Nicola talks about the new tax year…

Although we are now a couple of months into the new tax year it is worth having a refresher on some of the new rules and changes.

As you are probably aware the taxation of dividends has been reformed from 6th April 2016. The 10% tax credit on dividends has been abolished and has been replaced with a dividend tax allowance of £5,000, whereby the individual will pay no income tax on dividends received up to £5,000, regardless of their other income.

Dividends received in excess of £5,000 will now be taxed as follows:

7.5% for basic rate taxpayers

32.5% for higher rate taxpayers

38.1% for additional rate taxpayers

Individuals on fairly low incomes may now be brought into the self assessment regime in order to start paying over tax due, when there has been no liability in previous years.

One thing to watch out for is that HMRC have been adjusting tax codes in order to collect tax through the PAYE system. Don’t forget to check your coding notices as this can be removed. Tax on dividends received after 6th April 2016 will only fall due for payment by 31st January 2018.

If you think any of this will affect you, or you will be new to self assessment, please contact us and we can help you with registration and compliance with your tax obligations.

Also on 6^th April 2016, the new personal savings allowance was introduced. This applies a 0% rate for up to £1,000 of savings income such as interest, reducing to £500 for a higher rate taxpayer, and will not be available to any individuals who fall into the additional tax rate band.

In conjunction with this, savings income earned from 6^th April 2016 will be paid gross. Banks will no longer deduct tax from account interest they pay to customers.

For those of you running a payroll scheme, the annual employment allowance to set against employers NIC has been increased to £3,000, also from 6^th April 2016. This excludes one Director companies who are no longer able to claim the allowance.

Those famous words are still true – tax doesn’t have to be taxing. Please get in touch if you need any help or guidance

 

Ian tells us about how to get benefits without a tax implication…

It’s a stressful time in the office at the moment with the P11d filing deadline approaching.  All forms have to be filed by 6^th July and any Class 1A National Insurance paid over to HMRC by 19^th July.  Fortunately HMRC are set to reduce the requirements for reporting in the coming years but they still remain one of our clients (and our) least favourite piece of paperwork!

 

One of the things that employers probably aren’t aware of are trivial benefits.  Although HM Revenue and Customs don’t actually put a general statutory limit it is thought that they accept claims for benefits to be exempt when they are around or less than £50.

The best way to find out if a benefit will be considered trivial is to give the employer helpline a call on 0300 200 3200 and if they agree it is trivial you will need to ask your local employer office to confirm this in writing.

 

There are further rules regarding this to stop directors taking advantage of this and continually buying themselves small gifts.  There is an annual cap for directors (and members of their household) of £300 per year, however there is no limit to employees, so feel free to give them a small treat as often as you like, providing it isn’t a reward for work done ie. Meeting sales targets for the month.  Anything else such as taking them out for their birthday, flowers if they have been ill or a  work anniversary gift would be fine.

If you have any further queries regarding trivial benefits for either yourself or your employees then feel free to get in touch with us.

Nick Smith warns us about cyber crime…

Cyber attacks on large businesses such as Talk Talk and dating website Ashley Madison make front page news but the fact that small to medium sized organisations are equally, if not more, at risk of being targeted is rarely publicised.

 

Many SME owners have adopted a ‘we are too small to be attacked’ or ‘it’s not happened before, so why now?’ approach to cyber security.

 

However, some experts believe that a third of SMEs will fall victim to a breach so if hasn’t happened yet, it may be more down to luck than design.

 

Recent government figures suggest a SME hit by a cyber attack could lose as much as £310,000 with 64% of customers saying that they would be discouraged from buying from a business that has been subject to a breach.

 

Cyber criminals are becoming increasingly sophisticated with their tactics and on the basis that SMEs may not have the resources to invest in state of the art security systems, they are often viewed as low hanging fruit.

 

There is no time for complacency and SME owners must take this threat more seriously. They need to ask themselves, ‘could my business survive if I lost two-thirds of my customer base overnight?’

 

Cyber security does not need to be over complex and businesses that implement the following three simple steps can reduce the risk of being breached…

• Use 3 random words to create a strong password
• Install security software on all devices
• Always download the latest software updates

Jack talks about VAT…

A key part of my role at RT is completing VAT returns on behalf of our clients. VAT can be a bit of a minefield.

 As our blogs have shown in the past there are different schemes that are available should you decide or need to register.

In terms of actual registration the key points are as follows;

• You must register for VAT when you exceed the £83,000 VAT taxable turnover in a 12 month period or expect to go over this threshold in a single 30 day period. If you do not register within 30 days of exceeding the threshold you must pay HMRC any VAT you owe from when you should have been registered and may also incur penalties depending on how much you owe and how late you register. You can also voluntarily register for VAT if you do not exceed the £83,000 threshold and pay any VAT you owe from the date you register.
• When you are registered you must start charging VAT. As well as charging VAT on any goods or services you sell, which are ‘taxable supplies’, you may also reclaim VAT on business goods or services you have purchased. This is reported to HMRC through your VAT return where you will inform them of the amount of VAT you have charged and the amount of VAT you have paid. In your VAT return if you have paid more VAT than you have charged, you can reclaim the difference from HMRC. If you have charged more VAT than you have paid, you will have to pay HMRC the difference.

A couple of other points to bear in mind;

• There are three different rates of VAT: standard rate, reduced rate and zero rate. Most goods and services come under standard rate. Whether the reduced rate of VAT is used depends on the item being provided but also the circumstances of the sale. For example, electricity for domestic and residential use or for non-business use by a charity is always charged at the reduced rate of 5% VAT. Zero-rated are still VAT-taxable, but the rate of VAT that must be charged is 0%. For example, a charity shop selling donated goods.
• You cannot charge VAT on any item which is exempt or ‘out of scope’. Businesses cannot be VAT registered if they only sell exempt goods. Out of scope goods and services are outside the VAT tax system so you can’t charge or reclaim VAT for example goods and services you buy and use outside of the EU.

If you need any advice on VAT and if you should be registered then please do get in touch.

Jack Clarke

Amy tells us about a new service…

We know that for small businesses, getting paid from customers in a timely manner is extremely important, especially for maintaining a healthy cash flow. We have recently become aware of a product on the market designed to help small businesses take payment from customers where ever they are which could help boost sales and reduce the amount of trade debtors.

I Zettle enables businesses to take card payments by connecting the I Zettle card reader to their smart phone or tablet via Bluetooth. The ability to take card payments could allow tradesmen to take payment as soon as the job has been completed, or pop up food markets and taxi drivers to take card payments rather than just cash.

 

How much does it cost?

Based on monthly sales it starts at 2.07% from £2,000 sales per month and gradually reduces to 1.5% for sales of £12,800 per month and above.

The card reader costs £59 + vat if you want to accept contactless, otherwise it’s free.

No fees for refunds.

 

How does it work?

To get setup, you need to manually add a library of products that you sell. Then as a customer pays, select the product from the library you have created on the app. You can take cash or card payments and can buy a printer to produce instant receipts, or these can be emailed to the customer.

 

Visa, MasterCard, Visa Electron, V pay, Maestro, and American Express are all accepted.

 

After the sale

After the sale has been made you can generate different reports to spot patterns and trends eg sales over time/ average spend/ returning customers.

 

I Zettle can be synced with bookkeeping software such as Xero to automatically put the sales data into the accounts of your choice.

 

Who could use it?

Anyone that makes sales on the go, and has a compatible smart phone or tablet.

There are also other suppliers on the market who offer this service, if you would like to discuss your options we would be happy to talk them through with you.