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With Br**it fast approaching (perhaps), just a couple of days following this is one of the most radical events in the tax world since the Window Tax was first imposed in 1696. It will start with VAT and apply to all VAT registered businesses with turnover over the VAT threshold for 1 April 2019, before it is expanded to other taxes (income tax and Corporation tax) for this group.
It is part of the government’s plan to transform the UK to a digital economy whilst ensuring that individual’s and businesses pay the tax right and keep on top of their affairs. Other individual’s and businesses will follow and it will ultimately change not only your relationship with HMRC but also your relationship with us in terms of how we work and how often we have to be in touch. Do contact us if you want to know more about this and how it will affect you. The key thing for those impacted is to ensure they are using compliant software (https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-vat).
Optimal Salaries and Dividends
The two options from an optimal salary perspective for 19/20:
- £8,632 per annum (£719.33 per month) for Director-Only businesses; or
- £12,500 per annum (£1,041.67 per month) where you employ staff other than the Directors or have cashflow/reserve issues.
Assuming you have profits after tax available, to declare as dividends, the changes in 2019/20 make drawing down the right levels of dividends even more critical, whilst factoring in your exit strategy, with the 0% band falling from £5,000 to £2,000 but the 7.5% band increasing from £34,500 to £37,500, the higher and additional rates remains at their current level.
When we do your accounts we’d be delighted to provide you with a bespoke calculation to outline your options and the tax implications, so you can make the best decision for you.
Auto Enrolment increases from 6th April
Do you have an Auto Enrolment or Workplace Pension Scheme for your employees? If so, don’t forget from the 6th April 2019 the total minimum contributions will increase from 5% (of which 2% is Employer’s contribution) to 8% (of which 3% is Employer’s contribution) of qualifying earnings for eligible employees. The fun doesn’t stop there either; don’t forget staff have to be re-enrolled every three years. Therefore if you would like to discuss your options here, please get in contact with us.
Use of Home
Flat rates each month can be claimed in your accounts, based on the number of hours you spend working from home, where you keep a timesheet to prove this. However, if you have other household bills, which you believe should be paid for by your business, based for example on the number of hours you spend at home, the designated services this requires, or the space it takes, let us know and we can see if a bespoke calculation could be worthwhile for you.
Company Car
Whilst you often get better rates on cars if you purchase them through your business, where there is personal use of the car VAT might not be able to be claimed back and it can result in a Benefit-in-kind, increasing your personal tax. As a result, unless it is a zero-emission or low-emission vehicle, it often does not make sense from a tax perspective to have a car through your business. However, it is worth contacting us to explore this further. Commercial vehicles are of course different.
IR35
This is one of the most interesting and fast changing parts of the tax legislation, with more changes coming in 2020 for the private sector, as discussed in a recent blog. If you have one key customer on your business and want to know if you fall under this legislation please call today for an initial discussion. We can also conduct an independent assessment of your situation based on both your contract and actual performance of the contract.
IHT
As they say “people only pay IHT where they haven’t received the right advice” and there are many options here to mitigate this as part of estate planning. Whilst the nil rate band is increasing from £325,000 to £500,000 by 2020/21 meaning many are being taken out of this tax (for example if you are a husband-wife combination you would have £1,000,000 available before IHT is due as a result of the spousal transfer). However, if this is likely to impact you, do get in touch today.
BTL Structure
Do you have a Buy-To-Let property, or are you considering making the investment? Following the changes in the mortgage interest deductibility (50% allowable in 2019/20) and stamp duty, it is more critical than ever to get the right structure in place, which will ultimately depend on your exit strategy. Do get in touch here to discuss this further.
Stamp Duty Land Tax (SDLT)
This is becoming an increasingly interesting area especially following the introduction of the additional 3% charge. However, it is perhaps the least understood tax with mis-classifications leading to higher rates paid, Multiple-Dwelling Relief opportunities, in addition to chares from rental properties. If you have a potentially high SDLT charge coming up, or think you might have overpaid, we’d be delighted to give you an independent assessment here.
Tax Planning
In addition to ensuring you are claiming all the expenses you can through your accounts to reduce your tax bill as much as possible, why not book a tax planning session with us to discuss other instruments for reducing your tax such as different structures, pension planning, or investments in VCTs/EIS/SEIS?
Strategic Partners
We are lucky to work closely with great people across many sectors. Are you looking for key contacts, such as, Financial Advisors, HR Consultations, Marketing & PR specialists, Mortgage Brokers, Solicitors or Virtual PAs, to name but a few? If so, get in touch and we can make a recommendation based on your specific requirements.
Business Planning
If an investor approached you tomorrow, offering to make an investment in your business, would you be able to provide her with your Business Plan? Do you have forecasts and budgets to ensure you are on target to achieve your vision? Ultimately, what is your Exit Strategy and does your current actions and structure help you achieve this? We can help you here if you cannot answer all of these already.
Research & Development (‘R&D’) Tax Credits
These are not only one of the most generous reliefs for SMEs, but they are also still one of the easiest ways to reduce your corporation tax (additional 130% deduction, in addition to the original claimed cost), or claim cash back (at 14.5% where losses are being made) where the business seeks to advance science or technology, or has projects or activities that help resolve scientific or technological uncertainties. Is this you? If so, please get in touch today so we can discuss the potential here on your business.
Discover the benefits that R&D Tax Credits can have for your business and contact us today to explore the possibilities.
Fee Protection
The fees in dealing with HMRC enquiries is typically £3,000-5,000 + VAT, even if you haven’t done anything wrong. You protect your business against the unexpected, with contents, employment, equipment, life and property insurance, to name but a few; so why not have insurance for a HMRC enquiry? Our Fee Protection Insurance policies are due to expire on 31 March 2019, with the new policy information available on request. Clients who took out the policy last year will automatically receive an invoice for the renewal of this service. If you are interested in taking up this service, but haven’t previously done so, please contact [email protected] for a quote. Our policy this year also includes 24/7 365 days a year for:
- Employment;
- Health & Safety; and
- Commercial Legal support lines.
Marvellous March Promotion
You may be aware that if you refer a friend to us, you receive £25 in John Lewis from us , once they have signed up with us (quote code: REFER25). As a one-off promotion in March 2019, we will be offering £50 in John Lewis for any kind referrals that you make (quote code: MM50) so please get in touch here and refer your friends to us.
Direct Debits
Would you like your fees frozen for this year and the costs spread over 12 months? If so, let us know and we can arrange for a direct debit payment for you.
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