Cloud Accounting Support Services (CASS)CASS is a Xero Platinum Partner accountancy firm in Tamworth, Staffordshire, acting as an outsourced finance team for growing UK businesses. We offer bookkeeping, payroll, VAT, self assessment, limited company year-end accounts, MTD for Income Tax, business growth & planning, cash flow forecasting, outsourced finance, moving to Xero, discounted Xero subscriptions, Xero support/training, and meeting room hire in Tamworth.Contact us: +44 1827 780550 · info@cass-online.co.uk · 3 Pebble Close, Amington, Tamworth, Staffordshire, B77 4RD. Open Monday to Friday, 08:30–17:00.

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Tax, VAT & MTD

What has to be reported, when, and what Making Tax Digital changes.

These answers provide general information, not advice tailored to your circumstances. Rules can change and exceptions may apply — speak to the CASS team before making a tax, accounting or financial decision.

Can I arrange a payment plan with HMRC, and what information will they need?You may be able to agree a Time to Pay arrangement with HMRC. They will want to understand what you owe, why you cannot pay and what you can realistically afford. Approval is not automatic, and interest normally continues on overdue tax.Read the full answer

Can I charge my company interest on money I’ve lent it?Yes, you can charge interest on money you lend your company. The company normally deducts basic-rate Income Tax from interest paid to you and accounts for it to HMRC using CT61. You report the gross interest and tax deducted as part of your personal tax position.Read the full answer

Can I claim 100% tax relief on a new electric car?A qualifying new and unused zero-emission car can receive a 100% first-year allowance. HMRC's current guidance covers purchases before April 2027. This is a separate allowance because cars do not qualify for AIA.Read the full answer

Can I claim AIA on equipment bought through hire purchase?Qualifying equipment bought on hire purchase can be eligible. Once you start using it, relief can generally cover the capital payments under the contract, including future instalments. Interest is excluded from AIA.Read the full answer

Can I claim AIA on second-hand equipment?Yes, second-hand plant and machinery can qualify for Annual Investment Allowance. AIA does not generally require equipment to be new, unlike some other allowances. The asset, purchase circumstances and available allowance still need checking; cars and certain non-purchase or connected-party situations have separate restrictions.Read the full answer

Can I claim business expenses incurred before I started trading?Some qualifying revenue expenses incurred within seven years before trading starts can be relieved when the trade begins. The usual business expense conditions still apply. Assets, stock, advance payments and costs paid personally for a later company may need different treatment.Read the full answer

Can I claim tax relief for training courses or professional qualifications?Training can qualify, but the rules differ for self-employed people and employer-funded training. Consider how the course relates to the existing business or employment, who pays and whether personal benefits are involved. A course being useful or awarding a qualification does not settle the tax treatment.Read the full answer

Can I claim tax relief on a bad debt?You may get tax relief where a genuine business debt included in taxable income becomes irrecoverable, but the rules depend on how your business is taxed. Cash basis businesses generally cannot deduct an unpaid sale they never included as income. VAT bad debt relief is a separate claim with its own conditions.Read the full answer

Can I reclaim VAT on buying or leasing a car or van?The VAT rules differ for cars and commercial vehicles. VAT on buying a car is usually blocked unless a specific exception applies. Car lease VAT is normally restricted where private use is allowed. A van may qualify for recovery, but business use, VAT registration and the invoice still matter.Read the full answer

Can owning another company affect my Corporation Tax calculation?Yes. Companies under common control can be associated, which may reduce the profit limits used for the small profits rate and marginal relief. The answer depends on control, activity and timing, so tell your accountant about other companies before relying on the standard thresholds.Read the full answer

Can shareholders receive different amounts of dividends?They can where their holdings and share rights support it. Dividends are not simply allocated according to who needs the money. Check the company’s articles, share classes and available profits before approving different payments, particularly where family members are shareholders.Read the full answer

Can two separate businesses be treated as one for VAT registration?Yes, in some circumstances. HMRC can examine whether a business has been artificially separated to avoid VAT registration. Different names, bank accounts or legal entities do not settle the question, but genuinely independent businesses are not automatically combined.Read the full answer

Do I need to report income from a side business?Possibly. A small business alongside your job can still create reporting obligations. The trading allowance is based on qualifying gross income, not profit, and has conditions. Keep records and check the rules even if the activity feels informal or payments arrive through an app.Read the full answer

Does AIA mean I get the cost of my equipment back?No. AIA reduces taxable profits rather than refunding the purchase price. The tax saving depends on the tax rate applying to those profits and your business's overall tax position.Read the full answer

How do I claim Annual Investment Allowance?Claim AIA through your business tax return. Sole traders use Self Assessment, partnerships use their partnership return, and limited companies use a Company Tax Return with a separate capital allowances calculation.Read the full answer

How do I claim additional tax relief on my pension contributions?If your pension uses relief at source and you pay Income Tax above the basic rate, you may need to claim extra relief from HMRC. First check how your contributions are treated: relief already given through payroll should not be claimed again, and employer contributions are handled differently.Read the full answer

How does postponed VAT accounting work when I import goods?Eligible UK VAT-registered businesses can account for import VAT on their VAT return instead of paying it at import. Recovery remains subject to the normal rules. Customs declarations, monthly statements and bookkeeping must agree; postponed VAT accounting does not remove customs duty or make every import cost recoverable.Read the full answer

How is rental income split between spouses or civil partners?For spouses or civil partners living together, income from jointly held property is generally taxed equally unless a relevant exception or valid declaration applies. You cannot simply choose the split that gives the lowest tax. Beneficial ownership, evidence and Form 17 requirements need checking before using unequal shares.Read the full answer

How much Annual Investment Allowance can my business claim?The standard AIA limit is £1 million for a 12-month period. Shorter periods reduce the limit, and some businesses under common ownership or control must share an allowance.Read the full answer

How should I prepare my business for Making Tax Digital for Income Tax?Start by establishing whether your qualifying income brings you into the regime and from which tax year. The timetable and detailed rules can change, so use current HMRC guidance for the final position.Read the full answer

How should gift vouchers sold to customers be recorded for accounts and VAT?Selling a gift voucher brings in cash, but the accounting income and VAT may arise at different times. VAT treatment depends on whether the voucher is single-purpose or multi-purpose. Track sales, redemptions, refunds and expiry so vouchers are not counted twice or treated as ordinary sales without checking.Read the full answer

How should website development and software costs be treated in my accounts?The treatment depends on what you are buying. Routine subscriptions, hosting and maintenance are different from creating or acquiring an asset with lasting value. Check the accounting and tax rules separately: describing everything as software or marketing does not decide whether it can be deducted immediately.Read the full answer

Is AIA relevant if I use cash basis accounting?Sole traders and partnerships using cash basis normally deduct qualifying equipment purchases as business expenses instead of claiming AIA. Cars have separate capital allowance rules and do not qualify for AIA.Read the full answer

Is my company dormant if it has no sales?Not necessarily. Companies House and HMRC use different tests for dormancy. Having no sales does not automatically make a company dormant if it has other activity or transactions. Check both positions before filing dormant accounts or assuming tax reporting has stopped.Read the full answer

Is selling my unwanted belongings different from buying things to resell?Yes. Occasionally selling possessions you already own is different from buying or making goods to sell for profit. The activity determines whether you are trading, not simply the platform used. Valuable personal possessions can also raise separate Capital Gains Tax questions.Read the full answer

Should I buy equipment before my year end to reduce tax?Buying qualifying equipment before year end may bring tax relief into that period. However, contract terms and payment timing matter. The purchase should also make business sense and fit your cash flow.Read the full answer

Should I register for VAT voluntarily?Voluntary registration can make sense if most customers are VAT registered, you have significant VAT-bearing costs, or being VAT registered fits the commercial position you want to present. It can also avoid having to change pricing and systems suddenly when compulsory registration arrives.Read the full answer

What alternatives are available to Annual Investment Allowance?Alternatives include full expensing, 50% and 40% first-year allowances, specific 100% first-year allowances and writing down allowances. Eligibility depends on your business structure, the asset and the purchase date.Read the full answer

What are limited company accounts and what do they tell me?Limited company accounts are the formal annual financial statements of the company. They summarise its financial performance and position for the accounting period and form part of the company's statutory reporting obligations.Read the full answer

What are writing down allowances?Writing down allowances spread equipment tax relief over time. The main-pool rate is generally 14% from April 2026 and the special-rate rate is 6%, applied to the remaining tax balance rather than the original purchase cost.Read the full answer

What happens financially when someone joins or leaves a partnership?The partners need to agree how profits, capital, assets and liabilities are dealt with, and update the relevant records and tax reporting. The partnership agreement is central. Ordinary partnerships and LLPs have different legal requirements, so the structure matters.Read the full answer

What happens if I owe money to my company at year end?Money you owe your company is usually shown as an overdrawn director’s loan account. Leaving it outstanding can create a company tax charge, and a cheap or interest-free loan may create a personal benefit. The repayment date and how the balance arose both matter.Read the full answer

What happens if my business makes a tax loss?A tax loss may qualify for relief, but the options depend on your business structure, circumstances and the type of loss. It is not automatically a refund. Check the tax calculation and claim deadlines rather than assuming the loss disappears or cancels other tax.Read the full answer

What happens to my tax position when I sell equipment I claimed allowances on?Selling equipment can affect your capital allowance calculation, even if you previously claimed its full cost through AIA. The disposal value is normally brought into the relevant allowance calculation and may create a taxable balancing charge. The accounting profit on the sale and any VAT are separate checks.Read the full answer

What happens to stock and business assets when I stop trading?Stock and assets still need to be accounted for when trading stops. Selling them, keeping them personally or transferring them can have different tax consequences. VAT and capital-allowance adjustments may also apply, so prepare a closing list before disposing of anything.Read the full answer

What is CIS gross payment status, and how does it work?CIS gross payment status allows a qualifying subcontractor to receive payments without CIS deductions. It changes how tax is collected, not whether profits are taxable. HMRC must approve the status, contractors must check it appropriately, and the subcontractor must maintain compliance.Read the full answer

What is IR35, and when should my business check the off-payroll working rules?IR35 concerns people who work through an intermediary, usually their own company, but would be employees for tax purposes if engaged directly. Who assesses the arrangement depends on the client and engagement. Check the rules before agreeing the contract, rather than relying on the worker having a limited company.Read the full answer

Making Tax Digital for Income Tax is HMRC's system requiring affected sole traders and landlords to keep digital records, send quarterly updates and complete their annual tax reporting through compatible software.

Reviewed by Paul Barnes, Founder, Cloud Accounting Support Services · Last reviewed 29 September 2026

What is a limited cost business under the VAT Flat Rate Scheme?A limited cost business spends too little on qualifying goods under HMRC’s Flat Rate Scheme test. It must normally use a 16.5% flat rate, even if its trade usually has a lower rate. The test is based on relevant goods, not all business expenses, and needs checking each VAT period.Read the full answer

What is full expensing and can my business use it?Full expensing lets companies subject to Corporation Tax deduct 100% of qualifying new and unused main-rate equipment costs upfront. It does not apply to sole traders, partnerships, cars or most equipment bought to lease out.Read the full answer

What is partial exemption, and could it affect my business?Partial exemption can affect a VAT-registered business that makes both taxable and exempt sales. It determines how much VAT on costs can be recovered. Exempt sales and zero-rated sales are different, so the starting point is checking the activities correctly.Read the full answer

What is the 40% first-year allowance?Qualifying new and unused main-rate equipment bought from 1 January 2026 can receive a 40% deduction upfront. Writing down allowances apply to the remaining 60% from the next accounting period. Cars are excluded.Read the full answer

What is the 50% first-year allowance?Companies can deduct 50% of qualifying new and unused special-rate equipment costs upfront. The remaining cost goes into the special-rate pool for writing down allowances from the following accounting period.Read the full answer

What is the Annual Investment Allowance?AIA lets you deduct qualifying equipment costs from taxable profits in the period you buy them, within your available allowance. It can reduce your tax bill when you invest in your business.Read the full answer

What is the difference between a disbursement and recharging an expense?A disbursement is a payment made as an agent on your customer’s behalf that meets HMRC’s conditions. Recharging your own cost is different and normally forms part of your supply. Passing on the exact amount does not automatically make it a disbursement.Read the full answer

What is the difference between cash-basis and traditional accounting for a sole trader?Cash basis generally recognises income when received and allowable expenses when paid. Traditional accounting measures income and costs in the periods they relate to, including unpaid balances and other adjustments. Cash basis is the default for eligible businesses, but choosing the right approach depends on your circumstances.Read the full answer

What must I do when I stop trading as a sole trader?Tell HMRC that you have stopped self-employment, complete the required final tax reporting and review any VAT or employer registrations. Stopping sales does not automatically close every obligation. Keep records of the cessation date, outstanding transactions and remaining assets.Read the full answer

What paperwork should I prepare when paying a dividend?Check that the company has enough distributable profit, record the decision properly and prepare a dividend voucher for each shareholder being paid. Keep the paperwork with the accounts and match it to the payment. A bank transfer labelled dividend is not enough on its own.Read the full answer

What purchases qualify for Annual Investment Allowance?Many equipment purchases qualify, including computers, tools, machinery, office furniture and vans. Cars, land and buildings themselves do not qualify for AIA, although certain building fixtures and systems can.Read the full answer

What should I do if a supplier has charged the wrong VAT?Ask the supplier to check the charge and issue the correct documentation. Do not manually change their invoice or assume you can reclaim the VAT you think should have been charged. If your VAT return is due, check the appropriate treatment before submitting it.Read the full answer

Which date decides when a sale goes on my VAT return?Under normal VAT accounting, the tax point usually decides the return period. This can depend on when goods are supplied, services are completed, a VAT invoice is issued or an advance payment is received. VAT Cash Accounting and certain supplies have different timing rules.Read the full answer

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