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What is Construction Industry Scheme? – CIS Tax Simplified

What is Construction Industry Scheme? – CIS Tax Simplified

The Construction Industry Scheme (CIS) in the United Kingdom is a nationwide tax-deduction
scheme for British contractors and subcontractors. Contractors deduct money from subcontractor
payments and submit it to HM Revenue & Customs (HMRC) under the Construction Industry Scheme
The initiative attempts to address unethical industry practices such as hiring people on a “cash-in-
hand” basis and failing to comply with tax requirements. This article provides a simplified insight to
look at the scheme, including instructions on how to register with HMRC, file monthly returns, and
define who and what type of work is included.

How Construction Industry Scheme (CIS) Works

If you work as a contractor in the construction sector, you should be aware of your obligations under
the Construction Industry Scheme (CIS). It is essentially a PAYE-like scheme that demands that the
contractor is usually obliged to withhold tax on its payments to the subcontractor and pay the
deduction to HMRC.
Contractors are businesses that work in the construction sector and hire subcontractors to do the
actual job. According to UK law, contractors can be any legal business entity, including companies,
sole traders, and partnerships, which can include real estate developers, construction companies,
and even labour agencies.
CIS covers the following types of work:
• Alterations
• General works related to buildings
• Decorating
• Dismantling or demolition
• Heating, lights, electricity, water, and ventilation works
• Repairs
• Groundworks and preparation of site
If a business that isn’t in the construction sector spends $1 million or more on construction work in
three years, it may be considered a contractor. Housing associations registered in the United
Kingdom or operating in the United Kingdom are examples of this. The scheme does not cover
construction work done outside of the UK. A company headquartered outside the UK that performs
construction work in the UK, on the other hand, is subject to the rules and must register and pay tax.
If you meet the following criteria, you must register with the CIS as a contractor:
• you pay subcontractors to do construction work.
• Your company does not conduct construction work, yet you spend more than £1 million on it
every year.
Before you hire your first subcontractor, you must first register with CIS. Check HMRC’s status
guidelines. You should also consider if the subcontractor should be treated as an employee.
Contractors that perform certain types of construction work must comply with CIS and:
• Register with the scheme before hiring their first subcontractor
• Always check if they should hire individuals instead of subcontracting the work
• Verify with HMRC that subcontractors are registered with CIS
• make necessary deductions from subcontractor payments
• pay the money to HMRC
• give subcontractors with deduction statements
• all CIS deductions must be reported to HMRC on a monthly basis
• maintain complete CIS records
• notify HMRC of any changes to their business
Subcontractors should register for CIS as well. If they are eligible, subcontractors who do not want
any CIS deductions might apply for “gross payment status”. Failure to comply with the CIS
programme might result in penalties for contractors.

Subcontractor Verification

Verify if your subcontractor has registered with CIS and what their payment status is. The method
for verifying that a subcontractor is genuinely self-employed and should not be classified as an
employee of your company for taxation purposes is a critical component of the scheme. It is
important to understand that even though a contractor withholds tax on payments made to you and
may receive paperwork that looks similar to payslips, you are not being considered an employee and
hence will not be entitled to any of the employment rights that come with being an employee.
You should also establish that the subcontractor is self-employed in the contract between your
company and the subcontractor. However, if the contract is for employment, you must regard them
as employees for tax purposes and pay PAYE instead of registering them for CIS.

Who pays the tax under the CIS Scheme?

After properly verifying a subcontractor under CIS and based on HMRC’s response, the contractor is
obligated by law to withhold the following taxes from any payment owed to a subcontractor (they
will be listed in the subcontractor’s Self-Assessment tax return):
• If they are not registered as sub-contractor – 30% from non-CIS-registered subcontractors,
excluding the equivalent of VAT and the cost of plant hire or supplies.
• If sub-contractors are registered at the standard/ net rate – 20% from CIS-registered
subcontractors who are eligible to receive gross payments, excluding the equivalent of VAT
and the cost of plant hire or supplies.
• If the sub-contractor is registered with gross payment status, there are no deductions if a
subcontractor qualifies for gross payments.
The contactors will not deduct amounts from invoices (sent by the subcontractors) for direct
expenses such as material costs. The contractor’s deductions are subsequently remitted to HMRC,
who regards these as advance payments of the subcontractor’s income tax and national insurance
The contractor must provide a PDS (Payment Deduction Statement) to the subcontractor within 14
days of the end of the current tax month for any deductions made. The subcontractor should keep
these statements since they will be helpful in completing a Self-Assessment tax return.
A subcontractor may seek a duplicate copy of a PDS document that has been lost or misplaced. The
contractor must furnish it, but it must be properly labelled as duplicate.
You can utilise the CIS online service to submit monthly returns, as well as to verify your list of
subcontractors, view previously filed returns, and alter any data that need to be changed.

CIS Compliance

There should be no outstanding HMRC payments or tax returns. While HMRC frequently overlooks
minor compliance errors, having many failures recorded might result in your gross payment status
being revoked (which is reviewed once per year). HMRC laws require subcontractors to notify any
company changes, including:
• Change in company type, address (private or registered)
• Changing your business name
• Changing the business structure (which necessitates a new gross payment status review)
• Addition of any new shareholders (in the case of companies)
• The core trade has come to an end
A contractor accountant can assist you in staying on top of intricate compliance rules, claiming
overpayment CIS, and ensuring that you are paying the smallest amount possible.

Support from Bloom Financials

This is a brief overview of the processes you’ll need to follow to verify subcontractors and stay in
compliance with CIS.
If you have any questions about the scheme or require assistance with the verification procedure or
tax deductions, our team of experienced professionals would be happy to assist you. Don’t hesitate
to get in touch with us for more information.

A Guide to Correct VAT Errors & Make Adjustments

A Guide to Correct VAT Errors & Make Adjustments

As with any bookkeeping, errors can happen when completing a VAT return, especially if you’re maintaining a small growing business. VAT is incredibly complicated, and you should always seek advice about the VAT treatment of any transaction if you are uncertain. If you realise you’ve made a mistake once you’ve submitted a VAT return, try not to panic! Although sometimes simple, these errors can lead to significant VAT Penalties. Business owners should seek specialist VAT advice regularly to ensure they do not fall into these traps. The process for reporting and correcting VAT errors is relatively straightforward, and this brief guide explains the steps you should follow. This simple guide explains what to do in both scenarios.

As a VAT-registered business, you must submit VAT returns every three months.

Your VAT online account tells you:

  • when your VAT Returns are due
  • when the payment must clear HM Revenue and Customs (HMRC) account

When you submit the Return, the figures for the amount of VAT you collected and paid should be accurate and based on the correct rate of VAT. However, suppose you realise after submitting a return that you mistakenly omitted a receipt or a payment, charged a customer the wrong VAT rate, or made an error in your calculations. In that case, you must act quickly to put matters right.

Calculating the net value

To calculate the net value of errors, you must do the following

Add up the additional tax due to HMRC

Adjustments conditions

In certain circumstances, you can correct an error that you made in a previous VAT return by adjusting a future VAT return. VAT Errors come in all different shapes and sizes, but they generally arise where there is an Error on a VAT Return.  It can be where a business:

  • Fails to record the VAT on a sale where it should have been
  • Reclaims VAT on a cost where it should not have done so
  • Makes a calculation error in a VAT return
  • had a net error value (any VAT you overpaid minus any VAT you underpaid) below the HMRC reporting threshold of £10,000
  • Error was not deliberate (you should notify HMRC of any deliberate mistakes by following the instructions below)
  • Error was made in a return for an accounting period that ended less than four years ago

How to Make the Adjustment

You can adjust your next VAT Return if the net value of the errors is £10,000 or less. You can also adjust your next VAT Return if your error amount is up to 1% of your box 6 figure (up to a maximum of £50,000). If it is above the reporting threshold of £50,000, you must report to HMRC regarding the error.

If the error means you owe VAT, add the net value to box 1 of your Return. If the error means you are due a VAT refund, add the net value to box 4 of your Return. It’s essential to keep a record of the date of the error, the date you made the adjustment and the details of the error. You should also adjust your own VAT records to reflect the correct figures.

Reporting an error to HMRC

If you need to report a VAT return error to HMRC because it doesn’t fit the above criteria, you should fill out form VAT652 and send it to HMRC. While it’s possible to make an error report to HMRC without form VAT652, having one should make the process much easier. If you’re unable to access a form, you can write to HMRC directly to report an error.

When you contact HMRC, make sure you have the following to hand:

  • details of how each VAT error arose
  • the VAT accounting period in which the error(s) occurred
  • if the mistake was an input tax or output tax error
  • the amount of VAT under-declared or over-declared by your business in each VAT period
  • how you calculated this amount
  • whether any of the errors reporting resulted in your business paying HMRC an amount that wasn’t due
  • the total amount of VAT to be adjusted

HMRC’s VAT Notice 700/45 provides detailed information about correcting VAT errors, but you should consult with your accountant if you have any concerns about your VAT return.

HMRC’s Penalties for VAT Errors

HMRC may charge you penalties and interest if an error is due to careless or dishonest behaviour. You should tell HMRC about careless errors separately in writing, as well as adjust your current VAT Return. It may lead to a reduction in the penalty. If you’re late filing a VAT return or making payments to HMRC, you’ll enter a 12-month probation period. Should you file any further late returns or make late payments within this 12-month ‘surcharge period’, you will incur a default surcharge penalty. The probation period is reset for a further 12 months.

Prompted errors attract higher penalties than unprompted errors, so it’s essential to notify HMRC if you spot an error. In order for HMRC to consider any reduction to a penalty, you should inform them that you have made a careless error or deliberate inaccuracy regardless of its size or value. You need to be aware that HMRC might choose to issue you with a penalty if they consider that you have acted carelessly or dishonestly. The penalty can range from:

  • up to 30% if you have been careless
  • up to 70% where it’s a deliberate error
  • up to 100% if it was is both intentional and concealed

You should receive a reply from HMRC to confirm if your calculations are correct within 21 days. If you manage to convince HMRC that the appropriate action has been taken to prevent these errors from happening again, they may suspend the penalty.


Every business calculates the VAT amount, makes a return and sends it to HMRC. Not every Return but some of the returns may contain errors, and it is best to solve the same by making adjustments as early as possible before sending it to HMRC. However, you mustn’t make any further errors during the period the penalty is suspended. If you would like professional tax advice on any aspect of VAT reporting or error correction or would like confirmation that you are complying with HMRC’s VAT rules, Bloom Financials experienced tax consultants will be glad to help.

VAT Charging and Reclaiming: How to Deal with VAT Matters

VAT Charging and Reclaiming: How to Deal with VAT Matters

If you have a business, there are several decisions to be made. For example, if you are setting up a new business or expanding, one of the decisions is whether to register for VAT. If your turnover has reached £85,000, the decision is out of your hands – you have reached the VAT threshold and must register. If your turnover is below the threshold, you can choose whether to register or not.

Generally, once you’ve registered for VAT, you must put the corresponding rate on your invoices and make quarterly VAT returns and HMRC payments. If you are not VAT registered, or your customer is not, VAT becomes complicated.

You’ll need to make a decision on how to deal with a customer who doesn’t have a VAT number if you provide discounts, refunds, or return policies for non-VAT registered customers in your terms and conditions. The prices at which the products are supplied for such customers should take into account any such discounts etc.

This article explains the different ways VAT can be charged and outlines what you need to do to become VAT registered. We also highlight the penalties HMRC might charge if you get the process wrong. Make sure to get professional advice if you are unsure how to handle VAT since some aspects can be complicated.

Why you should register for VAT?

VAT, or value-added tax, is a consumption tax imposed on goods and services at each stage of production. It’s often only applied to the value-added at every step. The advantage of being VAT registered is that it simplifies tax returns and reduces the administrative burden for small business owners.

You can reclaim any VAT that you are charged for around 15 EU countries around you. When this happens, your input tax will be more than the output tax. If your input tax is more than the output tax, you can collect the difference back from HMRC, saving you some money. It’s important to remember that the figure of £85,000 must represent taxable turnover – that is, for the supply of goods or services that are VAT-rated. Any goods or services, not VAT-rated must not be included in the figure.

How to register for VAT

Any firm in the UK that sells products or services to other EU nations must register for VAT. The first stage is to register with the HMRC as a company within 30 days of launching a business. If you’ve already registered as a Sole Trader, the next step is to register for VAT in the United Kingdom with HMRC. In most situations, if you already have a company and want to register for VAT, you can do so online (or by using paper form VAT1). You’ll need the following information before you can log on and start your registration:

  • Your Unique Tax Reference. This is a ten-digit number you’ll have been sent when registering to pay Corporation Tax.
  • Your business’ bank account details.
  • Your company number and registered address.
  • Details of any associated businesses from the past two years.

If necessary, you may also require information about any businesses that are being transferred or purchased.

You should receive a VAT registration certificate when you apply for VAT (VAT4). This will state:

  • your VAT registration number
  • the date you need to submit your first VAT Return and payment by
  • your ‘effective date of registration’

You will quote your VAT registration number on any receipt or invoice in which VAT is applied to goods and services.

Charging VAT

You’ll be provided with a unique VAT number when you register for VAT, and you’ll have to start issuing VAT invoices instead of routine invoices. VAT invoices should include information such as the tax rate(s) imposed and the total amount of tax payable, as well as your VAT number. When you purchase VAT-rated supplies from a VAT-registered business, you’ll get a VAT invoice containing the supplier’s VAT number and the amount of VAT included in the total invoice. You must pay the full amount due to the supplier.

To charge or reclaim VAT on whatever you buy or sell, you must first be registered for VAT. If you’re registered for VAT, your VAT number must appear on practically every invoice you send out. There are a few exceptions (for example, if you sell secondhand items on a discount programme or sell zero-rated products), but VAT-registered companies must always include their VAT numbers on their invoices as a general rule. Businesses who aren’t registered for VAT are unable to reclaim any of the VAT they pay.

If you are VAT registered, you can get a refund from HMRC for the VAT you paid. You obtain a refund by reporting this as input tax on your VAT return. Even if the items are VAT-rated, if you buy supplies from a non-registered company, you should not receive a VAT invoice, and you must not pay any VAT stated wrongly on the invoice. If you pay VAT in error, HMRC will levy you a penalty fee.

Surcharges and penalties levied by HMRC for VAT violations

HMRC has a range of penalties regarding registration and payments. You must be familiar with the critical registration dates in order to comply with their criteria. Your Effective Date of Registration (EDR) is determined by whether you applied to register before or after crossing the threshold. If you do not apply on time, you may face fines for late registration.

It’s risky to charge VAT if you’re not registered. It’s also unwise to ignore your VAT bills.

You are also responsible for sending your VAT return on time when registered for VAT. A default will occur when HMRC does not receive a return on all VAT payable by a certain deadline. In certain circumstances, such as the COVID-19 pandemic, HMRC may prolong this deadline, allowing entitled businesses to withhold VAT payments.

VAT is also penalised if it is charged too early. You can’t legally charge VAT to your consumers unless you’ve registered for VAT. The penalty for charging VAT on an invoice without being registered is up to 100% of the VAT on the invoice. There’s also a ten per cent penalty for charging VAT before the deadline. Even if you notify HMRC that you made a mistake, you will be subject to this penalty.

VAT Returns are normally completed online for every 3-month VAT period. These returns must be delivered to HMRC within 1 month and 7 days after the end of the VAT period. If it’s within your budget, it may be beneficial to appoint an accountant to prepare and submit VAT returns and handle VAT affairs on your behalf. This is a brief overview of the rules on VAT registration and administration.

Bloom Financials Can Help

When you aren’t registered, charging VAT would almost certainly result in further penalties and charges from HMRC. However, not charging VAT according to your VAT plan, or the VAT scheme you choose for your business is problematic. Understanding the VAT threshold and how to register will enable you in avoiding penalties and claim money back on purchases. Our team of experienced tax accountants would be happy to assist you if you require professional guidance on any aspect of VAT or confirmation that you are fully complying with HMRC’s VAT requirements.

Reach Us

Please let us know if you have any queries. Wish to leave a comment on Bloom Financials Private Limited, or want further information, don’t hesitate, go ahead.

We offer tailored solutions for your business, regardless of your requirements. Our friendly team is ready to help you, so please feel free to contact us.

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What are benefits in kind? Introduction & tax guide

What are benefits in kind? Introduction & tax guide

Today companies provide their employees with various types of added benefits. Any benefit that you receive as an employee in addition to your basic salary is the Benefit in Kind from your employer. It can also be regarded as the benefit that you can use both in your personal time as well as the business hours and is referred to as a perk or the ‘fringe benefits’, that may be a vehicle provided by your company for both the office as well as the personal use. Although this all seems a nice added bonus, the noticeable thing is that it all may not necessarily go for free, and HRMC will need you to pay tax.

Moreover, this can be challenging for self-employed or employers to understand the rules about benefit in kind tax. Benefits are usually tax-free, while such are taxable, making it complicated to assess which rules apply to your situation according to your benefits. We are providing a quick guide here to make such things easier to understand.

What does benefit in kind mean?

These are the benefits that a company provides to their director or employee besides their wages or salary.

A company car, any residence accommodation by company, private medical insurance, or non-business travel are all examples of benefit in kind (BIK). Such benefits in kind that have a monetary value involved may be subjected to taxes, and you will be demanded to report HMRC as well.

Tax-free or non-taxable benefits in kind?

These are the most common benefits in kind you receive from the company or employer. In such cases, both the employee and employer are not demanded to pay the tax. Here are a few examples of non-taxable benefits in kind:

  • Subsidies meals provided to the employees at the canteen
  • Various entertainment facilities
  • Pension payments
  • Various other sports and safety facilities are available at the workplace
  • Expenses for transportation, e.g. public bus services

 Taxable benefits in kind

  • Vehicles provided by the company that is also allowed for personal use
  • Fuel for personal use
  • Accommodation having no rent or less rent than the market value
  • Fees of the children of employees
  • Private medical insurance
  • Loans from the company that is interest-free or discounted
  • Expenses for non-business travel

How to figure out what tax is to pay on a benefit in kind?

The rules to determine what tax needs to be paid or not are diversified to understand. It all depends on what benefits are being received or offered. When you are receiving a benefit in kind as an employee, you have to pay income tax for it.

To calculate how much you will pay, apply the income tax rate band according to your income tax to the taxable value of the benefit you are being offered. The band defines that you have to pay 20% if it stands under the basic rate; for the higher rate, it is 40%, and for the additional rate, it is 45%. A rule also says the employer providing the benefit in kind to his employee will also have to pay tax in the form of the employer’s NI at a rate of 13.8 per cent of the benefit’s taxable value.

Reporting and paying tax on benefits in kind

At the end of each year, all the employers are asked to report their employees’ benefits. They are responsible for this reporting.

Ways to report and pay tax:

There are two ways to report and tax the benefits

  1. P11D form submission

This is a tax form that keeps all the records of the employment benefits that the directors, as well as other employees, receive from the company over the year. The employer is responsible for submitting a P11D form for each employee receiving the benefits or expenses. Self-employed are considered both the employee and employer, which means they also need to fill out the P11D form. The form provides a list of all possible benefits which the employer simply selects the relevant ones and states the value of the benefit that was provided to the employee.

The P11D(b) form is also required to submit by you in the following conditions:

  • If you have submitted any P11D forms
  • The benefits or expenses of the employee have been paid through your payroll
  • HMRC has reminded you to report

The P11D(b) form must be submitted alongside the P11D and this allows for employers to pay their NI on the BIKs.

2.Paying tax through payroll

The tax on benefits provided to the employees can also be deducted and paid through the payroll.

For this, you need to get yourself registered with HMRC before the tax year starts (6th April). And an important thing to note down here is you do not need to submit the P11D form in this case, but the P11D(b) will still be required to be submitted.

For employees, income tax is charged on the BIK. The payment for this will be automatically deducted via your payroll and so there is nothing you need to do.

This guide helps make things a little easier to understand what the benefits in kind are, what benefits are taxable and what are not, what are the tax calculations, and how to report and pay off taxes as well. It also explains the complications of the procedure to assess the tax rules and accurately understand the benefits in kind tax calculations.

This demanding and hectic procedure needs time and expertise. Also, analysing the case of each employee who is being provided with benefits in kind may be confusing. Furthermore, reporting the taxes, filling out the P11D and P11D(b) forms, and paying off the taxes is a complex task to do by the employers and self-employed persons. Here you need experts who can perform all these tasks efficiently and precisely. Our company ‘Bloom Financials’ also provides its expertise in taxation regarding the benefit in kind. Employers, self-employed persons, and even employees can get help to make this procedure easier and swift.

Operating Business from Rented Property as a Landlord and Tenant

Operating Business from Rented Property as a Landlord and Tenant

  • Overview
  • What to Look for in a Rental Property
  • Characteristics of a profitable business rental property
  • What are the immediate benefits of renting property?
  • What are the major disadvantages of renting property?
  • Adjustment of rental property business in Covid-19
  • What if a tenant runs a company out of a rented space?
  • What credentials should tenants consider if they’re running a business out of a rented space?
  • How Do We Help?


Every property owner has one primary goal in mind, to create value from the land for goodwill or reputation. So, they usually set up well-managed and fully furnished houses. The land is sometimes purchased and rented by the owners to carry out their commercial activities. In such cases, owners are likely to benefit from various tax advantages.

However, we will focus on the advantages of rental property for starting or running a business in the United Kingdom. However, there are benefits and downsides to purchasing a rental property to create consistent long-term income and capital appreciation. Conversely, it requires a strong relationship between the tenants and property owners. Tenants are the “Limited Liability Entity” who signs the lease with the owner.

The rented property or home can also be utilised in numerous ways such as office, shop or restaurant. Tenants sometimes run their business from rented property that helps them to take benefit of taxes. Every owner and tenant running a business or wants to start from a rented property must consider some helpful tips regarding the land. Moreover, tenants working from a rented property needs to consider some authorised planning and government policies.

What to look for in a Rental Property

While starting a business from a rented property, you should consider the land or property area, which may help create money.

Property pricing: Business owners should keep an eye on other properties’ listing prices and check municipal records for final selling prices to get a sense of what a neighbourhoods’ true market worth is.

Tenant attraction: Look for a property with a qualifying neighbourhood and fair rentals for both appreciation and tenant attraction. It will also increase the property’s worth if you decide to sell it after a few years.

Profitability of ventures: It is critical to purchase a property at a reasonable price in order to assure a lucrative operation.

Characteristics of a profitable business rental property

Taxes on real estate

Taxes on profitable rental properties vary significantly from targeted regions to commercialism. If the neighbourhood is more commercial, the owner will almost certainly pay more. However, if a person is operating a business, it is not regarded as a negative thing. Commercial zones may help a variety of businesses, including restaurants and retail. Long-term tenants are attracted to the area by the high property taxes.


The vacancy rates and types of tenants that an area will attract are determined by the community in which it is purchased. If you buy near a university, there’s a good likelihood that more students will come. That’s the way a business won’t have to struggle to find more tenants every summer.

The Job Market

More renters are drawn to areas with increasing employment prospects. In addition, tenants are more inclined to relocate to places with more work prospects. Business owners must be confident that tenants would seek out such a place due to migrating to the neighbourhood.


Business owners should take a tour of the area to see the parks, restaurants, gyms, movie theatres, public transit, and other amenities that attract tenants. Try to find places with the finest combination of public facilities and private property. As a result, the prospects of attracting renters will improve.

Development in the Future

Visit the areas that will be more developed in the future. It’s an excellent growing location if there’s a lot of building going on. Also, keep an eye on new projects that may increase the value of nearby houses.

What are the immediate benefits of renting property?

For businesses, there are various advantages to owning a rental property.

  • Financially rewarding and have numerous tax benefits
  • Less insurance deductions, mortgage interests, and maintenance costs.
  • Selling a rental property and investing in another business without incurring capital gains taxes, if a business owner uses “1031 exchange”.
  • Business owners treat a room or portion of a house as a rental, deducting a percentage of the mortgage interest and other expenditures from the revenue.

What are the major disadvantages of renting property?

Owning a rental property has a number of drawbacks for businesses, listed down below.

  • As real estate is not a liquid asset, there is a lack of liquidity.
  • A sale may take many months to complete.
  • Taxes and insurance costs are constantly rising.
  • There is no guarantee that taxes would not grow faster than rents.
  • Natural catastrophes can also have an impact on insurance rates.

Adjustment of rental property business in COVID-19

The way businesses operate has evolved dramatically over the years, especially following a COVID-19 lockdown. Employees are increasingly opting to work from home rather than commute to the workplace. As a result, it has become a major source of concern for landlords, as rented property carries legal ramifications when it comes to renters working there.

When it comes to rented property, there are various legal considerations for both company owners and renters. It also necessitates the allocation of significant resources from the government and other management organisations.

In covid-19, maintaining a rental business in the best possible way has become a worry. With the new travel restrictions throughout the world, finding new renters and keeping existing ones is a complicated issue. Managing the rental premises may be a problem for business owners.

Business owners must consider a temporary adjustment in rental pricing to maintain business and minimise losses. Rent reductions for present or future renters will make properties far more competitive. Tenants who are going through a difficult time and don’t have a steady source of income require empathy and flexibility in order to rent out their properties.

As a Tenant, how to pay in Covid-19?

Some tenants may only want a little compassion to pay their rent so that owners may work with them in various ways.

  • Payment in instalments.
  • Long-term payment plan
  • Ask for extra time to pay rent  
  • Contract-based extensions in case of tenant is not a UK resident.

How to avoid money loss in Covid-19?

To avoid a significant financial loss, owners should examine the following options:

  • Learn about the government’s protections for COVID-19-affected tenants.
  • Business owners must investigate any local government subsidies or grants that may be available.
  • During the months when COVID-19 is in effect, a business owner who receives a loan from a bank must negotiate for a more flexible mortgage.
  • Many owners are laying off tenants and workers right now. If you have tenants, you must carefully consider the expense of laying off workers since this would very certainly need rehiring, training, and onboarding new employees, which is not a sensible way to manage time.

What if a tenant runs a company out of a rented space?

There are many self-employed tenants in the United Kingdom who work from their homes or rented properties. Thus, a tenant must primarily comprehend how working from a rented house would benefit him and how much tax he may claim.

For both sole traders and partnership businesses, there are two techniques for estimating tax business use of home or rented property.

The flat-rate method: In this arrangement, tenants are asked how many hours they spend each month running their company. The amount of tax you pay varies depending on how many hours you work at home every month. This technique is quicker since it just considers the costs of heat and light, not rent, council tax, or telephone and broadband.

The costs method: When a limited company operates a home-based business, the renter must employ the cost method. The amount of tax levied in this way is determined by the nature of business, and labour renters undertake at home.

Tenants can conduct their business from home or rented property depending on the type of business they are performing and obeying the legal regulations of the government. Nowadays, most tenants concentrate on running a home-based company. They do, however, have government-imposed laws and regulations.

If a company’s revenue is entirely derived via the internet, the UK government does not impose any tax limits. On the other hand, if your firm requires in-person meetings with overseas clients or freight deliveries, the government will force you to purchase a commercial property to conduct your business.

What credentials should tenants consider if they’re running a business out of a rented space?

Authorised Planning and Permission

Tenants must get approval from the council before altering traffic patterns or the living circumstances of their neighbours. Tenants may also require approval from their mortgage provider or landlord, the local planning office, and the local council to conduct a company from their house.


The tenants must think about getting the right business insurance.

Business rates

For landlord property, tenants are charged business rates according to different business conditions:

  • If a landlord’s property is used for both commercial and personal purposes by tenants.
  • If tenants offer goods or services to visitors to the landlord’s premises, the landlord will receive a commission.
  • If tenants hire individuals to work at the landlord’s place of business and make alterations to the landlord’s place of business, they will pay more property rent.

How We Help?

The growing epidemic is having an impact on many aspects of businesses. Bloom Financials believes that a pro-active, problem-solving approach is always more vital throughout COVID-19. It is up to us to turn this difficult situation to our advantage. So, let’s activate our optimistic thinking!

We have the professionals on board to advise and recommend how owners and tenants can stay afloat amidst this crisis. Our staff has produced practical guidance on how to negotiate payments with your renters and landlords, as well as how to find money-saving options.

We also make it simple to claim tax and use of business via home expenditures by allowing tenants to manage all of the bills and leases. So, just the percentage of a business cost can record as an expense in your accounts.