Welcome to our newsletter designed to bring you tax tips and the latest news..
We have some fantastic free events coming up, including an update seminar re Employment Law and H&S on 8th May, Twitter for Business, Bookkeeping Tips and our fabulous quarterly networking event. For booking please email [email protected] and for latest events listings. All our events are free, however, we are promoting the great work of the Newbery Lodge Preschool this year, therefore we are asking attendees to voluntarily text donations.
We have already filed our first client SATR2014s. If you would like to be super organised this year, please bring in your personal tax information asap.
We offer our clients free Business Review meetings with your Account Manager, please do utilise this and book a meeting now.
Please contact us for advice in your own specific circumstances. We’re here to help!
Table Of Contents
The Second Incomes Campaign provides a means to declare any “forgotten” second income with minimal fuss and penalties. All the tax due must be paid alongside any interest, this will be calculated from the date the tax was originally due to be paid.
To use the Second Incomes Campaign you must first notify HMRC either by completing an online form, or by calling: 0300 123 0945. HMRC will then respond with a disclosure reference number. You then have four months in which to make a full disclosure of the second source of income (quoting the reference number) and pay all the tax, interest and penalties due. We can help you calculate the amounts to be paid, and claim any losses.
However, from April 2015 the ability to elect for one property or another to be tax-exempt may well be removed. This is because the Government wants to tax overseas residents on the profits they make when they sell their homes in the UK.
Such overseas residents live in their UK homes for only a small part of the tax year, but currently pay no UK tax when those properties are sold (although they may pay tax in another country on the gain). If the election to opt for one property to be tax-exempt remained in place, all overseas residents would opt to have their UK home treated as their tax-exempt main home, and no additional tax would be raised.
So from April 2015 which property is your tax-exempt main home will be determined by factors such as where you are located most of the tax year, or where your family is based, or where the children go to school etc. It’s not clear how the elections which are currently in place will be treated.
If you are planning to dispose of one of your properties after April 2015 we can help you plan how to make the best use of the other continuing tax exemptions.
In this case the nudge is information about the average profit ratios businesses in your business sector make, as reported on their tax returns. Working out these average profit ratios is called “benchmarking”.
The Taxman is writing to a sample of traders in selected trade sectors quoting bench-marked profit ratios for those sectors. He asks the trader to review his turnover and expense figures before completing the 2013/14 tax return, with a view to ensuring the reported net profit (also known as bottom line) lies in a range around the bench-marked net profit ratio.
If you receive one of these benchmark letters, please send us a copy as the Taxman is unlikely to have copied us in. We can help you review your income and expenses to be reported on your tax return.
Don’t take the letter as a sign that the Taxman has any evidence that your reported figures are wrong. There are many valid reasons why your business may not be typical. For example you operate in a difficult geographical location, or your business may open for different hours than other similar businesses.
However, if you have been hiding sales which have been paid by credit or debit cards, the Taxman can now easily prove that your sales are understated. This is because he can request details of all transactions processed by debit and credit card companies.
That sales data can be broken down by trader, and compared to the VAT and tax returns you have submitted. However, remember the credit and debit card data could contain errors.So if you are challenged on the basis of your credit card sales don’t assume the Tax-man’s information is 100% correction
Flat Rate VAT
You can use the flat rate VAT scheme if you have an annual turnover up to £150,000 (net of VAT). Once registered to use the scheme, you must apply VAT to your sales at the rates required for the particular product or service (20%, 5% or zero). However, when completing the quarterly VAT returns you ignore any VAT paid on purchases, apart from large assets costing over £2000. You calculate the VAT to be paid over to HMRC as a flat percentage of your gross sales, with the percentage used determined by the trade sector which most of your sales fall into.
For example a hairdresser which is registered for the flat rate scheme must use a flat rate of 13%. On sales of £3,000 in the quarter she charges VAT at 20%: £600. She will pay VAT to HMRC of: 13% x £3,600 = £468.
You must choose to register for the flat rate VAT scheme, it will not be offered to you, even if you would be better off using the scheme. When you register you must choose which of 55 trade categories best fits the majority of sales made by your business. This is important as the flat rate percentages vary from 4% to 14.5% for different trade sectors, so an incorrect choice of trade sector can be very expensive.
You can change the trade sector you opt to use, but HMRC generally only permit a change to be made from the beginning of the current VAT quarter. You must also review the trade sector chosen on the anniversary of starting to use the flat rate VAT scheme. If your sales mix has altered so most of the sales are in a different trade sector, you must switch to using the flat rate percentage relevant to the majority of your sales. We can help you decide if the flat rate scheme
May Questions and Answers
A. This must be shown on the company’s corporation return if it has not been repaid to the company within nine months of the end of the accounting year in which this was made. This will generate a corporation tax charge equivalent to 25% of the outstanding amount. The amount of interest paid on the loan is irrelevant for the corporation tax charge.
However, if the loan is made for a fixed period at a fixed interest rate which is equal to, or higher than, the official rate of interest (now 3.25%), there is no benefit in kind charge for the director personally, and no need to report this on the form P11D.
Q. If my employer leases a car to me at the fair market value for such a lease, which I pay in full to the employing company, will I be taxed as if I had the use of a company car with no lease?
A. The law that taxes company cars was recently changed to ensure employees are always taxed on the provision of a company car, irrespective of how that car is provided. So although you lease the car from your employer you will still be subject to the benefit in kind charge, which is calculated as a percentage of the vehicle’s list price when new. The percentage varies from 0% to 35% depending on the vehicle’s CO2 emissions. Any amounts you pay to your employer for the personal use of the car reduce the benefit in kind charge, but you will not be better off using the leasing arrangement.
Q. My husband supports the IT and telecoms systems used by my company, which pays him £150 per week through the payroll for this work. Can the company also pay a small pension contribution on his behalf?
A. Yes your company can pay a pension contribution for your husband as he is an employee of the company, although as he earns less than the personal allowance (£10,000 per year) the company is not obliged to auto-enroll him in a pension scheme. The company can claim a tax deduction for his wages and pension contribution, as long as that total sum is not excessive for the work he does. You may want to get some comparable quotes for IT and telephone systems support to check you are paying a fair rate for the work he does.
May Key Tax Dates
19 – – Deadline for Employers’ 2013/14 end of year PAYE Returns (P35, P14, P38 & P38A). Penalties for non-submission.
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/5/2014
31 – Deadline for copies of P60 to be issued to employees for 2013/14