial interest.  However, there is an exception for directors who are Business Angels who do not receive remunerations who may qualify for Income Tax relief. If they become a paid director during the 3-year window the tax relief will not be withdrawn as long as the remuneration is reasonable.

 

REQUIREMENTS FOR SHARES


·       When the shares are issued they must be paid up in full in cash and they must not be full-risk ordinary shares nor be redeemable.

·       An investor cannot acquire the shares in question using a loan offered on terms and conditions that would not have been in place for any other shares.

·       There must not be arrangements in place for the investor that would protect him/her from the usual risks associated with investing in shares and there must be no strategic alliances where the company owners agree to similarly invest in each other to obtain the tax relief.

 

Expenses For Set Designers


Saving Set Designers Thousands for Over 10 Years


WE SPECIALISE IN SAVING YOU MONEY. OUR EXPERTISE IN TAX FOR STAGE PROFESSIONALS CANNOT BE BEATEN.

 

We provide specific tax advice to stage managers, deputy stage managers and assistant stage managers.

We offer fixed fees for the year, which includes telephone and email support at no extra charge.

If you are a member of the Stage Management Association then you qualify for a 25% discount on your personal tax return every year.

One of the first steps that we will take when looking at your accounts is ensuring that you are claiming absolutely every expense you are eligible to as an Set Designer. 

Just some of the amazing set design work of our client, Anna Rhodes of Rhodes Studios

 

SET DESIGNERS HAVE A NUMBER OF TAX DEDUCTIONS THAT ARE UNIQUE TO ANY OTHER INDUSTRY.

Below we have put together a list of some of the expense you are entitled to as a Set Designer. 

USE OF HOME AS AN OFFICE

Use of home as an office is an expense that all too often missed out by Set Designers. If you use your home to update your website, work with contractors or any other work-related uses you are entitled to claim this expense.

You are able to claim a percentage of your household bills for your use of home as an office. 

 

ADVERTISING

Getting your name seen and heard is a major part of being a successful set designer. Anyways you promote yourself in an effort to get ahead in your career is claimable. Whether you pay to be mentioned in an article or directory, run an ad campaign or any other forms of promotion- it's claimable. 

EQUIPMENT

Equipment is defined as items that you intend to use for a prolonged period. Your do not include this in your business expenses but instead in an AIA (Annual Investment Allowance), which works to reduce the tax you pay. 

If the item has been brought for a part-personal reasons you will have to apportion the expense. So that laptop you brought to apply for auditions can go on you AIA and save you money!

CONTACT US TO FIND OUT EVEN MORE TAX RELIEFS AND EXEMPTIONS FOR STAGE MANAGERS

EXPENSES FOR ARCHITECTS


SAVING ARCHITECTS THOUSANDS FOR OVER 10 YEARS


ILLUSTRATION BY ELLA JACKSON

ILLUSTRATION BY ELLA JACKSON

 

We understand that the life of an Architect is often a busy one. With high-demand for focus in planning, calculations and much more, the additional demand of filing taxes can be one job too many. 

Bambridge Accountants was set up to help professionals in the Creative Industry, such as architects,  file their taxes accurately, cost-efficiently and on time.  We understand all of the exemptions your entitled to and the obligations you must be aware of. 

 

As an architect there are several expenses that you are entitled to claim against tax.

MEALS AND TRAVEL

You can claim the cost of buying meals when you work overtime- provide that you have been paid an allowance by your employer.

The cost of your parking, tolls, taxis and public transport is also claimable if you are required to travel to attend seminars, meetings and training courses. The costs of travel incurred through using your own car for work are also claimable. This is usually calculated based on millage.

 

WORK CLOTHING

Work clothing is claimable against taxes. This includes:

·      The cost of buying uniforms

·      The cost of dry cleaning and clothing repairs

·      The cost of buying sun protection if you are working on site

·      The cost of buying any protective equipment required for your work

 

TRAINING

The cost of work-related training course is claimable as long as the subject of training related directly and clearly to your job.

 

WORK TOOLS AND EQUIPMENT

You can claim the costs incurred when buying or repairing equipment you use at work. The cost of the supplies you use at work such as stationary are also claimable.

 

Other work expenses

 

·      Annual membership and union fees

·      Work-related books, magazines and journals

·      Work related phone calls and rental

·      Work related internet connection fee costs

 

For more information on what you can claim as an architect contact us now

As an architect there are several expenses that you are entitled to claim against tax.

 

MEALS AND TRAVEL

You can claim the cost of buying meals when you work overtime- provide that you have been paid an allowance by your employer.

The cost of your parking, tolls, taxis and public transport is also claimable if you are required to travel to attend seminars, meetings and training courses. The costs of travel incurred through using your own car for work are also claimable. This is usually calculated based on millage.

 

WORK CLOTHING

Work clothing is claimable against taxes. This includes:

·      The cost of buying uniforms

·      The cost of dry cleaning and clothing repairs

·      The cost of buying sun protection if you are working on site

·      The cost of buying any protective equipment required for your work

 

TRAINING

The cost of work-related training course is claimable as long as the subject of training related directly and clearly to your job.

 

WORK TOOLS AND EQUIPMENT

You can claim the costs incurred when buying or repairing equipment you use at work. The cost of the supplies you use at work such as stationary are also claimable.

 

OTHER WORK EXPENSES

·      Annual membership and union fees

·      Work-related books, magazines and journals

·      Work related phone calls and rental

·      Work related internet connection fee costs

FOR MORE INFORMATION ON WHAT YOU CAN CLAIM AS AN ARCHITECT CONTACT US NOW