Auto enrolment Pensions. Please note that from April 2019 auto enrolment pension contributions will be increasing again. The employer contribution is raising from 2% to 3% and the employee contribution from 3% to 5%, thus the overall minimum contribution is raising from 5% to 8%.
Making Tax Digital (MTD) is introduced by HMRC from April 2019. This means that from April every VAT return must be submitted using HMRC approved software along with all the files used to complete the VAT return. This means that clients and Accountants can no longer file their VAT returns on line after compiling their returns using excel or a book. This obviously means HMRC receive all of your information on a quarterly basis and can now start checking [...]
Autumn Budget 2018. Some main points from yesterdays budget ; The personal tax allowance is rising to £12,500 from April 2019 (a year earlier than promised). The basic rate band is also increasing to £37,500 from April 2019, thus you will not pay higher rate tax until your earnings exceed £50,000 Despite calls for abolishment, Entrepreneurs Relief, reducing the tax on disposal of business (assets) to 10%, remains in place The Chancellor has tightened the rules on PSCs (Personal Service Companies) to [...]
Tax saving tips. Remember to pay your spouse if they are helping with your business, especially if they are not using their tax allowances or you are in the upper rate of tax. Everyone can earn £11,850 tax free this year. If you are a limited company always use your company pension scheme. Not only is this a tax efficient way of saving, the government also contribute. If you are working from home, always claim a nominal amount of “use of home” for [...]
Now we are in the middle of tax year 18/19, it is a good time to remind you of the major tax changes for this year affecting all our clients. The tax free allowance for everyone has increased from £11,500 to £11,850. The tax free dividend allowance has reduced from £5,000 to £2,000. The self employed Nation Insurance threshold has risen from £6025 to £6205, with weekly contributions rising from £2.85 to £2.95. Finally the Capital Gains Tax Allowance [...]
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%.