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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


How much will Making Tax Digital cost me?

You may have heard about Making Tax Digital (MTD for short) from us, from a colleague, on the news, or from HMRC (unlikely).  But you may be wondering what it means to you, and more importantly, how much will Making Tax Digital cost?

 

I understand your concerns, any new regulation that involves a change of processes is bound to cost you more, right?  Well, not necessarily.  In this post I’ll take you through your options. To find out more about what MTD is all about, click here for our previous article.

Firstly:

if you’re a client of Kinder Pocock’s, Making Tax Digital won’t cost you any more.  We are already finely tuned and ready for Making Tax Digital, and already filing all of your VAT returns online, directly from Xero.

Secondly:

Let’s assume you’re not a client of ours (get in touch if you’d like to be!)  So what are the costs you’ll be looking at:

 

1.  Online accounting software costs

The main feature of Making Tax Digital is that you will have to file your VAT return directly from your accounting software.  No more entering your totals into HMRC’s online portal.  This is a big problem for businesses with handwritten records, spreadsheets or desktop software.

We are big fans of Xero “beautiful” accounting software, but others are available.  There are free accounting softwares out there too, but you’d need to consider whether they have the features and functionality that you need, how regularly they’re updated, and how well they’re supported.  Here’s a list of HMRC’s approved MTD software which is a good starting point for you.

Xero has a range of subscriptions, starting at £10 plus VAT for their Starter subscription.  This allows you to send up to 10 invoices per month.  Xero Standard is £22 plus VAT and has unlimited transactions and users.  Xero Premium is £27 plus VAT per month, the same as Standard, but has multi-currency features, fab if you trade outside of the UK.

2.  Receipt Capture Software

You may also wish to take advantage of receipt capture software, which is a huge timesaver.  We are big fans of Receipt Bank which lets you snap photos of receipts and invoices, to be pushed across to Xero.  Subscription costs start at £20 per month plus VAT, depending on how many receipts you snap.  More info here on Receipt Bank’s pricing, but do come to us, as we can offer discounts.

3.  Moving from an old Record Keeping System to an Online Record-Keeping System

This could be a biggy, depending on what your current process is, and where you are in your financial year.  It’s always easiest to start a new system at the beginning of your financial year, so that you have a complete year in one place, and you know you’re starting with the right balances for your bank account, customers, suppliers etc.

However, Making Tax Digital is coming into force April 2019, so now’s the time to make a change, if you haven’t yet!

Moving from desktop software to online software:

If you’re moving from a desktop software like Sage or Quickbooks to Xero, we can convert this for you and the cost is covered by Xero #winning!  This brings across up to 2 years’ data into Xero, and there’s the option to bring more years across at £60 per extra year.

If you’re a new client to us, we will also perform a HealthCheck of your Xero data, that has come across from Sage or Quickbooks.  There’s a one off fee of £250 plus VAT for our HealthCheck, but if there’s nothing to adjust, this fee will be credited against our next invoice to you.

Moving from spreadsheets or handwritten books to online software

The only cost involved will be the time it takes to enter in any opening balances at the beginning of your financial year, or entering all transactions from the start of your year to date.  A good bookkeeper will charge at least £25 per hour, and may charge VAT too.  You could also consider doing this work yourself, but consider 2 things:

1 this isn’t cost free – think of the time it will take you, time that could or should be spent on other things like running your business, making your products, caring for your customers, making money!

2 you want to be sure that you have a fabulous start to your new online processes.  This could mean paying the experts to get it right for you.

4. Regular Record-Keeping and Submissions to HMRC

You may want to maintain your records yourself, or employ the services of a bookkeeper.  We can also manage your bookkeeping and VAT submissions for you.

If you’re thinking of the DIY approach, consider my thoughts above, it’s not cost free, and you may well benefit from getting the experts in.

A good bookkeeper is going to charge upwards of £25 per hour, and we can include bookkeeping and VAT returns with one of our monthly packages.  Our SupportMe package starts at £105 plus VAT per month, and we also charge bookkeeping on a fixed fee, currently based on £1 per transaction.

5.  What Other Costs could there be?

This will be down to you and what you need, but here are some ideas to think about:

New laptop – especially if you have handwritten records)

Smartphone – Xero and Receipt Bank both have apps, as do the major high street banks)

Internet access – usually a monthly fixed fee, but shop around

Mobile phone contract

Summary

Hopefully the above has given you some idea about how much Making Tax Digital will costs you.  Jot your costs down for each of the different points above:

1. Online accounting software costs

2. Receipt capture software costs

3. Moving from your old system to your new online system

4. Regular record-keeping and submissions to HMRC

5. Other costs

You may have some extra costs if you’re not already using accounting software.  However, if you’re moving from desktop software to online software you could be making quite a saving!

If you feel you’ve got extra costs, I recommend comparing the extra costs with the benefits you’ll be experiencing. These can include: easy but secure access to your data anytime anywhere, more free time, real-time access to your financials by your accountant, info at your fingertips to make better informed decisions. The list goes on!

 

Thank you for reading, and do get in touch to see how we can help, and to chat about the benefits of getting online.

Sharon

 

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

We specialise in Security, Technology, Design, Indie Hospitality, Indie Retail.

@KinderPocock

01432 273400

 

Contact Us to see how we can help

 


New Tax Year | What Does It Mean for Your Business

Tnew tax yearhis week the Chancellor gave us the Spring Budget, and with the new tax year fast approaching, here’s what it means for your business.

For information on how the new tax year affects you personally, please have a look at our blog post on this very subject.

We have also written a handy blog on the 5.5 Top Tax Tips to consider as we approach the end of this tax year.

 

 

1.  Corporation tax remains at 19%

The rate dropped in April 2017, and there is no higher rate.

2.  Annual investment allowance remains at £200,000

This means that you can spend up to £200,000 in this and the new tax year on eligible business assets, including plant and machinery, commercial vehicles etc.  This means that the full cost of any purchases up to £200,000 will reduce your taxable profits and your business tax.

For example if a limited company purchased a van for business use for £10,000, this will reduce it’s corporation tax by £1,900 (£10,000 x 19% corporation tax)

For many small and micro businesses this means that pretty much all eligible business assets purchased will reduce their taxable profits 🙂

3.  The VAT Registration Threshold remains at £85,000

Many people talked about a reduction to the VAT threshold.  Although this hasn’t happened, you could still see this as a reduction of sorts, as the threshold normally increases each year.

4.  Directors’ Salaries

In line with the rise in income tax and national insurance thresholds, directors can now receive a pay rise up to £11,850 (£987.50pm) or £8,424 (£702pm) if you did not want to pay NIC, but still be entitled to statutory benefits and state pension.

Top Tip: Have a look at our blog on What the New Tax Year Means for you Personally

 5.  National Living Wage for over 25’s increases to £7.83 on 1 April 2018

National Minimum Wage applies to under 25s as follows:

Aged 21 to 24 £7.38

Aged 18 to 20 £5.90

Under 18  £4.20

6.  Apprentice Rate rises to £3.70 on 1 April 2018

This applies to under 19s or those in their first year of apprenticeship, apart from over 25s, who are paid the national living wage.

7. R & D Rates remain unchanged

If you have less than 500 staff, and less than 100m euro turnover, you can claim SME R & D relief:

130% extra deducted from your taxable profits on your R & D costs

Or a tax credit if you’re making a loss.

Top Tip: Keep an eye on our blogs…upcoming R & D blog…

8.  Business rates will increase in line with CPI* instead of inflation

Small business rate relief still applies if your property’s rateable value is less than £15,000

*consumer prices index

9.  Making Tax Digital delayed until April 2019

This will only apply to VAT registered businesses, and means that you must file quarterly returns online.  This means filed online directly from online software, and uploading from manual records won’t count.

Top Tip: We work best with you and Xero Beautiful Accounting Software.  This will help you to manage your whole business onine, from wherever you are.

10.  Landlords and Mortgage Interest

From April 2017 HMRC are limiting mortgage interest claimed against rental income for higher rate tax payers.  This will be phased out completely by 2020/21.

Please see our 5.5 Top Tax Tips for more info on how HMRC are phasing this out, and what you can do about it.

Top Tip: On the plus side, as a landlord you can now claim mileage for journeys to and from your rental property, at 45p per mile.

 

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


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 🙂