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With increased time spent working from home the entitlement of what people can claim as allowable expense for tax purposes is potentially higher. There are several ways of calculating cost of home office use. The treatment is different depending on if the legal status is Soletrader or a Limited company employee/Director. We will discuss both options below. Soletraders and partnerships The rules are more generous for this group and they can even claim home use if their regular office is rented elsewhere, in which case the amount claimed should be apportioned according to time home is used as the office. Below are some examples of options available, however readers should always contact a professional to consider their specific circumstances. Working from home allowance would generally consist of three parts: - Household costs - Room or area used for business as a % of total rooms/area in the house - Time spent at home doing business as a % of total time spent at home We will analyse the three areas below in more detail. 1) What household costs can be claimed? Fixed costs • Interest on mortgage or rent • Council tax • Water if fixed amount per year • Buildings and contents insurance Variable costs • Electricity, gas, water if metered • Cleaning • Telephone and internet expenses Capital costs • Desk, chairs, monitors, laptop and any other office furniture can be claimed using capital allowances. Annual Investment Allowance (AIA), which lets businesses deduct 100% in the year of purchase, is £1 million on the purchases made between 1 January 2019 to 31 December 2020. If the equipment has some private use, the allowance should be apportioned accordingly. It is possible to also claim some repairs and maintenance but one needs to be careful how they work these out. If they repair an office that has say 98% of business use, then they can claim 98% repair cost of that office, but then they will not be able to claim proportion of general repairs and maintenance in the rest of the property. 2) How to work out Business vs Private use It is very important to note that if one claims any part of the property as 100% business use then they will lose part of their Private Residence Relief (PRR) , which is the Capital Gains Tax relief given on the sale of their main home. Even if home office has 2% private use, they will save their PRR entirely. They just need to apportion home office expenditure accordingly. There are couple of ways to work out business use. For example, if they work in one of the bedrooms for 160 hours a month and the same room is used for sleepovers or guests c.24 hours a month. In that case the business use would be 160/(160+24) = 87%. The amount of home use has increased over last few months, so when they do annual calculations they should note down the hours they have used home office over last few months, which will help them with annual tax return when the time comes. Another way would be to assume that the room is available to use 16 hours a day (awake time = 24-8) or, say 480 hours a month. If they work part-time, say 60 hours a month, that would be 60/480 = 12.5%. A very different percentage to the example above, and HMRC’s preferred method to calculate fixed costs, particularly if they work only few hours a week. Variable costs can still be calculated using the first method. 3) Based on number of rooms in the house or apartment Hallways, bathrooms and kitchens are excluded from the calculation. If they have three bedrooms, a dining room and a living room, that’s five rooms. If they use one room for business use, they can claim 1/5 = 20%. Then they should apply business use % of the household cost discussed above. For example, if the household costs are £20,000 a year, they have five rooms and 87% business use, they can claim £20,000 x 20% x 87% = £3,480. 4) Based on floor area Some businesses use several rooms in their house for business, perhaps they store goods in one room but carry out work in the other. Or they use the largest room in the house for the business. Then they should work out the area used for business/total area of the house (except bathrooms, corridors and kitchens). Again, they need to reduce the claim by % of any private use of the area. 5) Based on time Some people use the whole property for business and private use, usually the case with smaller properties. In that case area or room based calculation might not be practical. There are 168 hours in a week, if they work 40 hours a week, they can claim 40/168 = 24%. If they work more, they should keep track of their hours in case of questions from HMRC. 6) Fixed rate calculation If all of this is too much, then a simple £2 a week can be used, however that would only be £104 a year so it might be worth putting in the effort to make the calculations. There is also a simplified expenses calculation if one knows rough monthly hours and wants to keep it simple. The below does not include telephone or internet expenses, where they can work out business proportion of the use separately. The rule is: If they have done 25-50 hours per month, they can claim £10 that month, For 51-100 hours, claim £18 per month, and For 101 hours or more, claim £26 per month Arguably, if they have done more than 25 hours a month, they can claim more than £104 a year with latter version, so it is worth that little extra effort. Limited company directors and employees In order to have tax relief as an employee or a director, they must earn more than the tax free salary. Allowances are less generous for limited company employees and directors. £6 a week can be claimed from 6 April 2020 and £4 a week can be claimed for periods prior to that. They do not need to keep any records if they claim the flat amount but there must be a requirement to work from home, rather than a choice. Needless to say, during coronavirus crisis that condition has been met. Ways to claim: - They can claim up to £6/week from their employer tax free - If they complete self-assessment they can claim through that but it will take a form of a tax relief which will be 20% or 40% of £6/week, depending on what their tax rate is - They can claim online by filling in P87 through Government Gateway account If one has extra expenditure as a result of working from home , that exceeds £6/week, they can only claim on variable expenses (see above) and need to provide evidence. For example, they may have extra electricity, gas and telephone expenses during lockdown. Again, their first port of call would be to request their employer to cover these, who can claim those as tax deductible expense. Failing that, they can follow “ways to claim” steps above. The calculations can be complex, several factors need to be taken into account. The overall result should be reasonable, otherwise one can expect HMRC to ask questions. Best way is to use professional advice. If one wants to save money, they can make calculations based on what they think is right and ask an accountant to check it over. If you need help with any of the issues identified above, please feel free to arrange a free chat to see the ways we can help you. Stay well! Riina Trkulja Web: https://www.accountsassistants.co.uk Twitter: https://twitter.com/AccountsFriend Linked In: https://www.linkedin.com/in/riina-trkulja-53462b14/ About us: I qualified as ACA accountant when working with KPMG, then moved on to PwC due diligence practice. My most recent job was with James Caan, the Dragons' Den investor. I worked in his private equity business as Investment Director and also Finance Director. AccountsAssistants.co.uk supports small businesses by providing quality finance team outsourcing, bookkeeping, accounting and Finance Director services at reasonable rates. We are Chartered Accountants and members of ICAEW. We also support our clients with all the COVID grant and loan related queries.

Lockdown has opened our eyes to numerous new possibilities but also reminded us of our own desires to achieve a better work-life balance. Barriers to entry are much lower when working from home is a possibility and accepted by potential clients and employees. Below are key areas you will need to think about when you first starting out: 1. Validate your idea • Before you start spending time and money on developing a product or a service, speak to people in the relevant industry or potential customers about your idea. • Understand what your competitors are missing out on so you can really define your Unique Selling Point that will give you an advantage. • For example, a cake shop that caters for allergens like gluten or any other. Yoga that caters for busy moms designed to suit times around kids’ sleep times. • Once you get some clients/customers, always ask for feedback 2. At the beginning allocate 50-60% of your budget and time to marketing and sales related activities • Marketing and sales will be your most important activity aside from providing an excellent service or a product. • Also, do not underestimate the time it takes to get results . Rarely people go viral and become famous overnight. Often you will have to spend some money on advertising or on quality networking groups to just get going. Local Chamber of Commerce and Industry could be a good starting point. • Measure your Return on Investment (ROI) so you know what works. Also, only spend where your clients/customers hang out, don’t waste money on “good deals” that do not focus on your target group. • The more creative you are the less you will have to spend. You can arrange online events where you invite other small businesses as participants who can help spread the word. These events can give you publicity way beyond what you can achieve on your own. • Follow Twitter #journorequest for any PR requests . If you have an exciting product, publications may want to write about you or include your quotes. Also, write guest blogs where you can, it will help with establishing credibility for your brand and improves your SEO. • Utilise your personal networks to the extent possible. 3. When you sell a product or provide a service, understand the mark-ups and margins in your industry. • Starting out, you may need to make offers to attract customers but eventually aim at selling your product at 2-3x the cost of making it. That will leave you enough money for overheads and a profit. 4. Be resourceful with the cost of website, branding and office. You can always spend more later. • To start with, your money will give better returns when spent on products and marketing. • You can build a website for free and pay £1 a month for hosting by using 1&1 Ionos, Wix or any other similar sites. • There are logo builders like TaylorBrands.com and Canva where you can make a logo with endless iterations for £30. It will be ok for a start, you can always change later when you have more customers and cash. • Working from home is a great money saver, to hide your home address, get a virtual address which can give you a company address for £50-70 a year. If you need a meeting room, these are usually available for extra £60-70 for few hours at the time. 5. Budget for data protection, licences, memberships and insurance • For example, if you open a food preparation business you will need to comply with Health and Safety regulations and have relevant licences. • If you collect peoples’ personal data you will need to register with Information Commissioner’s Office (ICO) and pay data protection fee. You will also have to take steps to ensure that the data is kept safe and secure. • If you are an accountant, like me, you will need a practicing licence , I pay c.£1000 a year to ICAEW to be a practicing member where they ensure I provide quality service and follow Anti Money Laundering regulations. • And in any business you will need to take out Business Insurance and potentially Public liability insurance . 6. Soletrader or a Limited company? • The key difference is that company's liability will be limited by shares, so if someone sues you, the company will be liable and your personal assets are protected. • As a soletrader or a partnership, you will be responsible with all assets you own including your house. • There are tax consequences, but they are less significant after recent changes. 7. Accountant or DIY? • To start off with, use Excel or cloud based programme called Xero (c.£20pm.), which is very easy to use and intuitive. It is important to keep record of all your expenses , as this is one way to pay less tax. When you get too busy, give us a call. We have super reasonable rates to help you out. If you would like to discuss any of the above, go to our website https://www.accountsassistants.co.uk to find out more and book a free consultation , where we would happily get to know you and your business. Also follow us on Twitter https://twitter.com/AccountsFriend for daily tips and tricks for SMEs Best of luck!! Riina Trkulja About us: I qualified as ACA accountant when working with KPMG, then moved on to PwC due diligence practice. My most recent job was with James Caan, the Dragons' Den investor. I worked in his private equity business as Investment Director and also Finance Director. AccountsAssistants.co.uk supports small businesses by providing quality finance team outsourcing, bookkeeping, accounting and Finance Director services at reasonable rates. We are Chartered Accountants and members of ICAEW. We also support our clients with all the COVID grant and loan related queries. Web: https://www.accountsassistants.co.uk Twitter: https://twitter.com/AccountsFriend Linked In: https://www.linkedin.com/in/riina-trkulja-53462b14/

This crisis has painfully magnified already existing supply chain bullying that goes on, particularly small suppliers vs big company clients. Now that we have little bit of clarity on when some businesses are allowed to get going again and government funds have started to flow in, your clients, who are still owing money may start running out of excuses. There are several things businesses can do to ensure they get paid on time. Below are some tips that should help you make progress with cash collection efforts. 1. Make it easy to pay you but also be clear what happens if they don’t Ensure your invoices have clearly stated payment terms and bank account details. You can even offer direct debit if it is a repeat service. Also, include the following wording on your invoices: “We will exercise our statutory right to claim interest (at 8% over the Bank of England base rate) and compensation for debt recovery costs under the Late Payment Legislation, if the invoice is not paid according to our agreed credit terms.” If you decide to charge interest after the original invoice is issued, you can issue a new invoice just for the additional charges and interest. If you sell goods or products you should include “retention of title” clause in your contract. It is a clause that allows the supplier to retain ownership over the goods supplied until such time as certain conditions (eg payment of invoice) are met, thus providing the you with a form of security against the buyer's default or insolvency. A retention of title clause is sometimes known as a Romalpa clause or as a reservation of title clause. 2. You can legally charge interest, regardless if you have a contract or not According to The Late Payment of Commercial Debts Regulations 2013 companies have legal right to charge statutory interest of 8% plus base rate and compensation, even if it was not stated in the contract. £40.00 compensation can be claimed for debts under £1000.00, £70.00 for debts under 10,000 and £100.00 for debts over £10,000. There is no minimum debt value. 3. Build a good relationship with the person who is in charge of payments At the end of the day they are still people, in times like these they have limited resources and lot of people to pay to. Ensure you are on top of their priority list by contacting them regularly – call them after sending an invoice, then again after few days. Know their name. Follow up. 4. Deal with excuses politely and intelligently Most common excuses involve passing the buck eg the person authorising the payment is sick/on holiday/gone for a month etc. The reality is, life doesn’t stop when people are off. Ask if there is someone who has taken over temporarily, how do they deal with emergency payments like employee salaries or are there any pre-authorised cheques. The owner of owner-managed businesses never truly switch off, they always check emails and are able to answer queries if it is urgent, which your invoice clearly is. If the client is really struggling, agree a payment plan with realistic timelines. 5. Ensure you have evidence of service/product delivery and set up “read receipt” on invoices Clients may use dispute as a delaying tactic and can often raise an issue days or weeks later. Ensure you have stated in your contract and on the invoice the time limit for raising a dispute. Once you send the invoice, ensure you have evidence of the delivery or “read receipt” so they cannot use a missing invoice as an excuse. 6. There is free help available by Government Notify https://www.smallbusinesscommissioner.gov.uk if you are a small business with less than 50 staff. The Small Business Commissioner (SBC) is an independent public body set up by Government under the Enterprise Act 2016 to tackle late payment and unfavourable payment practices in the private sector. 7. Statutory Demands are very effective but will most likely ruin the relationship If the legal letters do not work and the invoice is not disputed, you can issue Statutory Demand. It is a notice to bankrupt your client. It’s very effective and the client cannot ignore it, they must respond within 21 days. You do not need a lawyer to do it, it can be a simple letter detailing the invoice(s) outstanding and the fact that the invoice is not disputed, government page has more details: https://www.gov.uk/statutory-demands It is unlikely that your relationship will remain positive after such action but it was probably getting sour at the point when they refused to pay and ignored your letters. 8. Going to court will cost some money but is sometimes the only way If the amount claimed is less than £100,000 you can also use Money Claim Online service (MCOL) which is Internet based HM Courts & Tribunals Service for claimants and defendants. https://www.moneyclaim.gov.uk/web/mcol/welcome. The fees start from £25 depending on the amount you claim. You may be asked to prove your claim in court, so you will need an understanding of the legal basis for your claim. If the client admits owing the money or do not respond, you can get the court to order them to pay without a hearing. However, if the other party does not act on the Order, you will need to ask the court to take action, which may result in paying another fee. 9. Take out insurance and do credit checks on new clients There are many different types of insurers, some only insure for insolvency, some also insure for protracted defaults. Some insurers may take 120 days to settle the claim, so look into small print when choosing an insurer. If claim is approved, up to 90% can be paid out. The insurer analyses the credit worthiness of each customer and provides a limit which is the maximum amount they indemnify if that customer fails to pay. If the insurer refuses to insure your client, you may want to consider requesting advance payments to avoid the risk of losing money. 10. If you deal with a large client check out their payment practices online As part of the package of measures introduced under the Enterprise Act 2016 regulations came into force in April 2017 requiring large businesses to publicly report the average time they take to pay their suppliers. This allows suppliers, including small businesses, to make informed decisions about who they do business with. Firms can check when large businesses pay their suppliers on https://check-payment-practices.service.gov.uk/search Companies who have to report are large companies that meet two or more of the size criteria for two consecutive years: £36m annual turnover, £18m balance sheet total, 250 employees. The key to successful cash collection is a process where you are clear about your terms and stay in regular contact with Accounts Payable team. However, if the client genuinely suffers cash flow difficulties, none of the above methods are likely to bring the cash in. It will then remain a judgement call if you will continue supporting your client through difficult times with a hope of coming out stronger the other end or withdraw your services. If the company goes into administration the creditors rank behind the liquidators, employees, banks and HMRC. Creditors rarely get their money back if the company is wound up, luckier ones may get 10% of the invoice value. That is why it is so important to stay on top of the chasing at the very beginning and perhaps even provide incentives to go on direct debit or pay early. If you had “retention of title” in your contract at the point of sale, you may be able to recover your goods. If you have identified your client as someone who can pay but is being difficult, notify insurers and Small Business Commissioner. It will be harder for them to carry on doing business with other suppliers. Stay safe, stay well! Riina Trkulja Founder of www.AccountsAssistants.co.uk About us: We support small businesses by providing finance team outsourcing, bookkeeping, accounting and Virtual Finance Director services at reasonable rates. By working closely with our clients we have improved their cash flow, identified cost savings, helped with debt collection and mentored how to gain powerful insights by using financial information. We are Chartered Accountants and members of ICAEW with Big 4 and SME experience totalling 15 years. Feel free to get in touch on hello@accountsassistants.co.uk Web: https://www.accountsassistants.co.uk Twitter: https://twitter.com/AccountsFriend @AccountsFriend You tube: https://www.youtube.com/channel/UCOlGXN2KPqk7gRwzmyiW0nQ?view_as=subscriber

Have you noticed how some businesses have a constant flow of customers and followers but others struggle? here in this video we have interviewed 9 successful businesses including Alex Partridge, the founder of LADBible and UniLad who will share their ultimate tips and tricks on how did they get their first clients and followers and what strategies kept them going. Some tips may surprise you! 😊💪 "Make it happen because you can!" Follow and subscribe for more incredible advice and videos! 👇

Last crisis produced several winners, Groupon amongst them. Companies who will survive this crisis will come out stronger for few reasons: • They will end up having less competition • They might benefit from the fact that lot of things have decreased in value – mostly real estate, big ticket purchases like furniture, equipment and some services. • Crisis also forces companies to be more disciplined and to provide better service which will ultimately help them to survive and thrive It is true that c.90% of investors, particularly angel and venture capital investors have stopped doing new deals as they focus resources on their current portfolios. We have got in touch with several seed or early stage investors to see if they are still active and below is a list of investors who are currently actively investing and the industries they are operating in. 1) Square One Foods They are Austrian based food and beverage investor but invest across whole of Europe. Michael Goblirsch, Partner in Square One Foods stated that their strategic focus and their key investment criteria remain unchanged, therefore they are looking for Seed stage Food & Beverage startups from the EU and UK and make investments up to €250k. Their key investment criteria: • Diverse, passionate team that is passionate about their business • Understanding and ability of how to build a successful consumer brand • Product that solves a consumer problem/ disrupts an industry 2) Green Angel Syndicate The syndicate invests in early stage, innovative technology companies that are seeking to improve the way people use resources - energy, water and the wider transition to a greener economy - sustainable transport, smart cities. Typically they invest £150-500,000, often participating with other investors, and they can act as lead investor or in a supporting role in a larger group, looking for SEIS or EIS tax relief on their investments. 3) Playfair Capital has said that their appetite to do new deals is as strong as ever, but it is likely that they will do a fewer deals than last year. They invest in seed and pre-seed companies mostly focusing on deep tech (AI, machine learning, computer vision), SaaS, marketplaces and B2B companies. Their typical first cheque is £400k although they can invest smaller amounts. 4) Abbey Road Incubator Its purpose is to support the endeavours of the brightest music tech entrepreneurs, researchers and developers and help introduce the next set of universally adopted recording technologies into the music business. They take 2% equity and provide mentoring and connections from top experts in music industry. 5) Technology companies should keep their eye on F6S It lists several opportunities that are open to tech start-ups all over the world, just filter your search to Europe or UK. 6) Wayra in partnership with Novartis have applications open for their accelerator programme to Healthcare start-ups that can accelerate and scale digital health solutions that will support the NHS to deal with the medium to long term challenges created by COVID-19. They also have couple of other accelerators open, just check out their website. 7) Sente , in partnership with the global snacks company Pladis and the Northstar Innovation Company (the innovation arm of global food and retail company Yildiz Holding) is investing in early-stage startups with novel ingredients, snacks, packaging and technology that can meet the needs and desires of an ever-evolving consumer landscape. Starting in London in June 2020, they will select startups from around the world for the opportunity to work with international snacks, food and retail brands as well as the chance for a $50,000 - $75,000 investment (first stage) and $250k+ (follow-on investment possibility) 8) Start-ups who are innovating in Supply Chain and Logistics , Manufacturing, B2B Mobility, IoT and IIoT, Machine Learning, Deep Learning, AI, 5G, Smart City , Aerospace, Space can get up to USD50k per team from Stratospheric Accelerator Cohort 9) https://www.seedrs.com is an equity crowdfunding website that have extended their campaign lengths and hold online pitching events to give entrepreneurs more chance to succeed. They stated that investment levels did go down in March but in the past few weeks, they have seen a sharp uptick back to pretty normal levels. The distribution of campaigns is probably shifting somewhat, as those businesses that are in sectors that are less affected by (or that even may benefit from) the crisis are the ones most likely to go forward and attract investment, while activity will be quieter in sectors most negative affected by the crisis. 10) https://www.angelinvestmentnetwork.co.uk is another website bringing early stage investors and start-ups together. Mike Lebus, the Founder of Angelinvestmentnetwork, has told us that the sectors that are thriving at the moment include ecommerce, pharma, biotech, medtech, big data, logistics, food delivery, streaming and gaming. Some investors who are still looking at deals are negotiating with entrepreneurs and carrying out due diligence, but won’t actually make the investment until things start to settle down. The good news is that this means everything is being lined up, and investors will be ready to pull the trigger, so hopefully there will be a flurry of activity when the climate improves. Government announced Coronavirus Future Fund on 20th April but in order to be eligible a company would have had to have raised at least £250,000 in equity investment from third-party investors in the last 5 years. Many start-ups would not qualify due to this criteria so would be forced to look at other options. However, if you do qualify then you would have to partner up with a private investor and government will match the funding. If you are not eligible for Future Fund, applications are still open for Innovate UK Smart Grants . Companies can get a share of up to £25 million to deliver ambitious or disruptive R&D innovations that can make a significant impact on the UK economy. If you need help navigating the investor applications landscape we can help by supporting you in several ways having worked with investors for several years. Just get in touch on hello@accountsassistants.co.uk