Archive for the ‘Uncategorized’ Category

Enhanced redundancy cover for parents

Tuesday, August 6th, 2019

The present legal protections against redundancy is to be extended by six months for new mothers returning to work. Parents returning from adoption and shared parental leave will also be protected.

The move comes in response to a government consultation which found that new parents continue to face unfair discrimination. Research estimates that up to 54,000 women a year felt they had to leave their jobs due to pregnancy or maternity discrimination.

Employers should note that pregnancy and maternity discrimination is illegal, and those on maternity leave have special protection in a redundancy situation. The reforms recently announced will, for the first-time, extend the redundancy protection for six months from the date of a mother’s return to work as well as covering those taking adoption or shared parental leave. This will help ensure new parents are protected from discrimination in the workplace, regardless of gender and circumstance.

Today’s announcement follows a raft of recent measures designed to support working parents, as part of the government Good Work Plan. These include proposed new leave entitlements for parents of sick and premature babies and proposed new measures to ensure large businesses are more transparent on their policies for parental leave and pay and flexible working.

Research commissioned by the Department for Business, Energy and Industrial Strategy (BEIS), found that one in nine women said they had been fired or made redundant when they returned to work after having a child, or were treated so badly they felt forced out of their job.

This change goes further than current EU requirements on maternity entitlements and parental leave.

According to government sources, the aim of this change in redundancy protection is for UK businesses to embrace flexible working and gender equality as this will make it easier for mothers and fathers to return to work and progress in their careers after parental leave.

Changes to private residence relief

Friday, August 2nd, 2019

If you rent out all or part of your home this may create a Capital Gains Tax (CGT) charge when you sell the property.

Presently, HMRC excludes the last 18 months of your ownership – even if the property is let for this time – when assessing any CGT liability. In a draft of the Finance Bill released last month, HMRC have confirmed that this 18 month period will be reduced to 9 months from April 2020.

The exemption for disabled property owners or those in a care home will continue to be 36 months.

The draft Finance Bill also confirms a change to the letting relief rules.

Letting relief is an extra deduction you can make from any CGT payable as a result of letting your home. You can claim the lowest of the following three amounts:

  1. The same amount that you can claim as private residence relief.
  2. £40,000.
  3. The same amount as the chargeable gain you made from letting your home.

From April 2020, you will only be able to claim this letting relief if you are in shared occupancy with the tenant.

Property owners contemplating the disposal of their home – which is or has been let for any period – may be advised to complete their sale before April 2020. In this way they will benefit from the 18 month exemption and the more flexible lettings relief.

Internet giants face tax-hike

Friday, August 2nd, 2019

It has been confirmed that from April 2020, the government will introduce a new 2% Digital Services Tax (DST) on the revenues of search engines, social media platforms and online marketplaces which derive value from UK users.

This is an attempt to tax, in the UK, revenues earned by these social media platforms from customers resident in the UK. At present, significant profits are being earned in the UK but transferred off-shore thus avoiding UK taxation.

In the notes confirming that these changes would be included in the Finance Bill 2019, HMRC said:

The revenues from the business activity – subject to DST – will include any revenue earned by the group, which is connected to the business activity, irrespective of how the business monetises the platform. If revenues are attributable to the business activity and another activity, the business will need to apportion the revenue to each activity on a just and reasonable basis.

A UK user is a user that is normally located in the UK.

The Digital Services Tax will apply to businesses that provide a social media platform, search engine or an online marketplace to UK users. These businesses will be liable to Digital Services Tax when the group’s worldwide revenues from these digital activities are more than £500m and more than £25m of these revenues are derived from UK users.

New homes to have car charge-points

Friday, August 2nd, 2019

In a bid to accommodate yet more electric vehicles on our roads, the government has launched a consultation aimed at increasing the number of homes with electric car charge-points. In a recent press release they said:

“All new-build homes could soon be fitted with an electric car charge-point, the government has outlined today (15 July 2019) in a public consultation on changing building regulations in England. The consultation comes alongside a package of announcements to support electric vehicle drivers and improve the experience of charging.

The proposals aim to support and encourage the growing uptake of electric vehicles within the UK by ensuring that all new homes with a dedicated car parking space are built with an electric charge-point, making charging easier, cheaper and more convenient for drivers.

The legislation would be a world first and complements wider investment and measures the government has put in place to ensure the UK has one of the best electric vehicle infrastructure networks in the world – as part of the £1.5 billion Road to Zero Strategy.

The government has also set out today that it wants to see all newly installed rapid and higher powered charge-points provide debit or credit card payment by Spring 2020.”

The government has already taken steps to ensure that existing homes are electric vehicle ready by providing up to £500 off the costs of installing a charge point at home.

Low paid workers to qualify for sick-pay

Friday, August 2nd, 2019

The government has started a consultation to transform support for sick and disabled staff and remove barriers for employees.

The Department for Work and Pensions has recently set out new measures to transform how employers support and retain disabled staff and those with a health condition.

Under the new measures the lowest paid employees would be eligible for Statutory Sick Pay (SSP) for the first time, while small businesses may be offered a sick pay rebate to reward those who effectively manage employees on sick leave and help them get back to work.

Under current legislation, to be eligible to receive SSP you must:

  • be classed as an employee and have undertaken work for your employer,
  • have been ill for at least 4 days in a row (including non-working days),
  • earn an average of at least £118 per week, and
  • tell your employer you’re sick before their deadline – or within 7 days if they do not have one.

Each year more than 100,000 people leave their job following a period of sickness absence lasting at least 4 weeks, and the longer someone is on sickness absence the more likely they are to fall out of work, with 44% of people who had been off sick for a year leaving employment altogether.

Tax Diary August/September 2019

Friday, August 2nd, 2019

1 August 2019 – Due date for Corporation Tax due for the year ended 31 October 2018.

19 August 2019 – PAYE and NIC deductions due for month ended 5 August 2019. (If you pay your tax electronically the due date is 22 August 2019)

19 August 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2019.

19 August 2019 – CIS tax deducted for the month ended 5 August 2019 is payable by today.

1 September 2019 – Due date for Corporation Tax due for the year ended 30 November 2018.

19 September 2019 – PAYE and NIC deductions due for month ended 5 September 2019. (If you pay your tax electronically the due date is 22 September 2019)

19 September 2019 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2019.

19 September 2019 – CIS tax deducted for the month ended 5 September 2019 is payable by today.

A new business, have you considered your options?

Tuesday, July 30th, 2019

If you are setting up a new business one of the options, you will need to consider is your business structure. There are two basic choices:

  1. Be self-employed, or
  2. Incorporate your business, be a limited company.

There is a world of difference between the two options.

Self-employed

Self-employed suggests that you work on your own, and this is certainly one self-employed option, but there are others.

You could have a business partner, or partners, and trade as self-employed but in a formal partnership arrangement. There are two basic types of partnership: a limited partnership (where the partners are not personally liable for any business risks) and a non-limited version where the partners’ personal assets are at risk in the event that the business cannot pay its debts.

This personal liability aspect is one of the key reasons that need to be considered when deciding on a structure for your business. The other is the impact of NIC and income tax.

If you are self-employed the profits of the business are taxable based on the tax status of the business owner or owners. There is no flat rate applied to business profits. The more you earn, the more NIC and income tax you will pay. And don’t forget, if you are self-employed and you run into financial difficulties, your personal assets may be at risk – unless you have opted for the Limited Liability Partnership arrangement.

A limited company

Alternatively, you could set up a limited company that is treated as a legal entity in its own right. Companies pay corporation tax, not income tax, at a single rate, presently 19%.

At first sight it may seem like a no-brainer, why would you be self-employed and pay much higher rates of NIC and income tax? Combine this with the limited liability aspect and the argument for trading as limited seems compelling.

Planning is key

Every potential new business-person should consider both options. There are pluses and minuses to each, and both need to be considered.

If you are thinking about a new business, perhaps your first venture into self-employment, please call so we can help you consider all the possibilities. This is not a process to be taken lightly and messing up could prove to be very expensive.

Why invest in tax planning?

Wednesday, July 24th, 2019

The way we organise our business and personal financial affairs determines the amount of taxes we pay. Most of us are focussed on outcomes, outcomes that on the face of it increase our profits or income without due regard for the effect these transactions have on our tax position.

A classic example is the rule that removes your entitlement to the annual personal tax allowance if your income exceeds £100,000. For the tax year 2019-20, your £12,500 personal tax allowance would be reduced by £1 for £2 that your income exceeds £100,000. And so, when your income reaches £125,000 you will no longer be entitled to claim this allowance. Because you are being taxed at a 40% income tax rate and you also progressively lose your personal tax allowance – between £100,000 and £125,000 – you are effectively taxed at 60% on this top £25,000 of your income.

With the benefit of hindsight, or more practically, with the benefit of tax planning, there might be lawful ways that you could reduce your income without compromising your finances and maintain your claim to the personal tax allowance.

Clearly, cost benefit considerations need to be advanced at this point. It is difficult to argue that you adopt a tax planning strategy if the cost of the support you need are more than taxes saved.

Planning requires a three-step process:

  • A fact-find to fully understand your present position,
  • Research to discover if there are any viable planning opportunities, and
  • The agreement of a course of action based on an appreciation of the investment required to provide the necessary advice and the likely tax outcome(s).

If your business or personal financial matters are complex, and you don’t invest in an annual tax planning review, we would be interested in talking with you to see if we could impact your tax footprint in a positive way. Please call, we can help.

The advantages of tax compliance support?

Tuesday, July 23rd, 2019

As UK resident persons we are obliged to comply with the law, if we don’t, there are consequences. These range from financial penalties to imprisonment.

Tax compliance covers areas such as submitting returns to HMRC by the required dates and observing certain disclosure rules if our personal or financial circumstances change in a particular way. For most of us this means submitting an annual tax return and paying any calculated tax, NIC or VAT liabilities as they fall due.

For most taxpayers this s a chore that cannot be avoided, and it is tempting to see any investment in professional fees to complete these returns as a cost. As advisors we have sympathy with this point of view and yet there are compelling reasons to view this compliance service as beneficial, as an investment not a cost.

Firstly, if you don’t have to complete and fret over what does and what does not need to be returned, you will have more time to spend on activity that furthers your business interests or gives you more time to spend with your family. It will also, we hope, give you comfort that your affairs are being handled professionally – the sleep better at night outcome.

Secondly, an impartial review of your tax affairs – in order to deal with your compliance obligations – may reveal opportunities to change the way you organise your business or personal financial affairs in order to reduce the impact of taxation.

Timing is also an issue. There are compelling reasons to have advance notice of tax payments. For example, our self-assessment tax returns do not need to be submitted until 31 January following the end of a particular tax year. So, for the tax year 2018-19, the filing deadline is 31 January 2020. Why leave completing your return until the last minute if this means you have no time to figure how you are going to fund tax payments due?

Tax compliance, if managed correctly, is much more than a rubber-stamping activity, and hopefully, this post will convince you that your investment in the process has advantages that will justify your investment. Please call if you need help with your tax compliance obligations.

No deal

Thursday, July 18th, 2019

The phrase “no-deal” is assuming a rather specific meaning as the exit from the EU grinds towards a conclusion – the present deadline for achieving a withdrawal agreement is the end of October. If we fail to achieve consensus by that date, there are three outcomes:

  • We agree terms for the withdrawal agreement,
  • We kick the deadline down the road, or
  • We leave with no agreement.

Recent debates on this topic would seem to indicate that the first option is unlikely, the second option doubtful which promotes the no-deal option to the top spot, more likely.

Although the majority of smaller businesses in the UK do not have direct trading links with firms in the EU, it does not stretch imagination by many degrees to conceive that our expanded supply chains (customers of our customers, suppliers of our suppliers) are EU businesses.

This inevitable conclusion means that if there is a no-deal outcome, and if this triggers a disruption in supply lines, then we all need to sit up and take notice.

Many firms who trade with the EU have already invested in strategies to secure their business interests in the event that we leave the EU with no-deal and have to cope with World Trade Organisation tariffs. Other practical difficulties, moving goods across the channel for example, require more imaginative planning.

It is instructive that the only detailed instructions published by government departments cover the no-deal scenario. We recommend that all businesses take a look at this material. See:

https://www.gov.uk/government/publications/uk-governments-preparations-for-a-no-deal-scenario/uk-governments-preparations-for-a-no-deal-scenario#conclusion.

We are working with clients to run risk assessment tests and create plans that will help them manage a no-deal transition. If you would like to avail yourself of this advice, please call asap. This topic is now assuming greater prominence and there really is little time left to get prepared…