Brighton has a thriving tech and digital scene — Silicon Beach is home to hundreds of startups, agencies, and SaaS businesses. We're comfortable with subscription revenue models, software development expenses, digital advertising costs, and the specific tax considerations for tech businesses.
We use the same cloud tools you do — Xero, Stripe integrations, Slack for communication. No paper, no fax, no faff. Just clear accounting for Brighton tech businesses.
Get in TouchSubscription income belongs in the period the customer is paying for, not the month the cash arrives. A company selling a £1,200 annual plan on 1 October, with a 31 December year end, has earned £300 by the year end and carries £900 as deferred income. Sole traders on the cash basis are taxed when they receive the money, but limited companies cannot use the cash basis.
Stripe and PayPal payouts arrive net of fees and refunds, so the bank deposit never equals sales. Book the gross sale, the processing fee and any refund separately, then reconcile the payout to the bank. If sales of £10,000 and fees of £290 produce a £9,710 payout, only the fee line explains the gap. Xero and QuickBooks feeds handle this well once the clearing account is set up properly.
| Transaction | How VAT works |
|---|---|
| Sale to a UK customer, business or consumer | UK VAT at 20% once you are VAT-registered |
| Sale to a business customer overseas | Generally outside the scope of UK VAT, with evidence the customer is in business |
| Sale to a consumer in the EU | The customer's country's VAT rules apply. The Non-Union OSS is one way to report it |
| Buying software or cloud services from an overseas supplier, such as AWS or Slack | Reverse charge: you account for the VAT on your own return and usually reclaim it |
Our guide to VAT on digital products covers the consumer rules in more detail.
Employer National Insurance is 15% above £5,000 a year per employee. A developer on £60,000 costs £8,250 in employer National Insurance (15% of £55,000), plus pension contributions. The £10,500 Employment Allowance can offset it, but a company where the director is the only employee paid above the secondary threshold cannot claim it.
Directors typically take a modest salary and the rest as dividends, with the £500 dividend allowance and rates of 10.75%, 35.75% and 39.35% above it. The right split changes from year to year, so we model it with you rather than applying a rule of thumb.
Under FRS 102, a company can either expense software development costs as incurred or capitalise them once specific criteria are met, and it is an accounting policy choice. Micro-entities reporting under FRS 105 must expense them. We agree the policy with you at the start of the year so the accounts and the tax computation stay consistent.
Enterprise Management Incentive options let employees buy shares at a price fixed at grant. If the exercise price is at least the market value at grant, there is normally no income tax or National Insurance on exercise. HMRC does not approve options in advance, but you must notify the grant within 92 days, and it is usually sensible to agree the share valuation with HMRC first.
SEIS and EIS give investors income tax relief, which makes them valuable when raising early money. Ask HMRC for advance assurance before you take any investment, because investors will want it. The limits are set by HMRC and change, so check the current figures on GOV.UK.
Related: corporation tax, payroll, start-up advice and tech advisory.
Sources: GOV.UK: Enterprise Management Incentives, GOV.UK: Apply for advance assurance under the venture capital schemes, GOV.UK: Employment Allowance, GOV.UK: Income Tax rates.
Not usually to business customers abroad. The supply is generally outside the scope of UK VAT if you hold evidence the customer is in business. Sales to UK customers carry 20% VAT, and sales to consumers in the EU follow the customer's country rules.
Spread the income over the period the customer is paying for. A £1,200 annual plan bought on 1 October is £300 of revenue by 31 December, with £900 carried as deferred income. Sole traders using the cash basis are taxed when they receive the money instead.
No, not if the director is the only employee paid above the secondary threshold. Once you employ someone else on earnings above that threshold, such as a developer, the £10,500 allowance may be available. Check eligibility before claiming.
No approval is needed before you grant them, but you must notify HMRC within 92 days of the grant. Agreeing the share valuation with HMRC first is usually sensible, because it fixes the option price and protects the tax treatment.