Massey Accounting Company

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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

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.

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Optimal Directors’ Salary for 2016-17

Probably the most important post of the year for limited company directors!

If you’re looking for the 2017/18 optimal directors’ salary, check out this year’s post here. Otherwise for our 2016/17 article read on.

An owner managed limited company will usually pay their directors’ / shareholders’ with a small salary + dividends.

The level of the director’s salary is usually set in order to avoid any income tax and national insurance. On this basis the recommended remuneration package for 2016-17 is:

Upper limits for 2016-17

Salary – per annum: £8,040 (last year £8,040)
Salary – per month: £670 (last year £670)

Dividend – per annum: £34,960 (last year £30,891)
Dividend – per month: £2,913 (last year £2,574)

It should be noted that with the introduction of the dividend ordinary tax rate of 7.5% there will be a personal tax bill of £2,025 if dividends are paid all the way up to the maximum basic rate limit of £34,960 (yes, that’s a personal tax bill of up to £2,025 compared to £nil last year!).

For those companies that also have non-director employees on the payroll then they will continue to benefit from the Employment Allowance which reduces the company’s Class 1 National Insurance contributions (Employers N.I.) by up to £3,000 (last year £2,000).

In such cases there may be an opportunity for directors to eke out a little more tax savings by paying themselves a salary of £11,000 and slightly lower dividends of £32,000 (the overall tax saving between the director and the company being around £237 (last year £203)).

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

Each client of Massey Accounting Company will be receiving a personalised recommendation shortly.


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.


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Can you insure against a tax investigation?

under_investigation-1024x665If you’ve ever received that dreaded letter through the door you’ll know that a tax investigation is costly in at least two ways:

1. A typical investigation results in tax penalties and interest levied on the taxpayer.

2. Your accountant will need to charge for their time spent defending your case.

And that’s not to mention your own time involved in digging-out and providing your historic records.

Whist you can’t insure against HMRC penalties or what they might discover to be unpaid tax you can insure against your accountants’ time in defending your case; ensuring that the final cost of tax and penalties is as low as possible.

Why is Massey Accounting Company now offering fee protection insurance?

Firstly, several recent enquiries from our clients’ prompted us to look at offering this service.

And secondly, let’s face it – the first thing you would do if you received that dreaded letter would be to call your accountant. In our experience tax investigation fees cause strain on our relationship with uninsured clients. I’m sure you understand that no one can work for free. The alternative might be to accept the assertions of HMRC and prematurely settle the enquiry. We would feel much more comfortable having the freedom to defend your case to the hilt!

How much does it cost?

The insurance can be paid monthly or annually in advance. There will be no difference in cost.

  • Personal Tax clients (eg. employment / rental income only) – £3 per month
  • Sole Traders – £8 per month
  • Partnerships – £9 per month
  • Limited companies – £10 per month

All of the above premiums also include complimentary access to Employment Law and Health & Safety advice lines.

What should you do next?

The insurance is backed by Croner-TaxWise. Please take a look at their explanatory leaflet hereTo sign up now simply send us an email and we’ll reply with your quote and sign-up forms.


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.


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Check out our new whiteboard animation

Please check out our newly created 2 min. whiteboard animation. Comments and feed-back are welcome! Please feel free to share.

 

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.


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Thank you John Oldham Plastering

Thank you John Oldham Plastering for your testimonial. We’re proud to be working with local businesses like yours.

Read John Oldham’s testimonial. Visit John’s website: www.plastererhighpeak.co.uk

Enjoy saving tax?

View our video: How to Save Tax YouTube-logo-full_color; and follow our blog on Google+ or click +Follow at the bottom of this page.


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Travel – no longer a tax deductible expense for contractors

Are you a contractor working through your own limited company? Then the government are about to drastically reduce your tax deductible expenses!

Essentially, contractors will no longer be able to claim for their cost of home-to-work travel and subsistence.

The detail
At Budget 2015 the government announced its intention to consult on proposals that will restrict tax relief for the cost of home-to-work commuting for those employed through an employment intermediary and working under the supervision, direction or control of any person.

The widely criticised consultation has now closed and it is expected that from 6 April 2016 the government will remove the ability of contractors to claim tax free travel and subsistence costs when all of the following apply:
A. The contractor works through an employment intermediary whose business is substantially the supply of labour;
B. The contractor can be subject to (or the right to) supervision, direction or control in their work by any person;
C. The contract is performed within the UK – tax relief for the costs of travelling to workplaces situated overseas is not affected.

It is now highly likely that these proposals will be included in the Finance Bill 2016.

There is no getting around the fact that this is very bad news for limited company contractors that can now expect significantly higher corporation tax bills. Some contractor may be able to re-arrange their affairs to reduce their exposure to the new rules. All of our contractor clients will shortly receive personalised guidance.

Enjoy saving tax?

View our video: How to Save Tax YouTube-logo-full_color; and follow our blog on Google+ or click +Follow at the bottom of this page.


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National Minimum Wage Rise from 1 October 2015

National Minimum Wage (NMW) rates rise from 1 October 2015. For an employee 21 years old+ the NMW is now £6.70 ph. Also of note is a significant increase in the apprentice rate to £3.30 ph (from £2.73). Ensure your payroll procedures are up to date. For further details and more rates visit gov.uk

Our client’s will shortly be receiving personalised guidance.

Enjoy saving tax?

View our video: How to Save Tax YouTube-logo-full_color; and follow our blog on Google+ or click +Follow at the bottom of this page.