Does The New 16.5% VAT Flat Rate Percentage Apply To Your Business?

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calculating vat

Does The New 16.5% VAT Flat Rate Percentage Apply To Your Business?

The new VAT flat rate of 16.5% started to apply from 1 April 2017 for “limited cost traders”.
A “limited cost trader” is one using the VAT flat rate scheme but where the VAT inclusive cost of goods for a year is less than 2% of VAT inclusive turnover, excluding certain specified items.

Those specified items include capital expenditure, food, fuel, and vehicle costs.
If you are currently using the VAT flat rate scheme contact us to discuss whether the changes will apply to you.

P11D forms: What you need to know

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david pollitt

P11D forms: What you need to know

The statutory P11D form is used by HMRC to ask UK employers to outline the cash equivalents of expenses, allowances and other benefits given over the tax year to directors and staff members or members of their family or household who earn over £8,500 per year.

Essentially, this form is all about reporting benefits in kind, from private healthcare to interest-free loans, season ticket loans or company cars, to name just a few.

Because these benefits, in effect, enhance your salary, National Insurance contributions may have to be paid on them (by the employer, not the individual staff member concerned).
Equally, the employer is responsible for filing this documentation.

P11D forms must be filed by the 6th July after the relevant tax year. So, for instance, you’d file the one for the 2016-2017 tax year on July 6 2017.

Make sure you include:

• Healthcare insurance
• Company cars
• Self-assessment fees a company has paid
• Non business-related travel and entertainment expenses
• Assets given to an employee which have significant personal use
• Any payments that would normally be paid by the employee but for which you have paid

Before April 2016, you could get dispensation from HMRC to omit expenses from P11D forms.

An exemption system is now in place under which most business expenses company staff members incur personally no longer have to be recorded.

These include:

• Travel (as well as subsistence costs incurred during business travel)
• Credit cards used for work purposes
• Business entertainment expenses
• Subscriptions and fees

HMRC imposes penalties for late filings and wrong filings. If the 6th July deadline is missed, there’s a two-week penalty-free window for filing, but after 19th July, a £100 monthly penalty applies per 50 employees.

You’ll receive a reminder and details of incurred penalties if you haven’t settled by November.
If you’re looking for accountants based in Keighley, BC Sunderland Driver can help ensure you meet that July deadline and file correctly. Talk to our friendly, professional team servicing the Keighley, Bingley and Shipley areas today.

Additional IHT Relief For Passing On Family Home Started 6 April

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family home

Additional IHT Relief For Passing On Family Home Started 6 April

For deaths on or after 6 April 2017 there is now an additional £100,000 inheritance tax (IHT) allowance where the family home is passed on to direct descendants. This was originally announced on 8 July 2015 and that date is relevant where the deceased has downsized to a lower value property.

This additional relief increases to £175,000 in 2020, and where the relief was not used on the death of the first spouse, it is available on the death of the surviving spouse.

This means that after 6 April 2020 a married couple can potentially pass on assets worth up to £1,000,000 without paying IHT as there would be £350,000 relief against the value of the family home in addition to the combined £650,000 nil rate bands (2 x £325,000).

Note however that the Labour Party have announced that if elected they will reverse this generous measure!

As mentioned in previous newsletters, it may be necessary to review your will and estate planning to ensure that you take full advantage of this new relief.

Make The Most Of Dead Time

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Make The Most Of Dead Time

We have all been there before – stuck in a city with time to kill between meetings. Some of us head off for the nearest coffee shop at this time while others might make a few calls or go for a stroll in order to think about the next meeting. Perhaps there is a better way to make the most of this dead time.

Focus on a project
Long waits in the airport or sitting on a long-haul flight can be used as the ideal time to focus on a special project. It may or may not be related to the reason for your corporate trip. Perhaps it is a good time to go through the notes of a presentation or the final details of a big project. You should bear in mind that there may be some difficulties getting online (particularly on planes) so you should download the files you need in advance of boarding in order to work offline.

Plan an activity
The line between work and private life is becoming increasingly blurred. As a result, one notable trend in corporate travel is business-leisure travel. In other words, business travellers try to make the most of the time between professional appointments on a corporate trip to get to know their destination or stay a few days longer to sightsee.

Make progress with your work
Periods of dead time between journeys can be used to make progress with work. For instance, you can catch up on email or read through some documents. If you are on a business trip for a few days, it can be a good time to do your expenses, check into your return flight and so forth.

Relax
Business trips tend to be a bit stressful. Therefore, it is extremely important to make sure you get some downtime on your own. A good set of headphones can be your best friend when it comes to getting some rest on a plane. Audio books can also be a good way to relax and can even provide some inspiration for your work. Perhaps watching a bit of Netflix or Amazon Prime on your tablet can help to take your mind off work. If you are sporty, it can be good to hit the gym or go for a run (which is also a great way to see a city if you are visiting on business).

Better To Pay Interest On Your Loan Account Than Dividends If Higher Rate Taxpayer

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tax payer

Better To Pay Interest On Your Loan Account Than Dividends If Higher Rate Taxpayer

Ever since the introduction of the 7.5% increase in the rate of tax on dividends in April 2016, it has been more tax efficient for owner managed business shareholders to pay interest on their loans to the company rather than pay themselves dividends.
The interest would be deductible against the company’s profits saving corporation tax at 19% (was 20%), whereas dividend payments are not tax deductible. A higher rate taxpayer would end up with more post tax cash, despite the rate being 40% compared to the 32.5% rate on dividends.

The table below assumes that the shareholder is a higher rate taxpayer and has already taken a dividend of £5,000 tax free.

tax payer graph

The above calculation also assumes that the shareholder has £500 of other interest so that the savings allowance has already been used. Note also that the company is currently required to deduct 20% tax at source and report the interest on form CT61.

Should We Give Shares To Children And Pay £5,000 Dividends Tax Free?

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child blowing bubbles

Should We Give Shares To Children And Pay £5,000 Dividends Tax Free?

The introduction of the £5,000 tax free dividend allowance has tempted many family company shareholders to give shares to other family members so that they can be paid £5,000 a year tax free. (Note that this allowance reduces to £2,000 from 6 April 2018).
Such a strategy needs to be carefully structured as there can be Capital Gains Tax on the gift of shares, and HMRC may also seek to tax the dividend as employment income under certain circumstances. The dividend will also be taxed on the parents if received by a child who is a minor.

If you are considering giving shares to other family members and then paying dividends, please come and talk to us first so that we can deal with this correctly.

U-Turn On Self-Employed NICs – For Now

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U-Turn On Self-Employed NICs – For Now

In his first Budget on 8th March, the new Chancellor Phillip Hammond announced that he would level the playing field between employees and the self-employed by increasing Class 4 National Insurance Contributions (NICs) from 9% to 10% from 6 April 2018 and then to 11% from 6 April 2019. His justification is that the self-employed are now entitled to more generous State Benefits than in the past, and thus NIC rate should be increased towards the 12% Class 1 NIC employee rate.

However, this was contrary to the Conservative Party manifesto pledge not to raise national insurance contributions during the life of the Parliament and the Government have bowed to political pressure and decided not to proceed with this proposal. Look out for a possible increase after the next election, which is now June 8th!
As previously announced, flat rate Class 2 NIC contributions, now £2.85 a week, cease on 5 April 2018.

Venting Your Frustrations In The Office

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work frustration

Venting Your Frustrations In The Office

Most people experience frustrations at work from time to time. Whether it is due to constant pressure, last-minute demands or irritating colleagues, at some stage, most of us reach a point where we want to vent our frustrations in the office.

Frustrations happen, and venting is an easy way to blow off steam. However, just because it happens doesn’t mean it’s ok. Constantly venting can spread negativity and bring your colleagues down. It can also be disruptive and annoying to the rest of your team.

Minimise the impact
Before you decide to vent your frustration, pause and take a moment to think about how you would like others to think of you at work. Do you want to be seen as a competent, intelligent leader? Unless you want to be known as someone negative who complains a lot, it’s probably best not to vent in the open office. If you really do need to talk to someone about the challenges you are currently facing, perhaps find a quiet room where you can close the door and discuss your issues with a trusted colleague or friend in the office.

Balance the positive and the negative
It is very easy to point out the things that are wrong. There is always something negative to focus on, no matter where you work. However, it is important to force yourself to notice the positive things too. If you challenge yourself to be a bit more observant, you will notice plenty of positive things happening around the office.

Write it down
Write down the things that are frustrating you so that you can better understand the problem. This can also help you to anticipate the issues that trigger your stress so that you can address them in future, before they become bigger problems. Writing things down can also help you to de-stress as the act of doing so is effectively venting your frustration (silently). This can also help you to arrange your thoughts and may even result in you coming up with a solution to the issue.

Invest time coming up with solutions
You can vent about things as much as you like but nothing will change unless you come up with some solutions. Try to spend some time thinking about how to solve the problem itself rather than focusing on the frustration caused by the symptoms of the problem.

Overseas Business

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passenger plane

Overseas Business

In today’s increasingly globalised world, more and more firms are doing business overseas. Where you do business dictates how you should manage your business etiquette and personal style.

Preparation time
It is good practice to spend some time preparing for your business trips and learning about a region’s history, customs and culture. This will allow you to prepare appropriately and assemble a number of talking points, which could be useful when you meet with potential (and existing) clients.

Punctuality
Arriving late isn’t a risk worth taking. Aim to be on time or slightly early. You cannot offend your host by being early to a meeting. In many countries it is considered rude to leave a meeting before it has fully concluded. Bear this in mind and build appropriate time between meetings into your schedule.

Communication
When conducting business in other countries, what you consider to be “normal” communication protocols may not be considered conventional in the region that you are visiting. It is best to read up on this before your trip. For example – in some countries, shaking hands at the start of a meeting is considered polite. However, in other countries the handshake may be replaced by a bow. It can be helpful to observe native business people first, and adapt your style accordingly so as not to offend your overseas business contacts during meetings.

Get some sleep
If you travel long distances on business, jet lag can be a real challenge. You don’t want to be fighting to stay awake in your business meetings. Therefore, build in time for power naps, appropriate levels of sleep and ensure you drink plenty of water. If you find coffee helps, then pack some in your travel bag so that you have it to hand. Try to plan your trip so that you have time to adapt to the new time zone. This may mean arriving early and getting some sleep, or staying up all day in order to get an early night and allow your body to adapt to local time.

New Trends In Online Search

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online search trends

New Trends In Online Search

The online world is constantly evolving. As such, the way that people use online search engines such as Google, Yahoo, Bing, etc. is changing all the time. Businesses need to keep up to date with these changes so that customers and potential customers can continue to find them online. Here are some of the big new trends that businesses need to be aware of.

Voice
People are now accessing their devices with their voice. People are using “digital assistants” such as Siri or Cortanta to search for things online. This is becoming more common as voice recognition technology continues to improve.

Messaging apps
People are now spending more time using messaging apps than on social media. This includes apps such as WhatsApp, Snapchat, WeChat, etc. Usage levels of messaging services overtook social media in 2015. Since then, usage has continued to grow.

Mobile
Look around the next time you are on a train or standing in a queue. You will notice that most people are staring at their smartphone screen, surfing the web and searching for information online. Since the arrival of the smartphone a few years back, mobile has become the primary channel through which people access the internet. One of the most significant consequences of this shift has been that we access the web much more often but for shorter periods of time.

Connected devices
According to a recent survey, people now own an average of 3.64 connected devices. This is going to keep on growing, particularly with the rise of the “Internet of Things” (IOT) and online digital assistants such as the Amazon Echo, Siri, etc.

What should you do next?
How you choose to take advantage of these trends depends on the type of business that you have and the customers that you are targeting.

Perhaps you should consider setting up a Snapchat or WhatsApp account for your business so that you can tap into these marketing channels. If you haven’t already done so, perhaps it is time for your company website to be redesigned with “responsive” technology so that it resizes appropriately for smartphone screens, tablets, etc. Maybe there are new ways for Siri or Cortana to access your firm’s services? Now is the time to consider these trends and how leveraging them could be advantageous to your business.