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MICRO-BUSINESS OWNERS URGED NOT TO DELAY WHEN REGISTERING FOR SELF ASSESSMENT

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MICRO-BUSINESS OWNERS URGED NOT TO DELAY WHEN REGISTERING FOR SELF ASSESSMENT

Freelancers and micro-business owners who have yet to register their business with HMRC are rapidly running out of time if they want to get their Self Assessment tax return submitted to HMRC, FreeAgent has warned.

The company – who provide award-winning cloud accounting software for freelancers, micro-businesses and their accountants – has warned business owners that failing to register for Self Assessment in the next week will mean they are unlikely to be able to submit their tax return on time, and will be fined by HMRC.

Emily Coltman FCA, chief accountant at FreeAgent, said: “Before you can submit your Self Assessment tax return you must first register with HMRC and get your unique activation code sent to you by post. You simply cannot file your return without this.

“It’s a relatively straightforward process but, as you’re relying on snail mail to get your code, it can take a while to receive the information you need. And if you leave it too late, you won’t get your code in time to be able to meet the January 31st deadline.

“Remember that HMRC doesn’t accept failing to register in time as an acceptable excuse for filing a tax return late, so if you don’t get your code and you can’t submit your Self Assessment return, you’ll receive an automatic £100 fine. In addition, if you don’t pay your tax you’ll also face extra financial penalties which can quickly escalate.

 “It’s better to act quickly and register with HMRC now than risk leaving it until it’s too late.”

During the last Self Assessment season, 870,000 people failed to submit their tax return before the January 31st 2016 deadline; leading to automatic £100 fines from HMRC.

In addition to failing to register with HMRC on time, Emily has also highlighted three other common mistakes that freelancers and micro-business owners make on their Self Assessment tax returns.

1- Failing to declare all income

When you’re filling out your tax return, you must remember to include all of the income you’ve earned during the year – not just what you’ve received via your main employment. This includes:

  • Any income that you had invoiced, or for which you’d done the work, before 5th April 2016, but which your customers did not pay you for until after that date (unless you’re using the cash basis to prepare your accounts)
  • Any other source of income – for example from another job, interest on a savings account or rent earned from property. You must have all of the relevant paperwork for this income (such as your forms P60 and P11D from your employer and your bank interest certificates) and remember that these will all have to relate to the tax year 2015/16.
  • Tax-free income – such as interest earned on an ISA – should not be included on your tax return.

 2- Leaving out other important information

You also have to include important information about expenditure that you have made for your business on your tax return. Failure to include these could result in you paying an incorrect amount of tax. These include:

  • All of your business costs – i.e anything you paid for yourself rather than from the business’s bank account. This includes any business costs that you incurred before the business started to trade, as long as you spent the money no more than 7 years before the start of your business and the cost could have been included if you had incurred it after the start of your business – e.g, costs like getting business cards printed before you made your first sale.
  • Unless you’re using the cash basis to prepare your accounts, you need to include any large pieces of equipment (or capital assets) that you bought for your business.  These don’t go in as day-to-day running costs but you may be able to claim capital allowances on them.

 3 – Including unclaimable expenses

 If you don’t get all of your expenses correct, you won’t pay the right amount of tax. So make sure you follow the correct rules around business clothing, entertaining, food & drink, business use of home and travel expenses – because there are many common mistakes that small businesses make with regard to these.

Either check HMRC’s website or look for an alternative source of small business accounting information to find out which expenses you can and can’t claim tax relief on before you tackle your tax return.

Business

Battling Covid collateral damage, Renault says 2021 will be volatile

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Battling Covid collateral damage, Renault says 2021 will be volatile 1

By Gilles Guillaume

PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.

Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.

“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”

De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.

The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.

Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.

Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.

The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.

The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.

Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.

“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”

Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.

SHARP HIT

The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.

Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.

The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.

In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.

Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.

Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.

Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.

It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.

De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.

($1 = 0.8269 euros)

(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)

 

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Business

UK delays review of business rates tax until autumn

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UK delays review of business rates tax until autumn 2

LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.

Many companies are demanding reductions in their business rates to help them compete with online retailers.

“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.

Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.

($1 = 0.7152 pounds)

(Writing by William Schomberg, editing by David Milliken)

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Discounter Pepco has all of Europe in its sights

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Discounter Pepco has all of Europe in its sights 3

By James Davey

LONDON (Reuters) – Pepco Group, which owns British discount retailer Poundland, has targeted 400 store openings across Europe in its 2020-21 financial year as it expands its PEPCO brand beyond central and eastern Europe, its boss said on Friday.

The group opened a net 327 new stores in its 2019-20 year, taking the total to 3,021 in 15 countries. The PEPCO brand entered western Europe for the first time with openings in Italy and it plans its first foray into Spain in April or May.

Chief Executive Andy Bond said its five stores in Italy have traded “super well” so far.

“That’s given us a lot of confidence that we can now start building PEPCO into western Europe and that expands our market opportunity from roughly 100 million people (in central and eastern Europe) to roughly 500 million people,” he told Reuters.

To further illustrate the brand’s potential he noted that the group has more than 1,000 PEPCO shops in Poland, which has a significantly smaller population and gross domestic product than Italy or Spain.

The company, which also owns the Dealz brand in Europe but does not trade online, has already opened more than 100 of the targeted 400 new stores this financial year.

Pepco Group is part of South African conglomerate Steinhoff, which is still battling the fallout of a 2017 accounting scandal.

Since 2019 Steinhoff and its creditors have been evaluating a range of strategic options for Pepco Group, including a potential public listing, private equity sale or trade sale.

That process was delayed by the pandemic, but Steinhoff said last month that it had resumed.

“The business will be up for sale at the right time. It’s a case of when, rather than if,” said Bond, a former boss of British supermarket chain Asda.

Pepco Group on Friday reported a 31% drop in full-year core earnings, citing temporary coronavirus-related store closures.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 229 million euros ($277 million) for the year to Sept. 30, against 331 million euros the previous year.

Sales rose 3% to 3.5 billion euros, reflecting new store openings.

($1 = 0.8279 euros)

(Reporting by James Davey; Editing by David Goodman)

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