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Employers and their staging date

Staging Date

A process started in 2012 which means eventually, all UK employers will be obliged to enrol all their eligible employees into a contributory pension scheme, known as Auto Enrolment.  This obligation is already being phased in, starting with the biggest employers.  The commencement date for an employer’s obligation to provide a contributory pension scheme is known as the staging date.

The government has said that no small employers (those with fewer than 50 employees) will be affected before the end of the current Parliament.  The general election will be on 7th May so we are nearly there.  Employers will be able to meet this obligation in any way they choose, but one way will be through a government-sponsored National Employment Savings Trust ( NEST ), a simple, low-cost scheme with very limited fund choice, and initial restrictions on transfers and contribution levels.  NESTs will be operated by the NEST Corporation, a not-for-profit trustee body, and will be regulated by the Pensions Regulator.

Alterledger can help

Alterledger can help you prepare for your staging and manage your auto enrolment process along with your payroll once everything is up and running.  Contact Alterledger or visit the website alterledger.com for more information.
 

Sole Traders lose Goodwill Tax Relief

Branding

Since 6th April 2008 and until 3rd December 2014 Sole Traders and Parternships were able to claim Entrepreneurs Tax Relief on Goodwill when becoming a Limited Company.

Until the 3rd December 2014 they would claim there Capital Gains Allowance

Period Tax-free allowance
5 April 2013 to 6 April 2014 £10,900
5 April 2014 to 6 April 2015 £11,000

Then claim ER which reduced the rate of tax to 10% on the gain.

But from the 3rd December they will now pay Capital Gains at the normal rates of CGT which are 18% or 28% (for Higher Rate Income Tax Payers).

This doesn’t change the potential ability of the company to offset goodwill against their Corporation Tax Return.

There are still other benefits related to goodwill as explained in this blog

The tax benefits of goodwill on incorporation?

steve@bicknells.net

Orchestra Tax Relief

New Creative Industries Tax Relief

The 2014 Autumn Statement from the UK Chancellor included a proposal for a new Orchestra Tax Relief.

Orchestra Tax Relief for UK Companies

FHM-Orchestra-mk2006-01 (Photo credit: Wikipedia)

Orchestra Tax Relief

Many orchestras are charities and therefore don’t pay Corporation Tax, but any that do pay tax may qualify for a future Orchestra Tax Relief.  The tax break proposed yesterday will be going through a consultation process, so if you have an interest get involved!

Other Creative Industries Tax Reliefs

For more information on the tax reliefs for Orchestras, Theatres, Animation, Video Games and High End TV please go to my blog post here: Orchestra Tax Relief.

Alterledger can help

Why wait for the law to favour your industry?  Contact Alterledger or visit the website alterledger.com to see if you can organise yourself better and claim more expenses to cut your tax bill.

 

Musicians tax breaks

Will Scottish entertainers make more money with proposed musicians tax breaks?

One of the consequences of the Scottish Independence Referendum is a “Command Paper” to be produced by Lord Smith of Kelvin and the Scottish Devolution Commission.  Among the proposals being put to the commission is copying an idea from Ireland to give artists and musicians tax breaks.


Musicians tax breaks

Special treatment for artists

The Republic of Ireland has given artists a tax exemption since 1969 which means the profits from the sale of works do not attract income tax up to a maximum of €40,000, or £31,500.  Everyone agrees that the tax system should be simplified – except of course if it the complication benefits you.  Is this a valid sign of support for artists or will everyone want “special treatment”?

Alterledger can help

Why wait for the law to favour your industry?  Contact Alterledger or visit the website alterledger.com to see if you can organise yourself better and claim more expenses to cut your tax bill.

 

How do you tell HMRC a company is dormant or active?

relax

Dormant is a term that HMRC and Companies House use for a company or organisation that is not active, trading or carrying on business activity. But HMRC and Companies House use the term dormant in slightly different ways.

For Corporation Tax purposes, HMRC views a dormant company as a company that’s not active, not liable for Corporation Tax or not within the charge to Corporation Tax.

A dormant company can be, for example:

  • a new company that’s not yet trading
  • an ‘off-the-shelf’ or ‘shell’ company held by a company formation agent intending to sell it on
  • a company that will never be trading because it has been formed to own an asset such as land or intellectual property
  • an existing company that has been – but is not currently – trading
  • a company that’s no longer trading and destined to be removed from the Companies Register

Generally your company or organisation is considered to be active for Corporation Tax purposes when it is, for example:

  • carrying on a business activity such as a trade or professional activity
  • buying and selling goods with a view to making a profit or surplus
  • providing services
  • earning interest
  • managing investments
  • receiving any other income

This definition of being active for Corporation Tax purposes is not necessarily the same as that used by HMRC in relation to other tax areas such as VAT, or by other government agencies such as Companies House.

If your limited company has been dormant but is now active, you must tell HMRC within three months of starting your tax accounting period. The best way to do this is to use HMRC’s online registration service.

HMRC have further details on this link

To contact HMRC you will need your Company UTR number and the 3 digit tax office number, then you can use this link to find out contact details for you Corporation Tax Office

When you call, Option 3 is for Dormant Companies and Option 4 is for Active Companies.

Then you will need to write to HMRC to advise them of the change in activity status.

Companies House still require Annual Returns and Annual Accounts even if the company is dormant, but these are obviously easy as there are no changes from the previous year.

steve@bicknells.net

Are you ready for the OTS to check your employment status?

And now round two of justify it

Contractor Weekly reported on th 29th July 2014…

As part of the ongoing mission to create a simpler and fairer tax system the Office of Tax Simplification (OTS) has been tasked with carrying out reviews of employment status and also tax penalties, with a view to producing a report in time for next year’s Budget.

According to the OTS, the boundary between employment and self-employment no longer reflects modern working patterns, particularly in recent years. Many people have multiple jobs and can be classed as employed in one whilst self-employed in another. The rise of the freelancing business model has also caused some to suggest this is a ‘third way’ between employment and self-employment.

A worker’s employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement.

Many workers want to be self-employed because they will pay less tax, this calculator gives you a quick comparison between being employed, self employed or taking dividends in a limited company.

HMRC have a an employment status tool to help you determine whether a worker can be self-employed or should be an employee http://www.hmrc.gov.uk/calcs/esi.htm

It will be interesting to see the report that the Office of Tax Simplification (OTS) produce, especially if they find a ‘third way’

steve@bicknells.net

Which is your team?

fifa

 

 

 

 

 

Well it’s all behind us now!

The World Cup with all its highs and lows is over and, as always, we find ourselves dissappointed at the results.

It occurs to me that this sporting event exemplifies many of the trials and tribulations businesses come across in trying to be successful. If you have a team full of players who are only interested in themselves as individuals, it is likely you will get poor results, even if the players seem to be very talented. However, if you have a team of players who are willing to sacrifice their personal status to further the team’s ambitions, the sum becomes greater than the parts and real magic can result.

Further, it is important that the team has a clear and common vision, which is driven through by the directors. If individuals in the team go in their own direction without reference to the vision, or ignore clear management guidance, the team as a whole will suffer.

So my advice is to look at your business and decide which team you would like to be.

Will your company resemble Brazil, Spain, or indeed England? Or will you be like Germany and hold the World Cup aloft?

Fiona 🙂

Free access to accounts filed at Companies House

Image

60% of the 3.5 million companies in the UK now file accounts electronically and you can access those accounts free of charge via http://companies.corefiling.com/search

 

Paul Driscoll is a Chartered Management Accountant, a director of Central Accounting Limited, Cura Business Consulting Limited, Hudman Limited, and AJ Tensile Fabrications Limited, and is a board level adviser to a variety of other businesses.

Get HMRC to pay you

HMRC will pay you interest

It is not that well-known that HMRC will pay you interest on tax paid early.  The interest rate is only 0.5% though, so it isn’t going to change your life.

In the case of Corporation Tax, any payment is due 9 months and a day after your year-end.  If you have a business bank account that pays no interest and the cash to pay your tax early you can pay your tax as soon as you have filed your return.   After the 9 months is up HMRC will send you the interest calculated.

British piggy bank

What spare cash?

See my earlier post on paying your debts first. In the situation where you have cash in the bank that you aren’t putting to good use and no outstanding debts paying your tax liability early will yield a small benefit.

Get your tax return done early

It is difficult to plan your cash flow if you don’t know how much tax you are due to pay.  Even if you don’t want to pay your tax early, it is helpful to know how much cash you will need to set aside.  The later you leave it to file your tax return the more pressure you can end up putting on your cash flow.  More importantly the later you leave it, the more pressure you put on your accountant.  Most accountants increase their fees as tax deadlines approach – or to put it another way you are likely to get a discount for starting early!

Don’t be late!

It won’t surprise anyone that HMRC will charge interest on late payments.  The interest rate isn’t the measly 0.5% mentioned above but is currently 3%.  As Bank of England rate increases  – expect this to increase too!

For support and advice on preparing your annual accounts and filing your tax returns contact Alterledger or visit the website alterledger.com.

 

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Planning to retire!

Dark jenny thinking

How many of us know what our business needs to achieve to deliver against our personal goals in the long term?

We all know that the state pension will be unlikely to meet our retirement needs in full. Most of us will be looking for our businesses to provide a safety net of income/capital value to make sure our retirements are secure.

However, as Steven Covey says you have to start with the end in mind. This means that you have to plan NOW to ensure you get out of your business what you need for the future.

If, like me, your business is largely centred on you as an individual your business is unlikely to be worth very much to someone else when you decide to stop. This means that your business needs to earn enough for you to make decent pension contributions now to fund your retirement.

If your business employs other people to deliver the product/service then you may be able to sell your business to realise value when you retire. However, you can only maximise this value if you start to plan several years ahead. It is vital that you can distance yourself from the business and that it can run without you, for example.

Whatever your goals it is never too early to start positioning your business so it is in the best position to meet them. If you don’t, you may find your retirement dreams end in cash strapped nightmares.

Fiona 🙂

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