Business Basics: Finance

Highlights:

• Because of the coronavirus pandemic, you can delay paying VAT normally due before June 2020. It now has to be paid by March 2021.
• Sole trader class 2 NI contributions are now part of the self-assessment (tax return) process, alongside income tax and class 4 NI contributions.
• Class 2 NI contributions are £3.00 per week for 2019-20. (£3.05 per week, 2020-21.)
  The proposed abolition of Class 2 has now been abandoned.
• Class 4 NI will stay at 9% for the moment, but the Chancellor might try to increase it in 2021.
• For the years 2019-20 and 2020-21 the personal allowance (i.e. free of income tax) is £12,500.
• The higher income tax rate of 40% kicks in after £50,000 (2019-20) for England, Wales and NI. The income tax bands for residents of Scotland are now very different. Check help sheet 3.
• VAT threshold is £85,000 from 1 April 2017. So you have to be VAT registered if your turnover in any 12 months hits that level. This threshold has been frozen until 2022.
• The Annual Investment Allowance (to buy kit and machinery) is £1m per year in 2019 and 2020.
• Corporation tax is 19% for all since April 2017.

Change to HMRC phone numbers

• Worried about paying tax as a result of coronavirus pandemic? Phone: 08000 241222

• HMRC Helplines (opens in new window)

Grants and loans for new businesses

The most important thing is to keep a sharp eye on your cash and don't throw money around. You might also be able to get a loan or grant from some of these places:

• Business Finance for You - an advice site for business
• The New Enterprise Allowance - an allowance and business mentor, through JobCentre Plus
• Prince's Trust - aimed mainly at 18-30 year olds

Useful sites to deal with late payers

• www.payontime.co.uk includes an interest calculator
• www.gov.uk info about the legislation
  Late Payment Legislation was introduced across all EU countries from March 2013.

The BusinessLink site has been replaced in England by www.gov.uk

Check out our coronavirus support advice on our updated Free Stuff page >

Help sheet 1 - Splitting the personal from the business >

Help sheet 2 - Types of business >

NEWHelp sheet 2f - Defining production freelancer status >

Help sheet 3 - Tax and National Insurance >

Help sheet 4 - Paperwork, record keeping and digital tax >

Help sheet 5 - VAT >

Help sheet 6 - VAT - Flat rate scheme for small businesses >

Help sheet 8 - Accountants (what they do and what to ask them) >

Help sheet 9 - Some practicalities, including an insurance checklist >

Help sheet 10 - Business plans >

Help sheet 11 - Polishing your image >

Help sheet - Balance sheets for limited companies >

For Microsoft Office (Excel and Word) users...

If you need these templates in other formats, please email us at: training@davidthomasmedia.com

Download all MS Office templates together (Zip file)

Or individually:

Spreadsheet - for personal (not business) spending

UPDATEDSpreadsheet - Pay Slip record for PAYE freelancers

NEWSpreadsheet - Monthly budgeting sheet for freelancers

Spreadsheet - Cash flow planner incl. PAYE income

Spreadsheet - Income and Expense (Profit and Loss) account for businesses

Spreadsheet - Cash flow for sole trader/Ltd

Template 7 - Invoice. (Or here for a pdf example with notes.)

Handout 13 - Blank project proposal form - with notes


For media freelancers (including payroll freelancers)Simple "Confirmation of Booking" letter - downloads Word doc in new window

For Apple format (Numbers and Pages) users...

Download all Apple format templates together (Zip file)

Or individually:

Spreadsheet - Personal (non-business) spending

NEWSpreadsheet - Monthly budgeting sheet for freelancers

UPDATEDSpreadsheet - Pay slip record for PAYE freelancers

Spreadsheet - Simplified freelancer cash flow planner

Spreadsheet - Income & Expense (Profit & Loss)

Spreadsheet - Cash flow forecast

Invoice template

We often meet trainees who are working in the UK but have moved to the UK from another country.

To check how much tax you might have to pay, have a look at the guidance on the HMRC website. Specifically, it's worth looking at the definitions of:

• 'resident'
• 'double taxation agreements'

VAT registered, and selling overseas?

If you're VAT registered in the UK you need to be sure whether or not to account for VAT yourself, or whether your client has to account for it.

The rules vary, broadly based on

• whether the client is based within the EU or not
• whether they are VAT registered in their own country or not

This is not the place to go into detail - especially as we don't yet know what will happen with Brexit - but you can find out more on GOV.uk: HMRC - VAT and Supply of Services

You may well need professional advice from an accountant who is used to working with international clients.