Massey Accounting Company

making your business less taxing


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Can the Cycle to Work Scheme Work for You?

Can the Cycle to Work Scheme Work for You?

What a great summer its turning our to be for cycling fans! As a business owner perhaps you’re wondering if the Cycle to Work Scheme could be of some benefit?

In my opinion, probably not, BUT…
The government have done it again – generally small owner managed businesses have found that the costs and hassle of operating the scheme outweigh the benefits.

For example – you could use a third party provider to set-up the scheme (usually a larger bike shop) but even then there’s salary sacrifice arrangements, benefits in kind, VAT claimed (then paid later!) and terms of employment to be updated. Forget it!

REAL WORLD SCENARIO
If you’re planning to use your bike for mostly business (including your commute) then your company can buy you a bike + safety equipment. The limited company will attract 20% corporation tax relief and be able to reclaim the VAT. Simples! A greater saving with much less trouble.

Source info: https://www.gov.uk/government/publications/cycle-to-work-scheme-implementation-guidance http://www.legislation.gov.uk/ukpga/2003/1/section/244?view=plain

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What happens if you don’t comply with Automatic Enrolment?

What happens if you don’t comply with Automatic Enrolment or you miss your staging date?

The Pension Regulator will initially focus on educating employers who miss their staging date deadline however persistent and deliberate non-compliance can lead to penalties of between £50 – £10,000 per day. Ultimately criminal prosecution can ensue. For more information please visit The Pension Regulator.

For those who get around to meeting their duties only after their staging date has passed then the consequences include, at a minimum, additional admin and professional fees, and you will be required to back-date any missed contributions (in some cases you may also need to pay the late employees contributions on their behalf).

Massey Accounting Company is starting its communication with each of its employers between 6 – 12 months before their staging date. If you need any help or just a have a question, please don’t hesitate to let us know.

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Budget 2016 – A Business Owners Guide

The Budget 2016 was by and large welcomed by small businesses. Notable for plans to scrap business rates for properties with a rateable value of £15,000 or less from April 2017 (up from £6,000) and a further planned reduction in the corporation tax rate to 17% from April 2020 (the current corporation tax rate is 20%, reducing to 19% from 1 April 2017).

Download here our more detailed: Guide to Budget 2016.

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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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National Living Wage to replace National Minimum Wage from April 2016

The National Living Wage of £7.20 per hour will become the new minimum pay rate for those aged 25 and over starting 1 April 2016.

Slightly confusingly the two terms National Minimum Wage (NMW) and National Living Wage (NLW) will now run in tandem but basically:

If your employees are aged 25 and over they will be entitled to the £7.20 National Living Wage.

Under 25 years old and they will be entitled to the National Minimum Wage of £6.70. Although there are lower rates for those under 21 or on an apprentice scheme. See our post regarding NMW for more details.

It seems that the change needs highlighting because we’ve become accustomed to the NMW rise on 1 October each year. But on 1 April 2016 many of your employees will be entitled to their second pay rise in 6 months. Please be sure to plan for the additional costs and adjust your payroll settings accordingly.

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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.


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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.


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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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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.