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October 2018 26 posts

WebBoss Design | | General Articles, Blogging
The Autumn Statement 2013 – Preview The Government’s plans to secure the economic recovery are set to be revealed at the Autumn Statement 2013 on Thursday 5th December by Chancellor of the Exchequer, George Osborne. Whilst in Washington attending the International Monetary Fund’s annual meeting, Osborne told reporters: “I still sit round that table at the G-20 with one of the highest budget deficits. Britain continues to have some very serious public finance challenges that need to be addressed, and although we’ve brought the deficit down by a third it’s still too high. Where we’ve got resources available we’ve got to make sure we’re doing what we can to reduce the deficit.” The Office for Budget Responsibility’s forecasts in March this year, used as a basis of the plans, showed a prediction of 0.6% economy growth in 2013, prompting Osborne to say he will announce revised budget forecasts and details of new measures at the Autumn Statement. He also stated: “We have a clear economic plan; we’ve stuck to that plan. I’m very far from feeling the job is done. We’re still in the very early stages of the recovery.” Surveys suggest actual growth figures for 2013 were better than expected, seeing expansion of around 1.4% as opposed to the OBR’s prediction of 0.6%. Common preconceptions of what the Autumn Statement may reveal include further cuts to the annual pension allowance, a rise in personal allowance, a 5% drop in income tax for those earning over £150,000, an increase in National Insurance Contributions for the self-employed, and introducing the recognition of marriage within the tax system. What plans would you like to see revealed? Let us know on Facebook or Twitter!...

WebBoss Design | | General Articles, Blogging
Seminar in September On the 10th September 2013, we will be holding our biannual seminar, this time focusing on Cost Conscious Growth. The event will be held in Gravesend, Kent – featuring a welcome breakfast on arrival, key speakers and the opportunity to network with other industry professionals over drinks. A morning and evening session are available with the three professional speakers presenting at both. The speakers bring a wealth of experience from their different backgrounds: Finance, Marketing and IT. First to take the mic will be Simon Fenech, Sales Manager of Codestone, covering The Benefits of Moving to the Cloud. Then, Dean Spencer, Director of Grapevine Marketing, will show you how to prevail with Zero Cost Marketing. Last but not least, Joanna Trinder from King and Taylor will demonstrate how to keep your finances in order with Online Book Keeping. Increasing revenue is not the only route to profit margins! We want to help our clients reduce their outgoings on necessary business services.  At King and Taylor, we want you to learn from industry experts who can teach you about certain aspects that could be vital to the success of your business. There are many accountants to choose from, so we recognise the need to help our clients on more than just financial matters by interacting with them. This event is held twice a year and features a specific theme every time, if you would like details on the next seminar then contact us here. It’s not too late to attend the upcoming seminar! To view the event details and register your attendance, please follow this link....

WebBoss Design | | General Articles, Blogging
Construction Industry Scheme The Construction Industry Scheme (CIS) sets out special rules for tax and national insurance (NI) for those working in the construction industry. For those contractors and subcontractors it is important to understand and comply with the regulations set out by the HMRC. The deadline for submission is 14 days after the end of the tax month. A key reminder for contractors: even if no subcontractors have been paid during a month, they still have to make a nil return. Employed or self-employed? Contractors must make a monthly declaration showing they have considered whether an employee is employed or self-employed. It is vital as the HMRC can be strict and impose a penalty of up to £3000, if they consider that negligent or incorrect information has been provided. It can be hard to declare which option title is correct, as many factors and stipulations apply, so please contact us for specialist advice: http://www.kingandtaylor.co.uk/contact-us/ Verifying with the HMRC The contractor has to contact HMRC to check whether to pay a subcontractor gross or net, not every subcontractor will need verifying. HMRC will give the contractor a verification number for the subcontractors which will be matched with HMRC’s own records. These numbers are a fundamental part of the system and it is important there is a fool proof system in place for obtaining and retaining them. Payslips Contractors have to provide a monthly payslip to all subcontractors paid, showing the total amount of the payments and how much tax, if any, has been deducted from those payments. It is a necessary requirement that the contractors include certain specific information on the payslip, for more details on this and any other details regarding CIS please follow this link to see the full document:http://www.kingandtaylor.co.uk/wpcontent/uploads/2012/01/Construction_Industry.pdf or alternatively contact us via our website for expert advice....

WebBoss Design | | General Articles, Blogging
VAT Annual Accounting Scheme Over the years HMRC has introduced a number of VAT schemes helping small businesses reduce the burden of administrative duties. The annual accounting scheme means companies are only producing one VAT return a year, in comparison to the usual four. Instalments still need to be paid throughout the year based on the businesses annual liability. Application to join the scheme must be made on form 600(AA) which can be found at the back of VAT Notice 732. Eligibility for the scheme must be considered because certain stipulations apply. Firstly, a company cannot apply if their taxable supplies will exceed £1,350,000 within the next 12 months. Following this, businesses current VAT returns must be kept up to date and it is not possible to register as a group of companies. For further help with the term and conditions, please contact us for specialist advice. The amount required for the instalments needed to be paid will be advised by the HMRC but there are several payment options. Businesses that have been registered for 12 months or more will pay their VAT in nine monthly instalments of 10%, of their previous year’s liability. An alternative choice would be to pay their VAT in three quarterly instalments of 25% of their previous year’s liability, falling due at the end of months 4, 7 and 10. Get in touch so we can help you make the appropriate selection for your business. The scheme can help your business with budgeting and cash flow, and reduce the amount of paperwork, although, a possible disadvantage is interim payments being higher than needed because they are based on your previous year. For further information on the annual accounting scheme please follow this link: http://www.kingandtaylor.co.uk/wp-content/uploads/2012/01/VAT_Annual_Accounting.pdf. Also please contact us via are website, so we can help you plan your VAT administration and help you decide whether the annual accounting scheme would be beneficial for your busin...

WebBoss Design | | General Articles, Blogging
5 Steps to Improve your Cash Flow In this tough economic climate it is more important than ever to ensure that cash flow is a priority in your business. Here we explain 5 steps to ensure you keep control of your cash flow and keep your business solvent: 1.        Understand your cash flow: Just like forecasting sales, dedicating time to analysing and forecasting your cash flow will give you powerful insight into the current and future status of your business, which will allow you time to plan and repair emergent problems. One of the easiest ways to monitor your business’ cash flow is to compare the total unpaid purchases to the total sales due at the end of each month. If the total unpaid purchases are greater than the total sales due, you are in negative cash flow. 2.        Plan your cash income and outgoings with your team Systematic financial planning is vital to a company remaining solvent. You must ensure that each Manager and department within your business is in line with the same financial plan. Set out clear financial guidelines and sign off procedures with all departmental Managers. You should construct a budget, at least annually, which will help detail the potential future cash flow problems or pinch points, and then allow the business to react to these instead of reacting to the needs of the business. 3.        Take steps to shorten your cash flow conversion period Examples of steps that could be taken: Preparing customer invoices immediately upon delivery of your goods or services to the customer – this helps ensure a quick receipt of payment Monitoring your customers’ use of credit and adjusting their credit limits accordingly. Offering customers a discount for paying their invoices early, this is known as early settlement. 4.        Decide who is vital to your business’s success Receiving discounts for early payment is one thing; but paying suppliers that aren’t as vital to your business befor...

WebBoss Design | | General Articles, Blogging
Share Ownership The distribution of shares is becoming an increasingly popular incentive which companies are regularly using to recruit or retain staff. It offers an attractive alternative to cash bonuses and according to new research in the UK and USA, it can also increase the productivity of your staff. Employees can obtain shares in their company without necessarily suffering a large tax bill through two routes. The first being Share Incentive Plans but the most popular form of share ownership for employees comes in the form of Enterprise Management Incentives (EMI). The latter allows selected employees to be given the opportunity to acquire a significant number of shares in their employer through the issue of options. Benefits Employees gain a stake in their company which results in increased staff retention and motivation. There is no direct cost to the employer in comparison with wage increases or cash bonuses. Usually there are no NIC charges for the employer when the employee sells their shares. How we can help We can help you decide whether EMI is appropriate for your business and whether the business will qualify. We are also able to help you with the necessary documentation required to establish and operate EMI and advise on the costs so please do contact us....

WebBoss Design | | General Articles, Blogging
Employment Benefits Following HMRC rules and regulations remains imperative to understand where employee benefits should be taxed and by how much? All business earnings are taxable but unless the benefit can be converted into cash there is no taxable benefit. Whilst this is a general rule, variants and a lot of small print occur therefore specialist advice should be consulted. Policies are detailed and can be subject to change as they have done in the recent budget for 2013. The Independent (2013); ‘Companies will benefit from the further trimming of corporation tax on all businesses – large and small – to 20 per cent in 2015.’ The complicated specifics of taxing should be reported properly to ensure no penalties are incurred. A P11D must be completed annually by employers, presenting HMRC with the benefits compensated to employees and directors. Please contact King and Taylor for further information on reports needed to be submitted by your business. Understanding which payments do not involve a tax liability is important. Dispensations can be granted by the HMRC, allowing the employee not to report certain expenses, an example being travel costs. National Insurance is required however this is not due on certain benefits, except vouchers, stock or shares. The majority of benefits are subject to Class 1A NIC payable by the employer. Which benefits will be taxed? The following benefits are taxable on all employees: • any living accommodation provided, unless job related • vouchers • credit tokens Important benefits which are not taxable: • retirement benefits which are paid by an employer into a registered pension scheme • meals provided in a staff canteen • drinks and light refreshments at work • parking provided at or near an employee’s place of work • workplace nursery places provided for the children of employees For further information on any topics discusses follow this link: http://www.kingandtaylor.co.uk/wp-content...

WebBoss Design | | General Articles, Blogging
Focus on Business Seminar This week saw the launch of our Focus on Business seminars. Our first seminar highlighted some of the legal and financial sides of running a business. The event took place at the Gravesend Best Western Hotel on the 21st of May as a breakfast session, where attendees were treated to breakfast and coffee as well as presentations from two recognised industry experts who offered their professional insights into several important topics. The first speaker was Adam Young, an active member of several professional bodies including the Personal Finance Society and the Institute of Financial Planning. An expert in his field, Adam is the MD of specialist financial planners Dragonfly and aims to raise his clients’ understanding of their options and goals. His talk provided valuable information for business owners, covering subjects such as family governance, succession planning, raising capital, and guidance on selling a business. Following Adam’s well-received presentation was Judith Jewiss, a renowned Chartered Accountant. Judith is a full member of the Institute of Chartered Accountants in England and Wales. An expert on compliance, forecasting, and regulation, Judith delivered an excellent talk on several financial areas including dividends, capital extraction, pension contributions, and a spread of similar themes. King & Taylor have received a very positive reaction to the seminar and would be delighted to see you at the next one!  ...

WebBoss Design | | General Articles, Blogging
Buy to Let Properties The UK property market, whilst not at its strongest, remains an attractive investment, especially in comparison to the currently inconsistent stock market. Buy to let is the investment into a property with the expectation of capital growth, with the mortgage costs covered through the rental income received from tenants. However, investors must be wary and confident that rent received is greater than expenses going out, such as letting fees, maintenance, service charges and insurance. When calculating sums make sure they are done carefully and backed up by research into the local market! Get advice from one of our agents if unsure about a property or the local market, and they can also advise on what a tenant would expect, to help deliver a quick let. Contracts and agreements must be watertight to protect yourself and to ensure everything is within in the law. Taxation, income tax will be payable on rent received after deducting allowable expenses. Allowable expenses include mortgage interest, repairs, agent’s letting fees and an allowance for furnishings. Tax is also required on the completion of a sale; this is known as capital gains tax (CGT). The tax will be charged on the disposal proceeds less the original cost of the property, certain legal costs and any capital improvements made to the property. CGT can be avoided in certain situations, an example being a property in your child’s name. If your child is at university, a buy to let arrangement can be advantageous. Rental income from the letting of the spare rooms would cover mortgage costs and CGT is avoided; if the property is the only one in your child’s name and you are acting as the guarantor on the mortgage. We would be happy to discuss buy to let further with you. Please contact us for more detailed advice via our website and click this link for more information on buy to let....

WebBoss Design | | General Articles, Blogging
Buy to Let Properties The UK property market, whilst not at its strongest, remains an attractive investment, especially in comparison to the currently inconsistent stock market. Buy to let is the investment into a property with the expectation of capital growth, with the mortgage costs covered through the rental income received from tenants. However, investors must be wary and confident that rent received is greater than expenses going out, such as letting fees, maintenance, service charges and insurance. When calculating sums make sure they are done carefully and backed up by research into the local market! Get advice from one of our agents if unsure about a property or the local market, and they can also advise on what a tenant would expect, to help deliver a quick let. Contracts and agreements must be watertight to protect yourself and to ensure everything is within in the law. Taxation, income tax will be payable on rent received after deducting allowable expenses. Allowable expenses include mortgage interest, repairs, agent’s letting fees and an allowance for furnishings. Tax is also required on the completion of a sale; this is known as capital gains tax (CGT). The tax will be charged on the disposal proceeds less the original cost of the property, certain legal costs and any capital improvements made to the property. CGT can be avoided in certain situations, an example being a property in your child’s name. If your child is at university, a buy to let arrangement can be advantageous. Rental income from the letting of the spare rooms would cover mortgage costs and CGT is avoided; if the property is the only one in your child’s name and you are acting as the guarantor on the mortgage. We would be happy to discuss buy to let further with you. Please contact us for more detailed advice via our website and click this link for more information on buy to let....

WebBoss Design | | General Articles, Blogging
Autumn Statement Update Key Changes & Updates for Individuals The biggest surprise after announcing in the last budget that there would be cuts to tax credits was the decision to keep the current regime, it had after all faced fierce resistance from both houses. The Chancellor did however make some changes to the benefits & tax system for individuals. Pensions A single tier pension for new pensioners from April 2016 has been set at £155.65 per week but not everyone will be entitled to the full single tier rate. The basic state pension is set to rise by £3.35 to £119.30 per week next year. With those in retirement benefitting from their state pension increasing by the higher of 2.5%, CPI inflation or the average wage growth, the government has pledged to retain this throughout this term. Landlords and Second Homes Landlords should be warned that from 2019 any Capital Gains Tax will become payable from 30 days of the sale, putting cash into the Governments pockets up to 21 months earlier than previously payable. Stamp duty has been set 3% higher on additional properties whether it is a buy to let or a second home to come into effect from 1 April 2016. This is expected to raise £1 billion by 2021. Administration of a Deceased Estate The government is to set out further plans for legislation to come into effect in 2016 to allow the ISA savings of a deceased person to continue to benefit from tax advantages throughout the administration of their estate. Temporary absence in Housing Benefit and Pension Credit The government will end the payment of Housing Benefit and Pension Credit to claimants to who travel outside of Great Britain for longer than 4 weeks consecutively, from April 2016.  Free child care 30 hours of free childcare for three and four-year-olds will be available from 2017, but only to parents working more than 16 hours and who each earn £100,000 or less which is lower than the initially proposed £150,000 limit.    Key...

WebBoss Design | | General Articles, Blogging
Inheritance Tax Inheritance tax (IHT) is levied on a person’s estate when they die, and certain gifts made during an individual’s lifetime. Most gifts made more than seven years before death will escape tax. Therefore, if you plan in advance, gifts can be made tax-free: the result can be a substantial tax saving. We give guidance below on some of the main opportunities for minimising the impact of the tax. It is however important for you to seek specific professional advice appropriate to your personal circumstances. Scope of the tax When a person dies IHT becomes due on their estate. Some lifetime gifts are treated as chargeable transfers but most are ignored providing the donor survives for seven years after the gift. The rate of tax on death is 40% and 20% on lifetime chargeable transfers. For 2015/16 the first £325,000 is chargeable at 0% and this is known as the nil rate band.   Main residence nil rate band The Chancellor announced in the Summer Budget that an additional nil rate band is to be introduced where a residence is passed on death to direct descendants such as a child or a grandchild. This will initially be £100,000 in 2017/18, rising to £125,000 in 2018/19, £150,000 in 2019/20, and £175,000 in 2020/21. It will then increase in line with CPI from 2021/22 onwards. The additional band can only be used in respect of one residential property which has, at some point, been a residence of the deceased. Any unused nil rate band may be transferred to a surviving spouse or civil partner. It will also be available when a person downsizes or ceases to own a home on or after 8 July 2015 and assets of an equivalent value, up to the value of the additional nil rate band, are passed on death to direct descendants. This element will be the subject of a technical consultation and will be legislated for in Finance Bill 2016. There will also be a tapered withdrawal of the additional nil rate band for estates with a net value (after deducting any ...

WebBoss Design | | General Articles, Blogging
Business Plans Every new business should have a business plan. It is the key to success. If you need finance, no bank manager will lend money without a considered plan. It is one of the most important aspects of starting a new business. Your plan should provide a thorough examination of the way in which the business will commence and develop. It should describe the business, product or service, market, mode of operation, capital requirements and projected financial results. Why does a business need a plan? Preparing a business plan will help you to set clear objectives for your business and clarify your thinking. It will also help to set targets for future performance and monitor finances and profitability. It should help to provide early warning for when you might need to reconsider the plan. Always bear in mind that anyone reading the plan will need to understand the essentials of your business quickly and easily.   Contents The business plan should cover the following areas.   Overview An overview of your plans for the business and how you propose to put them into action. This is the section most likely to be read by people unfamiliar with your business so try to avoid technical jargon.   Description A description of the business, your objectives for it and how you plan to achieve them. Include details of the background to your business for example how long you have been developing the business idea and the work you have carried out to date.   Personnel Details of the key personnel including you and any external consultants. You should highlight the skills and expertise that these people have and outline how you intend to deal with any weaknesses.   Product Details of your product or service and your Unique Selling Point. This is exactly what its name suggests, something that the competition does not offer. You should also outline your pricing policy.   Marketing Details of your target markets and your marketing plan. This may form ...

WebBoss Design | | General Articles, Blogging
The Basic's of VAT VAT VAT registered businesses act as unpaid tax collectors and are required to account both promptly and accurately for all the tax revenue collected by them. The VAT system is policed by HMRC with heavy penalties for breaches of the legislation. Ignorance is not an acceptable excuse for not complying with the rules. We highlight below some of the areas that you need to consider. It is however important for you to seek specific professional advice appropriate to your circumstances. What is VAT?   Scope A transaction is within the scope of VAT if: •  there is a supply of goods or services•  made in the UK•  by a taxable person•  in the course or furtherance of business. Inputs and outputs Businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs. Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT. The output VAT is being collected from the customer by the business on behalf of HMRC and must be regularly paid over to them. However the input VAT suffered on the goods and services purchased can be deducted from the amount of output tax owed. Please note that certain categories of input tax can never be reclaimed, such as that in respect of third party UK business entertainment and for most business cars. Points to consider Supplies Taxable supplies are mainly either standard rated (20%) or zero rated (0%). The standard rate was 17.5% prior to 4 January 2011. There is in addition a reduced rate of 5% which applies to a small number of certain specific taxable supplies. There are certain supplies that are not taxable and these are known as exempt supplies. There is an important distinction between exempt and zero rated supplies. •  If your business is making only exempt supplies you cannot register for VAT and therefore cannot recover any input tax.•  If your business is making zero rated supplies you should r...

WebBoss Design | | General Articles, Blogging
Attack On Pension Savings It is expected that the chancellor will announce in the Budget on the 16th March 2016 a flat rate tax relief on pension contributions. This has come under a lot of scrutiny from many financial professionals but is seen as the lesser of two evils when considered alongside a ‘Pension ISA’. The chancellor is considering a flat rate of between 20% and 33% which if set at 25% could have a major impact on those already in pension schemes/those planning their retirement investments. For those who have workplace pensions with defined fixed pension contributions this could reduce their monthly take home pay. As an example an individual on £60,000 salary, paying 5% into a defined fixed pension contribution would be paying in £3,000 to their pension. Under current legislation a higher rate tax payer would pay in £1,800 and the government would top up the contributions with £1,200 (tax refund into scheme). However, if a flat rate of 25% was introduced using the same scenario above, the individual would be required to pay in £2,250 with the government only topping up the contributions with £750. This would leave the employee having to pay in the additional £450, which would be taken from their salary. The below table shows how an individual paying 5% of gross salary into a defined fixed pension would be set to either lose or benefit :- Salary 5% Gross Contributions Current Tax Relief Current Net Contributions Proposed Flate Rate Relief @ 25% Gain/(Loss) £20,000 £1,000 20% £800 £750 £50 £40,000 £2,000 20% £1,600 £1,500 £100 £80,000 £4,000 40% £2,400 £3,000 £(600) £120,000 £6,000 40% £3,600 £4,500 £(900) £180,000 £9,000 45% £4,950 £6,750 £(1,800) £250,000 £12,500 45% £6,875 £9,375 £(2,500)   The treasury has not decided on how or if the changes are to come into effect but we are sure that the budget will shed...

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Concerns grow as taxpayers go on blissfully unaware of tax changes There is no hiding from the fact that huge changes to the tax system comes into effect from April, the introduction of the Personal Savings Allowance and the Dividend Allowance, will see radical changes to individuals tax bills, across all tax bands. Many will find their employment income reduced, due to changes to tax codes, to compensate for their interest not being taxed at source, which for many will be inconvenient, savings is for growing and wages is for enjoying. An individual earning £45,000 and receiving interest of £4,000 could see a reduction in their take home salary of £116.66 per month or if not included in their tax code could find themselves with a tax bill of £1,400. For those with lower income relying on their savings and the interest their savings generates, this could see them receiving tax bills for the first time. Usually individuals with earned income below their personal allowance and large savings income, would expect a refund of tax, but under the new regime, there is potential for huge swings. We are looking to advise our clients who fall into this category, one client who usually receives a refund of £1,600 is now expecting a liability of £3,600, a swing of £5,200! With scenarios such as this, you would think HM Revenue and Customs would be taking every opportunity they could, to warn individuals of these implication, but unfortunately they have not. Also, the banks are advising on mass, that interest will be paid gross because of the Personal Saving allowance, but no individual, tailored advice is being given, so people could end up with a large tax amount to find. We are not the only ones worrying about this non-published potential issue, the House of Lords committee concluded, that HMRC’s communications strategy, is “inadequate”....

WebBoss Design | | General Articles, Blogging
Business Rates Revaluation 2017 – how will your business be affected? Many business owners face uncertainty as the business rates revaluation looms with April 2017 just around the corner, bringing with it the first review of business rates in seven years. Although little has been confirmed, there is widespread speculation that some areas will face drastic increases, such as Dover Street in Mayfair with an earmarked 415% increase, due to the soaring property values. Other areas such as the town of Redcar in Yorkshire can sit somewhat comfortably with speculation that rates may get a reduction of 38%, correlating again with the falling property value in such areas. The government defended the forthcoming decision during the 2016 Budget, as they announced the biggest ever cut in business rates – worth £6.7bn over the next five years. From April, 600,000 businesses will pay no business rates at all and the revaluation will mean that nearly three out of every four businesses will see their bills fall or stay the same. The Milton Keynes Chamber is calling on the Chancellor to use his last Spring Budget to support long-term business investment by taking action to deliver real reform to the business rate system. Adam Marshall, Director General of the BCC, has said that the current rates system is ‘broken’ with some businesses noticing the steep increases compared to some with a decline around 40%. Furthermore, these business rates are making the UK an ‘unattractive place to do business’ all at a time when the UK’s uncertainty surrounding the future relationship with Europe is more unclear than ever. Islington Council have launched a petition with the Islington Chamber of Commerce calling on Chancellor Philip Hammond to halt the rates revaluation until the UK has left the European Union, although there is no current update on the success of this. Some properties are eligible for ‘Business Rates Relief’ from their local council. An example of this...

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Filing Tax/Accounts with HMRC Every 3 Months! Are you Prepared? Many people have reported still feeling in the dark about HMRCs new propositions when it comes to filing business and personal tax returns online from 2018, although one thing is for sure; we are certainly stepping into the Digital era. This time of year the word ‘deadline’ looms over all of our heads as the paper tax return must be filed by October 31st, albeit it only this way for two more years. Statistics show however, that the majority are already making the switch with only 11 percent of us filing by paper in 2015. Despite online filing becoming increasingly more common for businesses, research highlights that many still feel in the dark about the foundations of ‘Making Tax Digital’ which was first announced in the 2015 budget. HMRC have stipulated that one of the four ‘foundations’ of Making Tax Digital will be for businesses, proposing that they should not have to wait until the end of the tax year or even longer before knowing how much tax they should pay. This will be achieved by filing quarterly Tax Returns online. The Telegraph have commented that this will put an ‘unnecessary burden’ on companies that do still feel that they are in the dark. Experts have told the Treasury Select Committee that this controversial switch is being hastily imposed without any detail of what companies must do. Mike Cherry, head of Federation of Small Businesses has also told The Telegraph that he predicts ‘these changes would cost small businesses an extra £2,770 a year to file its returns, with many ill-equipped to handle online record-keeping’HMRC’s intentions, on the other hand, are clear for the move forward. With the abolishment of the paper Tax Return and the October 31st deadline, businesses will be able to concentrate on putting people and profit first, rather than paperwork. Similarly, it seems that there will be greater clarity when it comes to paying tax bills. Edward T...

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HMRC recover debts of up to £17,000 though PAYE codes From April 2015, HMRC bought in a new legislation which gave them the power to collect debts of up to £17,000 through an individual’s tax code, even without the individual’s consent. From the 2015 / 2016 tax year, this new method of debt collection referred to as ‘coding-out’ saw an increase from the previous collection limit of £3000 for earnings less than £30,000. The upper limit for how much debt can be coded out is linked to the tax payer’s income. There is a graduated scale so that the maximum £17,000 can be coded out for a person with earnings over £90,000. There is no change for those with earnings less than £30,000 a year, for whom the maximum remains at £3000. Earnings in this context means earnings from the main source of income paid through PAYE. The graduated limits are: Annual PAYE Earnings       Coding out limits Up to £29,999.99 £3,000 £30,000 - £39,999.99 £5,000 £40,000 - £49,999.99 £7,000 £50,000 - £59,999.99 £9,000 £60,000 - £69,999.99 £11,000 £70,000 - £79,999.99 £13,000 £80,000 - £89,999.99 £15,000 £90,000 and above £17,000 This scale is applicable to unpaid self-assessment debts, Class 2 NIC debts and Tax Credit overpayments, while a £3,000 coding out limit will still apply for self-assessment balancing payments and PAYE underpayments. To ensure a consistent approach and to safe-guard employees from excessive deductions from their pay, HMRC extended the ‘legislative 50% overriding limit’ to include all tax codes and not just ‘K codes’. This limits any deductions to a maximum of 50% of an individual’s relevant pay. HMRC use this power to code out debts only where they have not been voluntarily paid. They first write to you to explain that your Tax Code will change and give you an opportunity to settle your debt in another way. If your debt does appear in your Tax Code, i...

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You The Taxpayers to face the highest Tax Burden for 30 years The Institute for Fiscal Studies have recently claimed that UK taxpayers are facing the highest Tax Burden for 30 years. Over 37% of Britain’s National Income will be drawn from your tax receipts for the first time since 1986. These tax increases derive from a number of new legislations such as higher tax on dividend income, increase in tax on insurance premiums, higher vehicle excise duty and a new restriction on pension contributions for those on very high incomes. Hundreds of thousands of people, are suddenly paying a higher rate of tax as the threshold has failed to keep up with rising inflation, however the government have pledged to increase the threshold at which the higher rate of income tax is paid to £50,000 by 2020. The report has likewise said that £17bn of tax rises could be needed to contribute to bridging the gap between government income and outgoings. Income tax rates have risen steadily over recent years, meaning higher earners are paying an ever increasing proportion of the state’s total tax receipts. For example, the comparable rates for Income Tax Allowances and Income Tax Rates across the 2016 / 2017 and 2017 / 2018 are as follows: The personal allowance will increase from £11,000 in 2016 / 2017 to £11,500 in 2017 / 2018. The basic rate limit will be increased to £33,500 in the new tax year from the £32,000 as it currently stands and as a result of this, the higher rates threshold will increase to £45,000 from April 2017. We can see this as a positive step towards the government’s commitment to raising the personal allowance to £12,500 by the end of this parliament. This will rise in line with the consumer prices index measure of inflation, rather than the National Minimum Wage. Chancellor Philip Hammond has said that this will bring the way the allowance is increased into line with the higher-rate threshold....

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The 2017 car tax changes explained From next month, the way that vehicle tax is calculated will change, affecting all of us with vehicles registered with the DVLA from 1 April 2017. Vehicle tax for the first year will be based on CO2 emissions and after that the amount of tax that needs to be paid will depend on the type of vehicle. Unlike the current system, in which low-emission vehicles and petrol cars are exempt, the new Vehicle Excise Duty (VED) will only be free for vehicles with no tailpipe emissions (electric and hydrogen cars only). These new regulations will mean that all new cars will face a significant increase in their tax demands during the first year of registration and from their second year onwards a flat rate will apply. The rates for this are as follows: £140 a year for petrol and diesel vehicles. £130 a year for alternative fuel vehicles (hybrids, bioethanol and LPG). £0 a year for vehicles with zero CO2 emissions. For new vehicles with a list price of more than £40,000 – including zero emission cars – an additional supplement of £310 will be payable per year for the next five years. At the end of this period, the standard rate will apply. Although you may be able to negotiate the price down to a figure below £40,000 the government will use the published list price so you won’t be exempt from the £310 fee. If you register your new car by 31st March 2017 the updated road tax rate won’t apply as the reform will only affect vehicles registered from 1 April 2017. Those driving more polluting cars will pay a much higher tax in the first year, but lower tax in subsequent years – so eventually will break even. If you are in the market for a new car, it is worth completing the calculations to work out whether you are better off bringing the purchase forward to before April 1 so you can benefit from current system, or wait until next month to take advantage of the new one. If you are looking to buy a low-emission car or a...

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Brexit Tax Implications: The picture so far As the Prime Minister has triggered Article 50 this week to formally start the Brexit process, we have been looking into the effect that this may have on the UK Tax System for businesses. In reality, nobody is entirely sure about how Brexit will affect the UKs economy and growth, although the OBR has suggested that economic growth will slow. Prime Minister Theresa May has warned that there will be ‘bumps in the road’ but the Government is remaining positive about our future outside the European Union. Businesses have called for as much certainty as possible, as a survey conducted by The Financial Director has concluded that more than one third of companies still have not begun etching plans for Brexit while 77% of UK businesses are concerned about the impact that it will have. The most visible change for businesses is likely to be customs duty. For many years, most small and medium sized businesses have been used to moving goods around without incurring a duty or tariff liability. This is set to change as businesses begin to consider how they would cope with additional administration burdens created by import duty. For some businesses, holding stock in the EU rather than the UK for dispatch to the EU looks like a sensible option. It is also likely that there will be a loss of the distance selling thresholds for VAT purposes. At present, UK businesses that breach their local sales threshold, must register for VAT in the EU country where their customers are. Once the UK leaves the EU, those thresholds will cease to be available and UK companies will fall immediately into local EU VAT rules, meaning online retailers are likely to have to register for VAT in many EU countries where they do not currently have to. Some charities hope that Brexit will allow for a reduction in the rate of VAT they pay however there are warnings that any reforms introduced by the UK government could weaken charities’ VAT position. Si...

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Lifetime ISA – What you need to know As announced in the 2016 March Budget by George Osborne, the new Government Lifetime ISA will be available from 6th April 2017.  The Lifetime ISA (commonly referred to as the Lisa), is a tax-free savings account targeted towards ‘the next generation’ which provides you with a 25% government bonus. It can hold cash, stocks and shares qualifying investments or a combination of both.  You can save up to £4,000 a year and continue to pay into it until you reach the age of 50 which could theoretically net a £32,000 bonus for an 18 year old paying the maximum amount every year up to the age of 50. Once you have reached age 50, the account can stay open but you cannot make any more payments into it.  These funds must be used to buy your first home (with a value up to £450,000) or kept until age 60.  To open a Lifetime ISA, you must meet the following requirements:   You must be aged 18 or over but under 40. You must be a resident in the UK or be a Crown Servant or the spouse or civil partner of a Crown Servant.   If you withdraw the funds before the age of 60, you will have to pay a withdrawal charge of 25% of the amount you withdraw, with the exceptions being terminal illness with less than 12 months to live or transferring to another Lifetime ISA with a different provider. If you die, your Lifetime ISA will end on the date of your death and there won’t be a withdrawal charge.  Your Lifetime ISA savings and bonus can be used towards buying your first home without incurring the withdrawal charge, however your account must be open for at least 12 months before you can withdraw funds from it to buy this home.  If you already have a Help to Buy ISA, you can transfer those savings into your Lifetime ISA or you can continue to save into both, but you can only use the bonus from one to buy your first home. Some may wish to transfer the balance of your Help to Buy ISA if the amount isn’t more than the £...

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State Pension Age could rise to 70 for millennials An analysis for the Department for Work and Pensions (DWP) has suggested that workers under the age of 30 may not get a pension until they reach age 70. A second report by John Cridland, director-general of the Confederation of the British Industry proposes that those under the age of 45 may have to work to 68 resulting in millions of people in their late thirties and early forties now looking set to have to work for an extra year. He said that the aim was for a ‘smooth transition for tomorrow’s pensioners’ and try and make the future more ‘fair and sustainable’. The findings will help the government make their decision on what will happen to the State Pension Age (SPA) which is due in May. The SPA is the earliest age that somebody can receive their state pension and is set to rise to 66 between 2018 and 2020, to 67 between 2026 and 2028 and then to 68 between 2044 and 2046. In the worst case situation, GAD calculations suggest the change in retirement age from 67 to 68 could be pulled forward by as much as 16 years. The prospect of faster increases to the SPA was put to ministers as they consider ways to manage the growth of the UKs aging society, as by 2050, 56,000 Britons are expected to reach the age of 100. The government currently spends about £100bn a year on state pension and pensioner benefits and this is expected to grow as the population inevitably ages. The scenario is based on the assumption that people spend 32% of their adult life in retirement compared to the conventional assumption until now which has been that people will spend 33.3% of their lives in retirement. The increase in the state pension age is not the only solution. The government could look into other measures, such as increasing National Insurance Contributions but this would be unpopular and immediate, whereas the impact of a higher state pension would not be felt until further into the future....

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What to expect from the 2017/2018 financial year The first two weeks of April introduce some big reforms for your finances. Income TaxAs highlighted in the spring 2017 Budget, your tax free personal allowance will rise from £11,000 to £11,500 which means that the amount someone can earn tax free in 2017/18 will be over 75% higher than in 2010. This should save over 20 million people £100 a year. At the same time, the starting point for somebody to enter the higher rate tax band will move from £43,000 to £45,000, saving higher rate tax payers a further £400 per year. This is not the case however in Scotland, as the higher rate threshold for earned income has been frozen at £43,000. ISAAs detailed in this (www.klarityvision.com/lifetime_ISA) post , the new Lifetime ISA will be introduced in April. In addition to this, the allowance for saving into an ordinary ISA goes up from £15,250 to £20,000. ISAs allow investors to put money into a range of savings without paying tax on interest, dividends or capital gains. Inheritance TaxCurrently, any estate worth more than £325,000 carries a tax liability of 40% on anything above that threshold, however there will now be a new transferrable main residence allowance on property within the estate, enabling individuals to pass on an extra £100,000 tax free. Landlords Under current legislation, anyone who has taken out a loan to purchase a buy-to-let property can deduct all of the interest in order to reduce their income tax liability. From April, this relief will be restricted for higher rate tax payers to 75%, increasing the tax paid on rental income. Car TaxThe way that vehicle tax has changed, so that for the first year it will be based on CO2 emissions and after that will depend on the type of vehicle. The new regulations mean that all new cars will face a significant increase in their tax demands during the first year of registration and from their second year onwards a flat rate will apply. You can find...

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October 2018