Archive for January, 2017

Passing on the family home

Wednesday, January 11th, 2017

New inheritance tax rules for passing on the family home start on 6 April 2017 and many people have a New Year’s Resolution to either make a Will or update their Wills. This new relief should be taken into consideration when drafting your Will and we can work with your solicitor to make sure it is tax efficient.

From 6 April 2017 a new nil rate band of £100,000 will be available on death where your residence is left to direct descendants. This is in addition to the normal £325,000 nil rate band and will increase over the next 4 years to £175,000 in 2020. You may recall that when this was originally announced in summer 2015 the chancellor said that a married couple should be able to pass on their family home worth up to £1 million free of Inheritance tax. The rules are fairly complicated and HMRC have recently issued guidance on how the new relief will operate. We can review your personal circumstances to ensure that you take advantage of all relief that you are entitled to.

Tax Free Childcare Accounts to start 6 April 2017

Wednesday, January 11th, 2017

New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed by legal disputes with organisations involved in administering the existing scheme, but the new accounts will at last be introduced on a trial basis in early 2017.

The new scheme will then be rolled out across the country based on the results of the trial. The rules are complex, but where both parents work and earn at least £115 per week, they will be able to put up to £8,000 a year into a special account which the Government will top up with 20p for every 80p contributed by the parents. This account can only be used to pay for childcare such as nursery fees.

It is anticipated that the new scheme will eventually replace the existing childcare voucher scheme which is only available to employees who work for organisations that offer such schemes. The new system will benefit the self-employed as well as those workers in organisations that currently do not provide childcare vouchers.

More Tax Free Allowances from 7 April 2017

Wednesday, January 11th, 2017

In addition to the current £5,000 tax free dividend allowance and the personal savings allowance of up to £1,000 there will be two further tax free allowances starting from 6 April 2017. These will be a new £1,000 tax free allowance for self-employed income and a £1,000 rental income allowance.

These new allowances mean that individuals doing a small amount of self-employed work or receiving a small amount of rental Income will not need to report such income and consequently may fall outside self-assessment.

Note that the £1,000 allowances are the gross amounts that will be tax free each year. Where the gross income exceeds £1,000 there will be the choice of paying tax on the excess over £1,000 or deducting allowable expenses in the normal way.

For example Mr Nikon has a full time employment but also has a part – time photography business earning £1,500 a year with £800 of business expenses. Rather than paying tax on the net profit of £700 the new system will mean that he will only be taxed on £500 (£1,500 less the £1,000 allowance). If his gross income was below £1,000 it would be tax free and would not need to be reported to HMRC, probably keeping him outside of self-assessment.

More funding available to rural businesses

Tuesday, January 10th, 2017

£120 million of funding is to be made available to support farmers, grow businesses, and generate thousands of jobs in rural communities. This announcement was made by the Environment Secretary, Andrea Leadsom, earlier this month at the Oxford Farming Conference. Funding to be released will include further support for the following types of project:

  • Rural and farm businesses will soon be able to apply for the next round of the Rural Development Programme for England (RDPE) Growth Programme, which will help new businesses get off the ground and support existing companies to grow, develop new products and access new export markets.
  • Funding has already benefited dozens of businesses across England, including the Biddenden fruit handling company in Kent, which received £70,000 to install new equipment – leading to two new products and three new jobs – and Carvannel Free Range Dairy Ltd in Cornwall, which received over £80,000 to diversify their business and develop a new milk processing factory.

Speaking after the Oxford Farming Conference, Environment Secretary Andrea Leadsom said:

A quarter of England’s businesses are based in the countryside and this funding will give rural start-ups, family-run businesses and farmers looking to diversify the boost they need.

The RDPE has already supported a range of projects, from installing cutting-edge equipment to restoring flood plains, and the next round will help create more jobs, sell more products and help us access new markets.

As well as boosting businesses and creating jobs, past RDPE projects have benefited the natural environment – with money granted to Dovecote Farm in Northants helping restore flood-plain meadows and grassland along the Nene Valley, while supporting species like otters.

Confirmation of next steps for the RDPE follows the Chancellor’s recent guarantee on supporting projects signed before we leave the EU, providing they are good value for money and are in line with domestic strategic priorities.

The £120 million fund will sit alongside recently announced funding for other RDPE projects, including woodland creation and a flood action facilitation fund.

Meet the Team – Mark Plant– Practice Manager

Saturday, January 7th, 2017

Mark has been with Slaters since 2008.

Mark takes pride in working closely with clients acting as their Finance Director, so that he really gets to know their business and can help them tackle any issues. One of Mark’s specialisms is supporting/implementing accounting systems in particular SAGE, as well as assisting clients who are experiencing financial difficulty; or who wish to develop their business and require specialist financial advice.

Mark’s role at Slaters developed to become Practice Manager in 2016, supporting the work flow through the practice, implementing the new electronic post system, supporting clients with the sale and acquisition of businesses, and providing business and accounts advice.

Mark has 2 beautiful girls, Sophie and Lucy and a dedicated wife Gemma. He enjoys keeping fit, in particular running and weight training. Mark is an avid supporter of the Douglas MacMillan hospice, having completed the 3 Peaks twice and Potters Arf Marathon.

Meet the Team – Simon Barratt – Director

Saturday, January 7th, 2017

With a track record of over 30 years’ accountancy experience, Simon Barratt acquired Slaters & Co Accountants in 2016. Having previously worked in a senior role with Thompson Wright Accountants in Newcastle Under Lyme, Simon has a wealth of experience in supporting local businesses with the full range of accounting requirements.

Simon lives locally and celebrated 30 years of marriage to his wife Dawn in 2016. He has two children, Chris aged 26 and Lydia aged 23. In his spare time, Simon is a keen cricket fan and played for his local club for 38 years and is still involved as club treasurer. Simon also loves walking in the countryside with his family.

Simon takes pride in delivering a professional friendly service, and is keen to ensure that all Slaters’ clients receive accountancy support which is completely tailored to their specific requirements. The overall aim is to help clients’ businesses operate efficiently, and where possible, to save them money.

Tax return deadline at the end of this month

Thursday, January 5th, 2017

If you are required to file a tax return for 2015-16, and have not yet done so, you have until 31 January 2017 to complete the online filing process before automatic fines and possible penalties will be applied.

Readers may be amused by the following excuses made by tax payers who have previously filed late returns.

These included:

  1. “My tax return was on my yacht…which caught fire”
  2. “A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed”
  3. “My wife helps me with my tax return, but she had a headache for ten days”
  4. “My dog ate my tax return…and all of the reminders”
  5. “I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant”
  6. “My child scribbled all over the tax return, so I wasn’t able to send it back”
  7. “I work for myself, but a colleague borrowed my tax return to photocopy it and lost it”
  8. “My husband told me the deadline was the 31 March”
  9. “My internet connection failed”
  10. “The postman doesn’t deliver to my house”

The reasons above were all used in unsuccessful appeals against HMRC penalties for late returns.

HMRC will treat those with genuine excuses leniently, as they focus penalties on those who persistently fail to complete their tax returns and are deliberate tax evaders. This remains the case, although the excuse must be genuine and HMRC might ask for evidence. The ten excuses listed above were all declined on the basis that they were either untrue or not good enough reasons for late filing.

Tax Diary January/February 2017

Wednesday, January 4th, 2017

1 January 2017 – Due date for corporation tax due for the year ended 31 March 2016.

19 January 2017 – PAYE and NIC deductions due for month ended 5 January 2017. (If you pay your tax electronically the due date is 22 January 2017)

19 January 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2017.

19 January 2017 – CIS tax deducted for the month ended 5 January 2017 is payable by today.

31 January 2017 – Last day to file 2015-16 self-assessment tax returns online.

31 January 2017 – Balance of self-assessment tax owing for 2015-16 due to be settled on or before today. Also due is any first payment on account for 2016-17.

1 February 2017 – Due date for corporation tax payable for the year ended 30 April 2016.

19 February 2017 – PAYE and NIC deductions due for month ended 5 February 2017. (If you pay your tax electronically the due date is 22 February 2017)

19 February 2017 – Filing deadline for the CIS300 monthly return for the month ended 5 February 2017.

19 February 2017 – CIS tax deducted for the month ended 5 February 2017 is payable by today.

Capital gains tax planning 2016-17

Wednesday, January 4th, 2017

This is also an appropriate time of the year to consider your CGT position if you have already disposed of (or are considering a disposal) of an asset subject to CGT during 2016-17.

Most of our readers will be aware that they can make chargeable gains of up to £11,100 in the tax year 2016-17 and pay no CGT. This exemption cannot be transferred to a future tax year or carried back to a previous tax year if it is not utilised.

Many will also remember that it is no longer feasible to sell shares before 6 April 2017 in order to crystallise a CGT loss or a gain that is covered by the above exemption, if those shares, or part of them, are reacquired within 30 days of the disposal. However, it is still possible to reacquire holdings, within the 30 days period, if you use an ISA or self-invested personal pension (SIPP) to make the buy-back.

Transfers of chargeable assets for CGT purposes are exempt between spouses and civil partners. Also, the annual exemption is available to both parties. This combination means that couples may be able to share the gain on a disposal of assets and reduce their overall CGT charge.

This strategy, of transferring partial ownership to a spouse, can also reduce an overall CGT charge if the transferring partner/spouse is due to pay CGT at the higher 20% or 28% rate (as their gains fall to be taxed in the higher rate tax band) and the receiving partner/spouse would only be liable to pay CGT at the lower 10% or 18% (as their share of a transferred gain would fall into their free basic rate band).

The 10% and 20% rates apply from April 2016, but do not apply to disposals of residential property or carried interest – for these latter items, disposals are taxed at 18% to 28%, dependent on where the gains sit in the basic or higher rates bands.

And don’t forget, CGT is assessed and payable as part of your self-assessment. Any tax payable for 2016-17 will be due for payment 31 January 2018. On the same day you will also have to pay any other underpayment of income tax for 2016-17 and your first payment on account for 2017-18.

If you own assets that are subject to CGT on disposal, and you, and possibly your spouse, are struggling to fully utilise your CGT annual exemption, or you would like to discuss ways to minimise any CGT payable, please call to discuss your options.

Car fuel advisory rates from 1 December 2016

Wednesday, January 4th, 2017

From 1 December 2016, the advisory fuel rates have changed to:

1400cc or less: petrol 11p per mile, LPG 7p per mile

1401-2000cc: petrol 14p per mile, LPG 9p per mile

Over 2000cc: petrol 21p per mile, LPG 13p per mile

Diesel rates:

1600cc or less: 9p per mile

1601-2000cc: 11p per mile

Over 2000cc: 13p per mile

These rates can be used from 1 December 2016 to calculate the petrol content of mileage rates paid to employees, or as a basis to repay private petrol provided by employers for the use of a company car (see previous article).