It’s the end of the year and its time to enjoy and be in the Christmas spirit. It’s not long until we get to enjoy the food and drinks to last to the New Years celebrations. It is one of our favourite times of the year here at Cross Accounting. The darker evenings are given a little colour with the neighbourhood Christmas lights. While this is the time of giving and enjoying yourself, we would like to remind you of the financial aspect over the festive period.

Without trying to put out a negative mood, we do want to address the reality of credit card bills and debt and the very high interest charges they carry.

We have been speaking to a number of liquidators in the last couple of months and all have mentioned that it is this time around were people use their credit cards or store cards the most. This would make sense as we get ready to buy gifts and as the High Street stores accommodate their opening hours for the Christmas rush.

A survey by uSwitch finds that Britons borrow an average of £452 each at Christmas. Heading in to the New Year, this can cause a bit of a problem for some.

It is perfectly fine to go out and spend for loved ones and friends, but please stick to your budget. You want to end 2018 on a high and have the best possible start for the New Year.   

Let’s start the New Year in the best way possible. With positivity and new inspirations to keep both your personal life and business life in prosperity for 2019.

We would like to wish you a Merry Christmas and a prosperous 2019, from all at Cross Accounting Service.

The Budget 2018 has been released. The chancellor has put together how money will be spent for the forthcoming future. It is looking positive as there are predictions that the economy will grow as the forecast for 2019 raised from 1.3% to 1.6% and annual forecasts raised to 1.4% in 2020 and 2021, 1.5% in 2022 and 1.6% in 2023.

This Government has prioritised getting people into work as the best way to help people is to provide them with stability and a pay packet every month. Since 2010 over 3.3 million more people are in work and predicting 800,000 more jobs by 2023.

To provide the jobs, you will need businesses, and therefore the Chancellor has vowed to back another 10,000 entrepreneurs by extending Start-Up Loans funding to 2021 and following representations from the FSB, extending the New Enterprise Allowance. Which will provide mentoring and support for benefit claimants to get their business ideas off the ground.

UK to be in the digital era

Digital Platforms delivering search engines, social media, and online marketplaces have changed our lives. Digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business and to make this fair, there has been an introduction of UK Digital Services Tax.

This will be a narrowly-targeted tax on the UK-generated revenues of specific digital platform business models. It will be carefully designed to ensure it is established tech giants – rather than the tech start-ups - that shoulder the burden of this new tax.

The Digital Services Tax will only be paid by companies which are profitable, and which generate at least £500m a year in global revenues in the business lines in scope.

The tax will come into effect in April 2020 and is expected to raise over £400m a year.

Help for the High Street

There is also support for the High Street retail businesses. With many small retail businesses struggling to cope with the high fixed costs of Business rates, in 2016 there was an introduction of business rates relief measures worth £12bn.

Going further, at the next revaluation in 2021, rateable values will adjust to reflect changes in rental values. This will help retail businesses as for the next two years, up to that Revaluation, for all retailers in England with a rateable value of £51,000 or less, this will cut their business rates bill by one third.

That’s an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes.

Stamp Duty and Housing

The Budget is committed to keeping family homes out of Capital Gains Tax, but some aspects of Private Residence Relief extend it beyond that objective and is to provide relief for people who are not using the home as their main residence.

From April 2020 Lettings Relief will be limited to properties where the owner is in shared occupancy with the tenant and reduce the final period exemption from 18 months to 9 months.

All first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers’ relief, an increase since the last budget abolished Stamp Duty for first-time Buyers on properties up to £300,000. This relief will be made retrospective so any first-time buyer who has made such a purchase since the last Budget will benefit.

Personal Allowance Thresholds

Delivering higher wages for those in work is core to the chancellor. The poorest 20% have seen their real incomes grow faster than the richest 20% and the proportion of jobs that are low paid is at its lowest level for 20 years. This is largely due to the National Living Wage introduced in 2016.

From April the National Living Wage will rise again, by 4.9%, from £7.83 to £8.21, handing a full-time worker a further £690 annual pay increase, with the ultimate objective of ending low pay in the UK.

In April 2018, the personal allowance is the current of £11,850 and £46,350 for the Higher Rate Threshold. However, from April 2019 the Personal Allowance is raised to £12,500 and the Higher Rate Threshold to £50,000, a year earlier than planned.

A tax cut for 32 million people and £130 in the pocket of a typical basic rate taxpayer.

With the leaves turning brown, darker evenings, it is time to bring out the quilts and cosy up in front of the fire as Autumn is here. It is one of our favourite times of the year as the horrors of Halloween and the blasts of Bonfire night approach. A great time to spend with family and friends to have fun.

During this time, you want to avoid a fright and get the benefits of filing your tax return as early as possible. This will ease any pressure off as it is one task out of the way and you can solely focus on your business, giving it the final push to end 2018 on a high. The deadline of 31^st January never changes and HMRC reported last year that an estimated 2.6 million people had not filed their tax return two days before the deadline.

You risk an automatic £100 fine if you miss the deadline and there are more consequences for more delayed time. If your tax return becomes more than 3 months late then £10 daily penalties will accumulate. This is a situation you do not really want to be in as the penalties can be massive.

It really helps filing your tax return earlier, just because you do this early does not mean that the tax liability will have to paid over straight away. It is still the normal due date of January, so you have plenty of time to budget for however much you may need to pay over to HMRC. If you are due any refunds, then you will also get this earlier, where as any returns done in January, will take a lot longer for HMRC to process any refunds as it is their busiest time.

With a bit of organisation, you can get your paperwork in order and get your tax return over and done with all the while enjoying your Christmas and New Year’s plan stress free. You could pay too much or even too little tax, so the help of an advisor is vital. Contact us on www.crossaccountingservice.co.uk if you have any concerns regarding you tax return as we are always here to help.

The summer months are coming to an end as autumn closes in. Everyone is returning from their summer break, the children will be heading back to school its back to business.

It’s always great to plan ahead, so this time we talk about the new Making Tax Digital (MTD) that HMRC are set to introduce from April 2019, this has been going back and forth in consultation for some time now, HMRC now have communicated the requirements.

This will be mandatory for businesses registered for VAT with a turnover above the VAT registration threshold of £85,000. Businesses will need to keep VAT records digitally and their VAT returns using MTD compatible software. This will start from their first VAT period starting on or after 01 April 2019.

If you submit a quarterly return for the period 01 March to 31 May 2019 then you will have to comply with MTD rules for the period starting 01 June 2019. Businesses under the VAT threshold will not have to operate MTD but can choose to do so voluntarily, which we would recommend.

Going forward the use of compatible accounts software will be mandatory. The use of spreadsheets can no longer be used.   

HMRC are trying to reduce the number of VAT inspection on businesses that are complying and MTD will make this clearer for all. If you’re struggling and not understanding what to do and how to be ready for the April 2019 deadline, do not panic and contact us, as we are always here to help.

We all want to leave something behind for our loved ones. It’s what we get up in the morning and work hard for. But a financial gift unfortunately has a tax implication to it. Research shows that only 45% of people making financial gifts are aware of Inheritance Tax.

It is always recommended to write a will, you can get a professional to do this for you for as little as £150. Make sure your money goes to who you want it to.    

We are hearing a lot of cases where there is no will. It can cause issues in a couple of situations example if your partner needs to go into a nursing home. What happens to children under the age of 18. Your wife, husband or civil partner having difficulty accessing family funds.

The treasury benefits from £5.8 billion income in inheritance tax each year. There are also 10,000 unclaimed estates where a no next of kin has been found worth more than £150,000, plus thousands more amounting to several million pounds. After 30 years that money is gone if a direct descendant cannot be found, it goes straight to the treasury and not to your family.    

Live in partners are not next of kin, even if they have been living with you for 20 years or more. Under inheritance tax law they have no rights to anything if a will has not been created.

So, what is Inheritance Tax?

Inheritance Tax is a tax on an estate of someone who’s died. An estate is the likes of property, money and possessions. There is a tax-free threshold of £325,000. You normally don’t have to pay inheritance tax if the value of your estate falls below the £325,000 threshold.

If you pass all your assets to your wife/husband, civil partner there is no inheritance tax to pay, its only when you give assets away to other people that inheritance tax is payable. Its 40% tax over and above the nil rate band.

There is an elected transfer to your spouse, civil partner or charity where both your nil rate band and your partners can be added together to make a maximum tax-free amount of £650,000. The transfer is claimed on the occasion of the 2^nd partner dying. It’s not automatic there is a form to complete for this. Don’t assume its Automatic.

Your threshold can also increase if your estate is worth more than £325,000 and you give your home away to your children (this includes adopted, foster or stepchildren) or grandchildren. There is up to an extra £150,000 available to be added to your threshold. If the estate is below £325,000, you will still have to report this to HMRC. Probate forms usually must be completed within a certain timeframe of someone dying.    

Example

Say your estate is worth £550,000, your tax-free threshold is £325,000. You will get an increase of up to £150,000 if your home is given to direct descendants. The inheritance tax charged will be 40% of £75,000.

Who pays the tax bill?

Funds from your estate are used to pay the Inheritance Tax to HMRC.  If there is a will this is done by the person dealing with the estate known as the executor. The beneficiaries are the people who inherit your estate do not normally pay the tax on the things they inherit.

7 Year Rule

There is normally no inheritance tax to pay if you gift your home and live for another 7 years, although capital gains tax might come into play.  If you die within 7 years of giving all or part of your property, your home will be treated as a gift and the 7-year rule applies. There are many tax reliefs that can be gained between the 0 years and 7-year rule. Always use an accountant if your estate has multiple sources of income. Don’t miss out on the hidden tax reliefs.

Gifts

You do not have to pay any tax on gifts between spouses, you can give them as much as you like during your lifetime.   

Anyone is entitled to give gifts of up to £3,000 per annum without any inheritance tax being involved. You can carry over an unused annual exemption to the next financial year, this can only be the next financial year that immediately follows. It’s important to record this in a diary as proof to avoid it being used to reduce your nil rate band.

You can also give away the following, in each tax year:

·         Wedding gifts of up to £1,000 to any person (£2,500 to a grandchild, and £5,000 to a child)

·         Normal gifts out of your income, such as Christmas or birthday presents

·         Payments to help another person’s living cost such as an elderly relative

·         Gifts to charities and political parties

You can also give as many gifts of up to £250 per person as you want during the tax year if you have not used another exemption on the same person.

Inheritance tax is a complicated tax system that encounters many of the other tax systems within it, always seek professional advice if this is not a straightforward estate.

For those of you watching the Glastonbury Festival over the weekend.     

It was a great boost to our UK economy.   Some £40 million turnover taken over the 5 day event.  Over 200,000 people attended and 3 million people tuned in to see Kylie Minogue, with Stormsy and The Killers pulling in great ratings too.

Donations to Oxfam, Green Peace and Water Aid were the main charities benefiting from the event.

The area I want to draw to your attention was over 200,000 attended the event this year, and over 400 small food and merchandise providers helped make the event a great success.

Whether you love it or hate it,   its provided a great boost to what has been so far quite a difficult 2019 for many retail and service outlets.

Those 400 food and merchandise providers will be providing jobs to thousands of people, creating work for not just the Somerset area but all over the UK, as a lot of the suppliers would have travelled to the area for work.   

There was also 2,000 volunteers mainly representing and supporting the three main charities.

With our continuing confused political market at the moment, with uncertainty with what is happening with Brexit.    A lot of small businesses are struggling to keep a float,  they are finding it harder to gain long term contracts, and being able to gain fixed prices for goods that may be coming from overseas.    The uncertainty affects everything.    The exchange rate of the Pound Sterling to Euro is also still highly volatile.

Please keep supporting your local businesses, they are keeping millions of people employed at the moment, we most definitely need them into 2020.

We never hear about them in the news when they suffer, they just go about their business quietly.       We only hear about the larger companies finding things tough at the moment.

Our economy and stability we all like to take for granted heavily relies on them.

Give your local business whoever they are your full support in 2019 regardless of the political outcome.      Lets keep our economy robust to ride the storm.

#shop local

We’re halfway through the year and 2019 is not slowing down for anybody. There are approximately 5.7 million businesses in the UK, of which 96% are considered small or micro. So, we small businesses are crucial to the UK economy, there is no denying this.

Whether you are a start-up and excited for the times ahead, or an establishment renewing your challenges, we all want to be successful with our business. In our latest blog, we talk about tips we think are vital to any business.

We all have a vision in mind, of where we’d like to see our business in the future. This vision needs to be translated on paper as your business plan. A business plan is a must for all business owners. This can help outside investors get an insight of your business, for if ever you need funding to grow your business.

Business Plan

A business plan should consist of;

·    Summary – What is your purpose, what is your vision?

·    Target market – Who are you likely to sell to

·    Competitors – What is your rivals weakness? Why are you different?

·    Staff – Do you need people to help run your business. What level of skill and pay is required?

·    Suppliers – Who will be your main supplier?

·    Marketing Plan – How will you advertise yourself to the world

·    Operations – Which is the best way to run your business.

·    Finance – How much money do you need? Determine the profitability of the business.

Business Structure

As well as a business plan, you will need to have a business structure. Sole trader, partnerships and limited companies all have their own pros and cons. Deciding which structure to choose is not always straightforward. If an asset is owned outright, then you would need to consider retaining personal ownership on incorporation. If you’re not sure which structure model you should go for, then here at Cross Accounting we can give tailored advice to you.

Year End

We cannot stress enough the importance of doing your year end as early as possible. Once completed, this will give you peace of mind as you will not have to worry, until next year. It will also give you more time to budget for your tax bill. You will not be in a rush to find the money for the tax bill and not kill your cashflow. Keep all receipts for your expenses, these will all help lower the tax bill. If you buy equipment or tools, mobile phone bills, petrol, these are all deductible. HMRC can conduct random spot checks, so it’s important to keep paperwork, recommended for 6 years.

Budgeting

Having budgets in place for your business can help you predict the near future. This allows you to have a spending plan, so you can make sure you have money for the things you need and the things that are important to you. You can see what is eating up your cash and avoid spending on unnecessary fees. Below is an example of a very simple budget.

These tips will keep you motivated and more importantly give you an idea of where your finances lay, helping you to quickly identify if there are rainy days ahead.

If you need expert tailored advice, please do get in touch as we are always happy to help.

The new financial year is in full swing, and it’s when the new rates and regulations kick in. Your personal allowance has changed along with other vital thresholds that take effect when it comes to completing your tax return.

Personal Allowance

The new year brings the new personal allowance at £12,500 for the year. So, what is your personal allowance? Personal allowance is the amount of income in which you do not have to pay tax on. You will pay tax on anything over the £12,500, the table below will display what percentage of tax you pay in each band.

You do not get a personal allowance on taxable income over £125,000. Any income above this threshold and tax will be due on all amounts to the respective band.

Dividend Allowance

As well as the personal allowance, the dividend rate has also changed. Just like a personal allowance, you also have a dividend allowance. Dividends that fall in within your personal allowance do not count towards your dividend allowance.

The tax you pay depends on which Income Tax band you’re in.

Example

Say you were to get £4,000 in dividends in the 2019 to 2020 tax year. The dividend allowance is £2,000, so this means you pay tax on £2,000 (£4,000 minus £2,000) of your dividends. Your other taxable income is £30,000. Add this to your dividends of £4,000 and your total taxable income is £34,000. You pay a rate of 7.5% on £2,000 of dividends because your total taxable income is within the basic tax band.

National Minimum Wage

If you employ staff, then you are probably aware that the National Minimum Wage rate has also changed. It is a legal requirement to pay the NMW as an employer.

For all the rates mentioned, they usually change every year, typically in April. You must be aware of these rates to make the most out of completing your tax return and to fulfil your legal obligation. There are many other allowances and rates, but the ones mentioned are the usual ones that affect everyone. If you are worried about whether you are in the right tax band or not sure if you’ve used up all of your allowance, please visit our website on www.crossaccountingservice.co.uk or call us on 02920 653 995 where a member of staff can assist. We are always happy to help.