To April’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.
Please contact us for advice in your own specific circumstances. We’re here to help!
Pension freedom or liberation?
Pension freedom is a GOOD thing. The change in law from 6 April 2015 means that members of defined contribution pension schemes who are aged 55 or more should be able to draw what they want from their pension schemes. But “pension liberation” is a BAD thing. This is when scammers use confidence tricks to separate taxpayers from their pension savings, and the taxpayer has to pay high charges and tax penalties. Can you tell the difference?
Do you know when your younger workers will reach their key birthdays: 18 and 21? It is essential to know exactly when these dates fall, as reaching such a milestone will change the level of national minimum wage (NMW) which must be paid to that worker. The current and proposed NMW hourly rates are:
If you are married or in a civil partnership, and born on or after 6 April 1935 you can now apply for the new marriage allowance. This is not an extra amount of tax free allowance, but a transfer of £1,060 of unused personal allowance from one spouse or civil partner to the other. It will save the couple tax of £212 for 2015/16.
Charities and Tax
If you help to run a charity you need to keep on top of the tax and audit regulations that apply to charities, and the gift aid scheme.
A person with earnings or pension income of less than £10,600 and interest of up to £5,000 will pay no income tax in 2015/16. These individuals should not make gift aid declarations for donations made on or after 6 April 2015, as they do not pay the income tax which the charity reclaims in respect of that donation.
Class 2 National Insurance To Be Axed, Says Chancellor, George Osbourne.
Do you feel better off or more optimistic about the future of the economy in the medium to long term? Well, Chancellor George Osbourne certainly seems to think so. He claimed that “Britain is growing, creating jobs, and paying its way.” But how was the budget for you and your business? Were you pleased with the measures announced last week, or did you feel they didn’t go far enough? Well, here is Steven Glicher accountants’ summary of the measures the Chancellor has proposed for the next Parliament.
Smaller Businesses Now Eligible For Late PAYE Filing Penalties Under The RTI (Real Time Information) System.
Do you run a micro-business or smaller business – that is a business with fewer than 50 employees?
Then Steven Glicher accountants would like to inform you that you now potentially face the prospect of paying fines for late filing of PAYE submissions under the Real Time Information (RTI) system.
April Question and Answer Section
Q. My personal company operates from a little brick building at the end of my garden, which is heated with a portable gas heater. Can the company pay me for the cost of the gas bottles used for that heater, on top of the “use of home” allowance of £4 per week?
A. The company can pay you the actual additional costs for using your home for business purposes instead of the £4 per week working at home allowance. You would need to record and calculate the additional running costs you incur for using the brick shed, but we can help you with that.
Alternatively, the company could pay you rent for the shed including an amount for heat and light, but you would have to declare the rent received on your personal tax return. This arrangement could also have implications for the tax due when you sell the whole property. We need to talk through the details.
Q. Which is cheaper: the company to take out a corporate health insurance policy for its employees, or each employee to take out personal health insurance policies and the company to pay the policy premiums on behalf of the employees?
A. Generally, a corporate health plan is cheaper than several individual health plans, but that would depend on the number of employees involved and their ages. The cost of the corporate policy must be divided between the employees covered and reported as a benefit in kind on their P11D forms. The company will pay class 1A national insurance contributions (NIC) at 13.8% on the value of the P11D reported benefit, and each employee will pay income tax on the reported value of the health plan.
If the company pays the premiums for the personal policies of the employees, those amounts are taxed as additional pay of the employees. Thus the company must pay class 1 NIC due from employers at 13.8%. The employees must pay income tax, as well as the employees’ NIC at 12% on the amount paid for the policy premiums. The employer’s class 1 NIC may be off-set against any available employment allowance (worth up to £2,000 per business) for the year.
Q. I started trading as a hairdresser nine months ago and have made sales of £66,000 so far. I’m worried that I will have to register for VAT soon and lose 20% of my income directly to the taxman. What can I do?
A. The VAT registration threshold increased to £82,000 with effect from 1 April 2015. This is the maximum total sales you can make in any 12 month period before you are required to register for VAT. On your current sales pattern you will exceed the VAT threshold within the next three months.
Other than reducing your sales to keep the total below £82,000, perhaps by taking a break from work, there is nothing you can do to avoid the need to register for VAT. However, once registered you can reclaim VAT on things you buy for your business such as hair dyes, scissors etc. In your first VAT return you can also reclaim VAT charged on any services you used for your business within the six months ending with the VAT registration date and on goods purchased in the four years ending with the date of registration, as long as you still hold those items at the registration date. It is essential that the right VAT registration is entered on the VAT application form, we can help you with this.
April Key Tax Dates
5 – End of 2014/15 tax year. Last day to use up your annual exemptions for capital gains tax, inheritance tax and ISA’s
14 – Return and payment of CT61 tax due for quarter to 31 March 2015
19 – Deadline for finial submission of the year – 19th April. Penalties for late submission.
19 – PAYE/NIC, student loan and CIS deductions due for month to 5/4/2015 or quarter 4 of 2014/15 for small employers. Interest will run on any unpaid PAYE/NIC for the tax year 2014/15
30 – Additional daily penalties of £10 per day up to a maximum of £900 for failing to file self-assessment tax return due on 31 January 2015