By Katie Business News 0 Comments

New personal service company rules start this month

The “off-payroll” working rules that apply to certain workers supplying their services to clients via their own personal service companies start from 6 April 2021.

Under this new regime end user businesses will be required to determine whether that individual would have been treated as an employee or not if directly engaged. This will be a significant additional administrative burden on the large and medium-sized businesses to whom the new rules apply. This is a complex area based on different decisions by the courts and HMRC suggest that end user organisations use the CEST (Check Employment Status for Tax) online tool on their website to help with the determination. The end user business is then required to issue the worker with a Status Determination Statement setting out the reasoning for their decision, a copy of which is also given to any agency supplying the worker if relevant.

The determination notifies the agency that PAYE and NIC should be deducted from payments to the worker’s personal service company. That information should be passed down the labour supply chain if other entities are involved, and the ultimate fee payer is liable for making the tax and NIC deductions. If HMRC are unable to collect the tax from the fee payer, the liability will pass up the labour supply chain thus encouraging the end user organisation to carry out due diligence to limit their exposure.

Please contact us if you need assistance in complying with the new rules.

NO CHANGE FOR “SMALL” EMPLOYERS

“Small” businesses will be outside of the new obligations and services supplied to such organisations will continue to be dealt with under the current IR35 rules with the worker and his or her personal service company effectively self-assessing whether the rules apply to that particular engagement.

The definition of “small” is based on the existing Companies Act 2006 definition. That is where the business satisfies 2 or more of the following features:

  • Annual turnover of £10.2million or less
  • Balance Sheet total of £5.1 million or less
  • 50 employees or less

Need more information?

We offer a wide range of services which are unique to your business big or small. Our team of chartered accountants have a wealth of experience in a broad range of sectors including personal service companies. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Business News 0 Comments

5% VAT rate for food, attractions and accommodation extended

In order to continue to support businesses and jobs in the hospitality sector, the reduced 5% VAT rate will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK until 30 September 2021.

The 5% reduced rate of VAT will also continue to apply to supplies of accommodation and admission to attractions across the UK. From 1 October until 31 March 2022 the rate will be set at 12.5% and will then revert to 20% from 1 April 2022.

Need more information?

Do you need help with the 5% VAT rate? We offer a wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Subsidised meals for employees

An employer may provide subsidised or free meals for its staff tax-free. Employer subsidised meals must be:
–  Available to all staff.
–  Made available either at a canteen or on the employer’s premises.

‘Meals’, include light refreshments.
‘Available to all staff’ means available to all staff who work at any particular workplace.
– Meals may be provided by trolley service rather than from a kitchen in the workplace.
– Relief does not apply if any staff are excluded. For example, there would be no relief for meals provided in an exclusive director only dining room.

This tax relief is separate to and independent of the tax relief for Staff parties & Annual Functions or for Subsistence, claimed as part of business travel.
If the qualifying conditions for subsidised meals are not met, it may be possible to claim relief under the Staff Parties provisions, otherwise, the meals will be taxable benefits of employment and reported on form P11D.

Practicalities
– It is possible for a one-person company to claim the relief.
– If all employees have to work from home, it is possible that the relief can apply per employee per home workplace.
For example, in the case of a one-person company, where the director works at home:
– An agreement is made to provide staff lunch.
– The company may then reimburse the director’s costs of lunch.
– The director is expected to retain receipts and complete an expense claim form in respect of the expenses (on an actual basis).
–  Provided that these costs are reasonable and are paid in accordance with the legislation, the expense may potentially be agreed as a Flat-rate allowance with HMRC.
– It is advised to write into the employer’s PAYE office in order for HMRC to formally approve the flat rate to be reimbursed.
– If a flat-rate allowance is approved this reduces record keeping requirements.
– If HMRC does not approve the arrangement and the director in this example has failed to claim the actual amount spent, or does not have receipts to back it up, it is most probable that HMRC would raise a PAYE assessment on the employer.

Alternatively, a company and director may have an agreement that the director charges the company rent for use of home as a workplace.
– The provision of subsidised meals may be an additional service that is incorporated into that home working rental agreement at a fixed weekly cost.
– The director will be required to declare rental income and claim back expenses under Self Assessment.

Restrictions
Directors and employees who receive rent or an allowance for working from home may not claim the £1,000 Trading & Property Allowance due to the restriction that the allowance cannot be claimed if any payment is received by an individual’s employer (or the employer of their spouse or partner).

Need more information?

Do you need more guidance on the subject matter of subsidised meals?

We offer a wide range of services unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the hospitality sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Business News 0 Comments

Get ready for the new off-payroll working rules

Are you ready for the new off-payroll working rules?

This time last year businesses were preparing for important changes to the rules where workers supply their services via their own personal service companies. The start date was then deferred from 6 April 2020 to 6 April 2021.

The new rules are scheduled to apply to large and medium-sized businesses as defined by the Companies Act. Those businesses will be required to consider whether or not the worker would be regarded as an employee if directly engaged and so deduct tax and national insurance from payments as if they were an employee. This change does not apply where the end user is a small business under the Companies Act rules, where the current IR35 rules will continue to apply.

Thus, small organisations will not yet be required to consider the status of the worker or deduct tax.

Please contact us if you are affected by these changes as we may be able to help you with the determination of your workers’ employment status. If you are a worker supplying your services through your own company, we will also be able to advise you on the implications of these changes.

Need more information?

Do you need more help with IR35 and payroll?

Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. We work hard to create smart and effective tax-efficient solutions to aid growth. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant don’t hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

By Katie Business News 0 Comments

European property owners face higher tax bills

European property owners face higher tax bills

Now that the UK has finally left the EU some taxpayers will start to see additional tax costs. One example is where UK residents own holiday homes in EU countries that they rent out for part of the year.

Owners of EU rental properties may now be required to pay more tax in those countries, having previously benefited from a lower rate of tax for EU nationals. Those renting out Spanish properties for example will see the rate of tax they pay in Spain increase from 19% to 24%. There would be double tax credit relief for the overseas tax suffered against the UK tax liability on the rental income, but those who pay UK tax at 20% will see their overall tax bill increase as a result. The UK leaving the EU may also have the effect of increasing the amount of capital taxes and social security taxes payable by property owners.

The property tax rules vary from country to country, so contact us if you are likely to be affected by these changes.

Need more information?

Do you have a European property and need tax help? We offer a wide range of services which are unique to your business and work with clients all over the world. Our team of chartered accountants have a wealth of experience in a broad range of sectors, including property and construction. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Wealth Planning 0 Comments

Possible changes to capital taxes

Possible changes to capital taxes:

The Office of Tax Simplification (OTS) have been asked by the Treasury to review both Inheritance Tax (IHT) and Capital Gains Tax (CGT) recently which again suggests there could be changes to those taxes that may require pre-emptive planning action.

WILL CGT RATES GO UP?

The OTS report highlighted the mismatch between CGT and income tax rates which currently encourages taxpayers to prefer to take profits as capital rather than income. This potential opportunity has been addressed recently in the case of company liquidations where there is now a targeted anti-avoidance rule. There has also been increased scrutiny of share for share exchanges and company share buy backs by HMRC. Both of these transactions, if properly structured, can currently be taxed as capital gains instead of income.

The CGT annual exempt amount is currently £12,300 which is considered a very generous de minimis. It is important that taxpayers do not need to report trivial disposals of capital assets but perhaps we will need to get used to a more modest limit going forward. Consider making use of the current generous limit whilst it is still there.

A possible change that has featured in a couple of OTS reports recently concerns the treatment of property passing on death. Although the value of the property is subject to IHT, there is currently no CGT and also a tax free uplift to market value for CGT purposes.

The OTS recommendation is that the value for CGT purposes should be the deceased person’s base cost. Although there would still be no CGT to pay on death, the reduced base cost would mean a larger gain and CGT liability on subsequent sale.

We are hoping that the current business asset disposal relief that provides business owners with a 10% CGT rate on disposals will continue to apply as this encourages entrepreneurs to build successful businesses.

POSSIBLE INHERITANCE TAX CHANGES

As reported in an earlier newsletter, the OTS suggested simplifying IHT on lifetime gifts including reducing the period of potential exemption from 7 to 5 years. Such a change would mean that the donor would only be required to survive for 5 years following a gift for the transfer to be exempt from IHT.

The OTS also suggested that the conditions for Business Property Relief might be tightened up by aligning the rules with the definition of a trading company for CGT. This relief currently provides 100% relief on the transfer of shares in an unquoted company. The suggested change would mean that more transfers of shares would potentially be liable to inheritance tax and may require a careful review of your plans if you are looking to pass on your business.

Need more information?

Do you need help with capital taxes? We offer a wide range of services which are unique to your business and our team of chartered accountants have a wealth of experience in a broad range of sectors. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Is pension tax relief under the spotlight?

One area where the Chancellor could raise a substantial amount of tax would be to restrict higher rate tax relief on pension contributions.

There have been recent consultations with the pensions industry and it has been suggested that the government top up might be increased to 30% but with no further tax relief. That would continue to encourage people to save for their own pension but the better off would get less tax relief.  The pension rules continue to be complex and this may be announced as a simplification measure.

If you have spare cash that you are considering investing in your pension you might want to consider bringing that investment decision forward.

Need more information?

Do you need further guidance on pension tax relief? We have a dedicated pensions team who offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Business News 0 Comments

Top tips for driving your Business Development efforts this year

Top tips for driving your Business Development (BD) efforts this year.

Business development is often misunderstood. Some might say that it’s all about relationships, another will say it’s all about sales and others will talk about marketing. They are all right, in a way. Business Development is the creation of long-term value for a firm, through effective management of customers, markets and relationships.

Understand your customers

Customers pay the bills and should be front and centre of your BD strategy. Invest time and energy into researching and understanding your customers. Who are they, what products or services would add value for them and how can your firm help them to make a purchase decision? In the current environment, your customer research may help you to identify a new gap in the market. For example, your customers may need to buy online. Can you offer a better online experience than your competitors? Do you have a delivery mechanism that ensures that your products or services can be distributed to your customers easily and efficiently? You may find that your customers have turned to online marketplaces such as Amazon to buy everything. Maybe your firm needs to have a storefront on Amazon, in order to make it easier for your customers to buy from you.

Consider your target markets

Your customers are part of a specific market. For example, if they are businesses based in the UK then, from your perspective, they are part of the UK B2B market. Customers based in the USA might be part of your online and international market. Markets are constantly evolving. Customers who may not have purchased online 18 months ago may now be doing so on a daily or weekly basis due to lockdowns.

Perhaps overseas clients will be more receptive to buying from your business as they can no longer purchase products or services in a face to face environment. This shift to online presents new opportunities for businesses. Perhaps you could begin to have sales meetings with clients over Zoom or Skype video? Before March 2019, this would have been an alien concept, whereas today is has almost become the ‘new normal’.

Focus on building relationships

Relationships are the gravity that keep the planets aligned. The best businesses build, manage and leverage relationships that are based on trust and the ability to add value. Your relationship building efforts should focus on maintaining contact with customers, targets, employees, suppliers, referrers and industry bodies. Due to remote working, many of your contacts will be feeling a bit lonely and will be more open to the offer of a catch up call, virtual meeting, etc. You can leverage this as an opportunity to keep your firm front of mind, so that when a potential opportunity arises, your firm will be first on the list to get a call.

An opportunity to innovate

The current trading environment offers many businesses an opportunity to innovate. Customers have changed their buying habits, are more open to change and so now is a good time to rethink your sales process. If you don’t currently have an online product or service offering or a way of interacting with customers remotely, then now is the time to rethink how you engage with your target market.

Need more information?

Are you interested in business development in 2021. We offer a wide range of services which are unique to your business and here to help your business take new heights this year. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Self Assessment customers will not receive a penalty if they file by 28.02

HMRC has announced Self Assessment customers will not receive a penalty for their late online tax return if they file by 28.02.21

HMRC is encouraging anyone who has not yet filed their tax return to do so by 31 January, if possible. However, HM Revenue and Customs’ Chief Executive Jim Harra has announced Self Assessment customers will not receive a penalty for their late online tax return if they file by 28 February 2021.

Normally, late filing penalties are applied to all returns filed after the 31 January deadline. Those penalties are cancelled if the customer has a reasonable excuse for filing late. However, this year HMRC is not issuing late filing penalties for a month to help taxpayers and agents who are unable to meet the deadline. Late filing penalties will not be issued for online tax returns received by 28 February.

Taxpayers are still obliged to pay their bill by 31 January. Interest will be charged from 1 February on any outstanding liabilities. Customers can pay online, or via their bank, or by post before they file. More information on how to pay is at GOV.UK.

Need more information?

Do you need help with your tax return?

Our team of self-assessment accountants can help. We work hard to create smart and effective tax-efficient solutions for our clients, and ensure compliance with HMRC’s rules. If you want to learn more about how the team can help or simply want some tax advice from a trusted accountant, please don’t hesitate to contact us.

By Katie Business Advice • Business News • Wealth Planning 0 Comments

Delivering effective training to your team remotely

Providing training for your team when they are working remotely can be challenging.

Delivering a training session to a room full of people can be difficult enough. Engaging with your audience remotely presents a whole new challenge.

The first thing to think about is the delivery method.  Your firm may already have a webinar or conference platform in place. If not, there are lots of good options available such as Zoom, Microsoft Teams or Skype. Ideally you will want to use a platform that allows you to screen share, instant message and share files.

Getting people to attend training sessions when they are busy and working remotely can be a challenge. Creating a training schedule and sharing it well in advance can help.

Provide sufficient notice, explain the benefits of the training session and people will tend to prioritise attending your sessions.

Ideally you should record your session giving anyone who can’t make it the option to view the training session at a convenient time.

Remote employees will want to begin their training by knowing what the process will look like and what the expectations are, so outline a schedule reflecting the aims of the training and the overall principles it will explore – but save from going into the detail of the course itself.

Your training is only as successful as your pre-planning allows it to be, so make sure you invest the time before the training is rolled out. It’s also a good opportunity to troubleshoot any problems before they have a chance to arise, whether that’s to do with the platform you’re using, screen sharing, testing that any video content works, or having a test run through the learning content itself.

Keep your training session interesting by including videos, polls and asking questions which stimulate dialogue among your audience. The more discussion you can encourage, the more immersive the training session will be. Provide post-training materials that your attendees can refer back to.

The idea of post-training is to provide remote employees with the tools to refresh what they learned or build on it in their own time.  Post-training should include some resources that help people to implement what they learned – short videos, infographics and ‘how-to’ guides can be a helpful way of revisiting the training content.

Need more information?

We offer a wide range of services which are unique to your business and we understand the importance of remote working. We also offer all training to clients remotely including Xero and Sage training. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Is it time to review your will and think about the family home?

Now could be the time to review your will. Top of the to do list for many individuals is to make or update their will. Many think this is something to leave until later in life but it is important to get things in place once property is acquired or when children come along.

In the absence of a will there are statutory rules which dictate how your assets are distributed on death. Those statutory intestacy rules may not be tax efficient and you might to want to make specific provision in your Will for your unmarried partner or for the guardianship of your children.

Passing on the family home

One recent change that should be taken into consideration when drafting your Will is the additional Inheritance Tax (IHT) nil rate band for passing on the family home to direct descendants on death. We can work with your solicitor to make sure your Will is tax efficient.

Now that the additional relief is fully phased in it provides an extra £175,000 on top of to the normal £325,000 nil rate band.  Where the allowance is unused on the death of the first spouse, the unused allowance is available on the death of the surviving spouse, potentially allowing a married couple (or civil partners) to potentially pass on assets of up to £1 million without paying IHT.

This additional relief is, however, restricted if your assets exceed £2 million. The rules are fairly complicated but we can review your personal circumstances to ensure that you take advantage of all the relief that you are entitled to.

This relief is even available when you downsize to a smaller property.

For example, if a married couple currently live In a large house worth  £500,000 downsize to a flat worth £300,000, they could give away some of the proceeds during their lifetime and yet still benefit from inheritance tax relief based on the higher valued property.

They could even sell up completely and move into a rental property or a care home and still get the inheritance tax relief!

Need more information?

Do you need help to review your will? We offer a wide range of services which are unique to you and your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Annual Investment Allowance

£1 Million annual investment allowance extended 

The Chancellor recently announced that the temporary increase in the Annual Investment Allowance (AIA) for expenditure on plant and machinery has been extended to 31 December 2021.

The tax relief was originally scheduled to revert to just £200,000 from 1 January 2021, but that will now be delayed by twelve months.

Remember that there is currently an additional 100% tax relief for the cost of buying a new car for the business where the CO2 emissions of the car are no more than 50g per kilometre. That threshold reduces to 0g from April 2021.

Need more information?

Do you need tax and annual investment allowance guidance? We offer a wide range of services which are unique to you and your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Wealth Planning 0 Comments

New years resolution to save tax with pension planning

At this time of year we think about New Year’s resolutions and pension planning could be a great way. It is also a good time to start planning your tax affairs before the end of the tax year on 5th April.

An obvious tax planning point would be to maximise your ISA allowances for the 2020/21 tax year (currently £20,000 each).

You might also want to consider increasing your pension savings before 5 April 2021 as the unused annual pension allowance is lost after three years.

For those looking to do some inheritance tax planning, it would be a good time to review (or make) your Will.

Pension planning

For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and by their employer.

Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the current, but then lapses if unused.

Hence the unused pension allowance for 2017/18 will lapse on 5 April 2021 if unused.

Note that there are rumours that pension tax relief may be restricted in the next Budget. Under the current rules, the net after tax cost of saving £4,000 in a personal pension for a higher rate taxpayer is £3,000. HMRC then add a further £1,000 to your contribution and there is a further £1,000 relief when your tax liability is calculated, thus the value of your pension pot would be £5,000, for a net cost of £3,000. Remember that pension fund investments can go down as well as up, but a 40% fall would be unlikely.

Need more information?

We offer a wide range of services which are unique to your business and can assist with pension planning. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

higher rate taxpayers and gift aid
By Katie Tax 0 Comments

Charity & Gift Aid For Higher Rate Taxpayers

This year, the Gift Aid scheme will celebrate its 35th birthday. The scheme has been an incredible success, now raising upwards of £1.6bn each year. By now, you will surely be familiar with the concept – for every £1 you donate to charity, the charity can claim an extra 25% (or 25p) from HMRC.

This comes at no additional cost to you, as long as you’ve paid enough income and capital gains tax to cover the amount reclaimed.

However, what many people don’t realise is that higher-rate taxpayers can get an additional benefit from their charitable donations.

How does Gift Aid work for higher-rate taxpayers?

Where possible, all taxpayers should “Gift Aid” their donations to charity to provide additional benefit to the charity. However, higher-rate taxpayers can obtain additional tax relief on the gross value of their donation (i.e. after applying Gift Aid).

Let’s say your annual income exceeds the basic rate threshold of £50,271, and, therefore, you are a higher-rate taxpayer. If you make a £20 cash donation to charity and confirm that the donation is eligible for Gift Aid, the charity can claim a further £5 from HMRC, making a gross gift of £25.

Now, as you fall into the higher-rate tax bracket, you can claim back the difference between the higher rate (40%) and the basic rate (20%) on the gross donation. For a £25 gross donation, this equates to £5:

  • Initial donation: £20
  • Gross donation with Gift Aid: £20 + (£20 * 25%) = £25
  • Higher-rate taxpayer relief: £25 * (40% – 20%) = £25 * 20% = £5

You can claim this as a tax refund via your annual self-assessment tax return or as an adjustment to your tax code.

However, here’s the important part: you must make a declaration that you are a UK taxpayer, and you must have paid enough tax to cover the Gift Aid claimed by charities on your donations. If you’ve not paid enough, you will be taxed on the shortfall.

Finally, remember that Gift Aid does not just apply to cash donations. Many charity shops will now sell donated items on your behalf and can treat the sale proceeds as Gift-Aided donations.

Can charities claim Gift Aid on donations from companies?

If you’re a business owner and you’re wondering whether a charitable donation from your company is eligible for gift aid, the short answer is no. The Gift Aid scheme only applies to donations made by individuals.

Don’t let this put you off, though. Charitable donations made by companies qualify for corporation tax relief, effectively reducing your tax bill.

Just bear in mind that, while the charity receives the donation amount in full, there’s no additional top-up from HMRC. So if you’re trying to decide whether to make a charitable gift from your personal account or your company, you may want to compare the impact of each option on your personal and corporate tax liabilities, plus the gross amount your chosen charity will receive.

Need more information?

Do you need further help with Gift Aid or other forms of tax relief as a higher-rate taxpayer?

Our team can help. We’re a firm of trusted, chartered accountants, based in Manchester. We’ll support individuals and businesses with everything from end-of-year accounting to effective tax planning. For more information, please don’t hesitate to contact us via our website or by calling 0161 962 1855.

By Katie Business Advice 0 Comments

Christmas Gifts For Employees: Are They Tax-Free?

Are you thinking about rewarding your employees with a Christmas gift this year?

As it turns out, certain gifts to staff at Christmas are tax-free if structured correctly. Since April 2016, employers have been allowed to provide their directors and employees with certain “trivial” benefits-in-kind. The rules were brought in as a simplification measure, so that these benefits do not need to be reported to HMRC and are tax-free for the employee.

There are, of course, a number of conditions that need to be satisfied to qualify for the exemption, which we explain below.

Which employee gifts are tax-free?

For the tax-free exemption to apply, the following conditions must be met:

  • The cost of providing the benefit does not exceed £50.
  • The benefit is not cash or a cash voucher.
  • The employee is not entitled to the benefit as part of any contractual obligation, such as a salary sacrifice scheme.
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).

So, what does that all mean in practical terms?

It means that you can give your employees small, thoughtful gifts, such as a bottle of wine, a box of chocolates, or a store voucher, to mark key occasions. And here’s the thing, this doesn’t just apply at Christmas – you could also provide a gift on an employee’s birthday, to celebrate their wedding, or even religious festivals like Eid or Diwali.

As long as each gift costs £50 or less, isn’t cash or a cash-equivalent voucher, isn’t part of their employment contract, and isn’t a reward for doing their job, then it qualifies as a trivial benefit and does not create a tax liability for either you or them.

Is there a limit?

Yes and no!

For regular employees, there is no limit to the number of trivial benefits an employee can receive in a tax year, as long as each one individually meets the criteria.

However, for directors of ‘close’ companies (typically those controlled by five or fewer shareholders), there is an annual cap of £300 on trivial benefits.

What if the value of the gift exceeds the tax-free threshold?

If your gift exceeds £50, even by a single penny, the gift no longer qualifies as a trivial benefit. As a result, the entire amount becomes a taxable benefit.

This means it may need to be reported to HMRC via a P11D form, and both the employee and employer could face additional tax and National Insurance charges.

What about Christmas bonuses?

We get this question a lot. Towards the end of the year, if a company has done well, it may reward staff with a cash bonus.

A bonus payment typically does not fall under the trivial benefits scheme, as it contravenes the following conditions:

  • The benefit is not cash or a cash voucher.
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).

A bonus, whether it’s paid at Christmas or any other time, is considered a reward for services performed. That makes it part of an employee’s earnings, and as such:

  • It must be added to their salary for PAYE purposes.
  • You must deduct Income Tax and National Insurance through payroll as usual.

That said, bonuses are generally considered allowable business expenses. That means they can be deducted from your company’s taxable profits as a means of managing or reducing tax liabilities. If you want more advice on that, speak to our corporation tax specialists.

Need more information?

Gifts are a simple and tax-efficient way to show appreciation for your team. You just have to make sure you stay within the rules. But the tax-free benefits don’t stop there, you can also provide parties and social events throughout the year, to the tune of £150 per head. You can find out more about that here: Tax Relief For Staff Parties And Annual Functions

If you need more guidance on Christmas gifts for employees, please don’t hesitate to get in touch with us. We support businesses with a wide range of services, including end-of-year accounting, tax advice, and R&D claims.

By Katie Business Advice 0 Comments

Reference Pay

An employee’s reference pay will depend upon whether or not they were on the payroll and subject to an RTI submission for 2019/20 on or before 19 March 2020. Where that is the case their reference pay will be that used under previous furlough claims. Where the employee has joined since that date or not subject to an RTI submission prior to 19 March the reference pay will generally be that for the last pay period ending before 30 October.

There are exceptions to these rules and complications for those working variable hours and with variable rates of pay.

Reference pay: calculating 80% of wages

If an employee was not previously eligible for CJRS, 80% of wages must be calculated for employees:

  • on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
  • whose pay varies – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins

80% of wages is capped at the maximum wage amount which will be calculated in the in the way it was for CJRS before the extension .

We can of course assist you with your claims, or alternatively prepare them on your behalf.

 

Need more information?

Do you need further support with your payroll?

Our team offers a complete range of payroll services for companies across all sectors, from charities to construction firms.

If you want to learn more about how the team can help, or simply want some start-up advice from a trusted accountant, don’t hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

By Katie Business Advice 0 Comments

Green Homes Grant: make energy improvements to your home

Green Homes Grant: make energy improvements to your home

Homeowners

What is the Green Homes Grant?

The government will provide a voucher up to £5,000 that covers up to two-thirds of the cost of energy efficiency and low carbon heat improvements to your home. See which improvements are included in the scheme below.

You may be able to receive a bigger grant if you are a homeowner and you or a member of your household receives one of the qualifying benefits. The government will cover 100% of the cost of the improvements up to £10,000.

How do I apply?

  1. Check if you’re eligible for a voucher
  2. Check what improvements may be suitable for your home
  3. Choose which improvements you would like and see an estimate of how much they may cost
  4. Find registered installers to get quotes to carry out the work
  5. Apply for your voucher

The Green Homes Grant scheme will never include official representatives coming to your property uninvited or cold calling on the phone to encourage you to join the scheme.

Tradespeople

Tradespeople and businesses that are appropriately certified to install energy efficiency and/or low carbon heating improvements in homes need to register with TrustMark to carry out work under the scheme. This confirms to homeowners that you will install measures to high standards.

You will be added to a directory of TrustMark registered  installers and homeowners can then contact you to obtain a quote.

Tradespeople and businesses that install low carbon heating improvements in homes will also need to be MCS certified.

Once you are registered with TrustMark, you need to apply to become a Green Homes Grant installer so you can deliver work in the 600,000 homes that will receive vouchers.

Working during national restrictions

Tradespeople, including Green Homes Grant installers, can continue to work in people’s homes under the national restrictions from 5 November.

You must follow the COVID-19 Secure guidelines.

Installers do not need to physically attend a customer’s home to provide a quote and can do this remotely using a video call or detailed photos.

Need more information?

If you need more information on the green homes grant, do not hesitate to contact us – we offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Changes to Capital Gains Tax

Changes to capital gains tax:

If you sold your property after 6 April 2020 you must report and pay Capital Gains Tax within 30 days of selling property in the UK. You may have to pay interest and a penalty if you do not report gains on property within the time limit.

You can report Capital Gains Tax you need to pay:

  • using the Capital Gains Tax on UK property service within 30 days of selling UK property
  • straight away using the ‘real time’ Capital Gains Tax service
  • annually in a Self Assessment tax return

If you have to send a Self Assessment return for another reason, you must include capital gains on your return, even if you’ve already reported and paid them.

Before you report

You’ll need:

  • calculations for each capital gain or loss you report
  • information from your records about the costs and what you received (the ‘proceeds’) for each asset
  • any other relevant details, such as any reliefs you’re entitled to

Report gains and pay straight away

If you’re a UK resident you can use the ‘real time’ Capital Gains Tax service to report any gains that are not from selling UK residential property.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

When you use the service you’ll need to upload PDF or JPG files showing how your capital gains and Capital Gains Tax were calculated.

When to report

You can use the ‘real-time’ service as soon as you’ve calculated your gains and the tax you owe. You do not need to wait until the end of the tax year.

You must report by 31 December after the tax year when you had the gains.

The tax year runs from 6 April to 5 April the following year.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you ways to pay.

Do not pay your Capital Gains Tax bill until you’ve received your payment reference number.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

If you sold the property before 6 April 2020, report the gain using the ‘real time’ Capital Gains Tax service or in your next Self Assessment tax return.

If you’re not resident in the UK

If you’re a non-resident and you’ve sold property or land in the UK, tell HM Revenue and Customs (HMRC) within 30 days, even if you have no tax to pay.

Need more information?

Do you need more guidance on the changes to capital gains tax? We offer a wide range of services and are here to help you. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Bring your tax affairs up to date

Bring your tax affairs up to date:

2018/19 tax returns can be amended by the taxpayer up until 31 January 2021. Where the omitted property income or gain relates to earlier tax years the taxpayer should consider disclosing using HMRC’s let property campaign. If this affects you we can assist you in putting together the details that HMRC require.

Need more information?

Do you need guidance with your tax affairs? We offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

CGT business asset disposal relief lifetime limit just £1 million

In the March 2021 Budget, it was announced that CGT Entrepreneurs’ relief (ER) was replaced by CGT Business Asset Disposal relief (BADR) for disposals on or after 11 March 2020.

It was also announced that the 10% CGT rate would only apply to the first £1 million of qualifying gains in the taxpayer’s lifetime and many business owners have misinterpreted how this limit applies.  Unfortunately claims under the predecessor ER need to be taken into consideration so if £750,000 ER has already been claimed only the first £250,000 of qualifying gains after 11 March 2020 would qualify for BADR.

Any gains in excess of that amount would be taxed at normal CGT rates, currently 20% for higher rate taxpayers.

 

Need more information?

Do you need guidance on the replaced Business Asset Disposal relief (BADR)? Feel free to contact our team today for further CGT advice. We are here to help you and your business succeed.

We offer a wide range of accounting services that can be tailored to your business.

Our team has a wealth of experience in a broad range of sectors, from construction and property to the charity sector. We work hard to deliver smart and effective tax-efficient solutions. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant don’t hesitate to contact us.

For more information please call, email or use the form below.

By Katie Business Advice 0 Comments

Considering an electric company car?

Considering an electric company car? There is currently a zero P11d benefit for the drivers of electric cars in 2020/21. The legislation for this change is included in Finance Act 2020 which also states that the benefit will be 1% of list price in 2021/22 and then 2% in 2022/23.

The zero taxable benefit also applies to hybrid cars emitting no more than 50 grams of CO2 per kilometre with a range using its electric motor of at least 130 miles, but only for cars first registered on or after 6 April 2020. Unfortunately, the range of most plug in hybrids is considerably less than 130 miles. For example, the Mercedes A 250e costing £32,980 emits 26g CO2 but has a PEV range of only 45 miles.

An additional benefit for the business is that motor cars that emit no more than 50g CO2 per kilometre currently also qualify for a 100% first year allowance which means that the full cost can potentially be set off against business profits.

The Mercedes A 250e would currently qualify for a 100% first year allowance but the P11d benefit would be 6% for the employee in 2020/21.

Note however that the 50g CO2 threshold reduces to zero from April 2021 which means that hybrids will cease being eligible for the 100% write off. If the business can afford to do so it’s a good time to buy a plug in hybrid.

Need more information?

Do you need help purchasing an electric company car? We offer a wide range of services which are unique to your business! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Business News 0 Comments

Virtual meetings: running effective meetings

We have adapted our accountancy practice to work with existing and new clients through virtual meetings. Over the course of the past few months, we have all had to adapt to working remotely.

Despite lockdown restrictions, many businesses have found ways to move their operations online, with all staff working remotely. This has given rise to an increased volume of virtual meetings on services such as Skype, Zoom, Teams, WebEx or other popular online meeting services. This has resulted in a new challenge – how to have an effective virtual meeting.

Agenda

Just like any meeting, take the time to set an agenda and circulate it in advance of the call along with any supporting documents.

Setting an agenda and sticking to it helps to keep the virtual meeting on track. If there are lots of documents, make sure that you circulate them in time to allow people to read them well in advance.

Choose the right technology

There is nothing more frustrating than dialling into a video or conference call and not being able to connect due to a technical glitch. Before you set up your virtual meeting, check with the attendees that they are comfortable (and able) to use your platform of choice. If possible, use a system that allows users to join via a web browser – most platforms such as Skype, Teams, Zoom, WebEx, etc. allow this.

Etiquette

A virtual meeting is still a meeting, so make sure you give it your full attention. Ask all attendees to use video – this makes it harder for them to do something else during the virtual meeting as they will be on everyone’s screen. In addition, seeing people on screen can help those who have been working from home during COVID-19 to feel more connected.

Jump into the content

Don’t waste time (yours or other people’s) during a virtual meeting. Keep it short and get straight into the agenda. Aim to follow up within 24 hours of the meeting with any relevant action points as it keeps people’s attention. By sending the notes around 2 weeks after a meeting, momentum on any actions may be lost.

Need more information?

We have adapted our business to provide clients with virtual meetings. We offer a wide range of services which are unique to your business and work with clients virtually all over the world. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Certain property business owners are liable to class 2 National Insurance Contributions

Class 2 National Insurance Contributions (NICs) are currently paid at the rate of £3.05 per week by self-employed earners. A person who is liable to Income Tax on the profits arising from the receipt of property rental income will only be a self-employed earner for NICs purposes if the level of activities carried out amounts to running a business.

HMRC have recently issued clarification which states that in order for a property owner to be a self-employed earner, their property management activities must extend beyond those generally associated with being a landlord which include, but are not limited to, the following:-

  • undertaking or arranging for external and internal repairs
  • preparing the property between lets
  • advertising for tenants and arranging tenancy agreements
  • generally maintaining common areas in multi-occupancy properties; or
  • collecting rents.

The HMRC guidance suggests that the ownership of multiple properties, actively looking to acquire further properties to let, and the letting of property being the property owner’s main occupation could be pointers towards there being a business for NICs purposes.

A landlord will also be a self-employed earner if any of their activities amount to a trade for Income Tax purposes. This could include, for example, receiving income from other services provided to tenants.

Need more information?

Do you need more guidance on National Insurance Contributions? We offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Making Tax Digital 0 Comments

MTD for VAT to be extended to all VAT registered businesses in 2022

Since 2019, the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software.

From April 2022 these requirements will apply to all VAT-registered businesses.

It has also been announced that MTD for Income Tax Self-Assessment (ITSA), which was originally intended to start in 2018, will finally be introduced from April 2023 for unincorporated businesses and landlords with total business or property income above £10,000 per year.

Most businesses will have 2 years to prepare and test the service voluntarily prior to its introduction.

Need more information?

We offer a wide range of services for VAT-registered businesses. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want VAT advice from a trusted accountant don’t hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.