Massey Accounting Company

making your business less taxing


Leave a comment

Pension contribution rates increase from April 2018

If you employ staff and run a pension scheme the minimum contributions rates are increasing from April 2018 as set-out in the table below. This has long been the intention of The Pension Regulator (TPR) and is known as phasing.

 

 

Date Employer minimum contribution Staff contribution Total minimum contribution
Until 5 April 2018 1% 1% 2%
6 April 2018 to 5 April 2019 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

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: http://www.thepensionsregulator.gov.uk/en/employers/phasing-increase-of-automatic-enrolment-contribution

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.

Advertisements


Leave a comment

Autumn Budget 2017 – Small Business Guide & Tax Rates

2017.03 Hammond Budget

An uneventful budget, thank you Phillip!
Here’s a brief round-up of the main points for you as a small business owner:

Personal tax free allowance – to increase to £11,850 for 2018/19 (from £11,500)

Marriage Allowance – increase to £1,185 worth a possible tax saving of £237 (from £230)

VAT Threshold – has been frozen at £85,000 for two years (there’s a hint that this could be lowered in line with other EU countries after April 2020)

Tax free dividend allowance – will be reduced to £2,000 (from £5,000) as we already knew from April 2018.

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

Making Tax Digital – VAT registered businesses will be required to maintain digital records from April 2019 – meaning that most such business will need to consider using cloud accounting apps.

IR35 – Unsurprisingly, it was announced that HMRC will consult on reforms to IR35 for the private sector (public sector having already undergone reforms).

Self-Employed NI – Will delay the abolition of Class 2 NICs by a year until 6 April 2019. Class 4 will remain at 9%.

National Minimum Wage – increase to £7.83 starting April 2018 (from £7.50)

We have two downloads available for our clients:

Our Complete Guide to the Autumn Budget 2017, and our most recent Tax Rates Sheet covering 2016/17, 2017/18 and 2018/19

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.


Leave a comment

Spring Budget 2017 – A Business Owners Guide

2017.03 Hammond BudgetSmall business owners will probably find that yesterday’s budget was not as bad as some of the headlines are making out. Yes national insurance will increase for the self-employed and company shareholders will again see an increase in their personal tax bills but a quick look at the numbers shows that, for now, these increases are likely to be modest.

Mr Hammond suggested that the self-employed earning below £16,250 will actually end up paying less National Insurance – and this seems about right. In fact even if profits were around the £25,000 mark then the increase (which will start from April 2018) will be only around £140.

As for small company owners that pay themselves using a mix of salary and dividends (for the best 2017/18 salary and dividend mix see here) the announcement means a basic rate taxpayer who receives £5,000 in dividends will have to pay an extra £225 tax from April 2018. A higher rate tax payer will pay an extra £975.

On The Bright Side

Very welcome was the postponement to Making Tax Digital for the self-employed which for those under the VAT threshold means that quarterly reporting will not now become mandatory until April 2018 (starting April 2020 for limited companies).

And any firm coming out of Small Business Rate Relief will receive an additional cap next year on increases of no more than £50 a month.

Download our more detailed guide to the budget (including current and newly announced tax rates and thresholds) here.

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.


Leave a comment

National Minimum & Living Wage Rise from April 2017

National Living Wage (NLW) rates (for those over 25 years old) and National Minimum Wage (NMW) rates (for those under 25 years old) are to rise starting 1 April 2017.

The eagle-eyed among you may notice that those on the National Minimum Wage (NMW) are enjoying their second increase in a year (the last being 1 October 2016).

In summary, and effective 1 April 2017 the follow minimum wage rates will apply

  • Workers aged 25 and over – £7.50 per hour (up from £7.20 from 1 Apr 2016)
  • Workers aged 21 – 24 years old £7.05 per hour (up from £6.95 from 1 Oct 2016)
  • Workers aged 18 – 20 years old £5.60 per hour (up from £5.55 from 1 Oct 2016)
  • Workers under 18 years old £4.05 per hour (up from £4.00 from 1 Oct 2016)
  • Apprentice rate £3.50 per hour (up from £3.40 from 1 Oct 2016)*

* 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.

Employers may be relieved to know that future rises are now planned for just once a year in April.

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

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.


2 Comments

Optimal Directors’ Salary and Dividend Mix for 2017-18

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

Question: What’s the most tax efficient salary and dividend mix for the 2017/18 tax year?

An owner managed limited company will usually pay their directors / shareholders with a mix of salary and 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 2017/18 is:

Upper limits for 2017/18

Salary – per annum: £8,164 (last year £8,060)
Salary – per month: £680 (last year £671)

Dividend – per annum: £36,836 (last year £34,940)
Dividend – per month: £3,069 (last year £2,911)

It should be noted that since the introduction of the dividend ordinary tax rate of 7.5% on dividends over £5,000 there will be a personal tax bill of £2,138 (last year £2,025) if dividends are paid all the way up to the basic rate limit of £45,000 (last year £43,000).

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 (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 £11,500 and dividends up to a maximum of £33,500 (the overall tax saving between the director and the company being around £234).

This second option will not be the best fit for everyone. 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.


Leave a comment

Bogus Companies House Correspondence

Just a reminder that there are many businesses out there purporting to be or work with UK government agencies such as Companies House and HMRC. Before acting on any such correspondence arriving by email or letter please take care to verify its legitimacy.

Carefully watch out for the imitation letters – those which copy very closely the style and logos used by Companies House and HMRC.

As an example, this week I received a letter from Commercial Register demanding that I update and return my company’s details by a given deadline. There was no request for payment. Pictured below (overlapping the enclosed form (at the top) and the return envelope)

commercial-register-scam

On closer inspection the letter comes from Direct Publisher S.L.U. Madrid. Whilst many scams involve requesting a small payment by return (say £15-£30 typically) it seems that Commercial Register await your return of details then invoice your company €993 euros for an advertising directory entry! Apparently this is for the order you place when completing your details – which is certainly not made clear.

Please be careful with your personal and company details.

Feel free to share this info with fellow business owners and your own admin staff. And, as a Massey Accounting Company client please always feel free to ask if in doubt.

As a reminder the legitimate Companies House logo is shown below

ch_gds_logo

Of course Companies House and HMRC are aware of such frauds and their guidance can be found here:

Reporting fraud to Companies House

HMRC Avoid and report internet scams and phishing

 

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.


Leave a comment

Are gifts to customers allowable against tax?

As a general rule gifts to customers are not allowable against your taxable profits.

However, follow this guidance and you can afford to be a little more generous with your customers this year:

Small gifts which carry a conspicuous advertisement for the trader are an allowable expense. Common examples include: branded diaries, pens and mouse mats. The advertisement must be on the gift, not just the wrapping.

Unfortunately the expenditure of the following kind is specifically excluded (even if it incorporates your advertisement): Food, drink, tobacco, gift vouchers and gifts exceeding £50 per recipient (even if it carries your business logo).

Source material: http://www.hmrc.gov.uk/manuals/bimmanual/BIM45070.htm

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.