Is it the end of the tax return?

HMRC’s “Making Tax Digital” programme (cf our news item from September 2016 “HMRC wants you to be software savvy“.) has started to make real progress with the recent launch of Personal Tax Accounts.

Is your business ready for Making Tax Digital. Will your software cope?

Making Tax Digital (MTD) is intended to create a “real time” tax system where both businesses and individuals interact digitally with HMRC and have a much clearer view of their tax liabilities.

In order for it to work, however, business will be expected to provide more frequent updates to the taxman. Importantly this additional accounting information must be provided using “digital record keeping software” – bookkeeping / accounting packages or online services.

Making Tax Digital - Dudley and StourbridgePersonal Tax Account
Personal Tax Accounts are now available online to provide individuals with a consolidated view of tax, national insurance and pension information.  They will be the first port of call when people come to file their self-assessment tax returns but you can you can sign-up now to check tax payments, NI contribution history and even what pension you will be entitled to.

Register via the government gateway to take a look.  You will need your national insurance number and other forms of identification during the registration process.  There’s an overview video on YouTube if you want to see what the process entails.

MTD for Businesses
The introduction of MTD for businesses has been put back a year to April 2019. Initially it will apply only to businesses with a turnover above the VAT threshold (£85,000 as of 1 April 2017).

From April 2019 businesses will submit quarterly summary data (total income and total expenditure) to HMRC, followed by a year end submission. The year end submission is essentially an annual return, which will be used to reconcile the quarterly returns and provide a taxable profit calculation..

The government has said that the scheme will not be extended to businesses (inc. sole traders and partnerships) with turnover/income below the VAT threshold but above £10,000, until April 2020 at the earliest.

Digital Record Keeping Software
Although spreadsheets haven’t been been declared redundant quite yet, it is time for many businesses to consider switching to a computerised bookkeeeping / accounting system.  Even if your business is below the threshold for the initial switch to MTD, you may want to make the change early.  It may take some time to iron out any issues and get comfortable with the process of using a computerised system.

Lewis Smith & Co. can provide support and expertise on several effective systems.

  • Kashflow: Web-based accounting tool that offers key features such as banking and quotes for start-ups, sole traders and very small businesses. Available for as little as £7 +VAT per month.
  • Xero: Great for SMEs who require more advanced features such as invoicing, payroll and purchase order creation.  Lewis Smith & Co. were the first qualified Xero partner in the Black Country.
  • Sage: The UK’s number one bookkeeping and accounts package that can run an entire business.  As members of the Sage Accountants Club we can supply the software and provide both training and support.

Help and Advice
If you have any concerns about the impact of Making Tax Digital on your business then why not talk to us today?

Lewis Smith & Co. can help you devise an appropriate plan to switch to quarterly reporting and implement the right bookkeeping / accounting package for your needs.

Call us on 01384 235549 or email info@lewissmith.com to book a free, confidential appointment.

 

Lewis Smith & Co – Accountants for Wombourne businesses.

Dividend Income Over £5,000 – Use Your Personal Allowance

Depending on your circumstances there may a way to utilise your personal allowance to reduce your overall tax burden.

Instead of automatically allocating all of your personal allowance (£11,000 in the 2016/17 tax year) against your salary, you can use it (or some it) to offset dividend income instead.

In the current tax year the first £5,000 of dividend income is taxed at 0% with additional income being taxed at 32.5%.  Allocating personal allowance to dividend income would increase income tax exposure at 20% (up to £39,000) but reduce the amount of additional dividend income being taxed at 32.5%.

HMRC software appears to default to using personal allowance only against salary. Publicly available tax calculation software has to mirror HMRC calculations so neither you nor your accountant may be getting the optimal tax savings.

If you want an expert opinion on tax liability this year, why not talk to Lewis Smith & Co.? We offer the full range of tax planning and compliance services for both personal and corporate customers.

Call 01384 235549 or email info@lewissmith.com to arrange a confidential discussion today.

 

Lewis Smith & Co – Accountants for businesses in Wednesfield

Summer Ball Update

Lewis Smith & Co. announce that the Friends of Alfie Summer Ball 2017 raised a whopping total of £14,000.

Our team had a great time: we bagged some excellent auction items, tripped the light fantastic until the early hours and managed to avoid A&E.

It is our pleasure to support such a worthy cause.

Feel free to make donations to the Friends of Alfie Johnson or set-up your own fundraiser.  They are also always on the look out for people who need assistance – if you know of any disabled children, their parents or carers who need help then please tell them about the charity. Visit www.friendsofalfiejohnson.org.uk for all f the details.

Alfie Johnson Summer Ball 2017

The Lewis Smith & Co. team will be out in force on Saturday July 1st at the 9th annual The Friends of Alfie Johnson Summer Ball.

Friends f Alfie Johnson Summer Ball 2017

The Friends of Alfie Johnson charity was founded raise money in the name of Alfie Johnson, who suffered sustained brain damage through oxygen starvation at birth.  Now Alfie’s needs are being met the charity seeks to help disabled children in the boroughs of Dudley, Sandwell and Wolverhampton.

Lewis Smith & Co. has been an active supporter of the charity for some years, providing sponsorship and hands-on help when needed.  The Summer Ball provides an opportunity for us to help out and have fun at the same time.

Let’s hope they make stacks of money this year.

 

Lewis Smith & Co. – Accountants for charities and not-for-profit organisations

Does working from home give me a CGT problem?

An increasing number of our clients are running home-based businesses or are working from home at least some of the time.

One issue that troubles lots of people in this situation is whether claiming home expenses against tax has any impact on capital gains liability when selling the home.

Let’s clear up some misconceptions.

Claiming home expenses against income tax liability is not directly connected to the CGT issue.  Most people will be able to claim a proportion of fixed and running costs (by area of the house used and frequency of use) on items such as heat, light, insurance and phones, whatever use they make of their home.

The CGT issue relates to an exemption called Principal Private Residence (PPR) relief, which means that homewners do not normally pay Capital Gains Tax when they sell their main residence.  If any part of your home has been used exclusively for business purposes then part of any gain made from a sale might attract CGT.

There are two important points to consider.

The first is that for most people working at home it is unlikely that any part of the house is used exclusively for business.  Any personal or domestic use such as; doing home accounts, storing furniture or letting kids do their homework would allow PPR exemption to be maintained.

Secondly CGT would only be liable on the proportion of the gain attributed to the part of the property that was being used exclusively for business.  That gain would be offset by your CGT annual exemption of £11,100 (2016/17) and by double that if the property is owned by you and your spouse.

So you can go claiming home expenses to reduce income tax without causing problems when you sell your house. However it’s wise to think carefully about how much you claim because overdoing it could prompt an HMRC inspection. It’s also wise, therefore, to be able to show that no part part of your property is exclusively for business use (a box of strategically placed children’s toys, a set of golf clubs or the ironing board might help).

Lewis Smith & Co. is around to provide advice on both income tax and Capital Gains Tax if you need it. Why not set up a free, confidential discussion today?

Call 01384 235549 or email info@lewissmith.com to make an appointment with one of our tax experts.

 

Lewis Smith & Co. – Preparing company accounts for Kingswinford businesses for 30 years

Can You Afford an HMRC Tax Investigation?

Anyone can be selected: a business, director or individual tax payer

We have talked before about how HMRC is trying to close the multi-billion pound gap between what it should receive and what it actually collects. They have invested millions in sophisticated new computer systems to proactively target individuals and organisations. If any of their data sources don’t cross-match then you might be selected for an enquiry.protect against HMRC investigation with our fee protection service

The chances that you will be investigated are going up all the time. Dealing with HMRC is nearly always time consuming, stressful and costly.  Even if you are found to owe nothing to the taxman you will still have to pay your professional representation fees.

That’s why Lewis Smith & Co. has partnered with Croner Taxwise to offer you a Tax and VAT Enquiry Fee Protection Service.  The service offers up to the equivalent of £100,000 towards our professional fees resulting from an HMRC enquiry. Our cover includes zero policy excess and complimentary access to employment law and commercial health and safety advice lines.

Lewis Smith & Co. has all of the expertise and experience required to deal with HMRC on your behalf.  We’ll be there every step of the way with a mission to avoid or mitigate any additional tax demands, and to ensure you are treated fairly.

Peace of mind cover costs as little as £162 per client (inc. VAT).  Check our Fee Protection Service page for a full schedule of fees.

For more information then please get in contact to arrange a free, informal discussion of your needs.  Call 01384 235549 or email info@lewissmith.com, today.

 

Lewis Smith & Co. – Chartered accountants for Sandwell businesses

PM Targets Dudley

Theresa May visits DudleyThe Dudley borough hit the headlines this week as Theresa May chose the Netherton Conservative Club as the venue for an electioneering speech.

This must have felt like a safer place to meet Dudley voters after the Prime Minister had been refused permission to walk on the lawn of a resident in Sedgeley, earlier in the day.

The PM declined to make any specific pledges on either taxes or pensions in advance of the Conservative manifesto.

Good to see the media spotlight turned on our neighbourhood.

As soon as we hear more about Tory financial plans we let you know and try to provide some comment.

If you or your business need accountancy or tax planning support then contact us today. Call 01384 235549 or email info@lewissmith.com.

 

Lewis Smith & Co. – Accountants for Dudley businesses for more than 30 years
Image By UK Home Office [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Main Residence Nil Rate Band

You might need to change your will

One tax change that we haven’t highlighted yet in our discussions about the Budget is the “main residence nil-rate band” (MNRB). The MRNB is an allowance that has been introduced into inheritance tax calculation, and applies if an individual’s interest in a residential property is left to children or grand-children.

MRNB is currently worth £100,000 per person in addition to the normal allowance of £325,000 and it is due to rise by £25,000 a year until April 2010 when it will be worth £175,000.  At this point couples or civil partners will be able to pass on a £1m inheritance tax-free. Estates over £2m lose the relief at a rate of £1 for every £2 over the threshold.

Key rules to look out for are that the residence must be the family home and that discretionary trusts are not used. On the death of one partner an unused allowance will pass to the survivor and this could create an inheritance tax charge if the value of the total estate exceeds the allowance limits. This can be mitigated by passing assets to other beneficiaries to reduce the total estate size.

Of course inheritance tax planning is a complex and sensitive subject. If you would like a confidential, no-obligation discussion of how to start the planning process why not involve Lewis Smith & Co. today.

Simply call  01384 235549 or email info@lewissmith.com to set-up an appointment with one of our experts.

 

Lewis Smith  Co. – Taxation planning experts for Dudley, Stourbridge and Halesowen