BUDGET 2014 HIGHLIGHTS
The personal allowance is the amount of income you can receive each year without having to pay tax on it. This amount is to increase to £10,000 for 2014/15 and to £10,500 for 2015/16. The basic rate taxpayer will see a saving of about £112 in 2014-15 and a further £100 in 2015-16 on their annual income tax bill.
HIGHER RATE TAX PAYERS
The threshold for which individuals pay tax at the higher rate of 40% will increase by 1% for both tax years.
ANNUAL INVESTMENT ALLOWANCE
For businesses, the annual investment allowance will increase from £250,000 to £500,000 until 31 December 2015.
HIGHER ANNUAL SUBSCRIPTION LIMIT FOR INDIVIDUAL SAVINGS ACCOUNTS FROM 1 JULY 2014
The chancellor has announced big changes to the Individual Savings Accounts (ISA). The new policy means that, from July onwards, it will be possible to save up to £15,000 in total. Furthermore, the whole sum could be in cash unlike before where only half of the limit could be saved in cash and the rest in shares. Also, the 10p tax rate for savers will be abolished.
CLASS 2 NIC
From April 2016, Class 2 National Insurance Contributions (NIC) will be collected through self-assessment.
Parents paying 80% of childcare costs of up to £10,000 per child, aged up to 12, to a registered provider will get the remaining 20% tax-free from September 2015.
NEW TRANSFERABLE TAX ALLOWANCE
From April 2015, there will be an introduction to a new transferable tax allowance for married couples and civil partners.
All tax restrictions on pensioners' access to their pension pots to be removed, ending the requirement to buy an annuity. The taxable part of pension pot taken as cash on retirement to be charged at normal income tax rate, down from 55%. There is an increase in total pension savings people can take as a lump sum to £30,000
By Wilson Law at Tax Affinity Accountants
Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered to be small business experts helping and supporting business in the UK. They regularly help new business start up and provide valuable support for new businesses.
For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.
Many business owners wonder whether hiring an accountant is worth the extra expenditure. From the viewpoint of an accountant, it would be hypocritical for me to say that you’re better off doing all the accounting work yourself. In some respects that may be true. You may save some money by not having to pay accountancy fees. However, over the long run, you will probably realise that the time spent on dealing with your tax affairs and managing the company accounts can be used much more productively. Image the time is used earning a few more sales per week compared to being counted as dead time doing admin.
The phrase that time equals money is heard commonly. Not only do accountants save you both time and money; they also become an invaluable asset to your business. On that can become worth so much more than a simple financial cost. Here are a few things that we can add real “value” to your business:
Keeping your financial records organised and up to date is the most important factor to dependable financial statements. But why hire an accountant as opposed to a book-keeper. Unlike the duties of a book-keeper, an accountant can help interpret the results, offer professional advice and present the financial statements in a format that allows decisions to be made by business management. You would get a greater insight to your business and be able to plan ahead using forecast estimates.
Many business expenses are deductible. However, most of the rules and regulations change on a moving basis and vary from business to business. A good accountant will always be updated on the changing laws and regulations. And therefore should be saving you far more in paying less tax per annum than he/she should ever charge in fees. Their knowledge and experience will add real value to your business.
There are standard formats for filing your accounts and various other tax returns to HMRC. An accountant can ensure that the relevant information is submitted to HMRC in the correct format before the due date. If there is one thing that panics business owners more than anything is a letter from HMRC about a mistake in their tax return and accounts. An accountant can deal with any issues in that regard in an efficient manner. So many clients turn to an accountant after having incurred fines and penalties that they often wonder why they just didnt do it before.
Being aware of tax savings does not necessarily translate to actual tax savings. An accountant’s job is not only to tell you how much tax you owe but how you can save tax. The accountant should work with you throughout the year and offer advice on how to operate your business in a manner that will provide the most tax savings. This can save you substantial amounts of money in the long run - again far more than he/she should ever charge.
Business advice from an accountant can help grow your business. They can assess your current problems and provide solutions to fix them. Or if your business just needs a fresh but experienced perspective on how to expand. The advice can be on inventory management, risk management, lease and buy decisions, internal controls or pricing strategies, HR issues, mergers, sales and takeover of the whole business even.
Develop a Business Relationship
Lets be clear in our extensive experience there are a lot of arrogant and selfish accountants out there. People regularly come to us saying their previous accountant was not doing enough and was charging them for every little thing.
A good accountant wont mind spending as much time as you need to make sure you get all the help and support required. Their fees should be transparent and fixed, with no surprises.
Speaking with an accountant can get you the advice in regards to your tax affairs or business operations. He/She can help identify problems in your financial statements and consult you about it. They can often with a little direction from you, supply you with the ideas and expertise that you desire to push your business to places your imagined. After all the biggest businesses in the world trust some of the biggest firms of accountants to help them with their plans for global expansion and growth.
By Wilson Law at Tax Affinity.
Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered to be small business experts helping and supporting business in the UK. They regularly calculate and submit tax returns, year end accounts and so much more for their clients peace of mind. Whilst always ensuring great value for money service.
For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.
Small firms get more time to get ready for RTI submissions
HMRC has announced that it will be extending the new Real Time Information (RTI) reporting rules for businesses with fewer than 50 employees from October 2013 until April 2014.
This new extension now means that businesses are not required to change their approach halfway through this tax year. But small businesses are still required to report through the new system on a monthly basis, rather than each time they pay their employees.
This allows many businesses that pay weekly (or more) to report monthly instead of everytime they pay a member of staff.
HMRC, says that more than 1.4 million employer PAYE schemes are now reporting in real time since the start of the new tax reporting requirements in April. According to HMRC 83% of SMEs and more than one million micro employers have already started to report PAYE in real time.
HMRC goes on to say that from April 2014, all employers in the UK will need to plan to be reporting in real time, but also say it is continuing to work with businesses over the coming months to identify whether there are any specific circumstances that it needs to cater for the long term.
HMRC's director general for personal tax, said: "The roll-out continues to exceed our expectations. We will now write to the minority of employers who are not on board, to establish how we can help them meet the requirements of reporting in real time."
This extension for small businesses with less than 50 staff, till April 2014 is very helpful for SME's. It will help them continue to engage positively with RTI and to keep the costs of RTI reporting as low as possible.
At Tax Affinity Accountants we are experts in Payroll and are already helping our clients submit their payroll information on time and regularly to HMRC, feel free to contact us if you need help in your RTI complaince at www.taxaffinity.com.
In the current economic climate everyone should be looking for ways to save tax. And to help, we at Tax Affinity Accountants have compiled a list to do just that.
The tax codes, allowances and deadlines
1. Tax code
Check your tax code each year (the numbers and letters on your payslip). If you're on the wrong code, you may be paying too much tax.
2. Capital gains tax allowance
Remember that capital gains under £10,600 are tax-free. Married couples and civil partners who own assets jointly can claim a double allowance of £21,200. CGT is charged at 18% if you are a standard rate taxpayer, and 28% if you pay tax at a higher rate.
3. Tax return deadlines
Don’t miss the 31 October deadline if you want to make a paper tax return. You can do your tax online up to 31 January, but paper tax returns need to be in three months earlier than online tax returns to avoid a £100 fine.
4. Annual investment allowance
If you are a landlord or run your own business, take advantage of the annual investment allowance (AIA) to claim for capital expenditure on items such as tools and computers. You can claim relief on up to £25,000 a year.
How to pay less tax if you're self-employed
5. Tax-deductible expenses
If you’re self-employed, don’t forget to claim all your tax-deductible expenses, including cash expenditure where eligible.
6. Self-employed car costs
If you're self employed, you can claim the running costs of a car, but not the cost of buying one. If you use the same car privately, you can claim a proportion of the total costs.
7. Cash-flow boost for self-employed
If you are setting up as self employed, you may be able to improve your cashflow by choosing an accounting year that ends early in the tax year. This maximises the delay between earning your profits and your final tax demand.
8. Annual losses
If you are self employed, you can carry forward losses from one year and offset them against profits from the next. See our page on when the self-employed pay tax for more.
9. Payments on account
If you are self-employed and expect to earn less in 2012-13 than you did the year before, apply to reduce any payments on account that HMRC ask you to make.
Saving tax on property income
10. Rent a room
Rent a room relief is an optional scheme that lets you receive up to £4,250 in rent each year from a lodger, tax-free. This only applies if you rent out furnished accommodation in your own home.
11. Landlord's energy-saving allowance
If you rent out property you can claim special tax allowance of up to £1,500 for insulation, draught proofing and installing a hot water system.
12. Landlord's expenses
If you rent out property, you can deduct a range of costs before declaring your taxable income. These include the wages of gardeners and cleaners, and letting agency fees.
13. Tax relief on your mortgage
You can claim tax relief on the interest on a mortgage you take out to buy a rental property – even if it the rental property is abroad.
14. Reduce capital gains tax (CGT) on a rental property
Landlords are normally liable for CGT when they sell a rental property. If it has been your main home at some time in the past, you can claim tax relief for the last three years of ownership.
Pay less tax on savings and investments
15. Isa allowance
Use your tax-free Isa allowance. This year, the overall limit is £10,680, of which £5,340 can be put into in a cash Isa.
16. No CGT on shares held in an Isa
There is no capital gains tax to pay when you sell shares or units held in an Isa. For more details see Tax on savings and investments.
17. Junior Isas
Use Junior Isas or Children’s Bonus Bonds to avoid being taxed on gifts you make to your own children.
18. Transfer assets
Transfer savings and investments to your husband, wife or civil partner if they pay a lower rate of tax than you do. See our guide to tax and your partner for more information.
19. Children's savings
Stop children being taxed at source on their savings by completing a simple form (R85) on their behalf.
Tax savings for older people
20. Age-related allowance
If you are aged 65-plus you may be eligible for an increased personal allowance. This means you pay a lower income tax rate. See Tax in retirement.
21. National Insurance
Make sure you stop making National Insurance contributions if you carry on working beyond state retirement age (currently 62 for women and 65 for men).
22. Gift Aid
If you are over 65, making donations to charity through Gift Aid can reduce your taxable income to below the threshold at which you start to lose out on age-related allowances.
23. Tax relief on gifts
If you are in a higher tax bracket, you can claim back the difference between the basic and higher rate of income tax on any Gift Aid donations.
24. Inheritance tax
Lifetime gifts are not normally counted as part of your estate for inheritance tax purposes if you live for a further seven years after making them. Known as potentially exempt transfers (PETs) they can reduce your residual estate significantly. See our blog on inheritance tax.
Tax savings through employee benefits
25. Season ticket loan
If you are a commuter, check to see if your employer will give you a tax-free loan to buy your season ticket.
26. Pool cars
Use a pool car for occasional business travel, if your employer provides these.
27. Childcare schemes and tax credits
If you are an employee and pay for childcare, ask your employer if they have a childcare scheme. Salary sacrifice childcare schemes are easy to establish and can result in substantial savings for both employees and employers. For more details see working for an employer. Child tax credits can also save you money.
28. Company car?
If you are entitled to a company car, consider whether it would be more tax-efficient to take a cash equivalent in pay instead.
29. Going green
If you are changing your company car, consider a low-emissions model . These are now taxed at a lower percentage of their list price, than cars with a high CO2 rating.
30. Pay in to a pension scheme
Contributions to your employer's pension scheme (including any additional voluntary contributions you make) can be made from your gross pay, before any tax is charged.
For the most up to date and accurate advice speak to tax accountant, as these allowances and benefits do change every year.
Tax Affinity Accountants are expert Qualified Tax Accountants in Kingston upon Thames. To read more visit www.taxaffinity.com/blog and please feel free to comment and share this with your friends.
You should act as soon as possible to avoid tax penalties. As HMRC are becoming increasingly aggressive in enforcing penalties.
The tax return deadline is 31st Jan 2013 and all self employed people can be fined £100 for late submission in the first month then after that a daily charge of £10 on top of all previous fines. Which if can easily become £380 after just 2 months. Or simply £680 if it is 3 months overdue.
This rule applies even if there is no tax to pay or the tax they owe has been paid!
Uniquely however, this year the taxman has offered taxpayers a small extension of 2 days before imposing penalties. This is because of a strike by its call centre staff which meant HMRC would not be able to handle a similar volume to last year.
At Tax Affinity Accountants, we see far too many people each year who loose a huge amount of hard earned money to fines. While we are experts in Tax and can in many cases successfully appeal for discretionary discounts on fines, the fines are not normally completely cancelled by HMRC especially when they have already given a 2 day extension.
So we recommend that all local businesses and self employed people make sure to have their tax returns submitted as soon as possible well before the 31st Jan 2013 deadline.
At Tax Affinity Accountants we are an authorised HMRC agent and are very experienced in all types of Tax eg Self Assessment, Corporation tax, PAYE, VAT, Personal Tax, Construction Industry Schems (CIS) to name a just a few and would be happy to help local people resolve their tax issues.
For more useful information about accounting and tax accounting issues in Kingston upon Thames visit www.taxaffinity.com/blog
Tax Affinity Accountants are Companies House Registered and HMRC Authorised Agents
All employers in the UK are being urged by HM Revenue and Customs to get ready for major PAYE changes that come into effect in three months’ time.
In April 2013 employers will have to start sending PAYE returns electronically, using RTI-enabled payroll software, to HM Revenue and Customs (HMRC) each time they pay their employees as part of routine payroll processes. The returns will include details of all employees’ pay, tax and deductions. This new process will replace sending a separate return at the end of the year.
To be ready employers should follow these three easy steps:
1. Visit a PAYE Expert Accountant, like Tax Affinity, for comprehensive information about RTI, including how to prepare, payroll software options and hints and tips to help avoid some common pitfalls.
2. Acquire new or updated payroll software – employers will need to talk to their PAYE Expert Accountant or their payroll service-provider (if they have one) about this.
3. Start checking and updating employee information. It’s vital that the information employers have about their employees is accurate and up to date.
Ruth Owen, HMRC’s Director General Personal Tax, said:
“To avoid a last minute rush it’s vital employers act now, if they have not already done so.
“Employers will need to send their first return – called a ‘Full Payment Submission’ or ‘FPS’ for salary or wage payments made to employees on or after 6 April – and if they have 250 or more employees they will have to send an Employer Alignment Submission before the first FPS.
“Although reporting PAYE in real time will be straightforward for most, some preparation is needed. There is more to it than simply buying or updating software – although this is key. Employers may need to add employees such as casuals or those below the Lower Earnings Limit to their payroll system and must think about their payroll practices to make sure that they work for real-time reporting.”
Background about the new HMRC RTI - PAYE
Employers are required to begin to report in real time in April 2013, unless HMRC has specified a different date.
The RTI pilot was launched in April 2012 with just 10 employers. Since then, the pilot has expanded three times. By 31 March 2013, HMRC expects PAYE records for around 6 million people to be reported in real time.
Reporting PAYE in real time will bring it into the 21st century and will allow HMRC to receive information on employees’ earnings, tax and National Insurance Contributions as they are paid, rather than at the end of the year. RTI will make it easier for employers to administer PAYE and will make tax more accurate.
RTI will also support the operation of Universal Credit – the Government’s flagship welfare programme – which brings together means-tested in and out-of-work benefits, Tax Credits and support for housing, and will improve work incentives and make work pay.
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