A couple of things to do before the new tax year
Here are a couple of tax planning ideas to take care of before the new tax year begins on April 6th.
Use your 2016/17 ISA allowance
The ISA allowance for 2016/17 £15,240, so if you haven’t used it all up yet get investing soon. The £15,240 limit includes shares, bonds, cash (there is no restriction on the proportion you can invest in cash) or certain other investments.
Make pension pension payments
The current annual pension limit remains at £40,000. In addition, unused relief from the previous three tax years may be utilised once the current £40,000 limit has been used. However, the relief from 2013/14 will lapse on 6 April 2017.
If, for example, you have £10,000 unused allowance from 2013/14 you would need to make pension contributions of at least £50,000 by 5 April 2017 to avoid losing your 2013/14 relief. Remember also that pension savings continue to qualify for higher rate tax relief and may help to reduce your payments on account.
If you need any advice on tax planning then talk to us today. We’ll make sure you pay no more tax than you should.
Call 01384 235549 or email email@example.com to set-up an appointment.
Lewis Smith & Co. – Need help sorting wages and payslips? Try our payroll bureau service.
Are you a “limited cost trader”?
Flat rate VAT is rising to 16.5% from 1st April for businesses that HMRC designates as limited cost traders. This is defined as businesses that spend less than 2% of their sales on goods (not including capital goods, food and drink, and vehicles) for a given VAT accounting period. You will also be classed as a limited cost trader if you spends under £1,000 per year on goods even if that is more than 2 per cent of your total turnover. If you aren’t sure whether you are a limited cost trader then HMRC has provided a handy calculator tool on its website.
If your expenditiure on goods is greater than these limits then you will continue paying at your current flat tax rate.
The change is designed to stop businesses manipulating their accounts to qualify for the benefits that accrue from the flat rate scheme. It’s also a response to the rise in the numbers of self-employed and “labour only” businesses, which was highlighted as a cause in declining tax revenues.
The impact of the changes will vary according to which rate of VAT flat rate your are currently using. For service providers such as IT Consultants, Bookkeepers and Care Providers the increase will be around 2%. For some categories such as farmng, sport or recreation, and photography, however, the increase could be as much as 10%.
For some businesses on the cusp of the spending and turnover limits it may be advantageous to switch to standard VAT accounting. That has the benefit of allowing you to reclaim VAT on expenses, although it also means completing and filing a VAT return every 3 months.
Lewis Smith & Co. is here to help you make any VAT decisions and to sort out the admin if you need it.
Why not set-up a free, no-obligation discussion with one of our tax experts today? Simply call 01384 235549 or email firstname.lastname@example.org to book an appointment.
Lewis Smith & Co. – Accountants for businesses in Kingswinford.
Don’t miss out on £220!
HMRC has put out a reminder about a tax break that three quarters of eligible recipient haven’t claimed yet.
The transferable marriage allowance came into action back in April 2015. The allowance allows couples (who are married or in a civil partnership), where one person pays no tax because their income is less than the personal allowance of £11,000, to transfer £1,100 of personal allowance to the tax paying partner.
The tax break, which amounts to a benefit of £220, applies in all sorts of situations; where one person works part-time, has taken early retirement or is simply taking a career break for instance.
Even better HMRC will allow couples haven’t claimed the allowance to backdate their claim to the previous tax year, and receive a payment of up to £432.
You can apply today for the transferrable marriage allowance at the HMRC with just your National Insurance numbers and one of a range of acceptable forms of ID.
If you have any questions about the tax allowance or its impact on your tax affairs talk to Lewis Smith & Co. today.
Call 01384 235549 or email email@example.com to arrange a discussion with one of our experts.
Lewis Smith & Co – Need someone to manage your payroll?
Key question is did you take “reasonable care”?
The Daily Telegraph recently reported a rise of nearly 40% rise in the number of people fined by HMRC for deliberately understating income on their annual returns (28,663 fines in 2015-2016 compared to 20,740 in 2015-2015).
A number of commentators have suggested this demonstrates a hardening of attitudes by the taxman to tax returns errors in line with the increase in investigations. So don’t be surprised if your self-assessment return gets singled out.
The table below, taken from HMRC CC/FS7a (PDF opens in new window), highlights the penalties arising from different levels of infringement behaviours.
| Type of Behaviour||Unprompted Disclosure ||Prompted Disclosure|
|Reasonable Care||No penalty||No penalty|
|Careless||0% to 30%|| 15% to 30%|
|Deliberate|| 20% to 70%|| 35% to 70%|
|Deliberate and Concealed|| 30% to 100%|| 50% to 100%|
As you can see penalties only apply if errors on a return are seen to be “careless”, “deliberate” or “deliberate and concealed”. So what is the dividing line between making a mistake despite taking “reasonable care” and being deemed “careless”?
According to HMRC examples of ways you can take “reasonable care” include;
- keeping enough records to make accurate tax returns
- keeping those records safe
- asking us or a tax adviser if you are not sure about anything and following any advice given
In the HMRC Compliance Handbook CH81130 some examples are provided of situations where errors have been detected but no penalties are due. These include circumstances where you thought the rules meant one thing but they actually mean something else, arithmetical or transpositional inaccuracies or where the effect of the inaccuracies as not significant in relation to overall tax liability.
In other words there is quite some leeway in the interpretation and imposition of the rules.
If you find yourself on the receiving end of a penalty notice for problems with your tax return – especially if they are defined as “careless” – then you may be able to make a successful appeal. It is important to highlight to HMRC your circumstances (for instance that you can’t afford a tax advisor) and abilities (for instance inexperience at using a spreadsheet) in your correspondance.
Of course if you need help then Lewis Smith & Co. can act on your behalf and apply over 30 years of experience in dealing with HMRC to your case.
Why not contact us today for a free, no-obligation discussion with one of our expert team. Call 01384 235549 or email firstname.lastname@example.org.
Lewis Smith & Co. – Tax accountants for Stourbridge
Minimum Wage Obligation
Whether or not you believe in a National Minimum Wage, you have to pay it to those of your staff who are eligible.
HMRC has started a £1.7m campaign to remind employers of their obligation after investigators uncovered many instances of underpayment.
As part of the publicity for the campaign HMRC has released a list of excuses given by employers for their misdemeanour.
Here’s three of our favourites:
- “I’ve got an agreement with my workers that I won’t pay them the National Minimum Wage; they understand and they even signed a contract to this effect.”
- “My workers are often just on standby when there are no customers in the shop; I only pay them for when they’re actually serving someone.”
- “The employee wasn’t a good worker so I didn’t think they deserved to be paid the National Minimum Wage.”
As a reminder the current minimum wage for workers aged 25 or over is £7.20 rising to £7.50 on April 1st 2017 (take a look at Minimum Wage Rates 2017 for full details).
If you are concerned about managing wages and payroll in your business why not set up a confidential discussion with Lewis Smith & Co. We offer expert advice and a hands-on payroll bureau to help you manage all of your payroll issues.
Call 01384 235549 or email email@example.com today.
Lewis Smith & Co. – Chartered Accountants for businesses across Brierley Hill
Rates Change on April 1st 2017
Time to update your payroll system because National Minimum Wage rates are changing from April 1st.
Here’s a before and after list for you to check.
| Age|| 2016|| 2017|
| 25 and over|| £7.20|| £7.50|
| 21 to 24|| £6.95|| £7.05|
| 18 to 20|| £5.55|| £5.60|
| Under 18|| £4.00|| £4.05|
| Apprentice|| £3.40|| £3.50|
Remember that Real Time Information (RTI) means you must use the correct data to ensure your reporting is accurate.
Lewis Smith & Co. offers a payroll bureau service to take away all of the hassle of managing changes like this. Make sure you remain HMRC compliant and sign up today.
Call us on 01384 235549 or email firstname.lastname@example.org to discover more.
Lewis Smith & Co. – Accountancy services for Kingswinford businesses
How Are You (Tax) Planning The Year Ahead?
All good things come to an end don’t they. No more champagne breakfasts, tinsel on the Christmas tree or tables groaning with food.
2017 has started and no doubt you will be getting down to some serious work…on your tax return.
Online forms for the 2015-2016 tax year must be completed and filed by January 31st 2016. Don’t post your return late because you will get fined. After that have you thought about next year’s taxes?
We thought not.
Particularly if you run a business there are lots of changes related to tax going on. Digital tax proposals, the minimum wage increase, auto enrolment pensions and new rental property taxation amongst others. Thinking about tax now makes it easier for us to help you pay no more than you should in the future.
How about setting up a free, no-obligation tax planning discussion with one of our partners today?
Call 01384 235549 or email email@example.com.
Lewis Smith & Co. – Accountants for Charities and Not-For-Profit Organisations
It could start as soon as 2018!
We first mentioned this process back in September 2016 (“HMRC wants you to be software savvy“) after HMRC announced it’s intention to shift as much of the tax system as it can online.
Fundamentally businesses will be required to:
- Keep digital records
- Update HMRC with quarterly reports
- Provide an end of year submission/annual taxable profit calculation
There is likely to be a staged introduction to the changes, starting in 2018. Although that sounds a long way off Lewis Smith & Co. suggests that you start considering how you intend to fulfill HMRC requirements sooner rather than later.
Larger firms using accountancy software such as Sage will be naturally compliant with the new requirements.
For smaller businesses currently using spreadsheets or manual cash books the transition to simple accountancy packages such as KashFlow or Xero (which Lewis Smith & Co. supports) should be straightforward. The issue to consider is making sure you can put in place the processes to keep the systems updated and produce the required reports.
The real challenge may be for companies using bespoke management system (legal firms, dentists and doctors for instance) which handle financial transaction but don’t currently communicate with HMRC. We recommend that you approach your system providers now to understand whether they will be making appropriate upgrades. If they aren’t aware of the necessity or have decided not to make the required changes then you might to make a bigger transition than you thought.
Why not discuss Making Tax Digital with Lewis Smith & Co.? We can help you plan for the changes well in advance and ensure your business is fully compliant.
You can arrange a free, confidential discussion today. Call 01384 235549 or email firstname.lastname@example.org.
Lewis Smith & Co. – Accountants for Quarry Bank businesses