Abolition of the FHL Tax Regime During the Spring Budget 2024, the Chancellor announced the abolition of the Furnished Holiday Lettings (FHL) tax regime starting from April 2025. This change will affect many property owners who have benefited from the favourable tax...
What is a Trial Balance? A Trial Balance summarises all the debit and credit balances in a company’s accounting system. Typically prepared at the end of an accounting period, such as a month or a year, it is a key step in the accounting cycle. This process helps to...
What is Bank Reconciliation? Bank Reconciliation is the process of comparing the transactions recorded in your business’ financial records with the transactions listed on your bank statement. The aim is to ensure that the balances match, and if they don’t,...
What is a Company Year End? Your Company Year End depends on your business and typically aligns with the date you registered your company with Companies House. It’s different from the tax year, which runs from 6th April to 5th April. Your Company Year End typically...
A financial year end marks the conclusion of a 12-month period used by businesses to track, report and assess their financial activity. It is the point at which businesses stop recording income and expenses for the year and begin preparing their financial statements....
What is a Tax Year End? The UK Tax Year runs from 6th April until the 5th April of the following year. HMRC uses this timeframe to calculate your liabilities for the year, whether it’s Income Tax, Corporation Tax or Capital Gains Tax. For example: The tax year...
What is Solvency? Solvency refers to a business’ ability to meet its long-term financial obligations. Simply, it measures whether a business has enough assets to cover its debts. A solvent business is one that can pay off its liabilities over the long term,...
What is Liquidity? Liquidity measures how easily an asset converts into cash without losing value. Consider cash the most liquid asset because you can use it immediately for purchases or paying bills. On the other hand, assets like property or collectibles may take...
What are Fixed Assets? Businesses purchase fixed assets as long-term assets for continuous use. Businesses do not intend to resell or convert them into cash quickly. Instead, they support the business over several years. Examples of fixed assets include: Buildings:...
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...
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...
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...
What is Tax Investigation Insurance? Tax Investigation Insurance is a specialised insurance policy that helps individuals and businesses cover the costs associated with a tax investigation conducted by HMRC. Specifically, HMRC conducts these investigations as routine...
What is a Tax Investigation? A tax investigation is not an accusation of wrongdoing but a process to verify that a business or individual complies with HMRC’s tax laws and has paid the correct tax amount. What Triggers a Tax Investigation? Tax investigations can...
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...
