The Shrewsbury Accountants Blog – Taxassist Accountants in Sundorne

December 5, 2012

The Shrewsbury Accountant offers more advice about company cars

Filed under: company car taxation, owner-managed businesses, shropshire, Uncategorized, VAT — Tags: , , , , , , , — taxassistshrewsbury @ 12:58 pm

In my previous article on this subject, I explained the opportunities and pitfalls in a employer providing a car to an employee. I explained the taxation effect of acquiring the vehicle either by outright purchase or on hire purchase.

One other commonly used option is for the employer to  take out a lease contract to provide the car to the employee. Again, tax relief depends on a vehicles CO2 emissions and there are some changes planned for future years.

Currently, a business can deduct 100% of contract hire costs against business profits provided that the car’s Co2 emissions are 160g/km or less. There is a disincentive to taking out a lease for a car with higher emissions as legislation states that only 85% of the leasing cost of these cars is allowed against tax. This adjustment is made on the Corporation Tax computation. Please be aware that this restriction with apply to cars with emissions over 130g/km for leases signed after 1st April, 2013.

You will be aware that VAT is charged on contract hire charges. Where the vehicle is used for business purposes, 50% of the VAT (not all of it) can be reclaimed. Again, this is a common area of confusion.  There is no distinction for VAT regarding CO2 emissions.

A common question about company cars is which is the best way of providing one to an employee – buy, take out an HP agreement or contract hire it. It is usually important to review a number of aspects of the business’s tax affairs in order to provide a clear answer.

I hope this article has given you some useful pointers on this subject. We would be happy to advise further.

In my next article, I will talk about the taxation of cars owned and used for business by sole traders and partners.

 

April 17, 2012

The Shrewsbury Accountant, Nigel from TaxAssist has some free tax and business guides

Filed under: owner-managed businesses, Shrewsbury, shropshire, small business, tax savings, Uncategorized — Tags: , , , , , , , , , , , , — taxassistshrewsbury @ 12:05 pm

We have developed a number of useful guides on various practical and theoretical issues which may affect your business.

A full list can be accessed by clicking on the link below. You can then select and request the guides you are interested in.

Index to our tax and business helpsheets

We hope you find this useful.

March 22, 2012

The Shrewsbury Accountant, Nigel From TaxAssist Accountants, thinks you should look at our year-end tax planning factsheet

Filed under: owner-managed businesses, Shrewsbury, shropshire, small business, tax, tax savings, Uncategorized — Tags: , , , , , , , , , , , — taxassistshrewsbury @ 12:01 pm

There are only 14 more days until the end of the 2012 tax year. There is still time to save some tax. The tax planning fact sheet below will give you some ideas.

Year end tax planner – 5th April, 2012

I would also like to remind you that sole traders and partnerships should buy capital equipment before 5th April, 2012 to obtain tax relief in 2011/12 tax year. Similarly, limited companies with a 31st March, 2012 year end will need to buy these assets before 31st March, 2012 in order to claim tax relief in the current year.

There are major changes to capital allowances in 2012/13. The Annual Investment Allowance is reducing from £100,000 p.a. to £25,000 p.a.  There is also a nasty tax complication which may affect businesses with a non-March year-end. Please contact us if you plan to make significant asset purchases after 31st March so that we can advise you.

 

March 9, 2012

The Shrewsbury Accountant, Nigel of TaxAssist, has a useful checklist for you when assembling your financial records

Filed under: accounting, limited company, owner-managed businesses, Shrewsbury, shropshire, small business — Tags: , , , , , , , , , , , , — taxassistshrewsbury @ 10:00 am

Many clients have found our business records checklist useful when assembling their paperwork. There is a link to the file below (pdf)

documents checklist

When you combine this with our purpose design record keeping wallets, you are really helping yourself save money by saving us time.

March 8, 2012

The Shrewsbury Accountant, Nigel from TaxAssist, gives some last minute tax planning advice

Filed under: accounting, owner-managed businesses, Shrewsbury, shropshire, tax savings — Tags: , , , , , , , , , , , — taxassistshrewsbury @ 4:22 pm

For most businesses,  March is a vital time for business tax-planning to get things in place before the financial year end. Here is a list of our top tips:

  1. If you intend to purchase assets for use in your business (excluding motor cars but including vans), you should consider buying (not leasing), these assets before your year-end to reduce this years taxable profit. But be careful not to let the “tax tail” wag the dog.
  2. Similarly, for normal ongoing expenditure (e.g. repairs, professional fees and advertising), costs incurred before the end of the year will reduce the current years tax liability. However, this does not apply to stock items.
  3. Any staff bonuses that you pay prior to the end of your year will reduce your tax for the year. We can advise on minimising the national insurance cost of these bonuses.
  4. We can also reserve for a bonus in your accounts to qualify for tax relief this year, provided the bonus is actually paid within 9 months of the end of the year. We can also reduce your taxable profit by including staff holiday pay earned but not yet paid.
  5. If your spouse/civil partner/children over 13 work for the business, it is tax-efficient to pay a salary of £590 per month (£624 per month after 5th April, 2012) or maybe more, if they do not have other income (sole traders and partnerships not limited companies).
  6. Is there scope for salary sacrifice schemes benefitting you and your employees?
  7. If your sales in the year included unpaid sales that you consider will not be paid, we can make a provision to reduce your taxable profit by this figure. Don’t forget that you can recover the VAT on bad debts from HMR&C.
  8. If you have stock that you are unlikely to sell, we can write down the value to the likely selling price, instead of continuing to value at cost. This will reduce your taxable profits.
  9. Can any borrowings be restructured to maximise tax-relief.
  10. Have you considered changing to a limited company, we can give you a free-estimate of the likely tax-savings. (sole traders and partnerships only).
  11. Have you considered making a payment into a personal pension scheme?
  12. Do you need to start planning for the sale of your business?

For limited companies only

  1. If your spouse/civil partner/children over 13 work for the business, it is tax-efficient to pay a salary equal to their unused personal tax allowance.
  2. Has the company considered making a payment into a personal pension scheme.
  3. Have you taken the tax-efficient salary and dividend package? Are dividends properly documented?
  4. Will the year-end snapshot show the best possible picture of the company’s finances? This can improve the company’s credit-rating.

Please take advantage of our business health check which is available here. 2MinuteHealthcheck

If you need any further help. Please contact us.

February 17, 2012

The Shrewsbury Accountant, Nigel, from TaxAssist wants you to spend a little time reviewing your finances

Filed under: accounting, owner-managed businesses, shropshire, small business — Tags: , , , , , , , , — taxassistshrewsbury @ 3:18 pm

I know some of you will have seen it before.

Our 2 Minute Health Check System is a “tool” to help you consider all aspects of your financial “health”. Please clink on the link below (Word 2003 file)

.The TaxAssist Accountants financial health check.

 

There are sufficient questions on the forms to cover the main aspects of financial planning, asset protection and profit improvement but it is quite possible that other issues will arise during its completion.   At the very least, this exercise will give a colour-coded aide memoire to prioritise needs and wants.

If you need further help, just get in touch and we will be glad to help.

 

November 30, 2011

Nigel from TaxAssist Accountants in Shrewsbury gives his view on yesterday’s Autumn Statement

Filed under: accounting, autumn statement 2011, owner-managed businesses, shropshire, small business — Tags: , , , , , , , , — taxassistshrewsbury @ 11:05 am

I know you will probably be bombarded by these newsletters. Here’s ours which gives an update as it affects owner-managed businesses.

We are awaiting more details of the Seed Enterprise Investment Scheme which may encourage equity investment in small businesses.

Autumn Statement Summary 2011

Autumn Statement 2011On 29th November 2011, the Chancellor of the Exchequer, George Osborne, announced the Autumn Statement which provides an update on the Government’s plans for the economy, based on the latest forecasts from the Office for Budget Responsibility.

Small businesses across the UK have seen the devastating impact that excessive red tape and lack of funding have had, however some elements in this Autumn Statement offer chinks of light amongst the Chancellor’s doom and gloom.

Businesses in need of finance

Guarantees - The Government is to back £20 billion of business loans under the National Loan Guarantee Scheme. The scheme will lower the cost of bank loans for smaller businesses. Ministers hope the scheme will be live by the start of 2012 and it is envisaged it will run for the next two years. The scheme should deliver up to a one percentage point reduction in the cost of a business loan.

Trades people

Affordable mortgages - Under the New Build Indemnity Scheme, the Government hopes to increase the supply of affordable mortgages. The Government and house builders will provide security for the mortgages and home buyers will only require a five per cent deposit in order to purchase a new build house or flat. The scheme should help around 100,000 families and first time buyers to buy their own home plus increase opportunities for self employed builders, plumbers, plasterers and electricians to name but a few.

Right to Buy Scheme - Firstly, the Government will increase the discounts on the market value of homes purchased under the Right to Buy Scheme. And secondly, for each home purchased, the Government will provide an extra affordable home – in addition to the 170,000 already planned through the new Affordable Homes programme.

Small businesses that employ staff

Unfair dismissal - The qualifying period for unfair dismissal claims will increase from one year to two years from April 2012, to help reduce employers’ fears about taking on new staff. The Government also announced that it will be considering how the dismissal process could become simpler, quicker and clearer.

Compensated No Fault Dismissals - The government will be seeking views on the introduction of Compensated No Fault Dismissals for micro-businesses with fewer than ten employees. Under such a system, employees could be dismissed without employers having to cite a particularly reason, but happy in the knowledge that the notice period and pay would be predetermined and there would be no fear of tribunals (provided no discrimination is involved).

Fees – The Government will introduce fees for individuals who want to bring cases to employment tribunals. The level of the fees will be consulted on.

Work experience - All unemployed 18 to 24 year olds will be offered work experience or a Sector Based Work Academy place after three months on Job Seekers’ Allowance.

Incentives - The Government will provide an estimated 160,000 wage incentives of £2,275 each to entice employers to recruit young people.

Red tape – Deregulation is firmly on the Government’s agenda and as part of this; they have pledged to accept a recommendations review of health and safety regulation and look to go further with its Red Tape Challenge.

Mobile businesses

Fuel Duty – The fuel duty increase of 3 pence per litre that was due to take effect on 1st January 2012 will no longer occur. Furthermore, the increase planned for 1st August 2012 of 5 pence per litre will now only be 3 pence.

Small businesses operating from premises

Business rates - The Small Business Rates Relief holiday will be extended by six months from 1st October 2012.

Deferral – The Government will also give businesses the opportunity to defer 60 per cent of the increase in their 2012/13 business rates bill (as a result of the Retail Price Index uprating) and repay it equally across the following two years.

Businesses seeking planning permission

Non-planning consent – The Government will introduce a 13-week maximum timescale for the majority of non-planning consents, which will take immediate effect for Government agencies.

Appeals - The Government will ensure that there is a more effective system for applications to obtain an award of costs, if there is an appeal against an unsuccessful planning application where a consultee has acted unreasonably. This should start to be implemented in summer 2012.

Agricultural buildings – The Government will consult on proposals to allow existing agricultural buildings to be used for other business purposes such as offices and retail space.

Small business owners with a family

Child and Disability Tax Credits – The child element of the Child Tax Credit and disability elements of tax credits will be uprated in line with the Consumer Price Index (CPI) in 2012/13. By using the CPI, these tax credits should fluctuate according to changes in consumer spending patterns relative to changes in the price of goods and services.  This should mean that the child element of the Child Tax Credit will increase by £135 but the Government will not be going ahead with the planned £110 above-inflation increase.

Working Tax Credits - The couple and lone parent elements of the Working Tax Credit will not be uprated in 2012/13.

Live Updates as they happened on 29th November 2011

Time   Details

  • 12:20   George Osborne Has left the Treasury and is now heading for the House of Commons
  • 12:35   OBR revises GDP forecast for 2011 down to 0.9%
  • 12:35   OBR not predicting another recession
  • 12:46   Osborne asks the Unions to call off the strikes #AS2011
  • 12:48   Pension credit to increase by £5.30
  • 12:50   State pension age to increase from 66 to 67 in 2026
  • 12:53   Osborne hoping credit easing measures will reduce interest rates paid by small businesses by 1%
  • 12:55   Osborne to reinvigorate the Right to Buy Scheme
  • 12:58   Over 500 new infrastructure projects planned
  • 13:07   ”Planning laws need reforms” Osborne
  • 13:09   Osborne wants to “cut the burden of Health & Safety on small firms”
  • 13:11   50% income tax relief on loans up to £100k to qualifying small businesses
  • 13:12   Business rates holiday extended to April 2013
  • 13:17   Planned fuel duty increase in January 2012 scrapped
  • 13:18   Fuel duty increase planned for August 2012 reduced to 3p
  • 13:19   Coalition government to take Britain “Safely through the storm”
  • 13:19   George Osborne sits down and Ed Balls takes the stand
  • 13:20   Ed Balls states “Plan A has failed”

If you need further clarification, please do not hesitate to contact us.

November 25, 2011

Nigel from TaxAssist in Shrewsbury offers timely advice to businesses considering buying new equipment

Filed under: accounting, corporation tax, owner-managed businesses, shropshire, small business, tax savings — Tags: , , , , , , , , — taxassistshrewsbury @ 10:53 am

The Chancellor, George Osborne, announced in his emergency budget on 22 June 2010 the reduction of the Annual Investment Allowance (AIA) from £100,000 per annum to only £25,000 per annum from 6 April 2012 for unincorporated businesses, and from 1 April 2012 for companies.  Planning is required now to take advantage of the current level of allowance whilst it remains.

The AIA is a 100% deduction from taxable profits for qualifying expenditure on plant and machinery.  It can be claimed by an individual, partnership or company carrying on a trade, profession or vocation, a UK non residential property business or a furnished holiday let.

In the current fiscal year, qualifying capital expenditure of up to £100,000 by a business could qualify for 100% deduction in calculating taxable profits.  This is reducing to £25,000 per annum from April 2012.

As with many tax matters, timing is everything and there are some hidden dangers in the legislation. This is best explained by a number of examples, based on a limited company spending £50,000 on a new piece of equipment (examples 1 to 3).

1). If the company has a year-end of 31st March, 2012 and the obligation to pay for the equipment becomes unconditional before 31st March, 2012 then it’s all straight-forward. The company claims the £50,000 AIA against trading profits.

2) If the company has a year-end of 30th September, 2012 and the obligation to pay for the equipment becomes unconditional before 31st March, 2012 then it’s all still fine. The company is entitled to a time-apportioned AIA of £62,500 and claims the £50,000 AIA against trading profits.

3) However, If the company has a year-end of 30th September, 2012 and the obligation to pay for the equipment becomes unconditional AFTER 31st March, 2012 then THERE IS A PROBLEM. The company is still entitled to a time-apportioned AIA of £62,500 BUT the legislation (Finance Act, 2011 s11(7) limits the AIA in the period after 31st March, 2012 to the amount calculated for the accounting period. In this case, the AIA would be limited to half of £25,000 = £12,500. In terms of the tax bill, this delay in making the investment would increase the 2011/12 tax liability by £6,075.

4) Now ramming my point home. If your limited company has a 30th April, 2012 year-end (like mine) then the tax cost can be signficant even on small figures. Let’s say you invest £10,000 on 30th April, 2012. The legislation restricts the AIA available on this to 1/12th of £25,000 = £2,083. If you invested on 31st March, 2012, AIA of £10,000 would be available. The delay in the investment results in an increased tax bill of £1,266.

Sorry to bombard you with figures. Really my message is :

1/. Invest before 31st March, 2012 to take advantage of the current £100,000 AIA limit

2/. Be very careful about the tax implications of making investments between 1st April, 2012/6th April, 2012 (companies/sole traders and partnerships) and your year-end date. There are good reasons to bring investment forward before 31st March, 2012 or even delay until after your year-end date (if later than 31st March).

Please talk to your accountant or, preferably us, if you are planning to make a sizeable capital investment and need further advice.

October 1, 2011

Nigel from TaxAssist Accountants in Shrewsbury gives some advice about festive rewards for staff

Filed under: accounting, owner-managed businesses, shropshire, small business, tax, tax savings — Tags: , , , , , , , , , , , , , — taxassistshrewsbury @ 8:58 am

With the Christmas season approaching and businesses making plans for staff functions, bonuses and gifts, we would like to make you aware of the various tax implications of your generousity.

Cash gifts and bonuses to employees  -

Cash gifts and bonuses are treated as normal pay and subject to tax and National Insurance (NI) in the normal way. The payment should be put through the payroll. This also applies to any vouchers you give that can be exchanged for goods or services.

However, gifts to employees that can be considered trivial benefits such as a turkey, ordinary bottle of wine or box of chocolates will not need to be declared on form P11d. There is no set monetary limit below which benefits are deemed to be trivial but probably any amount less than £20 per employee would be considered trivial.

Any gifts of a higher value (and classed as non trivial) would be subject to tax and NIC and declarable either as a benefit on form P11d or the tax and NIC could be paid on these gifts by the employer by arranging a PAYE settlement agreement (PSA). A PSA is voluntary arrangement that the employer makes with HM Revenue and Customs (HMRC) to account for tax and NI  on benefits provided to employees.

Christmas parties (and summer events) -

Parties are a tax-efficient way of rewarding employees. Employees and their partners do not pay tax and NI on any parties they attend if the cost to the business is less than £150 per head in the tax year (starting 6th April). The cost per head is the total cost of putting on the function  – accommodation, food, drink etc divided by the total number of guests including the non-employees. For this purpose, the cost includes VAT whether you are VAT-registered or not. The event must be made available to all employees or those at a location (if the business has more than one site).

There are some hidden dangers. If the cost per head of a single party is greater than £150, then the whole amount would be subject to tax and NI.  For example, if the cost of an event is £175 per head the employee (with a partner) is taxed on a benefit of £350. In another scenario if the employer laid on 3 parties costing £100 per head then £90 per head then £40 per head, then tax and NI would be levied on the £90 party. Though the £100 and £40 parties were covered by the £150 annual exemption, the £90 party was not and so the whole event was taxable. So plan carefully.

I know it is very early to be talking about this

September 14, 2011

TaxAssist Accountants in Shrewsbury are offering a free business benchmark report

Filed under: accounting, limited company, owner-managed businesses, shropshire, small business — Tags: , , , , , , , , , , — taxassistshrewsbury @ 2:27 pm

One of the questions clients often ask me when reviewing their accounts is “how do my results compare against other businesses in the same industry?” It is a very good question and one that we can answer with our benchmarking service.

Benchmarking allows an organisation to compare itself against the competition, the market, either nationally or internationally, or against similar businesses in terms of size or turnover.

Once you discover areas of under performance against other organisations, you can investigate why and set in motion improvement strategies.

You are then in a position to benchmark your own current performance against past performance. You are also able to measure which improvement strategies are successful and which are not.

Over time, benchmarking should demonstrate a steady increase in performance in the areas measured.

We are now encouraging our clients to take advantage of a free one page performance evaluation report (normally £200) on completion of their next set of accounts. This offer is also open to new clients.

An example of the report is shown below:  Free business bench-marking report

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