What is a Liability? A liability is a debt or obligation a company must settle. This can be in the form of money, goods, or services. You should record liabilities on the right side of the balance sheet; which includes loans, accounts payable, mortgages, deferred...
The Employment (Allocation of Tips) Act From 1st October 2024, millions of workers across the UK will see a boost to their earnings, thanks to the Employment (Allocation of Tips) Act. This new law has been put in place to allow workers to keep 100% of their tips,...
What are Current Assets? Current Assets (CA) are short-term resources that a business owns and expects to convert to cash or use up within one year. Current assets appear first on a company’s balance sheet under the Assets section and support the daily...
What is Cash Accounting? Cash accounting, also called cash-basis, is a method of recording income and expenses based on when money actually enters or leaves your business account. This means you record a payment only when you receive it, and an expense only when you...
What is Accrual Accounting? Accrual accounting is a method of recording financial transactions when they happen, rather than when money changes hands. This approach helps businesses gain a more accurate picture of their financial health by tracking income and expenses...
Income Tax is a tax you pay on the money you earn. The government collects it through HMRC. However, not all income is taxable and the amount you pay depends on how much you earn. What Counts as Taxable Income? HMRC taxes various types of income, including: Employment...
Inheritance Tax is a tax on the estate of someone who has passed away. An estate includes property, money and possessions. The tax applies to the potion of an estate that exceeds the tax-free threshold, which currently stands at £325,000. If the total estate value is...
Capital Gains Tax (or CGT) is a tax on the profit you make when selling or disposing of an asset that has increased in value. This is different from Income Tax because it applies only when you sell an asset, rather than on regular earnings. The tax applies only to the...
State Pension Triple Lock Introduced in 2010, the Triple Lock is a government guarantee to increase the State Pension every year by whichever of three measures is the highest: 2.5% Inflation (measured by the Consumer Prices Index in September of the previous year)...
What is Pension Credit? Pension Credit is an income-related benefit that offers extra money to help with your living costs. It’s available to those over State Pension age and is especially beneficial if you’re on a low income. Importantly, you can receive Pension...
State Pension Increase Explained Good news first – the government have proposed raising the State Pension in April 2026. For those who receive the New Full State Pension (introduced after April 2016), the payment will increase from £221.20 to £230.05 per week. This...
What are HMRC Penalties? HMRC imposes penalties on taxpayers who fail to comply with their tax obligations. Consequently, these penalties serve as a deterrent to non-compliance and encourage everyone to adhere to tax laws. If you don’t file your tax return on...
Tax Investigation Insurance is a specific type of cover that protects you from the professional fees you will incur if HMRC investigates your tax affairs. These tax investigations can come from irregularities in your tax returns or entirely at random. The insurance...
An HMRC Tax Investigation, also known as a compliance check, is an official review of an individual’s or business’s tax records. HMRC wants to confirm that they are calculating and paying their taxes correctly. These investigations therefore allow HMRC to...
What is a Cash Flow Statement? A Cash Flow Statement outlines the inflows and outflows of cash and cash equivalents in your business. It provides insights into your company’s liquidity by covering debts and operating expenses without additional financing. Unlike...
What is an Income Statement? An Income Statement, also known as a Profit and Loss Statement (P&L), summarises a company’s income and expenses over a specific period. It provides a snapshot of a business’s financial performance and is essential for...
What is a Balance Sheet? The Balance Sheet provides a snapshot of a company’s assets, liabilities and equity at a given point in time. This enables stakeholders to assess the financial health and operational results of the business. Moreover, a Balance Sheet is...
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...
