What are assurance services?
Assurance services are provided by qualified auditors and aim to improve the context and quality of information and identify risks so key decision-makers can make informed choices for their business or organisation.
What is accounting?
Accounting generally describes the process or system of keeping financial records: recording, measuring, processing and reporting on financial information.
What are bonds?
When you buy a bond, you lend a sum of money to an institution, such as a company or government, for a set period of time. In return, you receive regular interest payments up until the end of the agreed period, at which point you are repaid the full investment.
What is bankruptcy?
Bankruptcy is a legal process that aims to provide relief to individuals or businesses who cannot afford to pay their debts. A person can be requested to be made bankrupt either of their own accord or by one of their creditors. Bankruptcy has serious consequences and is normally seen only as a last resort to financial problems.
What is bookkeeping?
Bookkeeping refers to the recording of financial transactions in accounting, which is done on a regular basis. Bookkeepers are responsible for keeping financial records up to date. Many businesses outsource their bookkeeping to reduce internal financial administration.
What is international business?
When transactions of goods or services are conducted across national borders at a transnational or global level, this is considered international business.
What does cloud accounting mean?
Cloud accounting is simply when your accounting process takes place on cloud applications rather than on an application stored and run locally on your computer. These cloud accounting applications are more secure, available from anywhere - via a simple web browser - and usually contain more up-to-date information.
What is a chartered accountant?
A chartered accountant is simply an accountant with a specific qualification, or accreditation, demonstrating a high level of proficiency and expertise in accounting services. The Institute of Chartered Accountants in England and Wales are generally regarded as the gold standard of qualified accounting professionals.
What is a high growth company?
Broadly, a high growth company is a company that increases rapidly in size over a short period of time. There are also more specific definitions such as one by the OECD which requires a company to grow by more than 20% per year for three consecutive years.
What is capital gains tax?
Capital gains tax (CGT) refers to the tax on the increase in value when certain assets are disposed of (usually sold). Only the profit or ‘gain’ from the disposal is taxed, not the full amount you receive and CGT only applies if your gains exceed your 'Annual Exempt Amount' (currently £6,000). This is due to reduce to £3,000 from April 2024.
What is corporate finance?
Corporate finance refers to an area of finance that specifically deals with the financing, funding, investments and capital structures of a corporation or business. Corporate finance services also include the buying and selling of businesses.
What is the difference between a charity and a not-for-profit?
A not-for-profit organisation is when the net profits from the organisation’s activities will not financially benefit any individual, owner or leader of the organisation. A charity is similar but is defined more specifically as being not-for-profit while also having philanthropic goals of improving the quality of life of a selected group of people or animals. In general, all charities are not-for-profit, but not all not-for-profits are charities.
What is meant by due diligence?
Tax due diligence is the process of comprehensively inspecting the past and current tax compliance of an entity to discover any risks or exposures. This is usually done before purchasing or selling businesses.
How is an estate valued?
The value of an estate is simply the total value of all assets, minus the total value of any liabilities such as outstanding mortgages, overdrafts and other debt. Assets can be made up of property owned, physical belongings, stocks and shares and anything else that you own or have an interest in.
What is an estate?
In simple terms, an estate is an individual’s net worth and is generally considered at the point of their death for potential inheritance tax (IHT) purposes. A person’s estate includes everything that makes up that person’s net worth. It includes but is not limited to all of their possessions, cash, financial securities, land and real estate as well as all other assets in which the person has a controlling interest, such as private businesses. Debt is often deducted from the estate value to calculate the net estate.
What is ESG investing?
ESG is a score that reflects the evaluation of a company’s sustainability standards. It stands for Environmental, Social and Governance and is often referred to as a more socially responsible type of investment.
What is exit planning?
Exit planning is the process of creating a strategy for exiting or transitioning a business to maximise value for the person leaving as well as the business itself. It is concerned with the legal, tax and financial implications of exiting a business, whether that be selling the business or passing on to new owners.
What is included in an estate?
A person’s estate includes everything that makes up that person’s net worth. It includes but is not limited to all of their possessions, cash, financial securities, land and real estate as well as all other assets that the person has a controlling interest in such as private businesses.
Why is an exit plan important?
A detailed and up-to-date exit plan is important as it allows you to react quickly to unexpected changes in your business such as unexpected offers or low profits. A good exit plan also allows you to mitigate the risk of financial failure and prepare and plan for the future.
What does financial planning mean?
Financial planning is the process of creating a strategy and roadmap towards achieving a business' or individual’s financial goals. It can include the steps that need to be taken and the objectives that need to be met in order to meet those goals.
What constitutes a gift?
Legally, a gift is the voluntary transfer of any amount of something that has value - such as money, property or assets - to someone else without the expectation or requirement of reciprocation.
What does HR mean?
HR typically refers to the Human Resources department in an organisation, but it can also be used as a term to describe the work force as a collective. HR departments manage the life cycle of an employee, including recruitment, grievances, benefits and leaving the company.
What is HR consultancy?
Human Resources consultancy provides a broad range of services across recruitment, training and performance for employees. An outsourced HR consultant can act on your behalf to attend meetings, implement policies and procedures, and ensure you follow employment law, or provide a less hands-on approach with an advisory service for all HR related matters.
What is a capital investment?
A capital investment refers to a sum of money procured by a company in order to pursue its objectives, such as business growth or acquisition of assets.
What is an investment bond?
An investment bond represents a long-term investment that can be likened to a loan, whereby an investor provides a set amount of money to a business or government with the guarantee of return with interest over a fixed period of time.
What is inheritance tax?
Inheritance tax (IHT) applies to the estate of somebody who has died, covering assets including properties, savings, and possessions. It can also apply if you give away assets during your lifetime, either at the time you make a gift to certain trusts or on your death if that is within seven years of the gift. There are reliefs which can reduce the charge, notably your nil-rate band (currently £325,000). However, as property values rise more and more individuals are affected so it is worth seeking estate planning advice to ensure you and your family are prepared.
What is investing?
In finance, investing is defined as actively putting capital (usually money) into shares, property, commercial ventures or financial schemes with the intention of growing your wealth.
What is passive investing?
Passive investing refers to a long-term strategy whereby investments are purchased and held, rather than actively participating in the buy/sell process. Passive management of investments is typically suited to the equity market, but can be used for other types of investment, like bonds or hedge funds.
What does liquidation mean?
Liquidation is the process of selling a company’s assets, like stock or property, in order to redistribute cash to creditors and shareholders. Liquidation typically occurs when a company is insolvent (unviable and unable to pay obligations where they are due).
What are national insurance contributions?
National insurance contributions (NIC) are essentially a tax on earnings and/or self-employment profits, payable by anyone over the age of 16 and below state pension age. Different classes of NIC apply to different types of income.
Why do we pay National Insurance?
Through National Insurance contributions, you secure entitlements to certain social security benefits such as State Pension or Maternity Allowance, as well as funding services such as the NHS.
What is an owner managed business?
An owner managed business is any business where the day-to-day management and operations of the business are handled solely by the owners. This is different to organisations where the ownership and management of the business is distinctly separate.
Are pensions taxable?
Yes, pensions are subject to tax. Even after you have retired, you will need to pay Income Tax on any income that exceeds your Personal Allowance. Final salary pensions that pay an income for life are taxable as earnings. Tax for defined contribution pensions differs depending on how you take money from your pension pot.
How much pension will you need?
How much pension you’ll need depends on your lifestyle, financial situation, retirement age and life expectancy. The general advice is to put as much into your pension as possible. We offer pension planning services which can help you decide how to best plan for your future.
How to avoid tax on your pension?
Pensions are taxed similarly to employment income, and each person is given an Annual Allowance that is tax free. To pay less tax overall, one popular method is to only withdraw the amount you need for the year, and no more. Withdrawing more than you need means you pay extra tax on the money you didn’t need anyway. Whether you can do this depends on the type of pension you have.
What does not-for-profit mean?
A not-for-profit organisation or business is a legal entity whose owners do not earn a profit. Instead, any monies earned or donated is fed back into the business.
What does payroll involve?
Payroll is the processes and transactions that lead to an employee receiving their salary. It involves processing, balancing and reconciling payroll data, processing PAYE tax payments and reporting these tax payments to HMRC. Payroll also involves all the record keeping associated with pay that companies require for their own records and for tax reasons.
What is a final salary pension?
A final salary pension is a type of Defined Benefit pension. Your income from a final salary pension is guaranteed, and a pre-agreed amount based on your salary at the time of your retirement, your length of service and your company’s accrual rate.
What is a pension?
A pension is essentially a savings plan, where you invest some of your income from work into a pot you can access in order to fund your retirement. There are many types of pension, so it can be beneficial to seek pension planning advice.
What is a private pension?
A private pension is a way to save money for use in later life, typically after retirement, that is separate from the government issued State Pension or a workplace pension. A private pension can be arranged by an individual or an employer and can be either a defined contribution or a defined benefit pension.
What is a SIPP pension?
A SIPP pension is a “self-invested personal pension”. With a SIPP, you choose when, how often and how much to deposit into it. SIPPs also offer a wider range of investment options, giving you even more control. Many individuals utilise a SIPP for share dealing and investment activity. A SIPP can also be utilised to own business property and can be extremely tax efficient for business owners.
What is a stakeholder pension?
A stakeholder pension is a type of individual pension with a defined contribution. They must meet specific government standards. Your retirement value is based on the amount you pay in and how your investments perform. Investments are chosen either by you or your employer.
What is payroll?
In simple terms, payroll refers to a list of individuals employed by a business and the compensation they receive as their salary. Payroll also covers the process of paying the defined salaries. It can also refer to the total amount of wages as paid by a company.
What types of pensions are available?
In the UK, there are three main types of pension: state pension, workplace pension and private pensions. State pensions come from the government and can be claimed once you reach retirement age. Workplace pensions are set up by your employers and private pensions are ones you set up yourself.
How much do you need to retire?
The amount needed to retire comfortably will differ from person to person. Typically, you’ll need between half and two-thirds of your annual salary, but some experts recommend up to 80%. A dedicated financial planner can help you to calculate how much you need to retire personally, and advise on how to achieve this too.
What is a registered office?
A registered office is the official address of a business, organisation or entity. In the UK, all limited company businesses are required to have a registered office recorded with Companies House.
What is retirement?
Retirement is the point at which an individual permanently leaves the workforce. Someone may also choose to semi-retire with reduced working hours before full retirement. Typically, the decision to retire is based on age or personal health.
How much is state pension?
In 2022/23, the full rate of the UK State Pension is £185.13 per week (approximately £9,627 per year). However, the pension you receive also depends on factors including your date of birth, the date you reached pension age, as well as your National Insurance contributions. Pension rules were changed in 2016, and there are lots of considerations to be aware of, so it’s important to check your State Pension online and seek pension planning advice.
How to value a startup?
Investors and stakeholders may use one or more different methods to value a startup, such as the cost to duplicate the business based on tangible assets and historic expenses, how much similar businesses are selling for presently, forecasting future cash flow risk and worth, and setting a valuation based on the current stage of the business.
What are startup costs?
Startup costs are the expenses associated with setting up a new business. These can include the cost of planning, property, advertising and employee expenses.
What does SME stand for?
SME stands for ‘Small to Medium Enterprise’, which in the UK is generally defined as a company with fewer than 250 employees. However, this definition can be used more creatively depending on the purpose.
What is a startup?
A startup is defined as a young or newly established organisation, project or entity that often provides innovative products or services that are believed to be in demand. Startups can range from an individual becoming self employed, an SME or a highly dynamic, fast growing new company..
What is a state pension?
The UK State Pension is a regular weekly sum paid by the government to claimants who reach pension age. The amount received depends on many factors including your date of birth and past National Insurance contributions
When can I get my state pension?
Your State Pension Age can differ depending on when you were born, and currently ranges from 65 to 68 years old. You can check your State Pension Age on the Government website.
Are cash gifts taxed?
Giving someone a cash gift does not generally lead to a tax charge on either the donor or the recipient. However, if that person earns money from that gift - such as interest on gifted money in a savings account - then they may be liable to pay tax on that income. Gifts may fall as taxable on the person making the gift under inheritance tax - generally if the gift is made within seven years of the donor’s death. Gifting a regular lump sum from your income is also not taxable but it does need to be evidenced that this gift is regular, directly from your income on which you pay income tax and does not affect your standard of living.
Are trusts taxable?
Yes, trusts are taxable. The amount of tax payable depends on the amount of trust income and the type of trust. Trusts count as a separate legal entity for tax reporting purposes so you will need to check whether the trust is within the trust registration service (TRS) and the self-assessment tax system.
Do charities pay tax?
Charities that are recognised by HMRC are eligible for tax relief and do not pay tax on income that is used for charitable purposes. Tax is payable in some circumstances for charities, such as on profit from property and money used for non-charitable purposes.
Do you pay taxes on investments?
Subject to some exceptions for tax-favoured investments such as individual savings accounts (ISAs), income from investments such as bank accounts and share dividends will be subject to income tax, with the amount of tax dependent on your level of income and the type of investments you have made. Profits made from the sale of assets or investments may be subject to capital gains tax (CGT). There are tax-free allowances for different investments and personal circumstances. Personal tax planning can help you to maximise your allowances.
How much is the personal tax allowance?
The standard personal allowance is £12,570 for 2022/23. Your personal allowance may differ depending on your income and other circumstances. The UK government updates personal allowances each financial year.
How much tax do businesses pay?
In the UK, the amount of tax paid by a business can depend on several factors such as the size of the business, turnover and the business type. Sole traders, limited companies, partnerships and charities all pay different rates of tax and may be entitled to various tax relief incentives.
How much tax do we pay?
Tax paid by individuals can differ greatly depending on your personal income and circumstances. Typically, a person will pay a fixed rate of tax determined by their level of income. There are many different types of tax in the UK that are applied to things like goods and services, income, inheritance and capital gains. A tax expert can identify the levels of direct tax you pay as an individual and give you advice on tax planning opportunities. A qualified financial expert can advise you on the commercial and tax implications of specific investments.
Is MTD compulsory?
The MTD (Making Tax Digital) initiative by HMRC is compulsory for VAT registered businesses with taxable turnovers over £85,000. From April 2022, it will also be compulsory for businesses with taxable turnovers below £85,000 to register for MTD. There are only a few circumstances which allow exemptions from MTD.
Is startup capital taxable?
Startup capital isn’t a singular entity since it’s normally composed of several different sources of income, so as a whole, it may not be taxable. There may however, be individual parts of an organisation’s startup capital that is taxable such as any income from startup investments.
What are investment tax credits?
Investment tax credits are a form of tax relief given to businesses. They allow an organisation to write off a percentage of the cost of investment from their taxes, reducing the amount of tax that needs to be paid on that investment.
What are the types of tax?
Income tax, national insurance, capital gains tax, inheritance tax, VAT, council tax and stamp duty land tax are the most common taxes an individual will experience in the UK. Corporation tax is applied to profits made by companies registered or resident in the UK.
What does personal tax allowance mean?
A personal tax allowance is the amount a person can receive as income before they begin to pay tax on it. For example, if a person earns £20,000 per year but their personal tax allowance is £12,500. They will only pay tax on £7,500 of their earnings. If they earn £10,000 per year with the same personal tax allowance, they won’t pay any tax on that income.
What is a tax audit?
A tax audit is simply a comprehensive review of the taxes being paid to HMRC to ensure the correct amount is being paid. A tax audit by HMRC can be expected around once every six years or can be triggered by anomalous, inconsistent or late tax returns.
What is a trustee?
The term trustee can refer to an individual or an entity (such as a company or firm) that has been appointed to take responsibility for money, assets or property on behalf of another individual or entity.
What is international tax law?
International tax law is the combined, complex set of rules and agreements that countries have in place to determine how companies pay tax when operating between international borders.
What is MTD?
In finance, MTD stands for Making Tax Digital. Making Tax Digital is an initiative from the UK government that aims to make tax administration easier and more efficient by using digital records in favour of paper tax returns.
What is pension tax relief?
Pension tax relief is when some of the tax paid on your contributions goes towards your pension pot, rather than to the government. Most tax relief is automatically applied at source.
What is tax?
There are lots of different taxes. Each is a compulsory charge levied by the government (on incomes, properties or purchases, for example) in order to fund government spending and public services.
Who needs to sign up to MTD?
If you’re currently a VAT registered business, you are required to sign up for MTD for VAT purposes.
What is a year end?
Year end is simply the date that the tax year ends. After this date each year it is considered a new tax year. It’s phrased as such because in many countries, the tax year end is different from the calendar year.
When is the year end?
The tax year end depends on the country you are in. In the UK, the tax year end is 31 March for companies and 5 April for individuals. Companies will generally have their own accounting year end date (often the anniversary of the month the company is incorporated in) and will draw up accounts to this date each year.