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Budget 2018 – It’s Personal!

Today’s Budget brought good news for UK taxpayers.  We’re bringing you our Budget 2018 – It’s Personal!

If you’re a UK business owner too, have a read of our blog:  Budget 2018 – The Business Bits

We’re just bringing the best bits here, otherwise you’ll slope off to Facebook or Insta!

Personal Allowance Increase brought forward

The personal tax free allowance will increase from £11,850 to £12,500 in April 2019. This is a big jump, and has been brought forward from 2020, so great news!

Quick example:

Everyone will be able to earn £1,042 per month before paying any tax. If you’re a company director, this is the amount to pay yourself from April 2019. If you’re a sole director just pay up to the NIC threshold (TBC).

Higher Rate Tax Increase

This has also been increased from £46,350 to £50,000 from April 2019, an increase of £3,650.

Quick example 1:

The extra £3,650 at basic rate tax means a tax saving of £730 for personal tax. If you’re receiving dividends it’s a  tax saving of £912.

Quick example 2:

If you’re a director taking salary and dividends,  you’d pay £2,850 in tax if you take up to £50k, compared with £3,762 now.

National Living Wage and Minimum Wage Increase

Make sure you’re receiving the right amounts from your employer:

National Living Wage increases from £7.83 to £8.21 from April 2019 for over 25s

National Minumum Wage increases from £7.34 to £7.70 per hour for 21s to 24s

Apprentice Rate increases from £3.70 to £3.90

Stamp Duty Cut

This is being cut for shared ownership of homes worth up to £500k. Great news if you’re looking to buy. This is also being backdated to November 2017.

Summary

There will be more devil in the detail, when it comes out, but in all a good budget with extra tax free cash in our pockets. As always, if you’d like to discuss more, please get in touch.

Thank you for reading!

 

Sharon

Professional Services Business of the Year

Kinder Pocock are an approachable cloud-savvy firm of accountants based in Herefordshire but supporting businesses on the move.

We specialise in Security, Design and Indie Hospitality businesses.

@KinderPocock

01432 273400

Contact Us to see how we can help


New Tax Year | What Does It Mean for You Personally

personal taxWith the new tax year approaching, and following the Spring Budget, here is our guidance on what this means for your personal tax.

 

You may wish to read our blog on what the new tax year means for your business here.

We also have a blog on our 5.5 Top Tax Tips to action before the end of the 2018 tax year.

Download our free App for more detailed info on tax rates, thresholds.

 

 1.  The Personal allowance increases from £11,500 to £11,850.

This means you can earn £11,850 before paying any personal tax.

If you’re a director you could now pay yourself up to £11,850 or £987.50 per month.

Top Tip: You will lose your personal allowance if your income is over £100,000

2.  The basic rate tax band will be £34,500 (increase from £33,500)

£1,000 extra income at 20%

Basic rate dividend tax is 7.5%

3.  40% Higher rate tax starts at £46,350.  45% Additional Higher Rate starts at £150,000

Higher rate dividend tax is 32.5%.  Additional higher rate dividend tax is 38.10%

Top Tip: Speak to our independent financial advisor Kevin Morris to see how you can reduce your higher rate tax

4.  National Insurance threshold increases to £8,424 from £8,164.

Directors who do not wish to pay NIC, but still remain eligible for statutory entitlements and benefits should pay themselves £8,424 per year, or £702 per month.

5.  The Savings Income rate remains at £1,000.

UK basic and higher rate taxpayers can receive interest income up to £1,000 per year without paying income tax.

6.  The Dividend allowance reduces from £5,000 to £2,000

This means additional income tax of £225 per year (£3,000 x dividend tax of 7.5%)

Basic rate dividend tax is 7.5% (for dividends above the tax free allowance, and up to the higher rate threshold of £46,500)

Higher rate dividend tax is 32.5%

Additional higher rate dividend tax is 38.10%

Top Tip: Make sure you use your 2017/18 dividend allowance of £5,000!  #useitorloseit

7.  Annual Pension Contribution limit £40,000

This remains unchanged – consider whether you should make personal or employer pension contributions (get in touch to chat through your options)

8.  Married Couple’s Allowance up to £1,185 can be transferred to your  Spouse

As long as both of you are basic rate taxpayers, and one of you has spare Personal Allowance

9.  Stamp Duty Tax Relief for First Time Buyers up to £500,000

For first time buyers purchasing residential property up to £500k, no stamp duty land tax will be charged.  As long as the property will be their only or main residence.

10.  Alcohol Prices Freeze but Tobacco tax rises at inflation plus 2%

However duty will rise with inflation for high-strength, low-cost drinks like white cider.

 

I hope you found the above facts useful, as always do get in touch to discuss any of the points mentioned.  Please keep an eye on our blog page for more useful posts!

Thank you for reading!

 

Sharon

 

Awards_Practice-Winner-Client-Service-Firm 

 

Kinder Pocock are an approachable cloud-savvy firm of accountants based in Herefordshire but supporting businesses on the move.

We specialise in Security, Technology, Coaches and Speakers, Design and Indie Retailers.

@KinderPocock

01432 273400

Contact Us to see how we can help

 


5.5 Top Tax Tips to Pay Less Tax

top tax tipsIt’s nearly the end of the tax year, but with our “5.5 top tax tips to pay less tax” you still have time to make a difference to your tax bill!

We have also created blogs on What the New Tax Year Means for you Personally, and What The New Tax Year Means for your Business.

As always our App has all of the latest tax rates and allowances, as well as lots of handy calculators.

 

We would always advise speaking to us directly about any tax planning you are considering, but the following are fairly straightforward top tax tips to help you to look at your personal tax affairs with a view to making sure that you are making the most of tax allowances and reliefs for the current tax year, which ends on 5 April 2018.

 

1.  Use up your Tax Free Dividend Allowance

Every UK taxpayer has a tax free dividend allowance of £5,000 for the year to 5 April 2018.  This means that dividends received up to this amount won’t be taxed.  This is in addition to your personal tax allowance.

From 6 April 2018 this tax free dividend allowance drops to £2,000.

Action: If you are a shareholder in your own company and the company has profits available, make sure the company has paid you dividends up to £5,000 this year.

Considerations:  Are there other shareholders in your company affected?  Is your spouse or partner using up their tax free dividend allowance?  Speak to us for an estimate on how much you can take out of your company in dividends, and how this will affect your personal tax.

2.  Use up your ISA Limits

An ISA is an Individual Savings Account that is exempt from income tax.  For the year to 5 April 2018 you can save up to £20,000 per ISA (Junior ISAs savings limit is £4,260, for 16 to 18 year olds)

Action: Move savings into an ISA before 5 April.

Considerations: Are you using your children’s Junior ISA limits?

3.  Transfer Unused Married Couple’s Allowance

If you or your spouse or civil partner are not using your Married Couple’s Allowance (MCA) you can apply to transfer some of the unused allowance up to £1,150 to the other spouse or civil partner.  This will reduce their tax by £230.

The personal allowance for the year to 5 April 2018 is £11,500, so if any of this is spare it may be worth considering transferring it.

Action: Check HMRC’s Marriage Allowance Calculator to see if you and your partner would save any tax by transferring the allowance.

Considerations: If one of you earns over £45,000 (£43,000 if you’re in Scotland) you are unable to transfer unused MCA.

4.   Make an HMRC Approved Investment

By investing in certain HMRC approved investment schemes you can reduce your tax by 30% or 50% of the amount invested.  For example if you invested £10,000 before 5 April 2018 you could reduce your tax bill for the same tax year by £3,000 or £5,000, depending on the type of scheme invested in.

Action: Get in touch with us or Kevin Morris our Independent Financial Advisor to discuss your suitability and requirements.

Considerations: The investment ties up your cash for 3 to 5 years, so make sure you wouldn’t need it before the en of the scheme.

 

5.  Make a Pension Contribution

If you’re a higher rate tax payer with a personal pension, any contributions you make in the tax year to 5 April 2018 will increase your basic rate tax band.  This means that contributions will push up your higher rate threshold.

For example, if you’re a higher rate tax payer with an income of £50,000, £5,000 of this will be taxed at higher rate.  However, if you make pension contributions of £5,000 this will push up your higher rate tax threshold from £45,000 to £50,000, saving you £1,000 in higher rate tax!

Action: Make a lump sum pension contribution before 5 April

Considerations: Speak to your pension provider to see whether you have spare annual pension allowance (you can currently only contribute up to £40,000 per year).

So those are our 5 top tips – do get in touch if you’d like to discuss any of the suggestions further.

 

But we promised you 5.5 tips though….. so here’s something to think about for next year:

Are you a Landlord and a Higher Rate Tax Payer?

Up until 5 April 2017, all landlords could deduct mortgage interest from their rental income, along with other allowable costs (repairs, agents’ fees etc).

From 6 April 2017 HMRC began phasing out mortgage interest tax relief for higher rate tax payers.  This means that by 6 April 2020 higher rate tax payers won’t be able to use mortgage interest to reduce their tax bill.

HMRC are phasing this in by reducing mortgage interest during the few next years as follows:

2017/18: 25%

2018/19: 50%

2019/20: 75%

2020/21:  100%

Action: Review your personal income to see if this will affect you.  Speak to us if you need to see how your tax and profits could change.

Considerations: Could you share the property with a spouse?  If you have more than 3 properties could you put them into a limited company.

We understand there is A LOT to think about here.  Please do contact us if you’d like a chat or more info.

Thank you for reading!

 

Sharon

 

**Please note the above content is for guidance only, and should not be taken as specific tax advice.  Always get specific tax advice relating to your personal tax situation.

 

 

 

Awards_Practice-Winner-Client-Service-FirmKinder Pocock are an approachable cloud-savvy firm of accountants based in Herefordshire but supporting businesses on the move.

We specialise in Security, Technology, Coaches and Speakers, Design and Indie Retailers.

@KinderPocock

01432 273400

Contact Us to see how we can help 🙂

 

 

 


Tax Investigations Service from Kinder Pocock for 2018


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Tax investigations are expensive, intrusive and stressful. The cost of an enquiry can seriously impact your financial security.

Even if HMRC agree that your records are 100% accurate and there is no additional tax to pay, you will still need to pay the professional fees associated with a robust defence – potentially up to £10,000.

 

We are pleased to offer our Kinder Pocock Tax Investigations Service, which is designed to provide clients with protection against the costs of an enquiry.  Our Service renews on 1 April each year.

Our tax investigations service offers businesses and individuals protection to ensure that in the event of an HMRC enquiry all your professional fees are provided for.  The cost of protecting against such financial losses is a fraction of the likely costs incurred during an enquiry.  When you consider that a typical HMRC enquiry takes over18 months to resolve, and can incur fees in the region of £5,000 or more, subscribing to the package is simply common sense.Our tax investigations package offers:

  • Full representation to HMRC on your behalf including handling all correspondence and interaction, including attending any 1-1 meetings
  • Comfort and peace of mind that we will fiercely defend any enquiry into you or your business.
  • Most importantly your professional fees will be paid.

As we feel it is important for all clients to have this protection in place, we are providing this protection for an affordable annual fee starting at £80 inc VAT for personal tax clients. You can sign up here for this service.

For further information please contact us by calling 01432 273400 or email sharon@kinderpocock.co.uk.

HMRC’s number one objective is to maximise revenue, and it is doing just that, bringing in an extra £10.3 billion a year, compared to just 5 years ago.   

How is HMRC doing this? It is using a clever computer analysis system called Connect to identify anomalies between such things as bank interest, property transactions and lifestyle indicators to decide which people to investigate.

It’s not unusual for an indepth tax enquiry to last well over a year, and run up fees of thousands of pounds.  Find out more here.

 

Could this be you?

HMRC opened an enquiry into one aspect of a business partnership’s tax return, it only lasted 6 months however, it still cost £10,000 in fees, despite the return being 100% accurate.  HMRC enquired into a private client’s residency status that lasted almost 2 years.  Even though the enquiry was closed with no adjustments, professional fees still amounted to £40,000.

Without tax investigations protection, these clients would have settled sooner and paid a lot more tax.


You can sign up for our Tax Investigation Service here, and find out more information here.

For further information please contact us by calling 01432 273400 or email sharon@kinderpocock.co.uk


HMRC’s Making Tax Digital Delayed and Scaled Down

The news we’ve all been waiting for!  Following the withdrawal of Making Tax Digital (MTD) from the 2017 Finance Bill, due to the June 2017 election, everyone has wondered whether it will be re-instated.

The word on the tax street was that it would continue in April 2018 as planned, as the trial was already running.

However HMRC announced this week that it is in fact being delayed, and significant changes being made.  So most small businesses can breath a sigh of relief.

The original plans were set out in our previous post, and were due to come in for all businesses above the VAT threshold (currently £85,000) in April 2018.

What’s Happening Now and How Does it Affect Me?

  • Only businesses with a turnover above the VAT threshold will have to keep digital records and only for VAT purposes. They will only need to do so from 2019.
  • Businesses will not be asked to keep digital records or update HMRC quarterly for other taxes until at least 2020, instead of 2018 as originally proposed.
  • Small businesses will be able to file digitally on a voluntary basis for other taxes.

This is so much more sensible, as the original plans would have been a huge burden to some small businesses.

However, it’s certainly not a secret that we advocate cloud accounting, and automating as much as possible.  We ourselves run our business 100% online, and help other businesses to do the same.   We see how the cloud and automation can vastly improve efficiency, profits and cash for small businesses, and will help you achieve this wherever we can.

We are always investigating new innovations, with a focus on time and financial efficiencies.  We do this by questioning whether a particular process can be improved by discussing solutions on a daily basis with our internal team, clients and software developers.  

Gary Turner is Xero UK’s MD, and within hours of HMRC’s announcement put this video up online.  It makes everything clear.

 

If you’d like to discuss how this affects you, please get in touch.

Thank you for reading 🙂

Sharon

sharon@kinderpocock.co.uk