What is a P45? A P45 document records details about your income and the tax you’ve paid while working for a particular employer. The form ensures that your tax records are accurate and up-to-date, both for you and for HMRC. You will receive a P45 when you leave...
What is a P60? Your employer issues a P60 at the end of each tax year, summarising your income and tax deductions from April 6th to April 5th of the following year. This form provides a clear record of what you earned and the taxes you paid over the year. What...
What is a P30? Employers use a P30 form to report their National Insurance Contributions (NICs) to HMRC. In the UK, employers are responsible for deducting NICs from their employees’ wages or salaries. These deductions help fund essential social services like...
What is an Accounting Journal? An accounting journal is a record where businesses document their financial transactions in chronological order. This process is the first step in the accounting cycle and is crucial for accurate financial reporting. Accountants and...
What is an Accounting Ledger? An accounting ledger records all financial transactions organised by account. This ledger records every financial move made by the business, providing a comprehensive view of its financial health. Think of it as the backbone of a...
What is an Accounting Period? An accounting period is a specific timeframe for which a business prepares its financial statements and reports. The purpose of an accounting period is to provide a consistent basis for measuring and reporting financial performance. This...
The Bank of England Cuts the Base Rate to 5% On the 1st August 2024, the Bank of England cut the base rate from 5.25% to 5% – marking the first base rate cut in over four years! The Bank of England (BoE) uses the base rate to control inflation, which also...
What is a Business Bank Account? A business bank account specifically manages the finances of a business. Unlike personal bank accounts, business bank accounts offer features tailored to business needs, helping you to manage income, expenses, and financial...
CIS Statements Adhering to the Construction Industry Scheme (CIS) requirements is crucial for both contractors and subcontractors. One of the essential components of CIS compliance is the proper handling of CIS statements. Contractors issue CIS statements to...
PAYE, or Pay As You Earn, is the system HMRC uses to collect Income Tax and National Insurance Contributions from employees. Employers deduct these taxes from wages before they reach employees, ensuring they pay taxes throughout the year rather than in 1 lump sum. Fun...
National Insurance, or NI for short, is a tax on earnings that funds various State Benefits. Employees, the self-employed and employers all contribute based on income levels. Unlike Income Tax, NI directly supports benefits that people may need throughout their lives,...
The Cycle to Work Scheme The Cycle to Work scheme helps employees purchase bicycles and equipment through a tax-efficient loan. Employers buy the bikes and lease them to employees through a salary sacrifice arrangement. This means employees pay for the bike in monthly...
What is the Lower Earnings Limit? The Lower Earnings Limit (LEL) is the minimum amount an employee must earn to qualify for certain state benefits and to start earning entitlement towards the State Pension. It is not the amount at which employees begin paying National...
What is Maternity Allowance? Maternity Allowance supports pregnant women and new mothers who do not qualify for Statutory Maternity Pay. Often, self-employed women, those recently employed, or those who haven’t worked with their current employer long enough, do...
The Personal Allowance is the amount of income you can earn each tax year before paying Income Tax. For the 2024/25 tax year, the standard Personal Allowance is £12,570. This means you do not have to pay tax on income up to this threshold. However, your Personal...
HMRC uses the Self Assessment system to collect Income Tax and requires taxpayers to complete a yearly tax return. Self Assessment is for those who do not have their taxes automatically deducted from their earnings or for those with additional income sources....
Does Tax Apply to Marketable Securities? Yes, tax does apply to Marketable Securities. Marketable securities quickly and easily convert into cash due to their high liquidity. Common stocks, treasury bills, and bonds, traded on public stock exchanges, are examples of...
What is Football Transfer Tax? Football Transfer Tax refers to the tax implications and regulations surrounding the transfer of football players between clubs. There is no specific tax but rather various tax considerations that come into play during the process of...
Tax in the UK follows a progressive structure, meaning the more you earn, the higher the percentage of tax you pay on the additional income. This blog covers the tax bands, allowances and rates for the 2024/25 and 2025/26 tax years. Your Tax-Free Personal Allowance...
Holiday Accrual on SSP When employees are unable to work due to sickness, they may be eligible for Statutory Sick Pay (SSP), currently set at £116.75 per week for up to 28 weeks in the UK. During these periods, employees still accrue Holiday or Annual Leave. Employees...
What is a P11D? The P11D form is used by employers to report expenses and benefits provided to directors and employees that are not processed through payroll. Examples include company cars, health insurance, and other non-cash benefits. Each director or relevant...
What is the VAT Flat Rate Scheme? The VAT Flat Rate Scheme (FRS) simplifies the way small businesses manage their VAT payments. Instead of calculating the VAT on every transaction, businesses pay a fixed rate of VAT to HMRC – depending on the industry. Key...
Corporation Tax is a tax on company profits, payable to HMRC. Unlike Income Tax, businesses do not receive a bill for Corporation Tax. Instead, they must calculate, report and pay it themselves. It applies to: Limited companies Foreign companies with a UK branch or...
What is Double Entry Bookkeeping? Double Entry Bookkeeping is an accounting technique that records each financial transaction twice – once as a debit in one account and once as a credit in another. This method bases itself on the accounting equation: Assets =...
