Its a couple of weeks to get everything done and ready for the when the New Year starts up again

6 April 2017

 

The government have made a number of changes to taxation during the year so its good to have a plan to make sure you maximised your tax free allowances.

 

Check you have used up all of your tax code,   because once its gone its gone for good and starts  fresh again in April.   The tax code is currently £11,000 for the year for individuals.

 

Husband and wife you can transfer £1,000 from either partner to the higher earner, this is good for part time or if a partner doesn’t work.

 

Have you bought your equipment ready for the new year to start.  Think of new equipment as not a ill put that off until later but an opportunity be more efficient, speed up your work or even make it easier for you.

 

Capital Gains Tax allowances timing of when you sell an asset is key as theres £11,100 tax free allowance for each year this is additional to your normal income tax code.

 

Flat Rate Scheme is changing from April 2017 are you ready, it will be 16.5% payment over if you are a business that is mainly labour orientated.

 

Are you one of the many higher tax rate earners who is having to deal with the mortgage tax relief restriction.   Wear and tear allowance has now gone,  keep all of your receipts if you are replacing furniture or equipment in your rental house, you cannot claim without your documents.  It is replacement only, first year purchases are excluded now.

 

Again Child Benefit is restricted or even taken away if you are a higher earner over £50,000

 

Child Care Vouchers ceases at the end of April 2018, have you signed up to them its £55 per week tax free allowance which saves you tax and national insurance for income of less than £43,000 per annum.

 

Have you used your £15,240 ISA allowance it all starts again in April.

 

Don’t forget the dividend tax rules have changed dividends now attract 7.5% to basic rate if your dividends are over £5,000.   32.5% for anything over £43,000 make sure youre saving your tax money.

 

So get planning,  check these items if you missed any of these out of your routine this could be saving you money.

 

 

 

Flat Rate Scheme

 

The Flat Rate Scheme is designed to simplify your records of sales and purchases. The process is to apply a fixed flat-rate percentage to your turnover to arrive at the VAT due. Fixed-rate percentage do vary depending on the type of business. You can find a list for percentage on this link https://www.gov.uk/hmrc-internal-manuals/vat-flat-rate-scheme/frs7300

 

From April 2017, there will be a new rule to start regarding the flat-rate scheme, this is because the government is concerned that some businesses are using the Flat Rate Scheme to pay less VAT than is appropriate. This will mainly affect businesses that spend very little on goods, such as businesses that provide service.

 

 So, what is changing? The new change will only affect businesses which have a very low cost base. These businesses will now be called “limited cost traders”. A business will be a “limited cost trader” if it spends less than 2% of its sales on goods or less than £1,000 a year, even if this is more than 2% of the businesses turnover on goods.

 

VAT returns can be a pain and take up time and not allow you to do what you do best, running your business! Visit www.crossaccountingservice.co.uk to discuss your VAT issues with us.

 

Restricting finance cost relief for landlords

 

From April 2017, there will gradually be an introduction of a basic rate reduction restricting the relief for finance cost. Finance cost includes mortgage interests, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans.

 

Landlords will no longer be able to deduct all their finance costs from their property income to arrive at their property profits. Instead, landlords will receive the introductory basic rate reduction from their income tax liability for their finance costs.

 

The governments gradual change will be as follows:

 

·         2017 – 2018 the deduction from property income as it currently is will be restricted to 75% of finance costs with the remaining 25% being available as a basic rate tax reduction.

·         2018 – 2019 the deduction from property income as it currently is will be restricted to 50% of finance costs with the remaining 50% being available as a basic rate tax reduction.

·         2019 – 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction.

·         2020 – 2021, all financing costs incurred by a landlord will be given as a basic rate tax reduction.

 

This change is being implemented to make the tax system fairer. The government want to ensure that landlords with higher incomes no longer receive the most generous tax treatment.

 

For landlords in Wales, there is also a new law that has come in for self-managing landlords to obtain a licence or have an agent to deal with their properties. This is compulsory and to find out if you need to apply visit www.rentsmart.gov.wales

 

We have a lot of clients with a portfolio of properties and help them when it comes to their

self-assessment. If you’re a landlord and don’t understand the rules, you can contact us on 02920653995 or send through an email on nicola@crossaccountingservice.co.uk

I see alot of business owners going into owning a business and under selling themselves.  

We all have different reasons for going into business.   You might be looking to be in charge of your own destiny.  You have a great idea that youve always wanted to pursue.  You lost your job and want to create your own or have a redundancy package that you want to re-invest.

Whatever your reason use these tips below as at the end of day,  if youre not making a profit your dreams and aspirations fall by the way side.

Protect Your Margin

Your margin should be enough that it not only covers the direct cost of your product or service materials and labour, but allows you to make a profit to cover overheads and leave a profit/ or income for yourself to grow and develop the company.

There is a market price for every kind of product or service, ie what your customers will pay for your product or service.  Stay ahead of the competition, know what they are doing, offer something different to stand yourself apart.

The margin itself

Costing your product or service is a vital project in itself. 

Be aware of the percentages your industry can attain.  If your in the food industry aim for a minimum of 3 x your costs, manufacturing products maybe lower between 60 and 100% depending on your product or market.

If you are making a product, Costs include
Materials, Labour, Energy

Keep this exercise in mind at regular intervals, at least every six months.  Energy and cost of materials do fluctuate, you need to be on top of that.

For the labour cost, time yourself making the product, as you get busier, look at ways of saving time.

Ie a machine might do the job faster than you, you might be able to buy in part of the process.

Manufacturing sites, keep a close eye on this with the use of computerised stock systems, using either FIFO or Standard Costing methods.  They see first hand any fluctuations, look into any big fluctuations, up or down.

You can also replicate this using a manual method .

Service Provider
Your service is likely to be mainly labour cost.

Experience and judgement always help when costing up a particular job.  But always keep an eye on the actual time it has taken to complete the exercise.  Keep timesheets at all times and for everything connected with that client.  You will be building up a record in order to raise the sales invoice, plus you will be staying up to date and applying realistic costs when quoting for work.

Cost savings

Save yourself cost of sale by buying direct from the Wholesaler, negotiating the prices.  More volume should equal better discounts.

Try and buy local where you can, your carriage costs could be saved.

Saving labour time, by knowing  your time elements to the job, using machinery where possible.  Time management.

Don’t price yourself too cheap.  Remember you need to be selling at a profit.

Offer added value and up sale marketing, to make higher margins.

Split your products up by margin, ie get the selling mix right, volume on lower margin, less of the higher margin.   

What constraints do you have
Do you have only limited capacity of manufacturing space, limited number of appointments available put day.  Put this into your budget, not just numbers.

If you can improve your margin to a realistic target, you will see the positive result on your bottom line, and hopefully in your pocket too.

Set yourself goals, you can always do better.  Keep that mind set, it’s a great planning tool.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

A summary from the recent Budget issued in March 2016

Budget 2016

Ensure that UK tax will be paid on UK property development;

Limit capital gains tax treatment on performance rewards; and
Cap exempt gains in the Employee Shareholder Status.

Loans to participators will be taxed at 32.5% to prevent tax avoidance.

And we’ll tighten rules around the use of redundancy payments.
Termination payments over £30,000 are already subject to income tax. From 2018, they will also attract employer national insurance.

First, some multinationals deliberately over-borrow in the UK to fund activities abroad, and then deduct the interest bills against their UK profits.

So from April next year we will restrict interest deductibility for the largest companies at 30% of UK earnings, while making sure firms whose activities justify higher borrowing are protected with a group ratio rule.

Tax Losses
And lastly we’re going to modernise the way we treat losses. We’re going to allow firms to use losses more flexibly in a way that will help over 70,000 mostly British companies.

Corporation tax
I can confirm today we’re going to reduce the rate of Corporation Tax even further.

Corporation Tax was 28% at the start of the last Parliament and we reduced it so that it’s 20% at the start of this one.
Last summer I set out a plan to cut it to 18% in coming years.
Today I am going further. By April 2020 it will fall to 17%

Internet Retail
I also want to address the great unfairness that many small businessmen and women feel when they compete against companies on the internet.

Sites like Ebay and Amazon have provided an incredible platform for many new small British start-ups to reach large numbers of customers.
But there’s been a big rise in overseas suppliers storing goods in Britain and selling them online without paying VAT.

That unfairly undercuts British businesses both on the internet and on the high street, and today I can announce that we are taking action to stop it.

That’s the first thing we do to help our small firms.
Second, we’re going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet.

Our tax system should be helping these people so I’m introducing two new tax-free allowances each worth £1,000 a year, for both trading and property income.

Business Rates
Business rates are the fixed cost that weigh down on many small enterprises.

At present small business rate relief is only permanently available to firms with a rateable value of less than £6,000.

In the past I’ve been able to double it for one year only.

Today I am more than doubling it, and I’m more than doubling it permanently.

The new threshold for small business rate relief will raise from £6,000 to a maximum threshold of £15,000.

I’m also going to raise the threshold for the higher rate from £18,000 to £51,000.
Let me explain to the House what this means.

From April next year, 600,000 small businesses will pay no business rates at all.
That’s an annual saving for them of up to nearly £6,000 – forever.
A further quarter of a million businesses will see their rates cut.

In total, half of all British properties will see their business rates fall or be abolished altogether.

And gets rid of tax for small businesses.

Stamp Duty
Just over a year ago, I reformed residential stamp duty. We moved from a distortive slab system to a much simpler slice system.

And as a result 98% of homebuyers are paying the same or less, and revenues from the expensive properties have risen.

At the moment, a small firm can pay just £1 more for a property and face a tax bill three times as large. That makes no sense.

So from now on, commercial stamp duty will have a zero rate band on purchases up to £150,000; a 2% rate on the next £100,000; and a 5% top rate above £250,000.

There will also be a new 2% rate for those high value leases with a net present value above £5 million.

This new tax regime comes into effect from midnight tonight. There are transitional rules for purchasers who have exchanged, but not completed contracts before midnight.

Severn Bridge Toll
I’ve listened to the case made by Welsh colleagues and I can announce today that from 2018 we are going to halve the price of the tolls on the Severn Crossings.

Sugar Tax
A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13.

That can be more than double a child’s recommended added sugar intake.

Let me give credit where credit is due.

Many in the soft drinks industry recognise there’s a problem and have started to reformulate their products.

Robinsons recently removed added sugar from many of their cordials and squashes.

Sainsbury’s, Tesco and the Co-op have all committed to reduce sugar across their ranges.

So industry can act, and with the right incentives I’m sure it will.

I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation:

I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.

So today I can announce that we will introduce a new sugar levy on the soft drinks industry.

Let me explain how it will work.
It will be levied on the companies.
It will be introduced in two years’ time to give companies plenty of space to change their product mix.

It will be assessed on the volume of the sugar-sweetened drinks they produce or import.

There will be two bands – one for total sugar content above 5 grams per 100 millilitres; a second, higher band for the most sugary drinks with more than 8 grams per 100 millilitres.

Pure fruit juices and milk-based drinks will be excluded, and we’ll ensure the smallest producers are kept out of scope.

We will of course consult on implementation.

We’re introducing the levy on the industry which means they can reduce the sugar content of their products – as many already do.
It means they can promote low-sugar or no sugar brands – as many already are.
They can take these perfectly reasonable steps to help with children’s health.

Of course, some may choose to pass the price onto consumers and that will be their decision, and this would have an impact on consumption too.

We understand that tax affects behaviour. So let’s tax the things we want to reduce, not the things we want to encourage.
The OBR estimate that this levy will raise £520 million.
And this is tied directly to the second thing we’re going to do today to help children’s health and wellbeing.

We’re going to use the money from this new levy to double the amount of funding we dedicate to sport in every primary school.
And for secondary schools we’re going to fund longer school days for those that want to offer their pupils a wider range of activities, including extra sport.

It will be voluntary for schools. Compulsory for the pupils.

There will be enough resources for a quarter of secondary schools to take part – but that’s just a start.

A determination to improve the health of our children.
A new levy on excessive sugar in soft drinks.
The money used to double sport in our schools.

Fuel Duty
A Britain fit for the future.
So I can announce that fuel duty will be frozen for the sixth year in a row.
That’s a saving of £75 a year to the average driver; £270 a year to a small business with a van. It’s the tax boost that keeps Britain on the move.

Tobacco Duty
Tobacco duty will continue to rise as set out in previous Budgets, by 2% above inflation from 6pm tonight – while hand rolling tobacco will rise by an additional 3%.

And to continue our drive to improve public health we will reform our tobacco regime to introduce an effective floor on the price of cigarettes and consult on increased sanctions for fraud.

Pub Industry
I’ve always been clear that I want to support responsible drinkers and our nation’s pubs.

5 years ago we inherited tax plans that would have ruined that industry.
Instead, the action we took in the last Parliament on beer duty saved hundreds of pubs and thousands of jobs.

Today I back our pubs again. I am freezing beer duty and cider duty too.
Scotch Whisky accounts for a fifth of all of the UK’s food and drink exports.

So we back Scotland and back that vital industry too, with a freeze on whisky and other spirits duty this year.

All other alcohol duties will rise by inflation as planned.

Class 2 National Insurance
Let me start with Enterprise.
We know that when it comes to growing the economy, alongside good infrastructure and great education we need to light the fires of enterprise.
And our tax system can do more.

To help the self-employed I’m going to fulfil the manifesto commitment we made, and from 2018 abolish Class 2 National Insurance Contributions altogether.

That’s a simpler tax system and a tax cut of over £130 for each of Britain’s 3 million strong army of the self-employed.

Capital Gains Tax
Our Capital Gains Tax is now one of the highest in the developed world, when we want our taxes to be among the lowest.

The headline rate of Capital Gains Tax currently stands at 28%
Today I am cutting it to 20%.

And I am cutting the Capital Gains Tax paid by basic rate taxpayers from 18% to just 10%.

The rates will come into effect in three weeks’ time. The old rates will be kept in place for gains on residential property and carried interest.

So faced with the truth that young people aren’t saving enough, I am today providing a different answer to the same problem.

Savings
We know people like ISAs – because they are simple.
You save out of taxed income; everything you earn on your savings is tax-free; then it’s tax-free when you withdraw it too.

From April next year I am going to increase the ISA limit from just over £15,000 to £20,000 a year for everyone.

And for those under 40, many of whom haven’t had such a good deal from the pension system, I am introducing a completely new flexible way for the next generation to save.
It’s called the Lifetime ISA.

Young people can put money in, get a government bonus, and use it either to buy their first home or save for their retirement.
Here’s how it will work.

From April 2017, anyone under the age of 40 will be able to open a Lifetime ISA and save up to £4,000 each year.

And for every £4 you save, the government will give you £1.
So put in £4,000 and the government will give you £1,000. Every year. Until you’re 50.

You don’t have to choose between saving for your first home, or saving for your retirement.

With the new Lifetime ISA the government is giving you money to do both.

For the basic rate taxpayer, that is the equivalent of tax-free savings into a pension, and unlike a pension you won’t pay tax when you come to take your money out in retirement.

For the self-employed, it’s the kind of support they simply cannot get from the pensions system today.

Unlike a pension you can access your money anytime without the bonus and with a small charge.

And we’re going to consult with the industry on whether, like the American 401K, you can return money to the account to reclaim the bonus – so it is both generous and completely flexible.
Those who have already taken out our enormously popular Help to Buy ISAs will be able to roll it into the new Lifetime ISA – and keep the government match.

A £20,000 ISA limit for everyone.
A new Lifetime ISA.

Tax Free Allowance
A Budget that puts the next generation first.
In two weeks’ time it will rise to £11,000.

We committed that it would reach £12,500 by the end of this Parliament.
And today we take a major step towards that goal.

From April next year, I am raising the tax-free personal allowance to £11,500.

That’s a tax cut for 31 million people.
It means a typical basic rate taxpayer will be paying over £1,000 less income tax than five years ago.

And it means another 1.3 million of the lowest paid taken out of tax altogether.

We made another commitment in our manifesto and that was to increase the threshold at which people pay the higher rate of tax.

That threshold stands at £42,385.

I can tell the House that from April next year I’m going to increase the Higher Rate threshold to £45,000.

A personal tax free allowance of £11,500.

No one paying the 40p rate under £45,000.

Full Article on

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

From November 2015 and updated in January 2016 there is now a requirement for any landlord to complete a landlords licence regardless of how many properties they own.

We have a number of landlords on our books so felt it was necessary to keep you informed of this new legislation.

The deadline for compliance is the end of November 2016,  failure to comply can carry large fines so landlords to please deal with this at your earliest opportunity.

Please visit the website below to see how this will apply to you.  This needs to also be considered if you are considering adding an extra income of property or planned pension provision in this area as this will also affect you.