Massey Accounting Company

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Beware of the mobile phone tax trap


It’s a well-known tax free benefit – an employer may provide one mobile phone per employee for both business and personal use without triggering a taxable Benefit-in-Kind (Section 319 ITEPA 2003).

Sounds simple enough but there are conditions:

• The mobile phone / sim-card must remain the property of the employer
• One phone per employee
• The contract must be between the employer and the mobile phone provider

It’s this final condition that often catches out micro companies that blissfully pay for the director’s mobile phone bill whilst the contract remains in the director’s personal name.

Whilst a seemingly minor technicality the tax treatment of reimbursement of mobile phone costs in this way triggers a costly Benefit-in-Kind Income Tax and National Insurance charge.

It has been reported that HMRC are taking a strict line on this matter, and when discovered, ordering assessments of often 4 years underpaid taxes averaging £500 before penalties and interest.

What’s the solution?

If your mobile contract isn’t in the company name – don’t overly worry – you’re not alone by a long stretch. To keep things practical (and in the real world) we suggest the following:

  • First of all, call your mobile provider to ask about their procedure for transferring the contract to the company (personally I found this surprisingly straight forward)
  • If there are extra charges to make the change during your contract, then wait until you’re out of your contract and try again – this is usually the easiest time to transfer your contract and you’re usually offered the same price as personal rate tariffs

Essentially, in our experience, it’s easier and cheaper than most people realise to review your mobile contracts yourself before HMRC do!

Source info:

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National Minimum Wage & Pensions rise from April 2019

From 1 April 2019 the minimum hourly pay rates along with the minimum contributions for auto-enrolment pensions will increase affecting both employees and employers.

First let’s look at the National Minimum Wages rates:

National Living Wage (NLW) rates (for those over 25 years old) and National Minimum Wage (NMW) rates (for those under 25 years old) will rise from 1 April 2019.

The NLW increase of 38p represents a 4.8% rise, equivalent to an annual increase of about £700 for a full-time worker.

In summary and effective 1 April 2019 the follow minimum wage rates will apply

Year 25 and over 21 to 24 18 to 20 Under 18 Apprentice *
April 2018 £7.83 £7.38 £5.90 £4.20 £3.70
April 2019 (new rates) £8.21 £7.70 £6.15 £4.35 £3.90

* The apprentice rate is for apprentices aged 16 to 18 and those aged 19 or over who are in their first year. All other apprentices are entitled to the National Minimum Wage for their age.

The Government has previously said it plans to raise the national living wage to at least £9 per hour by 2020.

Ensure your payroll procedures are up to date. For further details and more rates visit


Pension contribution rates increase from April 2019

If you employ staff and run a pension scheme the minimum contributions rates are increasing from April 2019. This has long been the intention of The Pension Regulator (TPR) and is the last increase of “phasing”. The increases are as follows:

  • Employer minimum pension contribution 3% (from 2%), staff contribution 5% (from 3%).

If we provide your payroll services then we will of course implement the increased rates on your behalf but because this represents an increased cost for both employer and employee we highly recommend that you let your staff know in advance of this change. To do so you may like to use this TPR letter template.

Source info and more detail:


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Optimum Directors’ Salary and Dividends for 2019/20

What is the optimum directors’ salary and dividend mix for 2019/20?

Small companies will usually pay their directors with a mix of salary and dividends. The level of the directors’ salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package for the forthcoming tax year is:


Upper limits (if intention is to fully utilise the basic rate tax band)



Directors’ salary – per annum



Dividends – per annum



It should be noted that dividends exceeding both the personal allowance and the dividend allowance of £2,000 will be taxed via the directors’ personal income tax return at 7.5%. Meaning that if dividends are paid all the way up to the basic rate band of £50,000 (2018/19 was £46,350) there will be a personal tax bill of £2,952 (last year £2,438)

Companies with more than just a single director on the payroll may benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employer’s N.I.) by up to £3,000.

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £12,500 and dividends up to a maximum of £37,500 (the overall tax saving between the director and the company being around £270).

This second option will not be the best fit for everyone. More than ever, personal circumstances must be carefully considered to give the best results.

Each client of ours will be receiving a personalised recommendation shortly.

Enjoy saving tax?

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on 
or click +Follow at the bottom of this page.

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Budget 2018 – Small Business Guide & Tax Rates

2017.03 Hammond BudgetHere’s a brief round-up of the main points from the Budget 2018 for you as a small business owner:

Personal tax-free allowance – to increase to £12,500 for 2019/20 (from £11,850)

Marriage Allowance – increase to £1,250 worth a possible tax saving of £250 (from £237)

VAT Threshold – has been frozen at £85,000 for a further two years (until April 2022)

Tax free dividend allowance – to remain at £2,000.

Corporation tax – to remain at the current rate of 19%.

Making Tax Digital – No further announcement meaning that HMRC push ahead with the incoming requirement for VAT registered businesses to maintain digital records from April 2019 – most such business will need to consider using cloud accounting apps.

IR35 – Rules which have seen many public sector contractors become employees are expected to be rolled out to private sector large and medium-sized businesses from April 2020.

National Living Wage – will increase to £8.21 starting April 2019 (from £7.83)

So, at what rate should you set your next year’s director’s salary and dividends? Bespoke advice will be sent to all clients in the coming months. In the meantime we have two downloads available:

Our Guide to the Budget 2018, and our most recent Tax Rates Sheet

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MTD means big changes to your bookkeeping

Are you ready for Making Tax Digital (MTD)?

If you’re a VAT registered business with a turnover above the registration threshold then Making Tax Digital (MTD) is compulsory from April 2019 and will mean big changes to how you do your bookkeeping. Watch this short video.

What is MTD?

From April 2019 businesses will have to provide VAT information to HMRC through MTD compliant software. If you’re already using cloud based software you may need to do little more than make sure it’s ready and working for MTD. If you’re maintaining pen-and-paper records then the MTD initiative is about to force upon you a huge change in your working practices.

HMRC recently issued their VAT Notice 700/22: Making Tax Digital for VAT detailing exactly what is required of the software you choose.

If you are maintaining manual bookkeeping records then please contact us immediately to discuss how we can help you implement MTD compliant bookkeeping.

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We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.

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Updates to our Privacy Policy

In view of the General Data Protection Regulation (GDPR) coming into effect tomorrow we have updated our Privacy Policy and Cookies Policy.

Our new policies offer more detail on what data we collect, how we use it and your rights. Keeping your personal information safe is very important to us.

You can read the full updated policies here: Privacy Policy, Cookies Policy and Disclaimer

We are in the process of updating our standard terms and conditions and letters of engagement. We will be in touch with each of our clients individually to bring these up to date.

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We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.

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8 tips to avoid a tax investigation by HMRC

Can you reduce your risk of a tax investigation by HMRC?

I believe that you can – and I’d like to share with you 8 tips on how to do that.

HMRC’s resources are stretched meaning that they’re far more likely to investigate where they have reason for suspicion.

This being the case how can you avoid attracting the attention of HMRC?

1. Appoint an accountant – Errors on Tax Returns are one of the most common reasons HMRC has for taking a look at your file. An accountant will significantly reduce the risk of errors.

2. Review your Tax Returns – Ultimately the book stops with you, not your accountant. When you receive your documents for review make sure you give them the due attention.

3. Submit your Returns nice and early – HMRC makes no secret of the fact that it views you as “risky” if you persistently file late returns.

4. Pay your tax on time – same reason as above

5. Keep business expenses sensible – HMRC compares sector averages – it knows how much you should earn before it even receives your Tax Return. Significant deviations from the norm will raise eyebrows. If you’re unsure if a particular expense is legitimate – ask your accountant.

6. Use the “white space” – Your tax return includes a box “Additional Info” (aka “white space”) – use this if you are declaring something out of the ordinary. It may help avoid questions which can lead to an investigation.

7. Beware of easily overlooked omissions – one-off capital gains, interest on savings or small second incomes can easily be forgotten about when it comes time to prepare your Tax Return. But these are not forgotten by HMRC. Since 2010 it uses it’s Connect software to trawl publicly available databases, e.g. Land Registry (provides details of property ownership and transactions), eBay and Airbnb (might give clues of second incomes), even Facebook and other social media websites have become a treasure trove of information to compare life-style with declared earnings.

8. Avoid avoidance schemes – the scheme promoters will tell you that these are legal avoidance of tax, not illegal evasion. However, aggressive schemes such as Employee Benefit Trusts (EBT’s) or Icebreaker (famously used by Gary Barlow) are constantly being shut down by HMRC. Worst of all the participators of these schemes find that some years later the government enacts retrospective tax laws (as controversial as that is) to recover lost tax since the inception of the scheme.

Three months free tax investigation insurance

If the dreaded happens your best defence is your accountant – for between £6 – £10 per month we can insure you against the professional fees incurred in defending your case. Sign-up within 30 days of this post and we’ll give you three months free cover. To better understand our tax investigation insurance please read our blog post Can you insure against a tax investigation?

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.