Supplying Digital Services to Customers in Other EU Countries

The VAT place of supply rules changed on 1 January 2015 where digital services are supplied to non-business customers. The place of supply changed from where the supplier was based to where the customer is located as some companies were avoiding UK VAT.

This rule change had serious implications for small businesses supplying digital services such as software downloads to non-business customers. Where those customers are in other EU countries the UK trader may be required to register for VAT in that country and charge that country’s VAT rate on the supply. This is because unlike the £83,000 UK threshold many EU countries have a zero threshold. To simplify compliance with the EU VAT rules HMRC introduced the VAT Mini One Stop Shop (MOSS).

How UK VAT MOSS works?

Once you register your business for the scheme, you must account for the VAT due on any qualifying sales by sending HM Revenue and Customs (HMRC) a VAT MOSS Return and payment each calendar quarter.

This means you only need to send a single VAT MOSS Return, each calendar quarter. You don’t have to declare the VAT due separately in each EU member state.

HMRC will send the relevant parts of your return and payment to the tax authority of the country where your customers are based.

Please contact us for further assistance if this may apply to your business. 

☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

New Accounting Rules for Businesses-SMEs 2016!

Tax Implications Of New Accounting Rules

The calculation of profits for tax purposes is based on the profits of the business computed in accordance with Generally Accepted Accounting Principles. The introduction of a new accounting standard (FRS 102) means that some of the figures in your accounts may need to be restated and these changes may have tax implications.

We will discuss these changes with you and seek to minimise the tax impact where possible.

Interest Free Loans and The New Accounting Rules

The treatment of interest-free loans is complicated under The New Accounting Rules - FRS 102.

One of the areas where there may be a change in your company’s accounts is where you have received or made a loan that is interest free or at less than market rates. Unless the loan is repayable on demand the new accounting rules require the loan to be recorded in the accounts on an amortised cost basis.  For example, this means that a £20,000 interest free loan repayable in two years time would be valued at £18,141 if the market rate of interest is 5%.

This method recognises that £20,000 today is worth more than £20,000 in two years time. If your company is borrowing the £20,000 then there would be finance expenses of £907 in year 1 and £952 in year 2 reflecting the initial £1,859 discount. These finance expenses would be deductible for corporation tax provided the lender is also charged to UK corporation tax on the interest. But if the interest free loan was from an individual such as a director there would be no tax deduction, a point clarified in the latest Finance Bill.

Is Paying Interest On Directors Loans Better Than Dividends Now?

The new 32.5% rate on dividends received by higher rate taxpayers means paying interest on directors’ loan account credit balances is now more tax efficient than paying dividends, once the new £5,000 dividend allowance has been used. This will also avoid the accounting issue mentioned above if a market rate of interest is paid. Unlike bank interest the company is still required to deduct 20% basic rate income tax and pay this over to HMRC quarterly with form CT61. Remember that higher rate taxpayers can receive £500 interest income tax free from 6 April 2016.

Inheritance Tax Planning using the New Lifetime ISA

Budget 2016 announced a new “Lifetime ISA” that will be available to those aged between 18 and 40 from 6 April 2017. The Government will add 25% to the amount saved subject to a maximum of £4,000 a year (plus £1,000 from the Government). It seems there will be no requirement that the savings come from the person named on the account so parents, grandparents, or other relatives could make payments into the account.

Where you have excess income and have concerns about inheritance tax (IHT), what about taking advantage of the exemption for normal expenditure out of income by committing to regular payments into the account. £4,000 a year would save you £1,600 IHT, so £2,400 net turns into £5,000 gross, per recipient!

Contact us to know more on how these will affect your business:
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

Employment Allowance: April 2016

Employment Allowance Is Now £3,000 But Not Single Director Companies.

You could get up to £3,000 a year off your National Insurance bill if you’re an employer.

The allowance will reduce your employers’ (secondary) Class 1 National Insurance each time you run your payroll until the £3,000 has gone or the tax year ends (whichever is sooner).

You can only claim against Class 1 National Insurance you’ve paid, up to a maximum of £3,000 each tax year. You can still claim the allowance if you pay less than £3,000 a year.

For the last two years there has been a £2,000 allowance available to employers to set against their employers National Insurance liability for the year. This increased to £3,000 from 6 April 2016 and no action is required if you claimed the allowance for 2015/16. However, from 6 April 2016, limited companies where the director is the only employee paid earnings above the Secondary Threshold for Class 1 National Insurance Contributions (£156 a week) will no longer be entitled to claim the Allowance.

HMRC guidance states that if more than one employee or director earns above the Secondary Threshold, the company will continue to be eligible for Employment Allowance for the whole tax year. This other employee could be the director’s spouse or partner. The HMRC guidance is not consistent with the legislation however and we hope to clarify the matter so that you don’t miss out.

More information at https://www.gov.uk/claim-employment-allowance!

Contact us via:
☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com 

RENEWALS BASIS IS BACK

RENEWALS BASIS IS BACK FOR BUY TO LET LANDLORDS Following the restriction of tax relief for mortgage interest and the 3% increase in Stamp Duty Land Tax, all is not doom and gloom for buy to let landlords. Following on from the consultation this summer, the draft Finance Bill 2016 includes the legislation to reintroduce tax relief for the replacement of furnishings in buy to let properties from 6 April 2016.  This will apply to both furnished and unfurnished lettings and will mean that the cost of replacing items such as cookers and washing machines will again qualify for relief following the withdrawal of a concession from 6 April 2013. Note that the alternative, and simpler, 10% wear and tear allowance will be withdrawn from 6 April 2016 for those letting properties fully furnished. Those letting properties under the more stringent furnished holiday letting rules will continue to be able to claim the Annual Investment Allowance which provides 100% tax relief for the initial furnishing as well as renewal of furniture in holiday properties.

Twitter Website Cards - Basics!

They say that “a picture paints a thousand words,” and Twitter’s recently unveiled “website cards” might just show that statement to be true.

Available on both desktop and mobile, Twitter cards allow marketers to add media to tweets – meaning businesses now have additional space to add content to. Users can attach photos, videos and media to Tweets that drive traffic to their website. Users simply have to add a few lines of HTML to their webpage, and those who Tweet links to that content will have a “Card” added to the Tweet that’s visible to all of their followers.

The website card allows users to easily discover interesting content while giving advertisers the ability to drive a higher volume of clicks since users are able to preview an image, related content, etc.

Website cards can be used to drive traffic to your website’s homepage, a product page or a specific landing page, perhaps giving your audience a little preview, or further information about what they will find when they click through.

Business users of website cards can use a range of targeting options based on signals including keywords or tailored market segments. The website cards can also be used in conjunction with conversion tracking to measure the end-to-end conversion from a Tweet engagement / Twitter campaign through to a user making a purchase or signing up to say, a newsletter.

The main reason these cards are useful is that they can be used to create a “call to action”. If you get your content and marketing message right, you should be able to improve your click-through rates to your website.

You will need an advertiser account on Twitter to start creating website cards. Twitter has now made its advertiser platform available for businesses in the UK, USA, Canada, Ireland, South Africa and a few other countries.  The website cards are pretty easy to create but it is worth noting that:

•               Maximum image size is 1 MB

•               Minimum required image height is 96 pixels

•               Minimum required image width is 240 pixels

•               Minimum of 5:2 aspect ratio required (An image of 640 pixels x 256 pixels).