Chartered Accountants of Poynton, Cheshire

Tax Tip

When you buy new equipment for your business, ask whether it is energy or water efficient.

Check the list on www.eca.gov.uk to see if you could get a 100% deduction fo the cost in the year of purchase.

On-line filing

Every year, employers are required to send details of the salaries, tax and National Insurance deducted from their employees.

These year-end returns have to be submitted by 19 May 2007 to avoid a fine. These documents can be submitted on-line via the internet.

We can assist you in this process. If you are a small employer (less than 50 employees) and you file on-line, HMRC will pay you £150 tax-free if you file on time for 2006/07.

Company Vans

There has been a big change to the taxable benefit due on vans.

Where an employer provides a van for an employee, which they can use for private journeys, the taxable benefit from 6 April 2007 becomes £3000 per annum.

This taxable benefit is not levied if the private use is merely incidental.

HMRC have given some guidance on what is incidental but this is not exhaustive so we will be pleased to advise on the situation if you are providing vans that can also be used for private journeys.

Useful sites

www.hmrc.gov.uk - H.M. Revenue and Customs

www.dti.gov.uk - Department for Trade and Industry

www.companies-house.gov.uk - company information

What sort of loan do I need?

We are often asked to help clients raise finance for their businesses and to advise them on the suitability of the type of loan they require. It is essential that the loan is suitable both for the business and the purpose the money is being borrowed for.

The following are the main types of loan that you might consider.

Secured or unsecured

A loan can be either secured or unsecured. A loan can be secured on an asset, such as property, machinery, a car or a director's own private residence.

The impact of a secured loan is that if the borrower cannot repay the loan, the lender has the right to sell the asset providing the security and then use the proceeds to repay the loan.

Overdraft

Should be used for short-term occasional borrowing. It is best used to provide short-term finance such as managing the difference in payment times between debtors and creditors. It is not suitable for long-term finance, such as the purchase of a property. If a business has a permanent overdraft, it might be worth considering swapping this for a longer-term loan.

Leases and hire purchase

Usually, these types of loan are used to buy medium-term assets such as cars, machinery and office equipment. Typically they last between one and five years and result in regular monthly payments to repay the loan and interest.

Factoring

This is a method of financing debtors and is ideal for fast-growing businesses. This involves the lender advancing money against every sales invoice made. So, if a business makes a sale of £10,000, for example, the lender might lend

£8,000 the moment the sale is made. The £8,000 plus interest is then repaid when the borrower's customer pays.

Mortgages

These are used to buy long-term assets, such as a property or long-life industrial machinery. The term of the loan will depend on the type of asset being purchased.

The precise loan needed for any business will vary and might involve a mix of some or all of the loans.

If you are a business in Cheshire, we at Appletons will be pleased to help you raise any finance that your business might require.

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