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Changes to Personal Tax – How will they affect you?

Posted by Charlotte Morley in Accounts, Business, News, The Business Hut, Tips | 0 comments

There are always tax and other financial changes to get to grips with when the new tax year starts on 6thApril.  Let’s take a look at how these changes might affect your earnings…

PERSONAL TAX THRESHOLDS

For employees, the personal tax allowance will increase from £11,850 to £12,500.  For most people, this means a small reduction in tax of £130 per year.  

Higher rate tax payers will now start to incur 40% tax on earnings over £50,000, rather than £46,350.

If you are a company Director, your tax efficiency can be maximised if your company pays you a salary of £8,632 and dividends of up to £41,368; giving you a tax bill of £2662.50.  Earning more than this will trigger tax on the dividends at a rate of 32.5% . Use this [Insert Personal tax estimator here} for a calculation tailored to your earnings.

BENEFITS IN KIND

Those who benefit from a company vehicle and/or fuel allowance should be aware of the following changes this tax year:

The percentage of tax applied to the list price of a company vehicle will increase based on its CO2 emissions.  These are published by the Vehicle Certification Agency [insert weblink]. Check out HMRC’s Ready Reckoner to calculate your company vehicle tax [insert weblink].

If your company allows personal use of a company van, or pays for fuel that you have used personally, it is classed as a Benefit in Kind (BiK).  The BiK on a company van will increase from £3,350 to £3,430, while the BiK on fuel provided for personal use of a van will increase to £655 (previously £633).

The fuel benefit calculation for company cars is not quite as simple.   A director / employee who drives a company car and also receives fuel is taxed on the cash equivalent value of the benefit each tax year.  The fixed cash equivalent amount is £24,100 this tax year (an increase from £23,400). 

The Benefit in kind charge is calculated by using an appropriate percentage, which is the same as the rate for company car benefit, and then multiplying by the fixed amount (so £24,100 in 2019/20).  So if the BiK percentage for your company car is 13%, your BiK amount on the fuel provided for personal use is £3,133 (13% of £24,100).

STUDENT LOANS

From 6thApril 2019, the earnings threshold before you start to repay a student loan will be as follows:

PLAN 1 LOANS – Rising to £18,935 (from £18,330)

PLAN 2 LOANS – Rising to £25,725 (from £25,000).

Directors being paid a salary & dividends and paying back a student loan must remember that the threshold for repayment is based on their total income.

This will apply to all current and future student loans where employers make student loan deductions, so it is important for those running a payroll for employees who have student loan deductions, to ensure that they have a record of what type of loan they have, so that the correct deduction are made.

OTHER PERSONAL TAX RELIEFS AND ALLOWANCES

PERSONAL PENSIONS

The tax-free amount you can pay into your pension remains at £40,000 per tax year.  The lifetime allowance for pension savings increases from 6thApril 2019 to £1,055,000 (from £1,030,000)

CAPITAL GAINS TAX

The capital gains tax annual exempt amount for individuals increases to £12,000 (from £11,700).

Entrepreneurs’ relief from 6thApril 2019, the minimum period throughout which the qualifying conditions for Entrepreneurs’ Relief must be met will be extended from 12 months to 24 months.

CORPORATION TAX, WORKPLACE PENSIONS AND ALLOWANCES

CORPORATION TAX

Corporation tax payable on business profits remains at 19%.  The Government plans to reduce this to 17% next tax year (on 6thApril 2020).

WORKPLACE PENSIONS (auto-enrolment)

From 6thApril 2019, the total amount of employer and employee contributions must be a minimum of 8% of your employee’s qualifying earnings.

ANNUAL INVESTMENT ALLOWANCE (AIA)

Companies will be able to claim £1 million as AIA for expenditure incurred between 1st January 2019 and 31st December 2020 on fixed assets such as plant and machinery.

BUSINESS RATES

Business rates for companies with a rateable value of £51,000 or less will be reduced by a third between 6th April 2019 and 31st March 2021.

With the new tax year upon us, why not give us a call to discuss the ways your business could be more tax efficient.   

If you’ve got any questions, from Personal Tax queries to MTD help, please don’t hesitate to get touch. Contact us at hello@thebusinesshut.co.uk or call on 01858 289 189. 

Thanks for stopping by,
Leanne

The rise of the HMRC scam.

Posted by Charlotte Morley in Accounts, Business, News, The Business Hut, Tips | 0 comments

There has been an extraordinary increase in reports concerning HMRC calls. These types of calls are known as a HMRC scam. Have a listen to an actual fraudulent voicemail received by one of our clients...

How do I know if it’s a scam?

The scam mostly consists of an automated phone call with a prerecorded voice letting you know that you are under investigation from HMRC. The message threatens people of taking serious legal actions against them, even claiming that their house is under surveillance. Much like our example, the target is asked to contact urgently a phone number, otherwise serious legal consequences will occur.

When calling back the phone number given, the person can be particularly threatening. They always follow the same long script regarding the target’s alleged debt. The worried victims are then persuaded into settling the debt immediately by disclosing their bank details. 

More recently, this scam has taken a new turn with the increase of fake text messages claiming to be HMRC and offering cash rebates. A link to a dangerous website is often attached to the text. Accessing the website can result in the spread of malware and the leak of the victim’s personal information. 

Persistent and ruthless, the scammers appear to be harassing more and more people. Although the messages appears to be sent randomly, vulnerable people such as the elderly are the obvious targets of this scam. HMRC have asked people to warn their elderly relatives about this scam.

How can I spot and protect myself from HMRC scams?

Use HMRC anti-fraud tools. You can consult HMRC official Help page to help you identify and prevent phishing phone calls and emails. If you think that you may be a potential victim of this scam, you can find examples or scamming emails and text messages that you can check against. If you are owed money they will let you know by letter or on their website portalthrough your login.

Learn how to recognise a scam call or text from a genuine contact. Text messages are NEVER used to contact people who are due a tax refund. Automated messages are sometimes used by HMRC about outstanding tax bills, however the Unique Taxpayer Reference (UTR) will always be mentioned. HMRC will never ask you out personal information out of the blue, such as PIN, password or banking details. Settling of debts can never be processed through such a method.

You can also download a CallBlocker app for Iphone and Android and they will block these calls for you. You can also help others by reporting your experience with these type of phone numbers.

HMRC is actively battling against these threats and urging people to report such incidents. Forward suspicious emails to phishing@hmrc.gsi.gov.uk and texts to 60599.

What if I think it’s happened to me?

Have you had a call or email that you suspect to be a scam? If you receive a suspicious message of this kind, never give out your personal details. Tell the caller you will report the incident to the authorities and immediately end the call. It is advised to block the number to prevent further contact. 

If you’ve got any questions, from Personal Tax queries to MTD help, please don’t hesitate to get touch. Contact us at hello@thebusinesshut.co.uk or call on 01858 289 189.

Thanks for stopping by,
Charlotte


VAT changes to eBay charges

Posted by Charlotte Morley in Accounts, Business, News, Sales, Tips, Xero | 0 comments

eBay recently wrote to business sellers to remind them of the upcoming changes to how VAT will be charged on fees. Effective from the 1st of August VAT will be applied to all fees. For the first time sellers will be able to reclaim the VAT on their VAT returns.

Historically sellers were unable to reclaim VAT but if they gave eBay their VAT number eBay would deduct the VAT at source. Then for the past 18 months eBay had special dispensation to not charge VAT for any business seller (even if they weren’t VAT registered).

This follows on from last year’s package of measures introduced by the Chancellor, aimed at tackling the rapidly growing VAT evasion by overseas traders that sell goods in the UK via online marketplaces such as eBay, Amazon and others. As a result, HMRC was given the power to force online marketplaces to ensure that their overseas customers were registered and accounting for VAT or risk being liable for the VAT themselves.

The change to how eBay charge VAT

Now, from the 1st of August eBay UK will bill from a UK entity and charge VAT on fees and only those who are VAT registered and able to claim input tax credits will be able to recoup the VAT paid to eBay.

Many sellers have welcomed the move – eBay will be charging VAT as a UK entity and the VAT will be passed to the exchequer. Sellers, especially those who have been suspected of dodging VAT will find the VAT added to their eBay invoice and if they’re not registered for VAT with HMRC won’t be able to claim it back!

For sellers who can reclaim VAT it’s effectively just a cash flow and accounting change with no financial impact to their bottom line.

Those it will negatively impact

There are a few sellers who will be negatively impacted – sellers registered as businesses whose turnover is too small to compulsorily register for VAT will either start paying VAT at 20% or take the decision to voluntarily register. Also sellers on certain VAT schemes who are unable to reclaim input VAT will also see their costs rise. It’s important to realise that this isn’t eBay’s fault however (net fees are not changing). VAT is a government mandated charge and for the past 18 months sellers have had a free ride and it’s just that this added Brucie bonus is coming to an end.

What if you’re billed mid month?

If you’re a business seller billed on the 15th of the month, your invoice dated the 15th of August 2017 will show VAT on all your fees. However, you’ll also see a credit for any VAT applied to your fees between the 16th and 31st of July.

If you need further help or have questions on VAT, we’d be happy to help. Perhaps we can help organise your accounts with a free month of Xero? Get in touch to organise a free of charge consultation. Drop us an email hello@thebusinesshut.co.uk or give us a call 01858 289189

Thanks for stopping by,

Charlotte

What is the Confirmation Statement?

Posted by Charlotte Morley in Accounts, Business, News, The Business Hut | 0 comments

You may have heard that from 30th June 2016 the confirmation statement replaces the annual return. We often get asked what this means and understand that you may still have questions. We’ve provided the details you need to know in our latest blog.

A Rise in the National Living Wage – April 17

Posted by Charlotte Morley in Accounts, Business, News, The Business Hut, Tips | 0 comments

From 1st April 2017 The National Living Wage (NLW) was given a little bump! The rise to £7.50 per hour is in line with Chancellor Phillip Hammond’s Autumn Statement announcement in November. The National Minimum Wage (NMW) is the minimum pay per hour most workers are entitled to by law. The rate will depend on a worker’s age and if they are an apprentice.