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Tip of the day

New Advisory Fuel Rates

As of tomorrow, there are new advisory fuel rates for paying employees for business miles in company cars and for their reimbursement of private miles driven.  These are also the rates you use for claiming back the VAT on business mileage claims. For petrol cars: 15 p for up to 1.4l, 17p for 1.4-2l and 25p […]

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Hidden Cost of Opting Out of Child Benefit

Since the government ‘stopped’ child benefit for those earning over £50k, many have been choosing to opt out of the benefit rather than having to complete a tax return and pay it back. On the face of it, this opt-out makes a lot of sense. However, there are hidden costs. Child benefit acts as a […]

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HMRC Confirm That Dividends Are a Valid Repayment of Overdrawn Directors Loan Accounts

Long-practised by those of us in the know, it has now been enshrined in statute that an undrawn dividend is a valid loan repayment. HMRC have moved to legislate on areas within loans to participators, which term includes shareholder-directors. One of the things that they are looking to stamp out is ‘bed and breakfasting’ where […]

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Don’t Forget HMRC Can’t See the Bleedin Obvious

Now that all your P35s are in (ahem), anyone with a repayment due will be well-advised to put a separate claim in for it. Now, you’d have thought that HMRC would be able to guess that if a repayment is due, then you would like to receive it.  Not so. So, if your P35 shows […]

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P35s Are Due on Sunday

Don’t forgot to get them in. And rejoice; for this is the last time you will ever have to do one. Instead, you will have to do 12 – 24 reports for 2013-14!!

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Don’t Forget to Tell HMRC When You Cease Self-Employment

Not only is it good form to notify tell the taxman when you are no longer within his clutches, you will also save yourself from being chased for your weekly Class 2 national insurance stamp if you tell HMRC as soon as you stop being self-employed.  We are not just talking retirement here.  Don’t forget […]

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Tax Consequences of Termination Agreements

A recent tax case reminds us that we all need to have regard to tax when drawing up compromise agreements. Johnson vs HMRC is a tale of a £75700 pay-off at termination of employment contract.  The intention was for this to include the repayment of a £30000 share option that the employee had previously invested […]

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New limit on disputing tax credits overpayment notices

Tax credit overpayments have blighted the tax credits system. It can be very painful to receive weekly amounts that you then have to pay back in one go because the Tax Credits Office decide you shouldn’t have had them in the first place. It is always worth looking at disputing the overpayment notice on any […]

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Don’t Be Lazy With Tax

2013-14 sees the ‘introduction’ of fixed rate expenses as part of the government’s tax simplification agenda. Now, I am all for tax simplification.  But in this aspect, HMRC have imposed arbitrary rates that are in my opinion simply not generous enough. One of the fixed rate expenses is nothing new.  It is the 45p for the […]

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EMI Schemes – Now With 10% CGT

Enterprise Management Incentive (EMI) schemes have been with us for quite a while now. They are a vehicle for giving employees shares in your company without triggering income tax charges for their value being deemed remuneration. The scrapping of business asset taper relief  stopped capital gains tax advantages from the schemes. This has now been […]

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CO2 Emissions – The Tax Goalposts Have Moved

As of the new tax year, the old magic numbers of 110 and 160 g/km have magically shrunk. You can now get a 100% first year capital allowance only if the car is < 95 g/km and you fall into the 8% capital allowance pool for cars > 130 g/km.  That 130g/km is also the new […]

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New Cap on Income Tax Relief

From 6th April, there is a cap on relief claimed against income tax.  The cap is set at £50000, or 25% of income if higher. The cap does not apply to reliefs that are given by increasing your basic rate band ie pension contributions and charitable donations. This will change much tax planning, particularly for […]

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The New Cash Basis – Avoid if You Invoice Upfront

Outside of the new cash basis, deferred income is your friend. If you invoice at the beginning of a service, you are able to push part of the sale back for the part that falls into the following financial year.  The principle under accruals accounting is that you match the sale with the underlying cost.  If you […]

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The New Cash Basis – Avoid If You Want to Carry a Loss Sideways or Backwards

There are 3 directions you can relieve a trading loss: forwards, backwards and sideways. Well, that is if you are outside of the new cash basis.  Put yourself inside and there is only one way you can move: forwards. This does not apply to a loss in the final year of business, but any other trading loss […]

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The New Cash Basis – Avoid if You Still Have a Car That You Got a 100% First Year Allowance For

Once again, a nasty little trap with this new cash basis. If you are still driving one of these eco green cars, while you would have felt very smug at the time with a 100% first year allowance, upon entry to the new cash basis you will have to pay tax on the car’s market […]

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The New Cash Basis – Avoid if You are About to Sell an Asset

It may seem like your best friend, the new cash basis.  Only pay tax when paid by your customers.  Sounds great, doesn’t it? But how good does paying tax on selling an asset? Outside of the cash basis, you would only pay tax on the bit that is more than the unrelieved tax relief on […]

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The New Cash Basis – Avoid if Your Borrowing Costs Exceed £500

At first, HMRC were to deny tax relief for interest from the new cash basis.  After consultation, they conceded that they would allow up to £500.  In pursuit of simplicity, they are suggesting they will ask few questions if you claim up to £500.  Ordinarily, they are not keen on tax deductions for interest, particularly […]

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The New Cash Basis – Avoid if You Buy on Credit but Sell on Cash

Tips on what not to do are somehow less fun than tips on what you should do.  They are just as relevant, though.  If you don’t know what you’re doing with tax it can get very unfair and very expensive. If your business sells for ‘cash’ at the point of sale eg a shop, then […]

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The New Cash Basis and the Facility to Reduce a Tax Bill by Accelerating Payments

The new cash basis affords tax relief on payments made, not costs incurred. So, as your year-end approaches, you should be looking at bringing forward any payments that you were always going to have made over the coming months.  These could be payments to suppliers for goods already invoiced, payments for purchases of stock or […]

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The New Cash Basis – Tick the Box if You Want Full Tax Relief on Your Capital Allowances Pool

The new cash basis allows tax relief in full on (paid for) capital assets. This is nothing very exciting while we still have the £250000 annual investment allowance. What is of interest is the transitional provision that allows for tax relief in your first cash year for any unrelieved capital expenditure. So, check those tax […]

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The New Cash Basis – Tick the Box if You Carry Stock, WIP or Accrued Income

The new cash basis works on receipts and payments. Stock, work in progress and accrued income are the pernicious results of accruals accounting where HMRC will insist that you cannot have tax relief for expenditure which relates to a sale that is yet to take place and that you should be paying tax on sales exercises performed […]

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The New Cash Basis – Tick the Box if Your Credit Sales Exceed Credit Purchases

The new cash basis of computing profits for those with a turnover beneath the VAT registration threshold is going to give a one-off cash flow advantage to those with more debtors than creditors. Your taxable profit is going to be worked out by what you have received in and paid out rather than what you […]

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New Cash Basis Could See Wild Fluctuations In Taxable Income – Why This Can Be and Why This Can Be Good

There are many times when it is good to have taxable income that rises and falls.  There are many times that it is good to be able to time the falls to say that you have a lower income in a year that really matters. This might be applicable to anyone there or thereabouts for […]

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The New Cash Basis – Enjoy Full Benefits Going In : Take Time to Pay Coming Out

If your decision one year is to embrace accruals accounting and ditch the cash basis, it is worth bringing into your thinking that any additional tax you might have to pay upon exit will be staggered over 6 years.

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The New Cash Basis – the Losers

As always in business and football, there are winners and losers. Yesterday’s tip gave some pointers to look for to see if you might win from the cash basis.  Today’s highlights a number who need to steer well clear. Those that I expect to decide against the cash basis are: Traders who make cash sales but make […]

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The New Cash Basis – Winners

As I have previously stated, those lucky enough to have a choice should be computing taxable profits on both the accruals and cash bases before making their choice. Generally, I expect the following will be more suited to the cash basis: Those with a greater value of credit sales than credit purchases. Those businesses that […]

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The New Cash Basis – Flexible Year-ends

As I said yesterday, this new cash basis of computing taxable profits is going to be great fun. You will have to be patient, but all those currently with 31st March / 5th April year-ends will (from 2014) now be able to pick any date between 31st March and 30th April and will be able […]

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The New Cash Basis is Here

From 2013/14 tax year, unincorporated businesses with turnover beneath the VAT threshold (currently £79000) have got a choice between preparing accounts on an accruals and on a cash basis. This is going to be great fun. As a starting point, accounts should from here be prepared on both bases and a choice made by which […]

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2013-14’s Magic Number

The wage that shareholder-directors should pay themselves in 2013-14 is £148 a week = £641.33 a month = £7696 a year. That is the optimum wage that affords the maximum corporation tax relief without any personal tax cost.

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New Tax Year, New Tax Rates

2013-14, eh?  How it comes around so quickly, how just writing it down looks wrong.  It’ll take until a couple of months into next footy season for it to look okay. So, changes in tax rates that you might be interested in / should be aware of: Personal allowance up to £9440.  Important thing to […]

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Welcome to a New Tax Year

For us accountants, out with the old and in with the new tax year is as exciting as it gets. 2013/14 is a tax year in which we will see a 45% top rate of income tax, cash accounting for the small self-employed, the end of a national insurance holiday for new employers, and an exaggeration of the […]

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1 Day to Go Till Tax Year-end – There’s Still Just About Time To…

… make a pension contribution to take you into a more favourable tax bracket. The most important thing to consider at such a late stage is what sort of tax relief you’ll get. Little excitement if you pay at 20%. More interesting if you pay at any of the following rates of tax: 40%, 50%, […]

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Get Your Feb VAT Return in Today

HMRC’s online filing service is planned to be offline from 6am Thursday 4th April till 6am Saturday the 6th April. This could not have come at a worse time for filing 02 13 VAT returns, whose deadline is Sunday the 7th April. I will be working Sunday, but unless you or your staff want to, you […]

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3 Days To Go Till Tax Year-end – There’s Still Just About Time For…

… checking where you’re taxable income is up to and measuring it against the various thresholds eg tax credits, personal allowance, higher rate band, upper rate band, band between £100k and £116,200 where your marginal rate of tax is 60%. Yes, you should have done this a while back and you should just be running […]

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Budget 2013 – Yet More Anti-Avoidance Initiatives

On top of the usual budget announcements that close loopholes, recent budgets have seen a more proactive attitude to protecting the public purse from those who seek to deny their fair share. Budget 2013 featured another new source of HMRC knowing what income you should be declaring before you declare it. This time, focus is on the […]

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Budget 2013 – New anti-avoidance provisions on Directors Loans

One or two of last week’s budget announcements have fun written all over them. This one wears “killjoy” on its forehead. I guess it only serves to confirm what we feared would get challenged, anyway, but from now any directors loan > £5k repaid and then re-loaned back out again within 30 days, or any > £15k […]

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Budget 2013 – The £2,000 Employers National Insurance Allowance

This is one of the flagship announcements of last week’s budget. And rather a fine flag-bearing ship it is, too. From April 2014, every employer will be excused the first £2,000 of their employers national insurance bill. Neither here nor there for the larger employers, but it will mean no employers NI for many small employers. […]

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Budget 2013 – Child Care Support Set to Change

Last week’s budget confirmed the earlier ‘leaked’ announcement that the current childcare vouchers scheme is to be replaced. Anyone who is in the old scheme when it closes, can stay in it.  It will just be shut for new entrants. This is great fun for tax advisors as there is a choice.  If not already there, you […]

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Budget 2013 – A Loosening of the Terms of the Requirement for Government Suppliers to Prove Their Tax Compliance

I think the changes announced in last week’s budget are good news.  Not sure, though. Understandably, the government is sensitive to what its stakeholders think about the quality of the suppliers it awards contracts to. It therefore wants to put measures in place to bar non-tax-compliant suppliers from its ledgers. The proposals were that this non-compliance […]

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Budget 2013 – Directors loans just got a little easier

One of the toughest jobs we poor tax accountants have is managing our clients’ current accounts with their personal companies. There are both corporate and personal tax consequences of being overdrawn on the current account you have with your company. The personal tax consequence kicks in when the balance owed by you to your company gets above […]

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