Tax News
Gascoynes feel it is of the highest importance to keep our clients up to date with the latest accountancy and taxation news. This page is devoted to educating you on past and present changes in order to help you plan for the future.
Autumn Statement - Update
In our Autumn Statement we promised to update you on the issues raised by the Finance Bill 2012. Following over 1,000 pages of draft legislation we have produced the following document summarising our findings which you can view by clicking here.
Autumn Statement 2011
On Tuesday 29th November 2011 the Office for Budget Responsibility (OBR) published its updated forecast for the UK economy. Chancellor George Osbourne responded to that forecast in a statement to the House of Commons. Read what Mr Osbourne had to say along with all the key points from the statement in our Autumn Statement 2011.
All aboard for VAT online
HMRC has now decided that all remaining VAT registered businesses will be required to file VAT returns online and pay any VAT due electronically from 1 April 2012.
To read more about this and the implications if this isn't done click here.
Internet trading - do you have anything to declare?
In a bid to target those who are not paying the correct taxes HMRC have recently announced further specific target areas, one of which is internet trading.
To see if this affects anything you may be involved with read the full article in our 2011 Winter Newsletter.
All Change on the CIS express
Penalties for late construction industry scheme (CIS) contractor monthly returns will be changing from October 2011.
The good news is that, in many cases, the new penalties may be lower than the previous position. In particular, for new CIS contractors there will be an upper limit to some of the penalties charged. This upper limit will apply when new contractors first send a monthly return if that return, and any other monthly returns are sent at the same time, are late.
To read the full article why not take a look at our new Autumn 2011 Newsletter.
Lowest paid to get a boost
The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. The rates are reviewed each year by the Low Pay Commission (LPC) and from 1 October 2011 once again these will be changing. To read what the new rates will be for the year and the changes being made click here.
Tax Credit Errors
In the Autumn comprehensive spending review HMRC, like the majority of the government departments, were given strict targets to meet over the next four years one of which was to deliver an £8bn saving on tax credits through fraud and error savings by 2014/15. HMRC have been writing to 12,000 self-employed people who are claiming tax credits where they believe that those claims are not genuine. If you are unsure about your tax credit claim or would like to discuss the issue further please do not hesitate to contact us or to read the full article click here.
Short Life not Short Thrift
Some unwelcome capital allowance reductions are set to come into operation from April 2012 but its not all bad news........
The Annual Investment Allowance (AIA) provides 100% relief on qualifying plant and machinery expenditure but it is to reduce from £100,00 to just £25,000. Further, the main writing down allowance (WDA) which applies generally to any expenditure in excess of the AIA in the current period will reduce to 18% annually from the current rate of 20%. To read more on the changes to capital allowances take a look at the new Summer 2011 Newsletter.
Business Records Checks
The need to keep proper records to comply with tax obligations and so avoid panalities has been increasingly emphasised in recent times following changes in the tax law. HMRC hav a range of guidance available which can be accessed at www.hmrc.gov.uk/record-keeping/index.htm and yet they have indicated that in the small and medium sized (SME) business sector there is still concern about poor business records and the resulting loss of tax.
If you would like to read the full article click here or alternatively if you would like to dicsuss the nature and extent of record keeping requirements for your business please do not hesitate to contact us for further advice.
Class 2 National Insurance Contributions (NIC) - the new payment arrangements
Class 2 NIC will be payable by the self employed at a flat rate of £2.50 per week in 2011/12. Currently, Class 2 NIC are paid by quarterly account billing or by monthly direct debit. This is set to change in 2011/12 to bring it in line with payments of income tax and class 4 NIC. To find out how else the National Insurance Contributions will affect you read the full article here.
Reducing Tax Emissions!
Employees and directors who have the private use of an employer owned (often referred to as a company car) have to pay income tax on the value of the benefit. Their employer also has to pay Class 1A national insurance on the value of the benefit. It is therefore critical in replacing such cars that both employer and employee are fully aware of the tax implications before such decisions are made. Click here to read the full story on our winter newsletter.
Extracting Profits Wisely
If a business is run as a company, funds may be extracted from the company in a variety of ways. The most important methods of income extraction are as follows:
- Remuneration (including benefits in kind)
- Pension contributions
- Dividends
- Loans from the company
- Interest on loans to the company
- Rent on personally owned property used in the company's trade.
In addition, some extractions can be structured as a capital gain. These include:
- selling assets to the company for value
- Purchase of own shares
- Liquidation of the company.
Certain of these gains may qualify for Entrepreneurs' Relief (ER) which means a 10% rate of capital gains tax and is therefore highly attractive. However, such capital extraction methods are only usually available at the beginning or end of an individual’s involvement with the company and HMRC have some nasty rules for the unwary, so advance planning is crucial. For more details on the different way in which to extract profits and to read the rest of our winter newsletter click here.
Raising Revenue
The Chancellor annouced in the Emergency Budget that the standard rate of VAT is to increase from 17.5% to 20% for supplies made on/after 4 January 2011.
In principle standard rated supplies that take place after 3 January 2011 will be subjected to the 20% rate, with the VAT fraction for supplies which are inclusive of VAT changing to 1/6.
For the full articles see page one of our Autumn 2010 Newsletter.
Securing 10% Capital Gains tax
As announced by the Chancellor in the emergency budget there is a significant rise in the Entrepreneurs’ Relief (ER) lifetime limit from £2 million to £5 Million for qualifying gains arising on or after 23 June 2010. Qualifying gains are taxed at a 10% rate which is very advantageous when compared to the standard 18% rate and the new higher 28% rate which applies from 23 June 2010.
This article recaps on which gains generally qualify for ER and some of the common pitfalls which can catch the unwary.
To read this article in full click on the link or go to the Autumn 2010 newsletter on our resources page.
Make every £ count
Since April 2008 most businesses, regardless of size, have been able to claim an Annual Investment Allowance of up to £50,000 each year on qualifying plant and machinery. This includes expenditure on commercial vehicles (not cars) and may also apply to replacement expenditure on certain fixtures in buildings (integral features), such as air conditioning and rewiring, where more than 50% in cost terms of the asset is replaced.
The AIA has now been increased from £50,000 to £100,000 in the Finance Act 2010. This will be extremely valuable for the larger businesses and some smaller plant intensive operations.
The increase will have effect for expenditure incurred from 1 April 2010 for companies and from 6 April 2010 for the self-employed in business.
For more information on this and to read the full article, click on the link or go to the Summer 2010 newsletter on our resources page.