Financial Freedom Tips

Posts Tagged ‘Preparing’

An individual tax return should include all sources of income however it is earned. Some individuals own properties that are rented out in order to generate an income, and this income should also be included on the self assessment tax return. 

Rental income is assessed under schedule A, therefore if an individual has rental income a separate schedule that shows how the Schedule A rental profits, or losses as the case may, be are calculated. It should be noted that it is rental profits and not rental income that is transferred to the self assessment tax return and assessed. 

When dealing with rental properties it is important to prepare a basic set of rental property accounts. These accounts don’t need to be sophisticated and since they are only going to the tax man they only need to consist of a profit and loss account. A equilibrise sheet is not required and preparing one would not add any value, therefore there is no point in preparing one. However, the rental profits should be prepared on the accruals basis, i.e. matching income and expenses to the correct period regardless of payment and receipt, just like trading accounts are. 

The first line of the schedule A computation should consist of the rental income, for the tax year, regardless of whether the cash has been received or not. If the property is managed by a management company it is important to gross up the income for letting fees and any other charges imposed. 

Any expenses directly related to the rental property can be deducted from the income. Such expenses are likely to include any mortgage interest that has been paid on the property, note the capital repayments are not allowable, council tax (where this is not paid by the tenant), any utility bills (where these are not paid by the tenant), fixes and renewals, professional fees (where they are of a revenue nature and not a capital nature) and accountancy fees etc. If any assets in the property have been depreciated this charge will need to be added back to the profit, which is the same treatment as if trading accounts were being prepared. 

Any capital expenditure, i.e. new furniture or fittings, property improvements etc. is not considered to be an allowable expense and should be added back to profit, if it has been deducted of course. The treatment is exactly the same as if trading accounts were being prepared. Depending upon the capital expenditure incurred it might be doable to claim capital allowances, even though there are special rules that need to be followed and adhered to. The UK capital allowances system is quite complex and seeking the advice and assistance from a professional is suggested to ensure there are no over or under claims. 

So, Schedule A rental profits are calculated as rental income less directly attributable expenses add any disallowable expenses add back depreciation less capital allowances. The resultant figure is then transferred to the self assessment return where it is assessed accordingly.

Find more about Tax Course articles from search form.

Small business finance acts as a stepping stone for the small businesses, to explore innovative and holistic approach of business to increase their profits. With small business finance borrower can minimize the difficulty of funds that the borrower comes crossways during the business.

Small business finance depends upon nature of the business i. e. new or seasoned business. Amount fetched through the small business finance can be used for various purposes like buying a land, furniture, raw material, advertisement, machinery, outgoing expenditures etc.

Depending upon the borrower’s stipulation he can either opt for the secured or unsecured loans. If the borrower wants to enjoy the captivating features and larger loaned amount then he should opt for the secured small business finance, but for that he has to place some valuable collateral against the loaned amount.

Borrowers who are looking for small amount can opt for unsecured small business finance. Unsecured small business finance is often availed by those borrowers who are unable to place collateral against the loan amount. Tenants or non-homeowners can avail the unsecured business finance at the competitive rate of interest.

Small business finance can be accessed from various lenders like prominent banks, institutions, lenders. With these, nowadays small business finance is also acquirable through the online market.

Online has evidenced to be a easy and the fast method of acquiring the small business finance. While opting for the small business finance borrower must not forget to compare the quotes of different lenders in respect to repayment period, lower interest rate, and the loaned amount.

Borrower with bad or poor credit history like CCJ’s, bankruptcy, defaults, arrears IVA, etc can freely opt for the small business finance.

The most important task to obtain small business finance is preparing a business plan. In small business finance, business plan provides the borrower to know what amount to be raised for his business.