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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


The Autumn Statement and What It Means to You

autumn statementThe Chancellor delivered his Autumn Statement on Wednesday 23 November, which highlights what we can expect in the new tax year starting 6 April 2017.

Below are the main highlights:

 

 

Business Tax

  • Corporation tax is set to fall to 17% from 20% by 2020.
  • £400m pledged into Venture Capital trusts to invest in innovative small businesses with potential for growth
  • £23bn national productivity investment fund aimed at backing new infrastructure and innovation over the next 5 years.
  • Business rates will continue to be reduced, and rural rate relief will double to 100% to bring it in line with business rate relief.
  • Insurance premium tax will increase from 10% to 12% in June 2017.
  • National Living Wage for over 25 year olds will increase from £7.20 per hour to £7.50:
  • National Minimum Wage will increase:
  • for 21 to 24 year olds – from £6.95 per hour to £7.05
  • for 18 to 20 year olds – from £5.55 per hour to £5.60
  • for 16 to 17 year olds – from £4.00 per hour to £4.05
  • for apprentices – from £3.40 per hour to £3.50

Personal Tax

  • Personal allowance will rise from £11,000 to £11,500 in April 2017.
  • Basic rate threshold will rise from £43,001 to £45,000 in April 2017.
  • The amount you can put into a pension without being taxed (money purchase annual allowance) after you’ve started taking incomes from it − will be reduced. It will fall from £10,000 now to £4,000 in April 2017.
  • ISA limit will increase from £15,240 to £20,000 in April 2017
  • From April 2017, non-doms will be deemed UK-domiciled for tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin

VAT

  • From 1 April 2017 a business will be required to use a FRS percentage of 16.5% if it is a “low cost trader”.
  • (a low cost trader is a business whose expenditure on goods (not services) is less than 2% of its gross turnover)

If you would like any more information on the Autumn Statement, or have any questions please get in touch straightaway.

Kinder Pocock app

Our app has already been updated following the Autumn Statement.

Thank you for reading!

Sharon


New Tax Year 2015/16 – Directors’ Salary and Dividend Thresholds

With the start of the new tax year on 6 April 2015, the amounts directors can pay themselves in salary and dividends before incurring income tax have changed, as follows:

 

1. Personal Allowance increases to £10,600

This means that most UK taxpayers can earn £10,600 this tax year before paying any tax.  As a director of your company, the company could pay you up to £883.33 per month through PAYE.

 

2. National Insurance Threshold Increases to £8,060

This means that as a director you can earn up to £671.67 per month through PAYE before paying NIC.

Alternatively, if you set your monthly salary at £883.33 to use up your full personal allowance, you would have a monthly NIC deduction of £25.40, leaving a net monthly salary of £857.93.

 

3. Employers NIC Allowance of £2,000 Continues

This means that the first £2,000 of employers’ NIC in this tax year does not have to be paid.  If you have no employees, you probably won’t pay any Employers’ NIC at all this year.

 

4. Dividends

As long as all of your personal income stays below the higher rate tax threshold, you will pay no personal tax.  The higher rate tax threshold this year is £42,385.  This figure includes the personal allowance of £10,600, and bear in mind that it applies to gross dividends (you will receive net dividends from your company).

 

So What Does It All Mean?

OK – so above you have the facts and figures.  What does this actually mean to you, and what do you need to do?

  • Directors with Employees:

Set your monthly salary at £671.67.  You will incur no personal tax or NIC on your salary.

You can take net dividends from your company up to £30,892 or £2,383 per month.

 

  • Directors with No Employees:

Set your monthly salary at £883.33.  You will incur employees’ NIC at £25.40 per month BUT the overall tax savings are far greater, if we also take corporation tax into account. (This is because your salary is deducted from the company profits before we work out corporation tax).

You can take net dividends from your company up to £28,606 or £2,574 per month.

 

**Available Profits from your Company:

Please be aware that although the tax and NIC thresholds allow you to take the above amounts as salary and dividends, you can only take dividends from your company out of available profits, and after providing for corporation tax.

If in doubt, always speak to us first before taking dividends.  If you take too many dividends, these are treated as illegal dividends and must be paid back to the company.

 

Disclaimer

The above facts and figures are for information only, and assume that your company is your only source of income.  The above should not be taken as specific tax advice.  Please speak to Sharon directly for advice relating to your specific situation.

 

Thank you for reading.

 

Sharon Pocock FCCA

sharon@kinderpocock.co.uk

 


Xero Payroll is Here!

We are thrilled with the new addition of Payroll to Xero Beautiful Accounting Software.

From 6 April 2015 you can process your payroll through your existing Xero account, and payroll data will flow seamlessly into your Xero accounts.

There will also be a secure employee portal, accessible through an employee app, allowing employees to access their payslips, and also request holiday and sick leave.

Xero Payroll will handle everything we would expect from payroll, including RTI (Real Time Information), Auto Enrolment, and Reporting.

Have a look at Xero’s Introduction to Payroll (just 2 minutes):

 

 

Xero Payroll is available now, so that you can set up your Employer and Employee information, pay rates etc, so that you are ready to go live from 6 April.

If we run your payroll, we are currently working on this for you.  We may be in touch for more information, so please respond quickly so that we are ready to process your payroll from Xero in the new tax year.

 

If we don’t run your payroll, but you wanted to get set up with Xero Payroll, there are lots of easy to access guides from Xero U.  But please make sure that you upgrade to Premium10 before 31 March 2015, so as to lock in Xero’s pricing for the next 2 years at £25+VAT per month (this includes your usual Xero accounting subscription).  From 1 April 2015, Premium10 will be £30+VAT per month.

I hope  you find this useful.  For more information contact myself or Rich directly.

 

Sharon:  sharon@kinderpocock.co.uk

Rich:  rich@kinderpocock.co.uk


HMRC PAYE Late Filing Penalties Come into Force 6 March 2015

Since the introduction of RTI (Real Time Information) filing for PAYE back in 2013, HMRC have been relaxed on introducing penalties.

However, these penalties are now in force for all Employers.

 

When Could You Get a Penalty?

 

When Don’t HMRC Charge a Penalty?

  • you’re a new employer and you sent your first FPS within 30 days of paying an employee

 

What Are the Penalties?

How much you’re charged depends on how many employees you have:

 

Number of employees Monthly penalty
1 to 9 £100
10 to 49 £200
50 to 249 £300
250 or more £400

 

If you’re over 3 months late you can be charged an additional penalty of 5% of the tax and National Insurance that you should have reported.

If you run more than one payroll, you will be charged penalties for EACH payroll.

Also be aware that HMRC are charging penalties quarterly, so the first time you get a penalty, it may be for up to 3 months!  AND they are not notifying us as your Accountants.

 

How to Ensure you Don’t Get a Penalty:

If we at Kinder Pocock are running your payroll, make sure you read every email you receive from us.  To ensure that we file the correct information with HMRC we do need your approval of your payroll figures before filing online on your behalf.

  • Always give us your payroll information in good time, and at least 2 days before your normal processing date.
  • Always let us know straight away of any employee changes, eg new staff or leavers, so that we can ensure that we include the correct information.
  • Once we have submitted to HMRC, we cannot resubmit.

 

Need More Info?

I hope this is helpful.  Please contact me, Sharon, or Rich Beale if you have any questions.

You can also refer to HMRC’s online guidance on penalties.

Sharon: sharon@kinderpocock.co.uk

Rich: rich@kinderpocock.co.uk