Some Employee Perks Are Being Lost and It Could Be Costly

Green & Co

Green & Co feature in the South Wales Argus discussing the tax changes for employee perks.

The new tax year has seen a raft of changes, with more legislative reform scheduled to come into effect over the next few years.

From changes in dividends, stamp duty, and national insurance (with a U-turn thrown in for good measure) the way that people are taxed is an ever-evolving landscape. However, it’s not just directors, landlords and the self-employed who have been targeted with new legislation.

Barrie Kenyon, partner at Green & Co Accountants and Tax Advisors said: “From 6th April, the tax and employer national insurance advantages of a salary sacrifice or salary exchange scheme was removed. This means that any employees who have swapped their salary for benefits, which typically include additional holiday days, will now pay the same tax as if they were buying them out of their post-tax income. The Chancellor, Philip Hammond, announced the changes in the autumn statement believing the previous schemes were unfair. From earlier this month, they have started to come into effect.

“However, these changes do not affect those employees who have reduced their salary for pension contributions, childcare purposes such as vouchers, workplace nurseries or directly contracted childcare, the cycle to work scheme and ultra-low emission company cars with co2 emissions of or less than 75g/km.

“The schemes were seen as attractive to both employees and employers, with reduced tax liabilities benefiting both parties.”

Mr Kenyon stressed that there were some caveats that accompany the changes: “If any arrangements which were in place before April 2017 relate to cars with co2 emissions over 75g/km, accommodation or school fees: these arrangements will be protected until April 2021. Also, other arrangements agreed prior to April 2017 that do not fall into the aforementioned categories will be protected until the end of the current tax year in April 2018.”

It is estimated that millions of workers from across the UK will pay more tax due to these changes, with the Treasury believing that these schemes are costing too much in lost tax receipts and national insurance contributions. It is estimated that the reform will cost employers in the UK around £85M this tax year, whilst increasing another £260M by April 2021 when the full changes will come into effect.

If you are worried about any of these forthcoming changes, please contact us at Green & Co for further help and guidance.

Green & Co Accountants and Tax Advisors specialise in business growth and tax minimisation for businesses across Wales and the South West of England.

For proactive advice, contact Green & Co Accountants and Tax Advisors on 01633 871 122, follow @Green_and_Co on Twitter or email barrie@greenandco.com.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

VAT Fuel Scale Charge

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To make accounting for private use of fuel simpler, you can choose to apply the VAT fuel scale charge. This scale charge adds back a fixed sum each VAT period to account for the private use of fuel, making redundant any need to split the mileage between business and private use.

The scale charge for any given vehicle is based upon its CO2 emissions. HMRC update the scale charge table every May, and this years can be found here.

Scale charges only apply to those cars where there is allowed private usage, and when you start using the scale charge, you must use it on all your company’s cars for which there is private use.

Those using the scale charges, should be sure to keep a record of:

  • Number of cars which it is applied to
  • CO2 band of each car (or cylinder capacity if the car is too old for an emissions figure)
  • Details of when cars have been bought and/or sold.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

Business Planning: Plan to Succeed!

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Writing a business plan may sound like a long and tedious process that will lead to very few benefits for your business, but in reality the benefits that can be achieved from business planning are huge.

  • Attracting investors – Business plans give investors a look at what a business expects to achieve in the future by using statistics, facts, figures and detailed plans. This gives businesses a better chance of attracting investors to provide capital.
  • Growth – A business plan can be used as a tool to help plan growth and associated costs and capital requirements.
  • Stick to the strategy – During the day to day running of a business it is easy to lose sight of what the main goal is. A business plan can be used to define what the business is or what it intends to be in the future. Clarifying the purpose and direction of your enterprise allows you to understand what needs to be done to meet your objectives.
  • Managing cash flow – Careful management of cash flow is necessary for all businesses. Using a cash flow plan is a brilliant way to link together educated guesses on sales, costs, expenses, assets you need to buy and debts you have to pay.
  • Milestones – A business plan can be used to set milestones that you can work towards. These are key goals that you want to achieve. Having all dates and deadlines visible in one place can make achieving these milestones so much easier.
  • Management – A business plan should include an organisational structure of your business, including titles of directors or officers and their individual duties. It is an ideal place to clarify who is responsible for what. Every important task should have someone in charge of its execution.

A business plan can help to identify potential threats and opportunities your business could face, avoid penalties or other legal problems, helping you to adapt quickly and efficiently to changes.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

 

Top Tips: Organising Networking Events

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Networking events are more or less everywhere, whatever your field or location. Thanks to social media, it’s easier than ever to set up, plan and run a networking event. But what are our top tips for achieving a successful one?

Keep it personal

As your events may start to grow, remember to still try and talk to everyone, thank them for coming, connect with them on social media and say goodbyes.

Keep a familiar format

Familiarity is useful when it comes to networking events; the same structure means regulars know the score, how things run and feel relaxed, and also makes it easy for newcomers to get to grips pretty quickly.

Choose the right venue

Choosing the right venue is the most important part, as it will go some way to dictating the tone, mood and direction of the whole event. Pick a central location that is easy for all to access.

Promote the event

Use social media, blogs, even a newsletter to market your event. Don’t delay, start as early as you can and execute it to the full.

Follow up

It’s really important that you keep the conversation going after a networking event, so keep in touch on social media or through emails. Send out any relevant information from the event too, such as speaker’s talks and contact details.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Tax Free Childcare

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The Government’s new Tax-Free Childcare scheme will be phased in across the UK from 28 April 2017, and will replace the current Childcare Voucher Scheme.

For the first time, the scheme will not only cover full time employees but also those who are part time, on maternity, paternity or adoption leave and people who are self-employed, subject to meeting HMRC’s eligibility criteria.  Initially, the scheme will only be available to parents of children under 2 years old, but by the end of the year this will be extended to all working parents across the UK with children under 12, or under 17 if disabled.

How the scheme works

The Government offers working families 20% support towards qualifying childcare costs.  Through the childcare service, parents must apply to open an online childcare account provided by NS&I, which payments can be paid into by the families and out of directly to the childcare provider.  For every £8 that is paid in to the account, the Government will make a top up payment of an additional £2, up to a maximum of £2,000 per child per year (£4,000 for disabled children).

Once this scheme has been implemented, any Employer Supported Childcare (ESC) schemes will be closed.  However, if you are already in an ESC prior to the launch you will have a choice of which scheme you would like to stay with, and the same scheme must be used for each child.

You can find a Childcare Calculator on the HMRC website which will help you compare the schemes available to you and check which works best for your family.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

New Allowance for Pension Advice

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A new allowance which will enable people to access pensions advice in a tax efficient way will commence in April 2017.

Under existing rules, if you require advice regarding pensions you will normally have to pay a fee to a Financial Adviser. A new allowance being introduced in April will mean that you will be able to use funds saved in a defined contribution type pension fund to pay for the advice instead. The ability to access the advice in this manner essentially means that the cost of the advice is tax free.

The amount which can be accessed is £500. It can be accessed up to 3 different times provided it is in different tax years.

Be aware that the allowance can only be used to pay for regulated advice and cannot be used by those in final salary schemes unless they also have a defined contribution pension plan at the same time.

If you would like further information or would like to discuss your situation please contact our tax team.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Year End Tax Planning Tips For Companies

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Corporation tax is set to reduce to 19% with effect from 1 April 2017 but opportunities still remain to reduce and defer corporation tax liabilities. Here are some you may wish to consider.

MAXIMISE CAPITAL ALLOWANCE

The annual investment allowance (AIA) provides 100% tax relief for qualifying expenditure incurred up to a limit of £200,000 for 12 month periods starting on 1 January 2016. The allowance can only be claimed in the period in which the expenditure was incurred. You should be aware that cars are excluded from this relief.

If you have a 31 March year end, it would be sensible to review capital expenditure plans and consider bringing forward any purchase to before 31 March, thereby utilising this allowance which might otherwise be lost.

On the other hand, if the £200,000 limit has been exceeded, then further purchases should be delayed until after the year end, if possible.

PENSION CONTRIBUTIONS

Relief for employer contributions is given in the chargeable accounting period in which the contributions are paid. In most cases it is sensible to ensure that all contributions are paid before that date in order to accelerate the relief. In the context of a 31 March year-end, if the payments are made before 31 March, relief is given at 20%. This would reduce to 19% for contributions paid after this date.

DEFERRING INCOME OR PROFITS

Consider delaying a transaction to shift profits forward into the next financial year, so as to delay by one year any corporation tax payable. This will also have the effect of reducing the corporation tax payable from 20% to 19%.

There are several ways of deferring income to the next tax year. Sales could be pushed forward to the next period, selling goods on consignment, or if a seasonal trade, changing the year end to exclude a more profitable period or to include a loss-making one.

CLAIM RESEARCH & DEVELOPMENT TAX CREDITS

Companies that have undertaken research and development work could qualify for generous tax reliefs. For an SME, for every £1 of qualifying R & D expenditure, an additional £1.30 is allowed in the tax computation. A loss making SME may be able to surrender the loss arising as a result of the R & D claim for a cash credit of 14.5%

CLEAR OVERDRAWN LOAN ACCOUNTS

The tax charged on a company loan to a “participator” is equal to 32.5% of the amount of the loan outstanding at the year-end, unless the loan has been repaid or cleared within nine months of the end of the accounting period. Companies should therefore review outstanding loans and consider clearing them within the nine months to avoid the tax charge.

CONSIDER ROLL OVER RELIEF

Any company that has realised gains on the disposal of land and buildings used in a trade should consider whether the corporation tax on this can be deferred by way of business asset roll over relief. This may be available if the company reinvests all of the disposal proceeds in new qualifying assets, either within 12 months before the disposal or up to 3 years after. Partial relief could be available if all the proceeds are not reinvested.

For further information please contact the tax team at Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

2017 Budget Review

Following on from the Chancellor’s first and last Spring Budget, we are pleased to provide you with our summary of the key announcements, along with our tax tables for the 2017/18 tax year:

Budget Summary

Tax Data
The main changes include:

  • The tax-free dividend allowance will be reduced from £5,000 to £2,000 from April 2018.
  • Class 4 national insurance contributions for self-employed workers will increase to 10% in April 2018 and rise again, to 11%, from April 2019.
  • Unincorporated businesses and landlords with a turnover below the VAT threshold will have until April 2019 before they are required to implement ‘Making Tax Digital’.

Among the key changes to note for this year are:

  • The Chancellor confirmed that corporation tax will be cut to a rate of 19% from April 2017 and it will be further reduced to 17% in 2020.
  • The personal allowance will rise to £11,500 in April 2017 and to £12,500 by 2020 and the higher rate income threshold will rise to £45,000, although special rules will apply in Scotland.
  • Individual landlords’ tax relief for finance costs will be restricted to basic rate tax – to be phased in over four years from April 2017.

More information on the Budget is available on our website or if you would like to speak to one of our team please contact us.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Are You Prepared For The New Pound Coin?

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As first announced in 2014, the new 12-sided £1 coin will be finally be here on the 28th of March.

For the first time in over 30 years, the pound coin will be changed after fears the existing coin was easily illegally copied, meaning a lot of worthless coins have been in circulation. The Royal Mint have declared the new coin the most secure in the world.

You will still be able to use the round £1 coin until 15th October, after that date they will become worthless.

As a result, prior to 28th March, you will need to upgrade your coin handling equipment, such as vending machines, supermarket trolleys, car park ticket machines and any other machine that accepts £1 coins. The Royal Mint has been working proactively with coin handling equipment manufacturers to ensure that upgrades and replacements are available. You will also need to train any staff on the new features of the coin.

To find out more information, please view the Royal Mint leaflet or visit www.thenewpoundcoin.com.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.