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The Real Cost of Setting Up and Running a US Company

Sat, 28 Mar 2026 20:48:00 GMT

Written by:

Sophie Thomas

COO & Co-founder

US Expansion Checklist

Sun, 15 Mar 2026 21:35:44 GMT

Written by:

Sophie Thomas

COO & Co-founder

US Expansion Checklist

Essential guide for UK & EU startups scaling into the United States

When Should a UK Startup Flip to a US Parent Company?

Thu, 05 Mar 2026 20:12:16 GMT

Written by:

Sophie Thomas

COO & Co-founder

When Should a UK Startup Flip to a US Parent Company?

If you’ve spent any time in founder circles, you’ve probably heard the phrase “Delaware flip” whispered like some kind of startup rite of passage.

For venture-backed companies, flipping to a US parent can be the right strategic move — but timing is everything . Do it too early and you create unnecessary complexity. Do it too late and investors start raising eyebrows.

So when should a UK startup actually flip to a US parent company? Let’s break it down.

First — what is a “Delaware flip”?

A Delaware flip is when your existing UK company becomes a subsidiary of a new US parent (usually a Delaware C-Corp).

Typically:

A new US parent company is formed
The UK company becomes its wholly owned subsidiary
Shareholders exchange their UK shares for US parent shares
Future investment goes into the US entity

The goal: make the company structure more familiar and investable for US venture capital.

The short answer: flip when the business case is clear

Here’s the honest truth: not every UK startup needs to flip .

A US parent usually makes sense when at least one of these is true:
✅ You are actively raising from US VCs
✅ A lead investor is requesting it
✅ The US is becoming your primary market
✅ You are preparing for a large institutional round
✅ Your future exit is likely US-led

If none of the above apply yet, flipping may be premature.

The most common (and sensible) timing points

1. Just before a priced US funding round

This is the classic moment.

Many founders flip:

Ahead of Series A
Ahead of a major US-led seed round
When a US VC term sheet is on the table

Why this works well:

Investors get their preferred structure
You avoid doing the work twice
The legal costs are easier to justify
Due diligence happens on the “final” structure

�� Founder tip: flipping after the term sheet but before closing is often the sweet spot.

2. When US investors explicitly request it

Sometimes the decision is made for you.

Many US VCs will say something along the lines of:

“We’re happy to proceed once you’ve flipped to Delaware.”

At that point, the conversation usually becomes about how quickly and cleanly the flip can be executed .

3. When the US becomes your main commercial focus

Even without immediate VC pressure, a flip can make sense if:

Most revenue is coming from the US
You are building a US team
Your go-to-market is US-first
Future acquirers are likely to be US-based

In these cases, aligning the corporate structure with the commercial reality can simplify life later.

When it’s probably too early to flip

We often see founders worry about flipping far too soon.

You may want to wait if:
❌ You’re pre-seed with no US investor interest
❌ The business is still UK-focused
❌ You haven’t validated product-market fit
❌ Cash runway is tight
❌ You want to minimise compliance overhead

Remember: a US parent brings additional complexity and cost. It’s not a free upgrade.

Early-stage companies can usually raise perfectly well in the UK first.

What founders often underestimate

A flip is not just a Companies House form and a celebratory coffee.

It typically involves:

Legal restructuring
Share exchanges
Tax analysis (UK and US)
Updated option plans
Banking changes
Ongoing dual-jurisdiction compliance

How OnTheGo Accountants supports Delaware flips

At OnTheGo Accountants , we help founders plan flips before investors start applying pressure .

Our support includes:

Pre-flip readiness reviews
UK–US tax coordination
Group structure planning
Financial clean-up ahead of due diligence
Ongoing cross-border compliance

Because the goal isn’t just to flip — it’s to flip cleanly, efficiently, and at the right time.

How US Investors Look at UK Startups?

Sat, 28 Feb 2026 23:14:16 GMT

Written by:

Sophie Thomas

COO & Co-founder

How US Investors Look at UK Startups (and What They Expect)

If you’re a UK founder eyeing US investment, here’s a quick reality check:

US investors absolutely love British startups…

…but only when the structure, numbers, and story make sense.

The good news? UK founders already have a strong reputation for building solid businesses. The bad news? US investors tend to have a very specific checklist — and they will notice if something’s off.

Let’s walk through how US investors typically view UK startups (and what you can do to stay firmly in the “fundable” pile).

First impressions: generally positive

UK startups often start with a credibility boost. From an investor’s perspective, the UK ecosystem produces:

Strong technical founders
Sensible capital efficiency
Good governance standards
Familiar legal framework

So you’re not starting from zero. That’s the good news.

The biggest question: “Why aren’t you a US company yet?”

If you take one thing away from this article, make it this:

US investors don’t hate UK companies — they just prefer investing into US ones.

Why?

Because US C-Corps (especially Delaware) are their comfort zone. They understand:

The legal framework
Share structures
Investor protections
Exit mechanics

When a UK company pitches, investors often immediately assess whether a future “flip” to a US parent will be required.

This doesn’t mean you must start in the US.
It does mean you should have a clear plan.

Founders who say “we’ll figure it out later” rarely inspire confidence.

What US investors actually look for

1. Clean, boring (in a good way) company structure

Investors are surprisingly fond of boring.

They want to see:

A simple group structure
No messy shareholder arrangements
No mystery share classes
No historic “creative” equity decisions

If your cap table looks like it was assembled during a late-night pizza emergency, expect questions!

Investment-ready financials

This is where many otherwise great startups wobble.

US investors expect:

Up-to-date management accounts
Clear revenue recognition
Sensible forecasts
Consistent KPIs
Proper bookkeeping (not vibes-based accounting)

Humour aside — messy numbers are one of the fastest ways to slow down a deal.

Investors aren’t expecting perfection at early stage, but they are looking for credibility and control.

A credible US market story

If you’re pitching US investors, they will want to know:

Why the US? And why now?

Strong answers include:

Existing US customers
Clear go-to-market plan
US hiring roadmap
Evidence of product-market fit scaling internationally

Weaker answers sound like:

“It’s a big market so… seemed like a good idea.”

(Investors have heard this one before. Many times.)

Awareness of cross-border complexity

Sophisticated investors know that UK-US structures come with tax and compliance wrinkles.

You don’t need to have solved everything — but you do need to show awareness of:

Potential US entity plans
Transfer pricing considerations
Where IP sits
Future group structure

Founders who are coachable and prepared

US investors often move quickly — and they expect founders to keep up.

They look for teams who are:

Responsive
Well prepared
Open to structural changes
Realistic about scaling

How OTG Accountants helps founders get investor-ready

At OnTheGo, we work with scaling startups before investors start asking the awkward questions.

We support founders with:

Investment readiness reviews
Group structuring planning
UK–US tax coordination
Financial clean-up and reporting
Pre-raise preparation

Because the best time to fix structure and financial gaps is before you’re in the middle of due diligence with someone in California asking very detailed questions at 10pm UK time.

(Trust us on that one.)

Planning to raise from US investors?

Speak to the OTG team about getting your business investment-ready.

Should Your Startup Set Up a US Entity?

Mon, 23 Feb 2026 13:33:13 GMT

Written by:

Sophie Thomas

COO & Co-founder

Should Your Startup Set Up a US Entity?

For ambitious startups with global plans, setting up a US entity can be a smart strategic move. The United States remains the world’s largest venture capital market, and many investors prefer structures they already know and trust.

That said, the benefits only really stack up if the structure fits your growth plans. Below we break down why founders choose the US — and what responsibilities come with it.

Why startups expand into the US?

Easier access to investment

One of the biggest drivers is fundraising. US investors (particularly VCs) are far more comfortable investing in US corporations — most commonly Delaware C-corps. The legal framework is familiar, investment documents are standardised, and equity structures are investor-friendly.

In practice, this can mean:

Smoother VC conversations
Faster funding rounds
Better support for employee share schemes
Stronger positioning for future exit

If raising venture capital is part of your roadmap, a US entity can make a real difference.

Stronger credibility in the US market

If you’re selling to US customers, having a US company can improve trust and reduce friction with:

Enterprise clients
Payment providers
US platforms and marketplaces

It often makes your business look and feel more “local” to US partners.

Flexible company structures

US corporate law — particularly in Delaware — is built with scaling businesses in mind.

Founders benefit from:

Multiple share classes
Flexible governance
No requirement for US-resident directors
Simple incorporation process

This flexibility is one reason the model is so popular with high-growth tech startups.

Key obligations to be aware of

Setting up in the US isn’t a “set and forget” exercise. There are ongoing compliance requirements.

Annual state filings

Most US companies must:

File an annual report
Pay franchise tax
Maintain a registered agent

Missing these can lead to penalties or loss of good standing.

US tax compliance

Depending on your activities, you may need to:

File US federal tax returns
Register in states where you have nexus
Run US payroll if hiring locally
Manage sales tax where applicable

Foreign-owned companies often have additional IRS reporting requirements too.

Corporate housekeeping

US companies are expected to maintain proper records, including:

Board and shareholder documentation
Share issuance records
Annual approvals or written consents

Investors will expect these to be in good order.

Cross-border considerations for UK founders

If you’re UK-based, it’s important to consider:

CFC rules
Transfer pricing
Permanent establishment risks
Double taxation exposure

Getting joined-up UK and US advice early is key.

Is it right for every startup?

A US entity usually makes sense if:

✅ You plan to raise venture capital

✅ The US is a key target market

✅ You’re building a high-growth scalable business

It may be unnecessary if:

❌ You’re running a lifestyle business

❌ All activity is UK-focused

❌ You want minimal compliance

How OTG Accountants can help

Setting up in the US can unlock major opportunities — but only if structured properly from day one.

OnTheGo supports startups with:

US expansion planning
UK–US tax coordination
Group structuring
Ongoing compliance
Investment readiness

Speak to the OTG team to explore whether it’s the right move for your business.

Why Tech Startups Should Consider a Salary Sacrifice Pension (Pros & Cons)

Fri, 06 Feb 2026 20:59:34 GMT

Written by:

Sophie Thomas

COO & Co-founder

Why Tech Startups Should Consider a Salary Sacrifice Pension (Pros & Cons)

For tech startups, every decision around cash, hiring, and employee benefits matters. Founders are often balancing limited budgets with the need to attract and retain great talent — all while keeping the business tax-efficient.

One option that’s increasingly popular with growing tech companies is a salary sacrifice pension scheme. Done properly, it can be a win-win for both the company and employees — but it isn’t right for everyone.

In this article, we explain what salary sacrifice pensions are, why tech startups often consider them, and the key pros and cons to be aware of.

What Is a Salary Sacrifice Pension?

A salary sacrifice pension arrangement allows an employee to agree to give up (or “sacrifice”) part of their gross salary in exchange for an increased employer pension contribution.

Instead of:

Paying part of their salary
Then making an employee pension contribution

The employer pays that amount directly into the pension.

The result is that both the employee and the employer can save on National Insurance contributions (NICs).

Why Salary Sacrifice Appeals to Tech Startups

Tech startups often:

Compete for talent with larger, better-funded businesses
Want to offer attractive benefits without large cash outlays
Employ higher-earning staff who value tax efficiency

Salary sacrifice pensions can tick all three boxes.

The Benefits for the Company

1. Employer National Insurance Savings

When salary is sacrificed, the company no longer pays employer’s NIC (currently 13.8%) on that portion of pay.

For example:

£5,000 sacrificed into pension
Employer NIC saving of £690

Many startups choose to:

Retain this saving, or
Share some or all of it with employees via higher pension contributions

2. A Cost-Effective Employee Benefit

Salary sacrifice pensions allow startups to enhance their benefits package without increasing headline salaries.

This can be particularly attractive when:

Cash flow is tight
The business wants to avoid locking in higher fixed pay costs

3. Supports Recruitment and Retention

Tech talent is increasingly benefit-aware.

Offering a salary sacrifice pension can:

Signal a well-run, mature business
Appeal to employees thinking long-term
Help differentiate you from early-stage competitors

The Benefits for Employees

1. National Insurance Savings

Employees don’t pay employee NICs on the salary they sacrifice.

For many employees, this means more money going into their pension at no extra cost.

2. Immediate Tax Efficiency

Because the contribution is made before tax:

Income tax is reduced
NICs are reduced
Pension contributions grow tax-free

This is particularly valuable for:

Higher-rate taxpayers
Employees trying to maximise pension saving

The Downsides and Risks to Be Aware Of

While salary sacrifice can be very effective, there are some important considerations.

1. Impact on Statutory Payments

Because salary sacrifice reduces contractual salary, it can affect:

Statutory maternity, paternity, and adoption pay
Statutory sick pay
Redundancy pay

A reduced salary may have a negative impact on those looking to secure loans or mortgages.

2. National Minimum Wage Rules

Salary sacrifice cannot reduce an employee’s pay below the National Minimum or Living Wage.

This means it may not be suitable for:

Lower-paid employees
Very junior roles

3. Employee Understanding

Salary sacrifice pensions are tax-efficient, but they can be confusing at first.

Without clear explanation:

Employees may worry about reduced salary
Take-up may be lower than expected

Education and good onboarding make a big difference.

How On The Go Accountants Can Help

We help tech startups:

Decide whether salary sacrifice pensions are right for them
Set up schemes correctly and compliantly
Model employer NIC savings
Communicate changes clearly to employees

If you’re considering introducing a salary sacrifice pension — or want to sense-check whether it makes sense for your team — we’re happy to help.

Get in touch with our team to discuss your options.

How to Budget Like a Founder

Mon, 02 Feb 2026 09:36:24 GMT

Written by:

Sophie Thomas

COO & Co-founder

How to Budget Like a Founder

For many founders, budgeting can feel like a chore – something you should do, rather than something that actively helps you run the business. But a good budget isn’t about restriction. It’s about clarity, control, and confidence.

Founders who budget well are better placed to manage cash flow, make hiring decisions, raise investment, and avoid unpleasant surprises.

In this guide, we’ll walk through how to budget like a founder, what to focus on and what to ignore!

Why Budgeting Looks Different for Founders

A founder’s budget isn’t the same as a big corporate budget. Startups are:

Growing (or changing) quickly
Often loss-making in the early stages
Highly cash-sensitive
Making decisions with imperfect information

That means your budget should be lightweight, flexible, and regularly updated – not a once-a-year spreadsheet that gets ignored.

Step 1: Start With Cash, Not Profit

One of the biggest budgeting mistakes founders make is focusing too much on profit and not enough on cash.

Your budget should always start with:

Opening cash balance
Expected cash in (sales, funding, grants)
Expected cash out (all costs, not just big ones)

This gives you a clear view of cash runway – how long the business can survive with the money it has.

�� Founder rule of thumb: Cash keeps you alive. Profit comes later.

Step 2: Know Your Fixed vs Variable Costs

Split your costs into two simple buckets:

Fixed costs

Costs that don’t change much month to month, such as:

Salaries
Rent
Core software subscriptions
Insurance

Variable costs

Costs that move with activity or growth, such as:

Marketing spend
Contractor costs
Hosting or usage-based software
Sales commissions

This helps you quickly see where you have flexibility if cash gets tight.

Step 3: Budget Monthly (Not Annually)

Annual budgets can be useful for strategy, but founders should manage the business month by month.

A simple founder budget should show:

Monthly income
Monthly costs
Net cash movement
Closing cash balance

Reviewing this monthly allows you to spot issues early and adjust before they become problems.

Step 4: Build in a Buffer

Startups rarely go exactly to plan.

Where possible, build in:

A contingency buffer for unexpected costs
Conservative assumptions on income
A clear view of your minimum cash balance

This is especially important if you’re pre-revenue or reliant on a small number of customers.

Step 5: Use a Simple Founder Budget Template

You don’t need complex software to start budgeting well. A simple spreadsheet is often enough.

A good founder budget template should include:

Opening cash balance
Monthly income by source
Monthly costs (fixed and variable)
Net cash movement
Closing cash balance
Cash runway calculation

Step 6: Use a Monthly Budget Review Checklist

Set aside 20–30 minutes each month to review your budget using a simple checklist:

✔ Does actual spend match the budget?

✔ Are any costs creeping up unexpectedly?

✔ Has income been delayed or accelerated?

✔ How many months of runway remain?

✔ Do we need to change hiring or spend plans?

Step 7: Budgeting for Growth and Hiring

When planning hires or major spend, founders should always ask:

What is the monthly cash impact?
How long before this spend generates value?
What happens if growth is slower than expected?

Budgeting isn’t about saying no – it’s about understanding the timing and risk of decisions.

How On The Go Accountants Can Help

We work with founders at all stages to:

Build simple, practical budgets
Create cash flow forecasts and runway models
Prepare budgets for investors and fundraising
Sense-check hiring and growth plans

If you’d like help building or reviewing your budget – or want a version tailored to your business – we’re happy to help.

Get in touch with our team to get started.

Tax‑Efficient Business Structures for Startups

Mon, 02 Feb 2026 09:28:40 GMT

Written by:

Sophie Thomas

COO & Co-founder

Tax‑Efficient Business Structures for Startups

Choosing the right business structure at the start of your journey can make a big difference to how much tax you pay, how easy it is to raise investment, and how flexible your business is as it grows.

There’s no one‑size‑fits‑all answer. The most tax‑efficient structure depends on your plans, your risk profile, and whether you expect to bring in investors. In this article, we walk through the most common UK business structures for startups, their tax advantages and disadvantages, and when each one tends to work best.

Your business structure affects:

How profits are taxed
How and when you can take money out
Whether losses can be used personally
How attractive the business is to investors
Your exposure to personal risk

Getting this right early can save time, cost, and restructuring headaches later.

1. Sole Trader – Simple, but Limited

How it’s taxed

As a sole trader:

Profits are taxed through Self Assessment
Income tax is charged at 20%, 40% or 45%
You also pay Class 2 and Class 4 National Insurance

Advantages

Very simple and low‑cost to set up
Minimal reporting and admin
Losses can often be offset against your other personal income

Disadvantages

No separation between you and the business (personal risk)
Tax rates can be high as profits grow
Not suitable for external investors

Example scenario

A freelance consultant or contractor testing a new idea with low risk and no immediate plans to scale may start as a sole trader for simplicity.

2. Limited Company (Ltd) – The Startup Favourite

For most growth‑focused startups, a limited company is the default choice.

How it’s taxed

Profits are subject to Corporation Tax (currently up to 25%)
Directors typically take income via a mix of salary and dividends
Dividends are taxed at lower rates than salary (depending on income level)

Advantages

Clear separation between personal and business finances
Often more tax‑efficient once profits increase
Attractive and familiar structure for investors
Access to reliefs such as:
Business Asset Disposal Relief (BADR)
Enterprise Investment Scheme (EIS) and SEIS
R&D tax relief

Disadvantages

More admin and compliance
Profits can be taxed twice (company and shareholder level)
Less flexibility in using losses personally

Example scenario

A tech startup planning to raise investment, reinvest profits, or scale quickly will almost always operate through a limited company.

3. Limited Liability Partnership (LLP) – Flexible but Less Investor‑Friendly

An LLP is often used by professional services firms, but it can be suitable for certain types of startups.

How it’s taxed

The LLP itself does not pay corporation tax
Profits are taxed directly on the members as self‑employed income
Each member pays income tax and National Insurance on their share

Advantages

Limited liability protection
Very flexible profit‑sharing arrangements
Losses may be offset personally (subject to rules)

Disadvantages

Higher personal tax rates as profits grow
Less attractive for equity investors
More complex personal tax compliance for members

Example scenario

A founder‑led consultancy or professional services startup, where profits are regularly withdrawn rather than reinvested, may prefer an LLP structure.

4. Partnership – Rarely Used for Scalable Startups

Traditional partnerships are similar to LLPs but do not offer limited liability, which makes them uncommon for modern startups.

When might this work?

Low‑risk businesses
Short‑term ventures
Situations where simplicity outweighs risk

For most startups, an LLP or Ltd company will be more appropriate.

5. Holding Companies and Group Structures

As startups grow, some move to a group structure, often with a holding company owning one or more trading subsidiaries.

Why consider this?

Helps ring‑fence risk
Allows profits to be moved between companies tax‑efficiently
Can support future exits or partial sales

These structures are usually implemented after growth or investment, rather than on day one, and require careful planning.

How On The Go Accountants Can Help

We help startups and founders:

Choose the right structure from day one
Review whether their current setup is still tax‑efficient
Prepare for investment, scale, or exit
Restructure as the business evolves

If you’re setting up a new venture – or wondering whether your current structure is holding you back – we’re happy to help you think it through.

Get in touch with our team to discuss your options.

R&D Tax Credits: The Most Common Mistakes That Cost Companies Money

Tue, 20 Jan 2026 19:38:25 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

R&D Tax Credits: The Most Common Mistakes That Cost Companies Money (and How to Avoid Them)

R&D Done Right — Episode 10 (Finale)

The UK’s R&D tax relief rules haven’t suddenly become harsher — HMRC’s approach has changed.

Today, claims are reviewed using data, benchmarking, and automated risk scoring , not just the narrative.

That means the most common failures aren’t scientific — they’re process-driven .

Here are the most frequent mistakes we see in 2025/26:

1. Treating R&D as a box-ticking exercise

HMRC wants to see technical ownership , not generic descriptions.

If the narrative looks like it was written by finance or a third party, it raises doubts.

2. Chasing percentages instead of defensibility

Staff apportionments are now the first thing HMRC checks.

Flat percentages, repeated patterns, or round numbers look like guesses — not evidence.

3. Over-claiming director time

Director time is one of the biggest triggers for adjustment.

Leadership and strategy don’t count as R&D time unless it’s direct technical contribution.

4. Poor project boundaries

Projects without clear start/end dates or mixed with routine work are hard to defend.

Strong claims clearly separate normal development from experimental R&D.

5. Misunderstanding grants and subsidies

Grants no longer automatically “taint” claims, but they can create state aid and control issues if not handled correctly.

6. Ignoring overseas expenditure rules

For periods starting after April 2024, overseas subcontractors and EPWs are generally disallowed .

This mistake costs companies money every year.

7. Treating the AIF as paperwork

The Additional Information Form is now the gatekeeper.

If it doesn’t match your claim, HMRC will flag or remove your R&D figures.

8. Oversharing during enquiries

Giving too much information can create new inconsistencies.

HMRC compares your response to the original claim — consistency matters more than volume.

9. Using advisers who haven’t adapted

The old approach focused on maximising the claim.

Now, strong advice is evidence-led, conservative, and enquiry-ready .

What good claims do differently

Strong claims are:

consistent
evidence-based
aligned with reality
designed to survive scrutiny

R&D relief still works — but it now rewards companies that treat it as a compliance process , not a marketing tool.

HMRC R&D Enquiries: What Actually Triggers Them—and How to Handle One

Tue, 20 Jan 2026 19:29:16 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

HMRC R&D Enquiries: What Actually Triggers Them—and How to Handle One

For many founders and finance directors, the phrase “HMRC enquiry” still feels like a warning siren. But in the modern R&D landscape, enquiries are becoming normal—and they’re often not about whether you did R&D, but how you calculated the claim.

Why HMRC Enquiries Are Now Common

HMRC now uses a volume-based compliance model , driven by the Additional Information Form (AIF) . That means most claims are reviewed by generalist teams using standardised checks—not deep technical scrutiny.

So, the question isn’t “Did you innovate?”
It’s “Do the numbers match the story?”

How Claims Get Selected for Review

Selection isn’t personal. It’s mechanical.

HMRC flags claims based on:

inconsistent narratives vs. costs
unusually high or identical staff apportionments
large year-on-year increases
heavy director time claims
first-time claims without benchmark data

The AIF makes these patterns easy to spot.

What an HMRC R&D Enquiry Looks Like

Enquiries usually start with a standard letter and a request for:

project explanations
staff apportionment breakdowns
supporting evidence

Most reviews split into two areas:

Technical narrative (was there genuine uncertainty?)
Financial construction (do the numbers add up?)

In practice, the financial side causes the most trouble .

The Most Common Challenges

HMRC usually focuses on:

staff apportionments
director involvement
subcontractor classification
project boundaries
gaps in records

They rarely “re-fight the science” unless the story itself is weak.

The Key Consistency Check

Before submitting, ask:

Do the staff days claimed match the timeline in the narrative?

If you claim 8 months of Lead Architect time for a 3-month sprint, you’re basically inviting an enquiry.

Biggest Mistakes During an Enquiry

Most problems are self-inflicted:

Oversharing
Too much irrelevant detail creates new questions.

Rewriting history
Changing figures or narratives mid-enquiry destroys credibility.

Panic
Conceding too quickly or acting defensively makes outcomes worse.

What a Strong Response Looks Like

Good responses are:

clear and specific
aligned with the original submission
supported by selective evidence
honest about judgment calls

The goal is to show the methodology was reasonable—not to overwhelm HMRC.

Typical Outcomes

Most enquiries end with:

full acceptance
minor adjustments
occasional project rejection

Penalties are rare unless there’s evidence of carelessness or deliberate misrepresentation.

The Best Strategy: Prevention

Claims built on consistent narratives, defensible apportionments, and strong records rarely escalate. When they do, they resolve faster and with fewer adjustments.

If you want your claim reviewed before filing or need support during an enquiry, get in touch .

The Capital Gains Tax Implications of Closing a Limited Company

Wed, 14 Jan 2026 08:23:40 GMT

The Capital Gains Tax Implications of Closing a Limited Company

Closing a limited company is rarely just a box‑ticking exercise. Whether you’re wrapping things up after a successful journey or facing a difficult wind‑down, there can be real tax consequences for founders and investors – particularly when money or assets are distributed.

In this guide, we break down the capital gains implications of closing a UK limited company, in plain English. We cover planned closures, investor scenarios, and what happens when a company unfortunately runs out of money.

What Actually Happens Tax‑Wise When a Company Closes?

When a limited company is closed, any value left in the business (cash or assets) is normally passed back to shareholders. From HMRC’s perspective, that value is treated as a distribution.

That distribution will be taxed either as:

Capital (subject to Capital Gains Tax), or
Income (subject to dividend tax rates)

Which route applies depends on how the company is closed, whether it’s solvent or insolvent, and how much money is being distributed.

Closing a Solvent Company – How CGT Usually Applies

a) Members’ Voluntary Liquidation (MVL)

If the company can pay all its debts and has more than £25,000 to distribute, an MVL is often the most tax‑efficient way to close it.

In an MVL:

Distributions are normally treated as capital
Shareholders pay Capital Gains Tax on any gain
The gain is broadly:

Amount received – cost of shares – allowable costs

What rate of CGT applies?

Most individual shareholders will pay CGT at:

10% or 20%, depending on their income level

If the shareholder qualifies for Business Asset Disposal Relief (BADR):

The CGT rate can be reduced to 10%
This is subject to the £1 million lifetime limit

To qualify for BADR, founders typically need to:

Hold at least 5% of shares and voting rights
Be a director or employee
Have met the conditions for at least 24 months

This is especially relevant for founders and management shareholders, but often not for passive investors.

Informal Strike‑Off (Companies House Dissolution)

If the company is solvent and has £25,000 or less to distribute, it may be possible to apply for a strike‑off instead of a formal liquidation.

In these cases:

Distributions up to £25,000 are usually treated as capital
Anything above this is taxed as dividend income

This route can work well for smaller companies, but care is needed – particularly where there are multiple shareholders or investors – as HMRC may challenge the treatment if the closure looks like tax planning rather than a genuine wind‑down.

What About Capital Gains for Investors?

For companies with external investors, the tax position is looked at shareholder by shareholder.

Each investor’s CGT position depends on:

Their shareholding percentage
The amount they receive on closure
What they originally paid for their shares

Many investors:

Will not qualify for BADR
May be subject to different rules (for example, corporate shareholders or funds)

Good record‑keeping is key here – especially share issue documents, subscription agreements, and historic valuations – to ensure gains (or losses) are calculated correctly.

When the Company Runs Out of Money (Insolvent Liquidation)

Not all closures are planned. Where a company can’t pay its debts as they fall due, it is classed as insolvent and will usually enter a Creditors’ Voluntary Liquidation (CVL) or compulsory liquidation.

The CGT position in an insolvent liquidation

Shareholders often receive little or nothing
Where shares become effectively worthless, a capital loss may arise

This loss can:

Be set against other capital gains in the same tax year, or
Be carried forward to offset future capital gains

In some cases, shareholders can make a negligible value claim, allowing them to lock in the loss before the liquidation formally ends. This can be particularly helpful for founders or investors with gains elsewhere.

Anti‑Avoidance Rules to Keep in Mind

HMRC is keen to prevent companies being closed purely to extract profits at lower tax rates.

The Targeted Anti‑Avoidance Rule (TAAR) may apply where:

A company is wound up
Capital distributions are made to shareholders
The shareholder starts or continues a similar trade within two years

If TAAR applies, what would otherwise be capital gains can be taxed as dividend income instead.

This is a common issue for founders planning their next venture, so it’s something worth checking early.

Key Planning Points Before You Close

Before closing a limited company, it’s worth stepping back and considering:

The most tax‑efficient way to close the company
Whether founders qualify for BADR
The tax position of each investor
Whether capital losses can be claimed
Any potential anti‑avoidance risks

A bit of planning up front can often make a meaningful difference to the final tax outcome.

How On The Go Accountants Can Help

We regularly support founders, shareholders, and investors with:

Solvent and insolvent company closures
Capital gains and capital loss claims
BADR eligibility reviews
Investor‑backed wind‑downs and exits

If you’re thinking about closing your company – whether it’s a positive exit or a tougher decision – we can help you understand the tax implications and choose the right path forward.

Get in touch with our team to talk through your options.

UK R&D Tax Claims: How to Allocate Staff Time Accurately

Wed, 07 Jan 2026 21:50:25 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Apportionments That Stand Up: How to Allocate Staff Time in UK R&D Claims

For UK tech startups and scaleups, staff costs often make up the majority of an R&D claim . Developers, engineers, data scientists, product leads, and technically involved founders are at the heart of qualifying expenditure. How you apportion their time between R&D and non-R&D activities can make or break a claim.

Since the April 2024 reforms and the merged R&D scheme , HMRC’s focus has shifted: it’s less about whether you do R&D and more about how much of your staff costs actually qualify. With the Additional Information Form (AIF) now mandatory, clear, consistent, and evidence-backed apportionments are more important than ever.

This guide explains what “just and reasonable” apportionment means, how HMRC evaluates staff time, and how UK tech companies can create claims that stand up to scrutiny.

Why Apportionment Matters More Than Eligibility

Most companies can describe qualifying R&D. But HMRC quickly moves from the technical narrative to the numbers. Staff cost apportionment is the bridge between what you say you did and what you claim .

HMRC doesn’t usually question the science first—they start with the percentages assigned to staff time. If your apportionments aren’t credible, the claim is at risk. Read more here .

What Counts as “Staff Time” for R&D

Staff time means time spent directly on qualifying R&D , not presence, effort, or job importance.

Qualifying R&D includes:

Designing/testing new architectures
Developing novel algorithms
Solving complex scalability or integration problems

Non-qualifying activities include:

Routine build work or standard configuration
Well-understood bug fixes
General management or people management
Commercial decision-making

Mixed roles are normal . A CTO might spend mornings on experiments and afternoons on planning. Apportionments should reflect reality, not flatten responsibilities.

Qualifying Indirect Activities (QIAs): Some supporting work counts if it exists solely because R&D is happening , e.g., technical planning or admin tied to experiments. Focus on direct R&D first, indirect only if clearly traceable.

Directors’ and Founders’ Time: High-Risk Area

Directors often wear multiple hats. Only technical contributions count. Robust apportionments usually relate to specific periods or activities , not flat percentages across the year.

The 100% myth: HMRC is skeptical of any 100% apportionments. Even in R&D-heavy businesses, staff spend time in meetings, training, or routine tasks. Credibility matters more than high percentages.

Evidence: What HMRC Really Wants

HMRC does not mandate timesheets or specific tools. They expect a just and reasonable methodology backed by evidence . Useful evidence includes:

Jira/Linear tickets tagged as R&D
Sprint plans and retrospectives
Git commit histories
Design documents and technical notes
Internal discussions about technical challenges

Claims based purely on memory are much harder to defend.

Common Apportionment Approaches

Pure engineers: Project-based apportionment using Jira tickets, Git logs, or other project tools.
Product or hybrid roles: Role-based apportionment with weekly diaries, sprint retrospectives, or internal notes.
Founders/CTOs: Activity-based apportionment using meeting minutes, design notes, and project documentation.

Consistency is key. The method must align with the technical narrative, cost mapping, and evidence base.

Small Changes, Big Impact

Apportionment has real financial consequences :

Example: Engineer earning £80,000/year

70% apportionment → £56,000 claim
40% apportionment → £32,000 claim

Across a team, these differences multiply. HMRC knows this, which is why scrutiny is high.

Where Claims Often Fall Down

Inconsistency: Year-round percentages that don’t reflect actual experimentation periods.
Overstated director time without evidence of technical contribution.
Lack of supporting documentation across multiple evidence sources.

Building a Sustainable Approach

Strong claims are incremental and evidence-driven , not reconstructed at year-end. Best practices:

Tag R&D work in project tools in real time
Keep brief monthly notes of uncertainty
Periodically review role-based splits
Document directors’ technical contributions precisely

This approach reduces risk, saves time, and makes claims easier to defend.

Summary

Apportionment is the bridge between your R&D story and the tax numbers .

Modest, consistent, well-evidenced percentages beat aggressive estimates.
Mixed roles are fine; percentages must reflect reality.
Evidence is not optional—HMRC expects a coherent methodology.

By approaching apportionment systematically throughout the year , claims become faster to prepare, easier to defend, and less stressful during review.

FAQ: Staff Apportionment

Can I claim 100% of a developer’s time?
Rarely defensible; most staff have non-qualifying activities.
Does HMRC require time-tracking software?
No, but you need a reasonable method backed by evidence (tickets, Git logs, sprint retros).
We’re agile—how do we track R&D?
Tag experimental tickets in real time; use sprint backlogs and retrospectives.
Can indirect staff like HR/finance be included?
Only if work is directly linked to a qualifying R&D project.
What if HMRC disagrees with my apportionment?
Claims can be scaled back, and careless errors may incur penalties. Clear, documented rationale is crucial.
Do I submit evidence upfront?
Submit your methodology in the AIF. Keep supporting documentation ready for any checks.

What Directors and PSCs Need to Know

Mon, 05 Jan 2026 20:37:01 GMT

Written by:

Sophie Thomas

COO & Co-founder

Companies House ID Verification: What Directors and PSCs Need to Know (Without the Headache)

If you are a company director or a Person with Significant Control (PSC) in the UK, you have likely heard the rumours: ID verification is here.

As part of the Economic Crime and Corporate Transparency Act, Companies House has rolled out the biggest change to the UK register in nearly 200 years. The goal? To stop fraud and ensure everyone running a UK company is who they say they are.

The good news? It sounds scarier than it is. If you get ahead of it, it’s a simple administrative tick-box exercise. Here is everything you need to know to stay compliant without the stress.

1. Who Needs to Verify? (And When?)

The rules are slightly different depending on whether you are setting up a new company or if you have been running one for years.

For New Directors and PSCs

Status: Strict. If you were appointed on or after 18 November 2025 , you must verify your identity before your appointment is filed with Companies House. You effectively cannot become a director legally without doing this first.

For Existing Directors and PSCs

Status: Transition Period. If you were already in your role before November 2025, you are currently in a 12-month transition period . You don’t need to panic today, but you do need to act soon.

The Deadline: You must verify your identity by the time your company files its next Confirmation Statement .
The Risk: If you leave it too late, your Confirmation Statement will be rejected, potentially leading to fines or your company being struck off the register.

2. How Do I Verify? (The Two Routes)

You have two options. Choose the one that suits your tech-savviness and budget.

Option A: The "Do It Yourself" Route (Free)

This is the direct digital route using GOV.UK One Login .

What you need: A smartphone, a biometric ID (passport or driving licence), and about 15 minutes.
The Process: You take a photo of your ID, scan the chip (if using a passport), and scan your face.
The Result: Companies House verifies you instantly and issues you a verified personal code .

Option B: The "Let Someone Else Handle It" Route (Paid)

If you struggle with technology, don't have a biometric ID, or just prefer a human touch, you can use an Authorised Corporate Service Provider (ACSP) .

Who are they? Accountants, solicitors, or company formation agents who are registered to perform checks.
The Process: They will check your documents (either in person or via their own secure software) and confirm your identity to Companies House on your behalf.

3. What Happens If I Don't Do It?

This isn't just a "nice to have"—it is a legal requirement. Ignoring it carries real risks:

Criminal Offence: Acting as a director without verification can lead to criminal charges and fines.
Director Disqualification: You could be banned from running companies in the future.
Company Freeze: Your company won't be able to file key updates (like adding new directors or filing annual returns), effectively freezing your business operations.

4. Your "Headache-Free" Action Plan

Don't let this sit on your to-do list until the deadline looms.

Check your Confirmation Statement date: Know exactly when your next filing is due.
Decide your route: Are you doing it yourself via GOV.UK, or will you ask your accountant (ACSP) to help?
Get your code: Once verified, you will receive a unique Personal Code. Keep this safe. You will need it for all future filings and for any other companies you direct.
Link it: Ensure your code is linked to your company record before your next filing.

 Need help navigating the new rules? If you are unsure which route is best for you, or if you have a complex corporate structure, get in touch with our team today. We can act as your ACSP and handle the paperwork for you .

Subcontractors, EPWs and Overseas R&D

Tue, 23 Dec 2025 22:00:52 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Grants, Subsidies and R&D: How Public Funding Affects Your Claim

Tue, 16 Dec 2025 21:44:44 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Do grants really reduce your R&D tax claim?

For years, founders have been warned that taking grant funding will wreck their R&D tax relief.

“Accept the Innovate UK money and your claim disappears.”
“Grant-funded projects aren’t worth claiming for.”

That advice used to have some truth in it.
It no longer does.

From 1 April 2024 , the UK moved to a new merged R&D scheme. In the process, the old SME rules that caused most of the grant-related damage were removed.

Yet the myth refuses to die — and it’s still costing funded startups serious cash.

The simple truth (post-April 2024)

For accounting periods starting on or after 1 April 2024 :

�� Grant funding does not automatically reduce your R&D tax relief.

HMRC’s guidance is explicit:
There is no restriction on claiming for subsidised costs under the merged R&D scheme or Enhanced R&D Intensive Support (ERIS).

If the work qualifies as R&D and the costs qualify, the fact that a grant helped fund it does not disqualify the spend.

That’s the rule change most founders — and many advisers — are still missing.

Why funded companies still get this wrong

If grants aren’t the problem anymore, why do so many funded startups still end up with:

reduced claims,
long HMRC enquiries, or
cash outcomes that don’t match expectations?

Because grants raise the bar .

Funded projects come with:

defined scopes and milestones,
reporting obligations,
named partners and suppliers.

If your grant documentation says one thing and your R&D claim tells a different story, HMRC will notice — even if the underlying work is genuinely innovative.

Grants don’t kill claims.
Inconsistency does.

The three questions that decide everything

Before you model a single number, you need clear answers to these:

When does your accounting period start?
The post-April 2024 rules only apply if your period begins on or after 1 April 2024.
Are you loss-making and R&D intensive?
If yes, ERIS can materially change the cash outcome — but only if it’s modelled correctly.
What exactly does the award letter say?
Grant conditions, state-aid tracking, and reporting language all need to align with your R&D narrative.

Most problems we see come from skipping one of these steps.

A quick reality check on the numbers

Under the merged scheme:

The headline credit rate is 20%
The credit is taxable , so the net benefit depends on your corporation tax position

For profitable companies, the real-world net benefit often lands around:

~15% (if taxed at 25%), or
~16% (if taxed at 19%)

Crucially, that calculation is based on qualifying R&D spend , not whether the spend was grant-funded.

The old instinct to “net the grant off the R&D costs” is usually wrong post-April 2024.

The hidden swing factor: contractors, not grants

In grant-funded projects, the biggest changes in claim value rarely come from the grant itself.

They come from:

contractors,
externally provided workers (EPWs), and
who actually made the decision to undertake the R&D.

Misapplying contractor rules can wipe out far more value than any grant interaction ever did.

And those rules apply with or without funding .

Where we see founders lose money

By the time clients come to us, they’ve often:

accepted outdated advice,
underclaimed “to be safe”, or
filed something that doesn’t match their grant reporting.

The result is either:

less cash than they should have received, or
months of avoidable back-and-forth with HMRC.

Both are expensive.

How we help grant-funded startups get this right

At On The Go Accountants , we specialise in R&D claims for funded and scaling businesses.

We don’t just “do the calculation”. We:

review your grant terms and reporting,
model merged scheme vs ERIS where relevant,
map contractors and EPWs correctly, and
build a narrative that actually matches what happened on the ground.

The goal is simple:
maximum legitimate relief, paid as quickly as possible, with minimal HMRC friction.

Thinking about a claim this year?

If you’ve taken grant funding and you’re unsure:

whether you’re over- or under-claiming, or
whether the April 2024 changes apply to you,

book a call with us.

We’ll walk through:

the grant,
the projects,
the numbers,

and tell you — clearly — what your best route is before anything is filed.

Getting this wrong costs cash.
Getting it right once is usually cheaper than fixing it later.

The Complete Guide to R&D Record Keeping for UK Tech Startups (2025 Update)

Mon, 08 Dec 2025 19:17:25 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

How software and AI companies can build HMRC-ready evidence under the merged R&D scheme

If there has been one major shift in UK R&D tax relief over the past few years, it’s this: HMRC now cares far less about how compelling your pitch deck sounds and far more about the evidence behind your claim.

For tech startups—especially those building software, machine learning models or AI products—that shift can feel uncomfortable. You’re juggling fundraising, shipping features and keeping the product stable. Creating an audit trail for every experiment rarely makes the sprint planning board.

But under the merged R&D scheme and today's tougher compliance environment, robust R&D record keeping is no longer optional . It is the difference between a claim that sails through and one that triggers a long, expensive HMRC enquiry.

This guide explains exactly what records HMRC expects, how long you must keep them, and how to build evidence collection into your existing development workflow without slowing your team down.

What HMRC Actually Wants to See in an R&D Tax Claim

When HMRC reviews a claim, it is trying to answer three core questions.

1. Were you genuinely doing qualifying R&D?

You need to clearly articulate:

the scientific or technological uncertainty ,
what was known at the time, and
why a competent professional couldn’t easily solve the problem.

For software and AI teams this might relate to scaling, system architecture, data engineering challenges, non-obvious algorithms or unpredictable performance characteristics.

2. Is there evidence of real experimental work?

HMRC expects to see:

iterations
tests
failures
design changes
technical decision-making

A polished description of the final product without evidence of the journey rarely satisfies inspectors.

3. Do the costs genuinely relate to this R&D?

Every staff cost, contractor invoice, cloud charge or material expense must trace back to a qualifying R&D project. If you cannot show that link, HMRC will challenge the claim—even if the project itself is valid.

The Core Evidence Every Strong R&D Claim Needs

In most tech companies, R&D evidence falls into three buckets.

1. Technical Records

These demonstrate the story of the R&D work. HMRC considers any of the following valid evidence:

Jira/Linear tickets
Git commits
Sprint notes
Design documents
Architecture diagrams
Test reports
Internal research notes
Prototypes or experimental branches

Individually these look mundane. Together, they show how your team tackled uncertainty and progressed toward a solution.

2. Time Records

HMRC knows engineers don’t spend 100% of their time on qualifying activity. You don’t need minute-by-minute timesheets, but you do need a reasonable basis for your apportionments.

Acceptable evidence includes:

time codes in your PM tool
monthly or quarterly allocation statements
logs created by the technical lead
sprint documentation showing who worked on which R&D tasks

3. Financial Records

These link R&D activities to the actual spend, such as:

payroll reports
contractor invoices
cloud computing bills
hardware or software purchases
grant funding evidence

Your R&D cost schedule should reconcile back to your statutory accounts so HMRC can trace every figure.

How to Embed R&D Record Keeping Into Your Software Workflow

Trying to rebuild a year’s worth of evidence at claim time is painful—and risky. The best approach is to integrate record keeping into normal software development processes.

Use Your Issue Tracker as the Source of Truth

Add simple R&D labels (e.g., R&D – ML Engine, R&D – Scalability).
Encourage engineers to include in the ticket description:

what the experiment is testing,
why the outcome is uncertain,
criteria for success/failure.

This adds seconds to a ticket and saves hours when drafting the technical narrative.

Agree and Document Staff Time Allocations

Revisit quarterly.
Store these in a single, auditable place.
A short memo signed off by the technical lead is normally sufficient.

Tag Spend Properly in Your Accounting System

Use project codes in:

Xero
QuickBooks
NetSuite
your expense management tool

This prevents the “everything under AWS” problem when building the cost schedule.

Subcontractors, Overseas Teams and Cloud Spend: What You Must Document

These are the areas HMRC scrutinises most heavily in 2025.

Subcontracted R&D

Make sure contracts and SOWs clearly state:

YOU decide the direction of R&D,
YOU control technical decision-making,
YOU bear the technical risk.

Without this, HMRC may disallow the costs.

Overseas Developers

The merged R&D scheme severely restricts overseas costs.

If you are claiming an exception, document why the work genuinely could not be carried out in the UK.

Cloud Computing Costs

You should be able to separate:

experimental/test environments (R&D), and
live production infrastructure (not R&D).

Screenshots, tagging rules, and short internal memos explaining your apportionment method are usually enough.

How Long You Must Keep R&D Records (and Why It Matters)

HMRC can open an enquiry up to six years after the end of the accounting period. That means an R&D claim you submit in 2025 may be examined in 2031 .

Therefore:

avoid personal email storage,
avoid tools with short retention limits,
use central, backed-up storage.

When HMRC raises an enquiry, they typically request:

detailed project descriptions
an expanded cost breakdown
supporting technical documents
evidence of staff time and apportionments
contracts and invoices
cloud cost analysis

If your evidence is complete, enquiries are usually painless. If not, you’re left trying to reconstruct an R&D claim under pressure.

Frequently Asked Questions About R&D Record Keeping

What records do I need for an R&D tax claim?

Evidence of:

the uncertainties,
the work done to address them,
how costs relate to that work.

How long should I keep R&D documentation?

Keep everything for at least six years .

What evidence does HMRC ask for in an enquiry?

Project descriptions, cost breakdowns, staff lists, time evidence, contracts, cloud invoices and technical documentation.

How strict is HMRC now?

Significantly stricter. Generic claims without evidence are routinely challenged.

Is there an official HMRC checklist?

Not a single one, but the themes are consistent:
clear projects, evidence of work, traceable costs.

How OnTheGo Accountants Helps Tech Startups Build Audit-Ready R&D Claims

At OnTheGo Accountants , we specialise in R&D tax relief for SaaS companies, AI startups and high-growth tech businesses.

Our R&D process includes:

identifying qualifying projects with your technical lead
reviewing your existing technical and financial records
drafting the technical narrative for the Additional Information Form
mapping staff time and contractor spend to projects
preparing a fully reconciled and HMRC-defensible cost schedule
highlighting weak areas before submission (not afterwards)

We prioritise long-term compliance over short-term optimisation.

Next Step

If you’re planning an R&D claim but aren’t confident your records would survive HMRC scrutiny, now is the time to fix that—not when an enquiry letter arrives.

Book a free 30-minute R&D consultation with OnTheGo Accountants.
We’ll review your current documentation and help you build a simple, scalable record-keeping system that fits naturally into your workflow.

Qualifying R&D Costs in 2025

Fri, 28 Nov 2025 21:18:06 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

What You Can and Cannot Claim Under the New Merged Scheme

Once you understand what actually counts as R&D, the next big question is simple but important: what costs can you include in your claim, and what must be left out?

Under the UK’s merged R&D scheme, which applies to accounting periods beginning on or after 1 April 2024 , the categories of qualifying expenditure are broadly familiar, but some details have changed:

Data and cloud computing costs are now fully recognised.
Subcontractor and overseas rules have tightened.
HMRC has clarified what is definitely out of bounds.

For tech and SaaS founders , this matters. How you treat staff time, contractors, cloud platforms, and grants can add or remove tens of thousands from your claim. This guide walks through each major cost category, explains how it works under the merged scheme, and highlights common pitfalls.

Main Categories of Qualifying R&D Costs

HMRC recognises specific cost categories for R&D tax relief. For accounting periods starting on or after 1 April 2023 , this includes:

Staffing costs
Externally provided workers (EPWs)
Subcontracted R&D
Consumables and materials
Software, data licences, and cloud computing
Payments to clinical trial subjects

From 1 April 2024 , these categories sit within the merged R&D scheme and Enhanced R&D Intensive Support . A key change: there is no blanket restriction on claiming subsidised costs , though grants and subsidies still need to be disclosed and correctly apportioned.

Important: If a cost does not fall into one of HMRC’s listed categories, it cannot be included in an R&D claim, no matter how “R&D-ish” it feels.

1. Staffing Costs: The Core of Most Tech Claims

Staffing costs are usually the backbone of R&D claims. Qualifying costs include:

Salaries
Employer NIC
Employer pension contributions
Certain reimbursed expenses

These apply to employees directly engaged in R&D , e.g., engineers, data scientists, technical architects, dev-ops, and sometimes product leads or technical founders.

Proportional claim example:

If a lead engineer spends 60% of their time on experimental algorithm design and 40% on production support, only 60% of their staffing costs are claimable.

Non-qualifying roles:

Dividends, general HR staff, sales, marketing, or purely administrative roles (unless a very small portion of time is genuinely R&D-related).

2. Externally Provided Workers (EPWs)

EPWs are individuals on another company’s payroll but working under your direction.

Eligibility rules under the merged scheme:

Location matters: Overseas EPWs usually do not qualify , unless the R&D cannot reasonably be carried out in the UK.
UK PAYE and NIC: The worker’s earnings must be subject to UK PAYE and Class 1 NIC.
Unconnected providers: Generally restricted to 65% of payment attributable to R&D work .

Practical takeaway: Review contractor arrangements carefully, especially overseas, to confirm qualifying spend.

3. Subcontracted R&D

Subcontracted R&D can be complex. Key points under the merged scheme (from 1 April 2024 ):

The SME vs. RDEC distinction is largely gone.
Eligibility depends on who decided to carry out the R&D and who planned the work .
Only the company making these decisions can claim subcontracted costs.
Overseas subcontractor costs generally do not qualify , unless UK conditions cannot be reproduced.

Many UK startups prefer UK-based subcontractors for IP protection and R&D relief.

4. Software, Data, and Cloud Computing Costs

Modern R&D relies heavily on cloud and data pipelines. HMRC recognises:

Data licences: Fees for datasets used in R&D (e.g., training ML models).
Cloud computing: Storage, virtual machines, operating systems, and platforms used in R&D.

Claimable costs: Directly used for qualifying R&D.

Non-claimable costs: Non-R&D parts of the business or routine hosting of live products.

Tip for SaaS: Segment cloud spend between R&D environments and production hosting.

5. Consumables, Materials, and Prototypes

Consumables are materials used up or transformed in R&D, including:

Prototype hardware boards
Chemicals or components
Third-party API credits for testing

Key test: The item must be consumed in the experiment, not become a finished product sold to customers.

Once a prototype becomes a product or capital asset, that portion is excluded .

6. Clinical Trial Volunteers

Relevant for life sciences, not software companies. Payments to trial subjects remain qualifying expenditure if related to eligible R&D.

7. Grants, Subsidies, and the Merged Scheme

Under the old SME regime, grants could restrict claims. Under the merged scheme:

No blanket restriction on subsidised costs.
Grants must still be disclosed , and double-claiming must be avoided.

Costs You Cannot Claim

HMRC explicitly excludes:

Production and distribution of goods/services
Capital expenditure on plant, machinery, or buildings
Cost of land
Patents and trademarks
General rent, rates, or leasing costs

Capital expenditure may qualify for separate R&D capital allowances , but not under the merged R&D scheme.

Practical Approach to Cost Mapping

Start with the project narrative .
Map staff time, contractors, cloud usage, and materials to specific R&D activities.
Document allocations with timesheets, sprint boards, or statements of work .
Segment cloud spend into R&D vs. production.

Accuracy matters more than ever under the merged scheme, especially for overseas and subcontracted costs.

Why This Matters

The merged scheme and Additional Information Form mean HMRC focuses on evidence, not just numbers .

Poorly allocated costs or overseas contractors without justification increase enquiry risk.
Clear documentation improves the chance of a smooth claim.

�� To help you get started, we’ve put together a simple checklist to map your qualifying costs and make your R&D claim easier.

Ready to Review Your R&D Cost Base?

If you are not sure which of your costs qualify under the merged scheme, we can help.

At OnTheGo Accountants , we help tech and SaaS founders:

Review projects and identify qualifying R&D activities
Map staff, contractor, cloud, and consumable costs
Handle overseas and subcontractor complications
Prepare Additional Information Forms and supporting reports

If we think a cost or even an entire project does not meet the standard, we will tell you. Protecting the integrity of your claim is more important than inflating the number on the tax return.

Contact: info@onthegoaccountants.co.uk to book a free 30-minute R&D consultation .

Autumn Budget 2025 – What It Means for You and Your Business

Wed, 26 Nov 2025 18:01:52 GMT

Written by:

Sophie Daykin

Tax Partner

Autumn Budget 2025: Key Updates and What They Mean for You

For tech founders and fast-growing startups, every Budget has the potential to shape hiring plans, runway, and long-term strategy. Although this year’s Autumn Budget didn’t introduce any policy changes aimed directly at the tech sector, the broader measures announced by Chancellor Rachel Reeves will still affect how startups plan for the year ahead. At OnTheGo Accountants, we’ve broken down the announcements so you can understand how the changes influence both personal finances and business operations.

1. Employment Costs Are Set to Rise

One of the most immediate changes for employers is the update to the National Living Wage and apprenticeship rules.

Updated National Living Wage Rates (from 1 April 2026)

The government has confirmed the Low Pay Commission’s recommendations, meaning hourly wages will increase across all age groups:

21+ rate: rising to £12.71 (4.1% increase)
18–20 rate: rising to £10.85 (8.5% increase)
16–17 rate: rising to £8.00 (6% increase)

These changes will particularly affect businesses planning to expand their teams in 2026, especially those with entry-level or junior staff.

Apprenticeship Support for SMEs

Small and medium-sized businesses stand to benefit from strengthened apprenticeship measures:

Full government funding for training apprentices under 25 in SMEs (ending the previous 5% employer contribution)
Apprentice minimum wage increasing to £8.00 per hour

This may make apprenticeships a more attractive option for companies looking to grow talent from within.

2. Changes to Family Support & Personal Taxes

Several adjustments to the benefits and tax system will impact households in different ways.

Universal Credit and Child Benefit

The “ two-child limit ” in Universal Credit is being abolished, meaning support will now be provided for all children in eligible families.
Plans to move the High Income Child Benefit Charge to a household-based system have been dropped. The existing individual income system stays in place:
The charge begins when one person earns over £60,000
The benefit is fully removed at £80,000

Frozen Personal Tax Thresholds

Tax thresholds will remain unchanged until 2031. This essentially means more people may move into higher tax brackets over time, even without major salary increases.

3. Business Taxation & Future Planning

The Budget included several measures relevant to business owners and company directors.

Business Rates

Retail, hospitality, and leisure businesses will receive permanently reduced business rates. To balance this, properties at the top end of the value scale—such as large distribution centres—will face a higher multiplier.

Employee Ownership Trusts (EOTs)

The tax relief available when selling a business to an Employee Ownership Trust is being scaled back:

Capital Gains Tax relief reduced from 100% to 50%
This could change the appeal of EOT structures for future succession planning.

Corporate Tax Stability

The government has confirmed a Corporate Tax Roadmap designed to keep the main rate stable, giving businesses more clarity for long-term planning.

UK Listing Relief

A new Stamp Duty Reserve Tax relief will be introduced to support companies looking to list in the UK, part of a wider plan to strengthen the domestic market for scaling firms.

4. Wealth, Assets, and Personal Financial Planning

A series of adjustments aim to bring taxation on investment and asset income more in line with earnings from work.

Dividend and Capital Gains Tax Increases

Tax on both dividends and property-related income will rise, which will affect directors who rely on dividend payments or those with investment portfolios.

Pension Salary Sacrifice Cap (from 2029)

National Insurance relief on salary sacrifice pension contributions will be limited to £2,000 per person. Higher-earning directors and employees will notice the biggest impact.

Electric Vehicle Levy

Owners of electric vehicles will soon need to report and pay a per-mile contribution, reflecting falling fuel duty revenues.

Final Thoughts: How to Prepare Now

This year’s Budget brings a mix of cost increases and targeted support. While rising wage requirements will add pressure for many employers, the expanded apprenticeship funding may help offset some of the burden. On the personal side, the combination of frozen tax thresholds and tighter pension rules means individuals should review their financial planning sooner rather than later.

If you’d like help understanding how these updates affect your business or personal finances, OnTheGo Accountants is here to support you through the 2025/26 changes.

Building a Bulletproof R&D Claim – How to Use HMRC’s R&D Online Eligibility Checker

Fri, 14 Nov 2025 18:27:08 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Introduction: why R&D claims matter

The UK’s research and development (R&D) tax relief regime is one of the most generous innovation incentives in the world. For tech start‑ups and scale‑ups, R&D relief provides a direct cash boost or corporate tax reduction that can help fund product development, data‑science projects or engineering experiments. In recent years the UK government has tightened its rules and moved to a merged R&D scheme: the SME scheme and RDEC have been streamlined with changes to overseas subcontracting, subsidised costs and the R&D intensity threshold. This means founders must stay on top of changing guidance and ensure claims are defensible from the start.

As well as releasing updated legislation, HMRC launched an R&D online eligibility checker – a free web tool designed to help companies assess whether their project includes qualifying R&D. This article explains how the checker works, its advantages and limitations, and provides a comprehensive guide to building a bulletproof R&D claim. We also look at the most searched keywords and frequently asked questions around R&D to optimise the article for founders searching for a trusted R&D advisor.

HMRC’s R&D online eligibility checker – what is it and how does it work?

HMRC’s online eligibility checker (also referred to as the R&D online checker or eligibility tool) is an interactive questionnaire hosted on GOV.UK. Launched in 2024 alongside the merged R&D scheme, the tool asks a series of yes/no questions about your project: what problem you are trying to solve, whether there is scientific or technological uncertainty, who does the work and whether it is conducted in the UK. Based on the answers, the checker gives a general indication of whether the work might qualify under the R&D rules.

Key features:

Guided questions – users answer a handful of multiple‑choice questions about their project. HMRC’s tool explains the concept of a “technological uncertainty” and stresses that the outcome must not be readily deducible by a competent professional.
Quick result – at the end, the tool provides a message such as “Your project appears to meet the definition of R&D” or “Your project is unlikely to meet the definition”.
Next steps – the checker links to HMRC guidance on claim preparation and to the additional information form (AIF) that must accompany corporate tax returns.

Benefits

Initial self‑assessment – start‑ups can quickly test whether a project is likely to qualify before committing to a full claim.
Awareness of key concepts – the tool educates users about the need for technological uncertainty and independent R&D. This is helpful for founders unfamiliar with R&D terminology.
Free and anonymous – no login or personal information is required, making it low‑risk for initial screening.

Drawbacks

Limited depth – the tool provides a binary answer and cannot assess nuanced projects. It does not replace professional judgement.
No expenditure calculation – there is no facility to estimate potential benefit or to distinguish between qualifying and non‑qualifying costs.
No record‑keeping advice – HMRC’s tool does not help with building the detailed technical narrative or cost breakdown needed for a claim.

Therefore, while useful as a first pass, the HMRC checker should not be the sole basis for decision‑making. Companies still need to build robust evidence and consider complex rules such as subcontracting, overseas work or state aid interaction.

Building a bulletproof R&D claim: a step‑by‑step guide

To maximise your claim and reduce the risk of enquiry, follow these steps:

1. Define the problem and the uncertainty

A qualifying project must aim to achieve an advance in science or technology and involve technological uncertainty. Write a problem statement that explains why the work could not be easily solved by a competent professional. For software, this might involve developing a new data‑processing algorithm that no existing library could handle; for engineering, it might mean creating a material that withstands extreme temperatures. Avoid marketing language and focus on the technical gap.

2. Record your process from day one

HMRC expects contemporaneous evidence. Keep a log of experiments, sprints or design iterations. Record failures as well as successes; the point is to demonstrate a problem was non‑trivial. Link time sheets and payroll data to specific R&D tasks and retain signed notes from the competent professional who directed the work. For each cost, note whether it relates to staff, subcontractors, software or consumables.

3. Map qualifying and non‑qualifying costs

Under the merged scheme, eligible costs include:

Staff costs – salary, employer NIC and pension for employees involved in R&D (apportion for partial time). Do not include sales or admin staff.
Externally provided workers (EPWs) – agency workers may qualify only if they are UK‑based and under your direct supervision.
Subcontracted R&D – only costs where you control the work and own the intellectual property. Overseas subcontractor costs are excluded unless specific exceptions apply.
Software and cloud computing – costs for platforms used exclusively for R&D (e.g., compute for training machine‑learning models).
Consumables – materials consumed or transformed during experiments.

Exclude marketing, sales, overheads, or any work done after the uncertainty has been resolved.

4. Choose the right scheme and check the intensity threshold

Under the merged scheme, most companies claim a 20 % expenditure credit (about 15–16 % net). If your company is loss‑making and R&D‑intensive (qualifying R&D makes up at least 30 % of total expenditure), you may be able to claim under the Enhanced R&D Intensive Support (ERIS) with a higher credit. Check your expenditure projections early in the year to see which category you fall into.

5. Handle state aid and grants correctly

If your project is supported by grants (e.g., Innovate UK), it may be classed as state aid. Under the new regime, subsidised R&D is not automatically excluded, but you must disclose the funding and apportion costs accordingly. Keep the grant award letter and record the aid basis (de minimis, notified or minimal financial assistance). If you have received de minimis aid, remember it counts towards the €200 000 three‑year cap (the same cap applies to SEIS). HMRC will expect to see that you have kept track of this.

6. Prepare the technical narrative

HMRC requires an additional information form (AIF) alongside your corporate tax return. Write a narrative that:

Introduces your company and project in plain language.
Defines the technological uncertainty and the advance sought.
Outlines the stages of the project and the experiments or iterations performed.
Describes any failures and how they informed the next steps.
Concludes with the outcome and the advance achieved.

Attach supporting documents where possible, such as design sketches, test results or code snippets. Avoid marketing material.

7. Submit and respond swiftly

File the claim through your corporation tax return and the AIF. After submission, keep project records for at least six years in case of enquiry. If HMRC requests further information, respond promptly and provide only the requested documents. Avoid speculating; if a question is unclear, seek advice.

Frequently searched questions and answers

Keywords and questions frequently searched by founders include:

What counts as R&D for software? – Work qualifies if it overcomes technological uncertainty. Using off‑the‑shelf libraries or building CRUD applications does not.
Can I claim for R&D done overseas? – Only if the work could not be done in the UK for technical or legal reasons. The merged scheme is much stricter on overseas subcontracting.
How does the 30 % intensity threshold work? – It measures the proportion of total company expenditure that is qualifying R&D; hitting the threshold may allow access to the ERIS higher rate.
Do I need to tell HMRC about grants? – Yes. You must disclose all state aid or subsidies in both advance assurance and the claim. Some grants may reduce the eligible expenditure, but under the merged scheme they can still form part of a claim if disclosed and apportioned.
What happens in an HMRC enquiry? – HMRC may ask for logs, technical narratives, cost breakdowns and evidence of uncertainty. If the evidence is robust, most enquiries end without adjustment. If not, HMRC may disallow some costs and charge penalties.

Conclusion and call to action

Preparing an R&D claim is not just about ticking boxes; it is about telling a technical story that demonstrates genuine innovation. Using HMRC’s R&D eligibility checker is a sensible first step, but it is no substitute for a comprehensive approach. By defining your uncertainty, recording your process in real time, mapping costs correctly and writing a clear narrative, you will build a claim that can withstand HMRC’s scrutiny. This is especially important under the new merged R&D scheme, which introduces the 20 % credit, 30 % R&D intensity test and tighter overseas rules.

If you want expert support to prepare or review your claim, OnTheGo Accountants can help. We specialise in tech start‑ups and scale‑ups, offering:

R&D claim preparation and review
Advice on state aid, SEIS/EIS interaction and Innovate UK grants
Record‑keeping systems and template documentation
Representation in HMRC enquiries

Book a free consultation by emailing info@onthegoaccountants.co.uk . We will explain how the new rules affect your business and help you build a bulletproof claim.

What Counts as R&D in 2025? A Founder’s Guide to Qualifying Innovation

Sat, 18 Oct 2025 18:57:57 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

What Counts as R&D in 2025? A Founder’s Guide to Qualifying Innovation

Innovation is everywhere at the moment. Every founder talks about it, every investor expects it, and HMRC rewards it through R&D Tax Relief. Yet, in 2025, the question “what actually counts as R&D?” is tripping up thousands of startups.

This guide sets out what HMRC really means by research and development, how the new merged R&D scheme changes things from April 2024, and what you should be doing to build a claim that stands up to scrutiny.

Why R&D Tax Relief Matters

For growing tech and SaaS companies, R&D Tax Relief can be the difference between a short runway and long-term sustainability. It turns innovation costs into a tangible cash benefit. According to HMRC’s September 2025 statistics, UK companies claimed £46.7 billion of qualifying R&D expenditure in 2022-23. The number of SME claims fell by more than 20 percent and HMRC now estimates that around one in seven claims contain errors.

That tells us two things. The incentive is still huge, but HMRC is taking a tougher stance on evidence and eligibility. The opportunity remains, but you need to get it right.

Understanding HMRC’s Definition of R&D

HMRC defines qualifying R&D as a project that aims to achieve an advance in science or technology and seeks to resolve scientific or technological uncertainty. In simpler terms, your team must be trying to do something that was not readily achievable at the start and where a competent professional in your field could not easily find the answer.

If your engineers are building new algorithms, experimenting with machine-learning models, integrating complex APIs, or tackling difficult design constraints, there is a good chance that qualifies. The critical point is that you must describe the uncertainty and how you tried to overcome it. HMRC is not interested in how profitable your project was; they want to see that you genuinely pushed technical boundaries.

What Usually Does Not Qualify

Plenty of impressive work still falls outside the scheme. HMRC continues to exclude activities that are purely commercial, aesthetic, or routine. Marketing research, user-interface tweaks, or refactoring code without any technical challenge are not R&D. Neither are tasks where the outcome is already known.

Work carried out overseas is also restricted. Under the current merged R&D scheme, most overseas subcontractor and externally provided worker costs no longer qualify unless you can show specific exceptions, such as a requirement to perform the work abroad because of physical or legal constraints. It is also important to note that only one party in the contractual chain can claim for a particular piece of work, and that will usually be the company that commissions and controls the development.

What Has Changed Since April 2024

The New Merged R&D Scheme

From April 2024 the SME and RDEC schemes were combined into a single R&D Expenditure Credit model. Almost all companies now claim through the same process. The new structure provides an above-the-line credit of 20 percent, which after corporation tax delivers an effective benefit of roughly 15 to 16 percent.

For loss-making startups with very high research intensity, HMRC has introduced Enhanced R&D Intensive Support. If at least 30 percent of your total company expenditure relates to R&D, you may qualify for a higher relief rate even if you are not yet profitable. This is designed to help deeply innovative companies that are still in their development phase.

Subcontracting and Overseas Work

The biggest shift is in how HMRC treats subcontracted and overseas work. If you subcontract development to another company, only one party can claim the costs, and in most cases that is the business commissioning and controlling the work. When work is performed outside the UK, those costs are generally excluded unless there is a genuine and unavoidable reason the work had to take place overseas.

This means founders must map out their R&D supply chain carefully. Know who is doing the work, where they are doing it, and under what contract terms. Keep written evidence that you own the IP and that you manage the direction of the technical work.

Subsidised or Grant-Funded Projects

Another change worth noting is how the merged scheme deals with subsidies and grants. In the old SME scheme, any subsidised R&D could be disqualified. Under the new merged system, HMRC takes a more flexible view. Projects that receive grant funding can still qualify, but you must disclose the source and type of funding and identify which costs are covered by the grant.

How to Structure and Record Your R&D Projects

The key to a defensible claim is structure and documentation. Think of every piece of development as a mini-experiment. Break your project into clear phases with defined objectives, challenges, and technical hurdles. Capture what you tried, what failed, and what finally worked.

Keep detailed records:

project logs or sprint notes showing technical problems tackled
code versions or prototype iterations with comments explaining what changed
time records linking staff to specific R&D work
notes or diagrams from the competent professional overseeing the work

If you engage subcontractors, keep the contracts and statements of work that show you controlled the direction and retained the risks. HMRC values contemporaneous evidence far more than retrospective summaries.

Frequently Asked Questions

Do overseas costs ever qualify?
Usually not, but if the work could only be performed abroad due to environmental or regulatory factors, you can include it. You will need to justify that exception clearly.

What is the Enhanced R&D Intensive Support scheme?
It is a separate benefit for loss-making companies where at least 30 percent of total expenditure is R&D. It allows a higher payable credit, designed to keep innovation moving even before profitability.

Can projects supported by Innovate UK or similar grants still claim?
Yes. Under the merged scheme, subsidised projects are no longer automatically excluded. You must disclose the funding and apportion the costs properly, but claims remain possible.

When do the new rules apply?
They apply to accounting periods beginning on or after 1 April 2024. If your year-end is December, you will first apply the merged scheme for your 2025 return.

Why This Episode Matters

Correctly defining R&D is the foundation of every successful claim. Misunderstanding what qualifies leads to disallowed costs, wasted time, and in some cases HMRC enquiries that drag on for months. When you know the criteria and build your evidence as you go, you protect your company and make future claims faster and safer.

Ready to Review Your R&D Projects?

 Book a Free 30-Minute Consultation
Email info@onthegoaccountants.co.uk to arrange a short call. We will review your projects, highlight potential eligibility, and explain what records to start keeping so your next claim is simple and defensible.

R&D Tax Relief 2025: Founder’s Guide to the New Merged Scheme

Sat, 18 Oct 2025 18:38:23 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

R&D Tax Relief in 2025: The Founder’s Guide to Innovation, Incentives & HMRC

If SEIS helped you raise capital, R&D Tax Relief is how you turn that investment into innovation. It’s the UK’s flagship incentive for founders building new technologies, testing AI models, automating systems, or solving tough engineering problems.

But the rules have changed, again. HMRC’s new merged R&D scheme came into effect for accounting periods beginning on or after 1 April 2024, unifying the old SME and RDEC regimes into one framework. This has blurred lines, tightened compliance, and left many startups wondering:

Do we still qualify? How do we evidence R&D correctly? And how do we avoid an HMRC enquiry?

This series unpacks the answers.

Why R&D Tax Relief Matters More Than Ever

According to HMRC’s September 2025 statistics, UK companies claimed £46.7 billion in qualifying R&D expenditure in 2022-23, but the number of SME claims fell by more than 20 %. HMRC now estimates error and fraud rates of 7.8 % overall and 14.6 % for SMEs.

That means one in seven claims could be challenged or denied.

So while R&D Tax Relief remains an incredible opportunity, it’s also a risk area for fast-growing startups. The aim of this series is to help founders:

Understand what counts as R&D under HMRC’s definition of “scientific or technological uncertainty”.
Navigate the new merged R&D scheme (2024/25), including the 20 % R&D intensity threshold, subcontractor limits, and overseas-spend rules.
Learn how to evidence R&D activities correctly; logs, competent-professional notes, baseline research, and technical documentation.
Avoid audit triggers and clawbacks by following a defensible, evidence-based claim process.
Clarify how R&D interacts with State Aid, de minimis grants, SEIS/EIS funding, and Innovate UK support.
Build internal record-keeping systems that satisfy HMRC’s guidance without creating admin nightmares.
Benchmark against real case studies from software, AI and engineering startups that got it right; and those that didn’t.

What You’ll Learn in This Series

Over the coming weeks, we’ll break down every stage of the R&D journey, from understanding eligibility to surviving an HMRC enquiry ,using plain English and real startup examples.

What Counts as R&D in 2025?
We translate HMRC’s definition of “scientific or technological uncertainty” into startup-friendly language.
Building a Bulletproof R&D Claim
How to structure your technical narratives, evidence your baseline, and identify the “competent professional.”
The New Merged R&D Scheme Explained
SME vs RDEC is now one scheme, we’ll unpack the new rates, intensity thresholds, and who wins or loses.
Record-Keeping for R&D: What HMRC Actually Wants
Turn ad-hoc notes and GitHub commits into compliant records HMRC will respect.
R&D and State Aid: Grants, SEIS & de minimis Headroom
Clarifying when aid counts toward limits and how to disclose correctly.
Surviving an HMRC R&D Enquiry
A founder’s guide to audit readiness: templates, communication tips, and what to do if you get “the letter.”
Advanced R&D:AI, Software & Data Science
How HMRC now distinguishes scientific vs commercial uncertainty in software and machine-learning projects.
R&D in Groups & Overseas Spend
The latest subcontractor and EPW rules and how to keep eligibility.
The R&D Founder Checklist (2025 Edition)
A downloadable questionnaire for internal pre-submission checks.

Why We’re Writing This

We’ve supported dozens of UK tech and SaaS companies through HMRC enquiries, revised AIFs, and complex claim reconciliations. Our goal with this series is simple: to make R&D Tax Relief understandable, defensible, and scalable.

If you’ve raised under SEIS or EIS and are now investing in development, this is the next stage of your funding lifecycle.

Follow the series, bookmark the guides, and if you’re unsure whether your project qualifies, get in touch.

The SEIS/EIS Cheat Sheet; Your Complete Founder Checklist

Fri, 10 Oct 2025 08:04:50 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

The SEIS/EIS Cheat Sheet; Your Complete Founder Checklist (2025 Edition)

If you’ve followed this series from start to finish, you now know how SEIS and EIS can turn investor interest into real capital. But with generous reliefs come exacting rules, and it’s surprisingly easy to miss one small condition that sends you back to square one.

This final guide brings everything together into a single, practical reference for founders and advisors. It’s the list we use internally before every raise or compliance submission, designed to keep you HMRC-compliant and investor-ready.

Why the Details Matter

SEIS and EIS lower investor risk, but HMRC tests every condition before granting relief. The company must meet strict age, size, trading and funding limits; investors must hold qualifying “full-risk” shares; and the money must be used for genuine growth within two years.

Tick all the right boxes and you’ll glide through advance assurance and compliance. Miss one, and you could lose reliefs worth thousands.

The SEIS/EIS Founder Checklist

1 Company Eligibility

Company under three years old (SEIS) or under seven years for EIS 10 for knowledge-intensive companies.
Fewer than 25 full-time employees (SEIS) / 250 (EIS).
Gross assets below £350 000 before SEIS issue / below £15 million before EIS.
Qualifying trade only no excluded activities (property letting, financial services, energy generation etc.).
If part of a group, the SEIS/EIS company must be the top parent, not controlled by another entity.

2 Investment Limits and Timing

Raising no more than £250 000 (SEIS) and £5 million (EIS) in any 12-month period (EIS lifetime limit £12 million £20 million for KICs).
SEIS shares must be issued before EIS shares, ideally on separate days, never simultaneously.
You can file your SEIS compliance once you have either traded for four months or used at least 70 % of the funds.
Funds must be used within two years for qualifying growth purposes, not to repay loans or buy existing businesses.

3 Advance Assurance Preparation

A clear, credible business plan and financial forecast showing how the funds will be used.
Evidence of genuine investor interest (even indicative emails).
A summary of all State Aid or grants received within three years, specifying which were de minimis or MFA.
Ordinary shares only, fully paid in cash, no redeemable or preference rights.

4 During the Raise

Issue only new, full-risk ordinary shares (no guaranteed returns or redemption rights).
Board minutes and subscription agreements dated and executed before SH01 filing.
Share certificates issued promptly and Companies House updated (Form SH01).
For combined SEIS/EIS rounds, keep tranches clearly separated and document each issue date.

5 After the Raise Compliance Statements

File SEIS1/EIS1 after four months of trade or after spending 70 % of funds; always within two years of the end of the tax year of issue.
Attach share register and investor list.
Explain the commercial purpose and use of funds.
HMRC issues a reference and approval, then you can send SEIS3/EIS3 certificates to investors.

6 Ongoing Compliance (Three-Year Holding Period)

Avoid disqualifying events. no repurchase of shares, no change of control, no loan repayments to investors.
Maintain accurate records showing that funds were used as planned.
Record and report any new grants or State Aid received during the period.

7 State Aid and Grant Interaction

SEIS counts towards the €200 000 de minimis aid cap over a rolling three years (up to the investment date).
MFA awards (£315 000 limit under UK Subsidy Control Act) do not reduce SEIS headroom but should still be disclosed.
Keep grant letters showing the aid basis (de minimis / MFA / notified).

8 Investor Relations and Record-Keeping

Send investors periodic updates on fund usage and growth milestones.
Store all HMRC letters, SEIS/EIS certificates and board minutes in one secure folder for future due diligence.

Why This Matters

Every successful raise balances ambition with compliance.

A clear audit trail; from investor communications to HMRC approvals, is what allows your next round to close faster.

At OnTheGo Accountants, we prepare founders for SEIS/EIS from the first investor conversation to the last compliance certificate, ensuring no technical condition undermines commercial momentum.

�� For a fillable version of this questionnaire, email info@onthegoaccountants.co.uk.

Delaware Flip Done Right: How We Helped a UK Tech Startup Expand to the US Without Paying Stamp Duty

Tue, 07 Oct 2025 17:55:13 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Thinking about a Delaware Flip?

For many UK tech founders, it’s the step that unlocks global growth. US venture capital, accelerator programmes like Y Combinator, and a huge market of early adopters often sit just beyond reach until your company has a Delaware parent.

But a flip isn’t just about registering in the US. If it’s handled without the right tax and accounting advice, it can trigger UK Stamp Duty, fall foul of anti-avoidance rules, or even confuse your company’s legal structure across two jurisdictions.

Here’s how we guided one SaaS startup through the process securing full Stamp Duty relief, staying compliant with HMRC, and leaving them investor-ready for a leading US accelerator.

Why UK Startups Are Flipping to Delaware

For ambitious UK tech businesses, the US is usually part of the long-term plan. It’s home to the biggest venture funds, the world’s best-known accelerators, and many of the customers who set global trends.

To participate, however, investors often insist that a Delaware-incorporated parent company sits at the top of the structure. A Delaware Flip achieves this by creating a new Delaware holding company and exchanging the existing UK shareholders’ shares for shares in that US entity. The UK company becomes a wholly owned subsidiary, continuing its day-to-day trading as before, but now part of a US-headed group.

Conceptually, it’s simple. In practice, the tax and compliance steps are highly technical.

The Risks If You Get It Wrong

Transferring shares in a UK company normally attracts 0.5 % Stamp Duty, even where no cash changes hands. Relief under Section 77 of the Finance Act 1986 is available for share-for-share exchanges, but it only applies when very specific conditions are met:

The acquiring company must issue its own shares (not cash or loan notes) in exchange.
Those shares must be issued in the same proportions and with equivalent rights to the shares being transferred.
The arrangement must have a bona fide commercial purpose and not form part of any scheme whose main purpose is tax avoidance.

Since 2016, an additional rule Section 77A FA 1986 can block relief where there are disqualifying arrangements in place. These are agreements or understandings that transfer control of the acquiring company, now or later, as part of a wider plan. Founders need to be sure that no such arrangements exist when the flip takes place.

Even when the technical tests are met, HMRC’s Stamp Taxes team will scrutinise the paperwork closely. An informal opinion from HMRC can help identify early red flags, but it isn’t binding; full relief only comes once the formal adjudication is granted.

Finally, the corporate housekeeping must be perfect: UK share registers, Stock Transfer Forms, and Companies House filings must all align with the new Delaware documents. Any mismatch will raise questions during US investor due diligence.

Case Study: A UK SaaS Company Expanding to the US

A high-growth UK software business building AI-driven products was invited to join a major US accelerator. To participate, they needed a Delaware top-holding company but were concerned about the tax and compliance risks.

Their three biggest worries were:

Triggering Stamp Duty on the share-for-share exchange
Falling within the anti-avoidance rules under Sections 77 and 77A FA 1986
Managing the complex filings required in both the UK and US

Here’s how we managed the process.

Step 1 — Early Planning and Risk Analysis

We began with a full review of the company’s structure, investor pipeline, and timing. Planning before the Delaware entity is even formed is crucial. We assisted in the mapping of the transaction to meet all Section 77 conditions ensuring matching share rights, no cash or debt consideration, and clear commercial rationale. We also checked for any convertible instruments, options, or SAFEs that might need special handling in the exchange so they didn’t jeopardise the relief.

Step 2 — Engaging HMRC Upfront

Before any share transfers took place, we provided HMRC’s Stamp Taxes team with a clear summary of the proposed transaction and requested informal feedback. HMRC confirmed there were no immediate concerns that would block relief, giving the founders early reassurance. Importantly, we explained that this comfort wasn’t final, a formal adjudication would still be required.

Step 3 — Perfecting the Paperwork

We then prepared and/or reviewed the core documents:

A Share Exchange Agreement setting out the transaction mechanics
Stock Transfer Forms for each shareholder
Updated registers of members for both the UK and Delaware entities
Companies House filings, including an updated Confirmation Statement (CS01) showing the new Delaware shareholder

Each document mirrored the others exactly. This consistency is essential both for HMRC’s review and for later investor due diligence.

Step 4 — Formal Section 77 Claim

We compiled a detailed Section 77 claim pack for HMRC adjudication. It included the commercial rationale, confirmations that no disqualifying arrangements existed, evidence of share equivalence, and all supporting corporate records.

We also addressed the anti-avoidance provisions directly, explaining the genuine commercial motive for access to US investment and accelerator participation rather than any attempt to sidestep UK tax.

Step 5 — Outcome: Relief Granted and Investor-Ready

HMRC reviewed the submission and issued a formal letter confirming:

Full relief from Stamp Duty under Section 77 FA 1986
No disqualifying arrangements under Section 77A
Proper stamping of all Stock Transfer Forms
No SDRT charge arising

This gave the founders the clean legal position they needed for US investors. With the Delaware parent in place and no unexpected tax exposure, the company completed its accelerator placement and raised its next round successfully.

Why This Matters

A Delaware Flip can transform a company’s trajectory, but it’s not a quick formality. HMRC relief isn’t automatic, and minor inconsistencies can cause big delays. The process demands careful sequencing, precise documentation, and clear disclosure.

Handled properly, however, the outcome is powerful: full relief from Stamp Duty, investor-ready records, and a structure built for international growth.

How OnTheGo Accountants Helps

We specialise in guiding UK tech and SaaS founders through complex reorganisations and cross border structures, including Delaware Flips, EMI schemes, and VC fundraising. Our focus is on clarity, compliance, and commercial sense helping you scale globally without tripping over UK tax rules.

When we manage a flip, we:

Confirm that the structure meets Section 77 and 77A conditions
Liaise with HMRC from initial outline to formal adjudication
Review to help keep both UK and US filings fully synchronised
Review any convertible instruments or options pre flip
Advise on residency and control to prevent UK tax leakage

If you’re considering a Delaware Flip or US fundraising, speak to us early. Getting the structure right from the start saves time, cost, and stress later.

�� Contact OnTheGo Accountants to discuss your plans in confidence.

Avoiding SEIS/EIS Mistakes: Founder’s Guide 2025

Mon, 22 Sep 2025 18:55:10 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Avoiding Costly Mistakes with SEIS/EIS, What We’ve Learned from HMRC

SEIS and EIS are two of the most generous tax relief schemes in the world. They’re also tightly policed by HMRC. For founders, the schemes can be the difference between securing investment and struggling to get a round off the ground. But I’ve seen plenty of cases where companies lose eligibility, not because they were bad businesses, but because they tripped over the fine print.

In this post, I’ll walk through the common mistakes that derail SEIS and EIS applications, and what you can do to avoid them. These aren’t abstract rules, they’re based on real patterns I’ve seen in HMRC responses.

The Wrong Kind of Shares

This one crops up all the time. To qualify, SEIS and EIS shares must be full-risk ordinary shares . They can’t carry preferential rights to dividends, they can’t be redeemable, and they can’t include guarantees of return.

Yet I still see subscription agreements or articles that sneak in clauses giving investors priority over dividends or repayment. To an investor, it feels like good protection. To HMRC, it’s an automatic red flag. If the shares aren’t full-risk, the whole raise could be disqualified.

Filing Too Late

Timing is critical. HMRC gives you two years from the end of the tax year in which the shares were issued to submit your compliance statement. Miss that window, and investors lose their relief permanently.

I’ve seen founders leave compliance until months after the round closes, thinking they’ll deal with it later. Then something slips through the cracks, and before they know it, they’ve blown the deadline. Investors don’t forget that kind of mistake.

Missing Investor Details

Another common pitfall is failing to provide HMRC with full investor details. Each investor’s name, the number of shares, and the amount subscribed all need to be included. Vague or incomplete submissions lead to HMRC queries, which drag out the process.

This one usually happens when founders don’t keep good records at the point of subscription. If the details aren’t tracked at the time, trying to reconstruct them later becomes painful, and investors can’t claim their relief until everything matches up.

Overlooking State Aid Rules

We covered this in detail in the last blog, but it’s worth repeating here. SEIS counts as de minimis State Aid, subject to the €200,000 cap over three years. If you’ve also received de minimis grants, you may not be able to raise the full £250,000 under SEIS.

The mistake isn’t taking grants, it’s failing to check the aid basis. Some Innovate UK awards are de minimis, others are notified aid, and others fall under the UK’s new MFA rules. HMRC will expect you to disclose them all, and if you don’t, your SEIS application may be rejected or cut back.

Structuring the Round Incorrectly

Founders sometimes try to mix SEIS and EIS shares in the same issue, rather than sequencing them. But HMRC insists SEIS shares must be issued first. If you don’t separate them properly, ideally on consecutive days, you risk invalidating one or both parts of the round.

I’ve also seen founders issue shares in multiple small tranches across different dates, each of which then requires its own compliance statement. That multiplies the paperwork and compliance costs for no real benefit.

Advance Assurance vs Compliance: The Disclosure Trap

Another mistake is thinking that advance assurance (AA) is a guaranteed green light. It isn’t. HMRC bases AA on the information you provide, and sometimes founders hold back detail, either because they don’t know it matters, or because they’re worried it could jeopardise approval.

The problem comes later. When you file the compliance statement, HMRC sees the full picture: share agreements, Articles, cap tables, investor lists, and grant history. If anything looks different to what you presented at AA, or if crucial information was missing the first time, HMRC can block the compliance.

I’ve seen this happen where founders disclosed just enough to get AA, but didn’t mention side agreements or previous grants. The AA was approved, but the compliance was rejected. Investors had already subscribed by then, leaving the company in a difficult spot.

The lesson is clear: be transparent upfront. AA is only useful if it survives scrutiny at compliance stage. HMRC would rather see everything early than have to unpick discrepancies later.

FAQs

Q: What happens if HMRC rejects my compliance statement?
You can usually correct and resubmit, but it delays investor certificates. The bigger risk is if the rejection reveals a fundamental error, like issuing non-qualifying shares, in which case the relief is lost.

Q: Can I fix mistakes in my articles after the raise?
Generally, no. HMRC assesses the terms at the time of issue. Changing them later doesn’t make the original issue qualifying.

Q: What if I’ve already missed the filing deadline?
There’s no extension. If the two-year window is gone, the relief is gone. This is why compliance needs to be handled immediately after a round.

Q: Can HMRC claw back relief after approval?
Yes. If conditions aren’t met for three years after the share issue (for example, if the company starts an excluded trade), investors can lose their relief.

Practical Advice

The best way to avoid these mistakes is to treat SEIS/EIS compliance as part of the fundraising process, not an afterthought. Get your articles and subscription agreements reviewed before you issue shares. Keep meticulous records of who invested, how much, and when. Check the aid basis of every grant you’ve received. And don’t delay filing compliance, make it a priority the moment the round closes.

HMRC isn’t out to trip you up, but they are strict. They expect consistency, transparency, and timeliness. If you can show that, your application will usually go through smoothly.

Why This Matters

Investors back startups under SEIS and EIS because the relief makes high-risk bets more attractive. If you lose that relief because of avoidable mistakes, you don’t just harm this round, you damage your reputation for future ones.

Getting SEIS/EIS right isn’t about box-ticking. It’s about protecting investor trust and proving you’re a founder who understands the detail as well as the vision.

How We Can Help

At OnTheGo Accountants, we’ve seen every mistake in the book — and we know how to stop them before they derail your raise. From checking share structures to mapping State Aid, we help founders file clean, accurate, and timely submissions that keep investors happy.

If you want peace of mind that your SEIS/EIS round will stand up to HMRC scrutiny, get in touch at info@onthegoaccountants.co.uk.

Next in the series: SEIS/EIS Cheat Sheet — A Downloadable Checklist for Founders

SEIS, State Aid & De Minimis Rules

Fri, 19 Sep 2025 23:20:26 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

SEIS, State Aid & De Minimis Rules: What Founders Must Know to Stay Eligible

When founders think about SEIS, the focus is usually on the headline rules: your company must be under three years old, have fewer than 25 full-time employees, gross assets under £350,000, and raise no more than £250,000 in SEIS funding.

But there’s a quieter set of rules that can trip founders up the State Aid framework, and in particular, the de minimis aid cap . Ignore it, and you could find yourself restricted or even disqualified from raising the full SEIS amount.

Why State Aid Still Matters for SEIS

SEIS is classed as a form of State Aid . That means it doesn’t exist in isolation. HMRC has to check whether your company has already benefited from other State Aid before deciding if your SEIS raise is valid.

This matters because State Aid isn’t just about investment schemes. Grants, subsidies, and other targeted government support can all count towards the total. If you’ve already tapped into these, they eat into the room you’ve got left for SEIS.

The De Minimis Cap Explained

The de minimis cap is a rolling three-year limit of €200,000 on State Aid a company can receive. Yes, it’s still calculated in euros even post-Brexit, because the UK retained this framework in parallel with the newer Subsidy Control rules. HMRC assesses against the euro value at the grant or investment date; in practice, founders just track the nominal figures and let advisors handle FX checks if they’re close to the line.

Note: Since 4 January 2023, the UK also has “Minimal Financial Assistance” (MFA) under the Subsidy Control Act (currently £315,000 over three fiscal years). HMRC has confirmed SEIS remains a legacy de minimis scheme, so MFA awards don’t reduce your SEIS allowance — only de minimis awards do.

SEIS counts toward the €200,000 ceiling. So do many Innovate UK grants, regional development funds, and even some COVID-era support where they were categorised as de minimis aid.

If you’ve already received, say, €50,000 of qualifying grants, your SEIS headroom is reduced by that same amount. Instead of the full £250,000, you might only be able to raise around £210,000.

What About EIS?

EIS sits under a different category of State Aid it’s “notified aid” under risk finance guidelines. This means the €200,000 de minimis cap doesn’t apply to EIS.

That said, other forms of notified aid can reduce your EIS headroom. For example, a large notified innovation grant could eat into the £5m annual or £12m lifetime EIS limits that run alongside the scheme. So while SEIS is directly constrained by de minimis, EIS interacts with State Aid in other ways.

Common Pitfalls

One of the most common mistakes is taking a large Innovate UK grant and then trying to raise the full SEIS allowance without checking the grant’s aid basis. If the grant was de minimis, it reduces your SEIS headroom pound-for-pound; if it was notified aid or MFA, it may not.

Another trap is assuming EIS automatically solves the problem. While EIS isn’t subject to de minimis, HMRC still expects a full disclosure of all prior aid and will test how other subsidies interact with your EIS limits.

FAQs

Can I still raise SEIS if I’ve had a grant?
Yes, but you need to check the aid basis. If the grant was de minimis, it reduces your SEIS allowance. If it was MFA or notified aid, it may not.

Do I need to disclose all grants to HMRC?
Absolutely. Both at the advance assurance stage and when you file the compliance statement, HMRC expects a full list of prior aid. Omitting this can cause delays or rejections.

Does EIS count towards de minimis aid?
No. EIS is notified aid, not de minimis. That’s one reason it’s often easier to use once SEIS is maxed out.

What happens if I breach the €200,000 cap?
You won’t be able to qualify the full SEIS raise. HMRC will restrict or deny relief for the portion that breaches the limit.

Practical Advice

The safest approach is simple: keep records. Every time your company receives a grant, subsidy, or other support, note the amount, the source, the date, and crucially the aid basis shown on the grant letter (de minimis / MFA / notified). That determines whether it chips away at SEIS.

When you apply for SEIS advance assurance, disclose everything. HMRC will always prefer a clear, transparent application over one that leaves questions unanswered.

If you’re close to the €200,000 cap, you may need to adjust strategy — perhaps splitting between SEIS and EIS, or timing a grant so it falls outside your rolling three-year window.

Why This Matters

For many startups, SEIS is the gateway to their very first round of investment. But HMRC doesn’t just test the SEIS rules in isolation. If you ignore State Aid and de minimis limits, you could disqualify yourself without even realising it.

The good news is that with planning, disclosure, and advice, these issues are manageable. SEIS is still one of the most generous early-stage funding schemes in the world — but you need to respect the fine print.

How We Can Help

At OnTheGo Accountants, we’ve helped founders raise SEIS alongside Innovate UK grants, R&D tax credits, and other forms of State Aid. We know how to map out the funding picture, identify risks, and present it cleanly to HMRC.

If you’re raising under SEIS and already have grant support in the mix, we can help you avoid nasty surprises. Get in touch at info@onthegoaccountants.co.uk.

SEIS/EIS & Multiple Companies: Avoid Disqualification Risks

Sat, 13 Sep 2025 08:40:54 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Founders with Multiple Companies: Navigating the Risk of SEIS/EIS Disqualification

It’s one of those questions I hear almost every week: “I’ve got more than one company, can I still raise under SEIS or EIS?”

The short answer is yes, but with caveats. HMRC looks very closely at founders with multiple businesses, and the wrong structure can easily disqualify your round. If SEIS/EIS is the lifeblood of your fundraising strategy, you need to understand how these rules work.

Why Multiple Companies Raise Red Flags

SEIS and EIS were designed to support genuinely early-stage, high-risk businesses. If a founder is connected to other companies, HMRC worries that money will leak into the wrong place, that relief will subsidise something ineligible, or that the “startup” isn’t really as early stage as it looks.

The rules don’t ban founders from being involved in more than one company but they do test whether the company raising funds is genuinely independent, genuinely trading in a qualifying activity, and not part of a wider structure that bends the spirit of the schemes.

Group Structures and Subsidiaries

This is where many founders stumble. If your SEIS/EIS company owns, or is owned by, another company, HMRC applies strict conditions.

The company raising under SEIS/EIS must be the parent at the top of the group. Subsidiaries are allowed, but they must be at least 90% owned and carry out qualifying activities.
If the SEIS/EIS company is itself controlled by another entity, it won’t qualify. Investors want reassurance that the company they’re backing is the genuine trading vehicle.

So if you’ve got multiple ventures, you need to be clear which one will be the “vehicle” for investment, and how its relationship with other entities is structured.

Connected Persons and Control

HMRC also looks at “connections” between investors, founders, and other companies. For example, if you control two companies, HMRC may treat them as linked when testing eligibility criteria such as gross assets, employee numbers, or trading age.

This matters because the thresholds are strict: for SEIS, gross assets must be under £350,000 before the share issue, and the company must be under three years old. If HMRC considers another company’s assets or age as part of the picture, you could lose eligibility without realising it.

Common Scenarios

I often see founders with one trading company and a second “side project” they want to spin up under SEIS. This can work, but only if the second company is genuinely independent and not just an extension of the first. If HMRC thinks the new company is a continuation of an existing trade, it won’t qualify as a fresh startup.

Another common situation is founders who hold IP in one company and want to raise SEIS/EIS in another. That can be fine, but only if the IP is licensed on arm’s length terms. If HMRC sees the setup as a way of funneling relief into an existing business, expect questions.

Frequently Asked Questions

Q: Can I raise SEIS/EIS if I’ve already got another trading company?
Yes, as long as the company raising funds meets all the criteria in its own right and isn’t treated as a continuation of the other trade.

Q: What if my other company is dormant?
Dormant companies generally don’t cause issues, but you’ll need to be clear with HMRC about their status.

Q: Can I use SEIS/EIS funds in a subsidiary?
Yes, but only if the SEIS/EIS company is the parent and owns at least 90% of the subsidiary. The money raised must be used for qualifying activity within the group.

Q: Will HMRC look at my other companies’ assets?
Potentially. If they view your companies as “connected” through control, they may aggregate assets and employees when testing the SEIS/EIS thresholds.

Practical Advice

If you’re a founder with multiple companies, clarity is your friend. Keep the company raising funds clearly ring-fenced. Make sure its filings, accounts, and structure all tell a consistent story: that this is the company doing the trading, this is where the growth will happen, and this is where the investor’s money will be spent.

If you’re planning to spin up a new entity purely to raise under SEIS, be prepared to explain why it qualifies as a new trade. Document everything. Be transparent with HMRC. And, ideally, get professional advice before you send in your advance assurance.

Why This Matters

SEIS/EIS relief is one of the most powerful levers UK founders have to attract early-stage investment. But the schemes only work if investors trust the paperwork. If HMRC spots that your company is too closely linked with others, or that the structure muddies the waters, they won’t just decline relief, they may scrutinise you more heavily in future.

Getting this right is not about box-ticking. It’s about showing investors and HMRC that your company is a genuine, qualifying startup not a clever reshuffle of existing entities.

How We Can Help

At OnTheGo Accountants, we’ve worked with founders juggling multiple ventures, IP holding companies, and complex structures. We know how HMRC approaches these cases, and we know how to present your story so that your eligibility is clear.

If you’re raising under SEIS or EIS and have more than one company in the picture, drop me a message at info@onthegoaccountants.co.uk. A bit of planning now can save a lot of pain later.

Next in the series: SEIS, State Aid & De Minimis Rules: What Founders Must Know to Stay Eligible

Why Your Finance Function Needs More Than AI?

Wed, 10 Sep 2025 11:25:48 GMT

Written by:

Sophie Thomas

COO & Co-founder

Why Your Finance Function Needs More Than AI: The Human Touch in CFO Services

In today’s hyper‑efficient business world, it’s tempting to lean entirely on AI. Let it automate forecasting, churn through data, and generate reports—and voilà, your finance department is running like clockwork, right?

Not quite.

Understanding your business—its services, products, and unique challenges—is just as essential as having powerful tools. At OnTheGo, we’re masters at deploying AI to supercharge automation. But ultimately, it’s our people—their strategic insight and deep client understanding—that make all the difference.

Tailored Finance, Not Cookie-Cutter Outputs

Every business is unique. Whether you’re a SaaS platform, building physical products, or selling globally, generic finance processes fall short.

But when you work with us, our CFO services go beyond building financial models. We design entire finance functions tailored to your growth trajectory—and that means we take time to learn your business, your market, and your needs. From KPIs to your burn rate, cash flow strategies to revenue recognition—our support aligns precisely with your growth path.

AI can generate dashboards—but only our people can translate those numbers into meaningful strategy.

Scaling a Finance Function That Grows With You

Startups evolve—fast. As your business matures, your finance function needs to adapt, scale, and eventually transition in-house when the time’s right.

That’s why OnTheGo offers flexible CFO packages:

Financial Modelling - from around £2,000 + VAT—covering 12-month cash flow forecasts, scenario planning, budgets, and KPIs
CashFlow Monitor - from £500/month + VAT—for regular KPIs, variance analysis, aged debtor reviews, supplier payment tracking, and monthly check-ins
Fractional CFO - £750/day + VAT—for deeper involvement like consolidated reporting, intercompany eliminations, revenue recognition, employee planning, pricing analysis, burn rate tracking, runway planning, and tailored management reporting

We pair this with additional services like bookkeeping, payroll, compliance, and tax incentives (R\&D, SEIS, EIS, EMI) to build a truly scalable finance stack. And when you're ready to transition in-house? Our setup ensures a pain-free handover, as we’ve demonstrated in client success stories.

AI Speeds Things Up—People Drive Success

At OnTheGo, we believe:

AI accelerates finance, handling routine, high-volume tasks quickly and reliably.
Our people deliver value, applying strategic insight to transform numbers into decisions that propel growth.

If you want a finance function that’s as agile as your startup, and as scale-ready as your vision—crafting processes that don’t just work, but work for you—let’s talk.

Claiming SEIS/EIS Tax Relief: A Founder’s Guide

Thu, 04 Sep 2025 09:14:56 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Claiming SEIS/EIS Tax Relief: What Your Investors Need from You

Raising under SEIS or EIS is a powerful way to attract investors. Founders tend to focus on the front end of the process, securing advance assurance and filing compliance statements, but it doesn’t end there. To keep your backers happy, you need to help them actually claim their tax relief .

Investors commit to SEIS and EIS because of the generous tax breaks. If those reliefs are delayed or denied due to missing paperwork or errors, trust quickly evaporates. In this episode of our Startups, Shares & SEIS series, we’ll look at how investors claim their reliefs, what you need to provide them, and the common mistakes to avoid.

How Do Investors Claim SEIS/EIS Relief?

Once HMRC approves your compliance statement, you’ll be authorised to issue SEIS3 or EIS3 certificates . These certificates are the official documents investors must have to unlock their tax relief. Without them, no matter how eligible the investment may be, HMRC will not process a claim.

The reliefs themselves are wide-ranging. The most immediate is income tax relief : 50% for SEIS and 30% for EIS. An investor who puts £20,000 into a SEIS round can reclaim £10,000 against their income tax bill for that year. Under EIS, the percentage is lower but the investment limits are far higher, allowing significant amounts of capital to flow into a company. Importantly, investors can also carry that relief back to the previous tax year, which can be a useful planning tool.

There are also significant Capital Gains Tax (CGT) advantages . Shares held for at least three years under SEIS or EIS are free from CGT on disposal. In addition, there are reinvestment and deferral reliefs that allow investors to either reduce gains from other disposals or push their tax liability into the future.

Finally, the schemes also protect the downside. If the company doesn’t succeed, investors may claim loss relief , offsetting the loss against income or capital gains. This makes SEIS and EIS particularly attractive for higher-risk early-stage investments, as investors are never fully exposed to the downside.

Most claims are made through the investor’s self-assessment tax return , but in some cases employees under PAYE can request an adjustment to their tax code once they hold a certificate, letting them access the relief sooner.

What Do You Need to Provide?

Your role as a founder is to make sure investors receive their SEIS3 or EIS3 certificates promptly and accurately. Each investor, and each subscription of shares, must have a certificate. These can only be issued after HMRC has approved your compliance statement.

Accuracy is essential. The information on the certificates — share classes, subscription amounts, number of shares issued, and the date of issue — must match your compliance statement and your Companies House filings. Even small inconsistencies can cause HMRC to query a claim, leading to frustrating delays.

Timeliness matters just as much. Many investors are keen to claim relief within the same tax year as the investment, or to carry it back to the previous year. If certificates are delayed, so is their ability to claim relief. This can create cash flow pressure for them and weaken your reputation as a founder. A smooth process demonstrates professionalism and builds long-term confidence.

It’s also important to maintain proper records. Keep a clear log of which certificates have been issued, when they were sent, and any corrections made. That way, if HMRC or an investor queries the paperwork months later, you can answer quickly and confidently.

Common Pitfalls to Avoid

The biggest pitfall is delay . Some founders focus so heavily on closing the round that compliance slips down the list. Investors left waiting months for certificates are unlikely to feel enthusiastic about backing you again.

Another common issue is inaccuracy . Errors in dates, amounts invested, or share numbers are enough for HMRC to reject a claim. Each correction means further correspondence and further delays.

A subtler but still important pitfall is around carry-back claims . Some investors will want to use their relief in the prior tax year. The certificate has a section that allows this to be indicated, but if it’s overlooked or filled incorrectly, that flexibility is lost.

Finally, there’s the problem of poor tracking . If you don’t keep a record of which certificates were issued and when, it becomes very difficult to resolve disputes later on. A simple spreadsheet or tracking system is often enough, but it needs to be kept up to date.

Frequently Asked Questions

What’s the difference between advance assurance and the compliance statement?
Advance assurance is HMRC’s indication that your company should qualify, based on your plans, before you issue shares. The compliance statement is your proof afterwards that you did meet the rules. Both are essential if your investors are to claim relief.

Can investors claim relief without a certificate?
No. Certificates are the official proof HMRC requires. Without them, no relief can be claimed, even if the investment qualifies.

How long does it take for investors to get their relief?
That depends on how quickly you file the compliance statement and issue certificates, and how efficient HMRC is. Well-prepared filings can result in certificates being issued within a couple of months; poorly prepared or inconsistent filings can drag on much longer.

Can investors split their relief across tax years?
Yes, relief can be carried back to the previous tax year, provided the investor had sufficient income tax liability in that year. This is one of the reasons timeliness is so important.

What happens if a certificate has an error?
You’ll need to reissue a corrected version. HMRC may cross-check it against your compliance statement, so accuracy upfront is far better than dealing with corrections later.

Why This Matters

Investors back early-stage companies partly for the growth opportunity, but largely because SEIS and EIS reduce their personal risk. If the relief process goes smoothly, it builds trust and positions you as an organised, credible founder. If it doesn’t, confidence erodes quickly and that makes future fundraising harder.

Helping investors access their relief is not just compliance; it’s part of the relationship you’re building with them. Do it well, and you increase the chances they’ll reinvest when you raise again.

How We Can Help

At OnTheGo Accountants, we support founders at every stage of the SEIS/EIS journey from advance assurance through compliance and onto investor relief. We’ll make sure your certificates are accurate, issued promptly, and fully compliant with HMRC’s requirements.

If you’d like us to handle the process or just review your compliance before you send it get in touch at info@onthegoaccountants.co.uk.

Next in the series: Founders with Multiple Companies — Navigating the Risk of Disqualification

The SEIS/EIS Compliance Statement: How and When to File

Thu, 28 Aug 2025 14:11:24 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Investor Decks, Cap Tables and Compliance: Accounting for Investment

Getting HMRC advance assurance is a huge milestone. But it’s not the final step. To actually unlock tax relief for your investors, you must file a compliance statement.

This is one of the most important parts of the SEIS/EIS process and one of the most commonly misunderstood. File too early, miss the deadline, or make an error in the paperwork, and your investors won’t get their SEIS3/EIS3 certificates. That means no tax relief, frustration for backers, and potentially real damage to your credibility as a founder.

This post in our Startups, Shares & SEIS series explains what the compliance statement is, when to file it, and how to get it right first time.

What is the SEIS/EIS Compliance Statement?

The compliance statement (Form SEIS1 for Seed Enterprise Investment Scheme, Form EIS1 for Enterprise Investment Scheme) is the formal return you submit to HMRC after issuing shares. It confirms that:

Shares were issued in line with SEIS/EIS rules,
The money raised is being used for qualifying business activity, and
Your company still meets the conditions of the scheme.

Only once HMRC approves your compliance statement will you be authorised to issue SEIS3/EIS3 certificates to your investors. Without these, investors cannot claim the relief they were promised.

When Should You File?

You cannot file immediately after issuing shares. HMRC requires proof that your business is genuinely active and that the funds are being used in line with the rules.

SEIS : You may file once your company has been trading for at least 4 months or has spent at least 70% of the SEIS funds on qualifying activities.
EIS : You may file once your company has carried out qualifying business activity for at least 4 months (no spending threshold applies).

For both schemes, the compliance statement must be filed within two years of the later of:

The end of the tax year when the shares were issued, or
The four-month trading/activity milestone.

SEIS and EIS Share Issue Sequencing

A key point: SEIS shares must always be issued before EIS shares. If you try to issue them in the wrong order, HMRC will refuse relief.

From a practical point of view, this sequencing creates an extra compliance cost. Each share issue requires its own compliance statement, so if you split SEIS and EIS shares into multiple tranches on different dates, you’ll need to file multiple forms. To avoid unnecessary duplication, it’s usually best practice to issue all SEIS shares on one day and all EIS shares on another. This keeps filings simple, reduces professional fees, and speeds up the compliance process.

What Do You Need to Provide?

When you submit SEIS1 or EIS1, HMRC expects consistency across all your filings. That means:

Company details : UTR, Companies House registration number, contact details.
Share issue details : Dates, share classes, number issued, and price paid (must match your SH01 filings).
Use of funds : Evidence of how the capital has been or will be used, in line with your advance assurance submission.
Business activities : A description of your trade, showing why it qualifies under the rules (avoiding excluded activities like property development or financial services).
Eligibility confirmation : Proof your company still meets scheme conditions (age, employee count, gross assets).
Supporting documents : Articles of Association, SH01s, board minutes, subscription agreements, and an up-to-date cap table showing pre- and post-investment ownership.
Investor details : A list of each investor, how much they invested, and how many shares they received.

HMRC may also request your business plan or pitch deck if it wasn’t included at advance assurance stage.

Common Mistakes Founders Make

Filing too early : submitting before the 4-month or 70% threshold (for SEIS).
Mismatched numbers : SH01 filings and compliance statements not aligning.
Non-qualifying shares : issuing preference or redeemable shares instead of full-risk ordinary shares.
Separate share issues : forgetting that SEIS and EIS must be filed separately, or splitting share issues unnecessarily across multiple dates.
Missing deadlines : failing to file within the two-year limit, leading to a permanent loss of relief.

SEIS/EIS Compliance Checklist

Before you file, run through this checklist:

Confirm 4 months trading or 70% of SEIS funds spent (SEIS), or 4 months of activity (EIS).
Check the deadline: within 2 years of end of the tax year shares were issued (or later of 4-month rule).
Issue all SEIS shares on one date and all EIS shares on another to reduce compliance costs.
Ensure SH01 filings match the compliance statement.
Prepare board minutes approving the share issue.
Confirm Articles of Association and share classes are SEIS/EIS compliant.
Compile investor details: name, amount subscribed, shares issued.
Update your cap table showing ownership before and after.
Gather evidence of business activity (invoices, contracts, R&D spend).
Attach business plan or pitch deck if not already sent to HMRC.
Ensure no excluded activities (e.g. property, finance, energy generation).
Submit SEIS1 and/or EIS1 separately if both schemes apply.
Once HMRC approves, issue SEIS3/EIS3 certificates promptly.

Why This Step Matters

Investors expect certificates quickly. Any delay reflects badly on your company and may damage relationships. Filing accurately and on time reassures investors that you are organised, trustworthy, and worthy of further backing.

Frequently Asked Questions

Q: What’s the difference between advance assurance and the compliance statement?
Advance assurance is HMRC’s indication that your company should qualify before you issue shares. The compliance statement is the proof, submitted after the share issue, that you actually met the conditions. Both are needed if your investors want tax relief.

Q: Can I file for both SEIS and EIS together?
No: you must file a separate compliance statement for each scheme. Remember too that SEIS shares must be issued before EIS shares.

Q: Do SEIS and EIS shares have to be issued on different dates?

Not necessarily, but it’s strongly recommended. All SEIS shares should be issued on one date and all EIS shares on another; otherwise you’ll need multiple compliance statements, which increases time and cost.

Q: How long does HMRC take to process compliance statements?
HMRC’s stated timeframe is 6–8 weeks, but in practice we see well-prepared submissions processed in as little as 2–4 weeks. Poorly prepared filings, or ones with inconsistencies, can take months.

Q: What happens after HMRC approval?
You’ll receive a reference number (SEIS2/EIS2) that allows you to issue SEIS3 or EIS3 certificates to your investors. They use these certificates to claim their reliefs.

Q: What if I miss the two-year deadline?
Unfortunately, there’s no extension. If you miss it, your investors lose their tax relief permanently.

How We Can Help

At OnTheGo Accountants, we handle SEIS/EIS compliance from start to finish. We make sure your paperwork matches across Companies House, HMRC, and your investor records, so you can focus on growth while we handle the detail.

If you’d like support with your SEIS1 or EIS1 submission or just a second pair of eyes or even a consultation around your specific approach contact us at info@onthegoaccountants.co.uk.

Next in the series: Claiming SEIS/EIS Tax Relief — What Your Investors Need from You

Investor Decks, Cap Tables and Compliance: Accounting for Investment

Thu, 21 Aug 2025 08:19:40 GMT

Written by:

Daniel Scott

Partner & Head of Accounting

Investor Decks, Cap Tables and Compliance: Accounting for Investment

When raising investment, your story and vision draw investors in, but your numbers and the way you present them determine whether they stay engaged. A clear cap table, aligned financials, and complete documentation aren’t just formalities, they’re credibility in action, especially when SEIS or EIS relief is in play.

Why Cap Tables and Decks Really Matter

Your cap table should outline your company’s ownership structure; founders, employees, investors, and any option holders and show what that structure will look like post funding. For SEIS or EIS rounds, investors need transparency: they want to know how their tax relief is protected and what dilution looks like. If your cap table is tidy and accurate, it builds trust; if it’s not, doubts creep in.

Likewise, your investor deck tells your company’s story; what problem you're solving, how you’ll do it, the size of the opportunity, the funding ask. But it must align seamlessly with other documents: your cap table, Articles of Association, board minutes, and your financial model. When the figures match across documents, you demonstrate organisation; mismatches create hesitation.

Cap Table Transparency Is Essential

A common mistake among founders is excluding convertible notes, employee options, or warrants from their cap table. You might think it looks cleaner to display only issued shares, but to an investor, it looks incomplete and possibly misleading. Especially where SEIS/EIS relief depends on share structure, full transparency signals professionalism.

Consistency Across Your Materials

Investors compare your deck, cap table, financial model, and legal documents carefully. If your deck says you’re seeking £250,000 but your legal filings show something different, that inconsistency raises red flags. Consistency matters more than style when each document tells the same picture, confidence grows; when they don’t, doubts surface.

Why Your Valuation Needs Explanation

Valuations are tricky. If you just state a number without context, it’s easy for investors to dismiss it. Instead, explain why, perhaps you based it on similar exits, comparable deals, or growth forecasts. By showing your rationale, you make the valuation believable, grounded, and stronger.

Frequently Asked Questions

Should I include employee options and convertible notes in my cap table?

Yes, everything that could become equity later should be visible. Investors deserve clarity when assessing their stake.

Do I need to explain my valuation?

Definitely. Share your assumptions, benchmarks, and how you arrived at the number. Investors look for the reasoning, not just the figure.

What if my documents don’t align?

Discrepancies can slow down or derail your funding process. Aligned documents build trust and speed things along.

SEIS & EIS Considerations Throughout

Because SEIS/EIS relief depends on the structure of shares and precise documentation, you need to make clear which shares are eligible. That needs to be visible on your cap table, in your deck, and in your Articles. That kind of clarity protects investors’ tax relief and shows attention to detail.

How We Can Help

At OnTheGo Accountants, we help founders prepare investor-ready materials: clean cap tables, aligned financials, compliant structures, and documentation that aligns with SEIS/EIS rules using our specialist advice. If you want your raise to run smoothly and with clarity, we’d be happy to support you. Drop me a line at info@onthegoaccountants.co.uk to get started.

Next in the series : How to Issue SEIS/EIS Shares the Right Way, Without Losing Tax Relief

SEIS/EIS Advance Assurance: What It Is and How to Get It Right First Time

Mon, 18 Aug 2025 10:23:37 GMT

SEIS/EIS Advance Assurance: What It Is and How to Get It Right First Time

For many UK startups, unlocking investment from angel investors or early-stage funds often hinges on one thing: tax relief. And the most powerful tools in the UK startup toolkit are SEIS and EIS. But before investors commit, they usually want reassurance that your company qualifies.

That’s where Advance Assurance comes in, and this blog breaks it all down for you.

So, what is Advance Assurance?

Think of it as a confidence booster for your investors. HMRC reviews your documents and, if everything stacks up, gives you a letter confirming that your company appears to qualify for SEIS or EIS tax relief. It’s not a legally binding decision, but it shows investors you’ve done your homework and taken the right steps.

Without it, you may find that conversations stall. Many serious investors won’t even look at your pitch until you’ve got it.

When should you apply?

Ideally, you should apply before you issue any shares. If you issue them first, you can’t then apply retrospectively, and you might lose eligibility altogether.

We recommend applying once you’ve got investor interest, even if those commitments are tentative. HMRC guidance says 4–6 weeks for a response, but in our recent experience, replies can come through in as little as 10–14 days. That said, delays can happen, so build in breathing space.

What does HMRC want to see?

HMRC is trying to work out if you meet the rules, and if your investment round is real and imminent. To show this, you’ll need to include:

A solid business plan or pitch deck that outlines your company’s activities and how they qualify under the SEIS/EIS rules
A short explanation of how you’ll use the funds, they need to fuel growth or innovation, not repay loans or buy existing assets
A current cap table, showing who owns what now and what things will look like after investment
Information about your investors, if not named individuals, at least the type of investors you’re talking to
Key company filings like your articles of association, certificate of incorporation, and any existing share agreements

If you’re applying for both SEIS and EIS, explain how you’ll split the funding and in what order the shares will be issued.

FAQs

Q: Can I apply for advance assurance without named investors?

Yes, but HMRC prefers some evidence that real investors are interested. Generic or speculative applications are more likely to be declined.

Q: How long does it take to get a response?

Officially 4–6 weeks. Realistically? We’ve seen responses in 10–14 days when the documents are clear and complete.

Q: What if I’ve already issued shares?

Then it’s too late for those shares, they won’t qualify. You can still apply for future rounds though, so act early.

Q: Can I apply for SEIS and EIS together?

Yes, and many do. But the application should clearly set out the split, with SEIS shares issued first. You can even do both in the same round with the right structure.

Tips for a Smooth Submission

Getting this right doesn’t have to be stressful, in fact, if you approach it like you're preparing for a funding round (which you are), it can run surprisingly smoothly.

First, make sure you're being specific. HMRC doesn't want to see vague promises about "growth" or "marketing spend." Instead, they want to understand how your raise will translate into tangible progress, whether that's hiring a lead developer, expanding your product line, or building out your MVP. The more concrete and measurable, the better.

Next, think carefully about your share structure and legal documents. It’s not uncommon for founders to have adopted template articles or included clauses that don’t quite work for SEIS or EIS. Something as small as a preference share or a missing statement of compliance can derail the whole thing. Make sure everything is in sync before you submit.

Your application itself should look and feel like a professional investment pack. If you’re already talking to investors, then most of the materials should exist, a cap table, a business plan or deck, a breakdown of how funds will be used. Pull these together into a clear narrative that shows HMRC your raise is legitimate and imminent.

And finally, if your company has any quirks, group structures, overseas elements, convertible notes, it’s worth speaking to an advisor before you hit submit. These things aren’t deal-breakers, but they do require a bit more care and explanation to get right.

What Happens After Approval?

HMRC will send you a reference number and a letter confirming they see no reason why your company wouldn’t qualify. This gives your investors the reassurance they need.

But remember: this is just the green light. Once shares are issued, you still need to:

Submit the relevant compliance statement (SEIS1 or EIS1)
File your SH01 and board minutes

Only once HMRC approves your compliance statement will your investors get their SEIS3/EIS3 certificates.

Our Support

We’ve handled hundreds of advance assurance applications and know exactly what HMRC looks for. If you want to reduce risk, speed up the process, and make sure investors have full confidence in your raise, we’re here to help.

�� Email info@onthegoaccountants.co.uk or book a consultation.

Next in the series : Investor Decks, Cap Tables and Compliance; Accounting for Investment

SEIS vs EIS: What Founders and Investors Need to Know

Wed, 06 Aug 2025 17:43:25 GMT

SEIS vs EIS: What Founders and Investors Need to Know

When raising investment in the UK, two government-backed schemes dominate early-stage funding: the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS). Both offer generous tax reliefs to investors and significant opportunities for companies trying to attract early funding. But they’re not interchangeable, and understanding the key differences is essential if you want to make the most of what’s available.

This article is the first in our Startups, Shares & SEIS series. It sets out the core differences between SEIS and EIS, using the most up-to-date thresholds and guidance, and provides practical tips for founders preparing to raise capital.

What is SEIS?

SEIS is tailored for very early-stage businesses looking to raise their first outside investment — and it’s highly attractive to angel investors.

As a company, you can raise up to £250,000 through SEIS, provided you meet the eligibility criteria:

You’ve been trading for less than four years
You have fewer than 25 full-time equivalent employees
Your gross assets are no more than £350,000 before the share issue
You’re a UK-based, unquoted company carrying out a qualifying trade

Funds raised under SEIS must be used within three years for the growth of your business.

From the investor’s perspective, SEIS offers 50% income tax relief, full capital gains tax (CGT) exemption on shares held for three years, and additional benefits like loss relief and reinvestment relief.

What is EIS?

EIS is aimed at more established companies that are still early in their growth journey. It allows you to raise significantly more up to £12 million in total, or £20 million if you’re classed as a Knowledge-Intensive Company (KIC).

To qualify, you must:

Have traded for less than seven years (or ten for KICs)
Employ fewer than 250 people (or 500 for KICs)
Hold less than £15 million in gross assets before the issue

EIS also imposes a cap of £5 million on the total amount of SEIS, EIS and VCT funding a company can receive in any 12-month period.

Investors benefit from 30% income tax relief, CGT exemption, deferral relief, loss relief, and in many cases, inheritance tax relief as well.

Can You Use Both SEIS and EIS?

Yes; and many startups do.

SEIS is typically used for a company’s first round of funding, and EIS is used for larger or follow-on investment. While you can’t issue SEIS and EIS on the same shares, you can structure a round to allocate the first £250,000 under SEIS and the remainder under EIS or run entirely separate rounds, starting with SEIS.

The important thing is to plan the timing and structure carefully. Getting advance assurance from HMRC before you issue any shares is a good way to confirm eligibility and avoid problems down the line.

Why Investors Care

Both SEIS and EIS significantly reduce the financial risk of investing in early-stage companies.

For investors, SEIS offers the most generous upfront tax relief available in the UK which is why many angel investors won’t even consider a pitch unless SEIS is in place. EIS, meanwhile, opens the door to much larger investments with long-term reliefs and planning opportunities that appeal to high-net-worth individuals, syndicates and early-stage funds.

If you want to be competitive in the investment market, offering these reliefs is a powerful advantage.

What Founders Should Focus On

If you’re preparing to raise investment and want to take advantage of SEIS or EIS, here’s what we’d recommend:

First, get your advance assurance sorted early. This is a formal indication from HMRC that your company and investment plans meet the requirements and most investors will expect to see it before committing.

Next, make sure your documentation is in good shape. That means having a clear share structure, proper valuation support, board minutes, and Companies House filings (like the SH01) all ready to go.

Don’t forget about compliance after the raise. Once shares are issued, you’ll have just 92 days to submit your ERS return to HMRC. Missing that deadline can create problems for both you and your investors.

And finally, keep an eye on the details, company age, employee count, and asset levels all affect your ongoing eligibility.

How We Can Help

At OnTheGo Accountants, we specialise in helping early-stage businesses plan and deliver investor-ready structures. Whether you’re applying for advance assurance, preparing a funding round, or just want to sense-check your compliance, we’re happy to help.

You can book a SEIS/EIS consultation or email us at info@onthegoaccountants.co.uk.

Introducing Our Startup Series: Shares, SEIS & Smart Structuring

Wed, 06 Aug 2025 07:00:00 GMT

Introducing Our Startup Series: Shares, SEIS & Smart Structuring

As a founder, navigating the early stages of investment, share structuring, and tax planning can feel overwhelming especially when you're focused on building something that matters. That's why we're launching a new content series designed to give UK startups and scale-ups clear, practical guidance on one of the most misunderstood (and most important) parts of growing a business: your equity.
Whether you're issuing your first shares, applying for SEIS advance assurance, or trying to understand how a cap table affects your next funding round, this series is for you.

Why Now?

The way people search for answers is changing fast. With new AI powered search experience already influencing what gets seen (and what doesn’t), it’s more important than ever for founders to find content that’s straight to the point, easy to understand, and actually useful.
At OnTheGo Accountants, we work closely with startup founders, investors and growth-stage businesses every day advising on share schemes, valuations, R&D claims, and everything in between. This series is our way of making that expertise available to more people.

What We'll Cover

Over the next few weeks, we’ll be releasing a five-part series covering:

1. SEIS vs EIS: Key Differences for Founders and Investors

Understand the tax reliefs, timelines and eligibility criteria that matter when raising investment.

2. SEIS/EIS Advance Assurance: What It Is and How to Get It Right First Time

A step-by-step guide to getting HMRC's early thumbs-up and avoiding common delays.

3. Investor Decks, Cap Tables and Compliance: Accounting for Investment

How to prepare for investor scrutiny and keep your books clean from the start.

4. Common Pitfalls That Delay SEIS/EIS Approval (and How to Avoid Them)

Real-world mistakes we’ve seen, and how to fix or avoid them altogether.

5. Founder FAQs: When to Issue Shares, How to Value Them, and What HMRC Looks For

Answers to the questions founders ask us the most (plus a few they don’t, but should).

Who This Is For

If you're a founder:

Preparing to raise capital or issue shares
Considering SEIS/EIS but unsure how to start
Wanting to understand how share structuring impacts tax, compliance, and future funding this series is built for you.

It’s also a useful resource for accountants, advisors, and investors who want a clear reference point to share with clients or portfolio companies.

Stay in the Loop

You can follow the full series on our blog, or sign up to receive posts as they go live.
If you’re already thinking about SEIS, share issues, or employee options and want to get ahead of the curve, we’re happy to review your structure, valuation, or compliance deadlines with you.

Book a free call or email us at info@onthegoaccountants.co.uk .

Next up: SEIS vs EIS: What Founders and Investors Need to Know

Companies House Identity Verification – What You Need to Know

Mon, 09 Jun 2025 16:29:25 GMT

Written by:

Sophie Thomas

COO & Co-founder

Companies House Identity Verification – What You Need to Know

You may have received a recent email from Companies House regarding new identity verification requirements under the Economic Crime and Corporate Transparency Act 2023. This is part of a broader government initiative to make UK companies more transparent and reduce economic crime.

Here’s what you need to know – and what you should do next.

What is changing?

From autumn 2025, it will become a legal requirement for the following individuals to verify their identity with Companies House:

Company directors
People with significant control (PSCs)
Anyone delivering documents to Companies House on behalf of a company

This means that simply setting up a company or being appointed as a director will no longer be enough – Companies House will need proof of who you are.

What is identity verification?

Identity verification will involve proving who you are using approved methods, likely to include:

Uploading ID documents (e.g. passport, driving licence)
A photo or video check to confirm your identity

More details and the official process will be rolled out ahead of the 2025 deadline.

Why is this happening?

The aim is to:

Make it harder for fraudulent or fake companies to be created
Increase transparency over who is really behind UK companies
Improve the overall reliability of the information held on the Companies House register

What do I need to do right now?

Forward the Companies House email to all company directors and PSCs, especially if you’re an agent who received it on the company’s behalf.
Stay informed – Companies House will release further guidance and tools in due course.
Complete your verification – link here

How we can help

We’ll be keeping a close eye on developments and will support our clients with:

Guidance on the identity verification process
Help setting up any necessary Companies House accounts
Ensuring your company records are up to date and compliant

If you have any questions about the upcoming changes or need help reviewing your company structure, don’t hesitate to get in touch.

Optimising Tax Liabilities with Section 431 Elections in the UK

Mon, 25 Nov 2024 14:38:39 GMT

Written by:

Daniel Scott

Head of Accounting

Optimising Tax Liabilities with Section 431 Elections in the UK

In the realm of employee share schemes, understanding the tax implications is crucial for both employers and employees. One significant aspect to consider is the Section 431 election, a provision under the UK's Income Tax (Earnings and Pensions) Act 2003. This election plays a pivotal role in determining how employment-related securities, particularly restricted shares, are taxed.

What is a Section 431 Election?

A Section 431 election is a joint agreement between an employee (or director) and their employer to alter the tax treatment of employment-related securities that have restrictions affecting their market value. By making this election, both parties agree to treat the shares as if acquired at their unrestricted market value (UMV), effectively ignoring any restrictions for tax purposes. This approach can influence the timing and amount of tax liabilities associated with the shares.

Why Consider a Section 431 Election?

Without a Section 431 election, any increase in the value of restricted shares attributable to the lifting of restrictions can be subject to Income Tax, which often has higher rates than Capital Gains Tax (CGT). By making the election, the entire future appreciation of the shares is typically subject to CGT rather than Income Tax, potentially resulting in a lower tax liability upon disposal.

Key Considerations for Employers and Employees

Timing : The election must be made within 14 days of the share acquisition date. If not completed within this period, the opportunity to make the election is lost.
Immediate Tax Implications : Making the election may result in an immediate Income Tax charge on the difference between the price paid for the shares and their UMV at the time of acquisition. However, this upfront tax can be advantageous compared to potential higher taxes on future gains.
National Insurance Contributions (NICs) : If the shares are classified as "readily convertible assets" (i.e., they can be easily converted into cash), both employer and employee NICs may be due on any Income Tax charge arising from the acquisition of the shares. By making a Section 431 election, you may mitigate future Income Tax charges, thereby potentially reducing or eliminating associated NIC liabilities.
Record Keeping : While the election doesn't need to be filed with HMRC, both the employee and employer should retain copies as evidence in case of future tax inquiries.

How OnTheGo Accountants Can Assist

Navigating the complexities of Section 431 elections requires expert guidance. At OnTheGo Accountants, we specialise in providing tailored tax advisory services to tech startups, e-commerce businesses, and digital agencies. Our team can assist you in:

Evaluating the suitability of Section 431 elections for your specific circumstances.
Ensuring timely and accurate completion of the election process.
Advising on the broader implications for your company's share schemes and overall tax strategy.

By leveraging our expertise, you can optimise your tax position and make informed decisions regarding employee share schemes.

Conclusion

Section 431 elections are a vital tool in the UK tax landscape, offering potential tax efficiencies for both employers and employees involved in share schemes. Understanding their benefits and requirements is essential for effective tax planning. For personalised advice and support, contact OnTheGo Accountants today.

Note: This article is for informational purposes only and does not constitute tax advice. For specific guidance, please consult a qualified tax professional.

Navigating the Evolving Landscape of Intangible Assets

Mon, 25 Nov 2024 13:56:00 GMT

Written by:

Daniel Scott

Head of Accounting

Navigating the Evolving Landscape of Intangible Assets: Insights for Tech Startups and High-Growth Companies

In today's rapidly evolving business environment, intangible assets have become central to a company's value and growth potential. Traditional accounting standards, however, have struggled to keep pace with the diverse and complex nature of these assets. Recognising this gap, the International Accounting Standards Board (IASB) and the UK Endorsement Board (UKEB) are embarking on a comprehensive review of IAS 38: Intangible Assets, a standard that has remained largely unchanged for over 26 years.

The Expanding Spectrum of Intangible Assets

Historically, intangible assets encompassed items like patents, trademarks, and copyrights. Today, the spectrum has broadened to include digital assets such as cryptocurrencies, big data analytics, human capital, and emission rights in carbon trading. These "intangible" intangibles are integral to modern business models, yet current accounting practices often fail to capture their true value.

The Need for Reform

Data from the UKEB reveals that intangible assets, while representing only about 3% of items on UK companies' balance sheets, had a carrying value of £351 billion in 2021. This discrepancy underscores the inadequacy of existing standards in reflecting the economic significance of intangibles. The forthcoming 'intangibles project' by the IASB aims to address these challenges, with significant developments anticipated in the coming year.

Implications for Tech Startups and High-Growth Companies

For tech startups and high-growth companies, particularly those in the UK, EU, and US, the evolving standards present both challenges and opportunities. Accurate recognition of intangible assets will provide stakeholders with a clearer picture of a company's value, fostering trust and potentially attracting investment. Companies will need to develop robust methodologies to assess and report the value of their intangible assets, ensuring compliance and maximising potential benefits. Additionally, changes in asset recognition may influence tax liabilities and benefits, necessitating proactive tax planning and advisory services.

Impact on UK GAAP

The ongoing review of IAS 38 by the IASB and UKEB is poised to significantly influence UK Generally Accepted Accounting Practice (UK GAAP). As the accounting landscape evolves to better reflect the complexities of modern intangible assets, UK GAAP is expected to undergo corresponding changes to maintain alignment with international standards and accurately represent the value of intangible assets in financial statements.

UK GAAP has historically aimed to harmonise with International Financial Reporting Standards (IFRS) to ensure consistency and comparability in financial reporting. Revisions to IAS 38 will likely prompt updates to UK GAAP, particularly within Financial Reporting Standard (FRS) 102, which serves as the principal standard for UK entities. These updates would incorporate new definitions, recognition criteria, and measurement bases for intangible assets, ensuring that UK financial statements reflect the latest international practices.

The current review addresses the challenges of recognising a broader spectrum of intangible assets, including digital assets like cryptocurrencies, big data analytics, human capital, and emission rights. UK GAAP may expand its recognition criteria to encompass these emerging asset classes, providing clearer guidance on their identification and valuation. This expansion would enable UK companies to more accurately report the value of their intangible assets, enhancing transparency and comparability.

Revisions to IAS 38 are expected to introduce more detailed measurement and disclosure requirements for intangible assets. UK GAAP will likely adopt similar enhancements, requiring entities to provide comprehensive information about the nature, valuation methods, and potential impairments of their intangible assets. These changes aim to improve the quality of financial reporting and offer stakeholders a more nuanced understanding of a company's intangible asset portfolio.

For UK businesses, especially tech startups and high-growth companies, these anticipated changes will necessitate a reassessment of current accounting policies and practices related to intangible assets. Companies may need to develop robust methodologies for identifying and valuing a wider array of intangible assets, ensuring compliance with the updated standards. Additionally, the enhanced disclosure requirements will require more detailed reporting, potentially impacting financial statement preparation processes.

How OnTheGo Accountants Can Assist

At OnTheGo Accountants, we specialise in supporting tech startups and high-growth businesses through a range of services. Our accounting services ensure compliance with evolving standards, providing accurate financial reporting that reflects the true value of your intangible assets. We offer strategic financial planning and analysis through our CFO services, helping you navigate the complexities of asset valuation and recognition. Our tax advisory experts provide guidance on tax implications related to intangible assets, optimising your tax position and ensuring compliance.

As the accounting landscape adapts to the realities of modern business, staying informed and prepared is crucial. OnTheGo Accountants is committed to guiding you through these changes, ensuring your business remains compliant and strategically positioned for growth.

For more information on how we can support your business, please visit our website or contact us on 03330 067 123 .

Don't Let HMRC Rejection Derail Your R&D Growth

Sat, 16 Nov 2024 15:02:51 GMT

Written by:

Sophie Daykin

Co-founder & Tax Partner

Don't Let HMRC Rejection Derail Your R&D Growth

The UK government has been generous in supporting research and development (R&D) through tax relief schemes. However, with increased scrutiny from HMRC, many businesses are seeing their claims rejected, even after initial approval.

Why Are So Many R&D Claims Being Turned Down?

HMRC has tightened its rules to clamp down on fraudulent claims and ensure that only legitimate R&D activities qualify for relief. This has led to a surge in rejected claims, particularly for tech companies.

The Impact on Business Growth

The uncertainty surrounding R&D tax relief can hinder business growth. Rejected claims can lead to unexpected financial burdens and stifle future innovation plans.

How Can You Safeguard Your R&D Investment?

To maximise your chances of successful R&D tax relief claims, it's crucial to work with experienced R&D tax specialists. At OnTheGo Accountants, we have a deep understanding of HMRC's guidelines and can help you navigate the complex process.

Our R&D Services Include:

Comprehensive R&D Assessment: We'll meticulously analyse your R&D activities to determine eligibility and maximise your claim.
Claim Preparation and Submission: Our experts will prepare accurate and well-supported claims to increase your chances of approval.
HMRC Liaison: We'll handle all communications with HMRC, ensuring a smooth and efficient process.
Risk Mitigation: We'll identify potential risks and take proactive steps to minimise them.

Don't Let Rejected Claims Hold You Back.

By partnering with OnTheGo Accountants, you can:

Maximise Your R&D Tax Relief: Claim the maximum amount you're entitled to.
Minimise Risk: Reduce the likelihood of HMRC scrutiny and rejection.
Focus on Innovation: Spend less time on paperwork and more time driving your business forward.

Take the Next Step

Contact OnTheGo Accountants today to discuss your R&D activities and learn how we can help you secure the tax relief you deserve.

Autumn Budget 2024: What you need to know

Thu, 31 Oct 2024 14:02:34 GMT

Autumn Budget 2024: What you need to know

OnTheGo Accountants are here to break down the key points from Chancellor Rachel Reeves' Budget announcement that may impact you as a business owner in the UK.

Higher Wages and Employer Costs:

National Living Wage Increase: Get ready for higher wage bills. The minimum wage for over-21s will rise to £12.21 from April 2025, with similar increases for younger workers. The government also hinted at a single adult rate in the future.
Apprenticeship Wage Increase: Apprentice wages will also see a boost to £7.55 per hour.
Employer National Insurance Hike: This is a big one. Employers' National Insurance contributions are jumping from 13.8% to 15% starting April 2025. Additionally, the threshold at which businesses start paying National Insurance on employee earnings drops from £9,100 to £5,000. However, there is some relief for smaller businesses with an increase in the employment allowance from £5,000 to £10,500.

Tax Changes:

Capital Gains Tax Uplift: Capital gains tax is increasing immediately, with the lower rate rising to 18% and the higher rate to 24%. Selling a second property? The Capital Gains Tax rate remains at 18% and 24%.
Inheritance Tax Freeze Extended: The freeze on inheritance tax thresholds will continue for another two years, meaning you can inherit up to £325,000 tax-free (with some exceptions).
Business Asset Disposal Relief Changes: Business Asset Disposal Relief remains at 10% for the rest of the year, but will increase to 14% in 2025/26 and 18% in 2026/27 onwards.
Non-Dom Tax Regime Abolished: This is a significant change. The non-domicile tax regime is being scrapped from April 2025. A new residence-based system will be introduced for temporary residents.
Stamp Duty on Second Homes: Expect to pay more for that second property. The stamp duty rate on second homes is rising, buyers will now pay 5% on top of the standard SDLT rates.
VAT on Private Schools: Private school fees will be subject to VAT starting in January 2025. Additionally, private schools will lose their business rates relief from April 2025.

Other:

Electric Vehicle Incentives Remain: The government is maintaining existing incentives for electric company cars until 2028, while also increasing the tax differential between electric and other vehicles.
State Pension Increase: Good news for pensioners! The state pension will rise by 4.1% in 2025/26, thanks to the government's commitment to the triple lock.

This budget represents a significant shift in tax policy and spending. OnTheGo Accountants are here to help you navigate these changes and ensure you are compliant with the new regulations. Stay tuned to our social media for further analysis and don't hesitate to reach out if you have any questions.

Let's Talk About Tax Codes On Your Payslip

Tue, 18 Jun 2024 14:28:36 GMT

Written by:

Sophie THOMAS

COO & Co-founder

Let's Talk About Tax Codes On Your Payslip

If you have employees in the UK, you've probably spotted some mysterious codes on their payslips. It can be a bit of a head-scratcher to figure out how these codes affect the tax deductions from their salary, right? So, let's demystify these common codes together, one by one.

L – This is the standard tax code letter, indicating the individual receives a tax-free personal allowance. If they receive the full allowance, which is £12,570 this year, the payslip should display the code 1257L.

K - If you see a K code, it likely indicates that your employee owes tax from a previous year, or might be receiving company benefits. If the sum owed exceeds the tax-free personal allowance, they will be paying additional tax to compensate.

M – M stands for Married! This symbolizes that a spouse or civil partner has transferred some of their allowance to your employee. As a result, a larger portion of their salary is applied at a tax-free rate. So there you go, marriage is worth it after all!

BR – BR stands for Basic Rate. HMRC often applies this rate if your employee has another job where their tax-free allowance is already in use. This means that the salary you pay them will be entirely taxed at the Basic Rate of 20%.

Emergency tax codes – Now, there’s a few you might see here, W1, M1 or X – these are all emergency codes and at some point, you are bound to have an employee that is assigned these after transitioning to you from another employer. These codes indicate that HM Revenue and Customs (HMRC) haven't received or processed all the necessary information. If they are assigned one of these codes, there's a chance they could be taxed incorrectly. However, don't worry - these codes are temporary. Once HMRC updates the employee’s information, they will be assigned a permanent code. Any issues with under or over taxation will be resolved the following month.

If an employee comes to you with a question about a tax code and you're unsure what it means or why it's changed, the best course of action is to advise them to call HMRC. HMRC has access to their personal tax records. However, be aware that wait times to speak with an HMRC advisor can be lengthy so for any general inquiries, feel free to get in touch with us on +44 (0) 3330 067 123

OTG tailors our approach to your company's payroll needs. We know every business is different, so apart from general payroll management, we also have industry-specific specialists on board. These whizzes know the ins and outs of specific industry requirements and can guide you on how to manage your payroll to get the most bang for your buck, no matter where your business is located.

UK Payroll Services for US and Global Teams

Mon, 17 Jun 2024 20:38:19 GMT

Written by:

Sophie THOMAS

COO & Co-founder

UK Payroll Services for US and Global Teams

If you're an overseas employer with employees in the UK, it's essential to work with experienced UK payroll providers who really know their stuff. This way, you can be sure that tax and National Insurance contributions are being correctly deducted from your employees' salaries.

Employers in the UK have multiple obligations that they must adhere to – here’s some key things that you need to know:

RTI - RTI , or 'Real Time Information', is a regulation requiring businesses to report payroll information to HMRC each time they process their employees' payments.
Workplace pension scheme - Employers must automatically enrol eligible employees into a workplace pension scheme and make contributions to their pension on each salary run.

Sick pay - Eligible employees who are too ill to work should receive a minimum of £116.75 per week as Statutory Sick Pay (SSP). The employer pays this for up to 28 weeks.

Holiday entitlement - Nearly everyone classed as a worker is legally entitled to 5.6 weeks of paid holiday per year, also known as statutory leave entitlement or annual leave. So employees who work a 5-day workweek must receive a minimum of 28 days of paid annual leave.

Benefits – Employee benefits, like a company car, private medical, gym membership etc., are a great way to attract talent but these must be declared to HMRC

Employer’s liability insurance - Employers' liability insurance can cover legal costs and compensation if an employee sues due to a work-related injury or illness. It's legally required for nearly all types of businesses to have this insurance.

Maternity/parental leave - Statutory Maternity Pay (SMP) or Statutory Shared Parental Pay (ShPP) is paid for up to 39 weeks and is paid out in the same manner as employee wages. Both tax and National Insurance will be deducted and employees must be checked for their eligibility before this is processed.

Here at OTG, we're pros at this. We help businesses from all over the world get to grips with the UK's complex PAYE system. This means we can take care of the whole process for you and offer a complete payroll solution. Our goal is to make the payroll process a breeze, so you can put your energy into running your business.

Funding Your Startup: A Roadmap to Growth

Mon, 10 Jun 2024 17:36:03 GMT

Written by:

Sophie Daykin

Co-founder & Tax Partner

Funding Your Startup: A Roadmap To Growth

The startup journey is an exhilarating rollercoaster ride. You've poured your heart and soul into your innovative idea, but to turn it into a reality, you'll likely need funding. Fear not, there's a wealth of funding options available, each with its own advantages and considerations. Let's navigate the exciting, yet sometimes bewildering, landscape of startup funding.

Bootstrapping: Building on Your Own Foundation

Bootstrapping is a classic startup strategy. It involves financing your venture with your own savings and maybe even some early sales revenue. Bootstrapping allows you to retain complete control of your company, but it limits your growth potential. It's a great option for startups with a clear vision and a budget-conscious approach.

Angel Investors: Not-So-Secret Weapons

Angel investors are high-net-worth individuals who take a chance on promising startups. They often provide valuable mentorship alongside their financial backing. However, angel investors typically expect a significant stake in your company in exchange for their investment. So, be prepared to potentially relinquish some control.

Venture Capital (VC) Firms: Geared for High-Growth

VC firms are like funding powerhouses. They pool funds from investors and invest in startups with the potential for explosive growth and substantial returns. While VC firms offer significant funding, they have stricter investment criteria and typically require significant equity stakes in return. So, be sure your startup is ready to scale fast if you pursue this route.

Small Business Loans: A Traditional Stepping Stone

Traditional banks and government agencies offer loans specifically designed for small businesses. These loans provide flexible repayment options but often come with higher interest rates. This can be a good option if you need a predictable funding source to bridge a short-term gap or finance specific equipment or inventory.

Crowdfunding Platforms: Unleashing the Power of the Many

Crowdfunding platforms allow you to raise capital from a large pool of individual investors. This approach is democratic and can generate significant buzz for your startup. However, it requires a compelling campaign and may not raise the substantial sums that VC firms or angel investors can provide.

Choosing the Right Funding Path

The ideal funding option for your startup depends on several factors:

Stage of Development: Are you in the early stages of brainstorming, or do you have a minimum viable product (MVP) ready to test the market? Different funding options cater to various stages of growth.
Funding Needs: How much capital do you require to achieve your initial or next-level growth objectives?
Company Goals: Do you prioritise maintaining control or are you open to giving up some equity for a larger investment?
Risk Tolerance: Each funding option has an associated risk profile. Consider your risk tolerance and comfort level with potential debt or equity dilution.

Taking the Next Step

Funding is the fuel that propels your startup's growth engine. By understanding the available options, carefully considering your needs and goals, and potentially seeking guidance from financial experts, you can make informed funding decisions that pave the way for a successful future. Remember, research is key! Explore the different options, compare terms, and don't be afraid to negotiate to secure the best fit for your startup's trajectory. Good luck on your funding journey!

Unlocking Employee Ownership: A Guide to EMI Schemes in the UK

Wed, 06 Dec 2023 19:32:46 GMT

Written by:

Sophie Daykin

Co-founder & Tax Partner

Unlocking Employee Ownership: A Guide to EMI Schemes in the UK

In the dynamic landscape of today's workforce, companies strive to attract and retain top talent. One innovative strategy gaining popularity in the UK is the Employee Management Incentive (EMI) scheme. This scheme not only serves as a powerful tool for employee retention but also fosters a sense of shared ownership and commitment.

What is an EMI Scheme?

The EMI scheme, established by the UK government, allows companies to grant share options to their employees. These options are a form of non-cash remuneration, providing employees with the opportunity to acquire shares in the company at a predetermined price. This initiative aims to align the interests of employees with those of the business, encouraging a collaborative and motivated workforce.

Key Features and Benefits

1. Tax Advantages:

- Capital Gains Tax (CGT) Benefits: When employees exercise their share options and sell the shares, they may benefit from lower rates of Capital Gains Tax compared to traditional income tax rates.

- Income Tax Savings: Employees typically don't incur income tax at the time of the grant or exercise of the option, contributing to the attractiveness of the scheme.

2. Flexibility:

- Tailored Schemes: EMI schemes can be customised to suit the specific needs and objectives of the company. This flexibility makes it suitable for businesses of various sizes and industries.

3. Employee Engagement:

- Ownership Culture: By providing employees with a stake in the company's success, EMI schemes promote a sense of ownership and pride in their contributions to the organisation.

- Retention Tool: The prospect of owning a share in the company can be a compelling factor in retaining and motivating key talent.

4. Growth Catalyst:

- Facilitating Growth: EMI schemes are particularly beneficial for startups and high-growth companies. They can be a vital tool for attracting skilled professionals and fostering a growth-oriented mindset.

How EMI Schemes Work

1. Granting Options:

- The employer grants options to selected employees, specifying the exercise price and any performance conditions.

2. Vesting Period:

- Employees may need to wait for a specified period (the vesting period) before they can exercise their options.

3. Exercising Options:

- Once vested, employees can exercise their options, acquiring shares at the predetermined price.

4. Tax Implications:

- Employees may benefit from favourable tax treatment, especially if the shares have increased in value since the grant.

Considerations and Compliance

While EMI schemes offer numerous advantages, careful consideration and compliance with regulatory requirements are crucial. This includes adherence to the specific rules outlined by HM Revenue & Customs (HMRC) regarding eligibility, valuation, and reporting.

As with any financial scheme, it's recommended to seek professional advice to ensure compliance with regulations and to tailor the EMI scheme to the unique needs of the company. Through strategic implementation, the EMI scheme can be a catalyst for both individual and organisational success.

If you would like to discuss how your business can implement an EMI scheme, get in touch with us today on 03330 067 123 or email info@onthegoaccountants.co.uk.

Navigating the Fiscal Landscape: A Deep Dive into the Autumn Statement 2023

Thu, 23 Nov 2023 13:51:02 GMT

Written by:

Sophie Daykin

Co-founder & Tax Partner

Navigating the Fiscal Landscape: A Deep Dive into the Autumn Statement 2023

The unveiling of the Autumn Statement by Chancellor Jeremy Hunt, accompanied by an updated economic forecast from the Office for Budget Responsibility, has laid out the trajectory for the UK's economic policies. Let's delve into the key announcements that will shape the fiscal landscape in the coming years.

Business Taxation: A Stable Outlook

Corporation Tax

No further changes to the rates, providing a stable environment for businesses.

Capital Allowances

The shift from the super deduction regime to 'full expensing' introduced in Spring Budget 2023 is now set to become a permanent fixture. A 100% first-year allowance for main rate assets and 50% for special rate assets signifies a long-term commitment to supporting business investments in plant and machinery.

Research & Development: Empowering Innovation

The merger of the Research and Development Expenditure Credit (RDEC) and SME schemes is a significant move. From April 2024, loss-makers in the merged scheme will see a reduction in the notional tax rate from 25% to 19%. The intensity threshold for additional support to R&D-intensive SMEs will decrease from 40% to 30%, encompassing around 5,000 more SMEs. The introduction of a one-year grace period ensures continuity for companies temporarily falling below the threshold.

OECD Pillar Two

Implementation of the OECD Pillar Two Undertaxed Profits Rule from December 2024 aligns with the global minimum tax framework, ensuring multinational enterprises face a minimum 15% effective tax rate across jurisdictions.

Investment Zones and Business Rates: Fueling Growth

Investment Zones Programme

A commendable extension from five to ten years, with three new zones announced in Greater Manchester, West Midlands, and East Midlands, highlighting the importance of regional growth.

Business Rates Support

A £4.3 billion support package over the next five years is aimed at aiding small businesses and the Retail, Hospitality, and Leisure (RHL) sector. This includes an extension of the 75% relief for RHL in 2024-25, capped at £110,000, and a freeze on the small business multiplier for the fourth consecutive year.

Enterprise Incentives: Fostering Investment

EIS and VCT Reliefs

Legislation will be introduced to extend the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) reliefs to 2035, providing a continued incentive for investment.

ATED

Annual charges for Annual Tax on Enveloped Dwellings will see a 6.7% increase from April 2024.

Personal Tax and National Insurance: A Balancing Act

Income Tax

No changes to income tax rates or thresholds.

National Minimum and Living Wage

A noteworthy 9.8% increase in the National Living Wage to £11.44 per hour for eligible workers aged 21 and over from April 2024.

National Insurance Contributions

Reduction in the main rate of Class 1 employee NICs from 12% to 10% and a decrease in the rate of Class 4 NICs for the self-employed from 9% to 8% from 2024. Abolition of Class 2 NICs for the self-employed from April 2024.

Other Changes: Streamlining Processes

Expansion and simplification of the income tax cash basis for the self-employed and partnerships from April 2024.
Individuals with income taxed only through PAYE won't be required to file a Self Assessment return from 2024-25.
Making Tax Digital (MTD) will proceed for self-employed individuals and landlords with annual income over £50,000 from April 2026, followed by those with income over £30,000 from April 2027.

Pension Reforms: A Comprehensive Overhaul

A comprehensive package of pension reforms aims to improve outcomes for savers, consolidate the pensions market, and enable diverse portfolio investments. The authorised surplus repayment charge will be reduced from 35% to 25% from April 2024, and the triple lock on the new state pension will result in an 8.5% increase to £11,500 per year from April 2024.

Indirect Taxes and Duties: A Balanced Approach

VAT

Expanding the scope of zero-rated VAT on Women's Sanitary Products and Energy-Saving Materials in an attempt to demonstrate a commitment to inclusivity and sustainability. The freeze on alcohol duties until August 2024, alongside increases in tobacco duties, reflects a nuanced approach.

HGV Levy and Vehicle Excise Duty

A freeze on HGV Levy and Vehicle Excise Duty rates for HGVs, coupled with an uprating of Vehicle Excise Duty rates for cars, vans, and motorcycles in line with RPI from April 2024, aims to balance economic considerations and environmental impacts.

Green Taxes

A mix of freezes, increases, and new initiatives in green taxes.

In summary, the Autumn Statement 2023 paints a comprehensive picture of the government's economic strategy, focusing on stability, innovation, regional growth, and sustainability. As businesses and individuals prepare for the changes ahead, the overarching theme is one of adaptability and resilience in the face of evolving fiscal landscapes.

Filing Overhaul for Small Businesses: Balancing Transparency and Privacy

Fri, 10 Nov 2023 12:09:16 GMT

Written by:

Daniel Scott

Head of Accounting

Filing Overhaul for Small Businesses: Balancing Transparency and Privacy

Recent developments in the United Kingdom have ushered in substantial changes to the way small businesses report their financial information. With the enactment of the Economic Crime and Corporate Transparency Act, small enterprises, including micro-entities, are now mandated to submit a profit and loss account to Companies House. This development has sparked a diversity of opinions within the business community. Let’s take a look at the implications of this change and the differing perspectives surrounding it:

The New Filing Requirements

1. Profit and Loss Account: Small businesses and micro-entities are required to file a profit and loss account, encompassing crucial financial data. This measure aims to enhance transparency by making the company's turnover information publicly accessible.

2. Director's Report: Small businesses must also submit a director's report, providing additional insights into their financial performance.

3. Abridged Accounts Abolishment: The Bill does away with the option for companies to prepare abridged accounts, which previously allowed for a condensed financial statement.

Definition of Small and Micro-Entities

To comprehend the scope of these changes, it is vital to define what constitutes a small business and a micro-entity. A small business is one that satisfies at least two of the following criteria:

- Turnover of £10.2 million or less

- £5.1 million or less on its balance sheet

- 50 employees or fewer

Micro-entities are defined as companies that meet at least two of the following criteria:

- Turnover of £632,000 or less

- £316,000 or less on its balance sheet

- 10 employees or fewer

A Lack of Clarity

Despite the legislation's passage, there is currently no established timetable for the enforcement of these new rules. Companies House has assured that the requirements for a profit and loss account will be set out in regulations, with further details communicated in due course.

Concerns and Divided Opinions

The introduction of these new filing requirements has ignited a wide spectrum of opinions within the business and accounting communities. Some argue that increased transparency is long overdue, given the limited liability that companies enjoy. They believe that making financial information accessible to the public is a necessary step to combat fraud.

Conversely, there are concerns about commercially sensitive information being divulged. Critics contend that this newfound transparency may lead to a "nosy neighbour culture" and put small businesses at a disadvantage when negotiating with larger customers. It is feared that competitors, suppliers, and even the general public may use this information to their advantage.

An Uncertain Future

The debate surrounding these changes is far from settled. While public access to profit and loss accounts remains a concern, it is up to the secretary of state to decide whether these accounts will be publicly accessible or kept private. The government's intention is to use these requirements to enhance the reliability and accuracy of the Companies House register and minimise the burden on businesses. It aims to address the issue of inaccurate or insufficient information currently present in the register.

The Economic Crime and Corporate Transparency Act ushers in a significant shift in the way small businesses report their financial information. While the government's goal is to strike a balance between transparency and minimising burdens on businesses, the impact of these changes remains uncertain. As the secondary legislation is finalised, more details will emerge, providing a clearer picture of how this will affect small businesses, their privacy, and their ability to thrive in an increasingly transparent environment.

What R&D expenses can be claimed back?

Mon, 18 Sep 2023 07:42:10 GMT

What can be claimed back?

R&D Tax Relief allows companies to claim certain costs associated with qualifying research and development (R&D) activities. Here are some of the main costs that can be claimed on an R&D tax claim in the UK:

Employee Costs

The salaries, pension costs, and employer National Insurance contributions for employees directly engaged in R&D activities can be claimed. This includes not only researchers and scientists but also supporting roles like project managers, technicians, and administrative staff who contribute to the R&D project. If your company uses staff provided by external agencies for R&D activities, the costs associated with these individuals can also be included in the claim.

Subcontractor Costs

If you subcontract R&D work to external parties, the payments made to them for qualifying R&D activities can be claimed.

Consumable Items

The cost of materials and consumables used directly in the R&D process can be claimed. This could include items like chemicals, software licences, prototypes, and other materials that are essential for the R&D project.

Software Costs

If your R&D activities involve purchasing or developing software directly used in the project, the costs associated with it can be claimed.

Utilities and Power

The costs of power, water, and fuel used directly in the R&D process can be included in the claim.

It's important to note that the costs being claimed should be directly attributable to qualifying R&D activities. Proper documentation is crucial when making an R&D tax claim. This includes records of the R&D projects, technical challenges, staff involved, project timelines, and financial records supporting the claimed costs. To get your claim right, it’s never too early to speak with a Tax Advisor!

How much is an R&D tax credit claim worth?

The tax credit rate for the R&D Tax Relief scheme depends on whether the company is classified as a small or medium-sized enterprise (SME) or a large company. The tax credit rates differ between these two categories.

R&D tax credits are determined by your investment in research and development activities. To perform an R&D credit calculation, you must pinpoint eligible expenses and enhance them by the applicable rate. This yields your ‘enhanced expenditure.'

By subtracting your enhanced expenditure from your taxable profits or incorporating it into your losses, you will achieve:

A reduction in Corporation Tax if your company is generating profits.
A cash credit if your company is operating at a loss.
Or a blend of both outcomes.

SMEs

You can claim tax relief if you’re a SME with:

less than 500 staff
a turnover of under 100 million euros or a balance sheet total under 86 million euros

SMEs that incur losses can seek reimbursement of up to 18.6p for every £1 spent on eligible R&D.

For R&D-intensive entities with financial losses (classified as those investing a minimum of 40% of their overall expenses in qualifying R&D), the potential reimbursement escalates to 27p for each £1 spent on qualifying R&D undertakings.

The average SME claim made in the 2020/21 tax year was

£53,282

National Statistics, HMRC

Large Companies

Large companies are able to claim 20p for every £1 spent on qualifying R&D activities.

Why engage with a Tax Advisor?

The eligibility criteria and rules for claiming R&D tax relief can be complex, consulting with tax professionals or experts who are well-versed in the UK's R&D Tax Relief scheme can help ensure that you maximise your eligible claims while adhering to the guidelines and requirements.

12 KPIs for SaaS Tech Startups should monitor

Wed, 26 Apr 2023 12:28:45 GMT

12 SaaS KPIs tech startups should monitor for optimum success

A quick search of Google reveals that there are anywhere between 8 and 32 must-track SaaS KPIs for tech startups to track to ensure they are in control of their business. Creating a SaaS KPI dashboard of 32 different indicators could easily lead to information overload and action paralysis, so we suggest starting with these top 12 key performance indicators. The most useful KPIs fall into four distinct categories, as follows:

Sales/Marketing
Revenue and Growth
Customer success

Some of the top 12 KPIs appear in more than one category.

Sales/Marketing SaaS KPIs

Within this category there are six important KPIs to consider. These are Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR) – sometimes also known as Annual Run Rate, Average Revenue per Account (ARPA), Customer Acquisition Cost (CAC), Customer Lifetime Value (CLTV), Customer Conversion rate and the Quick Ratio.

Let’s look at how to calculate these key metrics for a startup and why to use KPIs.

Monthly Recurring Revenue is the monthly income from new sales, renewals and upgrades, whereas Annual Recurring Revenue is the same but for the whole year. Our blog about MRR and ARR can help you decide if you need to track one or both and how to calculate them.

MRR helps you to understand the current performance of the company whereas the ARR is a helpful predictor of future income streams. Annual Recurring Revenue doesn’t take into consideration any seasonal variations in sales so bear this in mind when calculating your ARR as 12 times your MRR.

Average Revenue per Account is calculated by taking the MRR and dividing it by the number of accounts for the period in question. ARPA can help companies to understand which customers, services and products are generating the most revenue.

Customer Acquisition Cost is the amount of money is costs you to gain a new customer. You calculate it by dividing the total cost of sales and marketing by the number of new customers for the period in question. This metric can help you to determine whether you can afford to spend more money on sales and marketing and whether the campaigns are worth the effort.

Another of the ley metrics for a SaaS startup is Customer Lifetime Value or CLV. This calculates an estimate of how much money a customer will spend over their entire relationship with your business. You work this out by calculating your Customer Churn rate first (see below). Once you know your Customer Churn, you can use the following formula to calculate your CLV:

ARPA x (1/Annual Customer Churn rate)

An example will help here. If your annual churn rate is 20% and your APRA is £5000, then your CLV is 5000x (1/0.2) = £25,000.

Your Customer Conversion rate is a measure of how successful your sales process is. Conversion rate can be calculated in a variety of ways depending on your sales process. However, for SaaS companies, one of the most common ways to calculate conversion rates is to use the following formula:

(Number of free trial customers who go to paid software) / (number of free trial customers) x 100.

Some companies might calculate the conversion rate as the number of sales divided by the number of visitors to a specific page on a website or the number of sales as a percentage of the number of proposals. Whichever way you decide to calculate it, keep it consistent over time so you can monitor the trend in conversions.

Finally, under the Sales category, we suggest calculating the Quick Ratio . This SaaS KPI is useful for determining how well you are growing. A quick ratio of at least 4 is a good benchmark of a successfully expanding company. You can calculate your Quick Ratio as follows:

Quick ratio = (MRR added + expansion MRR) / (MRR downgrade + Churn MRR)

For example, a company has new MMR added of £15,000 + £5,000 of upgrades. They have £2,500 of downgrades and £1,500 of Churn). So (15+5)/(2.5+1.5) = 5. This shows that the company is successfully bringing in new accounts and upgrades faster than the rate at which customers are leaving or downgrading.

2. Revenue/Growth KPIs

Within this category of KPIs, aside from MRR, ARR and Quick Ration which are also Sales measures, you could consider tracking Customer Conversion rate, Customer Churn Rate, Revenue Churn, Net Burn Rate and Viral Growth. Each of these KPIs helps your startup to assess how well your revenue is increasing.

Churn rate is a measure of how many customers you are loosing over the period in question. You calculate it by dividing the number of customers cancelling by the total number of customers. If your business has 100 customers cancelling in a year where the total number of customers was 2,500, then your attrition or churn rate is (100/2500)*100 or 4%. It’s a good idea to keep an eye on this number and take action quickly if you see it creeping up.

On a similar theme, but using ££ instead of customer numbers, Revenue Churn calculates the % of revenue lost over the period. The calculation is Revenue churn = (revenue lost from lost customers) / (total revenue at beginning of period) x 100.

A company has lost revenue of £17,500 for accounts that left or downgraded. If the total revenue was £350,000, then the revenue churn was (17,500/250,000)*100 = 5%

Net Burn Rate shows how much money is being used each month to keep the company in business. For startups burn rate can be high. If you are spending £25,000 a month and bringing in £15,000 MRR then the net burn rate is £10,000. You can work out how much longer you can stay in business without any new investment by looking at your cash reserves and your net burn rate.

Viral Growth is the last SaaS performance metric in the Revenue/Growth category. Sometimes also known as viral coefficient, it’s used as a good indicator of company growth and brand awareness. The viral growth is calculated as the number of invitations sent from current users x conversion % / 100. A viral growth of over 1 is considered good and helps to reduce your customer acquisition cost.

3. Customer success KPIs

The main metric to look at here is the Net Promoter Score (NPS). The NPS measures customer satisfaction and shows your customers' willingness to promote your products to others. The formula you need is:

NPS = (# promoters / total # of survey respondents x 100) - (# detractors / total # of survey respondents x 100).

From a high score of 10, promoters are those giving your product/service 9 or 10, detractors are those giving 0-6. Scores of 7 or 8 are ignored when calculating NPS. Out of a survey of 100 people, 59 gave 9 or 10 and 11 gave 0-6 with 30 giving 7 or 8. The NPS is therefore 59 – 11 = 48.

How do you decide which KPIs to use?

It can be challenging to create the most useful dashboard of performance indicators and you may need to adjust what you track and how you track it over time to maintain the value in producing SaaS KPIs. There are many more metrics you could choose to track relating to your website performance, social media marketing, operational KPIs as well as internal measures such as employee satisfaction. Don’t try to track everything as you can become overwhelmed – just pick the top ones and focus your efforts there.

How On The Go can help with SaaS KPI reporting

If you would like to explore how to set up relevant KPI tracking for your tech startup, contact David Masih , our client relationship partner. David can provide information on how we’ve helped other businesses to grow using the right performance metrics. Call 03330 067 123 or email info@onthegoaccountants.co.uk and have a chat to us today.

You may also be interested in:

What is Net Cash Burn rate and how to calculate it

How to write a tech startup business plan

Capitalisation of R&D costs for tech startups

Mon, 17 Apr 2023 22:02:53 GMT

Capitalisation of R&D costs for tech startups – what you can and can’t do

A common question we get at OTG Accountants from our tech startup clients is,

‘How should we treat the capitalisation of R&D costs?’

In the UK, which follows the International Financial Reporting Standards (IFRS) framework, some R&D costs can be capitalised rather than expensed but how do you decide what and how much of your R&D costs to capitalise?

What is R&D expenditure?

R&D stands for Research & Development. These are the upfront costs that companies such as tech startups, healthcare & pharmaceutical companies and other organisations that innovate will incur when creating new products or services. R&D spend includes direct expenditures such as salaries, outsourced R&D, software, prototyping and consumables to design, develop, and enhance processes, products, services and technologies.

What is capitalisation of R&D costs?

IFRS allows a company to transfer some of its R&D costs to the balance sheet by way of capitalisation of expenses into assets. This spend will create profits in the future, so capitalisation of R&D costs enables a company to match the expense against the profits created from the expense.

Why capitalise R&D spend?

When R&D spend is capitalised, it is then amortised to the P&L account over the useful life of the asset, thereby matching the cost with the associated revenue to give a more accurate picture of profitability. The impact in the current year accounts is to increase EBITDA (earnings before interest, tax, depreciation and amortisation) by increasing the profit for the year. There will be a corresponding increase in fixed assets on the balance sheet which will then be written down by depreciation over subsequent years. FRS102, section 18 on Intangible assets states that this period should be less than 10 years.

What can you capitalise and what must be expensed?

According to FRS102 , companies may NOT capitalise research spend but may capitalise development spend that meets certain criteria.

A company may recognise the development spend as an intangible asset if it can demonstrate ALL of the following:

It must be technically feasible for the intangible asset to be completed so it can be used or sold.
It intends to complete the intangible asset so it can be used or sold.
It has the ability to use or sell the asset.
The way in which the asset will generate probably future profits e.g the company could show market demand for the output of the asset.
It has adequate resources to complete the asset development so it can be used or sold.
It must be able to reliably measure the costs associated with the asset creation.

Deciding whether to capitalise R&D costs or expense them

While it may be tempting to improve the short-term profitability of your company by capitalising your development costs, it may not be the best approach in the long-term, especially if you are seeking funding rounds. Tech company valuations are primarily based on a revenue multiple, so artificially inflating your profits through over-capitalisation of R&D costs could be storing up future problems.

What about R&D tax relief and capitalisation?

New businesses often assume that if you capitalise development costs, R&D tax relief cannot be claimed. However, this is not necessarily the case. HMRC’s guidance, the Corporate Intangibles Research and Development manual CIRD81450 provides for R&D tax relief of intangible assets when spend meets these criteria. The expenditure:

must be an allowable cost for tax purposes for the period in question,
must be an intangible asset in the accounts and
should have been incurred in the accounting period in question.

This means that in practice staff, subcontractor and software costs can be capitalised and included in a claim for R&D tax relief.

Accounting for your R&D costs correctly

It can be tricky to get this area of accounting accurate and optimised for your startup so if you need support, contact David Masih , our client relationship partner. David can explain how OTG Accountants can ensure your startup is compliant and as attractive as possible to potential investors. Call 03330 067 123 or email info@onthegoaccountants.co.uk for a no-obligation chat today.

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How OTG helped WooSignal stay on top of their accounts

Thu, 30 Mar 2023 12:58:18 GMT

How OTG helped WooSignal stay on top of their accounts

Please can you give us a brief overview of what WooSignal does and who your target audience is?

WooSignal Ltd is an App builder platform for e-commerce stores using WooCommerce. Our target audience is small-large e-commerce store owners who need an app for their business.

How has the level of support been at OTG?

OTG accountants have provided an amazing service to help our business stay on top of our accounts. Very knowledgeable, professional and great to work with.

What did you like most about using OTG services?

There were many things to like, however, if we had to pick one it’s the people. They helped us demystify a lot of important accounting terminology and informed us on the appropriate actions we should take.

Why would you recommend OTG?

We've been very satisfied with OTG and intend to continue using the service for the foreseeable future. They are accountants you can trust and provide simple, transparent pricing for their service. We'd highly recommend using their service.

Anthony Gordon
Managing Director
WooSignal Ltd

Changes to the National Minimum Wage April 2023

Tue, 21 Mar 2023 09:58:42 GMT

Changes to the National Minimum Wage April 2023

Each year the Low Pay Commission reviews and makes recommendations on the National Minimum Wage for workers in the UK. The Government is not obligated to accept the recommendations, but they often do. This short blog looks at the changes in National Minimum Wage from April 2023 and discusses the differences between National Minimum wage, National Living Wage and London Living Wage.

What is the National Minimum Wage?

The National Minimum Wage Bill was introduced as a concept in November 1997 and the law received royal assent in July 1998. It was the first time that the law had set a minimum hourly rate that employees must receive. The National Minimum Wage was introduced in April 1999 and was set at £3.60 per hour for workers over the age of 22 and £3.00 per hour for those aged 18-21. In the 24 years since this legislation was introduced additional worker categories have been added to include apprentices, younger workers and those over the age of 23.The national minimum wage is purely based on age and is not impacted by where you live, so there is not a different national minimum wage in London.

What is the National Living Wage?

The National Living Wage applies only to workers over the age of 23. It is a statutory minimum that must be paid by all employers and it is set as a % of median earnings. The aim is to reach 66% of median earnings by 2024.

What is the UK Living Wage and the London Living Wage?

The UK Living Wage and London Living Wage are the rates set by the Living Wage Foundation and are calculated based on the current cost of living. A set ‘basket’ of household goods and services are used to calculate the hourly wage rate. There is a separate higher rate for London to reflect the additional expense of living in the capital.

Changes to the National Minimum Wage Rates from April 2023

*Set by the Living Wage Foundation and not mandatory

The significant uplift in rates from 2022 to 2023 (c.10%) takes into account the increased rate of inflation caused by the cost of living pressures during the second half of 2022 and into 2023.

Why is the London Living Wage different to the National Living Wage?

The London Living Wage is higher to reflect the significantly higher costs of living and working in London. Property purchase and rental costs as well as travel, food and drink and other expenses are higher than other parts of the country. The London Living Wage applies in all boroughs in Greater London and is around 15% higher than national minimum wage rates.

Getting support for compliance as an employer

Keeping up with all the legal and taxation changes surrounding business and being an employer can be demanding. You can get help from David Masih , our client relationship partner, who can talk to you about the latest changes affecting your business and employees. We can support you with payroll, compliance & tax accounting as well as business advice and simple bookkeeping. Call 03330 067 123 or email i nfo@onthegoaccountants.co.uk .

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The March Budget 2023 at a glance

Wed, 15 Mar 2023 22:40:06 GMT

The March Budget 2023 at a glance

As Jeremy Hunt wraps up his speech for the March Budget 2023, we distil the main changes and updates so you can see what’s likely to impact you over the coming months.

Cost of Living measures

The Office of Budget Responsibility’s forecast for inflation is now a reduction from the current level of 10.1% to 2.9% by the end of 2023.
The Energy Price Guarantee will remain in place for the next 3 months to 30 June 2023 meaning the average household will not pay more than £2,500, saving around £160 for each family.
4 million households who are currently on pre-payment meters will no longer pay a premium for their energy bringing the rates in line with direct debit customers.
Additional funding includes £63m to keep leisure centres and swimming pools, £100m for charities, an additional £10 specifically for mental health charities.
Fuel duty will be frozen and the 5p cut is maintained for an additional 12 months, saving the average driver around £100 next year.
Alcohol duty on draft beer in pubs will be up to 11p lower than in supermarkets.

Enterprise and investment measures

The planned corporation tax increase to 25% from April 2023 remains intact.
12 new investment zones which will attract funding of up to £80m will be created across the UK, including one in each of Scotland, Wales and Northern Ireland.
The small business investment allowance is increased to £1m, meaning that 99% of all small businesses can deduct the full value of their investment from that year’s taxable profits.
New policy of full capital expensing for the next 3 years, with an ambition to make it permanent meaning that all costs of IT equipment, plant & machinery are fully deductible.
Additional R&D tax credit of 27% for SMEs spending more than 40% of their expenditure on R&D.
CCUS – £20bn support for carbon capture usage and storage (CCUS) projects to help meet net zero commitments.
The Climate Change Agreement scheme is extended for two years to allow eligible businesses £60m of tax relief on energy efficiency measures.
Nuclear energy vital to meet net zero commitments. Reclassified as environmentally sustainable which gives access to same reliefs as sustainable energy. GB Nuclear – bring down costs & supply 25% of energy by 2050. First competition for small modular reactors – co-fund the technology.
Reform regulations around medicines and medical technology – from 2024 the UK will move to different model to allow quick UK approval of medicines already approved by other global regulatory bodies.
Manchester Prize of £1m every year to person or team that does the most ground-breaking artificial intelligence research.

Growth and employment measures

The OBR is forecasting that the economy will contract this year by 0.2% but will avoid a technical recession (two consecutive declining quarters)
The Work capability assessment for disabled people will be abolished enabling disabled benefit claimants to work with fear of losing their benefits.
There will be an increase the number of 50+ Universal Credit claimants who receive mid-life MOTs from 8,000 to 40,000 a year.
£400m of support for mental health/musculoskeletal resources for people considering leaving work because of these issues.
For workers on Universal Credit without disability or sickness, more sanctions will be applied to receive benefits - anyone working less than 18 hours will receive more work coach support to get them back into work/increase their hours.
A new apprenticeship, known as a ‘returnership’ will be available for workers over 50 to enable them to upskill and retrain.
Up to 40,000 over 50s on UC will get access to a mid-life MOT to help them prepare for retirement and improve financial resilience.

Education and childcare measures

A pilot scheme of incentive payments of £600 for childminders joining the professional (£1200 through agencies)
Change in minimum staffing ratios of 1:4 to 1:5 for two-year-olds (ratios are not compulsory)
Upfront payments of £951 for one child and £1630 for two children to access subsidised childcare.
The Qualifying Care Relief threshold doubles to £18,140 which will mean a tax cut for a qualifying carer averaging £450 a year.
Children aged 9 months-2 will get 30 free hours (in households where all adults working at least 16 hours). However, this will be implemented in stages – two-year-olds will get 15 hours from April 2024, all children from 9 months will get 15 hours from September 2024. From September 2025, all children will get 30 funded hours a week of term-time care (38 weeks a year)

Personal finances

There are no additional changes to income tax rate, income tax personal allowance, NI, Capital Gains Tax, Dividend Tax, Stamp Duty, Universal Credit or National Pay rates which will all remain as stated in the Autumn Statement.

Wages from 1 April 2023

National Living Wage for those aged 23 and over: From £9.50 to £10.42 an hour
National Minimum Wage for those aged 21-22: From £9.18 to £10.18 per hour
National Minimum Wage for those aged 18-20: From £6.83 to £7.49
National Minimum Wage for under 18s and apprentices: From £4.81 to £5.28

For more information on the March Budget 2023, visit the Government website .

Understanding the impact of the latest Budget

To talk about how the March Budget 2023 might affect your business, investments and personal situation, get in touch with David Masih our client relationship partner. David can explore tax mitigation strategies during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Barriers facing women in business and how IWD can help

Fri, 10 Mar 2023 11:00:37 GMT

Barriers facing women in business and how International Women’s Day can help overcome them

Sometimes the message behind International Women's Day can get somewhat lost. This wasn’t designed to negate the achievements of others nor deny those who identify differently.

At OTG we celebrate the day to recognise how far we have come, socially, culturally and politically, but also to highlight the fact that while we may see an improvement, there are so many women across the world that still suffer simply because they are female.

OTG, which was founded by two women, works with businesses of all sizes both nationally and internationally so we recognise the ongoing challenges facing women in business on a regular basis.

Can female business owners compete with male business owners on a level playing field?

Barriers facing women in business

It is often quoted that women in business have to work twice as hard as their male counterparts to get half as much credit [1]. There are several common barriers which contribute to women having a harder time in the workplace and as women business owners.

Lack of access to capital

One of the biggest barriers faced by women in business is the lack of access to capital. A 2022 report by Beauhurst, an investment consultancy, found that in the UK, just 2p in every £1 invested went to all-female founding teams vs 85p for all male founding teams, the remaining 13p went to mixed teams. This huge disparity in accessing funding means that women business owners are automatically at a disadvantage in the marketplace compared to their male competitors. Having access to adequate early-stage funding in particular can mean the difference between a business thriving and one that goes under.

Some investors are implementing programmes to redress the balance, providing dedicated funding pots specifically for female founders. Although rates are increasing, progress is slow. British Business Bank estimates that at current rates, it will take until 2045 for women to receive just 10% of all deals.[2]

Gender bias in the workplace

There are many ways that gender bias against women can manifest in the workplace including:

Lower wages for the same job
Failure to promote
Receiving less support
Small pay rises
Being given less demanding work to complete
Being pigeonholed into typically female dominated roles such as HR & teaching

Work-life balance

Women business owners face unique challenges in achieving work-life balance. Work doesn’t stop when you power down the laptop when you have a family who need you. Current studies suggest that women in business and the workplace who are mothers do at least twice as much housework, eldercare and childcare then men with families. Given women are continuing to shoulder the burden of caring duties, it leads to issues balancing work and personal life. Eventually the level of stress coming from competing priorities can lead to reduced productivity and burnout.

Lack of representation

The lack of representation in senior positions is also a significant challenge faced by women in business. For those running their own companies, this is obviously less of a problem but in many larger companies, female leadership still lags behind the men. In the FTSE100, only 9 of the CEOs are female and none are women of colour and for the FTSE350, only 6% or 19 are female. [3]

Fear of failure

Almost two thirds of women surveyed by Vistaprint admitted that they were worried about failing in business. This is holding women back from starting a business – only 20% of business owners are female in the UK currently.[4] When it comes to starting a new business, many women don’t get the same support from family, friends and colleagues as male business owners receive.

Redressing the balance

International Women’s Day is a good opportunity for men to become involved in raising awareness of the inequity facing women in business and in life in general. Supporting women business owners means giving them confidence and encouragement, providing opportunities to grow their business, making great business connections and ensuring the can gain equitable access to investment. IWD provides a chance to reflect on what progress is being made and where there are still barriers to overcome.

Support for women in business

If you are a woman in business finding it challenging to get the right help to keep your business growing or you are considering setting up your own business but need some help to get started, we can help you with business advice, compliance & tax accounting and basic bookkeeping. Sophie Thomas, our Co-founder can explain how we can provide the right financial support so you can flourish. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

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[1] https://www.independent.co.uk/voices/hillary-clinton-julia-gillard-gender-equality-women-work-equal-pay-success-a9200791.html

[2] https://www.british-business-bank.co.uk/uk-vc-female-founders-report/

[3] https://www.raconteur.net/leadership/tse-100s-first-female-leadership-team-overdue

[4] https://www.telegraph.co.uk/business/women-entrepreneurs/five-barriers/

A simple guide to the funding stages of a start-up business

Wed, 22 Feb 2023 16:09:49 GMT

Are you a startup founder who is looking for the best way to finance your venture? While it's certainly not easy, there are plenty of options available - from personal or family and friend capital, customer revenue and debt financing to venture capital. And let’s not forget all those funding rounds that can help kickstart (or turbocharge!) your business growth: Seed round... Series A ...Series B and Series C… understanding which stage is right for you can be complicated but essential if you want to make sure everything falls into place!

The different funding stages of a start-up

Pre-Seed funding

Pre-seed funding is sometimes also known as bootstrapping. This funding generally comes from the business owner’s personal resources whilst they attempt to get the company off the ground. The funding is often used for proof-of-concept work, developing prototypes and market research. This is likely to be the cheapest and quickest way to get funding from people who believe in you and your goals but that doesn’t mean it isn’t still a business transaction. Anyone investing in you at this stage should receive interest on the money they lend you and be kept informed of your progress against targets.

Seed funding

The first official stage of the funding stages of a start-up is called seed funding. At this stage, the owner and family and friends may also still be funding the business, but more capital is required, so angel investors are a good option. An angel investor is usually a high-net-worth individual who provides funding in exchange for part-ownership. Investing in a start-up is risky and angel investors tend to require a reasonable equity stake in the business.

Series A

This is the first round of venture capital funding. Usually, at this stage, the business has a team in place and the initial product development is complete. Series A funding may come from Super Angel investors who have higher amounts to invest but it is much more likely to come from early-stage venture capital trusts who are able to raise more significant sums. Series A funding can often produce sufficient capital to help the start-up trade for 6-18 months.

Series B

This funding stage for start-ups is often when the largest growth occurs. The product/service is now scaled for a much wider market and the company is outperforming its niche competitors and building high-quality teams. Start-ups that reach Series B funding are already more successful than most other start-ups and as the company will have a proven business model, the investment is less risky than Series A. Consequently, it is easier to raise larger sums of funding more quickly. Start-ups can raise up to $20M in Series B funding and some of this may come from its previous Series A investors as well as new partnerships with other venture capitalists.

Series C

Series C funding is for companies that have a proven business model and who need more capital for expansion. Series C investors will often be entrepreneurs and individuals who have already invested in the company in the past. It makes sense to ask your Angel investors, Series A & B investors to continue investing with you as they will have already built up the relationship and trust. Series C funding may require input from banks and other larger financial institutions rather than individuals and smaller VCs.

IPO (Initial Public Offering)

The Initial Public Offering isn’t technically a funding stage of start-ups since the company is now likely to be a fully established going concern at this point, but we have included it for completeness. Companies that are looking to go public via IPO generally have a valuation in excess of $100M. The IPO may be the first point at which earlier investors stand to reap the rewards of their investment. Investors may also exit via a merger/acquisition.

Getting support

If you have a new venture and need more information about the funding stages for a start-up, get in touch with David Masih our client relationship partner. David can help you explore your options during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

How OTG Streamlined Payroll Processes for Recycleye

Mon, 20 Feb 2023 09:46:40 GMT

How OTG Streamlined Payroll Processes for Recycleye

Recycleye is a ground-breaking technology company bringing advanced machine learning, computer vision and robotics to the global waste management industry.

Our proven Recycleye Vision and Robotics solutions increase plant performance, enabling data-driven strategic decision making and delivering transparency, traceability and efficiency.

Installed in locations across Europe and the United States, our clients rely on us to add value to their sorting operations through increased purity and outputs. Combined with unique research on WasteNet, we are reinventing the economics of recycling.

What have been your pain points prior to starting with OTG and have you seen an improvement?

We wanted ease and flexibility in our payroll, tax and accounting solution; we find OTG easy and responsive, with quick turnaround times and good flexibility, which is super helpful to a growing business like ours.

How has your response time been with our Client Finance Manager?

Sophie responds quickly and helpfully, and on the rare occasion she is out of office, she always sets up an alternative option in advance.

Why would you recommend OTG?

If you are looking to take the weight of payroll off your own shoulders, and are looking for a flexible solution that understands and appreciate the challenges of a new business, in addition to providing solid advice and guidance, OTG is the option for you.

Anastasia Levy

People Manager

Recycleye

How R&D Tax Credits Are Changing From April 2023

Wed, 08 Feb 2023 17:46:25 GMT

How R&D Tax Credits Are Changing From April 2023

A lot has changed in the world of Research and Development (R&D) over the last few months, with the government and HMRC introducing some fairly major changes as of 1st April 2023.

Overseas subcontractor and EPW Costs

Payments made to overseas subcontractors and overseas externally provided workers (who are not

taxed through UK PAYE) will no longer be allowable costs for accounting periods starting after 1st April 2023. There is an exemption for subcontracted work that has to be undertaken overseas because the required ‘geographical, environmental or social conditions are not present or replicable in the UK’, but this is unlikely to apply to the majority of subcontracted work that is currently claimed.

Digital Submission

From April 1st 2023, all corporation tax returns, including amended returns, will have to be submitted

digitally – postal returns will no longer be accepted.

Request for additional information

From April 1st 2023, All claims submitted to HMRC must include additional information, such as a

breakdown of the types of R&D expenditure and the details of any agents who have worked on the claim.

Claims will also have to be signed off by a senior officer of the company.

Pre-notification of claims

New rules require first-time relief-claiming businesses (or businesses who have not claimed in the last three financial periods) to submit a pre-notification of their claim to HMRC online.

SME R&D claimants

For expenditure incurred on or after 1 April 2023, the additional corporation tax deduction for SMEs

claiming R&D relief will reduce from 130% to 86% and the payable tax credit rate will reduce from 14.5% to 10%.

The financial impact for SMEs in a corporation tax loss position for a particular accounting period is that the cash tax benefit currently available of up to 33.35% (230% × 14.5%) is to be reduced to 18.6% (186% × 10%), which is a significant reduction. If, instead, an R&D claimant company chooses to carry forward tax losses until a taxable profit arises to offset against the claim, the R&D relief would generate a cash tax benefit of 21.5%, i.e. 86% × 25% (increased corporation tax rate to 25% from the existing 19% rate).

Large company claimants

The large company R&D credit rate (RDEC) is due to increase from a current rate of 13% to 20%.

The cash benefit for claimant companies is to increase from a current rate of 10.53% (13% × 81%, due to the current 19% corporation tax rate) to 15% (i.e. 20% × 75%, due to the 25% corporation tax rate to apply). Another factor to consider is the profit before tax benefit, which can be recognised in the financial statements of claimant companies, increasing from 13% to 20%. This could represent a

significant boost to RDEC claimants, particularly where qualifying R&D expenditure is sizeable.

HMRC’s new focus on improving compliance invariably means more ‘red tape’ for businesses to navigate and more personal culpability for company directors as claims must now be endorsed by a named senior officer.

Having worked with Tech and Startup businesses for many years, we are all too aware of the financial burden these changes could have on your company. If you have further questions about R&D changes, contact David Masih, our client relationship partner who explains how OnTheGo Accountants can help your business with R&D. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

What is recurring revenue and should you track monthly or annual recurring revenues

Tue, 07 Feb 2023 11:15:56 GMT

Should you track monthly or annual recurring revenues?

Many SaaS businesses will operate with a subscription model, meaning that clients pay them a set fee each month or year; but which is the best way to track and predict your income – using annual recurring revenues or monthly recurring revenues? In this blog, we’ll explore the benefits of each to help you decide how to manage your business.

What is recurring revenue?

Recurring revenue is sales received from the same customer over and over again. The subscription model of doing business is widely embedded now, with consumers used to paying companies such as Netflix, Sky and Spotify each month for their entertainment services.

What is monthly recurring revenue?

Monthly recurring revenue, also known as MRR, is the total amount of money from subscriptions per month. The formula for monthly recurring revenue calculation is:

Monthly subscription price x Total customers = MRR

Let’s say your monthly subscription costs £19.99 and you have 5,000 subscribers, your monthly recurring revenue is £99,950.

Benefits of using recurring monthly revenue models

Monthly recurring revenue services such as the ones mentioned above create a predictable income stream which varies by customer numbers. It can give businesses an easy way to smooth out cashflow and to do more accurate sales forecasting. By charging customers on a monthly basis rather than all in one go, you can build up a relationship over time with the customer to create a higher chance of them being a customer for longer or opportunities to upgrade them to premium services or sell them new services alongside their existing subscription.

What are annual recurring revenues?

Annual recurring revenues are still subscription models, but customers are only billed once a year. Annual recurring revenue, also known as ARR is the total amount of money from subscriptions each year. The formula for annual recurring revenue calculation is:

Annual subscription price x Total customers = ARR

Let’s say your annual subscription costs £200 and you have 5,000 subscribers, your annual recurring revenue is £1,000,000.

Benefits of using recurring annual revenue models

Using annualised recurring revenue to manage your business reduces the administrative overhead in dealing with your subscribers as you only have to bill them once a year rather than 12 times. It reduces the scope for errors and increases the upfront cash flowing into your business. ARR is one of the key measures that potential investors will be looking for so it’s necessary to track it for your future growth and funding.

Calculating MRR during times of change

The above calculations are a simplistic view of how to calculate monthly and annual recurring revenues, but businesses are rarely this straightforward. You might offer a range of different packages at different prices and subscribers will come and go. To calculate your MRR more accurately you’ll need to account for upgrades, downgrades, new subs and those that cancel. Here’s how to do that:

Monthly recurring revenue at the beginning of the month

plus Revenue from new subscribers in the month

minus Revenue from subscribers lost in the month

plus Change in revenue from subscribers who upgraded in the month

minus Change in revenue from subscribers who downgraded in the month

equals Monthly recurring revenue at the end of the month

You’ll need to calculate this for each package separately before you can calculate your total MRR.

Calculating ARR from MRR

Simplistically you could multiple your MRR by 12 to give you an estimate of your ARR. However, this won’t take into consideration any of the events mentioned above and if you have any revenue generated from

one-time sales included in your MRR, this will distort your ARR figure.

Using MRR and ARR in your business

It can be time consuming to calculate your monthly recurring revenues and to work out your annual recurring revenues from your MRR. You may need support to decide the best way to track and forecast your revenues. David Masih , our client relationship partner can talk to you about which methods might work best for your business. We can support you with business advice, compliance & tax accounting and basic bookkeeping.

Call 03330 067 123 or email info@onthegoaccountants.co.uk .

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The Self-Assessment Deadline and 5 reasons to file early

Fri, 27 Jan 2023 11:44:41 GMT

The Self-Assessment Deadline and 5 reasons to file early

January is that time of year when accountants up and down the land are tearing their hair out over the self-assessment deadline. Revenues, expenses and profits incurred in the year to March 2022 must be reported to HMRC and any tax due paid by 31st January. This blog post explains what happens if you miss the filing/payment deadline and five reasons to submit your 2022/23 tax return early.

Missing the self-assessment deadline

If you fail to submit your 2021/22 tax return and pay any tax due by 11.59 on 31 January 2023, your tax return will be late. This means you will incur a couple of different penalties:

£100 late filing penalty – if your return is up to 3 months overdue. If you file your return more than 3 months late, you can incur higher penalties.
Interest on late payments – for every day your tax return and payment are late, you will accrue interest charges at base rate plus 2.5%.

Income tax self-assessment deadline penalties are being harmonised with VAT late payment penalties so the regime will change for ITSA customers with business or property income over £10,000 per year from the tax year beginning 6 April 2024, and for all other ITSA customers from the tax year beginning 6 April 2025. More information is available from HMRC website .

Why should you consider filing your 2023/24 tax return early?

There are a few reasons why it’s a good idea to get your tax return submitted early:

1. Minimise risk of mistakes

Filing your tax return on 31st January is stressful for you and your accountant. There’s a much higher risk of errors being made or data being omitted if you are pushing yourself or your accountant right to the deadline. By getting your data into HMRC in the first half of the tax year you can avoid expensive mistakes.

2. Avoid penalties

Late payment penalties are due if you are even one minute past the self-assessment deadline of 11.59 on 31st January. Early submission doesn’t mean you have to pay your tax early but it means you can avoid the risk of missing the deadline. It’s not uncommon for the online portal to have issues in the run up to 31 January due to the heavy volume of users.

3. Avoid shocks at the self-assessment deadline

When you submit your tax return earlier in the year, you’ll know exactly how much tax you owe months before you need to pay. This can avoid a huge shock at the end of the tax year leaving you no time to plan for payment.

4. Earlier refund of overpayment

If you are due a refund of tax this will usually be repaid within around 6 weeks of you submitting your tax return. By leaving submission until the self-assessment deadline, you are delaying your tax refund. That money could be working harder for you rather than earning interest for HMRC.

5. Time to save up for the bill

If you haven’t been putting money aside for your tax bill during the year, by filing your 2022/23 return as early as April 2023, you’ll have around 9 months to save up before you have to hand it over to HMRC. Leaving your tax return to the last minute means you may not know in advance how much you will need to pay.

Getting support to beat the self-assessment deadline for tax year 2023/24

Let us support you to get ahead of the tax return deadline in January 2024. Contact David Masih , our client relationship partner to learn more about how we help you save tax and take advantage of all the reliefs that are available to you. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

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Deadline for State Pension Top Ups Closes in April 2023

Tue, 24 Jan 2023 12:02:00 GMT

The current government scheme that allows individuals to top up their state pension is ending on 5th April 2023.

Time's running out!
Don't let years of hard work go for naught, get your historical gaps in National Insurance covered before it's too late. If you don't take advantage of this scheme soon then those vital contributions could be lost forever – and with them any hopes to retire comfortably in sunny Spain or the Bahamas. So act fast if you want a full state pension later down the line!

The additional 10-year window for top-ups

Under the current scheme, individuals who reached or will reach state pension age after 5 April 2016 are eligible to fill gaps in their NI record going back to 2006/7. However, this scheme is due to close on 5th April this year, reverting to the normal 6 prior years for historical contributions. This means gaps can only be filled in the NI record going back to 2016/17.

How to check if you are on track to get a full State Pension

Visit www.gov.uk/check-state-pension to find out if you are on track to receive the full State Pension.

What to do if you have gaps in your record

For some people, filling the gaps in the State Pension NI contributions record could make a significant difference to retirement benefits. A full year of NI contributions is currently worth around £275 per annum, so topping up your NI record could have a significant impact if you have big gaps. According to Money Marketing , an individual with 10 missing years could pay out around £8,000 to fix the gaps but see an increase of £55,000 in state pension over a typical 20-year retirement.

It's vital to get financial advice before making any changes to your NI contributions as circumstances differ for everyone and topping up may not be the best thing for you to do with spare cash. Anyone thinking of topping up their state pension for these earlier years should check with the Future Pension Centre at the Department for Work and Pensions to make sure it’s the right course of action for them.

Getting support for your pension and personal finances

Pensions are often a source of misunderstanding and confusion. Contact David Masih , our client relationship partner to learn more about how we help you save for the future as well as mitigate your tax. Call 03330 067 123 or email info@onthegoaccountants.co.uk.

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How OTG Accountants implemented credit control for Vyde

Sun, 15 Jan 2023 22:23:47 GMT

How OTG Accountants has implemented credit control for Vyde

Vyde Ltd is a fast growing advertising Tech company who joined OnTheGo in 2021 looking to build a finance function. Since then we have introduced several processes and improved their reporting system. We also successfully implemented a credit control function to streamline their billing process and ensured overdue invoices are been chased every single week without fail.

Vyde has a great team who are available on Slack to collaborate with us and provide the information required to close their month end process.

You’ve been with OTG for quite some time, what’s your experience been so far?

Vyde was looking for something above and beyond the standard accountants. We were looking for much more support as a small, growing, dynamic business with changing needs from investor requirements to a growing team and payroll all those kinds of different things. We really liked what OTG had to offer; a really flexible supportive offering which has really helped us through that phase of growth.

How are you finding our Credit Control Services? Have you noticed any difference?

Absolutely. Having somebody dedicated, to working on the credit control for us and really shortening the time in which we receive cash from those clients. (This has) translated to actual measurable numbers and I think also having Louise as an extension of our team has been really helpful.

What would you recommend to someone that’s looking for credit control and how having the service can help them?

I think understanding the specifics of what it is exactly that you need. For us we needed that extra level of support and somebody who could be part of our team. It’s been really helpful, its worked really smoothly and we are seeing the impact in the numbers so very positive.

Sam Peters

CEO & Co-founder, Vyde

6 New Year’s Resolutions for Startup Founders in 2023

Mon, 09 Jan 2023 23:07:10 GMT

6 New Year’s Resolutions for Startup Founders in 2023

As we ring in a new year, it’s the perfect time for startup founders to think about how they can make changes to set themselves up for success in 2023. Take a close look at your business and consider which tasks you could be outsourcing to free up your time and energy so that you can focus on what you do best. By making these six changes, you’ll be well on your way to a successful year.

1. Having bookkeeping done regularly

Up to date bookkeeping is essential for any business owner. It gives you a better understanding of your sales, expenses and profits so that you can identify trends and fix issues quickly.

If you're not able to commit to monthly bookkeeping yourself, make it a priority to outsource it to someone who will keep on top of it. By getting your fundamental bookkeeping in order now, you'll save yourself a lot of stress and potential penalties down the road.

2. Decreasing work stress

Being a startup founder can be stressful, especially if you are in a high-growth phase and there’s a million and one things to do. Running your own company is exciting but if you aren’t keeping on top of everything, it can become a pressured environment, leading to physical and mental wellbeing issues. Look for ways to reduce work stress which could mean outsourcing, taking on permanent staff or making hard decisions about working with certain clients.

3. Spending quality time with family

So, what can startup founders do to make sure they don’t miss out on family time?

In 2023, aim to spend quality time with the family, especially at the weekends. It’s about making a personal contract with yourself to ensure that work doesn’t take over your life completely.

You might even want to schedule in some ‘family time’ into your calendar, just like you would any other important meeting. By doing this, you can be sure that you won’t let work consume all of your time – and you can still be there for your loved ones when they need you.

4. Healthy lifestyle

Keeping healthy takes time and effort. It means eating proper meals instead of takeaways or grabbing processed food on the go. Making time to exercise is also a priority if you want to maintain good physical and mental health in 2023.

There may be ways to incorporate more movement into your workday, such as getting a sit-stand desk, taking the stairs more or even talking calls while you are out on a lunchtime stroll.

5. Learning to delegate

Know when it’s time to get more help in. Delegating tasks that take too long, are difficult or tedious is a great way to free up your time to work on the things in your business that only you can do or give you more leisure time.

Learning to delegate is a key skill for startup founders who will quickly find that they cannot hope to complete everything on their own. It’s not a sign of weakness to bring in help, it’s a strength.

6. Having someone like OTG Accountants as their CFO

Startup founders often manage the business finances themselves at the beginning of their business journey. Over time, you may need more complex information from your financial records or you need professional support to get ready for a funding round. That’s when it makes sense to engage with an accountant who can act as an outsourced CFO (chief financial officer).

Startups may not yet be able to afford a full-time Finance Director, so instead consider a business partner to help out on a part-time basis without having the complexities of dealing with employed staff. You could get support for a couple of days a month or to work on particular projects, depending on your current needs.

Helping startup founders to better work/life balance in 2023

David Masih , our client relationship partner can talk to you about how OTG Accountants has helped other startup founders to create a sustainable work/life balance while achieving challenging business goals. We can support your startup with bookkeeping, compliance and business advice.

Call 03330 067 123 or email info@onthegoaccountants.co.uk .

You may also be interested in:

Avoiding VAT penalties

Fuel rate changes

Avoid VAT penalties for late payments

Wed, 14 Dec 2022 09:34:46 GMT

How to avoid VAT penalties for late payments in January 2023

If you're a business owner, you know that keeping on top of your finances is crucial. HMRC is introducing a new VAT penalty scheme which will impact anyone filing VAT returns for VAT periods starting on or after 1 January 2023. We are sharing some tips on how to avoid VAT penalties for late payments in January 2023. So read on to find out more!

What are VAT penalties?

HMCR penalties are imposed for all companies that fail to submit a VAT return on time or make late payment of their VAT. Returns must be submitted within 1 month and 1 week of the VAT period end, so 7 May for the quarter ending 31 March. To avoid VAT penalties on late payment, VAT owed must also be paid over to HMRC by the same date.

How are the new VAT penalties for late payment and late submission different?

Under the old regime, surcharges for late submission and payment depended on the level of annual turnover and how often you had been late in the past. There was no surcharge on the first default within 12 months but surcharges for subsequent defaults were:

Penalties for VAT late filing

From January 2023, HMRC late filing penalties are calculated using a points basis, in much the same way as points on your driving licence. For each late VAT submission, companies will receive one penalty point.

VAT penalties of £200 will be charged once the penalty thresholds have been reached as follows:

Annual VAT returns 2 points
Quarterly VAT returns 4 points
Monthly VAT returns 5 points

Although no further penalty points will be added, an additional £200 penalty will be charged for each subsequent late submission.

Penalties for late payment

Up to 15 days overdue – no penalty if you pay in full or agree a payment plan

Between 16 and 30 days overdue – 2% on the VAT owed at day 15

31 days or more overdue - 2% on the VAT owed at day 15 plus 2% on the VAT owed at day 30.

There is also an additional penalty which is calculated at a daily rate of 4% per year for the duration of the outstanding balance. This is calculated when the outstanding balance is paid in full or a payment plan is agreed.

Interest charges on late payments

From 1 January 2023, HMRC will charge late payment interest from the day your payment is overdue to the day your payment is made in full at a rate of Bank of England base rate +2.5%.

Resetting your penalty points

You can reset your points total to zero by submitting all your outstanding returns for the previous 24 months and ensuring that your current return is received by HMRC on or before the due date.

HMRC penalty appeal

If you disagree with a penalty decision made by HMRC, you have the right of appeal . You can appeal against penalties imposed for the following reasons:

an inaccurate return
sending in your tax return late
paying tax late
failing to keep adequate records

If you filed a late VAT return, you can complete an appeal form if you had a reasonable excuse for why you were late. Reasonable excuses include close family bereavement, incapacitated in hospital, computer failure and a range of other legitimate reasons.

Appeals must usually be filed within 30 days of the date the penalty was issued.

Get help to with VAT submissions and payment

For more information on the upcoming changes in VAT penalties for late payments , visit the HMRC website. If you have further questions about VAT or other taxation, contact David Masih, our client relationship partner who explain how OnTheGo Accountants can help your business with tax compliance and mitigation. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Charity Donations And Tax Relief

Tue, 06 Dec 2022 12:11:08 GMT

Charity Donations and Tax Relief

Giving back is an important part of running a successful business and charity donations can be a great way to do it. With the right information, charity donations can provide your business with substantial tax relief while also doing good in your community.

So this holiday season, consider giving back and taking advantage of charity donation tax relief.

Which charity donations attract tax relief?

As a limited company, you can make tax deductible donations of cash, equipment, saleable products, land, shares, property, labour (seconded employees) and sponsorship payments. All these costs will reduce your corporation tax liability. Claim the tax relief by deducting the full cost from your taxable profits.

Cash donations

Deduct the full amount of the donation to charity or a community amateur sports club if the donation is not:

a loan that will be repaid by the charity
made on the condition that the charity will buy property from your company, or anyone connected with it
a distribution of company profits (e.g., dividends)

Donations of equipment or saleable product

Equipment could include items that have been used by your company such as office furniture, computers, vehicles, tools and machinery. You can claim full capital allowances on the cost of the donated equipment.

If you donate saleable product, also known as trading stock, do not record the value of stock as sales. This automatically gives you full tax relief on the value of the donated stock.

Land, property or share donations

If you give land, property or shares to charity or sell them for less than they’re worth, you can deduct the current market value (not what you paid for it) from your profit before tax and you won’t incur any capital gains tax either.

NB That charity donations of your own company shares do not attract tax relief.

Seconded employees

If you second an employee to work for a charity or your employee volunteers at a charity in work time, you can deduct the cost of wages and business expenses from your profit before tax to claim the tax relief. This does not apply to employees working for a community amateur sports club.

Charity sponsorships

Sponsorship donations to charities qualify for tax relief as business expenses if the charity:

publicly supports your products or services
allows you to use their logo in your own printed material
allows you to sell your goods or services at their event or premises
links from their website to yours

Get help to make tax-efficient charity donations

You can get information on how to claim tax relief on charity donations from HMRC website. If you have further questions about charity donations and corporation tax, contact David Masih , our client relationship partner who explain how OnTheGo Accountants can help your business support charities as tax-efficiently as possible. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Advisory Fuel Rates (AFR) changes for company car users effective from 1 December 2022

Fri, 02 Dec 2022 14:18:11 GMT

Advisory fuel rates (AFR) changes for company car users effective from 1 December 2022

The latest changes to advisory fuel rates

The government has announced the latest changes to advisory fuel rates for company cars, which will come into effect from 1 December 2022. These rates are reviewed on a quarterly basis and are designed to ensure that companies can accurately reimburse employees who use their own vehicles for business purposes. Let's take a closer look at the changes that have been made and how they might affect you:

Petrol and diesel cars

The rate for petrol cars of all engine sizes is set to decrease by 1p per mile from 1 December 2022, while the equivalent rate for LPG cars will increase by 1p per mile. These changes are in line with recent economic trends. Diesel vehicles that have an engine size of either under or over 2000cc are unaffected and remain unchanged.

Electric cars

The rate for electric cars is set to rise from 5 pence to 8 pence per mile from 1 December 2022 onwards. This rate will be reviewed on a quarterly basis starting from the same date to ensure that it remains reflective of current market trends and conditions.

Alternative fuels

The cost of other alternative fuels such as hybrid and LPG are also subject to change depending on the circumstances although it is expected that these changes will not significantly affect the overall landscape regarding advisory fuel rates as they tend to fluctuate less frequently than petrol, diesel and electric vehicles.

These latest changes to advisory fuel rates will come into effect from 1 December 2022 . Petrol vehicles of all engine sizes are set to see a decrease in rates while LPG cars will experience an increase. Electric cars will also become more expensive to run, but this cost is subject to review on a quarterly basis. If you use your own vehicle for business purposes, it's important to keep these changes in mind so that you can accurately calculate your expenses.

Getting the right information at the right time saves you money

Understanding all the changes that come out of HMRC is a full-time job, which is why you need an up-to-date accountant to keep you informed. Speak to David Masih , our client relationship partner who explain how On The Go Accountants can support your business to greater success. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

How OnTheGo Accountants helped Selina Finance transition from outsourced to in-house finance function.

Mon, 28 Nov 2022 22:26:32 GMT

How OnTheGo Accountants helped Selina Finance transition from outsourced to in-house finance function.

Our processes are built with scalability in mind so that when a tech startup wants to bring their finance function in-house the transition is as pain free as possible. We are extremely proud of Selina Finance's incredible growth journey and we are grateful to have had the opportunity to work closely with Hubert Fenwick, Co-founder & CEO of Selina Finance and his team in designing an outsourced finance function.

We like to be transparent with our clients from the outset that outsourced finance functions will eventually be outgrown as internal reporting demands increase, particularly when you need to put more financial controls in place. We have now successfully handed over Selina’s finance function to their own internal finance team.

1. A brief intro about Selina Finance and your fundraising experience?

Selina is the UK’s first HELOC (Home Equity Line of Credit) provider, bringing flexible digital finance to UK homeowners. We are a Series B company and have raised over £50M equity and £300M in debt financing since our inception.

2. Please can you share your experience of our bookkeeping and payroll process?

The OTG team were extremely helpful and responsive throughout, helping us at the beginning with simple bookkeeping and payment/balance tracking, and ultimately evolving into quite complex balance sheet transaction recording. On payroll, which can be quite complex (and with zero margin for error), the OTG team were very knowledgeable and helped us ensure consistency and ease of execution throughout our experience.

3. How did you find OnTheGo Accountants' services overall and if there is one thing we can improve on what that would be?

Overall I am a big promotor of the OnTheGo team and platform. I have recommended OTG to other early stage companies (and will continue to). In general I found the team to be highly knowledgeable and responsive, and they were able to simplify our finance stack significantly and meant we could focus on growing our business knowing that our finance function was in safe hands.

Can My Business Claim a Christmas Party as a Business Expense?

Wed, 23 Nov 2022 13:08:58 GMT

Can My Business Claim a Christmas Party as a Business Expense?

'Tis the season… for cold weather, hot chocolate and office Christmas parties! And if you're like most business owners, you're probably wondering if you can claim your company's Christmas party or Christmas dinner as a business expense. Luckily, the answer is yes... sort of. Here's what you need to know.

The party can’t cost more than £150 (including VAT) per person. This is probably the trickiest rule to navigate. If your company has over 100 employees, you might be thinking that it would be impossible to throw a party that everyone could attend for less than £15,000. But don't worry, there are ways around this. You could host the party at a restaurant or venue that offers group discounts, or you could do a potluck-style party where employees bring their favourite dishes. Whatever you do, just make sure that the per-person cost stays below £150.

The party must be an annual event, such as a Christmas party or a summer party. This one is self-explanatory as your company's Christmas party qualifies as an annual event, so you're good to go there. However, if you're thinking of claiming a one-time event like a team-building retreat or an employee recognition ceremony, please check with us before making the claim as there may be other criteria to meet.

The party must be open to all of your employees (and must consist mostly of employees). The purpose of the HMRC exemption is to encourage social events for employees, so the emphasis should be to include as many employees as possible. That being said, you are allowed to invite a few non-employees, like clients or suppliers. Just make sure that they don't make up more than 20% of the guest list.

Shareholders are not included in the exemption if they aren’t employees or directors. So if your biggest shareholder is also your brother-in-law who doesn't actually do any work for the company, sorry... he'll have to pay tax on his share of the Christmas fun.

You can claim an additional £150 (including VAT) per person for a plus one if they are family members or partners of your employees.

As long as you follow the rules laid out by HMRC claiming your company's Christmas party as a business expense is perfectly legal and can even save you some money come tax time. So go ahead and celebrate...your business will thank you for it!

The 2022 Autumn Statement at glance

Fri, 18 Nov 2022 12:39:27 GMT

The 2022 Autumn Statement at glance

The 2022 Autumn statement from the Government, the second in a couple of months, was delivered by Jeremy Hunt to a packed House of Commons on 17th November. As expected, there were some significant increases in the tax burden for many individuals and businesses, as well as spending cuts and freezes. Here’s a quick roundup of the changes likely to affect individuals and businesses.

Changes in the Autumn Statement 2022 affecting businesses

Business taxation

Employers NIC threshold remains until April 2028
VAT registration threshold remains at £85,000 until 31 March 2026.
The windfall tax on energy companies will be increased from 25% to 35% until April 2028.
A temporary tax of 45% will be levied on electricity generating companies.

Allowances/exemptions

R&D tax relief deduction will be reduced to 86% and the credit rate to 10%
Electric vehicles will no longer be exempted from Vehicle Excise Duty from April 2025

Let’s turn to the changes in the Autumn Statement 2022 affecting individuals and households

Personal finances

Income Tax/NI

There are no changes to the income tax rate or employees NI which will remain at their current rate until April 2028. Basic rate and higher rate thresholds remain fixed for the next 5 years. The 45% tax threshold will reduce from £150, 000 to £125,140 meaning more people will pay more tax as allowances do not rise in line with wage increases.

Capital Gains Tax

CGT allowance of £12,300 will reduce to £6,000 from 2023 and £3,000 from 2024.

Dividend Tax

Dividend allowance reduces from £2,000 to £1,000 from April 2023 and £500 from 2024.

Stamp Duty

Current stamp duty incentives remain in place until 2025.

Universal Credit

600,000 more people will be encouraged to meet with a work coach to increase the number of hours and earnings in an attempt to reduce the number of economically inactive working age adults.

State pension, benefits and tax credits

Will all rise in line with inflation at 10.1%.

Energy bills

Assistance to meet domestic energy bills will be reduced as the cap on unit prices will rise in April 2023 meaning the average household bill will increase from £2,500 to £3,000 a year.
Extra payments for particularly vulnerable people include £900 for those on means-tested benefits, £300 for pensioner households and £150 for those on disability benefits.

Wages from 1 April 2023

National Living Wage for those aged 23 and over: From £9.50 to £10.42 an hour from April 2023

Council tax

£100 rise for a typical Band D property, which will council tax to over £2000.

Government spending plans

NHS: budget increased by £3.3bn for next 2 years

Education: budget increased by £2.3bn for next 2 years

Defence: budget maintained at 2% of national income

Overseas aid: budget maintained at 0.5% of national income for next 5 years

For more detailed Autumn Statement 2022 coverage , you can visit the BBC Website.

Getting support

To talk about how the Autumn Statement 2022 might affect you and your business, get in touch with David Masih , our client relationship partner. David can explain how our services can help you to optimise profits and retain employees during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Manage Your Payroll Globally

Thu, 10 Nov 2022 09:52:35 GMT

In partnership with: Deel, an international payroll and compliance provider for your global workforce.

At OnTheGo Accountants, we take great care to work with only the very best partners who can help us provide top quality services to you. We work with Deel , an innovative international payroll provider, helping companies grow their global workforce. Sometimes you can’t find the perfect employee or contractor in your local or national market, so you need to recruit from a wider pool. Becoming a global employer can bring added complexity to your payroll and payments activity and that’s where Deel can streamline and simplify the process.

Who is Deel?

Deel is a US based international provider of payroll services and compliance services. Headquartered in San Francisco, Deel helps companies hire and make payments to staff in over 150 countries around the globe. Deel aims to revolutionise international hiring by providing robust processes to manage the legalities and paperwork in accordance with local employment laws. Deel provides a comprehensive compliance service shifting the liability away from its clients to ensure that all the right taxes, levies and fees are paid, all mandatory benefits are granted to employees and all paperwork is timely and accurate. Deel offers timely information for decision making, a user-friendly interface within a mobile app as well as desktop version and access to more than 200 legal and tax experts around the world.

When to partner with Deel?

You don’t need to be employing dozens of staff overseas to benefit from using Deel. You can take advantage of Deel’s worldwide network of legal entities in more than 80 countries. Your staff are employed by the local entity in the country where you want to hire and Deel manages the entire employment process for compliance, payroll services and HR admin, leaving you free to simply choose the right person for your team.

If you aren’t sure how to get started when you want to hire an overseas employee, check out the Deel Hiring Guide which will give you guidance on the best local practices to ensure your recruitment, onboarding and payroll works seamlessly and flawlessly.

What benefits does Deel offer?

A seamless easy to use dashboard to manage the legal, HR and payroll processes of hiring staff abroad.
Access to a global pool of talent to grow your business.
Real-time data providing local hiring expertise.
Global salary insights data.
Global employment comparison data.
Shift liability for employment compliance from your company
Hire contractors quickly ensuring watertight contracts are in place, protecting your business from potential risks.

Where does OnTheGo Accountants come in?

OnTheGo Accountants partners with Deel to help our clients manage their international payroll and overseas employees quickly and easily. We can help you get set up on the Deel platform and have your first overseas employee or contractor up and running within minimal fuss and effort.

Managing your international payroll

To get help with handling your employee and contractor payroll, get in touch with David Masih , our client relationship partner. David can explain how our payroll services and compliance services, alongside Deel, can benefit your business during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk.

Providing eye tests for employees

Wed, 05 Oct 2022 17:29:07 GMT

Six frequently asked questions about eye tests for employees.

1. Do employers have to provide eye tests for employees?

Although employers do not routinely have to pay for eye tests for all employees, the law states that if employees who regularly use display screen equipment (DSE) ask for an eye test, it should be paid for by the company.

2. Do employers have to pay for glasses for DSE users?

Health and safety regulations state that employers should pay for glasses if an employee needs them only for DSE use.

3. Do employees have to accept an eye test offered by an employer?

No, it’s not mandatory to have an eye test.

4. How can employees protect their eyes in an office job?

Have regular eye tests.
Ensure lighting is good.
Minimise screen glare.
Have the screen at an appropriate distant.
Wear glasses if you require them.
Adjust display settings for a more comfortable working experience.
Take regular breaks.
Look into the distance at least once every hour.
Don’t forget to blink.

5. What problems can occur from using DSE incorrectly?

Long spells of computer work can lead to headaches, tired eyes, eye focusing issues, discomfort and temporary short-sightedness. There is no evidence that using a DSE can cause permanent short sightedness.

6. Is an employee eye test a taxable benefit?

Yes, it is a benefit in kind for the employee who will need to pay tax and NI on the value of the test.

Eye test for employees is just one way to protect wellbeing

Your employees are your greatest assets. Find out about other ways you can look after their physical and mental health, so your business and your people thrive. Speak to David Masih , our client relationship partner who explain how On The Go Accountants can support your business to greater success. Call 03330 067 123 or email info@onthegoaccountants.co.uk.

PAYE Recurring Direct Debit

Wed, 05 Oct 2022 17:12:09 GMT

HMRC has announced that it has updated the PAYE Direct debit functionality to enable employers to make recurring payments.

Until now, employers have only been able to set up a direct debit to collect a single payment. The launch will see a change to the employer’s liabilities and business tax account (BTA) screens.

The new service, which is expected to be available from Q4 2022, will enable employers to set up a Direct Debit instruction authorising HMRC to collect directly from their bank account based on their return submissions. In addition, employers will be able to view, amend, or cancel the direct debit via a ‘Manage your direct debit’ link.

HMRC has also announced that it has extended employer PAYE for agent online services. This means that advisers and accountants will be able to access payment records as well as employer liabilities.

See the full HMRC announcement about PAYE direct debit recurring functionality.

Getting the right information at the right time saves you money

The mini budget at a glance

Thu, 29 Sep 2022 10:26:44 GMT

Inflation is the highest it’s been for 30 years, interest rates the highest for 14 years and the pound has sunk to its lowest rate against the dollar following Kwasi Kwarteng’s mini-budget speech on Friday 22nd September.

With the Ukraine war fuelling energy price inflation and the cost of living rising each week, many people are concerned about the winter ahead and wondering how to make their income stretch to all the bills. This blog post looks at some of the announcements that are likely to have the biggest impact on your personal and business situation.

Personal tax and National Insurance cuts

The basic rate of income tax will be reduced by 1% to 19% from April 2023. In addition, the recent 1.25% rise in NI will be reversed from 6 November. The additional rate of income tax of 45% for high earners is abolished from April 2023. This will apply to an estimated 629,000 individuals in the UK with incomes in excess of £150,000. The new Health and Social Levey to pay for the NHS is also scrapped.

Social care and benefits

People on Universal Credit working the equivalent of 15 hours or less (24 for couples) are expected to meet regularly with a work coach and take “active steps” to boost their pay. This change, which applies from January 2023, is expected to bring around 120,000 more people into the intensive work search regime.

Jobseeker aged over 50 will be encouraged to return to work with the help of a work coach.

Corporation tax

The planned increase in April 2023 in corporation tax from 19% to 25% is cancelled.

Business

New and start-up companies can raise up to £250,000 under the SEIS scheme which has been extended from April 2023.

Regulations have been changed to allow pension funds to increase UK investments.

The Annual investment allowance (AIA), which provides for 100 per cent tax relief on capital investment in qualifying plant and machinery up to a set expenditure limit, remains at £1m indefinitely. The 130% super-deduction which is due to end on 31 March 2023 has not been extended.

IR35 rules are to be simplified with the 2017 and 2021 reforms being repealed.

Share options for employees doubled from £30,000 to £60,000.

Bankers' bonuses

Rules which limit bankers' bonuses have been scrapped.

Homes and energy

Stamp duty thresholds have been changed. There is no stamp duty on the first £425,000 for first time buyers with effect from 23rd September.

The rates are now:

0%: £0 - £250,000 (£425,000 for first time buyers)

5%: £250,000 - £925,000

10%: £925,000 - £1,500,000

12%: £1,500,000+

Energy prices are capped for two years at 34p per kWh of electricity and 10.3p per kWh of gas used which means that an average house with average consumption will pay no more than £2,500 a year. Businesses, charities and the public sector will also receive a price cap guarantee.

Duties

The chancellor also announced in his mini-budget that the planned increase in duties on beer, wine, cider and spirits has been scrapped. VAT-free shopping for overseas visitors has been reinstated.

Infrastructure and investment zones

Businesses will receive tax cuts and relaxed planning restrictions in new investment zones across the country where business rates and stamp duty will be waived. New legislation will be brought in to cut planning rules, get rid of EU regulations and environmental assessments to speed up building.

How does the mini-budget affect you or your business?

If you aren’t sure how you can take advantage of the changes announced during the mini-budget, speak to David Masih , our client relationship partner who can talk to you about the impacts. Call 03330 067 123 or email info@onthegoaccountants.co.uk.

The impact of HMRC R&D tax credit payout delay

Thu, 15 Sep 2022 20:20:36 GMT

If your business has made an R&D tax credit claim recently or you are thinking of making one, you need to be aware that there have been substantial delays for companies receiving their payouts. Here, we assess what this could mean to your company.

What’s causing the R&D tax credit payout delay?

HMRC announced that it would be stopping payments for some R&D tax credit claims whilst it conducts a project to reduce fraudulent claims. This means there are likely to be significant delays to processing current and new claims and an increase in the time taken to payout the claim. According to the taxman, fraudulent claims increased to 4.9 per cent of all claims by smaller businesses in the year to April 2022, costing an estimated £469m. This represented a 40% increase in fraudulent claims over the previous year (£336m).

What is HMRC doing to help this issue?

HMRC have hired additional resources to work on investigating fraudulent claims which the revenue has suggested may be ‘incorrect, inflated or fraudulent.’ It is not known how many claimants are affected though HMRC says most claims are unaffected.

The system is complex which is part of the problem and if you aren’t fully conversant with the rules, it’s easy to accidentally claim costs that aren’t eligible. There are calls to simplify the two processes for making R&D tax credit claims which should cut down on fraud issues, but tax system simplification is a long process.

Should I hold off from claiming?

At On the Go, we suggest that you should still submit your R&D tax credit claim as soon as possible. You need to get your claim in the queue for processing and it’s hard to know when normal processing times will resume.

What can I claim?

R&D tax credit claims can be complex, so it’s always a good idea to work with an accountant or specialist R&D tax advisor. The Government website explains what constitutes an R&D project for the purposes of claiming tax relief. The work must be part of a specific project in science or technology and must relate to your business’ trading activities or activities you intend to start because of the R&D project. HMRC states:

‘To get R&D relief you need to explain how a project:

looked for an advance in science and technology
had to overcome uncertainty
tried to overcome this uncertainty
could not be easily worked out by a professional in the field

Your project may research or develop a new process, product or service or improve on an existing one.’

R&D tax credit types

There are two types of R&D relief depending on the size of your company. For small businesses with less than 500 staff and a turnover of under 100 million euros or a balance sheet total under 86 million euros, you can

claim an extra 130% of qualifying costs on top of the normal 100% deduction, giving a total of 230% deduction
claim a tax credit if the company is loss making, worth up to 14.5% of the surrenderable loss

For larger businesses, there’s the RDEC scheme. Small and medium-sized enterprises (SMEs) can also use the RDEC scheme if they have been subcontracted to do R&D work by a large company and have either:

received a grant or subsidy for their R&D project
expenditure which is more than the SME scheme aid cap

This scheme gives a credit of 13% of your company’s qualifying R&D expenditure irrespective of whether you are profit or loss-making. (This rate applies to expenditure incurred on or after 1 April 2020).

How do I get started?

Failing to claim all the R&D tax credits and other tax reliefs that you are entitled to could leave your business with a larger tax bill than necessary, eating into your shareholder profits. To avoid this issue, and for more information on which costs are eligible and how to start your claim speak to our Tax Partner, Sophie Bancroft . Call 03330 067 123 or email info@onthegoaccountants.co.uk.

Tech Startup HR Support: When should I hire an HR person?

Wed, 07 Sep 2022 19:33:01 GMT

One of the most common questions that our clients ask is about tech startups HR support so this blog explores when you should consider hiring a dedicated HR support person.

At the beginning of your business journey, you’ll be looking after all aspects of running your startup, from core product to finance, admin, marketing and HR support. However, if your company is growing rapidly which is common for tech startups, soon you will need to hire more staff to keep up with demand. Initially, you may be able to manage the recruitment, onboarding and ongoing HR processes for a small team of people, but as you get bigger, this activity will become more time consuming. When your HR is taking up more than a few hours a week, it’s time to hire in some tech startups HR support.

So where are you in your business journey?

1-10 employees – very small business or startup

At this level of staff, the HR can probably be managed in-house by the COO or perhaps CFO. You will need to ensure that you have robust documented processes in place and by law, you must have the following policies as a bare minimum:

Health & Safety
Disciplinary/Dismissal
Grievance

It’s also good practice to provide an employee handbook which explains to employees what is expected of them and you may also wish to write other policies to cover things like absence, diversity & inclusion and maternity which can help you to set the company culture and ensure everyone is clear on how things operate.

11-50 employees – growing small business or more established startup

Once a business has grown past a couple of dozen employees, you’ll need to have one person who has HR as their responsibility. Whilst HR could be in addition to their other responsibilities, such as office manager or admin, now could also be a good time to either hire a dedicated part-time tech startup HR support person or to consider outsourcing your HR to a consultant who can provide the employee oversight that your business needs. If your staff is located remotely, you may find that this creates more work so you might need to hire in a full-time resource at this stage.

50+ employees – established small business

With over 50 employees, the HR activity will be significant, so it’s important to ensure you have someone in place who can dedicate enough time to managing everything properly. With more staff, there’s more scope for issues so it’s vital to get a qualified full-time HR professional working for you. The advantage of an employee at this stage is that they will be embedded in your culture and be much closer to what’s going on so they can spot problems earlier and put in place actions to mitigate issues.

What should I do if my business is a high growth tech startup?

In this situation, it may be a good idea to hire in HR resource sooner rather than later. If your business is hiring a lot of people in a short space of time, the recruitment and onboarding activity could easily become overwhelming if you don’t have a dedicated resource to look after it.

The responsibilities of an HR person

Recruitment and onboarding: HR will manage the recruitment approach to attract the right employees to your company. They will handle the interview admin and deal with employment contracts.

Pay and benefits: HR staff will manage the pay review process and feed through changes to the payroll. They may even administer the payroll if you don’t have this function within your finance team. The HR team will be responsible for supplier relationships with benefit providers such as pension scheme, employee assistance programmes and wellbeing.

Health, safety and wellbeing: HR is responsible for ensuring a safe and healthy working environment from ensuring that your company is compliant to the Health and Safety at Work Act to providing support to employees who might be going through a difficult time with physical or mental wellbeing issues. HR can also be a liaison between the employee and the manager if required.

Learning and development: Staff training and continuous professional development is another HR responsibility. The team might run workshops and courses, face-to-face or online and they will also manage the booking processes for off-site training.

Employee relations: Should there be an disputes, grievances or disciplinary issues, your HR team will take the lead in managing these.

So, you can see that there is a lot of HR activity that is required to create a successful thriving company. Having the right HR support is not something that you can dismiss as an unnecessary expense.

Getting the right tech startup HR support in place at the right time is crucial

Although we don’t partner with any specific outsourced HR companies, you can look at the support you could expect to receive by going to CitrusHR’s website.

If you leave it too late to hire your HR support, you may find that your company is in breach of employment law, your processes are ill-defined and inefficient or that you’ve lost control of your company culture. To avoid these issues, why not speak to David Masih , our client relationship partner who can walk you.Call 03330 067 123 or email info@onthegoaccountants.co.uk.

The Cycle To Work Scheme for your employees

Mon, 15 Aug 2022 20:01:14 GMT

With more and more emphasis on helping the environment, business owners are looking for ways to improve their

eco-credentials.

One way is to encourage employees with a cycle to work scheme that allows them to save on buying a new bicycle. This blog post looks at different providers and how cycle to work schemes can benefit employees’ and the planet’s health.

What is Cycle to Work?

A Cycle to Work scheme is a salary sacrifice scheme that enables an employee to purchase a new bike from pre-tax income. These schemes are aimed at encouraging employers to help more of their staff use more environmentally friendly commuting methods as well as improve the physical and mental health of their employees.

How does a cycle to work scheme operate?

A cycle to work scheme usually allows the employee to choose a bike and accessories such as a helmet, clothing, gloves, lights etc. from a designated provider using a voucher which is deducted from the employee’s gross pay, usually on a monthly salary sacrifice. Employees may work with local bike shops or online outlets depending on the nature of their operations to ensure that their staff can access the scheme. Some schemes offer in excess of 2,000 bike shops to choose from.

What providers are there for these schemes in the UK?

There are a few providers of Cycle to Work schemes that employers can implement to offer this benefit to their staff. Perhaps the best known one is by CycleScheme which operates on a UK wide basis and works a bit like a PCP scheme that you might use to buy a car. There is a balloon payment at the end of the agreement if you want to keep the equipment at the end of the payment period which is between 1-4 years.

What are the tax implications of the scheme?

If the scheme meets the relevant criteria, the employee can get tax exemptions which mean that income tax and National Insurance Contributions (NICs) are reduced. For the employer there will be a reduction in NICs and Apprenticeship Levy (where applicable) based on the amount sacrificed.

Let’s have a look at a calculation to see the possible savings:

Basic Rate Tax payer – let’s use £25,000 salary.

Higher Rate Tax payer – let’s use £55,000 salary.

So, you can see that if you were to pay for the bike over 2 years, the monthly deduction from your employee’s salary would be £2000/24 = £83.33 but the cost to them would be £61.46 as a low rate tax payer and £53.13 as a high rate taxpayer.

What are the other benefits for employees?

Employees can choose from a wide range of cycle equipment including hybrid and electric bikes, making 26-40% savings on the list price. They become fitter and feel that they are playing their part in improving their local environment as well as saving money on expensive fuel or public transport costs. Payments can be spread out to improve affordability and enable employees to get a better bike than if they were paying the cost upfront.

What support is available to get set up?

Cyclescheme offers marketing support to employers to help them communicate the benefits to employees as well as enabling businesses to improve their eco-credentials and hit sustainability goals.

If you are considering implementing a Cycle to Work scheme in your business, get in touch with David Masih , our client relationship partner. David can explain how to get started during a no-obligation chat today.

Call 03330 067 123 or email info@onthegoaccountants.co.uk .

What are profit and loss accounts? What all tech founders should know

Mon, 15 Aug 2022 07:51:31 GMT

One of the most common questions that new tech founders ask is ‘What are profit and loss accounts?’ These vital business statements give company owners information about the financial health of the organisation as well as insight into exactly where money is being made and spent.

So, what exactly are profit and loss accounts?

Profit and loss accounts are statements detailing the revenues and costs of a business. The P&L is also sometimes known as the income statement or the income and expenditure statement. Income may take a few different forms and could include trading sales, interest income, income from asset sales, exchange rate profits to name a few. It’s likely that the expense part of the P&L is categorised in more detail so that the business owners and managers can see clearly where money is being spent.

Why you should review your P&L

Business owners who want to understand their current profit and loss account position should review the statement at least once a month. The income statement can be very simple such as

Or you might want to break it down a bit more to understand your core operating gross and net profits:

Let’s understand each line item on the above P&L.

Trading sales – this is the gross sales revenue achieved from selling your products or services. It does not include any income from other activities such as sales of assets or interest income.

Cost of goods sold – this is the raw materials and production costs of making your product. It includes direct staff costs, materials and distribution costs, but excludes general overheads such as rent, energy and marketing costs.

Gross profit – this is Trading sales less the cost of goods sold. It shows you how profitable your core product/service is.

Operating expenses – these are all the other costs associated with operating your core business. It includes admin costs, travel, entertaining, fuel, subscriptions and so on.

Net operating profit – this is the gross profit less the operating expenses. This shows how profitable your business is without taking into account taxes, interest payments and asset depreciation.

Other income – this includes any other income from non-trading activities such as interest income from bank deposits.

Non-operating expenses – this includes any other expenses such as income tax and interest expenses.

Profit before tax – this is your taxable profit for the period (or loss to be carried forward to the next period)

Expense breakdowns in your profit and loss account

On the P&L account, you can breakdown your operating expenses further so you can track how much you are spending on staff costs, equipment, finance, admin and so on. It’s important to set a budget for the year for each spend area and review your actuals against budget to account for any variances. If you never check what’s in your profit and loss accounts, it’s easy for costs to spiral out of control.

Profit and loss accounts provide key data for owner and investor decision making and the information feeds into tax returns, so it must be accurate. Some small businesses keep their accounts using spreadsheets and may never produce a full P&L statement. If you keep your accounts using an online tool such as Xero, the P&L is one of the standard reports that you can download quickly wherever and whenever you like.

Your monthly review could include the following checklist:

What is the bottom line? Have you made a profit or loss for the period?
How do your numbers compare to the previous period? Is your business growing or contracting?
How well controlled are your operating expenses? Have you gone over budget, or do you need to invest more in certain areas?
If you are using a spreadsheet, be careful to ensure that all the rows and columns add up because it is easy to miss figures which would introduce errors into the calculations.

From 1 April 2024, all businesses or property landlords earning more than £10,000 per annum will be required to submit their Income Tax Self-Assessment (ITSA) using approved online software packages such as Quickbooks or Xero. This is known as Making Tax Digital (MTD) and if are using an offline bookkeeping method such as paper or a spreadsheet, you will need to go digital from the deadline. To get a head start on MTD for ITSA , why not get in touch today.

If you need support with understand what the profit and loss accounts in your business mean, get in touch with David Masih , our client relationship partner. David can explain how we can train you so that reading your P&L becomes straightforward. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

When should a startup consider an outsourced Finance Director or CFO?

Thu, 30 Jun 2022 22:27:14 GMT

Hiring an outsourced Finance Director or CFO is an important decision and milestone in the journey of a startup company.

It’s vital to understand the difference between the two roles so you can bring in the most appropriate resources for your needs. This blog post will cover:

What does a Finance Director do?
What does a CFO do?
When to hire an outsourced FD
When to hire an outsourced CFO
How to make the decision
Benefits and considerations of an outsourced resource

What does a Finance Director do?

In a large business, there may be a CFO, Finance Director and Financial Controller, but in a startup, the FD and FC may be combined into one role. The Finance Director will oversee all the accounting activities and ensure that the startup financial records are fully compliant to current rules and regulations.

This is likely to include:

Setting up and maintaining internal controls
Monitoring company bank accounts
Developing and maintaining finance procedures and policies
Planning and preparing annual budgets
Facilitating compliance audits
Supporting the CFO and executive team with reporting and analysis

What does a CFO?

The CFO (Chief Finance Officer) is responsible for the strategic financial planning, as well as the business financial operations. The Finance Director or Financial Controller will report to the CFO if this role is split. In a startup initially, the roles may be combined.

The CFO is responsible for:

Managing financial risk
Financial modelling, planning and reporting
Providing financial advice to the CEO and Board

When to hire an outsourced FD?

Startup founders tend to manage the finances of the business at the beginning. However, once the company starts to grow it makes sense to bring in some additional resource to ensure that the money is managed as effectively as possible. As a rule-of-thumb, by the time you have annual revenue of around £500,000, your finances are likely to be quite complicated and an outsourced FD could be a good investment. At this stage, you may only need a part-time FD, also known as Fractional FD to keep on top of everything. Once you are at the £8-10m annual revenue stage, you are likely to need a full-time Finance Director, so an in-house option could make more sense at that point.

When to hire an outsourced CFO?

As your startup scales, you will probably find that you need more financial strategic direction. At this point, you can consider hiring an outsourced CFO. It is possible to hire a part-time CFO who can help move your business forward without the significant cost of a full-time in-house resource.

How to make the decision

There’s no single right answer as to when you should hire your FD or CFO, but you can ask yourself some of the questions below to help you analyse your requirements.

How complex are your operations?

If your accounting and operational processes are complicated, you are more likely to need detailed, accurate reporting and planning.

How much expertise do the founders have already?

If you are well-equipped with finance and business knowledge, you may be able to delay hiring but these activities may not be the best use of your time. Consider what else you could be doing if you hire in an outsourced CFO or FD.

How quickly is your startup growing?

If the pace of change is rapid, your finance operations are likely to need investment to keep up.

Is your startup looking for investment?

If you are looking for investors, your financial accounting and reporting needs to be error free.

Benefits and considerations of hiring an outsourced resource

Initially your startup might only new a few hours a month of FD or CFO expertise, so using a company that provides outsourced finance services makes much more sense. As you grow, this can be increased incrementally to suit your needs which means you aren’t paying for resources that aren’t fully utilised. Another benefit of using an outsourced provider is that you will be able to buy in resources faster than if you recruit in-house. In addition, it can be useful to have someone else involved at a senior level who can bring new ideas from outside the business.

On the other hand, if you are growing very rapidly, it might make more sense to invest time earlier to find the right in-house resource who can getting fully immersed in the role and be part of your journey.

At On The Go Accountants, we understand the needs of start up businesses and can provide advice and support to help you grow and scale. Get in touch with David Masih , our client relationship partner. David can explain how we can support you with full-time or part-time outsourced CFO resource during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Why hire an outsourced finance team?

Thu, 30 Jun 2022 22:09:24 GMT

Hiring an outsourced finance team is a big decision in the growth journey of a startup business.

Perhaps as the founder or co-founders, you have been handling all the company finance activity yourself, but now it’s becoming too much or too complicated for you to manage effectively. In this blog post you’ll learn

When to hire an outsourced finance team
What roles should you hire?
Benefits of hiring an outsourced finance resource
Considerations of using outsourced finance services
Getting support

When to hire an outsourced finance team

The finances of a startup company are usually managed by the founder or co-founders in the early months. When start-ups receive investment from venture capitalists or angel investors , the financial records can become more complicated. At this point, it may make sense to hire in outsourced finance resources to help with accounting, control, strategic planning and reporting.

What roles should you hire?

CFO – Chief Finance Officer

Responsible for strategic financial planning, managing financial risk and business finance operations. FD/FC reports into the CFO.

Finance Director/Controller

Responsible for all the accounting activities and ensures that financial records are fully compliant to current rules and regulations.

Finance Manager

Responsible for management and financial reporting to aid business decision making.

Bookkeeper

Responsible to accurate and timely record keeping and cash/credit control.

Benefits of hiring an outsourced finance resource

Flexibility

Hiring permanent resources is a big commitment that startups may not be quite ready for when they need expert finance resources. After all, Finance Directors and CFOs aren’t cheap. Using outsourced finance resource can give you the flexibility to adjust the resources you use as your business grows until it is the right time to hire a permanent employee.

Expert support

An outsourced finance team can give you the expert support you need because they have helped other startups before and understand exactly what you need to do to grow your business, increase profits and secure new funding.

Time Saving

Getting support from people who deal with finances and accountancy for a living can save you lots of time. Time that may be better spent nurturing new client relationships, perfecting your product or working on other business development tasks. As a founder, you don’t need to be dealing with finance transactions – there are more productive ways to spend your time.

Compliance

When it comes to managing the finance tasks that must get done to a deadline – VAT and company tax returns for example, it pays to outsource this activity as soon as possible. You’ll get peace of mind from knowing that the right figures are being submitted on time, so you won’t face any fines or interest penalties. Let your outsourced finance team keep you compliant with HMRC and Companies House whilst you get on with growing your business.

Considerations of using outsourced finance services

Cost

The cost of hiring outsourced resources may initially be more than the base cost of a permanent resource. However, don’t forget to add on all the additional costs associated with hiring an employee such as pension and other benefits. When you hire in your outsourced finance team, you may decide to start with a few hours a month or a day a week to keep costs under control whilst you grow. Bringing in part-time, outsourced resource means you can avoid the high costs of an employee until you need a full-time resource.

Lack of control

Using outsourced resources may mean that you aren’t fully in control of how the services are delivered.

Getting support

At On The Go Accountants, we’ve provided many start-ups with finance support to meet the changing and growing needs of their business. Get in touch with Dav id Masih , our client relationship partner. David can explain how we can work with you to supply a full-time or part-time outsourced finance team during a no-obligation chat today. Call 03330 067 123 or email info@onthegoac countants.c o.uk .

The Purpose of Capitalising Assets and When to Do It

Mon, 02 May 2022 21:18:21 GMT

If you deal with any business on a regular basis, you will have heard the term capital assets. Lots of businesses, have fixed assets or capital belonging to their company.

But what does the term capitalising assets actually mean? Capital assets can be anything from furniture to computers to buildings but they must have a useful life of at least a year.

They are called capital assets because HMRC treats them separately from any costs incurred in the day to day running of your business. These other costs are referred to as revenue expenditure. If you’re looking to capitalise your assets, this guide should get you started on what to look at and when.

What is capital expenditure?

Capital expenditure (Capex) is any amount that has been spent to buy or improve long term assets. This could be something small like a computer, or a large investment like an enormous manufacturing plant. These purchases are made to advance the business whether in terms of sales or productivity. A business should always maintain a history of all their Capex purchases and record them in a balance sheet.

After an asset is recorded, it then depreciates over its total lifespan. This means the value of the asset to the business gradually reduces as the asset ages. This reduction in value is known as depreciation and this expense is charged to the company's profit and loss account. This is normally done monthly. Accumulated depreciation is recorded on the company's balance sheet enabling the owner to see how much the asset is worth at any point in time, known as the net book value.

What is revenue expenditure?

Revenue expenditure is an expense that incurs as a part of your business producing products or services. Revenue or operating expenses must be accounted for in total in the period when the commitment to spend the money is made (under the accrual accounting basis) or when the cash leaves the bank (under cash accounting basis).

Keep in mind, this does not mean that revenue expenditures are in any way less important than capital expenditures. Revenue expenditures are required to be paid to keep the asset running and help the business realise the benefits. Examples include staff costs, rent, rates and utilities.

Why do we consider capitalising assets?

A business capitalises its assets so the cost of the asset can be matched against the subsequent revenue that having the asset will generate. For example, you buy a car so that your salesman can visit customers to sell your product. The cost of that car continues to deliver benefit to your company in the form of new sales over the useful life of the car. If you were to expense the car to the profit and loss account in the month you purchased it, you would have a loss on your P/L because all the revenue associated with having the asset would not be made in the first month. So, the benefit of capitalising assets is that it presents a clearer picture of how well your business is doing.

How to decide whether to capitalise or expense our assets

Deciding what to make an asset and what to write off as an expense is a judgement call for business owners but there are financial standards that you need to follow to help you decide about capitalising assets. Let’s use another example: you buy a computer and capitalise it on your balance sheet. A few months later you buy a printer to go with it. Should that be expensed or capitalised? It can be hard to decide.

To simplify the decision, think about what your definition of success is. Be realistic on whether a Capex investment will bring return into the business over a long period of time. You should also create clear lines of communication if multiple teams are looking to buy assets. It’s a good idea to create a capitalisation policy in your business. This can be helpful to decide what should be capitalised or expensed. A minimum threshold can also be applied - for example, £1000. There isn’t a set value in the eyes of HMRC for a threshold, so you will need to decide what works for your business.

Sorting out your capitalisation and depreciation policies and processes is a vital element of running a successful business. Get in touch with David Masih , our client relationship partner. David can explain how we can support you to achieve a streamlined accounting function during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Inventory accounting and why it’s important

Mon, 02 May 2022 21:10:29 GMT

Many small businesses are confident with recording their sales and purchases but may feel less knowledgeable when it comes to inventory accounting.

In this blog post, you will learn:

What is inventory accounting?
Why is it important for businesses to track their stock levels
The different methods of inventory tracking
Calculating the cost of goods sold and how it impacts profit margins
The benefits of an inventory management system
Tips for streamlining your inventory tracking process

What is inventory accounting?

Inventory is also known as stock and it is the accounting term for the goods you have purchased (raw materials), work-in-progress products and finished items that are not yet sold. Inventory is usually recorded as a current asset in your business balance sheet which will turn into revenue in the near future.

Why is accounting for inventory important?

Inventory items at any of the three production stages can change in value. This could be for a wide variety of reasons including change in consumer demand, product obsolescence, product aging, change in market supply. It is vital to have an accurate valuation of inventory to ensure that the balance sheet reflects the company assets correctly and this can be achieved using an inventory management system.

The different methods of inventory tracking

Inventory tracking is the process of keeping track of the inventory of a business. There are a few different methods that businesses can use to track their inventory. The first method is called first in, first out (FIFO). With this method, the inventory that is purchased or produced first is also the inventory that is sold first. The second method is called last in, first out (LIFO). With this method, the inventory that is purchased or produced last is the inventory that is sold first. The third and most common method is called average cost. With this method, businesses keep track of the average cost of their inventory and use that number to calculate their profits. The average cost method uses the weighted-average of all inventory purchased or produced in a period to assign value to cost of goods sold (COGS) as well as the cost of goods still available for sale. No matter which method is used, inventory tracking is an essential part of running a successful business.

Calculating the cost of goods sold and how it impacts profit margins

The cost of goods sold (COGS) is a key metric for businesses and is used to calculate the company's profit margins. COGS includes the cost of materials, labour, and other direct expenses associated with the production of goods. It excludes indirect expenses such as marketing, shipping, and administrative costs. Because COGS is subtracted from revenue to calculate profit, it has a direct impact on profit margins. A higher COGS results in lower profit margins. The COGS will be impacted by the method that you choose for valuing inventory. Accounting standards require that businesses adopt a consistent approach from period to period for inventory accounting.

The benefit of an inventory management system

There are several benefits of implementing an inventory tracking system, aside from helping to meet accounting standards compliance. These include:

More accurate valuation of your stock leading to better business decision making
Automation of stock management may enable a business to reallocate staff leading to greater productivity
Reduced costs – when your business has a better understanding of stock levels, you can reduce overstocking, leading to reduced storage costs without impacting supply to your customer
Better customer experience – a business that knows its stock levels at all times can create a better ordering and shipping process which leads to customer retention and repeat sales.

Tips for streamlining your inventory tracking processes

Inventory tracking is a critical part of any business, but it can be a time-consuming and expensive process. There are a few simple steps you can take to streamline your inventory tracking and reduce costs:

Automate data entry wherever possible. This can save a lot of time and reduce errors.
Use barcodes or RFID tags to track inventory. This can make it easier and faster to scan items and keep track of inventory levels.
If you make perishables, manage your inventory by production date to ensure you sell the oldest stock first.
Integrate your inventory tracking system with your other business systems, such as your accounting software. This will save time, reduce inconsistency errors and duplication and ensure that all your data is in one place.
Review your inventory regularly to pick up any discrepancies as early as possible.

Businesses can struggle with cashflow if they don’t have a good handle on their inventory accounting. Get in touch with David Masih , our client relationship partner. David can explain how we can support you to achieve a streamlined stock management system, during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Understanding the calculation for cost of sales

Mon, 02 May 2022 20:58:58 GMT

No matter the size of your business, understanding cash flow is vital to success.

It gives you the information you need to stay on top of the business’ finances and one key factor in this is having a clear method for the calculation for cost of sales.

When looking at your financial statements, it is important to understand the difference between the cost of sales (COS) and the cost of goods sold (COGS). You might see these terms used interchangeably but some differences set them apart. Cost of goods sold refers to how much a product or service has cost the business in terms of parts and materials. Cost of sales, however, is the total cost of that product or service. This is especially important if you run a SaaS (software as a service) business.

Why understanding COS is useful in business

Understanding cost of sales is one of the most important financial metrics you can track. It will tell you how efficient your business is in creating and selling your product. This in turn affects your businesses gross profit. Down the line, tracking your COS against the revenue of the business can help you see opportunities to lower costs and increase profit by quickly identifying any products or services that have low profitability.

If your cost of sales are very high, you will know that it is eating into the profit of the business and can act on this - an example being that you might renegotiate a contract with a partner or stop using a paid tool in your business that isn’t providing enough value.

If you want to have a chat with us regarding any other useful metrics that could be key to your business’ success, you can get in touch with us here . We’d love to help you out.

The calculation for cost of sales

Before you start to calculate any cost of sales, it’s important to know what needs to be included and what doesn’t. A good rule of thumb on this is if you stopped paying for an expense and you could still provide your service, then that expense shouldn’t be included in your cost of sales calculation. If an expense is crucial to the services you provide, it needs to be included. Some examples of things that might need to be included are software licenses, any related marketing costs and the wages for the employees involved in the delivery of the service.

Now let’s imagine your business sells web design services. You employ 2 designers at £3,500 a month, you spend £1,000 on software licences for design, and you have a part-time bookkeeper at £300 a month. You also have premises costs of £10,000 and other overheads totalling £3,000.

Cost of Sales = £3,500 + £3,500 + £1,000 = £8,000

Once you know what you need to include in your cost of sales formula, the rest is quite simple. Remember, calculating COS whenever you have an income statement is crucial to working out your gross profit.

How COS differs from OPEX

Operating expenses (OPEX) are any day-to-day expenses that keep a business running. At first, this can seem like another way of saying COS, but COS and OPEX are very different. COS includes costs that are related to providing your businesses service. What it doesn’t include are costs that go towards keeping the business running every day; these are your operating expenses.

Examples of OPEX include rent for your office, any employee training that might take place and even salaries for employees not directly involved with the delivery of your services. Knowing your OPEX tells you how efficiently your business is running overall, not just in creating a service or product.

In the example above, the £300 for the bookkeeping, £10,000 premises costs and £3,000 other overheads are part of your operating expenses and are not included in the calculation for cost of sales.

To get a greater understanding of the calculation for cost of sales or cost of goods sold, get in touch with David Masih , our client relationship partner. David can explain how our financial

management services can benefit your business during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk.

Workplace Pension Rules for Employers: What You Need to Know

Mon, 02 May 2022 20:50:52 GMT

All employers must, by law, offer employees a workplace pension. If you are an employer, you may be wondering what the workplace pension rules for employers are.

Other names for workplace pensions are ‘occupational pensions’ or simply ‘company pensions’.

Which employers need to provide a workplace pension?

All employers must provide a workplace pension scheme - this is called autoenrollment. Even if your business doesn’t have to enrol employees by law, a pension scheme still needs to be provided and you can’t refuse anyone that wants to join your pension scheme. However, you don’t need to make contributions for any employee who earns less than £520 a month. If any members of staff opt-out of your scheme within the first month, the money paid into the scheme must also be refunded to them.

Which employees can benefit?

If your employees are at least 22 years old and earn more than £10,000 a year, they meet autoenrollment pension requirements and must be placed into a pension scheme. Information must be provided to your employees about their rights whilst in your company’s scheme. This includes the date they have been added, the type of pension and who is providing it, how much they will contribute and instructions for leaving the scheme if they wish.

Staff who are under 22 but older than 16 who are earning more than £10,000 can choose to join your workplace pension and make their own contributions.

You do not need to enrol any staff that have already given notice that they are leaving, staff who have already taken a pension for their current role or have arranged to get a one-off payment sum - known as a ‘winding up lump sum’ - when they leave your employment. You must make sure that workplace pension rules for employers are being followed.

How to set up a workplace pension

When it comes to setting up a workplace pension, there are quite a few options available. Two of the major pension providers are NEST and SmartPension . NEST is a government-run pension scheme provider that specialises in autoenrollment for employees. The system itself is free for employers to use and has been built in line with practice guidelines from the Department for Work and Pensions and The Pensions Regulator. You can use NEST as your sole scheme or alongside other schemes you have set up.

SmartPension provides similar services to NEST but prides itself on payroll efficiency. The platform works on a ‘one click’ system with most payroll providers and takes the pressure off running pension admin every month. They give access to a digital retirement dashboard, making it easy for employers and employees alike to manage their payments leading up to retirement. They also offer a smart rewards scheme that gives your employees access to over 1200 rewards and discounts across major retailers in the UK.

Both services offer online setup with support but it is important to ensure that you get all your data correct from the outset. Make sure that you have all your business information to hand when you create your accounts. Don’t be afraid to look around and see what works for your size of business.

Pensions can be complex and it’s vital to get them set up correctly so why not get in touch with David Masih , our client relationship partner. David can explain how we can help you to understand the workplace pension rules for employers so that you can support your staff. Call 03330 067 123 for a no-obligation chat today or email info@onthegoaccountants.co.uk .

Difference between Balance Sheet and Profit and Loss Account

Mon, 02 May 2022 20:43:09 GMT

When it comes to understanding the financial position of your company, it is important to know the key differences between a balance sheet and a profit and loss account.

In this blog post, we will discuss these two important financial statements.

Key differences between the balance sheet and the profit and loss account

The Balance Sheet shows the financial position of the company as at the date it is drawn up e.g. as at 31 December 2021 while the Profit and Loss account shows the results of operations for the period e.g. For the year ended 31 December 2021.
The Balance Sheet is a statement of assets, liabilities and capital, whereas the Profit and Loss account is a statement of income and expenses.
The Balance Sheet is static; it doesn’t necessarily change from period to period, whereas the Profit and Loss account will always change with each new accounting period.
The Balance Sheet enables a comparison to previous years to show the relative stability, liquidity and solvency of the business. The Profit and Loss account allows you to identify and track trends in performance and profitability over time.

The relationship between balance sheets and profit and loss accounts

The profit and loss (P&L) account summarises a business' trading transactions - income, sales and expenditure - and the resulting profit or loss for a given period.

Any remaining profits not paid out as dividends are shown as retained profit on the balance sheet.

Many small businesses do not pay much attention to their balance sheet, particularly if they use cash basis accounting . Under the cash basis of accounting, transactions are only recorded when there is a change in cash at bank/in hand. This means that there are no accounts receivable or accounts payable to record on the balance sheet.

If you use accrual accounting, then the balance sheet becomes much more important as this is where you can track what your customers owe and what you owe your suppliers as well as how much stock you are holding.

The balance sheet is also a good indicator of the overall financial health of your business. The two key ratios to look at are the current ratio and the debt-to-equity ratio.

Current ratio = current assets/current liabilities
Debt-to-equity (D/E) ration = Total liabilities/total Shareholder equity

Reading your financial statements can be tricky if you don’t fully understand the difference between the balance sheet and the profit and loss account, but at OnTheGo Accountants, we are always ready to give our clients training or just have a quick chat to explain anything that isn’t clear.

Get in touch with David Masih , our client relationship partner. David can explain how we can help you to understand the workplace pension rules for employers so that you can support your staff. Call 03330 067 123 for a no-obligation chat today or email info@onthegoaccountants.co.uk .

Grants for Business: A Quick Guide on Type of Funding

Mon, 02 May 2022 20:32:45 GMT

You may have heard the term ‘business grant’ and wondered about how you could get one if you run your own business.

A business grant is a sum of money awarded to a company to help it develop and grow. You could use the money to invest in training, purchase new equipment or even reach new markets. Unlike a business loan, a grant does not need to be repaid. We have put together a few pointers on the types of funding you can apply for and how to go about doing so.

R&D grants and R&D tax credits

Research and development grants allow businesses of any size to access funding for the development of new products, services or processes to bring them to market. The result of this might be a new consumer device, medical treatment or software. They are usually offered by the government or universities and are ideal if you are looking to accelerate your growth or simply need funds to conduct more research.

The R&D Tax Credits Scheme rewards businesses for solving problems and sharing their solutions for the benefit of everyone. Whenever you spend money on an R&D project that qualifies, you can get a cash reward of up to 33% of the qualifying costs back or a reduction in the amount of Corporation Tax you will have to pay. When your claim is approved you can choose whether your business receives a refund or future tax relief.

Innovate grants

Innovation or innovate grants for business are offered to help companies grow through the development of promising ideas that change communities and the systems that we use every day. Organisations such as Innovate UK work with many partners to shape integral parts of society and give everyone the chance to participate. Innovate grants usually offer £200k to £2m of funding and are very competitive, so you will have to make a strong case.

EIC accelerator grants

EIC grants are specifically designed to support tech-based SMEs and startup businesses. They are provided by the European Innovation Council and are designed to help rapid growth, encouraging businesses to invest in game-changing innovations.

The EIC Accelerator two types of support:

grant funding of up to €2.5 million for innovation development costs,
direct equity investments of up to €15 million managed by the EIC Fund for scale up and other relevant costs.

An EIC grant can be applied for at any time and you normally receive a response within 4 weeks. If successful, you will be invited to a face-to-face interview with the EIC jury before a final decision is made.

How to apply for grants for business

To apply for any type of funding, your best port of call is their dedicated websites, GOV UK or through an expert team like the one we have. The application process for EIC grants can take some time but it is simple enough to follow once you get started. Here are some general tips:

Find out as much as you can from the grant awarding body about what they are looking for in your application
Write a comprehensive business plan
Give specific details on how you will spend the grant
Apply well ahead of any funding deadline as grants are usually highly competitive.

It can be tricky to put together a successful bid for grants for business, but at OnTheGo Accountants, we have experience in helping clients just like you get access to funding to allow them to grow more quickly.

Get in touch with David Masih , our client relationship partner. David can explain how we can support you to do more with your business during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

A short guide to the EU One Stop Shop (OSS) for VAT

Sun, 24 Apr 2022 20:16:38 GMT

For a little while now, the EU has provided a One Stop Shop (OSS) scheme in which a business can simplify up to 95% of their VAT obligations.

This can cover a business that provides SaaS (software as a service), is an online seller or provides an electronic interface within the EU.

To make things simple, it will allow you to register VAT electronically for doing business within the EU and have everything in one place, instead of registering for VAT in up to 27 EU countries. You can also declare and pay VAT that’s due on supplies of goods and work with the tax administration in any country you supply to - you can even communicate in your own language.

Non-EU companies selling e-services or digital products MUST register for EU OSS BEFORE starting to trade. You also need to register for the scheme if your business provides certain supplies of goods and your goods are worth more than £8,818 a year to consumers in the EU. You can find the full list and more information on this on the gov.uk website.

How do you register for EU OSS?

Before you register you will need to tell HMRC your UK registration number as well as a name and permanent place for your business. You must also apply to register by the 10th day of the month after your first supply of business. If you apply after this, your registration won’t take effect until the first day of the next calendar quarter.

The process of registering is quite easy. Log in to your government gateway with your businesses ID and password and find the OSS section in your account. You should have your log in details from when you registered for UK VAT. Make sure you also have your bank identifier code (BIC) and account number (IBAN) to hand.

Please be aware that this process is no longer available post-Brexit but we can

Union and Non-Union OSS

If you’re assuming that Union OSS and Non-Union OSS is based on whether you’re in the EU or not, you’re not far from the truth. The two definitions are based on the types of transactions and businesses that are eligible to use each type of tax return. To keep things simple, we’ve created a breakdown for you so you can see where your business might fit.

Union EU OSS is designed for EU and non-registered businesses who sell goods to customers within the EU. Examples of this include, transport, digital products, telecommunication or the supply of restaurant and catering services on board ships, trains and aircrafts.

Non-Union OSS is designed for non-EU businesses who are providing services similar to the above.

EU businesses are required to register for tax in their home country whereas a business outside of the EU might choose to only register in the country where they trade. This must correlate to where stock is held - so if you do business in France, you must register in France.

However, if you’re a non-EU business, you can register in whatever country you choose and would therefore fit into the Non-Union OSS category.

What if I’m a SaaS business?

If you’re a SaaS business based in the UK and provide digital products to customers in the EU, you need to register for Non-Union OSS. Even services such as having a website with a ‘buy now’ button and having minimal human intervention is classed as providing an e-service.

If your business just uses the internet or software to communicate with customers in the EU, that might not mean you are supplying an e-service. You can find the full list of what is classed as an e-service here . We understand that this can feel confusing and very overwhelming, especially if you’re a new business.

To get help unravelling the complexities of EU OSS and VAT, get in touch with David Masih , our client relationship partner. David can explain how our financial management services can benefit your business during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk.

Why not connect with us on LinkedIn too.

What is net cash burn rate and how can you calculate it?

Fri, 25 Mar 2022 18:38:23 GMT

Most companies measure their success by calculating how much money is being brought into the business.

What can sometimes be forgotten is how quickly money is spent, which is just as important, especially if you are a startup. How quickly you are getting through your cash reserves is known as net cash burn rate and keeping a close eye on this figure is crucial to success.

Net cash burn rate is usually calculated every month, but sometimes this is done quarterly or even yearly. When a business is starting, this can be very useful as it often predicts when you will become profitable. A burn rate can also show how long your business can operate before running out of cash - this is known as ‘runway’ and is calculated in months. Investment banking company JP Morgan suggest that start ups should have at least 12-18 months runway which allows time for projects to deliver value plus some extra time to arrange additional funding.

Keep in mind, net cash burn rate doesn’t include outstanding obligations, money transferred into other accounts or money that is promised and hasn’t arrived yet.

Calculating Net Cash Burn Rate

Calculating your burn rate is a lot simpler than you’d think. There are just two types you need to know about.

Gross Burn Rate: This is the amount of cash that you have spent in a month. It doesn’t take your total revenue into account.

Net Cash Burn Rate: This takes your revenue from cash into account as well as the cash lost in any single given month. Simply put, you just take away revenue from spending and use that number to calculate the rate. This will help start-up businesses understand how much they need to make before they break even.

You can also calculate your burn rates with or without your venture capital. Don’t worry if this seems like a lot to take in. If you’re a new startup or a sole trader, it’s worth taking the time to do this work now and make it part of your monthly routine from day one. If you need extra help with anything or want some extra information, get in touch. We can arrange a free chat at a time that suits you.

Example cash burn and runway calculation

Company A has investment of £1m, cash in the bank. Monthly operating expenses are £55,000 and is currently achieving £5,000 of income per month. Using the information above, we know that the gross burn rate is £25,000 and the net cash burn rate is £55,000-£5,000 = £50,000 per month.

With £1m in the bank and a net burn rate of £50k, the company has a runway of 20 months to become profitable.

How often should I adjust my burn rate?

You might calculate your net cash burn rate and realise, it’s higher than you thought. It’s always important to keep an eye on your financial outgoings and keep check of what your runway is. Tech startups should do this frequently, at least once a quarter to ensure that they aren’t at risk of becoming insolvent.

It’s smart to look at what your recurring monthly purchases do for you, especially if you’re a startup. If you have a lot of subscriptions and direct debits, there may be costs that can be trimmed without materially affecting your ability to grow your business. You may be surprised at the results when you take the time to look. You might have some outgoings that aren’t of any benefit at all and reducing these will reduce your cash burn rate and have a positive impact on your bottom line.

Other options apart from cost reductions

Generate additional cash from sales and marketing.
Invest in research and development to generate growth.
Sell company assets.
Raise external finance by issuing debt or equity.

Talk to us

To discuss net cash burn rate or anything else affecting your startup, get in touch with our client relationship partner David Masih . He can explain how our services and advice can benefit your business - including tax mitigation strategies - during a no-obligation chat. Give us a call on 03330 067 123 or email info@onthegoaccountants.co.uk .

Check out our testimonials to see how we help people just like you.

Spring Statement Round Up 2022

Wed, 23 Mar 2022 18:43:05 GMT

Chancellor Rishi Sunak has just sat down after delivering his Spring Statement 2022.

With the economy still recovering from the COVID pandemic and the full impact of the Ukraine war yet to feed into the public finances, many people are keen to know just what changes the Chancellor has planned and how they might be affected. This blog post looks at some of the announcements that are likely to have the biggest impact on your household budget.

1. Increase of £3,000 in the National Insurance threshold

From July, individuals will be able to earn £12,570 before paying any National Insurance Contributions (NICS). This brings the threshold into alignment with the Income Tax threshold, giving the average employee a tax cut worth around £330 per year.

2. 5p reduction in fuel duty.

Prices at the petrol pumps have been increasing at an eye-watering rate since the end of February 2022, with the average price of a litre of unleaded around £1.65p. From 6pm on 23rd March, the tax on fuel will be reduced by 5p per litre, a saving which should be passed on to motorists on garage forecourts. This translates to a saving of around £3 when filling the average family car.

3. £500m available to support vulnerable households

Mr Sunak recently announced a fund of £500m to support households suffering from rising costs of living. This Spring Statement increases the funding available to £1m which will be distributed from April by local authorities to families most in need.

4. Income tax cut of 1p

Whilst the Chancellor announce a reduction in the basic rate of income tax of 1p, he stopped short of saying exactly when this would be implemented, stating only that it would be brought in before the end of the current Parliament in 2024. So we can’t all rush out and spend or invest that money just yet.

5. VAT scrapped on home energy-saving measures.

With the energy crisis likely to deepen, households are looking for ways to reduce energy usage and improve the energy efficiency of their homes. VAT will be scrapped on materials such as solar panels, heat pumps and insulation in a bid to encourage more households to adopt renewables or more energy efficient options.

6. Business rates discount

For some businesses - retail, leisure and hospitality, there is a 50% discount in business rates up to £110,000 as these sectors continue to recover from the past two years.

7. Employment allowance

The employment allowance has been increased from £4000 to £5000. This allows eligible employers to reduce their Class 1 National Insurance liability helping small businesses to cope with spiralling overheads.

8. Forecast for inflation, growth and debt

The Office for Budget Responsibility estimates the following important headline figures for the coming year:

Inflation 7.4%

Growth 3.8%

Debt interest £83bn

9. No change

Despite many calls from the opposition parties to scrap the hike, Rishi Sunak is resolute on the subject of the 1.25% increase in National Insurance due to take place on 1st April. This is mitigated in part by the threshold increase which will help low and middle income households.

Upcoming Finance and Tax Changes April 2022

Wed, 23 Mar 2022 17:53:18 GMT

2022 is set to be challenging for many people's finances across the UK.

After many announcements during the 2021 Autumn budget, we will all soon see higher tax bills. For some, this isn’t a welcome change as the government had previously promised not to raise tax bills any higher.

To help you out with understanding the changes that come into effect soon, we have put together an overview of the main tax changes for 2022 and how they could affect you.

So what are the key Tax Changes in 2022 to look out for?

Class 1 National Insurance Rates- Employee

National Insurance will be rising on the 6th April 2022 by 1.25%. This is all part of the government's plan to introduce health and social care changes where working people contribute to fund the NHS and help tackle the social care crisis. Payment for this will be taken alongside your National Insurance until 2023, where the payments will then be split. This gives greater transparency around tax changes and what your national insurance payments are going towards.

If you’re paying Class 1 NIC and earning between £9,880 (£12,570 from July) and £50,270, you will now pay a tax rate of 13.25% instead of 12%. If you earn over £50,270, you will make payments at a rate of 3.25% instead of 2% on any income above the upper threshold.

Class 1 National Insurance Rates - Employer

Employers are not escaping the NIC rise either and the rate has also increased from 13.8% to 15.05% from April 2022.

National Minimum Wage

Another change which will affect disposable income and the amount of tax paid is the uplift to national minimum wage rates. This is worked out based on the employee's age and it is important to make sure that you are paying the right amount of tax for every employee. The table below shows the rates for 2021/22 and 2022/23.

Statutory Maternity, Paternity, Shared Parental and Bereavement Pay

The weekly rates for these types of payments will also change in April 2022. For maternity pay, allowance and parental pay, you will now receive £156.66 per week or 90% of your weekly earnings if the figure is less than the statutory rate. For parental bereavement pay, you will receive the same at £156.66.

Statutory Sick Pay

HMRC has also confirmed that Statutory Sick Pay (SSP) will be £99.35 per week. However, employees must be paid for each day they are off work due to an illness. The daily rate would then depend on the number of days that they work each week. Get in touch with us if you would like more information on this.

Dividend Tax

A dividend tax is charged at a different rate than income tax. If you’re the director of a limited company, this is seen as the most tax-efficient way to pay yourself. You’ll pay income tax on the salary part of your income and then dividend tax on dividends. The rate of dividend tax depends on what rate of income tax you pay. If you are on the basic taxpayer rate, you will pay dividend tax at the ordinary rate. As of April 2022, this is 8.75% which is a 1.25% increase from the 2021/22 rate. Higher rate dividend taxpayers will be charged 33.75% instead of 32.5% and additional rate dividend taxpayers will pay 39.35% instead of 38.1% respectively.

Corporation Tax

Although the rate of tax levied on businesses is unchanged for 2022/23 at 19%, businesses earning more than £250,000 in profits should be making plans already to adjust to a significant increase in the rate to 25% from 1st April 2023. A new small profits rate (SPR) of 19% which applies to small businesses making profits under £50,000 will be introduced in April 2023. Companies with profits between £50,000 and £250,000 will pay tax at the main rate by may be able to claim some marginal relief.

Understanding everything you need to know about tax changes in 2022 and 2023 can be time-consuming. Get in touch with David Masih , our client relationship partner. David can explain how we can support you to do more with your business during a no-obligation chat today. Call 03330 067 123 or email info@o nthegoaccountants.co.uk .

In partnership with: Telleroo, a fast-growing payments provider in the UK

Thu, 17 Feb 2022 10:28:32 GMT

At OnTheGo Accountants, we take great care to work with only the very best partners who can help us provide top quality services to you.

We work with Telleroo , a fast-growing payments provider in the UK to ensure that our clients day to day payment transactions are smooth and headache free. If you require automated payments to make your business more streamlined, Telleroo has excellent services available for you to try.

Who is Telleroo?

Telleroo is a UK based payments provider and aims to revolutionise the way business payroll and supplier payments transactions are managed. They believe payment processes should run efficiently and you should be able to delegate pay tasks such as creation, review and approval without any hassle. By connecting to Xero, your bank feed is updated in real-time and stays in sync with your client database.

When to implement Telleroo?

If your startup has 6 or more employee or supplier payments to make each month then a solution like Telleroo can really help to automate the entire payment process.

When ready, OnTheGo will set up your Telleroo account and send you an invite to review your details and complete an ID verification. You may also be asked to provide IDs of all PSCs (anyone who owns at least 25% of the equity in your company) to comply with AML regulations.

What benefits do they offer?

As Telleroo works seamlessly with Xero, fraud detection and error validations are automatically flagged.

Once bills have been approved in Xero you make a batch payment to sync the payments straight into Telleroo without manually keying in the payees and amounts. Then, when bills have been paid, you can instantly reconcile the whole batch in one click.

You can stop copying and pasting details from your employees payslips. Payroll payments from Xero are synced directly into Telleroo for your approval.

Where do we come in?

OnTheGo can help you:

Set up your account
Organise your monthly payroll and supplier payments
Confirm a single payment to be made from your account to be distributed at your chosen date and time

To get help with handling your payments more efficiently, get in touch with David Masih , our client relationship partner. David can explain how our financial management services, alongside Telleroo can benefit your business during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Why not connect with us on LinkedIn too.

How to Start an E-Commerce Business

Wed, 26 Jan 2022 23:09:05 GMT

How to Start an E-Commerce Business: A Quick Checklist

Have you ever shopped online and thought, ‘I wish I could sell my products like this?’ E-commerce business has exploded due to factors such as the pandemic and rising costs of commercial rent for high street shops. Everyone is trying to cash in on the money that is to be made from selling a unique product or service online. It can be overwhelming to know where to begin.

What is an E-Commerce Business?

Simply put, an e-commerce business is any business that conducts transactions electronically on the internet. Your computer, tablet, phone and other smart devices can be used to purchase goods and services for you. Almost anything in 2022 can be bought electronically.

Companies such as Boots, UberEats and Apple have soared online since 2019 when more and more of us started working from home. The pandemic led to a surge in customers wanting health products, food and electronics delivered straight to their door. Even e-commerce services such as Zoom and Microsoft have seen growth like never before as businesses purchase software to stay in touch with their employees remotely.

To help you out with your e-commerce business, we have put together a quick checklist on how to get set up and start selling your products online.

7 Steps to Building an E-Commerce Business

Create your offer: The hardest stage of all is probably at the beginning. What are you going to market and sell? Is it a physical product? Are you going to offer a service? Make sure that whatever you are going to offer, it’s a solid idea and most importantly, you’ve done your market research and know that there is a demand.
Do your research: This is essential before you even open a website builder. Your business is an investment and should be treated as such. Who else offers this product? It’s critical to know your competitors, especially if you are going into a saturated market. How will you be different, what makes you stand out from your competition?
Factor in costs: How much will your product cost? How much time will this take up? What expenses will you have? Many businesses run up high costs at the beginning but don’t drown yourself in debt if you can’t afford to pay it back. A chat with our team can certainly help you get to grips with what you can realistically do.
Create a business plan: A business plan is your roadmap for running your own business. It brings all your ideas together in one place and signposts what to do next. This plan will evolve as your business grows so you can reach new customers and markets.
Choose a name: Another big decision is what you are going to call your e-commerce business. Are you going to name it after yourself or your product? Remember, your businesses name will be everywhere. Make it memorable.
Register with HMRC: As you may know with any business, tax must be paid based on how much revenue the business has earned. Make sure your business is registered with HMRC , so they know you are trading. It doesn’t matter whether you’re a sole trader or a limited company, this must be done. You must register within three months of starting to trade.
Create your website: Make sure you have a customer-centric online store set up so purchasing your goods or services is straightforward. Sites such as WordPress, Squarespace or Shopify all have easy to use templates. Then you can list your products or services and start selling! Keep your website up-to-date and don’t forget to work on your SEO so you can be found. When you don’t have a shop front, you’ll need to work harder on your online presence to gain customers.

What are the advantages of online businesses?

Running an e-commerce business provides many advantages over a traditional run business. Yes, it’s hard work - but it’s also very rewarding. You can control and expand where your product is sold, which clients you work with and how you want to market your brand. One big advantage is that most e-commerce businesses can be set up from home on your laptop! There’s no need to pay for office rent or travel costs. It couldn’t be easier to get started.

Where do I get support if I want it?

To get help with your e-commerce startup or accelerating growth in your established e-commerce business, get in touch with David Masih , our client relationship partner. David can explain how our business advisory services can benefit your business during a no-obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Why not connect with us on LinkedIn too.

How R&D tax credits improve cashflow

Tue, 21 Dec 2021 22:12:58 GMT

What are R&D tax credits?

R&D tax credits are an incentive which encourages UK businesses working in the science and technology sectors to invest in innovative project. Many businesses need to spend money creating new technology, machinery, medications and other novel products. Exploring how to design and build innovative solutions is expensive so the UK Government offers tax breaks to encourage businesses to spend more on R&D and innovate, bringing significant advancements within their industry or the general population.

There are two different types of credits available:

Rates are correct for tax year 2021/22.

Claiming HMRC R&D tax credits

The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. The project must be part of your company’s existing business or relate to a new product that you intend to market because of the research and development. You can claim for R&D tax relief up to two years after the end of the accounting period it relates to.

The Government has strict criteria for R&D tax credit claims and more information can be found on their website, but the main points are:

To get R&D relief you need to explain how a project:

looked for an advance in science and technology
had to overcome uncertainty
tried to overcome this uncertainty
could not be easily worked out by a professional in the field
Your project may research or develop a new process, product or service or improve on an existing one.

What costs qualify for R&D tax relief?

Many costs associated with your R&D project can be claimed including:
Employee costs – salaries, NI and pension fund contributions
6% of agency or subcontractor costs for staff working directly on the project
Software licence fees
Consumable items used in the project – e.g. materials, utilities
Clinical trials volunteer costs (pharmaceutical R&D)

You cannot claim for:

the production and distribution of goods and services
capital expenditure
the cost of land
the cost of patents and trademarks
rent or rates

How do the tax credits improve cashflow

Companies who invest in R&D projects may run into cashflow problems if they spend upfront to develop a new product and the income relating to that spending comes much later. In the case of pharmaceutical R&D, projects can be 10-15 years or even more. R&D tax credits can plug the gap in cashflow.

Which businesses can benefit most?

Some businesses are more likely to encounter cashflow issues than others.

Startup businesses working on proof of concept or prototyping will incur costs upfront and there could be a significant delay until they begin to make revenues from their new products. Such businesses are likely to require additional sources of funding and R&D tax credits can help to balance the cashflow problem.

Getting support

Claiming R&D tax credits can be done through your Corporation Tax form (CT600) but if you would like support to calculate your R&D costs and the amount you can claim, OnTheGo Accountants can assist.

Get in touch with David Masih our client relationship partner who can discuss your situation during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

The Autumn Budget 2021 in a nutshell!

Thu, 28 Oct 2021 18:18:44 GMT

For those in the financial and business world, many eyes were on Rishi Sunak as he delivered the Autumn Budget 2021 statement this week.

Much of the content had been already leaked to the press in the few days prior to his speech but if you need a quick roundup of the main changes for business owners, read on.

Changes in the Autumn Budget 2021 affecting businesses

Taxation

Basis period reform is expected to commence from 6 April 2024, with a transitional year before this.
Corporation tax will remain at 19% until April 2023 after which the rate will increase to 25% with a Small Profits Rate of 19% for profits not exceeding £50,000pa.
There will be marginal relief for profits between £50,000 and £250,000.
From 1 April 2022, a Residential Property Developer Tax will be introduced at 4% for property development businesses with profits over £25 million. Proceeds will be used to fund replacement of unsafe cladding on high-rise buildings.
VAT registration threshold remains at £85,000 until 31 March 2024.
As previously announced, employers will pay 1.25% Health and Social Care Levy via NI contributions for 2022. In 2023, this will become a standalone levy.

Allowances/ rate discounts

Between 1 April 2021 and 31 March 2023 (extended in the Budget from 31 December this year), expenditure on new plant and machinery qualifies for a 130% super-deduction.
Expenditure on assets in the special rate pool (such as integral features in buildings and certain cars) will benefit from a 50% first year allowance.
The £1 million annual investment allowance (AIA) limit for expenditure on plant and machinery will be extended until 31 March 2023.
From April 2023, Research & Development (R&D) Tax Relief will be extended to include data and cloud accounting costs.
50% business rate discount for companies in the retail, hospitality and leisure sectors, up to a maximum of £110,000 will apply in 2022/23.

Personal finances

Income Tax

There are no changes to income tax rate or personal allowance which will remain at their current rate until April 2026.

National Insurance

The new 1.25% Health and Social Care Levy will be introduced from 6 April 2022 for employees and the self-employed.

Capital Gains Tax

The 30 day time limit for reporting capital gains on the sale of residential property and for payment of the tax has been increased to 60 days from Budget day. However, there are no changes to CGT rates or allowances.

Dividend Tax

From 6 April 2022, the dividend tax rates will also be increased by 1.25%. The basic rate dividend tax will increase to 8.75%, the higher rate dividend tax will increase to 33.75% and the additional rate dividend tax will increase to 39.35%. No increases or changes to the main or savings income tax rates.

Stamp Duty

The SDLT nil rate band for property purchases reverted to £125,000 from 1 October 2021.

Universal Credit

The taper rate in Universal Credit will reduce from 63p to 55p and work allowance increased to £500.

Wages from 1 April 2022

National Living Wage for those aged 23 and over: From £8.91 to £9.50 an hour
National Minimum Wage for those aged 21-22: From £8.36 to £9.18
National Minimum Wage for 18 to 20-year-olds: From £6.56 to £6.83
National Minimum Wage for under-18s: From £4.62 to £4.81
Apprentice Rate: From £4.30 to £4.81

Getting support

To talk about how the Autumn Budget 2021 might affect you and your business, get in touch with David Masih our client relationship partner. David can explain how our services can benefit your business with tax mitigation strategies during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Cash accounting vs accrual accounting – Which should you use?

Wed, 20 Oct 2021 07:30:02 GMT

Unless you have a background in finance, when you start a business, you may not know the difference between cash basis accounting and accrual accounting for recording your financial transactions.

This blog post will explain the two systems, the different treatments and why we believe that the accrual accounting basis is the best option for businesses looking to grow and find investors.

Cash basis accounting

Cash basis accounting involves recording transactions in your accounts when money changes hands. That means that revenue is only recorded in your accounting software when the income is received in your bank account. Expenses are recorded only when the money leaves your account. This method of accounting is simpler for small businesses to manage.

Let’s look at an example:

Company A agrees a deal with company B for £48,000 and invoices company B on 3 July. The payment terms are 30 days from invoice date. Company B pays the invoice on time and Company A records the revenue received on 2 August in their books.

Accrual accounting

Accrual accounting takes a different approach to recording the transaction. Revenue is recorded as soon as the sale agreement is made and similarly expenses are recorded when a purchase order has been signed or there is another commitment to make that spend.

Looking at Company A and B in the above scenario, under the accrual accounting method, £48,000 would be recorded as sales on 3 July and the amount appears in your Receivables account on the balance sheets (also known as debtors). This means that the value of the sale is recorded earlier under accrual accounting that it would be under cash basis accounting. When the invoice is paid and money hits the bank account, the accounts receivable is credited and the bank is debited.

Similarly, if you purchase goods, you will record the purchase amount in your accounts payable when the purchase order is signed creating a creditor on the balance sheet. When the purchase invoice is settled and money leaves your bank account, you debit the accounts payable and credit the bank.

The accrual method is straightforward for companies that supply physical goods – revenue is earned when the order is fulfilled. However, if you provide service contracts which span several months or even accounting periods, then you will need to apportion the value of the contracts across the relevant months to indicate when the revenue is realised or earned.

Let’s work through the previous example:

If Company A provides a contract for maintenance services for £48,000 for 12 months servicing, the earned revenue each month would be £48,000/12 = £4,000 a month. Only after the full year would the total amount of £48,000 be recognised as revenue.

So how do you choose which method to use?

Advantages of Cash-Basis Accounting

If it’s in your books, that means it is in your bank account which makes understanding your cashflow easier.
No specialised financial accounting knowledge needed to keep your accounts.

Disadvantages of Cash-Basis Accounting

You won’t have detailed information about how much you’ve made in sales and when.
Makes sales forecasting more difficult.
You may not have a complete overview of expenses that might be coming along so it’s easier to overspend your budget.

Advantages of Accrual-Based Accounting

More detailed picture of when your business is achieving sales or incurring costs, allowing you to budget more effectively and see trends in your data.

Disadvantages of Accrual-Based Accounting

For small businesses in particular, the accrual method may add unnecessary complexity to their bookkeeping and accounting.
Cashflow forecasting and tracking is more complex

Looking for investors for your business? Choose accrual accounting.

Investors expect growing business owners to be using accrual accounting. Some banks simply won’t lend to companies that aren’t using the accrual-based method of accounting. Under this approach, potential investors will get a more complete view of the financial health of your business where revenue is matched with expenses incurred to create that revenue. It is also much easier to see the financial viability of the business if you can quickly identify your debtors and creditors by looking at a balance sheet.

If you are currently using the cash basis of accounting and you are considering outside investment such as an angel investor or venture capitalist , you will need to supply several months of accrual-based accounting books, so make sure you factor that into your investment planning.

Getting support

If you are unsure on the right approach for your business or you need support moving from cash-basis accounting to accrual accounting, get in touch with David Masih our client relationship partner. David can help you explore your options during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

How to write a tech startup business plan

Mon, 18 Oct 2021 20:06:35 GMT

Why should you write a tech startup business plan? Surely it would be better to focus your efforts into

getting your business up and running rather than spending time on paperwork?

Although many business owners only think about writing a business plan when they are seeking funding, having a clearly articulated plan can help you to grow your business more quickly, focus limited resources in the right areas to achieve your targets and of course, attract the right people to help you, whether

potential investors, collaborators or employees.

So how do you write a tech startup business plan?

There are 8 key areas to address with your tech startup business plan:

Executive Summary
Business Opportunity
Market Research
Company Description
Product/Service Overview
Sales and Marketing
Financials
The ask

Writing a business plan can be time-consuming and especially in the fast-paced world of technology, it can quickly go out of date. That’s why it’s a good idea to write a concise tech startup business plan so that you can keep it current without it being a huge effort when things change. Additionally, your investors are busy people who are unlikely to have time to read hundreds of pages of a business plan. However, that does not mean that you should scrimp on substance. Your plan needs to contain sufficient detail to give your potential investors confidence in your strategies.

The Executive Summary

This section is vital to help position your company and products in the marketplace and as an attractive option for investors. This section should be short and written as a summary of the detailed report which is why you write it last.

It should include the answers to the following questions, ideally in no more than a couple of sides of A4.

What product or service are you selling?
What problem is your product/service going to address?
What solution will your business provide?
Who will your customers be?
How is your product/service better than others on the market?
What are your company objectives for the next few years?
What are the financials associated with those objectives – expected sales and profits.
What is the funding requirement and what exactly will the money be used for?

The Business Opportunity

This is a deeper dive into the problem you are solving, for whom and how. In this section, you need to explain the existing problem your tech start up is targeting. You must identify who currently experiences this problem and outline your proposed solution to the problem in a business opportunity statement so that potential investors can quickly see whether your company is offering something that they can support wholeheartedly. Your investors need to believe in your product as a vital solution to a clear and present issue and one that is better than existing marketed options.

Market Research

This section is where you demonstrate how you have identified that your solution can solve a real-life problem and the potential size of your market share. There’s no point filling a gap in the market if there’s no market in the gap. Make sure you do thorough market research before spending too much money on prototyping or creating an MVP (minimum viable product). Although you may think your idea is great, if it’s solving a non-issue, then you won’t be able to sell it. Figures from CB Insights show that 35 % of startups fail because there simply wasn’t a need for the product.

Company Description

This section is usually short and gives an overview of what the company does, for whom and how in a succinct sentence or two. It should also provide organisational information about the management and team structure showing who is responsible for what activities. Don’t forget to include the company vision and mission statements.

Product/Service Overview

In this section, be sure to include specific details on the features and benefits of your product/service and how exactly it will solve your customers’ problems or meet their desires. Highlight your USP and indicate what will set you apart from your competitors, making you an attractive investment opportunity.

Sales and Marketing

Provide your plans for how you will market your product and close your sales deals. Identify your planned sales channels e.g., e-commerce website and explain your marketing strategies, e.g. website, PPC advertising, email marketing and so on.

Financials

Having solid justifiable sales forecasts and profit projections is a must have for any potential investor. There needs to be clarity around how the figures have been pulled together and the projections should show a range from pessimistic to realistic to optimistic. You should aim to provide monthly sales forecast figures for the first year and annual or quarterly figures for the next 3-4 years showing the growth you expect to achieve.

You will also need your balance sheet showing your assets and liabilities, your cashflow statement to prove that your business can stay afloat and an estimate of when you will breakeven and start to turn a profit.

The ask

If you are writing your business plan to get funding, then be clear about what you need from a potential investor. State your funding requirements and what exactly you plan to do with the capital you raise. You must also include how you plan to pay back the capital and deliver on the investor’s profit expectations for the investment.

Getting support with your tech startup

We are often asked if tech startups need an accountant from the very beginning and of course, the answer is no; you can do your own accounts if you choose. However, employing an accountant to help with a tech startup should be seen as an investment rather than a cost. Your accountant will be aware of grants and reliefs that are only available to certain types of business or spend categories such as R&D and it’s very likely they will save you far more in taxes then it will cost you to hire them. In addition, if you hire an accountant from the beginning, you will set your finances and company structure up correctly from the get-go thus saving you time, money and frustration later on.

OnTheGo Accountants can provide impartial feedback and support with the preparation of financial forecasts to ensure that you provide all the information required to get your investors as excited about your product as you are. Naturally we also provide everything from the data entry through to specialist tax and risk management consultancy. We have a range of accountancy packages to suit every business, so contact us today to explore your options.

Call 03330 067 123 or email info@onthegoaccountants.co.uk.

What to expect from outsourced accountancy services

Thu, 30 Sep 2021 16:46:20 GMT

Outsourced accountancy services come in a wide range of packages and include everything from simple bookkeeping services through to a full finance function. But do you really know what to expect and how can you get the right support and best value for your business?

Outsourcing your accounting services

Start up businesses that are growing rapidly often need help to ensure that managing admin, finances and marketing doesn’t impact on developing new core business and implementing secure operational processes. This usually means that you need to bring in help from outside to manage functions such as HR and finance.

When entrepreneurs start a business, one of the most common tasks they do is to appoint their accountant. That’s a great idea because the last thing you need is to get your finances in a mess and miss tax filing deadlines. However, many people try to do most of the accounting themselves using softwares like Xero, Quickbooks etc. to raise invoices and manage payments. They rely on their accountant at year end to sort out all the invoices and receipts, so that the numbers can be submitted to HMRC. Whilst that’s fine and it meets the legal requirements, it doesn’t help you run your business efficiently and it doesn’t help you spot potential issues or opportunities until it may be too late to deal with or take advantage of them.

What can outsourced accountancy services help you with?

1. Bookkeeping

This is the time-consuming daily data entry that is the foundation of good accounting. Without accurate books, you can’t know how your business is really performing. That’s why at On The Go Accountants, we provide you with a team of dedicated bookkeepers who get to know your business intimately and can spot when things look unusual, helping you to identify potential problems long before they become difficult issues.

2. Accountancy

Your Finance Manager will assist you with filing your returns to HMRC and other authorities – that will include quarterly VAT returns, year-end self-assessment tax returns, and company accounts. These are the tasks that usually come to mind when people think about what an accountant does for you.

3. Payroll

When you grow your company and you need to hire employees, you want to be certain that all the payroll related matters are taken care of efficiently – the last thing you need is to be paying incorrect amounts to staff or to HMRC.

4. Management accounting

Many small businesses are unaware that they can get monthly help to understand what the numbers in their business are telling them. By keeping a close eye on the detail of trends in your figures and by using budgeting, forecasting, actuals tracking and cashflow forecasting, you can keep on top of changes as they happen. Management accounting services include detailed reporting to help explain any differences (variances) between your plan (budget) and your actuals. This information can help you to quickly identify profitability and cashflow issues before they can substantially hurt your business.

5. Tax advisory services

Another area of outsourced accountancy services that is less well understood is tax advisory services. Your Finance Manager is an expert in all the reliefs and tax schemes that can help you to save money. If you aren’t taking advantage of the available reliefs then you are paying more tax than you need to. Whilst getting this specialist advice comes with a fee, it can often save you thousands more in reduced taxes. For example, if you are developing a product or software, you could be entitled to R&D tax credits that encourage investment in science and technology. For start-ups, this can help your company stay viable in the early years.

6. Risk management

Creating a close relationship with your Finance Manager where they work alongside you regularly in your business as a partner means they can help you to manage any risks. Creating contingency and business continuity plans enables you to feel confident that your business would be able to recover in the event of a significant adverse incident. When businesses do not have robust risk management, they are more likely to fail.

Getting started with outsourcing your business finances

If you are just starting out and need help managing your business finances, then you could employ a freelance bookkeeper, but if you have plans for quick expansion, then you might find it more beneficial to use a larger company who will be able to provide you with more outsourced accountancy services as you grow.

On The Go Accountants can provide everything from the data entry through to specialist tax and risk management consultancy. We have a range of accountancy packages to suit every business, so contact us today to explore your options.

Call 03330 067 123 or email info@onthegoaccountants.co.uk .

Is your business insurance fit-for-purpose?

Fri, 27 Aug 2021 21:33:19 GMT

Year after year, thousands of UK businesses sleepwalk into insurance renewals. This can be a costly mistake to make, with many ending up over-insured or, more concerningly, under-insured.

Rather than waiting until that moment you need to make a claim, it’s worth digging out those policy documents and undertaking an assessment of your business insurance needs.

Insurance can seem complicated, and finding the right policy for your tech start-up can seem difficult with a traditional insurer. So we’ve worked with innovative business insurance company Superscript to make understanding your insurance needs quick and easy.Ask yourself three simple questions:

1. Does my insurance cover my business’s risks?

At first glance, the small print and jargon that make up your policy documents can be off-putting, but persevere – it’s simpler than it seems! Business insurance is just an umbrella term that comprises a number of different covers with slightly jargony names. Your policy will be made up of these different covers, so now’s the time to dissect your policy documents to see what you’ve got. Think about the following:

First off, if you have employees (full time, part-time, temporary and even unpaid), employers’ liability insurance is a legal requirement . Not having it can result in a fine of up to £2,500 for each day you should have had it.
Check your public liability insurance . You will likely have this as it’s the most common element of cover taken out by UK businesses. Its purpose is to protect your business against legal and compensation costs caused by accidental injury or damage to a member of the public (by this definition, anyone who isn’t your employee) or their property.
Check for business contents cover . This is sometimes called business equipment cover. A basic way to think about what it covers is by imagining turning your office upside down. Everything that falls is likely to be considered contents (minus the people, of course!)
Whether you own or rent your business premises, you may have office buildings. You can think about this in the same way as business contents cover, except it covers everything that doesn’t fall when the building is turned upside down (so bricks, mortar etc.).
Look out for professional indemnity insurance . This is an extremely popular element of cover. If your business enters into contracts with other businesses or clients, you’ll definitely want to consider this cover, as it offers protection for legal and compensation associated with your business’s contractual obligations. You may find that it’s actually a prerequisite for certain contracts and for those in certain professions.
Do you have cyber insurance ? The word ‘cyber’ may well put many business owners off exploring its merits, but it’s an increasingly important cover for a large proportion of businesses. If you’re reliant on computer systems and/or hold client information, downtime or a data breach could be disastrous – especially without the right response capabilities. This is where cyber insurance really comes in useful.
If you’re a sole trader you can ignore this one, but if you’re a limited company or partnership, you may have directors’ and officers’ insurance (also known as D&O insurance) which is designed to cover the personal liabilities of those in key management positions. If you’re seeking funding, it’s worth noting that VCs will often require it before investing.

2. Is my business insurance fit for today’s risks?

As a tech start-up it may be the case that a typical insurance policy won’t cover the risks your business may face, particularly if you operate in an industry that represents emerging or specialist risk.

To understand if your current insurance has you covered is a two part question:

Part one: does your business still look the same way it did when you first took out your business insurance?

If things have changed (for example, you have more or fewer employees, or a higher or lower business turnover ) and you’ve renewed without informing your insurance provider, you may well be over or under-insured. It’s always worth checking these details. With Superscript it’s as simple as logging into your online account where you can even adjust these details yourself.

Part two: does your cover address newer threats?

Newer threats, such as the threats of cyber extortion and cybercrime often aren’t covered by your standard business insurance policy (although with Superscript, cyber insurance can be bought as part of your business insurance package, or alone), which is why it’s worth checking to see what you’re covered for – if anything at all.

3. Am I overpaying?

Whether you’re of the mindset that the peace of mind having cover brings is worth paying more than you need to, or you feel like insurance is one of those things you’d really rather not pay for, paying for cover you don’t actually need is never going to be worthwhile.

One size doesn’t fit all, Superscript believes that all businesses deserve tailored cover and because change is inevitable, this cover should be flexible. The online quotation process takes the average person less than two minutes to run through and enables you to build cover to match your business needs. Cover through Superscript is monthly, so you’re able to adjust and adapt your cover as and when you need to (no admin fees!).

Please feel free to contact David Masih at OnTheGo Accountants on 0333 0067 123 for further details.

How OnTheGo streamlined Exii's bookkeeping and payroll process

Tue, 24 Aug 2021 21:43:33 GMT

Exii - an eCommerce Sales Recommendation Engine powered with AI

Exii is an eCommerce Sales Recommendation Engine powered with AI, designed to help eCommerce brands figure out what to sell (Products), who to target (Customers) and where to find them (Sales channels), all through data.

One of OnTheGo’s aims is to alleviate the burden of everyday accounting for tech founders. Please can you share your experience of our bookkeeping and payroll process?

We use a bookkeeping software which is great but it is a lot of information to take in. OnTheGo’s monthly bookkeeping report helps me to see just what I need in one place; it lets me know if there’s anything needed from me like missing invoices and gives me an easy to read summary of info that is actually useful for the day to day running of the business.

Payroll is no longer a challenge for us. I can let the team at OnTheGo know if there are changes or new starters, they prepare a summary for me to check and then submit everything required. All my employees have access to their own portal for payslips, P45s etc. Simple!

We appreciate our clients' feedback and always look for improvements in our services. How do you find OnTheGo's services overall and if there is one thing we can improve on what that would be?

I really can’t fault the service provided! I would love another way to reach the team though – I don’t always have scope to check my emails.

We love feedback like this! And guess what, now we use Slack so that checking in with your dedicated point of contact is even easier!

OnTheGo always have it covered for Spokes Education

Thu, 19 Aug 2021 10:35:45 GMT

Spokes Education - Digital Learning Creators established in 2013

Since forming in 2013, Spokes Education have worked with clients around the world and across public, private and third sectors. They consider themselves a social business, volunteering their time to a number of charities, schools, businesses and individuals on a range of schemes and projects.

Can you share your experience of our bookkeeping and payroll process??

Three years ago, I moved from a sole contractor to an agency model. The support from OnTheGo was amazing, taking care of all of the concerns I had about payroll and the subsequent taxes and pension payments. Every question I had was answered quickly, expertly and always in the most friendly way.

More recently, we’ve had a number of other queries about post-Brexit foreign taxes which again are always taken care of.

Can you share y our experience of support given to help your business grow?

OnTheGo have not only helped us to grow our business to the point where we now have 12 staff and are turning over £1/2m, they have helped keep my stress levels at an all time low, as I know they always have it covered and it’s one less thing for me to worry about.

Angel investors vs Venture capitalists – Understanding the differences

Thu, 12 Aug 2021 08:09:51 GMT

At On The Go Accountants, we are often asked about angel investors vs. venture capitalists, so we thought it would be helpful to explain the differences between these two types of funding.

What is an angel investor?

An angel investor is a private individual who invests their own funds into a startup, usually at an early stage. In addition to the money, they may also bring business experience and contacts. Often angel investors, also known as seed investors, are wealthy individuals who either have a passion for helping start-ups or they may simply be helping a family member or friend to get their product off the ground (or building their Minimum Viable Product) or can even be for tax breaks.

The amount of the investment is decided by the angel investor who will usually take shares in your startup in return for the invested funds. They may contribute advice and business acumen, but they aren’t responsible for growing your business.

An angel investor would probably be investing in a company via a crowdfunding platform or an angel syndicate network unless they are investing in a company referred by their friends or family.

What is venture capital?

A venture capitalist (VC) is usually a firm rather than an individual investor. Venture capital firms actively look for start-up businesses with high growth potential to invest in. The funding amounts are generally larger than those of an angel investor(s) and the venture capital firm is likely to want some influence over how your business is run.

Venture capital firms are comprised of professional investors and the money they invest comes from a wider variety of sources including corporations, high net worth individuals and private and public pension schemes.

As venture capital firms usually get more involved in your business strategy, management and growth, the percentage they take, in the form of shares, is often higher than angel investors. When the time comes for the venture capital firm to sell their shares, they can either sell them back to the owners or to the public, through an IPO (initial public offering) with the aim of making back much more than their original investment.

The funding

Generally, an angel investor (or angel syndicate) might invest up to £1m into your startup whereas a venture capitalist is likely to deal with much larger sums and probably wouldn’t be looking to invest less than £1m. It is very common for more than 1 VC to be participating in Series rounds with 1 lead VC.

It’s important to seek out the right level of funding because taking more than you need will bring with it added pressures when the time comes to pay back the investment.

Angel investor vs venture capitalist – how do I choose?

If you are an early-stage start-up, you will likely find it easier to deal with an angel investor(s) – they work alone which means that decision making is quicker. The amounts involved are smaller and their involvement in the business on a day-to-day basis is likely to be less than that of a VC.

Venture capitalists often invest at a later stage once the business model has been proven although there are more VCs that will work with early-stage start-ups now. If you choose to work with a VC, be prepared to have your investors more involved with how you run your business.

Here’s a summary of the pros and cons of angel investors vs venture capitalists

Pros

Cons

Alternative funding via loans

Loans might seem like an attractive option because you don’t have to give away equity in your company and lenders don’t usually get involved in the running of your business. However, loans require repaying and can have a detrimental impact on an early-stage start-ups cashflow. In addition, loans do not generally come with advice, support and even time committed to get the business off the ground. If you are at pre-revenue stage this may not be an option at all.

If you are considering funding options for your business and you need some advice, get in touch with David Masih our Client Relationship Partner. David can help you explore your options during a no obligation chat today. Call 03330 067 123 or email info@onthegoaccountants.co.uk .

First Year Allowances

Sun, 11 Apr 2021 21:32:45 GMT

On the 3rd March 2021, the government announced the following temporary first-year allowances (FYAs):

The super-deduction

This gives a 130% FYA for expenditure on plant and machinery (P&M) that would fall within the main pool. This means that for every pound a company invests, their taxes are cut by up to 25p.

Expenditure is classed as super-deduction expenditure where all the following conditions are met:

It is incurred on or after 1 April 2021 and before 1 April 2023.
It is incurred by a company within the charge to corporation tax.
It is expenditure on plant or machinery which is unused and not second-hand.
It is not within any of the general exclusions - common examples include where the the asset is a car; where the asset is acquired in the period in which the qualifying activity is permanently discontinued and where expenditure is incurred on the provision of P&M for leasing.

Example

Example Ltd purchases new computer equipment for £100,000 on 31 ^st May 2021.

The computer equipment is qualifying plant and machinery and therefore meets the conditions for the super-deduction.

The amount of the super-deduction is £130,000 (£100,000 at 130%). This will receive corporation tax relief at 19% which is £24,700 .

Had this purchase been made prior to 1 ^st April 2021, it would have fallen within the company’s annual investment allowance, producing relief of only £19,000 (£100,000 at 19%).

The SR Allowance

An “SR allowance” – in the form of a 50% FYA – may be claimed in respect of qualifying expenditure (referred to as “SR allowance expenditure”).

Expenditure is considered SR allowance expenditure where all the following conditions are met:

It is special rate expenditure.
It is incurred on or after 1 April 2021 and before 1 April 2023.
It is incurred by a company within the charge to corporation tax.
It is not within any of the general exclusions - common examples include where the asset is a car; where the asset is acquired in the period in which the qualifying activity is permanently discontinued and where expenditure is incurred on the provision of P&M for leasing.

What is plant and machinery?

The kind of assets that will qualify for either the super-deduction or the 50% FYA include, but are not limited to:

Solar panels
Computer equipment and servers
Tractors, lorries, vans
Ladders, drills, cranes
Office chairs and desks
Electric vehicle charge points

Budget 2021

Wed, 03 Mar 2021 22:44:17 GMT

This afternoon The Chancellor, Rishi Sunak announced his economic plan to help the UK's recovery from Covid-19. We wanted to bring to your attention the following updates:

Protecting jobs and livelihoods

Furlough Scheme Extension to September 2021
The Coronavirus Job Support Scheme setup to help maintain your workforce if you have been directly affected by the Coronavirus has been extended to 30th September 2021. From now until 30th June 2021, there will be no changes to the scheme with HMRC continuing to pay 80% of employee's wages for hours not worked. As businesses start to reopen, employers will be required to cover 10% of wages for hours not worked in July and 20% in August and September along with Employers National Insurance and Pension Contributions.

SEISS (Self-Employed Income Support Scheme
Due to the continued impact Covid-19 is having on Self-Employed individuals, the SEISS scheme will continue with a fourth and fifth grant. It was announced that a further 600,000 who filed a 2019/20 tax return will now be able to claim for the first time.

Stamp Duty Holiday Extension
The stamp duty holiday announced last year has been extended to 30th June 2021. This means that buyers in England and Northern Ireland do not pay stamp duty on the first £500,000. Following this to the 30th September 2021, the nil rate band will be double the standard level at £250,000. From 1st October 2021 rates are set to resume to the usual level.

VAT - Hospitality, Accommodation and Attractions
The temporary VAT reduced rate (5%) for Hospitality, Accommodation and Attractions in the UK has been extended to 30th September 2021. Followed by a rate of 12.5% for a further six months to 31st March 2022.

Strengthening the public finances

Personal Tax
The Personal Tax Allowance for 2021/22 has been set at £12,570 with the Basic Rate Band increasing to £37,700. These rates are set to remain until April 2026.

Corporation Tax
From April 2023 the rate of Corporation Tax will increase to 25% for businesses with profits greater than £250,000. Businesses with profits less than £50,000 or less will continue to be taxed at 19% with a taper being introduced for profits between £50,000 and £250,000.

Research and Development Tax Credits
From April 2021, the amount of SME payable tax credit that a business can receive in any one year is being capped at £20,000 (plus three times the company's total PAYE and NICs liability).

Future Investment

'Super-deduction' available for investment in new equipment

Companies investing in qualifying new plant and machinery assets will benefit from a 130% first year allowance. The new form of relief will be available for two years and is set to end on 31st March 2023.

Review of Research and Development Tax Relief
A review will be launched into Research and Development tax relief to make sure the UK remains a competitive location for cutting-edge research.

Future Fund: Breakthrough
A new 'Future Fund: Breakthrough' will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million.

If you have any queries with any of the points above, please contact your dedicated accountant.

Brexit Preparation

Sat, 21 Nov 2020 15:46:32 GMT

As you will be aware, 31st of December marks the end of the Brexit transition period following which the UK will no longer form part of the European Union. Whilst there remains much uncertainty about what this means, it is imperative that businesses continuing to trade with the EU in 2021 understand what obligations they must fulfil in order to remain compliant, and we’re keen to help you through this process as much as possible.

VAT MOSS Changes - for Digital Services Providers only

For sales made on or after 1 January 2021, you will not be able to use the UK’s VAT Mini One Stop Shop (VAT MOSS) service to declare sales and pay VAT due in EU member states.

From 1 January 2021, to continue to use VAT MOSS you’ll need to register for the VAT MOSS scheme in an EU member state, by the 10th day of the month following your first sale to an EU customer. For example, if you make your first sale on 12 January 2021, then you must register by 10 February 2021.

You cannot register for VAT MOSS in an EU member state before 1 January 2021. The digital services threshold of EUR 10,000 will no longer apply.

We would recommend that you register for Non-Union VAT MOSS (if you do not have an establishment in any EU countries) in Ireland as their tax system is very similar to the UK.

VAT Changes - for Ecommerce Businesses

To date, goods delivered to a consumer in another EU territory have been referred to as ‘distance sales’. After 31 December 2021, these distance sales will be considered ‘exports’ from the UK and ‘imports’ into the EU. UK suppliers will need to note that:

in most EU countries the registration threshold for non-established suppliers is NIL
the goods will need to clear customs when they arrive in their destination member state and import VAT, and also possibly customs duty, will be due
most such goods are delivered by post and, unless the supplier has arranged to pay the import VAT (and possibly Customs duty) in advance, the local post office may withhold the parcel until the customer has paid the import taxes due
there may be reliefs from import VAT and duty for some low-value consignments
if you use an online marketplace (such as Amazon) you may be asked for additional information as, increasingly, online marketplaces are being held liable for the VAT due on sales made via their platforms.

From 1 July 2021, the EU is extending the single EU VAT return, One-Stop-Shop (‘OSS’), to e-commerce cross-border distance selling of goods. This will include imposing the obligation on non-EU sellers and marketplaces to appoint a special VAT agent, an ‘Intermediary’. This is similar to a Fiscal Representative.

Non-EU resident businesses may also use the OSS simplified filing. They must first register as a ‘non-Union’ taxpayer with the tax authority of any EU member state. They can then file quarterly OSS filings like any EU e-commerce seller. There is a requirement to file a regular domestic VAT return in at least one EU member state. VAT incurred on imports may be declared in the OSS, too.

NOTE: Sellers holding stock in other EU countries will not benefit from the OSS single return simplification. They must remain VAT registered in each country where they are holding stock. This includes selling using the Amazon FBA program.

To report the VAT charged at the point of sale, a new declaration, ‘Import One-Stop-Shop’ (IOSS), is being introduced. This will report distance selling across EU borders of imported consignments not exceeding €150. Sellers will have to register for IOSS in just one EU state. They will be issued a unique IOSS identification number which should be listed on all packages sent to the EU. This will indicate to customs that VAT is being properly declared and help ensure speedy customs clearance.

Like the OSS, IOSS will be a quarterly filing submitted to a tax authority in one nominated EU member state. It will declare import VAT due in all EU countries. The format and due dates will be the same as the VAT OSS. Sellers will have to make a single cash payment of the VAT due to the country where they are IOSS registered.

Amazon FBA

If you are using Amazon FBA across EU countries, there would already be an assumption that you are registered for VAT within each country that you are operating (note the VAT registration thresholds in most EU countries is NIL) and are making the relevant VAT submissions on a monthly/ quarterly basis as required by the EU state.

If you are using Amazon FBA in the US or Canada, please be aware that even if Amazon deducts Sales Tax and remits to the State you had sales activities, the State would still require you to have a Sales Tax permit and submit a return on a monthly/ quarterly basis.

GDPR - European Representatives

If you are a UK-based controller or processor:

with no offices, branches or other establishments in the EEA; but
you are offering goods or services to individuals in the EEA or monitoring the behaviour of individuals in the EEA.

then you will still need to comply with the EU GDPR regarding this processing even after the end of the transition period.

For more information please see here .

How can OnTheGo Help

We’re keen to help guide you through this transition as much as we can, however we do not have a local presence outside the US and the UK and therefore cannot make EU VAT filings on your behalf. As such there are a couple of options for you to consider, depending on your situation and preference:

If you need assistance with VAT MOSS registration please contact us.
If you are an e-commerce business, you can use a 3rd party VAT registration and filing service provider, to register you in those countries where you sell, and automating the subsequent VAT filings. If you are using Amazon FBA, you can also use Amazon VAT services (managed by Avalara) which should be a cost-effective solution.
Ceasing sales within the EU until the UK Government are able to secure a more transparent and concrete plan as to how the UK will be able to trade with European countries in the future

Please be aware that if you are selling on Amazon FBA in the US, you are likely still required to hold a valid sales tax permit and file sales tax returns in states where a) you have sales tax nexus b) your marketplace collects and remits sales tax on your behalf.

If you are selling via your own website (e.g. Shopify), please contact us and we can advise you whether Nexus will apply to you.

Tech Talk with Omar - July 2020 update

Thu, 06 Aug 2020 07:15:18 GMT

Much of the news this month was dominated by what will become of the US’ big Tech giants.

We may not hear any updates on this until November but we’ll certainly be keeping a close eye on this one as early suggestions claim that the move will pave the way for smaller Tech firms to compete against the likes of Apple, Facebook etc.

In other news...

Global expansion may sound daunting and is often flagged as ‘high risk’, and indeed there are a multitude of factors involved, from hiring new teams to meeting local tax laws. Fivetran , a data integration startup has now closed $100m Series C to accelerate their global expansion. $100m seems like a lot of money and as such, other startups may fear this as a barrier to enter new markets. Each startup is unique and some would require more funding than others to scale up their operations. Data analytics/ metrics plays an important part in the decision making process.

A question I am often asked is ‘why do you need offices in different countries if a tech startup can do everything remotely’? Whilst you can provide services online, its also critical to invest in building an in-country sales/ marketing team to increase your local presence.

I feel it’s the right decision for SAP to spin out their $8bn acquisition Qualtrics to support their fast growth. This is very common amongst large companies; restructuring their high growth brand to avoid government scrutiny , the likes of which we have seen some of the biggest tech companies currently facing. SAP remains a market leader in large retail and manufacturing companies, whereas Netsuite appears to be increasingly popular amongst software companies. To me, UX is much more important than some of the bigger brands and SAP still seem behind on this - their implementation process can be somewhat long winded.

Xero is a great accounting software for tech startups but if you have high volume transactions (especially SaaS business models) their API limitation can be very challenging. We can redesign your finance process and implement a scalable solution to support the growth rate.

It is shocking to see how many redundancies have already been confirmed by some of the big players in the UK. I worked for one of these companies and I understand from experience how difficult it is to make a role redundant, particularly when I know how my family depends on my income. I learned the hard way that when you grow your startup; don’t just keep hiring people because you have investors’ money to burn, think if the role you are creating is sustainable in the long term or whether it is just a temporary position until you can look to automate the tasks in the future (a very common problem for startups).

Stamp Duty Land Tax: Temporary reduced rates

Sat, 18 Jul 2020 07:20:36 GMT

On Wednesday, 8th July 2020, Chancellor Rishi Sunak announced a reduction in stamp duty rates in a bid to stimulate the housing market.

If you purchase a residential property between 8th July 2020 to 31st March 2021, you will only start paying stamp duty on the amount that you pay for the property above £500,000. The rates of stamp duty land tax can be found in the table below:

The rates for first time buyers have been replaced by the reduced rates above.

Higher Rates for additional properties

Limited Companies and Individuals buying their second property must pay the 3% higher rate for any residential property they buy if:

the property is £40,000 or more
there is no lease on the property in place with more than 21 years

The following rates now apply:

On the 1st April 2021, the stamp duty rates will revert back to the rates of SDLT in place prior to 8th July 2020.

Tech Talk with Omar - June 2020 update

Mon, 29 Jun 2020 20:54:30 GMT

There, I did it! That’s every boxset on Netflix successfully binged… does anyone else remember how to live real life out of lockdown??

Whilst I try to navigate my way out of the front door, let’s see what has been happening this month:

The US is to start taking similar measures in line with the UK and other EU countries to impose digital tax . This will undoubtedly cause issues for companies considering their future investment decisions if the resulting tax system is not uniform. As a tech startup, it’s so important to understand your compliance costs ahead of expanding your business. Whilst it may be tempting to just take the plunge with overseas selling, the implications and compliance risks you expose yourself and your business to are many so from experience we would always recommend drawing up a detailed plan first.

Amazon’s new investment in the self driving car brilliantly demonstrates how a company can look to diversify their investment to future proof their return. Each startup is unique and they exist to solve one problem on a mass scale, but as they continue to grow on their journey they can look to acquire other technologies which can benefit their existing business (e.g. customer base, new technology, team etc.). Amazon of course is not the first to branch out; other tech giants such as Facebook acquired Instagram & Whatsapp, and more are doing exactly the same to expand their business in the right direction and increasing shareholder value.

The FCA have ordered Wirecard to freeze customer funds to protect their money following their €1.9bn scandal. EY, having been their long time auditors, may be scrutinised for not spotting the accounting irregularities soon enough. It is still unclear what actually went wrong here, whether their finance team was intimidated by the management board to manipulate their books is one possibility. It’s not uncommon for High Growth companies to build their own finance team and take back control of their accounting function - this is when things start to get more creative.

Covid-19 has certainly changed the way retail stores will operate in the future. Microsoft have now decided to close all their retail stores and turn some of their existing shopfronts into “Microsoft Experience Centers” including those in London. Who knows, brick and mortar stores may soon become a thing of the past but I do hope the cost savings are reinvested back into product improvements and hiring support staff to retain that engagement with their customers.

OnTheGo Accountants was founded to provide a scalable finance function to growth focused tech companies so that they can retain full control over their accounts receivable (sales invoices) and banking whilst appointing us to oversee their finance operations as a whole. We offer risk management services to SaaS & FinTech companies, which allows us to spot irregularities as and when they occur. If you would benefit from a redesign of your finance system, book a no obligation chat today with one of our finance experts on 03330 067 123 or email info@onthegoaccountants.co.uk .

VAT Key Facts

Fri, 26 Jun 2020 22:22:51 GMT

Who wants to learn more about VAT?! Nobody – correct answer!

Let’s face it, out of all the taxes out there VAT has got to be the worst. Not just because it’s so darn complicated but because the rules change wherever you go. But like it or not, VAT will become an integral part of your business the more you grow and expand so let’s hold hands and get through this together!

Here are 5 VAT key facts that you might not know, but really should:

1. What is the reverse charge mechanism?

Reverse charge VAT operates throughout the EU and essentially shifts the responsibility of reporting transactions from the seller to the purchaser. Under the Reverse rules, the purchaser of the services is required to declare both their purchase, as input VAT, and the seller’s sale, as output VAT.

So what’s the point? The aim here is reduce the seller’s requirement to register in a given country within the EU i.e. if you have no VATable sales to report then you won’t exceed the threshold for registration. At the same time, the authorities will still gain a full picture of the transactions occurring.

This could apply to you in a couple of ways then; if you supply services to a client in the EU and the transaction falls under the Reverse charge rules, you don’t charge them VAT and your client will be required to record the transaction on their side. Alternatively, you might purchase services from the EU in which case you may not pay VAT but you will need to declare both the sale and the purchase on your VAT return.

Don't fall into the trap, reverse charge doesn't apply if you make exempt supplies. You may need to pay VAT on the supply at the UK rate. This puts you in the same position as if you had received the supply from a UK supplier rather than from one outside the UK. You can find HMRC's rule here (section 5.4)

2. Does a non-UK business supplying services to a UK company need to register for VAT?

Staying with the Reverse Charge, interestingly this rule also applies to non-EU Contractors/ Freelancers providing services to UK companies – provided the receiver of the service is VAT registered then the transaction would fall under Reverse charge and the seller would not need to register for VAT in the UK.

A word of caution here; the recipient of the services must be VAT registered for Reverse charge to be applied. If a sale is made to a non-VAT registered business or an individual then likelihood is they will need to charge VAT and potentially register for VAT in that country.

3. Who needs to complete an EC Sales List?

The EC (European Commission) Sales List allows local tax authorities to confirm the amount of VAT being paid and declared by all involved parties in EU transactions.

As such, you’re required to complete this if you make supplies of goods to a business registered for VAT in an EU member state or make supplies of services subject to the reverse charge in your customer’s EU member state.

Note this is an additional requirement i.e. it doesn’t replace your normal quarterly VAT return, and heck lets make it even more interesting – depending on the level of your sales, you may have to submit a list annually, quarterly or even monthly!

4. When should a business register for VAT MOSS?

VAT Mini One Stop Shop, or VAT MOSS, may sound like where you get your penny sweets and pick’n’mix but unfortunately it’s yet another way of paying VAT, in this case on supplies of certain digital services. Like Reverse Charge though, VAT Moss allows users to make just one payment to HMRC in the UK as opposed to registering in multiple EU countries that you supply to.

The focus here though is digital services - what are digital services you ask? I was really hoping you wouldn’t! The answer is… there is no fixed answer. The definition varies from country to country, as do the thresholds for registration, but in a nutshell this can be any product that the customer accesses via the internet for example downloading a programme or logging into an online portal.

Therefore with this one we always recommend discussing your services and sales process with one of our experts before going through the registration process.

5. Does the distance selling limit apply to non-EU businesses?

Distance selling covers the process of supplying and delivering goods (not services) from one EU country to another EU country, but specifically to a customer who is not registered for VAT so in many cases this will be to private individuals but can of course also be non-registered businesses.

If this applies to you, then with regards to the UK you would be required to register for VAT if your distance sales exceed £70k in a single year.

However, if you are based outside of the EU then distance selling would not apply to your sale of goods in the UK. You might want to warn your customers however that they may have to pay duty or import VAT.

If your goods are stored in another EU country from where you’re based, then any sales within that storage facility country are not considered distance selling. In which case you may be required to register for VAT with the local tax authorities before you start selling.

Phew, time for a lie down I think!

Tech Talk with Omar - May 2020 update

Wed, 03 Jun 2020 21:26:21 GMT

As the UK spent another month in quarantine, much of the Tech World seems to have been business as usual. So what’s been happening...

Zoom has acquired an encryption startup, Keybase , which in my opinion will increase their security credibility. Given the urgency and the time required to build encryption, it would certainly seem the right route to take - acquire as opposed to build from scratch.

I certainly wasn’t expecting Microsoft to compete with Airtable but I can definitely see a clear motive behind it. I like Airtable’s functionality so i’ll be interested to see what Microsoft Lists has got to offer.

I truly believe that being a data savvy Startup you can make better decisions and hit your revenue KPIs. Read more

I sensed this was coming! With the current climate seeing the demand of online shopping rising even further, it seemed only a matter of time before big dogs Facebook and Instagram jumped on board and gave users the opportunity to buy directly through their pages and profiles.

43 US states have now implemented the “ economic nexus ” process since the Supreme Court ruling in June 2019. Unfortunately, SaaS and Internet businesses are not exempt from Nexus and in some states you may need to set up a company before you can even register for sales tax.

Don’t forget that physical presence Nexus can trigger sales tax if you have an employee or contractor working in the state so our recommendation is always to be prepared before you launch.

If you have any questions or want to learn more about US taxation, reach out to me at omar.faruq@onthegoaccountants.co.uk

Covid 19 Update

Fri, 29 May 2020 12:48:55 GMT

Covid-19: An update on the Job Retention Scheme and SEISS

On Friday, 29th May 20, Rishi Sunak provided us with some further updates on the schemes introduced to support UK Businesses through the Coronavirus.

Coronavirus Job Retention Scheme

It has been confirmed that there will be a gradual withdrawal of the Job Retention Scheme over the next 5 months.

The Job Retention Scheme was introduced by HMRC to support businesses that are unable to maintain their current workforce due to the Coronavirus. For both June and July 20 the scheme remains unchanged and employers can continue to apply for a grant that covers 80% of their usual monthly wages (up to £2,500 a month), plus the associated Employer National Insurance and Pension contributions.

From August 20 HMRC will continue to pay out the 80% of salaries up to a maximum of £2,500, however the Employers will be liable for the Employers NI and pension contributions.

In September 20 the government will cut its grants to 70% of wages up to a cap of £2,190 and Employers will pay NI, pension contributions and 10% of wages to make up to the 80% total.

Finally in October 20, the government will cut its grants to 60% of wages up to a cap of £1,875 and Employers will pay NI, pension contributions and 20% of wages to make up to the 80% total.

Bringing employees back part time

From 1st July 20, a month earlier than previously announced, businesses can bring back furloughed employees on a part time basis.

Employers will determine the part time hours worked and will be responsible for 100% of the wages whilst the furloughed employees are at work.

A claim can still be made under the job retention scheme for the employees normal hours not worked.

Closure of the Scheme

The Job Retention Scheme will close to new entrants from 30th June 2020. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June.

Self-Employment Income Support Scheme

The chancellor also announced an extension to the Self-Employed Income Support Scheme.

Eligible self-employed people will be able to claim for a second and final SEISS grant in August. This will be a taxable grant worth 70% of their average monthly trading profits for three months.

Claims for the first SEISS grant, which opened in the middle of May 20, must be made no later than 13th July 20.

If you have any questions about any of the above, please do get in touch with your Accountant at OnTheGo who will be happy to help.

Tech Talk with Omar - April 2020 update

Mon, 04 May 2020 21:48:31 GMT

Is anyone else tired of online quizzes with the family yet?!

Last night Mum arranged for her food shop to be delivered just as the quiz began so I think the feeling is mutual!

Quizzes may be all I have managed to do this month but the Tech World still seems to be buzzing:

A great briefing has been written by Beauhurst on the effect of Covid-19 on investments. It’s still too early to call whether the VCs will follow the same trend we saw back in 2008 .
Zoom has been criticised for poor security and the robustness of its system. The CEO of the company has apologised and taken full responsibility, promising to get this resolved asap. Criticism however is always an opportunity to refocus and overcome future challenges.
The current climate has really emphasised how important a role the CFO plays when it comes to crisis management and dealing with liquidity during times of disruption. Cost cutting strategy is one of the most played cards used to keep the business afloat and something we are seeing a lot of at the moment.
Hiring permanent remote staff may also be on the agenda for many CFOs once the pandemic is over. As a finance partner I always encourage hiring remote staff provided it doesn’t impede your competitive advantage and any risks can be mitigated. Another important
A really useful article on rolling forecasts which can help businesses meet their targets after the crisis compared to traditional budgets.
Investors are now more interested in online delivery startups which have inevitably become very popular during Covid-19. US based food delivery company, Cheetah has just closed an impressive $36m Series B round.
Facebook has grabbed another opportunity during the pandemic by launching their own video chat Rooms and competing directly against Zoom and Google Meet.
I’m both scared and fascinated by this AI platform, Codota , developed by an Israeli startup - can AI really replace a human developer? Codota, mi’m keeping my eye on you!

Right, now to prepare another 10 questions for tonight’s quiz...sigh!

An update on COVID-19

Thu, 30 Apr 2020 08:03:47 GMT

News on existing schemes and plans for new systems to help our UK businesses continue to come through from the Government. Here is an update on the schemes available .

Coronavirus Job Retention Scheme

The Job Retention Scheme has been extended to the 30th June 2020.

The Job Retention Scheme was introduced by HMRC to support businesses that are unable to maintain their current workforce due to the Coronavirus. If you have been directly affected you can furlough employees, that were on the company payroll on or before 19th March 2020 and apply for a grant that covers 80% of their usual monthly wages (up to £2,500 a month), plus the associated Employer National Insurance and Pension contributions.

The online portal to make the claims is now live with payments being made to employers within 6 working days.

The Bounce Back Loan

Rishi Sunak has now announced a new scheme described as “bounce-back” loans aimed at supporting small to medium sized businesses in the UK through the COVID-19 crisis, who may currently have trouble accessing credit.

The scheme is set to launch on the 4th of May and will allow those affected apply for a loan of up to £50,000 over up to a 6 year period. 100% of the loan will be backed by The Government and there are to be no fees or interest applied in the first 12 months.

Currently the terms state that provided your business is based in the UK, affected by Coronavirus and was generating a profit in December 2019 then you will be considered eligible however details on the application process are yet to be released.

Future Fund

Primarily geared towards Tech Startups, the Future Fund will look to provide government loans starting from £125,000 to up to £5 million, with the scheme set to launch in May 2020.

To be eligible your business has to have previously raised at least £250,000 in equity investment from third-party investors in the last 5 years and be able to attract the equivalent match funding from third-party private investors/institutions.

Please be aware that Future Fund doesn't currently include SEIS/ EIS investments.

More information on this can be found on our blog here .

If you have any questions about any of the above, please do get in touch with your Accountant at OnTheGo who will be happy to help.

Coronavirus Future Fund

Mon, 20 Apr 2020 20:35:01 GMT

For innovative companies which are facing financing difficulties due to the coronavirus outbreak

It has now been confirmed that HMRC will soon be introducing a scheme for Startups facing financing difficulties following the outbreak of Coronavirus.

The Future Fund will provide government loans starting from £125,000 to up to £5 million, with the scheme set to launch in May 2020.

Eligibility will be based on the following:

Your business is an unlisted UK registered company
Your business can attract the equivalent match funding from third-party private investors/institutions
Your business has previously raised at least £250,000 in equity investment from third-party investors in the last 5 years

Caveats to be aware of:

The funding must be used for working capital only and not to repay any other borrowings, pay out dividends or bonus payments to staff
The Future Fund is considered a convertible loan which will mature after 36 months
The Government shall receive a minimum of 8% per annum (non-compounding) interest to be paid on maturity of the loan

If you would like to register your interest in this, please do get in touch and we can discuss your options as soon as further guidance is released by HMRC.

Tech Talk with Omar - March 2020 update

Thu, 02 Apr 2020 23:44:42 GMT

I never thought the day would come where the novelty of working at home in pajamas wore off, but it's happened!

Anyway, whilst I sit here trying to work out how to put real trousers on let’s take a look at what’s been occuring in the Tech World this month:

Another Startup bites the dust and this time it’s a legal startup Atrium . They have been in my watchlist since September 2018 when they closed their Series B funding round. I couldn’t quite figure out how a legal startup-like Atrium could differentiate themselves from a traditional law firm if they are offering legal advice. Yes, I agree that you can build a software which can pre-populate standard legal templates by asking a user to fill in some details but when it involves legal advice provided by lawyers, things must be much harder to scale. AI can reduce some admin time, but for now it clearly can’t fully replace a human.

Volatility continued at major stock markets due to the spread of Coronavirus and economic uncertainties. A warning from Sequoia Capital makes it clear that VCs will be taking a more cautious approach to investments until the pandemic is over.

Exciting news for UK based proptech Startup, Goodlord , who have closed their Series B funding round of £10m with the sole aim of simplifying the rental process.

Certainly a clever idea for Amazon to licence their cashier-less store technology to other retailers. It is a great concept and I am sure we will start to see more Startup companies applying this technology and developing the concept even further.

Increased demand and popularity may not always mean higher profits. Both Zoom and Slack have seen increased demand since the Coronavirus outbreak and as they both offer free versions, not all new users will equate to paying customers but they definitely will increase their chances to convert these free users to paid as they become part of their tech stack.

We can’t thank our healthcare workers for their continued sacrifice and hard work looking after patients suffering from Covid-19. There are many ways big corporations have been going above and beyond their corporate social responsibilities and Airbnb is setting a new example for others.

There is a lot we can learn from the last recession and how that impacted funding decisions. It doesn’t mean the same pattern will follow but my personal recommendation would be to reassess your current brand proposition and see how your Startup can deal with a crisis like this in the future.

I’ve done it, trousers on! The zip goes at the back right??

Coronavirus Government Grants

Tue, 24 Mar 2020 23:28:44 GMT

An update from OnTheGo Accountants on COVID-19

From everyone at OnTheGo we hope you are well and keeping safe.

This is a difficult time for everyone at the moment so whilst we are still waiting for the finer details from HMRC surrounding their plans to help UK businesses and employees, we wanted to keep you up to date with what we know so far:

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employee’s salary as opposed to them being laid off.

The salary subsidy will be paid through a new HMRC system (HMRC will set out further details on the information required) and will reimburse 80% of furloughed workers wage cost, up to a cap of £2,500 per month.

It is not clear whether directors / shareholders of owner managed companies can put themselves ‘on furlough’, we are still waiting on further details.

VAT payments

For VAT returns submitted between 20th March 2020 and 30th June 2020, the VAT payments can be deferred. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.

All UK businesses are eligible for the deferral and do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.

Please be advised that if you would like to defer your next VAT payment and have a direct debit setup, you will need to cancel this.

Income Tax payments

Individuals assessed under the Self-Assessment system liable to make a payment on account on the 31st July 2020 can defer their payments to 31st January 2021.

This offer is automatic with no application required. No penalties or interest for late payment will be charged in the deferral period.

Universal credit

Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.

HMRC Time to Pay

HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.

Business Rates Holidays and Cash Grants

For businesses currently paying little or no business rates due to small business rates relief, they will receive a cash grant of £10,000 (increase from £3,000 announced in the March 20 budget). You do not need to do anything, your local authority will write to you if you are eligible for the grant.

Any businesses in the retail, hospitality and leisure sector in England will pay no business rates in the 2020/21 tax year. Furthermore, businesses in these sectors with a rateable value between £15k and £51K will also receive a cash grant of £25,000 per property. There will be no actioned required by you, your local authority will be in touch with a revised business rates bill and confirm your eligibility for the cash grant.

Support through the Coronavirus Business Interruption Loan Scheme

A new coronavirus business interruption loan scheme has been setup to provide support for small and medium-sized businesses. This scheme will give businesses access to a wide range of funding including: overdrafts, loans, asset finance and invoice finance of up to £5 million in value for up to 6 years.

The government will provide lenders with a guarantee of 80% on each loan and will pay to cover the first 12 months of interest payments along with any lender-levied fees.

This scheme is being delivered through commercial lenders, you can find more on the key features, along with the eligibility criteria on the British Business Bank website. We partner with a credit broker, Capitalise, who partner with all major commercial lenders including those offering CBILS, so do let your dedicated Accountant know if this is of interest.

We hope to be able to send out something more concrete as soon as HMRC have made the information available but in the meantime we will be monitoring this on a daily basis and please be assured we are here if you need any help anything.

March 2020 Budget

Thu, 12 Mar 2020 23:12:08 GMT

March 2020 Budget: OnTheGo Accountant’s Summary

OnTheGo Accountants has put together the following summary of Rishi Sunak's March 2020 Budget to keep you updated on the latest changes:

Personal Allowance and Higher Rate Band: Unchanged

The Personal Allowance and the Higher Rate Band threshold will remain unchanged at £12,500 and £50,000 respectively.

Entrepreneur’s Relief: Lifetime limit

From 11th March 2020, the lifetime limit for Entrepreneurs relief will be reduced from £10 million to £1 million.

National Living Wage: Increased

The National Living wage will see a 6.2% increase from £8.21 to £8.72 an hour from April 2020.

Dividend Allowance

The Dividend allowance is unchanged at £2,000.

Corporation Tax

The Corporation Tax rate will stay the same at 19%.

Capital Gains Tax: Residential Property

From April 2020, if you sell a residential property in the UK you’ll have 30 days to report any gains to HMRC and pay any Capital Gains Tax due.

Off-payroll Working in the Private Sector

As expected, IR35 reforms will continue to be extended to the Private Sector as of April 2020.

Annual investment allowance

Companies will be able to claim £1m as AIA for expenditure incurred from 1 January 2019 to 31 December 2020. No announcement was made on extending the date and if unchanged, it will fall to £200,000.

Temporary return of Statutory Sick Pay (SSP) claims

Small and medium-sized businesses and employers to cope with the extra costs of paying COVID-19 related SSP will be refunded for eligible SSP costs. This refund will be limited to two weeks per employee

Employment allowance reform

The allowance was increased to £4,000 but is no longer universal with several conditions applying. Including that from April 2020, this will be limited to employers with an employer NICs bill below £100,000 in the previous tax year.

Increasing the flat rate tax deduction for home working

From April 2020 the maximum flat rate Income Tax deduction available to employees to cover additional household expenses has been increased from £4 to £6 per week where they work at home under home working arrangements.

Pension changes

From 6 April 2020, the adjusted income limit will rise to £240,000 (increased from £150,000) and the threshold income limit will rise to £200,000 (increased from £110,000). For higher earners the government also reduced the minimum reduced annual allowance that you can have under the tapering rules from £10,000 to £4,000.

R&D

Research & Development Expenditure Credit (RDEC) rate increases from 12% to 13% from 1 April 2020. The changes to the PAYE cap on the payable tax credit in the SME R&D schemes has been delayed until April 2021.

Digital services tax

From 1 April 2020, there will be a new 2% digital services tax on the revenues of search engines, social media services and online marketplaces which derive value from UK users, when the group’s worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users.

If you have any queries with any of the points above, please contact your dedicated accountant.

Changes to Capital Gains Tax

Wed, 11 Mar 2020 23:08:04 GMT

Don’t get caught out: Changes to Capital Gains Tax – UK Residential Property

From 6th April 2020, if you’re UK resident and sell a residential property in the UK, you’ll have 30 days to report any gains to HMRC and pay any Capital Gains Tax due.

Capital Gains Tax is calculated on the profit made when you sell your residential property, this will be chargeable at the higher rates of 18% and 28% depending on whether you are a basic or higher / additional rate tax payer.

What needs reporting?

You will need to report your disposal to HMRC if you dispose of:

A property that you’ve not used as your main home
A holiday home
A property which has been let out
A property you have inherited and not used as your main home

What doesn’t need reporting?

You won’t be required to report the following disposals:

A sale made before the 6th April 2020 (This will be due by the normal Self-Assessment deadline)
A property that has been your main home for the duration of ownership and qualifies for Private Residence Relief
A gain that falls within your Annual Exemption Allowance (£12,000 – 2019/20)
A property that was sold at a loss
A property that is outside the UK

How will my gain be reported?

HMRC will be launching a new online service which will allow tax payers / agents to report and pay any Capital Gains Tax due.

It’s important that your gains are reported within the 30 day window as HMRC may send you a penalty as well as charge interest on the tax due.

If you need any assistance calculating and reporting your gain to HMRC, please get in touch.

Tech Talk with Omar - February 2020 update

Mon, 02 Mar 2020 20:56:25 GMT

Is anyone else in trouble for forgetting Valentine's day?

I’m holding out for the day some Start-up invents an app that can think of, buy and deliver all of my present needs! Until then… what else has happened this month:

It will be very interesting to see how US states set up and implement real-time sales tax remittances. From this we can certainly envisage how technology & AI will be able to help businesses obtain real-time data and improve cash flows. Read more
Can WeWork differentiate their business model from other service office providers like Regus? That would be a question for their new CEO to clarify. Read more
High time for Asana (founded by Facebook co-founder) as they go public. It would be worth keeping a close eye on their valuation to see if they are not overvaluing their share price as we previously witnessed in the recent IPO failures. Read more
Without doubt, an Independent Director, or NED, plays a fundamental role within company structure as they can constructively challenge the executive directors and provide independent oversight. We have learned that Facebook recently added Dropbox’s CEO to their board - surely this may raise concerns about “impartiality”. Read more
Even Netflix couldn’t escape MP scrutiny! Yes I agree that international tax reform is needed for each country to receive their fair share of tax, but on the other hand will this be at the cost of more layoffs? Or will big companies simply find new ways to avoid paying corporate tax (e.g. transfer price, profit shifting). Read more
Viva España!! Spain is becoming the number 1 choice for Latin American startups looking to expand in Europe. Language and cultural similarities are of course very important factors when it comes to overseas expansion. I now have another reason to retire in Spain, Gracias amigos! ��. Read more
Pod Point who crowdfunded 3 times with Crowdcube has now been acquired by EDF Energy. A great move for EDF showing their commitment and interest in cleantech.
If you haven’t already read the 2019 deal report (UK) published by Beauhurst , this is definitely one to catch up on. AI is still ahead in the funding war, and Starling Bank , founded by leading female entrepreneur and banking veteran Anne Boden, has closed yet another funding round.
N26 has decided to close its UK operations due to increased regulatory requirements following Brexit. I would love to find out how other UK challenger banks like Revolut, who currently hold a European Banking Licence, are preparing for the Brexit transition period.
Looker data analytics software, targeted at medium-sized businesses, has now acquired part of the Google family. The move definitely seems to show how Analytics and BI will be shaping the future of finance and investment decisions.

Thank goodness there’s no romantic holidays in March! Wait a second… isn’t it my wife’s birthday?? Does that happen every March now?! Where’s that present idea app!!

Introducing Quaderno - Tax Automation Software

Mon, 24 Feb 2020 21:51:41 GMT

At OTG Tech, just whispering the words ‘Sales Tax’, ‘VAT’ or ‘GST’ is like dangling cat-nip in front of a very nerdy kitten!

We’re not so far gone however that we don’t realise this maybe isn’t the case for all of you out there. Particularly our Tech and E-Commerce clients who have one or two more important things to spend their time on; you know like growing their business, keeping their customers happy, WORLD DOMINATION!! Is that last one too much?... No I think that’s fair.

So, what have we done to soothe that naughty tax headache of yours – well check out our tax automation partner Quaderno :

Quaderno integrates with all of your popular payment channels like Recurly, PayPal, Stripe etc. and then collects all the info you need to understand your thresholds and obligations for Sales Tax (in the US states), VAT (in EU countries) and GST (in countries like Australia). Helping you to comply with every little tax rule around the globe and all presented in super sleek, easy to read reports. Seriously guys this software is good looking, I’m talking Danny de Vito good looking – no-one else is into Danny?! Alright just me…

If you’re looking to automate your tax invoices or understand your international sales tax/ VAT responsibilities, get in touch and let’s see if OnTheGo and Quaderno can’t make your life easier!

Tech Talk with Omar - January 2020 update

Thu, 06 Feb 2020 19:21:15 GMT

2019 showed there’s no signs of slowing down for new and growing Tech companies here at OTG.

So what happened in the World of Tech StartUps this month:

The UK Tech sector has accelerated even further according to the Government’s Digital Economy Council, with VC investment increasing by 44% and reaching a record £10.1bn, surpassing that of China and the USA. This is undoubtedly a testament to the great innovators we have here in London and the UK, but will Boris be able to snag us a trade deal to ensure we remain leaders in the Tech industry for years to come? Read More Here

Retail currency dealer Travelex was hacked just after New Year’s Day with the hackers reportedly demanding $6 million for not only the decryption key but also to prevent 5GB’s worth of customer data being exposed.

Whilst the validity of this is yet to be determined, it certainly reminds us of the need to review your current cyber risk exposure periodically. For peace of mind you may also want to consider cybersecurity insurance.

Visa announced it would be buying the API Startup Plaid for a cool $5.3 billion in a move to simplify the process of sharing banking and financial information. That’s 2x that of its final private valuation, a big win for its shareholders and investors!

Crunchbase has reported the proportion of female founded, or co-founded- Start-up businesses has doubled since 2009 from 10% to 20% - an incredible increase in 10 years but still shockingly low. This coincides with RBS’ new boss, Alison Rose – the bank’s first female boss – announcing that they would be setting aside £1bn to help support female entrepreneurs in the UK and overcome the challenges that face them. Read More Here

Amidst tentative trade talks with the US, Sajid Javid continues to skate on thin ice as he pushes on with his plans for digital service taxation on Tech giants. The Guardian quotes the US Treasury Secretary’s threatening response “If people want to just arbitrarily put taxes on our digital companies we will consider arbitrarily putting taxes on car companies.” Now that the UK has officially closed its doors to the EU, Mr Javid may want to reconsider biting the hand that feeds us!

I can’t believe all of this happened in 31 days… I’ve only just taken down the Christmas tree! If you’ve come across any interesting Tech stories this month, get in touch.

IR35 - Considering your options

Sun, 12 Jan 2020 12:22:18 GMT

What we know so far…

As April 2020 approaches, we know many of you will be looking to secure a new contract outside of IR35 and we have found it very encouraging that some of you have already been able to do so which takes you well into the new tax year. From this, we are very hopeful that outside IR35 contracts will still be available, if potentially harder to source initially.

It does certainly appear that some of the larger companies, and particularly banks who do tend draw more attention from HMRC during times of policy change, will be taking a blanketing approach. Whilst this isn’t what we had hoped for, there is reassurance to be found in the Public Sector who, having suffered the same blanketing enforcement back in 2017, have now come full circle and are offering outside IR35 contracts. This is possibly how the Private sector market will progress also.

Ultimately our opinion is the requirement for a highly skilled temporary workforce will always exist, and the logistics of offering permanent PAYE positions for short term projects or paying more for temporary Umbrella or Inside IR35 roles is surely not sustainable.

However, during this time of uncertainty it’s vital that you are able to find security in your work and confidence in when your income will be coming in so whilst we certainly don’t view contracting as a thing of the past, its important to understand what you can do with your Limited company in the meantime.

Understanding your options…

If you find yourself struggling to achieve a new position outside of IR35 in the coming months, our initial advice would be see what else may be available to you as a temporary alternative.

There are several options to consider:

Permanent employment
Accepting an Inside IR35 role
Contracting under an Umbrella company

During this time, your company can remain open and simply tick along as normal. You Accountant would continue to do complete your Accounts, VAT returns etc but, as there would be no sales, there would be no tax accrued.

To help you with this we will be able to offer a reduced accountancy fee.

This can then give you more time to assess your situation and your potential of returning to an outside IR35 contract in the future in which case you can simply resume operating through your Ltd company.

What can you do…

As the responsibility of assessment moves from you to your client or agency, you may feel like you’re losing control over your contracts. Be proactive and make sure you have already assessed your position as a genuine business owner and not an employee ahead of any determinations by your client or even HMRC, and compile the evidence to support it.

Consider gathering records that demonstrate this such as:

business insurance certificates
company branded stationery
proof of office address

In addition to this, you can go even further by:

getting your current contract reviewed (we can arrange this for you)
completing HMRC’s online IR35 tool
considering additional IR35 insurance cover

Should you need to convince anyone of your status, having everything at hand will put you in a great position.

A word of caution…

We have been advised recently that there have been a large number of faux Umbrella companies being set up to target the contractor market offering alternative solutions to Umbrella and PAYE models.

Always remember the golden rule - if it sounds too good to be true then it probably is!

If you have any questions about how IR35 may impact you, get in touch with your Accountant who will be happy to talk this through with you.

Investing for the Future

Wed, 27 Nov 2019 20:03:52 GMT

As I watch my one year old playing with the box her new toy came in; so carefree, her whole life ahead of her.

I think… ‘what on Earth have you managed to get all over your face now?!’.

Three baby wipes and several tears later, that thought is followed by ‘what am I actually doing to provide for your future?’.

The business is going well and we have some savings, but I’m not sure that 57pence I made in interest last year is going to fund you through university, or pay for your first deposit on a house, or allow you and your boyfriend to make countless trips to Amsterdam because you’ve suddenly discovered an interest in Dutch architecture – I’m not falling for that one baby!

So, let’s consider the options:

Stocks and Shares

Investing cash surplus in the stock market is the high risk, full throttle option but can yield some good returns.
You have the option here of investing directly through your company or drawing a loan from your company to invest personally. This would allow you to take advantage of the Capital Gains allowance. This is afforded to individuals but not businesses – but make sure you are aware of any interest/tax implications with your loan.
Take care also when trading through your business that you do not run the risk of being considered an ‘investment company’ as opposed to a ‘trading company’. This could pose a threat to your claim for Entrepreneur’s Relief in the future.

Property

Whether through your current Ltd company or financed by the same through a separate entity, rental property investment has become increasingly popular in recent years and rightly so. This route allows you to inject your cash into an asset that will hopefully increase in value over time whilst making you a return on monthly rentals. That income can then be extracted tax efficiently or reinvested in additional properties.
By doing this through your company, you can also benefit by expensing the full amount of your finance costs incurred i.e. mortgage interest which is no longer available to landlords on an individual basis.
Be aware that it can be harder for companies to obtain a mortgage initially so this may only be viable if you have been trading for a certain period of time.

High Interest Accounts

A lower yield than the above options however there is no work involved with this one and far lower risk involved.
Typically with higher interest accounts or bonds, you will agree to tie your money up for a minimum period ranging from a few months to a few years with the reward providing you with a higher interest rate than regular current accounts.
Note there may be penalties if you decide to withdraw your cash sooner than the agreed timeframe.

What do you think then baby? Oh! Now you sleep – why does this always happen when I talk accountancy with you??

Year End Accounts Deadline

Wed, 27 Nov 2019 19:54:51 GMT

Year End Accounts: Don't get caught out by the deadlines!

Every year all Limited Companies, even dormant ones, are required to submit Annual Accounts.

Late submission of these Accounts will result in an automatic fine, and a substantial one too! So when do you need to file your Accounts?

The main company deadlines are as follows:

Company Accounts: To be filed 9 months following the Company's Year End date to Companies House.

Corporation Tax: Payable 9 months and 1 day following the Company's Year End to HMRC. Note in this is your first Year End you may have two amounts payable with different due dates.

Corporation Tax Return: To be filed 12 months following the Company's Year End.

If you fail to meet your Accounts deadline with Companies House, the fines are as follows:

There are then separate deadlines for your Corporation Tax Return:New Paragraph

It’s not all bad though folks – if you’re able to submit your return and payment early, HMRC should pay you a little bit of interest so it’s definitely worth getting ahead of your deadlines.

Get in touch to see how we can help you get on top of your company Accounts.New Paragraph

Who said HMRC is the Grinch that stole Christmas?

Wed, 27 Nov 2019 00:00:00 GMT

As the holidays approach, you might be surprised to hear that you can treat yourself and your staff through the business as a tax deductible expense.

If you are a Ltd company Director, you can claim an annual event for yourself and any staff you employ as long as the cost per head doesn’t exceed £150 (including VAT).

This £150 can be used to cover costs such as accommodation, transport and food and drink and can be used against a single event or spread throughout the year.

Don’t forget all receipts must be retained! This is considered an exemption, not an allowance so you can’t just withdraw £150 cash from the company (nice try fella!).

Throughout the year, you can also claim ‘trivial benefits’ from your limited company. Per HMRC’s website, “You don’t have to pay tax on a benefit for your employee if all of the following apply:

it costs you £50 or less to provide
it isn’t cash or a cash voucher
it isn’t a reward for their work or performance
it isn’t in the terms of their contract”

Just note that you can’t claim more than £300 on trivial benefits in a tax year.

Examples of benefits could include:

Gift vouchers up to £50 for shops, etc
A gift for a special occasion e.g chocolates, flowers, etc
A meal out to celebrate
A guided tour of OnTheGo Accountants office… alright fine, I thought that was a nice gift!

If you have questions of any of above, get in touch with us today.

Seasons Greetings from all of us at OnTheGo Accountants!

Getting to grips with EMI schemes

Fri, 15 Nov 2019 19:45:29 GMT

What is the EMI Scheme?

The Enterprise Management Incentives Scheme is a great way for Start-Ups and growing Tech businesses to get talent on board without having to fork out market competitive salaries. This HMRC approved incentive allows companies to grant share options to their employees which they can then choose to exercise in the future and exchange for true shares in business. If employees then go on to sell their shares, any profit will be classified as a Capital Gain and will be taxed at just 10% so there are savings to be had for both employer and employee.

How does it work?

When options are given to employees they will have an ‘exercise price’. This is the current market value of those shares in the company.

These options are just that – optional. There is no obligation on the employee to purchase the shares in the future and they cannot be passed on to anyone else. Typically the employee will take up their right to buy shares as the value of the company’s shares increase; the trigger for this recognition often being when the company is sold.

Example

Noah is given 1000 options at £1 each
In 5 years, the market value of the shares has increased to £5 per share.
Noah exercises his right and purchases his options for £1,000 and then sells them for £5,000.
Noah has made a Capital Gain of £4,000. Every individual receives an annual exemption allowance; for 2019-20 this is £12,000 so in this case there would be nothing payable but if the gain exceeds the allowance then funds will be taxable @ 10% - note this is provided the employee has met the conditions of the EMI agreement.

How we can help

Our specialists can help you establish your EMI scheme and liaise with HMRC on your behalf, along with giving you advice on the best structure for you and your business.

Give us a call today to discuss your options.

Personal Allowance

Mon, 21 Oct 2019 19:49:52 GMT

As standard, every individual receives a Personal Allowance – this year the Personal Allowance is £12,500 and is the amount of income you do not have to pay tax on.

You may receive more if you claim certain allowances but you may actually receive less if your income exceeds £100k. In this case your Personal Allowance will be reduced by £1 for every £2 you receive over £100,000.

Income Tax

Dividend Tax

This tax year each individual receives a Dividend Allowance of £2,000 so you will only pay tax on dividends you receive over this amount.

Please be aware, if you receive in excess of £10,000 in dividends you will need to submit a Self Assessment Personal Tax return.

If you’re unsure if you need to complete a return, click here to see our blog on whether this may apply to you:

For more rates and tax bands click here to visit HMRC’s income tax webpage.

What is entrepreneur’s relief?

Fri, 01 Feb 2019 20:19:53 GMT

If you’re a business owner planning to sell up or wind up your company, Entrepreneurs’ Relief can save you a small fortune on your tax bill.

Here are some facts and figures:

Entrepreneur’s relief is a reduced income tax rate for Shareholders who want to close their company and extract the cash in the most tax efficient way. Income tax is then paid on the self-assessment tax return for the tax year is which the company is closed. Each shareholder is entitled to the relevant shareholding proportion of their capital gains distribution.

The regular rate of Capital Gains Tax (CGT) is 20% for people paying more than the basic rate of income tax, however applying for Entrepreneurs’ Relief allows sellers to only pay a reduced rate of 10% on the disposal of shares.

Entrepreneurs’ Relief is subject to a lifetime allowance of £10 million for disposals on or after 6th April 2011.

Everyone is entitled to have £12,000 tax free Capital gains distribution (annual exemption allowance), but please note this rate is for 19/20 tax year and may vary from tax year to tax year.

Who can claim entrepreneur’s relief?

Your company has to have traded for at least one full year.
You hold at least 5% of the shares and voting rights for at least 12 months.
You are a director, office holder or paid employee for at least 12 months.

Illustration

In our example, both individuals are closing through voluntary member’s liquidation but Laura is entitled to entrepreneur’s relief and Ben is not.

Please be aware there are restrictions of claiming Entrepreneurs relief more than once, please contact OnTheGo Accountants for a free consultation.

Why do I need business insurance?

Fri, 04 Jan 2019 00:00:00 GMT

You have insurance for your house, car and belongings, so why overlook business insurance?

If your actions lead to anything being damaged or someone being injured; or any advice you provide or work you complete results in a client losing money, a claim could be made against you.

It is therefore important that you have comprehensive insurance in place to protect you against the above risks.

What types of cover do you need to consider?
Professional Indemnity Insurance
This provides cover if you are accused of professional negligence, errors or omissions and giving bad advice. It will also cover you for any loss of documents, loss of data and a breach of confidentiality.

Employer’s Liability Insurance
This is compulsory for almost all UK businesses and often insisted upon by clients. It covers employees – i.e a family member working in a clerical role, or a replacement you hire to fulfil a substitution.

Public Liability Insurance
This provides cover if someone is injured, or property is damaged as a result of our actions whilst supplying services. Whether you are on your own premises, in a client’s office or out on site.

OnTheGo can help..
Ask your accountant today, all our monthly packages entitle you to a 10% Discount on Kingsbridge Contractors Insurance standard package.

Employing New Staff

Fri, 21 Dec 2018 00:00:00 GMT

You’ve worked hard and your business is growing; so much so that you now find yourself in the position where you need to employ someone to help you…now that’s impressive – You’re the Boss! The Big Cheese!! Chief Moneybags!!!

But whilst you’re basking in your newfound oh so bossy glory, it’s important to understand your requirements when employing staff for the first time, so let’s have a look:

What you need to know
There are 4 main requirements to consider:

Before you take anyone on, make sure you register for PAYE with HMRC. Ideally this should be done at least 4 weeks before you pay any new staff.
Draw up a contract of employment detailing your employees duties, hours, terms and conditions etc. Be mindful that you must pay your employee at least the National Minimum Wage and always check if they have the legal right to work in the UK.
Seek employment insurance. You’ll need employers’ liability insurance before any employees start slipping on those blasted banana skins on the office floor!
Enrol your staff automatically into a workplace pension scheme provided all of the following apply:

they are classed as a ‘worker’

they are aged between 22 and State Pension age

they earn at least £10,000 per year

they usually work in the UK (see HMRC’s detailed guidance on this if you aren’t sure)

Employees can actually opt out of the pension scheme after the automatic enrolment so have a chat with them about their preferences for this.

Pension providers
Take your pick of pension providers who are independently reviewed and regulated by the Financial Conduct Authority and are open to small employers:

Aviva Master Trust
The BlueSky Pension Scheme (TBPS)
Workers Pension Trust
AutoEnrolment.co.uk
Aviva Workplace Pension
True Potential Investments
NEST
The People’s Pension
Corporate Pensions Trust
Standard Life Workplace Pension
Ascot Lloyd Benefit Solutions
Welplan Pensions
The Creative Pension Trust
The Lewis Workplace Pension Trust

How OnTheGo can support you

We can complete and submit your PAYE application to HMRC on your behalf. Following this, our payroll services include running your employees payroll on HMRC compliant software where your employees will have access to their own payroll portal and can access their payslips anytime they want.
We work with Kingsbridge Insurers who can contact your directly to go through your obligations and insurance plans.
We recommend SmartPension due to their advanced technology platform and if you go ahead we can set up your workplace pension for and offer thorough guidance throughout the process. If you require, we can also submit pension deductions with SmartPension every month for you.

For employment contracts, its always best to get some employment legal advice however there are simple templates you use online and you can follow HMRC’s guidelines here .

If you have questions of any of above, get in touch with us today.

Making Tax Digital – What we know so far

Sun, 18 Mar 2018 08:48:25 GMT

OnTheGo Accountants has recently participated in a webinar with both HMRC and FreeAgent to discuss Making Tax Digital, the first major phase in HMRC’s plans to fully digitise the UK’s tax system.

We have put together a simple summary below to highlight the information you need to know:

When will MTD be implemented?
The mandatory MTD VAT service will begin from your first VAT period starting on or after the 1st April 2019.

Who will be affected by MTD?
All businesses with a vatable turnover above the VAT threshold of £85,000 (2018/19) will need to apply the new MTD rules from 1st April 19. They will need to continue do so until they deregister from VAT.

However, if you voluntarily registered for VAT and your taxable turnover remains below £85,000, you are not required to follow the MTD rules.

How will MTD work?
All businesses subject to the new MTD rules will need to store their records digitally and submit their returns through an MTD compliant software. The accounting system used to store your records must be API enabled – this technology will allow your software to communicate with HMRC.

Not sure if your software meets the criteria? Check out HMRC’s list of MTD compliant software.

How OnTheGo Accountants can assist with the new changes?
OnTheGo Accountants work with FreeAgent, Quickbooks and Xero who are all fully compliant for the MTD submissions.

If you’re worried that you’re not ready, give us a call today! 03330 067 123

A Guide to VAT for Contractors

Thu, 27 Jul 2017 12:51:51 GMT

Now I’m not going to lie to you – if I had to put every tax in order of favourite to least favourite (which, granted, is one of the duller games we Accountants like to play), then VAT would be bottom of the list! This little gem can be a minefield, so it’s important to stress that everyone’s situation is different; if you have a specific question surrounding VAT, speak directly to your Accountant who can guide you…whether they like it or not!

However, if you are a contractor just starting out or perhaps nearing the threshold for compulsory registration, there are some key points for VAT you should consider first, namely:

Should I register for VAT? and
Should I go Standard or Flat Rate?

So let’s look at your options…

When to Register
For 2018/19, the threshold for compulsory VAT registration is £85,000 so to assess this you should look ahead to the next 12 months and try to gauge what you expect your turnover to be. If your sales are likely to be in this region or more, then register straight away.

You can also register voluntarily regardless of your anticipated turnover (provided you are trading) in order to benefit from being on the Standard or Flat Rate scheme which will help you operate as tax efficiently as possible.

However, voluntary VAT registration isn’t for everyone. If you are working directly with the public, then charging 20% on your invoices may deter future business.

Furthermore, regardless of the benefits of being registered, if your business activity is minimal, perhaps a hobby or part-time job, or likewise if your workload is very high then you may prefer to simply not bother – whilst your Accountant should prepare and file your VAT return for you, it is ultimately one extra thing to think about each quarter.

How to use the Standard Rate Scheme
When registering for VAT, unless you opt otherwise you will automatically be placed onto the Standard Rate. Under this scheme, you will charge 20% on your invoices which are then paid over to HMRC… think of yourself as the Sherriff of Nottingham here – you are collecting the VAT and paying it over to King John…boo!

The amount you pay over to HMRC, however, can be reduced by any VAT you incur on your expenditure, and here’s where you can make some additional profit throughout the year.

It’s important to note that VAT won’t be incurred on all of your expenses and, if it is, it may not always be at the standard 20% rate so you will need to base your VAT reclaim on the receipts themselves. As a general rule, VAT is not typically reclaimable on:

Business entertainment
Insurance
Public transport

The Flat Rate Scheme
As an alternative, the Flat Rate Scheme attempts to simplify this by paying a fixed percentage, according to trade, of your sales over to HMRC, so VAT is no longer reclaimed on your expenditure (with the exception being any capital purchases of £2,000 or more).

For instance, if you are an IT contractor you would have a fixed percentage to use of 14.5%*. Let’s say you raise an invoice for £1,000 + VAT (£1,200 in total). Under the Standard Scheme you would have to pay £200 over to HMRC less any VAT you have recorded as incurred on your expenses, yet under the Flat Rate, you simply pay £174 (£1,200 x 14.5%)… no muss no fuss.

But (sorry people there’s a but here now), this easy-peasy method has been complicated since April 2017 by the introduction of HMRC’s Limited Cost Trader classification. Going forward, your fixed percentage will only be based on your trade if you are not deemed a Limited Cost Trader, which HMRC define as a business with gross expenditure on ‘Relevant Goods’ of:

less than 2 % of their Vat inclusive turnover, or
greater than 2% but less than £1000 per annum.

What are ‘Relevant Goods’ I hear you ask? Well, these don’t include:

Travel and accommodation
Subsistence – food and drink
Motor vehicle costs including fuel, mileage, lease payments
Internet, phone bills and accountancy fees
Training and memberships
Gifts, promotional items and donations
Office equipment, laptops, mobile phones and tablets

As such, a large majority of contractors going forward fall into the category of Limited Cost Trader and therefore must use the blanket Flat Rate percentage of 16.5% which is ultimately less tax efficient.

OnTheGo Advice
There is a silver lining of course, when registering for VAT you will benefit from a discount of 1% for the first 12 months so even if you fall within the Limited Cost Trader classification, this will bring your Flat Rate down from 16.5% to 15.5% – whilst this doesn’t sound like much, the percentage reduction will make a notable difference in profit made from VAT.

If tax efficiency is your main drive, then following your first year of registration you can then switch over to the Standard Rate scheme and reclaim on your expenditure. If the prospect of the additional bookkeeping associated with this puts you off though, you can simply remain on the Flat Rate – you will still make a profit from the VAT by being registered although, depending on your expenditure, it is likely to be slightly less.

A note to existing OnTheGo clients here, as your bookkeeping is included within your accountancy package you will not see an increase in workload by going onto the Standard rate scheme…hooray!!

Our advice, as always, is one size doesn’t fit all – give us a call on 03330 067 123 to go through your personal circumstances and we can guide on the best VAT route for you.

otga

The Real Cost of Setting Up and Running a US Company

US Expansion Checklist

US Expansion Checklist

When Should a UK Startup Flip to a US Parent Company?

When Should a UK Startup Flip to a US Parent Company?

First — what is a “Delaware flip”?

The short answer: flip when the business case is clear

The most common (and sensible) timing points

1. Just before a priced US funding round

2. When US investors explicitly request it

3. When the US becomes your main commercial focus

When it’s probably too early to flip

What founders often underestimate

How OnTheGo Accountants supports Delaware flips

How US Investors Look at UK Startups?

How US Investors Look at UK Startups (and What They Expect)

Should Your Startup Set Up a US Entity?

Should Your Startup Set Up a US Entity?

Why Tech Startups Should Consider a Salary Sacrifice Pension (Pros & Cons)

Why Tech Startups Should Consider a Salary Sacrifice Pension (Pros & Cons) ﻿

How to Budget Like a Founder

How to Budget Like a Founder

Tax‑Efficient Business Structures for Startups

Tax‑Efficient Business Structures for Startups

R&D Tax Credits: The Most Common Mistakes That Cost Companies Money

﻿ R&D Tax Credits: The Most Common Mistakes That Cost Companies Money (and How to Avoid Them)

1. Treating R&D as a box-ticking exercise

2. Chasing percentages instead of defensibility

3. Over-claiming director time

4. Poor project boundaries

5. Misunderstanding grants and subsidies

6. Ignoring overseas expenditure rules

7. Treating the AIF as paperwork

8. Oversharing during enquiries

9. Using advisers who haven’t adapted

What good claims do differently

HMRC R&D Enquiries: What Actually Triggers Them—and How to Handle One

HMRC R&D Enquiries: What Actually Triggers Them—and How to Handle One

Why HMRC Enquiries Are Now Common

How Claims Get Selected for Review

What an HMRC R&D Enquiry Looks Like

The Most Common Challenges

The Key Consistency Check

Biggest Mistakes During an Enquiry

What a Strong Response Looks Like

Typical Outcomes

The Best Strategy: Prevention

The Capital Gains Tax Implications of Closing a Limited Company

UK R&D Tax Claims: How to Allocate Staff Time Accurately

Apportionments That Stand Up: How to Allocate Staff Time in UK R&D Claims

Why Apportionment Matters More Than Eligibility

What Counts as “Staff Time” for R&D

Directors’ and Founders’ Time: High-Risk Area

Evidence: What HMRC Really Wants

Common Apportionment Approaches

Small Changes, Big Impact

Where Claims Often Fall Down

Building a Sustainable Approach

Summary

FAQ: Staff Apportionment

What Directors and PSCs Need to Know

Companies House ID Verification: What Directors and PSCs Need to Know (Without the Headache)

1. Who Needs to Verify? (And When?)

For New Directors and PSCs

For Existing Directors and PSCs

2. How Do I Verify? (The Two Routes)

Option A: The "Do It Yourself" Route (Free)

Option B: The "Let Someone Else Handle It" Route (Paid)

3. What Happens If I Don't Do It?

4. Your "Headache-Free" Action Plan

Subcontractors, EPWs and Overseas R&D

Grants, Subsidies and R&D: How Public Funding Affects Your Claim

Do grants really reduce your R&D tax claim?

The simple truth (post-April 2024)

Why funded companies still get this wrong

The three questions that decide everything

A quick reality check on the numbers

The hidden swing factor: contractors, not grants

Where we see founders lose money

Why Tech Startups Should Consider a Salary Sacrifice Pension (Pros & Cons)

R&D Tax Credits: The Most Common Mistakes That Cost Companies Money (and How to Avoid Them)