Author: Glenn

Recessions can be tough on small businesses, but they do not have to spell disaster. With some smart thinking and a bit of planning, many firms can keep going and even emerge stronger once the economy picks up. Here are some practical ways to stay afloat when times are hard.

1. Cut back on unnecessary spending
Now is the moment to go through all your costs. Cancel anything you no longer use, negotiate better deals with suppliers, and look for savings wherever you can. Every bit helps.

2. Focus on what you do best
Stick to your most profitable products or services. When money is tight, it makes sense to concentrate on the parts of the business that bring in the most value.

3. Build strong relationships with customers
Your regular customers are more important than ever. Stay connected, offer good service, and look for ways to add value. People are more likely to stick with businesses they trust.

4. Keep an eye on cash flow
Having enough cash to cover the basics is vital. Chase late payments, offer discounts for early payment if it helps, and try to agree flexible terms with suppliers.

5. Find new ways to earn
Could you offer something new? Sell online? Reach a different group of customers? Exploring extra income streams can give your business a welcome boost.

6. Stay in the public eye
It may be tempting to cut back on marketing, but staying visible is key. Use low cost tools like email newsletters, social media, and local events to keep your name out there.

7. Look after people
A business is only as strong as the people behind it. Support your team and yourself. Good morale and clear communication can make a big difference during uncertain times.

A calm, steady approach and some flexibility can go a long way in helping your business come through a recession in good shape.

Did you know you may be eligible for tax relief on professional fees and subscriptions? If your membership is required for your job and the organisation is HMRC-approved, you could claim back tax for up to four years. Find out if you qualify and how to apply.

You may be eligible to claim tax relief on certain professional fees and subscriptions, provided they meet specific criteria:

• Professional Membership Fees: Tax relief can be claimed on membership fees that you are required to pay in order to perform your job. These fees must be necessary for the fulfilment of your professional responsibilities.
• Annual Subscriptions: You can also claim tax relief on annual subscriptions to approved professional bodies or learned societies, provided that your membership with these organisations is relevant to your profession.

Tax relief cannot be claimed, in the following cases:

• Life Membership Subscriptions: Tax relief is not available for life membership fees, even if they are for professional bodies or societies.
• Fees Not Paid by You: You cannot claim tax relief on professional membership fees or annual subscriptions if they have been paid by someone else, such as your employer.
• Non-approved Organisations: Tax relief is not available on fees paid to professional bodies or organisations that are not officially recognised by HMRC.

You can claim tax relief for the current tax year as well as for the four preceding years, allowing you to potentially recover tax paid in previous years if you have not yet done so.

When making a claim, you must provide evidence of payment for each professional fee or subscription, such as receipts or other supporting documentation that clearly indicates the amounts paid. A claim can be made from the following link https://www.tax.service.gov.uk/claim-tax-relief-expenses/what-claiming-for

If you are registered for self-assessment you must submit your claim through your tax return rather than using the separate claims service.

Since April 2020, landlords can no longer deduct mortgage interest as an expense. Instead, tax relief is capped at 20%. This change affects UK and non-UK resident landlords, trustees, and partnerships but excludes companies. Learn how this impacts your tax bill.

In April 2017, new rules were introduced that limited the tax relief on mortgage costs for residential landlords to the basic rate of tax. This restriction on finance costs was phased in over several years and was fully implemented by 6 April 2020. As a result, all finance costs, including mortgage interest on rented properties, are no longer allowed as expenses. Any available tax relief is now capped at the basic tax rate of 20%.

Finance costs includes interest on mortgages, loans (including those for furnishings), overdrafts, alternative finance returns, mortgage fees, and other related costs, such as discounts, premiums, and disguised interest. However, no relief is granted for capital repayments of a mortgage or loan.

You will be affected by this restriction if you are:

• A UK resident individual letting residential properties in the UK or abroad.
• A non-UK resident individual letting residential properties in the UK.
• An individual letting residential properties in a partnership.
• A trustee or beneficiary of trusts liable for Income Tax on residential property profits.

The finance cost restriction does not apply if you are a:

• UK resident company
• Non-UK resident company

These entities will continue to receive relief for interest and other finance costs in the usual manner.

When selling a business, the Transfer of a Business as a Going Concern (TOGC) rules can allow the transaction to be VAT-free if key conditions are met. This prevents unnecessary VAT charges and ensures compliance with HMRC. Learn how TOGC applies to your sale.

A TOGC is defined as "neither a supply of goods nor a supply of services” meaning it falls outside the scope of VAT and no VAT would be charged on the sale.

For the TOGC rules to apply, all of the following conditions must be satisfied:

• The assets must be sold as part of a business that is operating as a "going concern." This means the business must be actively running, not just an 'inert aggregation of assets'.
• The purchaser must intend to use the assets to carry on the same type of business as the seller.
• If the seller is a taxable person, the purchaser must either already be a taxable person or become one as a result of the transfer.
• If only part of the business is sold, it must be capable of operating independently.
• There must not be a series of immediately consecutive transfers.
• Additional conditions apply to transactions involving land.

The TOGC rules can be complex, and both the seller and buyer need to ensure they comply with all the conditions. These rules are mandatory, so it's crucial to establish whether a sale qualifies as a TOGC from the outset. For example, if VAT is charged incorrectly, the buyer cannot recover it from HMRC and would need to seek reimbursement from the seller.

If you are self-employed as a sole trader or a partner in a business partnership, you are required to maintain suitable business records as well as separate personal income records for tax purposes.

For tax compliance, these business records must be kept for at least five years from the 31 January submission deadline of the relevant tax year. For instance, for the 2023-24 tax year, where online filing was due by 31 January 2025, you must retain your records until at least the end of January 2030. In some situations, such as when a return is filed late, you may be required to keep the records for a longer period.

As a self-employed individual, you should keep a record of the following:

• All sales and income
• All business expenses
• VAT records if you're VAT registered
• PAYE records if you employ anyone
• Records of your personal income
• Details of any grants received if you claimed using the Self-Employment Income Support Scheme (SEISS) due to coronavirus

You don't necessarily need to keep the original physical records. Most records can be stored in an alternative format, such as scanned copies, as long as they can be retrieved in a readable and uncorrupted format.

If any of your records are lost or unavailable, you must attempt to reconstruct them. If the figures are estimated or provisional, you must inform HMRC accordingly. Failing to keep proper or accurate records can result in penalties.