Posts tagged ‘Vat Rate’

Drowning under a mountain of paperWith 2011 more that half way through, how is your business performing?


Here are twelve tips to act an aid-memoire when trying to stay in control of your business:

  1. If you are not producing regular management accounts, consider what financial information can be easily extracted from your accounting system to help you monitor the business. You can only extract meaningful information if your records are up to date and accurate.
  2. If you are selling a product, make sure you know your break even sales volume – this could be higher than you realise, particularly with pressure on prices.  What level of waste are you experiencing?  Are you carrying too much stock?
  3. If selling a service, check how many hours of time you are invoicing out a month – how much of it is resulting in billable income?   Are you charging at the right levels?  Are you competitive without being cheap?
  4. Project Management PlanRevisit your business forecasts and cash flow projections for the coming 12 months on a regular basis – are they still realistic in the current climate?  What costs can be trimmed back?
  5. If cutting costs, make sure you know which of your costs are fixed and which are variable.
  6. What can you delegate/outsource so that you can devote more of your time to looking after key clients and driving the busimess?
  7. A big, bad debt can be disastrous for business, so make sure you monitor your debtors carefully.  Keep in regular contact, resolve disputes quickly and discuss options at an early stage if they are having difficulties.  A debtor making round sum payments on account is often a warning sign.  Consider credit checking businesses that do not have any history with you.
  8. Look after your purchase ledger with as much care as your sales ledger.  Good suppliers are key to you being able to deliver to your customers, keeping prices down and an essential source of credit when managing cash flow.
  9. Make sure you have up to date information to hand when requesting a renewal or increase in your banking facilities and keep your bank manager informed of changes to the business and its performance.
  10. Check that the financial structure of your business is correct.  If you are relying on short term finance for long term projects then you need to get the balance right.  What assets do you have to secure more cost effective commercial finance?
  11. Income taxGet your tax affairs up to date and make sure you have provided for payments due in January and July as well as Corporation Tax due nine months after the accounting period if trading through a Company.  This is just as important if profitability has declined as you may be able to reduce any payments on account that fall due.
  12. Check you are using the most effective VAT scheme.  If you have a large sales ledger, cash accounting may be more appropriate.  Have you calculated whether the flat rate scheme results in less VAT being paid over to HMRC?


The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

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The new Chancellor, George Osborne  delivered his first budget on 22 June 2010. He said his budget was ‘tough  but fair’ but described it as being ‘unavoidable’ due to ‘the years of debt and spending’ by the previous labour government.

News PhotoThe Chancellor’s package included various tax increases and spending cuts, some measures had been widely anticipated such as the increase in the VAT rate and an increase in Capital Gains Tax. The Chancellor stressed that his measures were intended to be fair ‘Everyone will pay something but the people at the bottom of the income scale will pay proportionately less than those at the top’.

As tax is not my preferred subject (I have highly experienced colleagues for dealing with that!) I will be brief:

The key announcements included:

VAT Rate rise – As anticipated the VAT rate will increase from 17.5% to 20% with effect from 4 January 2011.

Personal Allowance increase – The personal income tax allowance is to increase by £1,000 in April 2011 to £7,475. This is worth £200 a year to a basic rate taxpayer.

Capital Gains Tax increase – The Capital Gains Tax rate for higher rate taxpayers will increased from 18% to 28% from 23 June 2010. It remains at 18% for basic rate tax payers.

Entrepreneurs Relief extended – Entrepreneurs relief has been extended to a rate of 10% on the first £5m of gains as opposed to the first £2m.

Corporation Tax Rate cut – The Corporation Tax rate will be cut by 1% each year over the next four years until it reaches 24%. The Small Companies rate is to be cut to 20%.

National Insurance rise to stay – The National Insurance rate increases announced by labour remained intact and will still take place however the threshold at which employers start to pay will rise.

No change to Cigarettes, Alcohol and Fuel – No changes were made to duty on cigarettes, alcohol or fuel and the plan to increase the duty on cider from July was scrapped.

Freeze on Child Benefits – Child benefit is to be frozen for the next three years.

Changes to Tax Credits – Tax credits will reduce for families earning over £40,000 next year but for low income families they will receive more Child Tax Credit with the amount per child increasing by £150 above the rate of inflation.

State Pensions – The state pension is to be linked to earnings from April 2011 and is guaranteed to rise in line with earnings or 2.5% whichever is greater. The increase in the state pension age to 66 is to be accelerated.

For further details on the key announcements download a copy of our budget summary.

Alternatively come along to one of our Budget Seminars which we are holding on the 24th and 25th June where we will be providing planning advice as a result of the changes.

Disclaimer: This article is for general guidance only.  All taxation planning should only be undertaken after appropriate professional advice.  George Hay Chartered Accountants are registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.