Naylor Wintersgill Chartered Accountants

Industry News

National Living Wage Increases from April 2017
National Living Wage Increases from April 2017

From April 2017:

As part of the Autumn Statement, and following the recomendations of the independant Low Pay Commission, the goverment has announced that it will increase the National Living Wage (NLW) by 4.2% from £7.20 to £7.50 from April 2017.

This is estimated to mean a pay raise for over a million workers. In total, earnings for a full-time worker on the National Minimum Wage (NMW) will have increased by over £1,400 a year since the indroduction of the NLW in April 2016.  The Goverment's target is for the NLW to reach 60% of median earning by 2020 subject to sustained economic growth.

The Goverment has also announced that they accept all of their recommendations for the other NMW rates (which were last increased in October 2016) to apply from April 2017 to increase the rate for:

  • 21 to 24 year olds from £6.95 to £7.05 per hour
  • 18 to 20 year olds from £5.55 to £5.60 per hour
  • 16-17 year olds from £4.00 to £4.05 per hour
  • apprentices from £3.40 to £3.50 per hour

If you have any queries or would like to discuss anything further on this matter, please get in touch with our payroll team for advice tailored to your particular circumstances.

A Reminder of National Minimum Wage Increases (July 2016)
A Reminder of National Minimum Wage Increases (July 2016)

From 1st October 2016, the following National Minimum Wage increases will occur

National Minumum Wage Changes from 1st October 2016

                 ·         The rate for 21 to 24 year olds will increase from £6.70 to £6.95 per hour

                 ·         The rate for 18 to 20 year olds will increase from £5.30 to £5.55 per hour

                 ·         The rate for 16 to 17 year olds will increase from £3.87 to £4.00 per hour.

                                                            ·         The apprentice rate will increase from £3.30 to £3.40 per hour.

Predicted National Living Wage changes from 1 April 2017

The National Living Wage (NLW) was introduced by the government on 1st April 2016 for all working people aged 25 years old and over and the NLW is currently set at £7.20 per hour.

The government has asked the Low Pay Commission (LPC), who have been handed the responsibility for recommending annual increases, to suggest a figure for the National Living Wage going forward. The LPC will also continue to provide recommendations for the National Minimum Wage, as they have previously done so.

There is an expectation that the NLW will rise steadily with an aim set for it to surpass £9 per hour by April 2020. It is suspected that the NLW wage will rise from £7.20 to £7.60 per hour in April 2017, but the exact increase figure has yet to be confirmed.

Please look out for more updates from us as more information is released.  You can always few our previous blog posts on The National Living Wage here .

If you have any queries or would like to discuss anything further on this matter, please get in touch with our payroll team for advice tailored to your particular circumstances.

 

 

Companies House changes affecting you (June 2016)
Companies House changes affecting you (June 2016)

There are some big changes coming in the Company Secretarial world and we would like to make you aware of the following changes that will affect your company from 30th June 2016.

The Small Business, Enterprise and Employment Act received Royal Assent in March 2015 and as part of this legislation the following changes will come in to force on the 30th June 2016:

The annual return to Companies House will be replaced by a new confirmation statement.  

The confirmation statement is intended to serve the same purpose as the annual return, however, one of the main differences is that rather than providing a snapshot of your company data at a specific date, companies will now need to review the information held at Companies House and confirm that this is correct and fully up to date.  This review has to be carried out at least once a year. 

Once the new confirmation statement, dated after the 30th June 2016 has been filed, companies must then let Companies House know as and when changes to appointments etc. take place.

The filing deadline for the confirmation statement (previously the annual return) is changing from a 28-day grace period to 14 days after the 'made up date'. e.g. a confirmation statement made up to 30th September 2016 must be filed by 14 October 2016. 

When the confirmation statement is filed, companies will, for the first time, have to notify Companies House of the people with significant control. 

A person with significant control may be a director, shareholder or someone who is running the business in the background.  There are five categories of people who could be regarded as having significant control but, if there is no one with overall control, a company has to make a statement to that effect.

What will happen now?

If we take care of your company secretarial requirements you will receive, ahead of your filing deadline, a company profile which will show the information that we hold for your company.

You will be asked to confirm that this is correct and to identify the people with significant control. 

A new PSC (People with Significant Control) Register will now record these details and will automatically become part of the company’s statutory registers.

Please help us to help you by providing any changes to your company structure as soon as these take place.

We are here to help

We are always here to help and should you wish us to take care of the annual company secretarial needs of your company do not hesitate to contact us.

Remeber, you can always visit our blog and follow us on Twitter to keep up to date with all the latest industry news.

Goldman Sachs wants to do you a favour...(January 2016)
Goldman Sachs wants to do you a favour...(January 2016)

As many of you will know, we’ve long been involved with the Goldman Sachs 10K programme and deliver the finance module and workshops here in Yorkshire. We’ve just heard word that the application process for the first national cohort of Goldman Sachs 10,000 Small Businesses UK programme (10KSB UK) has just opened via the Saïd Business School.

The Goldman Sachs Programme is renowned as a comprehensive programme designed to provide high quality, practical education and business support to leaders of high-growth small businesses and social enterprises across the UK.

As they expand the programme nationally, they have asked us (as key players in the SME Ecosystem) to share this opportunity within our network of small businesses, entrepreneurs and social enterprises. The application site is now open and interested applicants should apply by 8th February to be considered for the spring 2016 cohort.

We think that the GS10k programme is a fantastic opportunity for great businesses and leaders to grow their networks and their knowledge and skills base, and wanted to let you all know about this fantastic opportunity to join the first National cohort.

The following eligibility criteria apply:

•The applicant must be the primary owner / co-owner of the business, or the most senior decision-maker if the business is not limited by shares

•The business must have been operating for at least three years and will generally have between five and 50 employees

•The business should have an annual turnover of at least £250,000

•Social enterprise applicants must be commercially operated businesses that achieve their social purpose through trading rather than grant funding

•The business must be scalable and capable of generating additional local employment

•Applicants should not have extensive recent management education

•Preference will be given to those businesses operating in or on behalf of disadvantaged communities or regeneration areas

If you have any questions, or would like more information, please contact us at hello@naylorwintersgill.co.uk or call Lee on 01274 733184 and we’ll point you in the right direction for application…

Car and fuel benefit changes - update (December 2015)
Car and fuel benefit changes - update (December 2015)

Employees and directors with company cars, and who also have some or all of their private fuel paid for by their employers, are subject to the fuel benefit charge - determined by multiplying a notional list price by the appropriate percentage for the car, based on its CO2 emissions.

The car fuel notional list price will increase from £22,100 to £22,200 with effect from 6 April 2016. For a company car emitting between 111 to 115g CO2 per km, the scale charge would be 20% of £22,200 and this would result in taxable fuel benefit of £4,440 and £1,776 income tax for a 40% taxpayer. At 11p per mile the employee would need to drive 16,145 private miles to make having private fuel paid for worthwhile.

Private use of company vans

Where employees are provided with a company van, the taxable benefit increases from £3,150 to £3,170 for 2016/17 and there will be an additional taxable benefit of £598 where private fuel is provided by their employer.

Note that this charge does not apply to all company van drivers, only those who use the van for private journeys.

Plan for Online Tax Accounts (December 2015)
Plan for Online Tax Accounts (December 2015)

In the Autumn Statement 2015 the Chancellor confirmed plans that will see most small businesses (and the self-employed) using an online tax account by the end of this decade.

What does this mean for me?

Most business, the self-employed and landlords will be required to keep track of their tax affairs digitally and to update HMRC at least every quarter via their digital tax account. The plans aim to reduce errors through record keeping and will allow you to see your tax position online and access your account using free apps and software – but it’s your job to keep the account up to date.

Employees and pensioners will not be affected unless they have another source of income which pays more than £10,000 per annum.

What inpact will this have?

It is hoped that the new digitisation plans will make it more simple to report and pay tax although, at first, it may prove difficult to see how an increase in reporting frequency will deliver reduced business administration costs. The digital requirements may be of particular concern to businesses not currently using accounting software and possibly only preparing accounts on an annual basis.

The Government is due to consult on the details and publish its plans to transform the tax system in 2016. It has already been announced that from 2019, when the digital accounts are up and running, that the Government will require capital gains tax to be paid within 30 days of completion of any disposal of residential property.

In his statement, the Chancellor also pledged an extra £450million into the department leading the transformation, Government Digital Service (GDS). This could have positive long term implications for how small business use government services. The funds allocated to the GDS will allow them to continue with the creation of common platforms, such as GOV.UK Pay, which will simplify hundreds of different payment systems that are currently in use. This should provide a simple payment gateway for all central government services, increasing and simplifying both interaction and communication.

George Osborne has also said that some of the savings made in the government’s own budget through efficiency will be re-invested with an extra £800million adding weight to the fight against tax evasion.

Advisory fuel rates have changed (December 2015)
Advisory fuel rates have changed (December 2015)

Changes to the advisory fuel rates from 1 December 2015

The advisory fuel rates have been changed with effect for all journeys undertaken on or after 1 December 2015.

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Engine size

Petrol - amount per mile

1400cc or less

11p (11p)

1401cc to 2000cc

13p (14p)

Over 2000cc

20p (21p)

 

Engine size

Diesel - amount per mile

1600cc or less

9p (9p)

1601cc to 2000cc

11p (11p)

Over 2000cc

13p (13p)

 

Engine size

LPG - amount per mile

1400cc or less

7p (7p)

1401cc to 2000cc

9p (9p)

Over 2000cc

13p (14p)

Autumn Statement 2015 - Key Points
Autumn Statement 2015 - Key Points

Effective immediately

These measures come into effect for loans provided, assets acquired or transactions performed on and after 25 November 2015:

•Relieving measure for charities connected to close companies. Where the trustees of the charity hold shares in the close company and the charity receives a loan from that close company, a tax charge of 25% of the loan is currently payable .That tax charge will not apply where the loan from the company is made for a charitable purpose

•Blocking of tax avoidance schemes involving intangible assets held through partnerships and LLPs which contain a company as a member (mixed partnerships). The law is changed to ensure the intangible asset is treated for tax purposes under the intangible asset rules that apply for companies, when the asset is held by a mixed partnership.

.Manipulation of disposal values of plant and machinery to achieve excess balancing allowances or reduced or no balancing charges under the capital allowances rules. The disposal value will be adjusted for tax purposes to reflect the payment (in whatever form) actually received for the asset. This applies for corporate tax and income tax.

•Where a company or individual takes on the obligations under a lease, in return for some consideration (paid in any form), that consideration will be taxable, even if the consideration is received by a connected person.

•Disguised remuneration schemes will be closed down with effect from 25 November 2015 by the use of retrospective legislation.

From April 2016

•No changes to the rates or thresholds for Working or Child Tax Credits, except the income rise disregard will reduce from £5,000 to £2,500.

•Apprentices levy will be 0.5% of employer's wage bill, but employer will get a £15,000 allowance to set against this. Only employers with wages bills of over £3 million will pay the levy.

•Benefit in kind charge for a diesel company car carries a 3% supplement. This was to be removed from 6 April 2016, but it will now stay in place until 2020/21. Small Business Rate Relief is extended for a year from 1 April 2016.

.Stamp Duty Land Tax (SDLT) on residential properties purchased to let or as second homes to carry a supplement of 3% on top of the normal rates for residential properties. This will not apply in Scotland.

•State retirement pension will be set at: o £119.30 p/w for existing pensioners; o £155.65 p/w for the new single tier pension for those who reach state pension age on and after 6 April 2016.

From April 2017

•Tax-free childcare savings scheme will only be available where parents earn below £100,000, previously the earnings cap was to be set at £150,000. Each parent will have to work for a minimum of 16 hours/week to qualify.

•SDLT will have to be paid within 14 days of completion of property purchase – not 30 days as it currently the case.

From 2019

•CGT due on the disposal of residences will be payable within 30 days of the completion disposal

The National Living Wage
The National Living Wage

Set to be introduced in April 2016 the National Living Wage (NLW) is a new measure to be put in place by the government for working people aged 25 years and over.

It is being billed as a new ‘premium’ on top of the existing National Minimum Wage (NMW) which will still apply for employees less than 25 years of age. Introduced in stages companies are set to be required to pay a minimum of £9 per hour for over 25’s by 2020.

The adult NMW rate is currently £6.70. From 1 April 2016 the premium will come into effect on top of the NMW, taking the National Living Wage to £7.20. The NMW will continue to apply for those aged 21 to 24, with the premium added on top for those aged 25 and over, taking the total hourly rate to the National Living Wage.

 

Current Hourly Rate

Hourly Rate from April 2016

National Minimum Wage : Apprentice

£3.30

£3.30

National Minimum Wage : Under 18

£3.87

£3.87

National Minimum Wage : 18 – 20

£5.30

£5.30

National Minimum Wage : 21 - 24

£6.70

£6.70

National Living Wage: 25 and over

n/a

£7.20


The government are looking to offset this increase by moving corporation tax to 18% - a 2% cut and extra help for small companies will come in the form of increasing the Employment Allowance by 50% to £3,000, which will reduce the Employers National Insurance Contributions payable.

 

The new tax-free Dividend Allowance
The new tax-free Dividend Allowance

From April 2016 the Dividend Tax Credit will be replaced by a new tax-free Dividend Allowance.

The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have. The allowance is available to anyone who has dividend income.

Headline rates of dividend tax are also changing.

You’ll pay tax on any dividends you receive over £5,000 at the following rates:

·         7.5% on dividend income within the basic rate band

·         32.5% on dividend income within the higher rate band

·         38.1% on dividend income within the additional rate band

This simpler system will mean that only those with significant dividend income will pay more tax.

If you’re an investor with modest income from shares, you’ll see either a tax cut or no change in the amount of tax you owe.

Dividends received by pension funds that are currently exempt from tax, and dividends received on shares held in an Individual Savings Account (ISA), will continue to be tax free.

From April 2016 you have to apply the new headline rates on the amount of dividends you actually receive, where the income is over £5,000 (excluding any dividend income paid within an ISA).

The Dividend Allowance will not reduce your total income for tax purposes. However, it will mean that you don’t have any tax to pay on the first £5,000 of dividend income you receive.

Dividends within your allowance will still count towards your basic or higher rate bands, and may therefore affect the rate of tax that you pay on dividends you receive in excess of the £5,000 allowance.

 

Examples

 The way the allowance will work in different situations is demonstrated in the examples below.

 Where appropriate to the calculations, the examples use the limits that will apply from April 2016:

  • Personal Allowance: £11,000
  • Basic Rate Limit: £32,000
  • Higher Rate Threshold: £43,000

Example 1

“I receive less than £5,000 per year in dividends”

From April 2016 you won’t have to pay tax on your dividend income as it is within your new Dividend Allowance.

Example 2

“I receive dividends of £600 from shares invested in an ISA”

As is the case now, no tax is due on dividend income within an ISA, whatever rate of tax you pay.

Example 3

“I have a non-dividend income of £6,500, and a dividend income of £12,000 from shares outside of an ISA”

With a Personal Allowance of £11,000, £4,500 of the dividends are under the threshold for tax. A further £5,000 comes within the Dividend Allowance, leaving tax to pay at Basic Rate (7.5%) on £2,500.

Example 4

“I have a non-dividend income of £20,000, and receive dividends of £6,000 outside of an ISA”

You won’t need to pay tax on the first £5,000 of dividends due to the Dividend Allowance, but will pay tax on £1,000 of dividends at 7.5%.

Example 5

“I have a non-dividend income of £18,000, and receive dividends of £22,000 outside of an ISA”

Of the £18,000 non-dividend income:

  • £11,000 is covered by the Personal Allowance
  • the remaining £7,000 to be taxed at Basic Rate

 Of the £22,,000 non-dividend income:

  • the Dividend Allowance covers the first £5,000
  • the remaining £17,000 of dividends to be taxed at the Basic Rate (7.5%)

Example 6

“I have a non-dividend income of £40,000, and receive dividends of £9,000 outside of an ISA”

 Of the £40,000 non-dividend income, £11,000 is covered by the Personal Allowance, leaving £29,000 to be taxed at basic rate.

 This leaves £3,000 of income that can be earned within the basic rate limit before the higher rate threshold is crossed. The Dividend Allowance covers this £3,000 first, leaving £2,000 of Allowance to use in the higher rate band. All of this £5,000 dividend income is therefore covered by the Allowance and is not subject to tax.

 The remaining £4,000 of dividends are all taxed at higher rate (32.5%).

 

Future Company Car Tax Rates (Sept 2015)
Future Company Car Tax Rates (Sept 2015)

 

Company Car Tax rates have traditionally been announced around two years in advance, to give certainty over costs to industry (and to software suppliers). Finance Bill 2012 therefore legislated the rates for 2014-15, but the government has also announced proposed changes for 2015-16 and 2016-17. In future years company car tax rates will be announced three years in advance.

The chart below shows the rates right through from the current year to April 2017. The following notes may help to explain some of the movements.

2015-16

From April 2015, the five year exemption for zero carbon and the lower rate for ultra low carbon emission cars will come to an end. Two new bands will be introduced for ultra-low emission vehicles (ULEVs). These will be introduced at 0-50 g/km (5%) and 51-75 g/km (9%).

The remaining appropriate percentages will increase by 2 percentage points for cars emitting more than 75 g/km to a maximum of 37%.

2016-17

The appropriate percentages will increase by 2 percentage points to a maximum of 37%.

New European standards which come into force in September 2015 will require diesel cars to have the same air quality emissions as petrol cars. The 3 percentage point diesel supplement will therefore be removed in April 2016, so that diesel cars will be subject to the same level of tax as petrol cars.

2017-18 and 2018-19

The appropriate percentage will increase by 2% for cars emitting more than 75g/km to a maximum of 37% in each of the years 2017-18 and 2018-19.

Company Car Tax
Tax year 2015-16 2016-17 2017-18 2018-19
CO2 emissions
g/km
Appropriate % of car list price taxed Appropriate % 
Petrol and Diesel
Appropriate % 
Petrol and Diesel
Appropriate % 
Petrol and Diesel
Petrol Diesel
0 - 50 5 8 7 9 11
51 - 75 9 12 11 13 15
76 - 94 13 16 15 17 19
95 - 99 14 17 16 19 21
100 - 104 15 18 17 21 23
105 – 109 16 19 18 23 25
110 – 114 17 20 19 25 27
115 – 119 18 21 20 27 29
120 – 124 19 22 21 29 31
125 – 129 20 23 22 31 33
130 – 134 21 24 23 33 35
135 – 139 22 25 24 35 37
140 – 144 23 26 25 37
145 – 149 24 27 26
150 – 154 25 28 27
155 – 159 26 29 28
160 – 164 27 30 29
165 – 169 28 31 30
170 – 174 29 32 31
175 – 179 30 33 32
180 – 184 31 34 33
185 – 189 32 35 34
190 – 194 33 36 35
195 – 199 34 37 36
200 – 204 35 37
205 – 209 36
210 – 214 37
215 and above

 

A reminder about the National Minimum Wage increases (Sept 2015)
A reminder about the National Minimum Wage increases (Sept 2015)

From 1 October 2015, the following National Minimum Wage increases will occur:

 *        the adult rate will increase by 20 pence to £6.70 per hour

 *       the rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour

 *       the rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour

 *       the apprentice rate will increase by 57 pence to £3.30 per hour

 *       the accommodation offset increases from the current £5.08 to £5.35

 

Advisory fuel rates have changed (Sept 2015)
Advisory fuel rates have changed (Sept 2015)

Changes to the advisory fuel rates from 1 September 2015

The advisory fuel rates have been changed with effect for all journeys undertaken on or after 1 September 2015.

Engine size

Petrol - amount per mile

1400cc or less

11p (12p)

1401cc to 2000cc

14p (14p)

Over 2000cc

21p (21p)

 

Engine size

Diesel - amount per mile

1600cc or less

9p (10p)

1601cc to 2000cc

11p (12p)

Over 2000cc

13p (14p)

 

Engine size

LPG - amount per mile

1400cc or less

7p (8p)

1401cc to 2000cc

9p (9p)

Over 2000cc

14p (14p)

Hello FRS102 - Changes in UK Accounting (July 2015)
Hello FRS102 - Changes in UK Accounting (July 2015)

A new accounting standard FRS102 is here to stay and will change the way we prepare certain parts of the accounts.

Why?

Companies are currently required to prepare accounts using UK Generally Accepted Accounting Principles (UK GAAP).  This has been replaced with a new set of accounting standards to bring the UK regime in line with International rules.

Companies who prepare their accounts using the International Financial Reporting Standards (IFRS) will not be affected.

All other companies will have to adopt the new rules, depending on their size and structure.

When?

The new rules are mandatory for accounting periods commencing on or after 1 January 2015.  In reality this means that year ends of 31 December 2015 are likely to be the first to experience the changes and we will use this as our example.

How?

The accounts for the year ended 31 December 2015 will be prepared fully under the new rules.  The comparative figures will also need to reflect the new rules.  This means that the Balance Sheet figures at 31 December 2014 and 2013 will be amended.  However, these accounts will not be resubmitted formally.

What?

The main areas impacted are:

  •          Properties – the valuation and disclosure
  •          Fixed assets – again valuation and disclosure
  •          Holiday Pay provision
  •          Long term loans (bank and other)
  •          Taxation and deferred tax
  •          Descriptions of balances
  •          Profit/loss and retained profits

It is quite possible that the accounts previously prepared will remain very similar to those in the past.  However for some companies who have more complicated accounts, the changes will need to be thought through in more detail.

All our partners and staff are currently being trained on the changes and they will be able to talk you through the specific impact on your accounts.  Please do not hesitate to ask a member of our team for more information.

Childcare Funding - what's new? (July 2015)
Childcare Funding - what's new? (July 2015)

Do you know about the changes happening in childcare funding? The Government was originally planning to launch the new Tax-free Childcare scheme in the autumn; however, the scheme will now be launched in 2017.

What are the changes?

Tax-free Childcare will see the Government subsidising 20% of a child’s childcare on costs of up to £10,000 per year, providing savings of up to £2,000 per child. Parents will pay into an account when they are using childcare and the government will add the additional 20%. At first glance, this new scheme can look very appealing but in reality, many parents are better off on Childcare Vouchers.

Furthermore, many parents will see their childcare costs decrease in 2016 as the Government will be introducing 30 hours free childcare for 3 and 4 year olds in households where both parents work. This will lead to many more parents being financially better off on Childcare Vouchers as opposed to on Tax-free Childcare.

Should you wish to discuss the best option to suit your personal circumstances, please get in touch. Alternatively, the government provide a website calculator to help you decide if you would be better off taking childcare vouchers or not -  www.gov.uk/childcare-vouchers-better-off-calculator

From an employer’s perspective, childcare funding schemes can be hugely beneficial – not only seen as an incentive for employees but also provides relief on employer’s National insurance contributions. If you’d like to find out more, please speak to Reji Garcha in our Tax Department.

R&D Tax Credits continue . . . . (July 2015)
R&D Tax Credits continue . . . .  (July 2015)

This is a reminder about a government initiative which allows businesses to claim Tax Credits on any activities they have undertaken to improve growth and develop the business. This is a fantastic way to inject some much needed cash into your business and the latest government statistics show that over 90% of eligible businesses have not yet claimed.

You potentially qualify for the business Tax Credits if you are a UK Limited Company and you do any ONE of the following:

             Design and produce new products.

             Regularly change the way you make products.

             Develop or improve manufacturing processes or services.

             Develop software, IT solutions or products in-house.

             Have invested in failed projects or developed products not launched.

             Employ any staff with a technical or scientific background.

             Develop or improve materials or devices

             Develop samples, prototypes or undertake testing.

As with anything of this nature it is all about getting the application correct and if you do, you can claim up to 32.6% of the total development costs. In monetary terms the average SME's claim is £46,000 per annum and you can claim back 2 financial years plus your current year. In recent months, Naylor Wintersgill has been very successful in this specialism.  We would be more than happy to help guide you through the process and make the claim on your behalf. Please contact us if you would like to know more.

Registration opens for married couples tax break (February 2015)
Registration opens for married couples tax break (February 2015)

Registration for the new Marriage Allowance for married couples and those in civil partnerships is now open (from the 20th February 2015).

The government has opened registration for the new Marriage Allowance, a tax break for married couples, helping them save up to £212 a year.

Applying online is straightforward. Couples can register their interest to receive the Allowance now at www.gov.uk/marriageallowance

From 6 April 2015, more than 4 million married couples and 15,000 civil partnerships will be eligible for the tax break.

The Allowance means a spouse or civil partner who doesn’t pay tax – therefore is not earning at all or is earning below the basic rate threshold (£10,600) - can transfer up to £1,060 of their personal tax-free allowance to a spouse or civil partner – as long as the recipient of the transfer doesn’t pay more than the basic rate of income tax.

If you have any queries, please contact our tax department via rajvinderg@naylorwintersgill.co.uk

 

Small Employers not ready for Auto Enrolment (February 2015)
Small Employers not ready for Auto Enrolment (February 2015)

 The majority of small and micro-employers have not set up a workplace pension scheme ahead of their auto-enrolment staging dates, according to research by the National Employment Savings Trust (NEST).

Around 45,000 small and micro companies will pass their staging dates between April and December 2015, while in 2016 and 2017 more than half a million will stage each year. However, the study by the state-backed pension provider found that 83% of small and micro employers still do not have a workplace scheme set up.

Less than one-fifth (18%) say they understand what the reforms will mean for their business in practical terms, despite 91% of small employers and 85% of micro employers claiming that they're aware of the reforms. The businesses surveyed were asked whether they are planning to seek advice ahead of their staging dates: 74% said they will get support from an intermediary of those, 59% said they will go to an accountant for advice, 70% of employers with 4 members of staff or less will talk to an accountant.

Tim Jones, chief executive of the NEST, said: "Until now, auto-enrolment has just not added up for accountants - the duties so far have only fallen on large employers that typically may not have turned to accountants for pension advice.  2015 is the year that all changes. Thousands of small and micro employers will enrol their workers in a pension scheme and our research shows that many will look to accountants for help. Our experience with employers so far tells us that the role of intermediaries is critical."

Are you a small or micro employer? Please contact our Payroll Manager, Kath Buck to talk about preparing for your staging date or register your interest for our next auto enrolment seminars planned for April 2015.

12 Strategies for keeping your tax liability to a legal minimum (January 2015)
12 Strategies for keeping your tax liability to a legal minimum (January 2015)

 12 strategies to keep your tax liability to a legal minimum

The run-up to the tax year end on 5 April 2015 is the perfect time to consider tax planning opportunities and to put in place strategies to minimise tax throughout 2015/16.

 Good planning and careful timing are critical if you want to maximise tax reliefs or minimise the tax bill on a transaction or investment, and to avoid falling foul of the system of penalties and interest levied by HM Revenue & Customs (HMRC). With some prior preparation, you could arrange your financial affairs to minimise the impact of tax on you, your family and our business.

 1       MAKE SURE YOUR TAX CODE IS CORRECT

Check your tax code each year (the numbers and letters on your payslip). Don’t assume that HMRC know what they are doing. Check the basics - are your name, address and National Insurance number right? The notice will also state your employer’s name; if you no longer work for that employer, something is wrong.

 Check the letter at the front of your tax code. For example, L is used for anyone getting the basic personal allowance; P is used for those aged between 65 and 74 getting the full personal allowance; Y for those 75 or over getting the full personal allowance; V is used for those aged between 65 and 74, eligible for the full personal allowance and the married couple’s allowance who just pay basic-rate tax; K means you get no tax-free pay or owe money to HMRC.

 The numbers on your tax code are worked out as follows. Firstly, your tax allowances, any income you’ve not paid tax on – part-time earnings or untaxed interest – and any taxable employment benefits are added up. This figure is then taken away from the tax allowance and divided by 10. This is added to the relevant letter and becomes your tax code. If you’re on the wrong code, you may be paying too much tax.

 

 2       TAKE ADVANTAGE OF THE NEW INDIVIDUAL SAVINGS ACCOUNT (NISA) ALLOWANCE

 Make sure that you fully use your tax-efficient NISA allowance. From 1 July 2014, the annual limit increased to £15,000 (with effect from 6 April 2015, this will increase to £15,240). This can all be located to a Cash NISA or a Stocks & Shares NISA, or alternatively split between both cash and stocks and shares.

 This means married couples, for example, could put up to £30,000 between them into NISAs this tax year (before 5 April), and a further £30,480 from 6 April.

 Interest received on cash savings or gains from NISA investments are tax-free. Higher-rate taxpayers

don’t have to pay any further tax on dividends from investments either, and you don’t have to declare NISAs on your tax return. Also, there is no capital gains tax to pay when you sell shares or units held in a NISA.

 

3       JUNIOR NISAS PROVIDE GOOD LONG-TERM SAVINGS

Consider using Junior NISAs (the replacement for Child Trust Funds) as a good long-term savings option for a child’s future and to avoid being taxed on gifts you make to them. In the tax year 2014/15, the Junior NISA allowance is £4,000, and this will increase to £4,080 in April 2015.

 

4       SAVE TAX WITH PENSION CONTRIBUTIONS

Take advantage of tax reliefs and (tax-deductible) employer contributions to build a fund for your retirement. Personal contributions to pension schemes attract tax relief at your highest rate, making them an ideal tax-efficient investment vehicle.

 For pension contributions to be applied against your 2014/15 income, you must pay on or before 5 April 2015. Tax relief is available on annual contributions limited to the greater of £3,600 (gross) or the amount of the UK relevant earnings, but also subject to the annual allowance. The basic annual allowance cap on pension savings is £40,000 for 2014/15.

 

5       TRANSFERRING ASSETS COULD OFFER TAX BENEFITS

If you are married and do not own assets in some form of joint ownership, it may be advantageous for tax purposes for transfers to be made to ensure joint ownership. Consider transferring savings and investments to your spouse if they pay a lower rate of tax than you do. Complex rules apply, but if appropriate to your particular situation, it could provide benefits for income tax, capital gains tax and even inheritance tax. Transfers should be outright and unconditional.

 

6       AGE-RELATED ALLOWANCE ELIGIBILITY

If you were born before 6 April 1948, check if you are eligible for an increased personal allowance. Not all income is taxed, which means you might pay a lower income tax rate. For 2014/15, the age- related personal allowance is £10,500 and £10,660 if you were born before 6 April 1938. As time passes, the additional age-related allowance will disappear as it is overtaken by increases in the standard personal allowance.

 

 7       IT’S GOOD TO GIVE

The Gift Aid scheme is for gifts of money to charities by individuals who pay UK tax. Charities can reclaim tax on any donations made by individuals, whether large or small, regular or one-off – provided the conditions for the tax relief are satisfied.

 Gift Aid donations are regarded as having basic-rate tax (20%) deducted by the donor. If you are over 65, making donations to a charity through Gift Aid could reduce your taxable income to below the threshold at which you start to lose out on age-related allowances. If you are in a higher tax bracket, you can claim back the difference between the basic and higher rate of income tax on any Gift Aid donations.

 

8       FULLY UTILISE YOUR CAPITAL GAINS TAX ALLOWANCE

Capital gains tax is a tax on the profit when you sell or ‘dispose of’ something, an ‘asset’ that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive.

 For individuals, capital gains in 2014/15 under £11,000 are tax free. Married couples who own assets jointly can claim a double allowance of £22,000. Capital gains tax is charged at 18% on your total taxable income and gains (up to £31,865) if you are a standard-rate taxpayer, and 28% if you pay tax at a higher rate (from £31,866).

 

 9       INHERITANCE TAX MATTERS

You need to check if you have a potential inheritance tax liability. Each individual has a current tax- free allowance of £325,000, known as the ‘nil-rate band’. Inheritance tax only applies to the value of your estate above this at a rate of 40% on death. However, transfers between married couples are exempt from inheritance tax, or the seven years prior to death, and if the nil-rate band is not used on the first death. This means that the value of your estate on the second death that will be exempt from inheritance tax doubles up to £650,000.

 Lifetime gifts are not normally counted as part of your estate for inheritance tax purposes if you live for a further seven years after making them. Lifetime transfers are exempt, potentially exempt, or chargeable lifetime transfers.

 

10     EFFECTIVE TRUSTS

Trusts can provide a way of reducing inheritance tax liabilities, not just for the donor but also for the recipient. The rules are complex, but significant tax savings could be achieved with careful planning and receiving professional advice. In particular, trusts can be an effective way of using important reliefs on businesses and agricultural properties.

 

11     WHERE THERE’S A WILL, THERE’S A WAY

If you die without a Will, the intestacy provisions will apply and may result in your estate being distributed in a way you would not have chosen. You should write a Will and keep it up to date to reflect changes in the family situation. In particular, Wills need to be reviewed and amended as necessary on marriage or on divorce. The precise position depends on whether English or Scottish law applies.

 

 12     REMOVING VALUE FROM AN ESTATE

Life assurance arrangements can be used as a means of removing value from an estate and also as a method of paying inheritance tax liabilities. A policy written under an appropriate trust can be arranged to cover an inheritance tax liability due on death. It is particularly useful in providing funds to meet an inheritance tax liability where the assets are not easily realised. 

Business owners may need to bring their business sale forward
Business owners may need to bring their business sale forward

According to a report issued by the National Audit Office in November 2014, Entrepreneurs’ Relief has cost the Treasury £2bn a year more than expected.

This then brings into sharp focus the implications and cost if you are considering selling your business in the near future. And consideration might need to be given to bringing this forward. Even if no changes are forthcoming it is always best to consider your options and take advice as many business sales take time and certain steps need to be taken in advance in order to maximise tax reliefs.

It will be disappointing and short sighted if this relief is abolished or diminished. In the current climate of clamping down on aggressive tax schemes, Entrepreneurs’ Relief is a breath of fresh air as the 10% rate has reduced the incentive for tax payers to seek to push the boundaries with complex tax avoidance plans. Increases to the rate may indeed lower tax revenue and increase tax avoidance activity once again.

Currently eligibility criteria:

Entrepreneurs' relief applies to a disposal of shares in a trading company provided that, during the period 12 months prior to the disposal:

·         the company is a trading company (or the holding company of a trading group);

·         the relevant individual holds at least 5% of the company's ordinary shares; and

·         the relevant individual is a director or employee of the company.

 We’re here to help – please talk to us about preparing your business for a sale.

Accounting on the cloud
Accounting on the cloud

We’re proud to announce another new development at Naylor Wintersgill . . . we’ve become an accredited partner with Xero - a refreshing new take on accounting software that will simplify and streamline your accounts. It has been created specifically for small businesses and start-ups, suiting your requirements so you can access it anywhere, anytime and from any device with an internet connection.

Xero allows you to monitor financial performance in real-time so you always know the state of your cashflow. It also lets you share information online and collaborate with your trusted accountant.

Why try Xero?

1. Real-time view of your cashflow.

Xero’s dashboard gives you a summary of all yo