Home » Articles posted by Steve Bicknell (Page 12)
Author Archives: Steve Bicknell
Who will takeover if the controlling shareholder dies?
What happens in the event of serious illness or death of a controlling shareholder?
Every business should have a plan in place. Normally illness and capacity will not change the voting rights but death will.
Usually the companies articles of association will contain rules which authorise the executors of a deceased shareholder to register as the share owners until they transfer them to the beneficiaries. This is often not the best solution.
A better way is to prepare a shareholders agreement which sets out what will happen.
Its worth considering:
- pre-emption rights – these arrange automatic transfer to named shareholders
- purchase rights – these will allow the company to buy back the shares from the beneficiaries
If you haven’t got a plan, make one before its too late
steve@bicknells.net
New Company Reporting Thresholds now in place
The new regulations came into force on 6th April 2015 setting the following thresholds for small companies
| Turnover | £10,200,000 | |
| Total assets | £5,100,000 | |
| Average no. of employees | 50 |
Medium Company thresholds will now be
| Turnover | £36,000,000 | |
| Total assets | £18,000,000 | |
| Average no. of employees | 250 |
Micro Entities thresholds are unchanged
| Turnover | £316,000 | |
| Total assets | £632,000 | |
| Average no. of employees | 10 |
As before its a 2 out of 3 test. The Audit thresholds are unchanged.
Micro entities are no longer required to produce a directors report.
The new thresholds will apply to financial years beginning on or after 1 January 2016. However, early adoption is permitted.
Further details in SI2015/980
steve@bicknells.net
Employers – Will you process auto enrolment in-house or outsource to an Accountant/Bureau?
The Pensions Regulator continues to try to inform employers about their new automatic enrolment (AE) duties. There is so much information available it has lead to much confusion. For employers, there is no getting around AE either. It is here to stay whether you like it or not. Employers that have at least one member of staff now have specific, mandatory duties to perform. This includes enrolling those employers who are eligible into a workplace pension scheme and contributing towards it. There are also some duties that need to be completed for non-eligible and entitle employees.
Another consideration for employers is whether you have the time or staff resources to deal with AE in-house or outsource this to a payroll bureau or accountant?
Confused? Join BrightPay for a free webinar where we will take you through our step-by-step guide to automatic enrolment has been designed to help employers understand the processes involved in completing their automatic enrolment duties.
One of the subjects on the webinar will weigh up the advantages of processing auto enrolment in-house or will you look to outsource this job to an accountant, bookkeeper of bureau? See the webinar agenda below.
Agenda
• Auto Enrolment Overview
• Staging dates
• Assessing Employees
• Enrolling
• Option of Postponement
• Handling Opt-outs and Refunds
• Supporting Employee Communication
• Recording and Providing Reports
• Integration with various Pension Providers
• Payroll Software
• Process AE in house or outsource
Register here today
Don’t worry if you can’t make it on the day we will record the webinar and send it to you after the webinar, along with any questions and answers that were discussed on the day. By registering your details for the event we will automatically send the information to you.
Falling HMRC Fuel Rates – are your claims right?
The rates only apply when you either:
- reimburse employees for business travel in their company cars
- require employees to repay the cost of fuel used for private travel
If you pay a rate per mile for business travel no higher than the AFR, for the particular engine size and fuel type, HM Revenue and Customs (HMRC) will accept there is no taxable profit and no Class 1A National Insurance to pay.
You can use your own rates which better reflect your circumstances if, for example, your cars are more fuel efficient, or if the cost of business travel is higher than the guideline rates.
Advisory Fuel Rates from 1 March 2015
These rates applied from 1 March 2015. You can use the previous rates for up to 1 month from the date the new rates apply.
| Engine size | Petrol – amount per mile | LPG – amount per mile |
|---|---|---|
| 1400cc or less | 11p | 8p |
| 1401cc to 2000cc | 13p | 10p |
| Over 2000cc | 20p | 14p |
| Engine size | Diesel – amount per mile |
|---|---|
| 1600cc or less | 9p |
| 1601cc to 2000cc | 11p |
| Over 2000cc | 14p |
COMPANY car mileage rates have been slashed by up to 18% as HMRC cut the tax allowance across all six of the petrol and diesel categories in response to continuing fuel price falls.
Hardest hit by the rates, known as advisory fuel rates (AFR), are drivers of company cars with petrol engines greater than 1,401cc which have suffered a 3p cut in rates applicable from 1 March.
steve@bicknells.net
When is a tax deduction allowed on property acquisition?
Acquisition costs need to split into capital and revenue expenses.
“Several tests have been developed through case law to ascertain whether expenditure is revenue or capital in nature. The ‘enduring benefit’ test, which originated from Atherton v British Insulated & Helsby Cables Ltd [1925] 10 TC 155, is one such test.
“In this case, that expenditure incurred with a view to providing the business with an ‘enduring benefit’ was not allowable as a trading expense. ‘Enduring benefit’ means that the expense will benefit the business not just in the year in which it is incurred, but also in the years that follow. [Taxation]
Capital Expenses
- Legal costs for the property purchase
- Property Acquisition Cost
Capital expenses are only recovered as part of the capital gains calculation when they are added to the purchase cost to reduce the overall gain.
Revenue Expenses
- Mortgage arrangement fees
- Legal fees on arranging loans
- Lenders normally include valuation fees in their charges
Revenue expenses are charged to the P&L and are deductible against income tax/corporation tax.
When loan costs are material they would normally be amortised over the period of the loan in order to apply the matching principle of accounting.
You cannot deduct:
- Expenses incurred in connection with the first letting or subletting of a property for more than a year. These include legal expenses such as the cost of drawing up a lease, agents’ and surveyors’ fees and commission.
- Any costs of agreeing and paying a premium on renewal of a lease.
- Fees for planning permission or registration of title on property purchase.
steve@bicknells.net
How does s455 tax apply to Directors Loans? what if you ‘bed and breakfast’ the loan?
Directors (participators in a closed company) often borrow money from their companies with the intention of paying a dividend to repay the loan.
If the loan is outstanding more than 9 months after the company year end, then an extra 25% corporation tax charge is due, this is the s455 tax which is refunded when the loan is repaid as explained in this blog
http://stevejbicknell.com/2015/02/04/new-tax-procedure-for-directors-loans-s-455/
HMRC were concerned that some participators were avoiding this tax by raising funds short term to repay an outstanding loan. They would then draw a new loan very shortly afterwards – HMRC refer to this as “bed and breakfasting”. New anti-avoidance rules were therefore introduced in 2013.
These new rules incorporate two provisions – the “30-day rule” and the “intentions and arrangements” rule.
30-day rule
This applies where within a 30-day period:
- a shareholder makes repayments of their s455 loan; and
- in a subsequent accounting period, new loans or advances are made to the same shareholder or their associate.
So basically prevents the use of ‘Bed & Breakfasting’
‘intentions and arrangements’ Rule
Relief is denied regardless of the 30 day rule, if prior to repayment there is an outstanding amount of at least £15,000 and at the time the amount is repaid to the company, any person intended to redraw any of that amount or had made arrangements to make a new withdrawal; and a new withdrawal is made.
The relief denied is the lower of the amount repaid and the amount redrawn.
steve@bicknells.net
How does Principle Private Residence Relief work?
Principle Private Residence Relief (PPR) is useful relief that saves you capital gains tax (18% for basic rate tax payers and 28% for higher rates tax payers) on your main residence, but how does it work, lets take a basic example
Property Purchase Date 30/04/2001
Property Purchase Price £100,000
Date Moved Out 30/10/2010
Letting Start Date 01/11/2012
Date Sold 31/10/2014
Sale Price £200,000
Capital Gains tax calculation
Sale proceeds 31/10/2014 £200,000
Cost (assuming no improvements) -£100,000
Gross capital gain £100,000
Reliefs available
Principle Private Residence Relief
Actual Occupation 9.5 Years
Started 30/04/2001
Ended 30/10/2010
Plus last 18 Months of Ownership 1.5 Years
The Property was empty prior to letting
Up to 18 months could be by ‘absence for any reason’
Total period where private residence relief is
available 11.0 Years
Total Period of ownership 13.5 Years
Principle private residence relief
£100,000 x (132 mths/162 mths) £81,481
Gain after principle private residence relief £18,519
Letting Relief
01/11/2012 to 31/10/2014 2.0 Years
Lettings relief is to lower of
£40,000 statutory maximum
£81,481 the principle private residence relief in this example
The gain for the letting period
Gain attributable to letting 2/13.5 x £100,000 £14,815
This is the lowest figure
Capital gain after reliefs £3,704
Annual Exemption for 2014/15 £11,000
So in this example there is no tax to pay
For further details see the HMRC Helpsheet 283
For gains on sales prior to 6 April 2014, PPR is available for the last three years of ownership of a property that has been a main residence at any time. This is the case regardless of whether or not it has been occupied during the last three years of ownership.
But as a result of the 2014 Budget, from 6 April 2014 the automatic exemption from tax on gains in relation to the final years of ownership is now restricted to cover the last 18 months rather than three years.
steve@bicknells.net
What are Dispensations and Scale Rate Allowances?
Its nearly time to prepare your P11D’s, here is a link to the 2014-15 P11D
You’ll need to submit an end-of-year form to HM Revenue and Customs (HMRC) for each employee you’ve provided with expenses or benefits.
The form will either be a P9D or a P11D, depending on the expense or benefit.
You may need to submit form P11D(b) to report the amount of Class 1A National Insurance due on all the expenses and benefits you’ve provided. You should do this if:
- you’ve submitted any P11D forms
- you’ve been sent a P11D(b) form by HMRC
If you don’t submit any P11D forms, you can tell HMRC that you don’t owe Class 1A National Insurance by completing a declaration.
Due by 6th July 2015.
As an employer, you can apply for a dispensation on some expenses and benefits you provide for your employees. This means you won’t need to report them to HM Revenue and Customs or pay tax or National Insurance on them. Here is a link to apply for Dispensations.
There are also Benchmark Scale Rates which can be paid tax free, alternative you can claim the actual costs
| Description | Amount (up to) |
| Breakfast rate | £5 |
| One meal (5 hour) rate | £5 |
| Two meal (10 hour) rate | £10 |
| Late evening meal rate | £15 |
steve@bicknells.net
Free Webinar for Employers
Free Webinar: The Essential Guide to Auto Enrolment for Employers
For employers auto enrolment is here to stay!!
If you are an employer who does not have payroll software or use the HMRC Basic PAYE tools to process your company’s payroll then this webinar is for you. This free webinar will take you through the main administration employer duties of auto enrolment including: an auto enrolment overview, staging, employee assessment, enrolment, postponement, opt in & opt outs, employee letters, reporting, choosing payroll software and processing auto enrolment in house or outsource it.
This webinar is specifically designed to help employers understand the processes involved in completing their automatic enrolment duties. Each and every employer with at least one member of staff has new obligations to carry out.
The webinar is ideal for employers who process their payroll in-house or are considering outsourcing it to a payroll professional. The session will help you understand what is involved for you and your business.
Places are limited.
For more information visit our website
Trivial Benefits £50 exemption deferred
It had been proposed that there will be a new statutory exemption for trivial benefits up to a limit of £50 from from 6 April 2015, this measure is not included in the first Finance Bill of 2015, it has been deferred until after the election.
The £50 tax exemption would have been on items such as birthday and Christmas gifts. The legislation would have also introduced an annual cap of £300 in some circumstances.
So we are stuck with the old rules for now
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits. . For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned. If a benefit is trivial it should not be included in a PSA (EIM21861).
http://www.hmrc.gov.uk/manuals/eimanual/EIM21863.htm
There are some non taxable benefits you be interested in….
HMRC Helpsheet 207 – Non-taxable payments or benefits for employees
http://www.hmrc.gov.uk/helpsheets/hs207.pdf
steve@bicknells.net
Business Accountant 