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Budget 2021 - Employing People

3/3/2021

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The employment allowance remains at £4,000 meaning small businesses only pay Employers NI after this point.  It is worth noting that the threshold at which Employers NI is due is lower than the employees NI threshold of £9,568 at £8,840.

​See what else by reading on below...
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Budget 2021 - VAT Threshold

3/3/2021

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The VAT threshold will continue at £85,000 and the lower rate on hospitality will continue at 5% to 30 September and then be subject to an interim rate of 12.5% until 31 March 2022. 

​Care will be needed on using software for VAT returns with Vat quarters that do not coincide with these dates
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Budget 2021 - Business Tax

3/3/2021

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​
Here we explain in bullet points how the 2021 Budget impacts upon  Business Tax .

​With all of the important points to take note of...

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Budget 2021 - Personal Allowances & National Insurance

3/3/2021

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The point at which people will pay income increases slightly at £12,570 for 2021/22 and remains frozen until 2026. 

​Spouses and civil partners may transfer £1,257 of their personal allowance to each other.


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31 January Tax Bills

11/30/2020

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At the start of the pandemic the Chancellor announced that the July 2020 payment towards the 31 January tax bill could be deferred until 31 January 2021.  For many people this leaves a rather large balancing payment just after a lockdown and Christmas.

Find out more below...

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Self Employment Grant 3

11/30/2020

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Version 3 of the Self-Employment Income Support Scheme (SEISS) launched 30 November and is paying out upto 80% of annual profits provided you meet certain criteria which are similar to the first 2 tranches.

​See what this means below...
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Christmas Party and Trivial Benefits – The Season to be Merry?

11/30/2020

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Normally I have clients looking forward to using their Christmas party allowance (not sole traders or partners) however this year might be a bit different but I’ve come up with a plan to help!

Why not save the allowance of £150 per person including VAT and 1 guest for when restaurants reopen and use it before the end of the tax year?  Instead have a think about trivial benefits for you and your employees?

A number of restaurants and take aways have become pretty clued up at home delivery service or indeed delivering restaurant meals for you to reheat.  Why not use a £50 trivial benefit to send something like this to an employee (or indeed yourself if you are an employee) – remember maximum 6 of these benefits per year and it must never exceed £50.  A well known restaurant chain is doing a menu where you can get food for 2 (sometimes with house wine) by mail order costing less than £50 including delivery!

If that doesn’t work for you or your employees a gift upto £50 for Christmas is perfectly allowable.  Don’t go over the allowance!  You can’t get the VAT back on the gift.
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Working from Home Help

6/1/2020

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HMRC has relaxed rules that usually restrict reimbursement for spending on office equipment for home workers for the rest of 2020/21 which will help avoid a nasty tax bill. ​

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Motorcycles

6/1/2020

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This is a subject I’ve not really written about but it occurred to me that the rules aren’t a strict as for cars powered by traditional fuels.  When we’re being asked to travel alone, it is actually an option worth considering. Here's why...

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Cycle to Work Scheme

6/1/2020

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Cycling to work isn't such new a concept, but of late, and with workplaces adapting to new ways of working, it has become a popular choice for many of us. So how might this relate to accounting and how might it affect you?

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Electric Cars

6/1/2020

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This is where it gets more interesting, for Company Director owners of businesses, I have been advising that the taxable benefit for a car is becoming prohibitive in many cases (and fuel is a definite no), however the latest draft legislation suggests the following benefit for electric only cars:



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Budget 2020 - What's in it?

3/11/2020

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Everything you need to know about the Spring Budget 2020

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Christmas Party and Trivial Benefits – Companies and Employees Only

12/16/2019

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As it’s that time of year don’t forget you can claim £150 for a company director and guest for your Christmas party (or parties) provided the total does not exceed £150 – exceeding it invalidates the relief.

A Christmas gift not exceeding £50 is also allowable – again exceed this amount and the relief is invalidated.  During the year a maximum of 6 such gifts are allowable.
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Going Green

12/16/2019

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Whilst we’re not clear what the next budget has in store, I’m pretty sure that tax incentives in some shape or form will be around for some time to come for green vehicles.  With electric (not hybrid) cars becoming more and more advanced and new models due in the new year, the following allowances might be useful:
Until 1 April (5 April 2021 for income tax) a low or zero emission car can qualify for a 100% first year allowance (FYA) if its CO2 emissions do not exceed 50g/km and the car is purchased new and unused.  A similar 100% FYA applies for zero emission vans, where the vehicle is purchased new and unused before 1 April 2021, or 5 April 2021 for income tax.  However, as all commercial vehicles qualify for 100% relief under the AIA, this special FYA for zero emission goods vehicles is not needed by the majority of businesses.
This is where it gets more interesting, for Company Director owners of businesses, I have been advising that the taxable benefit for a car is becoming prohibitive in many cases (and fuel is a definite no), however draft legislation (bearing in mind the forthcoming budget) suggest the following benefit for electric only cars:

  • The 2019/20 taxable benefit for a zero emissions car is 16%
  • From April 2020 cars with an emissions rating of 0 will reduce to 0% (draft legislation)

Charging points also qualify for Capital Allowances.

The planning point here is that your business can buy outright an electric car by April 2021, claim 100% first year allowance and the driver does not have a taxable benefit from April 2020.  Let’s see what the budget brings but it’s definitely worth considering going green!


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Letting Out Your Home

8/1/2019

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When you move house it’s sometimes not possible to sell your existing home in the timescales and some clients have elected to let out the property.  

In recent years there have been changes to the way in which mortgage interest is relieved in the calculation of let property profits and from 6thApril 2020 there will be changes to the Capital Gains Tax regime.

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IR35 New Rules For Some Contractors

8/1/2019

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There are some changes afoot in the contractor market.  

​Those of you who have heard the term IR35 will know it’s legislation dating back to the early 2000’s designed to prevent people on generally long term contracts from being ‘employed’ through their own companies and saving significant amounts of National Insurance and sometimes tax.  


The decision on whether to apply IR35 and pay the extra tax currently lies with the contractor.

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Making Tax Digital Update 2019

8/1/2019

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​For businesses trading above the VAT threshold, the ability to log onto HMRC and manually complete and submit a VAT return is progressively being removed.  

Believe it or not mid July HMRC were saying that only 25% of businesses that need to swap over have done to date!

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MTD – Preparing Your Business

3/27/2019

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For many businesses the ability to log onto HMRC and manually complete and submit a VAT return is being removed.  The following changes are taking place:


  • HMRC are changing servers and the functionality to submit VAT returns the old fashioned way will not be available to many businesses
  • Businesses and agents will need new gateway credentials to use the new server
  • You will be required to keep digital records of your VAT returns for 6 years
  • The only way to submit a Vat return for periods beginning on or after 1 April 2019will be to use compliant software and submit from that software  - if your next VAT return is April 19 then it will be fine to do it the old fashioned away and your July return will be the first one due under the new regime so there is a little time yet
Clients preparing their own VAT returns:

  1. You will need to check with your software supplier that they are MTD compliant – most of the major names are working on this but people using older Sage desktop versions should check for upgrades that are MTD compliant
  2. You may need to activate your software
  3. You will need to check your HMRC log in and ensure it is MTD ready
 
For clients who use book keepers and myself, we are in the process of setting up agent services accounts and securing additional software as we’re ready in good time.
 
So in reality a business filing a quarterly return from April to June 2019 is likely to be first affected by the change with the filing date of 7 August 2019 being unchanged.
 
HMRC have issued guidance on this link.

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Useful Reliefs – Tax return or Not?

3/27/2019

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As we approach the end of the tax year, It’s worth reminding you of some useful reliefs to enable you to consider if you owe any tax or indeed need to complete a tax return. 
 ​

  • Property Allowance – £1,000
  • Trading Allowance - £1,000
  • Rent a room relief - £7,500
 
Property and Trading Allowance - Where the £1,000 allowances cover allof the income (no expenses are ever allowed) then you don’t need to declare it.  In the case of these being your only other source of income it means you don’t need to do a tax return anymore.
 
So for example, you’re a teacher and you do some tuition earning £15 a week then previously you should have completed a tax return and provided you don’t have any income other that your PAYE salary then you probably don’t need to do a tax return.  There is quite a bit more to this particularly where people have a main sole trade and a ‘hobby business’ and the detail can be found on this link.
  
The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.  You can let out as much of your home as you want. If income falls below this limit (as with the above reliefs, you can’t deduct costs), then the relief is automatic and provided there is no other reason to complete a tax return, you don’t need to do one.
Follow this link for more information. 

As a reminder if you need to complete a tax return you must register by 5thOctober to be sure to avoid a penalty.  It’s important to note that if you do need to complete a tax return and fail to do one, HMRC ‘not sending you one’ is not considered a reasonable excuse if you are subject to a compliance check.
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Personal Allowances & National Insurance - What's Changed?

3/27/2019

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The following personal allowances will take place with effect from 6thApril 2019:
 
  • Personal Allowance £12,500
  • Point at which you pay higher rate tax £50,000
  • Child Benefit starts to reduce from £50,000
  • Point at which you start to lose your Personal Allowance remains at £100,000
  • Additional rate tax commences at £150,000
  • The point at which Company Directors and Sole Traders pay National insurance rises to £8,632
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Employing People - What You Need To Know

3/27/2019

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There might not have been a budget in March, but lots is changing on the employment front.
 
National Minimum (NMW) and Living Wages will increase from 1 April 2019.  The changes are as follows:
Age Group

National Living Wage (25+)

NMW (21-24)

NMW (18-20)

NMW (16-17)
April 2018

£7.83 p.h.​

​£7.38 p.h.

​£5.90 p.h.

​£4.20 p.h.
April 2019
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​£8.21 p.h.

​£7.70 p.h.

​£6.15 p.h.

​£4.35 p.h.
It’s important to note that the change is 1 April and not6thApril so wages and salaries change before the end of the tax year.  HMRC continue to remain responsible for policing this and with the payroll data that is now submitted its pretty easy to tell who’s not complying!
 
Following the increases, its also really important that you also check to see if an employee needs to be taken into a pension scheme as the £10,000 trigger remains unchanged which means more people are likely to qualify.  The Pensions Regulator has a useful toolkit here:
 
https://www.thepensionsregulator.gov.uk/en/employers
 
Pension contributions will also rise and this link is particularly helpful.

For more detailed advice, why not contact me here?
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Budget 2018 – “A Defining Moment”?

10/30/2018

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This week the Chancellor delivered his second budget this year – the autumn one is intended to include the tax but as we know Brexit could change it all.  

It’s usual for some budget policy decisions to be ‘leaked’ before the budget but the press were running some pretty wildly varying theories over the weekend.  

​Let’s see what happened in this "defining moment":
  • Increasing the planned the point at which people pay tax to £12,500 (National Insurance has lower thresholds)
  • Increasing Annual Investment Allowance to £1m for 2 years
  • Freezing the VAT registration threshold for a further 2 years at £85,000
  • Increasing living and minimum wages
  • Confirming the planned reduction in Corporation Tax to 17% in 2020
  • Confirming major changes to the IR35 regime

​The papers which support the budget often contain far more than what is actually said on the day and it is clear that there will be further consultations on VAT and the implementation of the IR35 changes.
 
I’ve also produced an audio recording of my commentary on the budget!

 
Don't forget, this newsletter is designed to draw attention to specific topical issues and is in no way intended to provide advice tailored to your business - advice must always be sought before acting on any item featured.
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​Personal Allowances & National Insurance

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The point at which people will pay income tax rises to £12,500 for 2019/20 which is some £650 higher than the current year.  From April 2019, spouses and civil partners may transfer £1,250 of their personal allowance to each other.  

​The point at which people pay higher rate tax has risen and will be £50,000 for 2019/20 which is by far the biggest personal tax change. 

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The new £50,000 does create somewhat of a cliff edge, as at £50,000 earnings you will:
  • Pay higher rate tax
  • Start to lose your child benefit
  • Lose some savings allowance
 
The thresholds at which people pay National Insurance have not risen as significantly so employees and sole traders can still expect to pay National Insurance even if there is no tax to pay. The threshold will be £8,632.
 
Class 2 National Insurance (at £3 a week) will continue to be collected as part of the Self Assessment process and now will continue as the Class 3 alternative would have been costly to low earners.
 
Clients working for large organisations through ‘personal companies’ could see a major change in their taxation from April 2020 as HMRC seek to tax them as being employed rather than as a freelancer.  These rules were piloted within the public sector this tax year and will be rolled out to larger organisations.

Selling Your Let Property

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A further change to Capital Gains Tax will be introduced from 2020 whereby you will potentially lose lettings relief on a house you previously occupied and the ‘final 18 month’ rule reduces to 9 months, so people who let their houses out after occupying them and make a significant gain are likely to pay more tax.
 
​

​VAT Threshold

The VAT threshold will continue at £85,000 – it is widely anticipated that following the UK’s departure from the EU, a taper system may be introduced for lower turnover businesses to start paying some VAT.

Employing People

PicturePhoto by Alex Kotliarskyi on Unsplash
National Minimum and Living Wages will increase from April 2019.  


​The changes are as follows:

  • Increase the living wage from £7.83 to £8.21 per hour
  • increasing the rate for 21 to 24 year olds by 4.3% from £7.38 to £7.70 per hour 
  • increasing the rate for 18 to 20 year olds by 4.2% from £5.90 to £6.15 per hour 
  • increasing the rate for 16 to 17 year olds by 3.6% from £4.20 to £4.35 per hour
  • increasing the rate for apprentices by 5.4% from £3.70 to £3.90 per hour
 
It is important you review all employees on the payroll to ensure you are compliant.  With ‘RTI’ payroll reporting in place it would be very easy for HMRC to spot non-compliant employers and indeed a number of businesses have already been fined, named and shamed.
 
There were changes to Employment Allowance but these are unlikely to affect most clients. It is vital if you are a single director company that you do not claim this (even if HMRC basic tools or your software allows it)as HMRC are now carrying out compliance checks in this area and are set to collect underpaid National insurance.  ​

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Bootcamp Time for Businesses Under 3 Years Old

10/3/2018

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I’ve been doing some work with a programme called ADVenture in Bradford which is designed to help businesses under 3 years old with:
  • Training
  • Funding
  • Loans
I’m running a finance course in November but in the meantime if you’re looking to grow, the following link might be useful!
https://www.bradford.ac.uk/management/working-with-business/support-for-business/ad-venture/
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Making Tax Digital – 6 Months to Go!

10/3/2018

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Believe it or not the ICAEW’s latest statistics show that 82% of businesses are still logging onto the HMRC gateway to complete their VAT returns with the remainder filing directly from software.  

More worryingly around half of the businesses surveyed by the ICAEW had no idea this was changing.

From 1 April 2019 businesses caught by the rules will be required to:
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  • Maintain their accounting records digitally in a software product or spreadsheet, and
  • Submit their VAT returns to HMRC using functional compatible software – i.e. not the gateway

The burning question therefore is, who and what does this apply to?

  • Only VAT registered businesses;
  • With turnover of more than £85,000 (so if you voluntarily registered this may not apply but you can elect to join in the scheme);
  • Your first VAT return period starting on or after 1 April 2019.
 
Once your turnover in the preceding 4 quarters exceeds the £85,000 threshold then you need to join the scheme and if your turnover falls below the limit you don’t exit the scheme.  HMRC have prepared a list of software what is compatible with the new regulations:
https://www.gov.uk/government/publications/software-suppliers-supporting-making-tax-digital-for-vat/software-suppliers-supporting-making-tax-digital-for-vat
 
Income tax and Corporation tax will follow in a year or two’s time.
 
I’ve prepared a short video to help you prepare... See Below.

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Class 2 National Insurance – Self Employed

10/3/2018

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​The current weekly for 2018/19 is £2.95 and is based on whether profits are at least equal to the small profits threshold of £6,205 and the number of weeks of self-employment in the year.  This is paid alongside your tax bill on 31 January.  

Voluntary contributions may also be paid if profits are below the threshold.  The original plan was to abolish Class 2 National Insurance from April 2019 and potentially merge them with Class 4 which runs at 9% of profits.  Class 4 does kick in at the higher level of £8,424.

There has however been a further announcement made (September 2018) by the Exchequer secretary to the Treasury that the government will not proceed with the Class 2 changes following a review of evidence concerning the impact on self-employed individuals with low profits.  In short, the weekly contributions will continue to be collected as part of your tax return.
 
The fear was that people who are below the threshold who still want to pay the £2.95 would have had to pay significantly more to access Class 3 National Insurance at £14.65 per week.

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    Nigel Gorski

    Say it as it is and you'll never be misunderstood. Here in the Blog you'll see news posts on many topics of interest to your and your business...

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© Nigel Gorski Consulting 2016, Nigel Gorski BA ACA (Sole Practitioner), 23 Hollinwood View, Bingley, West Yorkshire, BD16 2EF
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