If you work for the NHS or for Local Government and you are a contractor then you will have been notified that there will be changes coming in as of April 2017.  We are increasingly being asked the same question by many clients who are confused and have not been advised correctly by their recruitment agnecy or end client. So we have compiled an easy bullet point guide below:

For a vast majority of contractors this means the recruitment agency or NHS / Council paying you has to decide how to pay you after April 2017. They may opt for the safest course of action / most profitable for them which may not be financially beneficial for you. And increasingly we are seeing a knee jerk reaction by most NHS and Council Management staff and recruitment Agencies is to incorrectly lable everyone the same even when HMRC does not say this in their rules.
The vast majority of NHS and Council Management staff and recruitment Agencies are wrongly saying everyone is inside the scope for IR35 just because they cannot be bothered to work out who is and who isn't and they do not care if a person pays more tax than is really due.

So have at look below at the correct options as per HMRC, that all contractors have in all ongoing negotiations:

1. Work for non NHS and local government / council companies who are outside the scope of this legislation.
2. Prove you are not applicable, and then still be paid in full to your Limited Company, same as before. You have the right to present an  independent report from an IR35 assessment company to establish you are indeed outside the scope of legislation. The report can cost around £175 depending on the company used and once you are proven to be outside the scope all parties paying you should pay in full with no deductions. Suffice to say this small fee may save a lot of money in tax and paperwork later.
3. Have tax and NI deducted at source and claim back the over paid tax at the end of the tax year. This is actually very similar to other industries where HMRC refund on an annual basis the over deducted tax after a tax return is submitted to them annually. You must make sure all such income payments are paid to your personal bank account and not to your company bank account. Otherwise you will be taxed twice.
4. Any work you do for a non NHS and local government / council company should still be paid in full to your company bank account.
5. Avoid an umbrella company at all costs as this is going to cost you the most, even more than being directly employed.  Because an umbrella company charges the contractor for employers NI contributions (approx 13%) and extra admin charges on top of normal tax and NI deducted. You can claim back over paid tax on the tax return but will not be able to claim the extra charges and Employers NI. A lot of agencies will push worker here because they will make extra money from the charges passed on. Know your rights as they cannot force you to only have an umbrella company.
6. If you do opt for employment only contract then only tie yourself in for a very short time eg 3 months maximum. As the situation is bound to change soon and the structure of contractor work will have changed and settled by then allowing you to move back to using your limited company if this is still the most tax efficient choice.
7. Do not close your limited company as it can go into a dormant or inactive status and be reused at any time and has an unlimited lifetime. The company can also do other type of work and can be used for working for non NHS and Local Council work.
8. A limited company can still carry on incurring costs without income indefinitely and this will lead to the eventual corporation tax falling and falling as expenses rise and rise in the company. With the actual earned income possibly being completely wiped out by expenses eventually. This effectively allows the director / shareholder to take more of the income earned in the limited company with little to no corporation tax.

Lastly give it time, as one door closes inevitably another opens, and once the changes start to actually be implemented recruitment agencies and the NHS Trust's will most likely find a way around the rules and may well re-employ people in a different way when they see the sea of dissatisfaction from the majority of the contractors that is bound to come.

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames they are considered in the Industry to be expert accountants and tax advisors for small businesses. Helping and supporting business throughout the UK, they regularly help clients grow their business providing tailored advice.

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.

How the queen’s new polices will affect businesses around the UK (big/small)

Today I will give you some insight into how the queen’s new polices will affect businesses around the UK (big/small). There are various topics from the queen’s speech that would affect businesses around the UK (big/small). I will discuss each one in detail to give you an insight before it comes into play.

''To build a stronger economy we must support smaller businesses to compete within their sector. Furthermore, we should ensure they should not be disadvantaged by those who do not play by the rules (larger companies)''.

The main elements are:

• Make it easier for small business to access finances; develop payment practices between small businesses and the clients; grant small firms with reasonable access to the £230 billion spent each year in the shape of public procurement contracts and enhance the availability and resources of funding for businesses that want to invest.

• Guarantee that the red tape that influences small businesses is regularly reviewed to ensure policies are either cut or remain effective and to place that requirement into law.

• Strengthen the reputation of the UK as a trustworthy and fair place to do business, by increasing transparency around who owns and controls UK companies with a register of beneficial ownership, strengthen rules on director disentitlement and remove pointless costs from insolvency law.

• Strengthen UK employment law by tackling National Minimum Wage abuse and cracking down on abuse in zero hours contracts.

• Making it easier for small businesses to expand overseas.

We must protect public revenues by tackling avoidance and also help hard working taxpayers by simplifying the collection of class 2 National Insurance contribution (NIC) paid by the self-employed.

Simplifying the NICs paid by the self-employed:

• Simplify the collection of NICs for the self-employed, who presently have to navigate 2 different processes for 2 separate classes of NICs. 

• Move the collection of class 2 NICs into self assessment, so that it could be collected alongside class 4 NICs with effect from 6 April 2016 (for the 2015 to2016 tax year onwards).

Public sector land assets are to be transferred directly from arms-length bodies to the homes and communities agency, reducing bureaucracy and managing land more efficiently. Furthermore, guarantee that future purchases of land owned by the homes and communities agency and the Greater London authority will be able to develop and use land without being affected by easements and other rights and limitations suspended by the agency. Land registry would transfer statutory responsibility for the local land charges register and delivery of local land charges searches to the land registry, supporting the delivery of digital services and broaden land registry’s powers to facilitate it to grant information and register services relating to land and other property.

The adjustments to the pension tax rules (as announced at the budget) are to help people get on by giving them greater independence and choice over how to access their defined contribution pension savings.

The main elements are:

• Introducing a new tax structure that removes limitations to the way individuals can access their defined contribution pension savings and permits them to access their investments to their marginal tax rate.

• Removing the previous limitations the government placed on how individuals are able to access their money and give individuals the independence and choice to access their pension as they see fit.

• Introducing anti-avoidance requirements to avoid individuals taking advantage of the new flexible arrangements for tax avoidance purposes.

• Private pensions will supply wider choices with defined ambition pensions encouraging greater risks by sharing between parties and allowing savers to have superior assurances about their retirement savings.

Other measures that will effect businesses and indviduals are as follows:

• A new 5p charge for all plastic bags at stores
• New powers to allow fracking firms to dig under private property without needing the land owners permission
• A renewed pledge to increse efforts to keep Scotland in the union
• A Limit to excessive redundancy payouts for public sector workers
• Fines for employers who do not pay the minimum wage
• Up to £2,000 in childcare vouchers for parents who are working

By Tahir Malik at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Kingston upon Thames they are considered in the Finance Industry to be the experts in all types of Accounting and Tax issues. Helping and supporting businesses and individuals throughout the UK, Europe and USA.

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:

Proper Book-Keeping

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.

Allowable Expenses

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.

Compliance

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.

Tax Advice

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 Consulting

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.

Driving Sales in the Current Economic Climate

The frenzy of the bullish market looked unstoppable to many people; even the so called professionals of the financial market were caught up in the typhoon of prosperity. The share market was booming, business profits were skyrocketing, property prices were ever increasing and consumer spending was at an all time high. However, the path to everlasting wealth was halted by the global financial crisis of 2007-08. The crisis threatened the collapse of major financial institutions, the bailout of banks by national governments and the largest slump in the stock markets to date. The effects resulted in a global recession that lasted till 2012. Things have started to look better in 2013. There has been high confidence in stock markets, the housing market has been growing at a healthy rate and people are beginning to spend again. It is probably safe to say that we are currently in a boom. But how can you as a small business benefit from this? Here are a few points you can consider to boost your sales in the current economic climate.

Tapping into New Markets

You may begin noticing changes in your customer base.  Customers that your service or product may not usually target for may start to appear due to changes in their economic circumstances. Goods which are income elastic (sensitive to changes in income) will usually see a rise in demand when people have more disposable income. Consumers may switch to more premium versions of a product when they can afford to do so. Therefore it is important for businesses to react to such changes in their customer base and expand their marketing to cover new markets.  Make sure your product is of good quality as consumers may switch to alternatives if they consider your product to be inferior.

Providing the Best Customer Service

With new faces showing up to your business at a daily basis you may start to think that giving good customer service will not matter much. Unfortunately, history shows that although economic booms can last a while; they do not last forever. It is crucial that the standard of customer service remains high as it is the returning customers that will keep your business above the water when times become tough again. And when the times are good, it can only have a positive effect on sales.

Bringing in Talented People

Some businesses may struggle to cope with the surge in demand and begin to crumble under pressure. Costs will rise significantly in order to meet with unexpected demand, short-term liabilities may be unmet because of poor cash flow management and staff may feel overburdened due to a lack of training or experience in handling the new unforeseen problems. It is important to know the limitations of your workforce and accept the fact that the business may be growing at a rate that you can’t keep up. There are several ways to tackle these issues. You can hire staffs that are more experienced at working in a fast-paced environment. Another way is to have your personal accountants offer you advice on how to manage your business more efficiently and keep your costs down. Having access to professional guidance provides you the necessary knowledge for success.

Cheap Borrowing

Take advantage of cheap money from banks. Interest rates are generally lower and the terms to borrowing are more flexible during times of economic growth. This means that it is usually the most optimal time to borrow money and expand your business. Whether that may be to fund a new project, replace old equipment or train your staff; being ready for increases in demand can help reduce unexpected costs and accelerate business growth if planned correctly. Just be sure that you can meet the regular interest payments to avoid soiling the credit worthiness of your business.

Work Harder

Businesses that operate in accordance to changes in the season will know how difficult it is to keep afloat during periods of closure. For example, a sea side restaurant may get around 75% of its annual revenue during the summer time alone and will probably not be open for business during the winter season. Similarly, businesses may decide to open their business for fewer days of the week or cut their opening times if they face a slump in sales. In order to truly maximise the benefit of a booming economy, a business must be in business to attain such benefits. It will be difficult to see a significant rise in profits if your business is open for only four hours a day while your competitors get quadruple your profits rewards for working an extra four hours.  Remember that once fixed costs are covered, any revenue in excess of its variable cost is pure profit.

By Wilson Law at Tax Affinity.

Tax Affinity Accountants are considered in the market to be experts in Tax and Accountancy in the UK. Based in Kingston upon Thames they have clients right across the UK as well as Europe, Middle East and North America.

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.