 |
||
|
Welcome... To October's Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman. If you need further assistance just let us know or you can send us a question for our Question and Answer Section. We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year. Please contact us for advice in your own specific circumstances. We're here to help! |
||
| Morgan Hemp Fuels Expansion With More Recruitment | top |
Morgan Hemp is continuing with its steady expansion, having boosted the team with another new recruit.The firm has taken on a new Junior Accounts Clerk, who is studying towards his professional accountancy qualifications, AAT Level 3. Morgan Hemp recruited two other Junior Accounts Clerks in the spring of this year.
Joe Parker, aged 20, has joined the Morgan Hemp team as an integral part of the continued growth of the Swansea-based company - highlighted by the firm's expansion into neighbouring premises in recent years.
Joe, from Penllergaer, brings with him BTEC National Diplomas in Business Management and Accounts, as well as some experience gained at a South Wales building firm.
Morgan Hemp Director Martin Hudson said the recent appointments were part of the firm's wider success story.
"Morgan Hemp has a diverse client base from sectors including legal, medical, construction and property as well as local business start-ups and entrepreneurs. We have continued to expand and mature as a company and we are proud to be able to offer an ever-growing number of specialist services to our clients.
"But we are also aware of the importance of nurturing new talent and I'm delighted to see Joe bring his enthusiasm to the Morgan Hemp team. I look forward to seeing him grow in the company.
"Joe displays the kind of diligence with a professional and approachable manner, that we at Morgan Hemp pride ourselves upon, and he is already proving himself to be a respected member of staff."
| South Wales Accountancy Firm on the Ball With Mumbles Youth Team Sponsorship | top |
Swansea accountancy firm Morgan Hemp are on the ball when it comes to supporting youth football. They have sponsored Mumbles Rangers Albion Under 13s boys 11-a-side team, providing new shirts.The chartered certified accountants have long associations with the Mumbles team, with one of the company directors, Mark Robinson, being a regular team coach for the Under 12 girls.
Mark said they were delighted to give their backing to the young squad.
"We are very happy to show our support for grass roots sport and it is great to see so many youngsters enthused about football and fitness. We wish them success on the pitch."
The team, which plays home games at Underhill Park in Mumbles, sports the Morgan Hemp company logo on the team kit.
Club Chairman, Chris Parkin said: "We are grateful to Morgan Hemp for their support and we hope we can do them proud this season!
"Community support is so important for grass roots sport in Wales and sport has so many benefits for youngsters that go far beyond fitness, which is why we are dedicated to maintaining Mumbles Rangers FC long into the future."
Morgan Hemp has a track record for throwing its weight behind youth sport - last year they sponsored the Welsh National team at the first European Junior Touch Rugby Championships, in addition to their continued sponsorship of Morriston RFC.
| Changes to NICs for the Self-employed | top |
At the spring Budget 2015, the government announced its intention to abolish Class 2 NICs. Although few details have been announced to date, it appears that after the abolition of Class 2 NICs, the self-employed will continue to pay Class 4 NIC, but this will be subsequently reformed to include a contributory benefit test. The proposed changes raise a few issues - in particular, whilst abolishing Class 2 NIC will be a welcome simplification to the current system, it is essential that a self-employed individual's contributory benefits entitlement is not eroded by the change. For example, for 2015-16, it is not possible for a sole-trader to pay Class 4 NIC unless their profits exceed £8,060; however, they can still make Class 2 NIC payments, even if their profits are below the small earnings exception threshold (£5,965 for 2015-16), and this, in turn, will retain entitlement to various contributory state benefits. For those who do not opt to use a Budget Payment Plan, the payment date for the 2015-16 liability (£145.60) will be due on 31 January 2017. Self-employed traders will need to budget for this lump sum payment accordingly.
| Spotlight on Contractor Loan Schemes | top |
HMRC are adamant that these schemes do not work and are strongly advising contractors and freelancers to keep well away from them. Individuals who have been using the schemes are being encouraged to withdraw and settle their tax affairs as soon as possible to avoid substantial penalties and interest charges being incurred.
HMRC have confirmed that this type of scheme must be declared under the Disclosure of Tax Avoidance (DOTAS) legislation, which means that the promoter is required to pass the scheme reference number (SRN) to all the users who must declare it on their tax return.
HMRC have added a new module entitled Contractor loan schemes - too good to be true (Spotlight 26) to their Spotlight series, which covers various tax avoidance schemes that HMRC consider to have wide tax implications. The module, which can be found here https://www.gov.uk/government/publications/spotlight-26-contractor-loan-schemes-too-good-to-be-true/spotlight-26-contractor-loan-schemes-too-good-to-be-true, may be of interest to anyone using, or considering using, a contractor loan scheme.
| Tax Credit Changes Approved | top |
Following the announcement in the Summer 2015 Budget, there has been much debate over the draft regulations and their impact. In particular, there is concern about how the introduction of the national living wage will affect the proposals; whether there are likely to be any behavioural impacts brought about by the proposals; and the degree to which the proposals are likely to impact upon the successful transition of tax credits to universal credit.
Two changes - the increase in the taper rate from 41% to 48%, and reduction in the income threshold from £6,420 to £3,850, will affect many existing claimants and mean that they are likely to see a fall in the amount of tax credits received.
Currently, tax credits are reduced (tapered) by 41p for every £1 that income rises above the following thresholds:
- For WTC only claims, the threshold for 2015-16 is £6,420
- For CTC only claims, the threshold for 2015-16 is £16,105
- For WTC and CTC claims, the threshold for 2015-16 is £6,420
Although not directly announced, these changes, combined with the freeze on some elements of tax credits, mean that the CTC-only threshold will also reduce as a consequence down to £12,125. Broadly, this means that people with incomes above the new thresholds will see their tax credits reduced lower down the income scale and at a much faster rate.
The Low Incomes Tax Reform Group (LITRG) has produced guidance and a useful table, which shows the maximum loss of tax credits, at various levels of income, from the changes set to take effect from April 2016. The table can be found here. http://www.litrg.org.uk/News/2015/150917-How-will-tax-cuts-2016-affect-you
| IHT on Main Residence Nil-rate Band and Downsizing Proposals | top |
The proposed rate bands are:
- £100,000 in 2017-18
- £125,000 in 2018-19
- £150,000 in 2019-20
- £175,000 in 2020-21
It is proposed that from 2021-22 the band will rise in line with the consumer price index (CPI).
Broadly, the proposals mean that where part or all of the RNRB might be lost because the deceased has downsized to a less valuable residence, or has ceased to own a residence, the lost RNRB will still be available, providing certain qualifying conditions are met (see below). The intention is that an estate will be eligible for the proportion of the RNRB that is foregone as a result of downsizing or disposal of the property as an addition to the RNRB that can be used on death.
If the proposals are enacted, the qualifying conditions for the additional RNRB will be broadly the same as those for the RNRB, that is the:
- individual dies on or after 6 April 2017;
- property disposed of must have been owned by the individual and it would have qualified for the RNRB had the individual retained it;
- less valuable property, or other assets of an equivalent value if the property has been disposed of, are in the deceased's estate (this includes assets which are deemed to be part of a person's estate);
- less valuable property, and any other assets of an equivalent value, are inherited by the individual's direct descendants on that person's death.
In addition, under current proposals, the following conditions will also apply:
- the downsizing or the disposal of the property occurs after 8 July 2015;
- subject to the condition above, there will be no time limit on the period in which the downsizing or the disposals take place before death;
- there can be any number of downsizing moves between 8 July 2015 and the date of death of the individual;
- downsizing will also include disposing of part of a property (including land occupied and used as a garden or grounds) or a share in it;
- where a property is given away, assets of an equivalent value to the value of the property when the gift was made must be left to direct descendants;
- the value of the property will be the net value i.e. after deducting any mortgage or other debts charged on the property;
- the additional RNRB will be tapered away in the same way as the RNRB if the value of the estate at death is above £2m;
- the additional RNRB will be applied together with the available RNRB, but the total for the two will still be capped so that they do not exceed the limit of the total available RNRB for a particular year; and
- a claim will need to be made for the additional RNRB in a similar way that a claim is made to transfer any unused RNRB to the estate of a surviving spouse or civil partner.
The technical note, entitled Inheritance Tax on main residence nil-rate band and downsizing proposals provides further details of the proposals and gives some useful examples to illustrate how they will apply. Responses to the note, which are requested by 16 October 2016, will inform the draft legislation to be included in the Finance Bill 2016.
The technical note can be found here. https://www.gov.uk/government/publications/inheritance-tax-on-main-residence-nil-rate-band-and-downsizing-proposals-technical-note/inheritance-tax-on-main-residence-nil-rate-band-and-downsizing-proposals-technical-note
| October Question and Answer Section | top |
Q. I am a VAT-registered sole trader, owning a cycle shop in my local town. I am thinking of opening a second shop in another town and am wondering how I will deal with this for self-assessment and VAT. Will I need to register the new shop for VAT separately and complete two VAT returns - one for each business?
A. I presume you are going to be selling similar goods and providing similar services in the new shop. If that is the case, you will be able to do one self-assessment for the two businesses by amalgamating the figures for both shops. For VAT purposes, the HMRC state that it is the 'person', not the business, who is registered for VAT. A person can be either an individual or a legal person or entity and each VAT registration covers all the business activities of the registered person. This means that even if your new business has a different name, you will only need one VAT registration number.
Q. I own a rental property and let it out on a fully-furnished basis. Can I claim a tax deduction for the cost of replacing items as and when needed?
A. The government withdrew the 'renewals basis' capital allowance for furnishings in rental properties from April 2013, which means that currently only the 10% wear and tear allowance for a fully furnished rental property is available to you. Note that the wear and tear allowance is not available to those property businesses that rent part-furnished or unfurnished property.
The good news, however, is that in the Summer 2015 Budget the government announced that, as from April 2016, the 10% wear and tear allowance will cease and will be replaced with a new 'replacement allowance'. Broadly, the new relief will enable all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings in the property. The relief will apply to landlords of unfurnished, part-furnished and furnished properties (but not to 'furnished holiday lettings' (FHLs) or commercial properties).
Under the new replacement furniture relief, landlords of all non-FHL residential dwelling houses will be able to claim a deduction for the capital cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant's use in the dwelling house, such as:
- movable furniture or furnishings, such as beds or suites,
- televisions,
- fridges and freezers,
- carpets and floor-coverings,
- curtains,
- linen, and
- crockery or cutlery.
The new replacement furniture relief will only apply to the replacement of furnishings. The initial cost of furnishing a property will not be included.
Q. I am a higher-rate taxpayer. My wife currently works part time and pays tax at the basic rate. We have a second property that we rent out but the deeds are held in my sole name. Is it worth putting the property into joint names, or even transferring it to my wife outright, so that we pay tax on the rental income at the basic rate?
A. If you live with a spouse or civil partner and have income from property you jointly own, you will normally be taxed on an even split of the income between you. In your particular circumstances there are two options available:
1. Under what is known as the '50:50 rule', you can simply make your wife a partial owner of the property, which means you will each be taxed on 50% of the rental income. For the purposes of these rules, the actual amount she owns is not relevant - it could be 99%, 50% or even 1%, as long as she is a partial owner.
2. You can make your wife a partial owner of the property and notify HMRC of the proportion she holds accordingly. You do this by submitting Form 17 to HMRC to record your actual shares of ownership. You will both then be taxed on the rental income according to the proportion you both actually own in the property (known as the 'actual basis'). You will need to provide HMRC with evidence that your beneficial interests in the property are unequal, for example a declaration or deed. You can complete Form 17 online here. https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/SpecPersTax_iForms/1.0/17&template=17.xdp
| October Key Tax Dates | top |
1 - Due date for payment of Corporation Tax for the year ended 31 December 20145 - If a Tax Return has not been received, individuals and trustees must notify HMRC of new sources of income and chargeability in 2014/15
14 - Return and payment of CT61 tax due for quarter to 30 September 2015
19 - Tax and Class 1B national insurance due on PAYE settlements for 2014/15
19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/10/2015 or quarter 2 of 2015/16 for small employers
31 - Deadline for 2014/15 self assessment paper returns to be filed for HMRC to do the tax calculation. If a paper return is being filed also the deadline for tax underpaid to be collected by adjustment to your 2016/17 PAYE code (for underpayments of up to £3000 only)
| Need Help? | top |
| New Clients Welcome | top |
Please contact us if we can help you with these or any other tax or accounts matters.In addition, if there's anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to come to meet with you to discuss how we can help and provide you with a competitive quote for our services.All new client consultations are provided free of charge and without obligation.
| About Us | top |
Whether you are a large limited company or just starting out we can help you manage all your financial matters from book keeping and wages to annual accounts and raising finance. Visit our website http://www.morganhemp.co.uk for more information.
If the images do not show.
If the images contained within this email do not show correctly please add this email to your safe senders list.
|
Unsubscribe To unsubscribe from this email please Disclaimer |