Does working from home give me a CGT problem?

An increasing number of our clients are running home-based businesses or are working from home at least some of the time.

One issue that troubles lots of people in this situation is whether claiming home expenses against tax has any impact on capital gains liability when selling the home.

Let’s clear up some misconceptions.

Claiming home expenses against income tax liability is not directly connected to the CGT issue.  Most people will be able to claim a proportion of fixed and running costs (by area of the house used and frequency of use) on items such as heat, light, insurance and phones, whatever use they make of their home.

The CGT issue relates to an exemption called Principal Private Residence (PPR) relief, which means that homewners do not normally pay Capital Gains Tax when they sell their main residence.  If any part of your home has been used exclusively for business purposes then part of any gain made from a sale might attract CGT.

There are two important points to consider.

The first is that for most people working at home it is unlikely that any part of the house is used exclusively for business.  Any personal or domestic use such as; doing home accounts, storing furniture or letting kids do their homework would allow PPR exemption to be maintained.

Secondly CGT would only be liable on the proportion of the gain attributed to the part of the property that was being used exclusively for business.  That gain would be offset by your CGT annual exemption of £11,100 (2016/17) and by double that if the property is owned by you and your spouse.

So you can go claiming home expenses to reduce income tax without causing problems when you sell your house. However it’s wise to think carefully about how much you claim because overdoing it could prompt an HMRC inspection. It’s also wise, therefore, to be able to show that no part part of your property is exclusively for business use (a box of strategically placed children’s toys, a set of golf clubs or the ironing board might help).

Lewis Smith & Co. is around to provide advice on both income tax and Capital Gains Tax if you need it. Why not set up a free, confidential discussion today?

Call 01384 235549 or email to make an appointment with one of our tax experts.


Lewis Smith & Co. – Preparing company accounts for Kingswinford businesses for 30 years

Can You Afford an HMRC Tax Investigation?

Anyone can be selected: a business, director or individual tax payer

We have talked before about how HMRC is trying to close the multi-billion pound gap between what it should receive and what it actually collects. They have invested millions in sophisticated new computer systems to proactively target individuals and organisations. If any of their data sources don’t cross-match then you might be selected for an enquiry.protect against HMRC investigation with our fee protection service

The chances that you will be investigated are going up all the time. Dealing with HMRC is nearly always time consuming, stressful and costly.  Even if you are found to owe nothing to the taxman you will still have to pay your professional representation fees.

That’s why Lewis Smith & Co. has partnered with Croner Taxwise to offer you a Tax and VAT Enquiry Fee Protection Service.  The service offers up to the equivalent of £100,000 towards our professional fees resulting from an HMRC enquiry. Our cover includes zero policy excess and complimentary access to employment law and commercial health and safety advice lines.

Lewis Smith & Co. has all of the expertise and experience required to deal with HMRC on your behalf.  We’ll be there every step of the way with a mission to avoid or mitigate any additional tax demands, and to ensure you are treated fairly.

Peace of mind cover costs as little as £162 per client (inc. VAT).  Check our Fee Protection Service page for a full schedule of fees.

For more information then please get in contact to arrange a free, informal discussion of your needs.  Call 01384 235549 or email, today.


Lewis Smith & Co. – Chartered accountants for Sandwell businesses

PM Targets Dudley

Theresa May visits DudleyThe Dudley borough hit the headlines this week as Theresa May chose the Netherton Conservative Club as the venue for an electioneering speech.

This must have felt like a safer place to meet Dudley voters after the Prime Minister had been refused permission to walk on the lawn of a resident in Sedgeley, earlier in the day.

The PM declined to make any specific pledges on either taxes or pensions in advance of the Conservative manifesto.

Good to see the media spotlight turned on our neighbourhood.

As soon as we hear more about Tory financial plans we let you know and try to provide some comment.

If you or your business need accountancy or tax planning support then contact us today. Call 01384 235549 or email


Lewis Smith & Co. – Accountants for Dudley businesses for more than 30 years
Image By UK Home Office [CC BY 2.0 (], via Wikimedia Commons

Main Residence Nil Rate Band

You might need to change your will

One tax change that we haven’t highlighted yet in our discussions about the Budget is the “main residence nil-rate band” (MNRB). The MRNB is an allowance that has been introduced into inheritance tax calculation, and applies if an individual’s interest in a residential property is left to children or grand-children.

MRNB is currently worth £100,000 per person in addition to the normal allowance of £325,000 and it is due to rise by £25,000 a year until April 2010 when it will be worth £175,000.  At this point couples or civil partners will be able to pass on a £1m inheritance tax-free. Estates over £2m lose the relief at a rate of £1 for every £2 over the threshold.

Key rules to look out for are that the residence must be the family home and that discretionary trusts are not used. On the death of one partner an unused allowance will pass to the survivor and this could create an inheritance tax charge if the value of the total estate exceeds the allowance limits. This can be mitigated by passing assets to other beneficiaries to reduce the total estate size.

Of course inheritance tax planning is a complex and sensitive subject. If you would like a confidential, no-obligation discussion of how to start the planning process why not involve Lewis Smith & Co. today.

Simply call  01384 235549 or email to set-up an appointment with one of our experts.


Lewis Smith  Co. – Taxation planning experts for Dudley, Stourbridge and Halesowen


Dudley Business and Innovation Enterprise Zone

DY5 Delight

Accountants for DY5 Enterprise ZoneLewis Smith & Co. would like to welcome Insurance Protector Group (IPG) as the first business to set-up shop in the DY5 Business and Innovation Enterprise Zone.

The Enterprise Zone is being developed by a partnership of Dudley Council, Black Country LEP and West Midlands Combined Authority.  Its mission is to rejuvenate the existing Waterfront business complex and to further the develop the site and the surrounding area. The expectation is that the zone will support the creation of 300 new businesses, enable 7,000 new jobs and inject £600m into the local economy.

Whilst we are seeing some buoyancy in the business environment around Dudley, Stourbridge and Halesowen, we are delighted to see the the DY5 project celebrating its initial success. Having the Waterfront back as a thriving local commercial hub will have a knock on effect to plenty of other businesses in the area.

Lewis Smith & Co. is, of course, ready to provide expertise in accountancy and taxation to businesses that are relocating to the Enterprise Zone or starting-up to take advantage of its benefits.

Why not get in touch today to see how we can help you. Call 01384 235549 or email and set up a confidential, no-obligation discussion.


Lewis Smith & Co. – Accountants for Dudley businesses


Image © Copyright Brian Clift and licensed for reuse under this Creative Commons Licence

Apprenticeship Levy 2017

Are You Ready for the Levy?

A change is coming to large payroll businesses with effect from 6 April 2017 – the Apprenticeship Levy will apply to all businesses with annual payroll costs in excess of £3 million pa.

Apprenticeship Levy 2017. Are you prepared to pay?

The levy is being implemented by the government to help pay for an expansion in apprentice training. Employers, both public and private sector, with a wage bill over £3 million will be required to pay the levy of 0.5% of the payroll. A ‘levy allowance’ of £15,000 per year will be subtracted from the 0.5% total.

The levy must be calculated and reported monthly via an EPS report and paid over with the usual PAYE & NIC deductions by 22nd of each month. Group companies with multiple payrolls only attract one annual allowance between them.

Once you have started paying the levy you get access to funding for training apprentices through the new HMRC apprenticeship service account.  This allows you to reclaim your Apprenticeship Levy contributions as digital training vouchers.

Apprenticeship Levy details are available in an HMRC manual and there is guidance on the funding scheme too.

The Apprenticeship Levy represents another on-going business cost, and a reporting and compliance requirement for your payroll.

If you need to understand the implications for your business or just want help managing the extra work, why not talk to us today?

Lewis Smith & Co. offers both tax planning and a highly efficient payroll bureau.

Call 01384 235549 or email and set up a confidential, no-obligation discussion today.


Lewis Smith & Co. – Accountants for Sandwell Businesses

No National Insurance Rise

Hammond Hangs Head

Only days after upsetting the small business community and a substantial section of his own party, Chancellor Philip Hammond has scrapped plans to raise NICs for the self-employed.

Philip Hammond backs down in NIC row

The 2% increase in Class 4 National Insurance, which we highlighted in our Spring Budget 2017 overview, was due to be introduced in 2 stages starting in April 2018.  However, commentators quickly picked up that this move contradicted the Conservative manifesto tht declared that there woul be no NIC rises.

In the short term this is obviously good news for the self-employed. Unfortunately since there is now a reported £2bn hole in the government’s finances it won’t take long for some or all of us to be targeted to make up the shortfall.

In the meantime if all of this is leaving confused over how to plan your business finances, why not talk to Lewis Smith & Co.

Our team of tax experts and compliance experts are on hand to help you sort things out.  Call 01384 235549 or email to set up a free, no-obligation discussion today.


Lewis Smith & Co – Accountants and tax advisers for Kningswinford
Picture of Philip Hammond from Flickr courtesy of the US Government

Spring Budget 2017

Bashing Business Budget?

The Chancellor, Philip Hammond, may have expected some plaudits for his increases in social care spending and higher funding across a number of areas health, education and infrastructure.  Sadly for him the big headlines have made by his supposed attack on “white man van” – the self-employed.

Budget highlights for Dudley Borough small businesses from Lewis Smith & Co.

Here’s our pick of the highlights of the Chancellor’s first budget (and the last one to be delivered in Spring).

National Insurance
The announcement that set Fleet Street ranting was an increase in Class 4 National Insurance for the self-employed.  The rate will go up from 9% to 10% in April 2018, and then form 10% to 11% in April 2019.

The increased NI rate applies to earnings between £8,060 and £43,000.  Class 4 earnings over £43,000 will continue to be taxed at 2%.

Commentators have said that this means the self-employed could pay, on average, around £240 per year more in NI.

Dividend Tax
In an attack on both small business directors and on wealthier savers the tax-free dividend allowance will fall from £5,000 to £2,000 per year from April 2018.

Income Tax
The personal allowance will rise by £500 to £11,500 and the higher rate threshold increases to £45,000 from April 2017.

The annual ISA allowance increases to £20,000 from April 2017

Business Rates
£435 million of support has been set-aside to mitigate the affects of interest rate rises.  Pubs have been singled out for help with a £1,000 discount on rates for one year (if they have a rateable value less than £100,000.

Local authorities are being given £300m to provide discretionary relief.

Tax Avoidance
Measures have been put in place to stamp down on tax avoidance.  These include:

  • Greater regulation of pension transfers to foreign schemes
  • Imposition of VAT on mobile phone use by UK residents when outside of the EU
  • Penalties on professionals who sell tax avoidance schemes that are later found to be unlawful.

Unsure What This Means for You?
There are a number of Budget changes that will impact our small business clients.  If you aren’t sure how this will affect you and your business in the months and years ahead then Lewis Smith & Co. can help.

Simply call 01384 235549 or email to set-up a free, no-obligation discussion about your tax situation.


Lewis Smith & Co. – Local accountants for Sandwell businesses.
Picture of Philip Hammond from Flickr courtesy of the US Government