Using business goods instead of selling them is usually VAT-free, but some cases require VAT payments. These "taxable self-supplies" include cars taken from stock and certain buildings. Read on to see how to stay compliant.

If your business makes products or buys and sells them, you might end up using some goods in your own business instead of selling them.

Usually, you do not have to pay VAT on goods used this way, because you are not actually making a VAT taxable supply. However, there are some exceptions. These exceptions are called “taxable self-supplies.” You will need to keep track of these goods you use in your business for VAT purposes.

Self-Supply of Cars

If you are a motor manufacturer or dealer and take a car from your stock for your own use, that is a taxable self-supply. In this case, you will need to pay VAT on the car.

Other Taxable Self-Supplies

There are some other situations where goods you use in your business are treated as taxable self-supplies. These include:

• Certain non-domestic buildings you build or extend using your own labour.
• Cars on which you reclaimed VAT because they were meant for use as a taxi, hire car, or driving school car, but you actually used them for a non-qualifying purpose.

Selling Goods Bought for Your Business

If you buy something for the business but later sell it to a customer (even if it’s to one of your employees), you will need to charge VAT on the sale price.

A salary sacrifice scheme lets employees swap cash salary for non-cash benefits, saving tax and National Insurance. But earnings must not fall below the National Minimum Wage, and life events may impact eligibility. Learn how to navigate these rules.

If an employee wants to join or leave a salary sacrifice arrangement, the employer must update their contract to clearly reflect the changes in cash and non-cash entitlements. Additionally, significant life events—such as marriage, divorce, a partner's redundancy, or pregnancy—may require adjustments to the arrangement, providing employees the option to opt in or out.

Certain benefits are currently exempt from Income Tax or National Insurance contributions and do not need to be reported to HMRC. These include:

• Contributions to pension schemes
• Employer-provided pension advice
• Workplace nurseries
• Childcare vouchers and employer-provided childcare contracted before 4 October 2018
• Bicycles and cycling safety equipment (including cycle to work schemes)

In some cases, for example, when a salary is exchanged for an employer contribution to a pension scheme, the reduction in salary may also reduce the employer's National Insurance contributions liability.

Starting or growing a small business often requires capital, but securing the right funding can be a challenge. Fortunately, there are various funding sources available to entrepreneurs, each with its own benefits and drawbacks.

Personal Savings

Many small business owners start with their own savings. This avoids debt and interest costs but can be risky if the business struggles.

Friends and Family

Borrowing from friends or family is common, but it’s essential to have a clear agreement to prevent misunderstandings.

Bank Loans

Traditional bank loans offer structured repayment terms and can be used for various business needs. However, they often require a strong credit history and a solid business plan.

Government Grants and Schemes

In the UK, grants are available from organisations like Innovate UK and local councils. These don’t need to be repaid, but they are highly competitive and often have strict criteria.

Crowdfunding

Platforms like Kickstarter and Crowdfunder allow businesses to raise money from the public. This is particularly useful for innovative or community-driven projects.

Business Angels

Angel investors provide funding in exchange for equity in the company. They often bring valuable business experience and mentorship alongside capital.

Venture Capital

For high-growth startups, venture capital firms can offer large investments. However, they usually demand significant control and a share of profits.

Invoice Financing and Asset-Based Lending

Businesses can use unpaid invoices or assets as collateral for funding, helping with cash flow issues.

Alternative Lenders

Online lenders and peer-to-peer platforms provide faster, more flexible loans but often at higher interest rates.

Choosing the right funding source depends on your business needs, growth plans, and willingness to take on risk or debt.

A well-structured credit control system is crucial for small businesses to maintain cash flow and reduce the risk of bad debts. Without proper controls, late payments can disrupt operations and put financial strain on the business.

Clear Credit Terms
Setting clear credit terms at the outset ensures customers understand their payment obligations. This includes defining payment deadlines, interest on overdue invoices, and the consequences of non-payment. Offering different terms for new and repeat customers can help mitigate risk.

Creditworthiness Assessment
Before extending credit, assessing a customer’s financial stability is essential. Checking credit reports, trade references, and previous payment history can help determine whether a customer is likely to pay on time. Establishing credit limits based on risk assessments reduces exposure to bad debts.

Efficient Invoicing Process
Timely and accurate invoicing encourages prompt payments. Using electronic invoicing systems ensures invoices reach customers quickly and reduces the risk of disputes. Clearly stating payment terms, due dates, and bank details on invoices makes it easier for customers to process payments without delay.

Proactive Payment Monitoring
Tracking outstanding invoices and following up on late payments is vital for maintaining cash flow. Automated reminders, personal follow-ups, and structured escalation procedures help ensure payments are received on time. A disciplined approach to chasing overdue invoices prevents accounts from falling into arrears.

Flexible Payment Solutions
Offering multiple payment methods, such as direct debit, online payments, and instalment plans, makes it easier for customers to pay on time. Flexibility can improve customer relationships while ensuring steady cash flow.

A well-managed credit control system not only reduces financial risks but also strengthens business stability. By implementing clear policies and proactive follow-ups, small businesses can maintain a healthy cash flow and build long-term customer relationships.

When a trade ends, income doesn’t always stop. Post-cessation receipts can still arise, and knowing how they are taxed is crucial. Whether it’s Income Tax or Corporation Tax, the recipient—not necessarily the original trader—bears the responsibility.

There are special rules for the taxation of post-cessation receipts after a trade has ceased. The legislation clearly states that the person who receives or is entitled to the post-cessation receipt is the person who is subject to Income Tax or Corporation Tax on the income. This person does not necessarily have to be the same one who was originally carrying on the trade.

The only factor to consider when determining whether these rules apply is whether the income qualifies as a post-cessation receipt. If it does, then, unless a territorial exclusion applies, the income is taxable for the recipient.

The legislation provides for the taxation of certain receipts arising from the carrying on of a trade which:

• are received after a person permanently ceases to carry on a trade;
• arise from the carrying on of the trade before the cessation; and
• are not otherwise subject to tax.

In addition to income meeting these conditions, the legislation specifically identifies other types of income treated as post-cessation receipts. There are also certain receipts, such as payments for the transfer of trading stock, which are specifically excluded from being classified as post-cessation receipts.