Gwent Landlord Forum – 31 May 2017

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2017 is flying by and changes to Landlord regulations seem to be keeping pace. So we would like to invite you to attend the 3rd Gwent Landlord Forum of this year, taking place on Wednesday 31 May between 6pm and 8pm, at The Parkway Hotel and Spa.

As always, our invitation goes out to all who may be interested so if you know someone who is a landlord or thinking about becoming a landlord, please do pass this invitation on to them – we are always happy to welcome new guests.

Speakers

Neil Soundy of Neil Soundy Financial Services Limited will be talking about:

  • Buying via Limited Company/Special Purpose Vehicle (SPV)/Trading Company.
  • Lower rental coverage requirements via Limited Company/SPV.
  • Buying Multi Unit Block or HMO.
  • Basic taxation on Limited Company Buy To Let (BTL)
  • Use of Tenancy in Common on existing personal BTL’s
  • Possibility of transferring existing personal BTL’s to Limited Company.
  • Airbnb for landlords

Daniel Bellis, Policy Officer with the Residential Landlords Association (RLA) will be speaking about:

  • The Renting Homes Act and how they are creating standardised contracts across the rental sector.
  • He will also cover other changes, such as Fit for Human Habitation regulations, changes in abandonment procedure and changes to joint contracts.
  • With over 20 different regulation still to finalise before landlords start using the new system, a lot has already changed since the Act was first passed.

Eventbrite - Gwent Landlord Forum

For any enquiries about this event, please contact Katie Williams at Green & Co on 01633 871122, Email: katie@greenandco.com.

The Rising Tide of Auto Enrolment

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Over the course of the next two years Auto Enrolment Pension contribution rates are rising. These changes will affect you as an employer as well as your employees.

Currently the total minimum amount is 2% of qualifying earnings, of which the minimum for the employer to pay is 1%. This means that the employee normally also pays 1%.

From 5 April 2018, these rates will increase. The new total minimum will be 5%, with the minimum employer contribution rising to 2%. From 5 April 2019, they will rise again to 8% and 3% respectively.

Of course, both the employee and the employer can chose to pay more into the scheme should they wish. For instance, if an employer wishes to contribute to his employees’ pension the whole 2% currently prescribed, the employee would not need to add anything, as the minimum amount has been reached.

If you are staging soon, or have perhaps passed your staging date, and would like any help don’t leave it too late! Our dedicated payroll team will be happy to help ease the burden.

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

Some Employee Perks Are Being Lost and It Could Be Costly

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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.

Class 2 Voluntary Contributions

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Although the self-employed heaved a sigh of relief when the Chancellor reversed his decision to raise the rate of Class 4 NIC recently, other changes in the structure of National Insurance will give cause for concern, particularly for those with low earnings.

The abolition of the self-employed stamp (Class 2 NIC) from April 2018 means those who are currently below the Small Earnings Exemption and have been paying voluntary Class 2 contributions in order to secure contributory benefits will no longer be able to do so.  From that date they will have to pay Class 3 voluntary contributions which is currently £14.10 per week, compared to the Class 2 amount of £2.80 they are currently contributing.  In addition, the special rates for share fishermen (currently £3.45) and volunteer development workers (£5.60) will also be abolished, so they too will have to pay the higher Class 3 amount to maintain their contributions.

The situation is further complicated as in the past those with income below the Class 2 limit had to opt out of paying the stamp by applying for exemption, whereas now low earners have to opt in if they wish to make contributions – a fact many may not have been aware of, and may give rise to gaps in their records.

You can check your Class 2 record by logging onto your personal tax account at HMRC on-line, by post or by phone – details can be found here. If you have gaps in your contributions you can now backdate your Class 2 contributions for up to 6 years but you will need to do so before Class 2 is fully abolished.  You need 35 years of contributions paid or credited to be entitled to the full state pension.

If you would like to discuss your situation with one of the team at Green & Co, please contact us on 01633 871122.

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

Some employee perks are losing their tax breaks.

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From 6 April 2017 the tax and employer national insurance advantages of a salary sacrifice or salary exchange will be removed, with the exception of:

  • Pensions
  • Childcare (Vouchers, workplace nurseries or directly contracted childcare)
  • Cycle to work
  • Ultra-low emission cars with co2 emissions of or less than 75g/km.

Any employees who have swapped their salary for benefits, for example, additional holiday days, will now pay the same tax as if they were buying them out of their post-tax income.

If any arrangements which were in place before April 2017 relate to cars with co2 emissions over 75g/km, accommodation or school fees, they will be protected until April 2021. All other arrangements (arranged before April 2017) that are not detailed above will be protected until April 2018.

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

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

 

Proposed NIC rise has been dropped!

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As mentioned in the recent Budget, the Chancellor had intended to increase the Class 4 National Insurance Contributions (NIC). The NI rate for the self-employed (Class 4) was meant to increase from 9% to 10% in April 2018, followed by another rise to 11% in April 2019. This would have brought NIC for the self-employed more in line with the employment rate, which is currently 12%.

Today, however, the Chancellor Philip Hammond has made a complete u-turn, announcing that the government will scrap the increase. This action has been taken because many feel the change would break the manifesto promise not to increase National Insurance, Income Tax or VAT.

Chancellor Hammond has explained that “it is very important both to me and to the Prime Minister that we are compliant not just with the letter, but also the spirit of the commitments that were made. In the light of what has emerged as a clear view among colleagues and a significant section of the public, I have decided not to proceed with the Class 4 NIC measure set out in the Budget.”

This means that the 4.8 million Britons who are currently self-employed  can rest assured that, for now, the Class 4 NIC rate will stay at 9%.

If you have any questions regarding this change, or any of the other changes announced in the Spring Budget, please don’t hesitate to contact us.

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.

Business groups set out Spring Budget priorities

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Business groups have outlined their priorities for businesses and the economy ahead of the 2017 Spring Budget. 

In a letter to Chancellor Philip Hammond, the Confederation of British Industry (CBI) called on the government to ‘back business’s growth ambitions’ to help build prosperity across the UK, and to work alongside firms to ‘prioritise stability’ during periods of economic uncertainty.

The CBI also urged the government to tackle the UK’s ‘outdated’ business rates regime and limit its ‘growing burden’ on businesses.

Echoing the call of the CBI, the British Chambers of Commerce (BCC) also recommended that the government take action on ‘delivering real reform’ to the business rates system. It called for HMRC to abandon the ‘fiscal neutrality principle’ in business rates reform, suggesting that this acts as an ‘unacceptable barrier’ to the revision of the system.

In its submission, the BCC outlined its desire for the government to bring forward the switch from the Retail Price Index (RPI) to the Consumer Prices Index (CPI) to April 2017, instead of during 2020, as is currently planned.

Meanwhile, the Federation of Small Businesses (FSB) has advocated for a ‘pro-business’ Budget that supports self-employed individuals, urging the government to help more people start up in business. It also called for the government to ‘improve job creation and drive productivity across the nations and regions of the UK’.

In a radical move, the Institute of Directors (IoD) has claimed that the UK tax system is ‘not keeping up with the growth of self-employment and the digital economy’, and has called for the Chancellor to create a new Tax Commission when he presents his Budget. The IoD argues that the new Commission should investigate how tax applied to the self-employed could be brought into line with employees, and how online stores could be taxed fairly in relation to high street shops.

The Institute has also called for an increase in the Annual Investment Allowance (AIA) cap from £200,000 to £1 million and a consultation on ‘liberalising’ investment schemes for business start-ups.

The Chancellor will present the 2017 Spring Budget on Wednesday 8 March. Full coverage of the key announcements will be available on our website, so please visit regularly. 

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

Concerns for small businesses using the VAT flat rate scheme

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From 1 April 2017 HMRC are changing the rules for using the VAT Flat Rate Scheme (FRS). 

In an attempt to wipe out what HMRC has seen as abuse of the flat rate scheme, businesses will now need to determine whether they fall into a “limited cost trader” category, by comparing the percentage of goods they purchase in relation to their turnover. Limited cost traders must use the new 16.5% rate; previously, the rate was entirely dependent on the nature of the trade, the highest of which was set at 14.5%.

However, the Chartered Institute of Taxation (CIOT) has warned that the changes could have a considerable negative effect on many of the 400,000 businesses currently using the flat rate scheme, the majority of which are compliant.

They suggest that new regulations will all but wipe out the original intent of the scheme, which was to simplify VAT for the small trader. The criteria for being a limited cost trader must be reviewed for every VAT quarter, meaning that taxpayers could be remitting different rates in different quarters – hardly a simplification! Tax points and cut-off dates will be crucial in determining status for the scheme but, say the Institute, some will undoubtedly find ways to tweak the figures to avoid falling into the limited cost category. The goal of eradicating abuse of the scheme would therefore seem unrealistic.

The CIOT suggests there could be other ways for HMRC to tackle the problem, such as perhaps making it unavailable to those who register voluntarily, and are calling for them to re-think the proposals. In the meantime they expect that many businesses will opt to go back to the standard VAT scheme rather than wrestle with the complexities of the new regime.

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

Accountancy firm develop its own software in bid to perfect service to clients

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This weeks edition of the South Wales Argus features an article on the development of our own software.

An accountancy firm has developed its own software suite in order to help businesses manage their taxation and finances better.

Cwmbran-based accountancy firm Green & Co Accountants and Tax Advisors has spent over two years researching what their clients need ahead of what is a busy few years of legislative changes.

The software suite is comprised of three facets; an income tax forecaster, a financial performance review and a prosperity dashboard.

Barrie Kenyon, Partner at the firm, said: “Recently, the government has made a number of adjustments to the tax system that are all coming into effect across the next three to four years such as the changes to mortgage interest relief and company car benefit. We want our clients to see how the changes in legislation will affect them so we can reorganise remuneration in a tax-efficient way.”

With Green & Co’s software suite, clients can use the forecaster to analyse the current taxable income and see what future liabilities will be for the next five years.

Explaining the financial review element of the software, Mr Kenyon said: “Some clients may not be able to fully understand the numbers thrown at them from the accounts. It is important that they know how to digest the data from key performance indicators of how the business is performing. Our graphical analysis helps clients understand how the business has been performing year-on-year and it is something we can help them work through and improve upon.

“Our prosperity dashboard reviews the business’ progression toward set goals whilst affording directors accurate up-to-date information as opposed to waiting until year-end accounts are produced.”

The theory behind the software is to provide businesses with real-time information in order to make quicker and better-informed decisions regarding the performance, direction and sustainability of the business.

Mr Kenyon continued: “As with everything we strive to achieve, our end goal is to help build a stronger business for our clients whilst increasing profit and reducing liabilities.”

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.