Autumn Statement Update 2016

Business Matters_Steve Woods via Dreamstime

Business Matters_S Woods (Dreamtime)

It was Phil Hammond’s first Autumn Statement since becoming Chancellor and it will be his last, as the usual spring budget is moving to the autumn from 2017.

There was lots of talk about productivity and where our gross debt is at present, but for you – our small business and individual clients, here are Moore Accountancy’s main highlights:

Increase in Personal Allowance (PA) and Higher Rate Tax (HRT) threshold

For 2016/17, the PA is £11,000 and the HRT is currently for income levels over £43,000.

Next year (2017/18) this shall rise to £11,500 and £45,000 and the eventual aim is to ensure that the PA increases to £12,500 and the HRT to £50,000 by 2020. After this point the PA is planned to rise in line with the Consumer Price Index.

An increase to these allowances is always good news for both individuals and small business owners.

 

National Living Wage

This was introduced last year and is separate to the National Minimum Wage. This will go up from £7.20ph to £7.50p from April 2017. Read our previous article about the differences between the two.

This is a positive thing for the country and should boost the flow of cash in the economy, although it will be an added burden for micro businesses.

Salary Sacrifice Schemes to be removed

From April 2017, any salary sacrifice schemes (aside from schemes relating to pensions, cycle to work, low emission cars and childcare) will be abolished. These include gym memberships, school fees, private health insurance, accommodation, company cars and car parking.

This does not affect many of our owner managed businesses, but if you are an employee of a large organisation, then we suggest you take up salary sacrifice schemes before April 2017 and benefit for a further year of reduced NIC and tax. After April 2018 these will no longer be protected.

 

Savings

Those individuals who have been prudent over the years and saved their pennies have been hit hard over the last couple of years with interest rates at a record low.

The government will be launching a new National Savings & Investment bond which allows savers to save up to £3000 over a 3 year period. It aims to offer a market leading rate. It should be launched in the spring.

In addition to this, those savers who are basic rate with more than £1,000 worth of gross interest, or higher rate with more than £500 worth of interest should continue to look at utilising ISAs. The threshold has been increased to £20,000 per annum effective from 6/4/17.

 

Corporation Tax rates

The chancellor confirmed that he would not change George Osborne’s plans to reduce Corporation Tax from the current rate of 20% to 19% (from 1/4/17) down to 17% (from 1/4/20). This is welcome news for all businesses in the UK as it shows that the Government’s plan to have the lowest tax rate in the G20 is still on the agenda.

 

VAT changes

Many small businesses have been using the Flat Rate Scheme (FRS) as a simplified way of accounting for their VAT liabilities each quarter.

Unfortunately from 1/4/17 a new VAT rate of 16.5% will be introduced for many labour only businesses who have limited costs (to be known as a “limited cost trader”) and we understand that this will supercede any existing rates which may have been used by existing VAT registered businesses.

The details have not yet been finalised but we believe that a trader whose VAT inclusive expenses on goods (not services) are < 2% of their VAT inclusive turnover or <£1,000 will fall into this category. Note that the expenses used in the calculation will also exclude: capital expenditure, food and drink consumed by the business and vehicle and fuel expenses.

This will affect many of our smaller VAT registered clients, so please ensure you contact us to discuss this further for your specific situation.

 

Making Tax Digital

This is the Government’s current plans to move all small businesses and Landlords to a quarterly reporting and filing regime and away from the current once a year filing.

Many bodies, including the ICAEW have contributed to the consultations which have taken place over the last few months to discuss what HMRC and the Government want from businesses and how they expect businesses to cope with the onerous requirements.

The Government intend to publish its response to these consultations in January 2017 and we shall of course update our clients as to what it will mean for you at that point.

 

More support for Research and Development (R&D) and finance for growing firms

The Government plan to provide a further £400m boost for venture capital funds.

They may also review the tax position of companies who undertake R&D in order to make the UK more competitive in this area.

Many companies may be eligible for R&D tax relief, and whilst this is not a speciality of Moore Accountancy, we have contacts we can pass you on to for further guidance, so please get in touch if you think you may benefit.

 

Letting agent fees

These have been banned which is a cash flow benefit for many renters as it will reduce any up-front costs required when taking out a tenancy.

For landlords however, agreements with agencies should be reviewed to see whether the costs will now be passed onto landlords instead. It will therefore be necessary for landlords who use agents to review their income and costs to ensure they are not disadvantaged significantly.

If you wish for a more thorough review then please read our newsletter update.

Please contact Sid at Moore Accountancy (info@mooreaccountancy.co.uk) if you think any of the above changes will affect you and we can arrange a call or meeting to discuss any tax implications.

One simple way to avoid getting stung by the HMRC task force

We’ve all heard the story of the huge multi-national corporate companies that whilst operating very successfully in the UK pay little or no tax.

The latest company to come to light is Facebook, where it has been reported that despite making an estimated £200 million from its UK operations it paid no corporation tax last year!  And whilst Facebook tell us “We take our tax obligations seriously..to ensure compliance with local law”, it is tax avoidance in many people’s eyes. And many of us feel it is well, immoral.

HMRC

But it’s not just huge multi-nationals that are guilty of tax avoidance and the HMRC came up with the idea of launching a series of Task Forces to crack down on tax evasion throughout the UK.

Working in what they describe as “short, sharp, bursts” these task forces are focusing on targeted areas of the country, and in what they are describing as “high risk” industries.

One such Task Force is looking at the property rental market and here at Moore Accountancy we have had first-hand experience in dealing with such a case. We were contacted by a very worried landlord who had been guilty of perhaps not declaring everything as efficiently as they should. With our experience, however, we were able to handle the case with ease.

This is what they had to say

‘We recently engaged Moore Accountancy to resolve our previously undisclosed income from a flat we have been renting out for several years. Sid was wonderful, visiting us at home, spending lots of time going over our books and sorting everything out quickly and efficiently. She liaised with HMRC, and made what was quite a worrying situation into just a blip!!.  She kept us informed at all times, without us having to push for info. All in all, even having had to spend money!! it was made almost painless.!!. ‘

It’s not just landlords that have been targeted, so far they have looked at health professionals, the fishing industry in Scotland, taxi drivers in London, hauliers in the West Midlands and the holiday industry throughout the UK, to name but a few, and they have plenty more planned.

How can we help?

We feel that when dealing with the HMRC it is imperative that you get professional advice from the outset and working with a practice like Moore Accountancy is the right place to start. We have not only had experience in working with the HMRC task force but are confident that we can offer you the best advice for your situation.

There’s no getting away with it, yes you will have to pay the tax. But by doing it before the tax man cometh means that you could avoid a heavy fine and the possibility of a criminal prosecution, not to mention a very invasive investigation.

Get in touch with us today, we have a wealth of experience in dealing with the HMRC and therefore understand the process impeccably, it could save you a massive headache and tax bill in the long run.

2012/13 tax year – will the granny and pasty tax budget changes affect small businesses and individuals?

The 2012 Budget, a few weeks ago didn’t really surprise anyone. We knew what many of the income tax and corporation tax levels were going to be for 2012/13. We received further clarifications on some things and the Government have managed our expectations for the 2013/14 tax year.

Budget Image courtesy of Tax Credits

It will be remembered as the “pasty tax” and “granny tax” budget due to the VAT changes on hot food and the change in the pensioners personal tax thresholds.

Below are some of the key points summarised – please bookmark this post for future reference – and if you or anyone you know needs an Accountant in South Manchester (Altrincham) then get in touch!

 

 

General:

  • Child benefit will be fall by 1% for every £100 earned over £50,000. Only earners with more than £60,000 will lose all the benefit
  • Stamp duty on properties over £2m is now at 7%
  • Increase in fuel duty of 3.02p per litre from 1 August 2012

Individuals:

  • Personal Allowance to be £8,105 from April 2012 (Higher rate effect from £42,475 (PA + £34,370) for under 65’s
  • Personal Allowance to be £9,205 from April 2013 for under 65’s
  • Personal Allowance to be £10,500 from April 2012 and to remain the same for 2013/14 for 65-74 year olds
  • Personal Allowance to be £10,660 from April 2012 and to remain the same for 2013/14 for over 75 year olds
  • In April 2013, the top rate of Income Tax will be reduced from 50 per cent to 45 per cent
  • NI Class 2 rates increased to £2.65pw (small earnings exemption at £5,595)
  • NI Class 4 rates remain at 9% on profits over £7,605 (£7,225 2011/12)
  • CGT level remains at £10,600

Small Business – general:

  • VAT registration threshold increased to £77,000
  • No new regulations for firms with less than 10 staff continues for next few years (aside from public safety)
  • Consultation on simplifying tax for small firms with a turnover of up to £77,000

Limited Companies:

  • Main rate of Corporation Tax 24% from April 2012
  • Small rate of Corporation Tax remains at 20%
  • Tax credit to be introduced for video games, animation and high end TV industries

There have obviously been many other changes in the 2012 budget for small businesses and individuals which are not as relevant to the majority – if you feel there is something you require more information on then please get in touch with Moore Accountancy – South Manchester Accountants.