Bank Feeds

Many of the cloud book keeping services allow you to automatically import bank transactions in to the software. This has the advantage of ensuring the bank always reconciles, reduces data entry and saves time as the better software learns what the repeat transactions are and will code them automatically.

Paypal transactions can also be imported directly in to some of these products.

At Sutherland Black we have clients on Freeagent, Xero and Kashflow and support them all. We also have an internal system called Bankstream that we use to do client’s book keeping for them.

There are two main types of bank feeds. Unfortunately UK banks seem to be difficult for the software providers to deal with. They are obviously need to somehow get read only access to people’s bank accounts in order to import transactions but conversely the banks are rightly concerned about security.

One way for the software providers to deal with this is use a third party bank aggregator, the largest one of which is a company called Yodlee. They then use a technology called screen scraping to import the transactions. In order to use this a user needs to provide them with their user name and password. We have never heard of an issue with this but some people worry that this breaks their banks terms and conditions.

Some of the software providers have managed to obtain “direct” feeds from individual banks so that a third party does not need to be used. At present the list is:

Xero: HSBC, Metro Bank, Natwest, RBS, Santander Business. Other banks need Yodlee.

Kashflow: Uses Yodlee only.

Freeagent: Barclays Business. Other banks need Yodlee.

If you would like to talk to us about moving your book keeping on to the cloud please give us a call.


Changes to Class 2 National Insurance

Some of our self employed clients (ie clients who are structured as a sole trader, partnership or LLP) will have noticed that their Class 2 National Insurance Direct Debits have stopped.

This is because from the 2015/16 tax year Class 2 National Insurance is being collected through the Self Assessment Return.

So far so easy. However with the advent of the new flat rate state pension it is extremely important that people keep their National Insurance records up to date. To  get the full state pension there must have been 35 years of contributions.

So if a self employed person has made a loss or made profits of under £5,885 a year then they don’t have to make a contribution, however a voluntary contribution could be made to create a qualifying year of contributions. If a client is considering not contributing for the year they should check their record here It is now extremely easy to check your NI record and see any missing years. It can be surprisingly cheap to pay up missed years, especially if a partial year of self employment was paid for example.

There has been a lot of publicity regarding the new state pension, however the flat rate only applies if people have a full National Insurance record.


Digital Tax Accounts and Quarterly Reporting

Last year’s Autumn statement contained an announcement which on the face of it wasn’t that exciting but will have a profound impact on our clients.

HMRC has had online services for Businesses and Individuals for many years. These are now being migrated into HMRC’s new “Digital Tax Accounts” which will give greater information about the taxpayer’s affairs. On the face of it this seems like a software change rather than anything significant. However there is one aspect to this that will affect most businesses in a way that will increase their compliance burden.

The government has announced that by 2020 self employed individuals and businesses will be expected to submit data to HMRC on a quarterly basis rather than annually at present. It is unclear how this will work in practice but what seems definite is that this is the end of businesses keeping paper records and only having to prepare a tax return on an annual basis. Indeed it has been much trailed that the personal tax return will be phased out completely.

The majority of our clients use some sort of bookkeeping software, but many of them have outdated copies of desktop software such as Sage which they do not use to directly submit information to HMRC.

It seems inevitable that the easiset way for businesses to comply with this requiremement will be to migrate to one of the online Book Keeping software systems such as Xero, Freeagent or Kashflow as they will have to include the functionality to submit the quarterly data required. Indeed the software Companies are one of the biggest proponents for this change as you can see here

This will not remove the requirement for Companies to prepare proper accounts on an annual basis and to submit a Corporation Tax return. As the basis that these accounts are prepared on is often different to how people run their book keeping it is hard to se how the quarterly information is going to assist HMRC! For a very basic overview of their intentions HMRC have posted this video

The easist way for clients to position themselves for this change is to make sure their bookkeeping software is up to date and possibly the “cloud” software packages will allow the easiest transition. Watch this space……………..


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