National Insurance (NI). The Government has announced they are doing a U turn and will NOT scrap self employed Class 2 NI as planned. This is a fixed weekly amount of £2.95 which was collected by direct debit and was due to be scrapped as a tax break for the self employed. It will now continue to be collected via your tax return in addition to self employed Class 4 NI, which is 9% on profits above £8,424. Please note [...]
Buy to Let (BTL) tax changes. From 2017/18 tax year the way you can claim mortgage interest against your BTL income changes. Previously, the interest was deducted from your rental income and the profit added to your overall income and taxed at your prevailing rate. Now you will simply receive a 20% tax credit for your mortgage interest that will be deducted from your tax bill. This means there is no difference if you are a basic rate tax payer, [...]
Dividends. Remember that dividends can only be paid from your company profits and no more frequently than monthly. These payments do not effect your Corporation tax but they will effect your personal tax. For 2017/18 you received the first £5,000 of dividends tax free, for this tax year it is reduced to £2,000. After that you are personally taxed at 7.5% in your personal tax return for basic rate tax payers and then 32.5% for higher rate payers and [...]
Self assessment penalties explained. If you file your self assessment tax return after 31st January you will receive a £100 fine. If it is 3 months late you are then fined £10 per day for up to 90 days. If it is 6 months late you are fined another £300 or 5% of any outstanding tax (whatever the higher) and again if 12 months late, another £300 or 5%. If you are late paying your tax, in addition to being charged [...]
Remember that if you sell any assets such as shares or property these must be declared on your personal tax return. Everyone receives an £11,700 CGT allowance and then your gains are taxed at 10% for basic rate tax payers and 20% for upper rate. If you sell your business (assets) then you can claim ENTREPRENEUR RELIEF AT 10%.
New Data regulation rules (GDPR) regulating how personal data is held by companies comes into affect from today. This is a positive step for personal security. Please note that PMC Partnership will only ever hold and use our clients personal data to administer and manage our relationship with our clients. Data will never be disclosed to a third party without express permission and data will not be held for longer than necessary. All data is sent by our secure [...]
Employee tax relief – remember that if either you or your employees pay for business expenses personally and are not reimbursed, they can claim personal tax relief. The allowable expenses are varied from travel costs to protective clothing. You either claim through your personal tax return or if you are not in self assessment via the HMRC website at www.hmrc.gov.uk
From April 2018 the National Minimum Wage and National Living Wage is increasing to £7.83 for those above 25, £7.38 for 21-24 year olds, £5.90 18-20 year olds, £4.20 for below 18 and £3.70 for apprentices. Remember it is the employers responsibility to pay all employees at least these rates of pay.