Brexit – What are the Tax Implications?

One of the main reasons that individuals voted "leave" was to restore fiscal sovereignty to the UK so that we are able to set our own laws, in particular tax law, without interference from Brussels.

Significant tax changes currently require “State Aid” approval and we have seen many recent tax changes forced on us by the EU such as the extension of Furnished Holiday Letting treatment to EU properties and the extension of EIS and EMI to companies with a PE in the UK instead of trading wholly or mainly in the UK.

New Chancellor, a new tax strategy?

George Osborne, a leading member of the “remain” campaign, pledged to cut corporation tax to encourage investment in the UK in response to the referendum result. In an interview with the Financial Times, the former chancellor said he would reduce the rate to below 15%, although he did not mention any timescale and may not remain chancellor post Brexit. It will be interesting to find out whether the new chancellor Phillip Hammond will adopt a similar approach to corporation tax

VAT is the one tax that is likely to see the most significant changes as a result of leaving the EU. However, it is well known that it will take 2 years following the UK’s notification of Article 50 before we leave the EU. So until then, businesses will trade as normal, with business to business trade (“B2B”) in the EU being largely VAT and Duty free.

Possible VAT changes

VAT is a European tax.  Withdrawal from the EU means that UK VAT law will no longer be governed by the EU VAT Directive.

In Budget 2016 it was announced that VAT would raise £138bn revenue for the UK Treasury in 2016/17, second only to income tax and about £100bn more than corporation tax.  Therefore, it is expected that VAT or something equivalent will remain in place as an important revenue raiser for the UK, but the UK will in future have more freedom to set VAT rates.  On the plus side, more zero-rating may emerge, whereas on the downside VAT may be raised above 20%, to cope with a possible recession and to generate additional revenue.

The biggest VAT impact will be the change to Intra-EU trade.  At the moment B2B transactions are zero rated for VAT purposes. In future such sales will be imports into the EU and subject to EU VAT, which has a number of potential consequences. On the plus side, there will be no more Intrastat or European Sales Lists (ESLs) for UK business to complete.

However, businesses and their advisers will need to consider the following points:

• Will a local EU VAT registration be required?
• There will be increased freight agent costs of arranging imports and exports. There will be a requirement to “enter and clear goods”;
• Whilst UK businesses should still be able to recover VAT on overseas expenses, the system is paper based and is a more onerous and lengthy procedure.

Possible Customs Duty changes

This potentially has a major impact and very much depends on the negotiation of a Free Trade Agreement (“FTA”) with the EU.

Without an FTA, the normal WTO tariffs apply.

For example, for a UK car manufacturer selling cars to its’ French subsidiary would result in a 10% duty tariff, being imposed on the transaction.  Therefore, an FTA is critical to businesses with EU supply chains.

Contact us to know it better and what changes your business should make!
APJ Accountancy | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com

Benefits In Kind, Shares Issued To Employees and Directors & Company Car Advisory Fuel Rates Updates!

Reporting Benefits In Kind and Shares Issued To Employees and Directors

It’s that time of year again when the annual return of benefits in kind and expenses paid on behalf of directors and employees needs to be made to HMRC.

Unless the employer holds a dispensation, this includes expenses such as travel and subsistence that are reimbursed to employees and directors.

Note however that from 2016/17 the employer will no longer need such a dispensation if the expenses are wholly, exclusively and necessarily incurred in the performance of the individuals’ duties.

Remember also that whenever companies issue shares to employees and directors they need to consider whether or not an entry needs to be made on the end of year HMRC Form 42. This form is used to report events relating to shares and securities obtained by reason of employment and needs to be submitted online by 7 July following the end of the tax year. As usual we can assist you on complying with these reporting requirements.

Trivial Benefits In Kind Now Exempt

Employees are no longer taxable on trivial benefits in kind, provided the cost to the employer is less than £50. This must not be cash or vouchers or a reward for past or future services but is intended to cover gifts of flowers on a birthday or a turkey at Christmas.

Company Car Advisory Fuel Rates

These rates are the suggested reimbursement rates for employees’ private mileage in their company cars and are reviewed each quarter on 1 March, 1 June, 1 September and 1 December.  In line with an increase in fuel prices, the rates that apply from 1 June 2016 are shown below:

Engine Size	Petrol	Diesel	LPG
1,400 cc or less	10p		7p
1,600 cc or less		9p (8p)
1,401cc to 2,000cc	13p (12p)		9p (8p)
1,601cc to 2,000cc		10p
over 2,000cc	20p (19p)	12p (11p)	13p

Where there has been a change, the rates that applied prior to 1 June 2016 are shown in brackets.

You can use the previous rates for up to 1 month from the date the new rates apply.

If you reimburse your employees the tax free amount of 45p a mile (25p after 10,000 miles) for using their own car for business purposes, then 20/120ths of the above amounts can be reclaimed as input VAT by your business.

For example, a diesel-engine car emitting over 2,000cc = 12p x 1/6 = 2p input VAT a mile.

Contact us for all your Tax needs!
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

Monthly UK Tax Updates - May/June 2016

Changes Next Year for Public Sector Workers “Off Payroll”

It was announced in the March Budget that Finance Bill 2017 will include measures to change the rules for those workers supplying their services to public sector bodies via their own company. The current rules require the intermediary to consider whether or not the IR35 rules apply to the engagement, and if so apply PAYE and National Insurance (NIC) to the income paid via the intermediary company.

If the proposed changes go ahead the public sector body will be required to assess whether the IR35 rules apply and operate PAYE and NIC.

For these purposes public sector includes central Government departments, Local Authorities, the NHS, schools and other bodies such as the BBC.

Tax Relief for Travel Expenses For IR35 Workers

Another measure affecting such workers, and those in the private sector, concerns tax relief for travel and subsistence expenses. New legislation in the current Finance Bill 2016 seeks to deny relief for travel and subsistence expenses incurred by workers caught by the IR35 rules. The restriction will also apply to agency workers where there is supervision, direction and control (SDC) over the worker by the end user client.

According to updated HMRC guidance the SDC test will be the only test used to determine whether the new rules will apply and ignores the other employment status factors. The HMRC examples suggest that if there is no expertise within the end user organisation then there is likely to be limited SDC and the worker will continue to be entitled to relief for travelling to the client’s premises.

Possible New “Look Through” Entity Will Change Small Company Taxation

The Chancellor announced in his Budget Speech that the Government is considering further major changes to small company taxation following a review by the Office of Tax Simplification (OTS).

As in many small companies the directors are also shareholders the OTS believe that it would simplify matters if the shareholders of such companies were to be taxed on their share of profits made by the company in proportion to their shareholdings. In other words the shareholders would be subject to income tax in a similar way to members of a partnership or LLP and there would be no corporation tax paid by the company. This would clearly level the playing field between limited companies and unincorporated businesses. However it is likely to result in more tax payable than under the current rules!

We will monitor further discussions on this possible future change and keep you updated.

Changes to Construction Industry Scheme (CIS) Reporting

Following the abolition of monthly paper CIS returns from 6 April 2016 HMRC have indicated that some leniency will be allowed for late returns for the first three months of the new tax year. Contractors and other businesses required to operate CIS now have to submit their returns online.

It is proposed that from April 2017 contractors will also be required to verify subcontractors online.

Remember that it is not just mainstream contractors that are required to operate CIS. The system extends to property developers who pay plumbers, electricians, and others in the building trade. However CIS does not apply to home owners and property investors who renovate a property prior to renting out to tenants.

Thinking of Building Your Own House? You Can Reclaim The VAT

You can apply to HMRC for a VAT refund on building materials and services if you are building a new home, or converting a property into a home. In order to qualify the home must be separate and self-contained, be for you or your family to live or holiday in, and not be for business purposes (although you can use one room as a work from home office). Builders working on new buildings should zero rate their work anyway and you won’t pay any VAT on their services.

Where there is an existing dwelling on the site you will normally need to demolish the existing building, however it will count as a new build where a single façade is retained if that is a condition of the planning consent. You may also claim a refund for builders’ work on a conversion of non-residential building into a home, or a residential building that hasn’t been lived in for at least 10 years.

When you make your claim you must supply a copy of the planning permission, a full set of building plans, the invoices - including tenders or estimations if the invoice isn’t itemised, and proof the building work is finished. Please contact us if you need advice or assistance on this or any other VAT matters.

Scottish Taxes

In these newsletters we tend to focus on tax matters that apply generally throughout the UK. However, under powers devolved to the Scottish Government there is now a different system of tax for the transfer of property in Scotland instead of SDLT.

Please contact us if you are considering buying a property in Scotland. We will also keep you up to date with other Scottish tax developments from time to time. 

New Accounting Rules for Businesses-SMEs 2016!

Tax Implications Of New Accounting Rules

The calculation of profits for tax purposes is based on the profits of the business computed in accordance with Generally Accepted Accounting Principles. The introduction of a new accounting standard (FRS 102) means that some of the figures in your accounts may need to be restated and these changes may have tax implications.

We will discuss these changes with you and seek to minimise the tax impact where possible.

Interest Free Loans and The New Accounting Rules

The treatment of interest-free loans is complicated under The New Accounting Rules - FRS 102.

One of the areas where there may be a change in your company’s accounts is where you have received or made a loan that is interest free or at less than market rates. Unless the loan is repayable on demand the new accounting rules require the loan to be recorded in the accounts on an amortised cost basis.  For example, this means that a £20,000 interest free loan repayable in two years time would be valued at £18,141 if the market rate of interest is 5%.

This method recognises that £20,000 today is worth more than £20,000 in two years time. If your company is borrowing the £20,000 then there would be finance expenses of £907 in year 1 and £952 in year 2 reflecting the initial £1,859 discount. These finance expenses would be deductible for corporation tax provided the lender is also charged to UK corporation tax on the interest. But if the interest free loan was from an individual such as a director there would be no tax deduction, a point clarified in the latest Finance Bill.

Is Paying Interest On Directors Loans Better Than Dividends Now?

The new 32.5% rate on dividends received by higher rate taxpayers means paying interest on directors’ loan account credit balances is now more tax efficient than paying dividends, once the new £5,000 dividend allowance has been used. This will also avoid the accounting issue mentioned above if a market rate of interest is paid. Unlike bank interest the company is still required to deduct 20% basic rate income tax and pay this over to HMRC quarterly with form CT61. Remember that higher rate taxpayers can receive £500 interest income tax free from 6 April 2016.

Inheritance Tax Planning using the New Lifetime ISA

Budget 2016 announced a new “Lifetime ISA” that will be available to those aged between 18 and 40 from 6 April 2017. The Government will add 25% to the amount saved subject to a maximum of £4,000 a year (plus £1,000 from the Government). It seems there will be no requirement that the savings come from the person named on the account so parents, grandparents, or other relatives could make payments into the account.

Where you have excess income and have concerns about inheritance tax (IHT), what about taking advantage of the exemption for normal expenditure out of income by committing to regular payments into the account. £4,000 a year would save you £1,600 IHT, so £2,400 net turns into £5,000 gross, per recipient!

Contact us to know more on how these will affect your business:
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

The Key Points From Budget 2016!

One of the main themes of the Chancellor’s March 2016 Budget was to ensure that the next generation inherits a strong economy, is better educated, and grow up fit and healthy. His proposed “sugar tax” on the soft drinks industry will be used to fund longer school days for those that want to offer their pupils a wider range of activities, including extra sport.

He again stressed his prudence in concentrating on debt repayment and the importance of “mending the roof while the sun shines”, although he acknowledged that there were numerous factors that could impact on his “bullish” growth forecasts and promises of future budget surpluses.

There will be further changes affecting savers and he hinted that there could be yet further changes to pensions, but not for the time being.

PERSONAL ALLOWANCES

As already announced, the basic personal allowance for 2016/17 will be £11,000. The March Budget announced that this will increase to £11,500 for 2017/18. Remember that if your adjusted net income exceeds £100,000 the personal allowance is reduced by £1 for every £2 over £100,000 giving an effective rate of 60% on income between £100,000 and £122,000 for 2016/17. Contact us for advice on planning to avoid this 60% rate.

INCOME TAX BANDS

The 20% basic rate band for 2016/17 will be £32,000 and for 2017/18 it was announced that this will be £33,500. This means that you will pay 40% tax if your taxable income exceeds £43,000 for 2016/17 and the threshold will be £45,000 for 2017/18. The 45% top rate continues to apply to taxable income over £150,000 for 2016/17.

FURTHER CHANGES TO ISAs

The current £15,240 ISA limit is frozen for 2016/17. The Junior ISA limit remains at £4,080 for 2016/17.

The Chancellor announced that the ISA allowance will increase to £20,000 from 6 April 2017 and that from the same date there will be a new “Lifetime ISA” account where investors aged between 18 and 40 who save up to £4,000 a year will have 25% (up to £1,000) added by the government. Those who have been saving in the new “Help to Buy” ISA will be able to transfer their savings to this new account and use the savings to help them buy their first home or use them to provide an additional pension. These may in future replace traditional pension saving schemes.

PENSION ALLOWANCES REDUCED

There was much speculation about further major changes to pensions such as taxing the lump sum and limiting tax relief, but these did not materialise.

From 6 April 2016 the pension fund lifetime allowance will be reduced from £1.25million to £1million. Transitional protection for pension rights already over £1million will be introduced alongside this reduction to ensure the change is not retrospective.

As already announced, those with income in excess of £150,000 will have the normal £40,000 annual allowance reduced by £1 for every £2 over £150,000.

£1,000 SAVINGS INCOME TAX FREE 2016/17

From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that people earn on savings. If they are a basic rate taxpayer and have a total income up to £43,000 a year, they will be eligible for the £1,000 tax-free savings allowance.

If they are a higher rate taxpayer and earn between £43,000 and £150,000, they will be eligible for a £500 tax-free savings allowance, but those with income in excess of £150,000 a year will be taxed in full on their interest income.
As a result of these changes banks and building societies will pay interest gross from 6 April 2016.

NEW DIVIDEND RULES START 6 APRIL 2016

It was announced in the Summer 2015 Budget that there would be a £5,000 tax free dividend allowance from 6 April 2016 and that once used the rate of tax on dividend income would increase by 7.5%. This means that basic rate taxpayers will pay 7.5% tax on dividend income, higher rate taxpayers 32.5% and additional rate taxpayers 38.1%. Note that from 6 April 2016 dividends will no longer carry with them a 10% notional credit. This is the reason why dividends received by basic rate taxpayers were effectively tax free up to 5 April 2016.

32.5% TAX ON LOANS TO PARTICIPATORS FROM 6 APRIL 2016

Where a “close” company controlled by 5 or fewer shareholders (participators) makes a loan to one of those persons the company is required to pay tax to HM Revenue and Customs. The rate of tax increases from 25% to 32.5% from 6 April 2016 in line with the dividend rate for higher rate taxpayers. This tax is not payable if the loan is cleared within 9 months of the end of the accounting period and will continue to be repaid to the company if the loan is repaid or written off after the 9 month period.

CAPITAL TAX RATES

An unexpected announcement was a reduction in the rate of capital gain tax from 6 April 2016 down from 18% to 10% for basic rate taxpayers and 28% down to 20% for higher rate taxpayers. The 18% and 28% rates remain for disposals of residential property.

There has been no change in the inheritance tax nil rate band which remains at £325,000 until 2020 although an additional nil band will be available from 6 April 2017 where the main residence or assets of an equivalent value are left to direct descendants. This additional relief will be protected where the person downsizes to a less valuable property from 8 July 2015 onwards. Please contact us if you would like to discuss inheritance tax planning.

FURTHER CHANGES TO CGT ENTREPRENEURS’ RELIEF

Entrepreneurs’ relief (ER) will be extended to external investors in unlisted trading companies. This new investors’ relief will apply a 10% rate of CGT to gains accruing on the disposal of ordinary shares held by individuals. These shares must be subscribed for by the claimant and acquired for new consideration on or after 17 March 2016. The shares must have been held for a period of at least three years starting from 6 April 2016 and there will be a lifetime cap of £10 million.

In the 2014 Autumn Statement it was announced that it is no longer possible to claim CGT entrepreneurs’ relief against the gains arising on the sale on or after 3 December 2014 of goodwill by a sole trader or partnership to a limited company in which they have a controlling interest. That restriction was then legislated in Finance Act 2015. It has now been announced that the relief will still be available provided that the transferor does not receive more than 5% of share capital or voting rights in the acquiring company.

LOWER CORPORATION TAX RATES

A single corporation tax rate of 20% has applied since 1 April 2015 regardless of the level of the company’s profits. In the Summer 2015 Budget it was announced that this would reduce to 19% in April 2017. The Chancellor has now announced that this will now be reduced to 17% from 1 April 2020.

£1,000 TAX FREE FOR “MICRO -ENTREPRENEURS”

From April 2017, the government will introduce new allowances for the first £1,000 of trading income and the first £1,000 of property income. Those with income below this level will no longer need to declare or pay income tax on that income. Those with income above the allowance will also benefit by deducting the relevant allowance from their gross income. This appears to be aimed at people starting small businesses on E-Bay and renting on air B&B.

NEW CORPORATE TAX LOSS RULES

There will be fundamental changes to the rules for setting off corporate tax losses starting on 1 April 2017. For losses incurred on or after 1 April 2017, companies will be able to use carried forward losses against profits from other income streams or from other companies within a group. However, large companies with profits in excess of £5m will only be allowed to offset brought forward losses against 50% of the amount of profit in each future period.

INTEREST RELIEF RESTRICTED FOR MULTI- NATIONAL COMPANIES

From 1 April 2017, to restrict profit shifting by multi-nationals, the UK will be introducing a Fixed Ratio Rule limiting corporation tax deductions for net interest expense to 30% of a group’s UK earnings before interest, tax, depreciation and amortisation (EBITDA). This is in line with the rules that exist in several other countries and will address profit-shifting through interest charges. Note that this restriction will not apply where the net UK interest expense is less than £2 million.

SDLT CHANGES

The rules for calculating the Stamp Duty Land Tax (SDLT) charged on purchases of non-residential properties and transactions involving a mixture of residential and non-residential properties changed with effect from Budget Day to bring them more into line with the mechanism for charging SDLT on residential property. On and after 17 March 2016, SDLT will be charged at each rate on the portion of the purchase price which falls within each rate band. The new rates and thresholds for freehold purchases and leases premiums are:

Purchase price	SDLT rate,  cumulative
Up to £150,000	NIL                        NIL
£150,001 - £250,000	2%                   £2,000
£250,001 and over	5%       (no maximum)

Note also that the additional 3% SDLT charge on additional residences commences on 1 April 2016.

TAX RELIEF ON SMALL DONATIONS TO CHARITY INCREASED TO £8,000

The Gift Aid Small Donations Scheme (GASDS) allows charities to treat small donations such as those in collecting boxes as if Gift Aided.

With effect from 6 April 2016 the maximum annual donation amount which can be claimed through GASDS will be increased from £5,000 to £8,000 allowing charities and Community Amateur Sports Clubs to claim Gift Aid style top-up payments of up to £2,000 a year.

VAT REGISTRATION LIMIT £83,000

The VAT registration limit has been increased by £1,000 to £83,000 from 1 April 2016. The de-registration limit also increased by £1,000 to £81,000.

If you have any questions, please contact us at:
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

Why businesses can benefit from cloud accounting?

Cloud computing has become increasingly pervasive over the last few years and many software developers now provide cloud-based services. But what is the cloud, and how can cloud accounting software benefit your business?

‘The cloud’ is another term for ‘the internet’. Cloud computing refers to the practice of accessing data or programs over the internet, instead of using your hard drive or office server. Cloud accounting software is software that can be accessed online. Traditional small business accounting programs require installation and can present a number of problems:

·    Costs and complications of backing up data and installing upgrades

·    Insecure data storage and protection

·    Limitations on the amount of devices running the software

·    Limitations on the amount of people able to access the software

Cloud accounting software eliminates many of these issues. For example, data backups and software upgrades are carried out automatically, saving your team the laborious job of performing these tasks manually. In addition, data security is enhanced: you no longer have to worry about a laptop or hard drive falling into the wrong hands, as the data is stored remotely and can only be accessed with the correct passwords. This also means that incidents such as fires or floods no longer carry the risk of permanent destruction of client data.

In terms of software access, cloud accounting companies provide a number of options, giving business owners greater opportunity to enhance teamwork and collaboration without compromising control. Many companies provide flexible price plans, allowing businesses to scale their accounting function according to their needs and budget. 

Perhaps the most significant advantage of cloud accounting is that it allows businesses to access their data and software from any device with an internet connection 24/7. Small business owners can therefore stay connected to their data and accountants from almost anywhere, providing greater control and peace of mind. 

Top 3 benefits to your business:

1.         Clear, real-time overview of your current financial situation

2.         No installation necessary and updates are automatic, allowing for more time to be spent on more important work

3.         Everything is backed up automatically, and your data is more secure

Talk to us about getting a demo, we’d be delighted to show you how easy it is to move your accounts to the cloud!

Monthly Tax and Accounting News and Updates - What you need to know on June?

Our Monthly Tax and Accounting News and Updates post is designed to keep you informed of the latest tax and accounting issues for businesses.

We are here to help you if you need further information on any of the topics covered.

 

Emergency PAYE Tax Code To Be Applied To Certain Pension Withdrawals

The new flexible pension rules came into force from 6 April 2015 for those aged 55 or over with money purchase pension schemes. As announced by the Chancellor in last year’s Budget, these individuals will be able to withdraw as much as they wish from their pension fund but will be taxed on the amount withdrawn at their marginal tax rate. In some cases, the pension fund administrator will apply an emergency PAYE tax code to the payment on a month 1 basis which may result in more tax being deducted than the amount eventually due. This can either be reclaimed at the end of the tax year or during the year if you complete the appropriate HMRC form. Note that we can advise you of the tax implications of the amounts that you are considering to withdraw from your pension fund and, where necessary, assist you in reclaiming any excess PAYE deducted.

Further Budget On 8th July

Following the Election result on 8 May, the Chancellor has announced that there will be a second Budget. We expect this to include a number of Conservative manifesto tax pledges.

HMRC Don’t Yet Have The Power To Raid Taxpayers’ Bank Accounts

HMRC are seeking the power to recover unpaid tax over £1,000 from taxpayers’ private bank accounts and legislation was originally going to be included in the 2015 Finance Act. However the new measures were not included in the first Finance Act but may be included in the next one!

This new power will only be used where the taxpayer has ignored several demands for payment. Additionally, the taxpayer’s bank account should not be reduced below £5,000 by HMRC.  If enacted, this proposed new power will extend to joint bank accounts in the tax debtor’s name, but not those in the spouse’s sole name.

Considering Giving Shares In Your Company To Employees?

More and more companies now give their employees the opportunity to acquire company shares. If correctly structured, this can be a very tax efficient way of attracting and retaining staff, as they are able to share in the success of the company. However, if you get things wrong there can be significant tax charges on the employee and employer. As a general rule, if employees are allowed to acquire shares at less than market value, the discount is taxable as employment income and PAYE; national insurance may also be due. So for example, where the employee pays just £1 for a share worth £10, the £9 difference would be taxable.

The issue of shares to an employee also needs to be reported to HMRC using Form 42 by 6 July following the end of the tax year. There are a number of schemes that you may wish to consider where the receipt of the shares will not be taxed as employment income and in some cases will only be subject to capital gains tax when the shares are eventually sold. It used to be possible to ask HMRC for confirmation that the share scheme satisfied the rigid rules for the tax advantages to apply, but this is no longer possible and employers are now required to “self certify” that the share scheme complies with the legislation. We can assist you with this process if you would like to consider putting a share scheme in place.

Enterprise Management Incentives (EMI) Share Option Scheme

The best employee share option scheme currently available is the EMI share option scheme. In order to take advantage of this, both the company and employees must meet certain conditions. The company must carry on a qualifying trading activity and have a gross asset value of no more than £30 million. The employee or director must work at least 25 hours a week for the company and not hold more than 30% of the company’s shares at the time that the EMI options are granted. The main tax advantages of EMI share options are that provided the option price is set at the correct value there would be no income tax or national insurance when the option is granted or exercised. Furthermore, the employee will then usually benefit from CGT entrepreneurs’ relief which provides a 10% rate when the shares acquired under the option are eventually sold, such as on the sale of the business.

Corporation Tax Relief For Employee Shares

A further tax advantage of allowing employees to acquire shares in the company is that the employing company may be entitled to a corporation tax deduction. This deduction is the difference between the amount payable by the employee and the market value of those shares at the time they are acquired. This will generally be the amount taxable on the employee so, for example, if the employee pays £1 a share when the shares are worth £10 each then the £9 per share discount will be deductible for the company.

Forms P11D Due By 6 July

As mentioned in the tax diary, the deadline for filing the 2014/15 returns of benefits and expenses paid to employees is 6 July 2015. Note that there can be significant penalties for incorrect returns so they need to be completed with great care. Remember that unless the employer holds a dispensation from HMRC, employees’ and directors’ reimbursed expenses (such as travel and subsistence) also need to be reported. We can assist you in completing the forms and to put in place control procedures that will satisfy HMRC requirements to grant a dispensation from reporting certain expenses.

Contact us for if you have any doubts or Accountancy needs!
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com


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Autumn Statement 2014: Surprise Announcements - What you need to know!

Autumn Statement 2014: surprise announcements on restriction of Entrepreneur's Relief on incorporation and new Stamp Duty Banding.

Income Tax

Personal allowance increased to £10,600 for 2015/16 (a £100 increase on the previously stated £10.500).

Higher rate threshold to be increased to £42,385 from April 2015.

NI upper earnings and upper profit limits will increase in line with the higher rate threshold

Confirmed no changes to come into effect before April 2017, relating to restricting the personal allowance for non-residents.  Any changes will be subject to further consultation.

Remittance Basis

In the next Parliament, the remittance charge for non-UK domiciled individuals is set to increase for longer UK residence. The basic charge of £30,000 will remain unchanged, but for non-doms who have been resident in the UK for 12 out of the past 14 years, it will be increased to £60,000, and for those UK resident for 17 of the previous 20 years, it will increase to £90,000.

Pensions

From April 2015, the 55% tax charge on inherited pensions is withdrawn, allowing unused pension pots to be passed on tax free.

Joint life or guaranteed term annuities will also be able to be passed on tax free where death occurs before age 75.

Corporation Tax

Creative sector reliefs

Reliefs extended to include a new children’s TC tax relief from April 2015.

Consultation announced to introduce a new orchestra relief from April 2016.

R&D Relief

Tax credit for small and medium companies increased from 225% to 230% and the credit will be increased from 10% to 11% from 1 April 2015.

From 1 April 2015, the costs of materials incorporated in products that are sold will be excluded from relief.

New advanced assurance scheme to be introduced for small businesses making their first claim and new guidance to be developed.

Employers and employees

Government to review the use of employment intermediaries ‘umbrella companies’ with a view to introducing possible counteraction measures in Budget 2015.

In addition to the removal of NIC’s form under 21’s from April 2015, with effect from April 2016, employers will not have to pay NI contributions for apprentices aged under 25 earning up to the Upper Earnings Limit.

From April 2015 the £2,000 annual NI ‘Employment Allowance’ is extended to households that employ care and support workers.

Proposals to introduce a new form of employee shareholding vehicle in order to reduce the costs for employee controlled companies have been shelved for the time being. Consultation revealed a lack of interest amongst employers and share scheme specialists. Plans to change the definition of marketable securities have also gone back to the drawing board.

Capital Gains Tax

NEW – Entrepreneurs Relief (ER) will no longer be available on the disposal of goodwill on transfer of a business to a related close company (incorporation). The measure has effect for transfers on or after 3 December 2014.

ER will now be allowed where a qualifying gain, which has been deferred into investments qualifying for Enterprise Investment Relief (EIS) and Social Investment Tax Relief (SITR), is subsequently realised.

Stamp Duty

NEW - Significant changes to the Stamp Duty Land Tax (SDLT) regime

The old rules whereby the rate of SDLT would be determined by the purchase price of the property and applied to it in full (known as the ‘slab’ system) has been abolished with effect from 4 December 2014.

The new rules introduce a banding system whereby the SDLT is determined by the rate applicable to the amount of the overall purchase price which falls within a given band (akin to the current income tax system)

The new bandings and rates are;

0 -125,000	0%
125,001 – 250,000	2%
250,001 – 925,000	5%
925,001 -1,550,000	10%
1,500,001 and over	12%

Transitional provisions are in place where contracts have been exchanged but not completed, which allow the purchaser to choose whether to apply the old or new rules.

Enveloped properties

From 1 April 2015 the Annual Tax on Enveloped Dwellings (ATED) will be increased;

£2m-£5m	£23,350
£5m-£10m	£54,450
£10m-£20m	£109,050
£20m and over	£218,200

VAT

From April 2015, search and rescue and air ambulance charities will be eligible for VAT refunds, and hospice charities will also receive refunds for VAT incurred.

Inheritance Tax

The government will not introduce a single settlement nil-rate band for trusts, but will target avoidance through the use of multiple trusts in Finance Bill 2015.

IHT exemption for members of armed forces extended to members of emergency services and humanitarian aid workers responding to emergency situations.

Others

ISA’s

ISA limit increased to £15,240 with effect from April 2015.Junior ISA and Child Trust Fund limits increased to £4,080.

From 3 December 2014, an ISA holder can pass their ISA benefit to their spouse or civil partner on death. The additional ISA allowance will be equal to the value of the savers ISA holdings at the date of their death. This is in addition to thesurvivor’s own normal ISA limits.

Business Rates

‘High street discount’ increased from £1,000 to £1,500 from April 2015 to March 2016.

Small Business Rate Relief doubled for a further year.

Check these resources for more information:

Autumn Statement 2014: 16 things you should know

Chancellor George Osborne's Autumn Statement 2014 speech