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).
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
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 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 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.
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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 firstname.lastname@example.org 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.
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After a very busy and exciting year at The Business Hut, we were sad to say goodbye to 2018. It’s been good to us.
We want to start by saying a massive thank you to our clients and suppliers. We’ve loved watching client’s businesses develop and getting to know new prospects. We now assist clients in a wide variety of industries including retail, IT, marketing, furniture and property. Getting to know so many businesses and industries has helped to strengthen our services. Here’s what some of our clients had to say…
Making Tax Digital (MTD) is an HMRC initiative that requires VAT-registered businesses above the £85k threshold to keep digital records and submit VAT returns using compatible software such as Xero. If that’s your business, you’ll need to be compliant from 1 April 2019.
The sun has disappeared and we will soon be enjoying some autumnal fun; but that’s not the only change we’ve seen this September at The Business Hut. We’re feeling the excitement in the office as our team has expanded by two! Each bringing tons of enthusiasm and laughter- and they’re looking forward to getting to know both new and existing clients!