Introduction

Capital gains tax is payable when you sell an asset for more than its purchase price. The transfer of assets between spouses and civil partners is exempt from capital gains tax as the transfer is considered to be on a “no gain, no loss” basis. This simple case becomes much more complicated when the transfer of assets is a result of the separation of the couple or as part of the court order during the financial dispute resolution.

Who should read this?

Separation

Before covering the capital gains tax liability on separation, we need to understand what counts as separation. The couple can be treated as separated from each other if ;

1. Separation is under a court order, or
2. A separation agreement is in place, or
3. The separation is under circumstances where it is likely that the separation will be permanent.

In each case, the marriage or civil partnership must have broken down. In case 3, if you live in the same house as two individuals, the separation is likely to be permanent. You will be treated as separated from your spouse or civil partner. It is vital to note that this is a point of law rather than a point of tax, and you must seek professional legal advice if in doubt.

Transfers in the Tax Year of Separation

Suppose, on separation; one spouse transfers their share of the property to the other during the tax year of separation, i.e. between 6 April and 5 April of the following year. In that case, the transfer will be on a no gain, no loss basis. If the transfer takes place after the tax year of separation, the transfer will be deemed to have taken place at the market value. The market value is used because they are still connected even though the couple is separated.

Example of Transfer of Property on Separation

• Mr Jam transferred his share in the family home to Ms Butter on 30 June 2020.
• Mr Jam and Ms Butter separated on 1 December 2020. Mr Jam transferred another asset to Ms Butter on 1 March 2021.
• The above transfers take place for an amount which gives neither a gain nor a loss to Mr Jam.
• Transfers may take place on no gain, no loss basis up to and including 5 April 2021, even though the couple stopped living together after 1 December 2020.

Suppose a transfer takes place between you and your spouse or civil partner after the end of the tax year in which you are separated. In that case, there are rules to decide the date of disposal and the amount of consideration on disposal. These rules depend on your particular circumstances, and the information you’ll need is the date of:

1. Any decree absolute or dissolution of the civil partnership
2. The court order if the asset was transferred by such an order
3. Any other contract under which the asset was transferred

These rules are complicated, and you must speak to your tax adviser to seek further assistance.

Principal Private Residence Relief

The family home stops being the main residence for the spouse or civil partner moving out; therefore, the availability of the PPR relief can be at risk. And if this happens, the spouse or civil partner moving out may have to pay capital gains tax on the transfer.

If the transfer takes place within nine months of one spouse moving out, there will be no capital gains tax as the last nine months exemption will apply automatically.

However, if the transfer takes place after more than nine months of one spouse moving out, full PPR relief will only be available if;

1. The home continues to be the other spouse’s main home
2. The transfer is a result of the court order or consent order
3. The leaving spouse has not elected a new main home or principal private residence.

Conclusion

A divorce can be the most stressful time and having to leave your family home, selling or transferring it can be emotionally draining. On top of that, the harsh reality is that the whole process comes with complex capital gains tax implications.

During such stressful times, it is easier to forget the small details that can prove costly in the future. My advice is that if you are in any doubt, always seek professional tax advice from a tax adviser. Most tax advisers offer a free 20 to 30-minute consultation, which you can use to establish how much help you will need and what a professional help can bring to you.

About author

Zia Tahir, the author of this article, has years of experience and in-depth knowledge of complex income tax and capital gains tax. To book a free and non-obligatory with Zia Tahir, please call us on 020 7859 4047 or fill in the contact form below.

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Communicating with children and their parents should come naturally to you. If someone wants to start a babysitting business then she must be mature, compassionate, reverent, punctual, structured and courteous.

Starting a babysitting business in the UK is a very good idea and it can be thought of as a small business start-up. Your professional career will get a lot of business knowhow and understanding that babysitting would provide and you will get rich dividends throughout. It is a profitable business.

It is a low cost, flexible, round the year, recession-proof and all ready-money business. Baby sitters have the flexibility of working hours and can manage time for their other commitments balancing their professional and personal lives.

In babysitting business you will have to watch over the children and play with them as well as make food for them. Reaching out to prospective customers is something that you will need to do by marketing and advertising your business. Other responsibilities include carrying out administrative work like keeping track of your finances, answering phone calls and replying to emails and managing schedule.

And in case you are hiring employees for your babysitting business then you have to do their background checks and also have to know parents and their children properly so that you could provide them with a babysitter matching their exact needs.

One can follow the following steps for a successful babysitting business in the UK:

1. Right Business Plan

Clarity in business plan solves a great deal of confusion. Following are few points to remember:

Costs involved in starting a babysitting business

The start up cost of babysitting business in the UK is substantially reasonable. Transportation that is reliable adds up to the cost. Along with this a good website will consume considerable investment to begin with. It will assist in marketing your services. Thus, marketing and transportation are two important costs apart from business insurance.

Define your target market?

Primarily families, working parents belonging to upper middle class to middle class should be the target audience. The clients in fact want faithful and reliable caretakers with whom they could have a long lasting relationship.

How to generate more income through babysitting business?

The below mentioned points can help generate more income:

• Paying attention to your online services.
• Thinking about opening a babysitting facility.
• Providing online and in-person courses like CPR, standard safety and first aid.
• Utilising opportunity before and after school and for last-minute sitters as parents desire to pay more during that time.
• Higher wages are paid to caretakers having early education degree and pre-school education knowledge.

Giving appropriate Business Name

Choice of a right name speaks volumes. Register a domain name and set up a professional email account.

2. Legal Entity Formation

Setting up a legal business entity like a limited company can actually mitigate your personal damages in case your business encounters legal issues.

3. Business Bank Account Opening & Credit Card Application

For protection of personal assets, separate business banking and credit card details should be used. Do not mix your personal assets like home, car etc. as it is risky in case of legal tussle.

Business Bank Account Opening

• This helps in separating your personal assets from the assets of your company and assists in protecting personal assets.
• Tax filing and accounting becomes simpler.

Availing Business Credit Card

• All personal expenses are separated from business expenses.
• It helps you to maintain a good credit rating of your company so that applying for bank loans for business becomes easier.

4. Establishing Business Accounting

Financial performance of your babysitting business can be well understood if various expenses and sources of income are recorded properly. Annual tax filing becomes much easier if accurate and detailed accounts are kept correctly.

5. Taking Necessary Permits and Licenses

If required permits and licences are not obtained, then that can lead to levying of hefty fines and may result in the closure of your business.

6. Acquire Business Insurance

Your babysitting business needs insurance so that it can function under safety and be a lawful entity. Business insurance gives security to the financial health of your company in case of any loss.

Your Brand Definition

When you brand your company, a perception is created in the minds of people. A strong brand provides your business an edge over your other competitors and makes it look prominent.

Promoting & Marketing Your Babysitting Business

The babysitting business in the UK depends upon reputation and referrals. Initially reach out to family and friends to provide them services. This helps in fostering a good impression of your babysitting business and improves your abilities and reputation.

To start, you can register with any of the online babysitting forums using your profile as resume. In the course of time you can build on it to acquire new business goals.

Apart from this you can use social networking sites like Facebook and twitter to reach to a greater no. of prospects. You can also place ads there for promoting your babysitting business.

Repetitive Footfalls of Customers

Fame, reputation and services of a business go ahead its success. When parents and children will be happy with your services then they themselves will call you and will also do word-of-mouth publicity for your babysitting business. It is much easier to retain a satisfied customer than to look out for newer ones.

8. Have a Good Online Presence

More information regarding products and services can be gathered about a company when it has a proper online presence. Being active on social media too can generate good no. of clients or customers for babysitting business in the UK.

The post How to Start a Babysitting Business in the UK appeared first on Spherical - Chartered Tax Advisers.

Experts are there to take care of these financial complications. Through meticulous planning like supporting documents, models, backups and solutions the experts can monitor start-up  businesses and help them reap manifold benefits.

It is always better to take assistance of professional accounting services so that businesses can be strategically managed. Following are the ways in which a start-up business is benefitted by taking the help of accounting services:

Calculated Risk Taking:

On regular basis a start-up business has to take up accounting matters that are complex in nature like, cash flow examining, financial forecasting, and financial statements balancing. Professional accounting services are available that can manage financial and tax intricacies which could be really beneficial for a start-up business. Taking risks and calculated decisions are certain important things that are required to move ahead in start-up business. And accounting services come handy as they help in calculating the risks that are involved and help in predicting the outcomes of the business decisions that are taken.

The actual progress of start-up business in financial matters can be effectively measured utilising expert accounting services. And such revelations can help the owners understand if the start-up business is on its way to reach its goals and figure out gaps or obstacles to business success. Taking the help of accounting services can actually foster the start-up business to plan guidelines on the outset and lay down feasible short term goals that will be in sync with their long term objectives.

Reliable Decision Making:

Expanding business and generating sufficient profits are what a start-up business dreams of. This becomes far from reality as the apathy in planning or financial support during decision making can adversely affect the current as well the future decisions. With the assistance of accounting services the business owners are in a position to take decisions that are reliable for investments, purchase, growth etc. on the basis of cost benefit analysis, margin analysis, break-even analysis, scenario modelling etc. that in turn would guide start-up business owners to conceive plans for resource management and financial strategies assuring them with opportunities of expanding business and profits.

Different Perspectives:

Many a time the desired target set by start-up business is not achieved due to several hiccups that the owners encounter like failing to give due consideration to different perspectives before business decisions are really made. It is always better to outsource jobs related to accounting services like bookkeeping etc to professional experts so that different perspectives are realized.

Valuable Resource like Time is saved:

A start-up business owner cannot afford to waste his precious time, which is a valuable resource, on matters that can be easily outsourced to accounting services providers. The accounting services professionals can easily manage bookkeeping, business advisory and growth services of the owner’s start-up business. Thus, delegating these responsibilities to experts can save huge amount of time and money of the owner and allow him to focus on core business area and remove unnecessary financial hassles and bookkeeping tasks. These accounting experts can set the tax right, find out relevant tax exemptions and will streamline the accounting part of the company. Saving tremendous amount of time and money the accounting service providers can judiciously plan out company budget, manage inventory, file tax returns, manage payroll, and prepare customer invoices thus helping the company to adhere to government rules and regulations.

Clarity on business performance:

A success path for the growth of a start-up business depends upon a regular checking of business performance in regard to generation of profit and processes in the company. Hiring accounting services provider can help to calculate progress in business and can also figure out the various trends in business that are important from improving business revenues perspective and reducing business cost perspective at a much initial stage that might be instrumental in eliminating hindrances posing to be threats and would be responsible for impeding the business growth.

Cash flow management:

The accounting services providers can advise start-up businesses about when cash-flow issues will arise. They can thus help in developing cash flow projections that could be done daily, weekly, monthly, annual or 3-5 times in a year and directing them to lenders who can provide a competitive line of credit so that there won’t be any problem in payroll while other important business needs are met.

Strategic business planning:

The plans and ideas of the business owners can be put on paper by these experts so that securing finance becomes easier and also help in business expansion.

Protection Against Legal Hassles:

Start-up business owners will never want to be tangled in legal maze of fines and penalties at the outset of their business exploration. A careful deliberation is required in regard to bookkeeping, filing tax, account submission as these are matters of sensitivity and are needed to be handled with extreme care.

When an accounting services provider’s help is sought then he can easily help pinpoint legal problems, and can correctly file tax returns and find out appropriate tax exemptions that can be successfully claimed by the business owner.

Accounting services providers in London are highly competent. They help clients grow while saving the clients’ money, tax and time. Most tax effective solutions are provided by these professionals that are multi-fold beneficial. Small start-up businesses are helped to design successful financial strategies as per the structure of their business while proving that all government laws and regulations are properly adhered to.

These competent accounting services professionals can actually save money and time and also help in taking appropriate decisions because of their experience. With their network and planning strategies they help start-up business scale heights in business performance.

Accounting services providers also advise on Cashflow Forecasting, Working Capital and Finance, Building and Monitoring KPI’s as part of business reporting etc.

The post How can an accountant add value to the startup business? appeared first on Spherical - Chartered Tax Advisers.

Traditional way of functioning often limits accounting departments. A mindset of ‘this is how it is done’ prevails as far as procedures are concerned. But when available accountancy services are used then the day to day financial operations can be overhauled for company’s benefit. Project accounting, financial processing, treasury management and the general ledger save staff costs, speed monthly closings, improve cash management and help a company become more profitable when these basics are revamped.

It is recommended that clients update their accounting systems so as to easily manage monthly earnings and out-goings. Following are the ways by which accountancy service in the UK can actually help to maximise profits and increase cost efficiency:

Accounts Receivable

Credit Management Improvement: Many companies take orders and then ship goods without properly conducting a credit check. For this the sales people get paid but they don’t do the collection of bills. And the delays in credit checks can bring about loss because of increase in the bad debt of the company. A company should opt for software package that would allow credit checks to be done during entering the order.

Accounts Payable

Simplifying processing of expenses: This can be done by asking the employees to submit travel and other expenses electronically with a pre-coded charge which removes the coding and saves time in future calculation. Electronic sheets help in reducing manual error computation.

Changing purchase order items vouchering: Valuable time of accounts payable staff is lost in reviewing invoices against insufficient purchase order information for verification when inventory, raw materials or supplies and services are bought. This problem can be eliminated when the employee or the department making the purchase is asked to issue important financial information like charge code, terms of payment, methods of payment and the vendor payment address.

Outsourcing consignment payment:Normally, an accounts payable clerk handles multiple pieces of paper to reconcile shipments and shipping documents and then manually keys in each freight bill. Usually multiple pieces of paper are handled by accounts payable clerk to reconcile shipments and shipping documents and then each freight bill is manually keyed in. There are many accountancy services in London that can help companies in time-sensitive payments like reconciliation performance, accurate charging of audit bills, doing remittance job and provide companies with regular feedback for automatic entry into financial records.

Using purchase cards for employee travel and small purchases: Multiple bills for small ticket items can be consolidated by the accounting staff into one check and numerous checks required for envelope stuffing, postage, and multiple vendors can be avoided.

General Ledger

Acquiring tax information at the time of processing source documents: A transaction must not be handled twice and it should be recorded once for both management and tax reporting purposes. This saves a lot of time and cost for businesses who frequently need management reports prepared.

Adopting a standard chart of accounts:The same list of accounts (receivables, payables, cash) must be used by every division, business unit and subsidiary of a company for general ledger. A more accurate reporting is ensured in the consolidation process when standardised accounts and account codes are used.

Monthly closing time reduction: As per the norm for many companies the monthly financial statements are published in the middle of the succeeding month and hence the top management is prevented from reacting on timely basis to changes in the business world. The accountancy services in London can help to revamp the financial system to shorten this lag. By taking their service the companies will not only reduce processing time in monthly closings but also get a huge cost saving.

Project Accounting

Setting up separate coding for project management: When the cost of an ongoing capital expense item such as building an addition to a company facility is to be captured, a separate coding for the project under accounts payable should be set up so that the integration of those costs to the general ledger is done easily. Handling a transaction twice is eliminated by such a procedure. And the accountancy services in the UK can come handy in solving such problems.

Treasury Management

Speeding up bank reconciliation: When the information on cheques cleared from the bank, daily rather than monthly, is wished to be downloaded by company depending on the volumes of cheques it writes, the daily routines is more manageable as the volumes increase at month ends. Such practices are adopted by the accountancy services in the UK and their assistance could speed up monthly closings.

Fixed Assets

Integrating fixed assets with general ledger: As it is thought to have a little impact on a company’s day to day operations, this system is overlooked during a review to modernise financial operations. The information for tax purposes, financial statements and depreciation is required to be traced by the accounts as demanded by fixed assets. On the completion of capital expenditure projects, they are capitalised as fixed assets that immediately begin to generate depreciation expense. The accountancy services in the UK help in the integration of those data subsystems with accounts payable and the general ledger, then fixed asset sub-system is updated that appear in the general ledger. Thus, finished capital projects become fixed assets in a timely manner and are not lost. One more task is eliminated from the monthly closings list due to such integration.

The financial operations of the companies can be streamlined and simplified by taking the accountancy services available in the UK and particularly the accountancy services in London. A lot of companies can benefit out of such modifications as there will be huge savings in staff costs and also improvement in financial reporting. Using such services can help get advice on areas of a business that will lead to profit maximising and cost efficiency

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