New Tax Rules Starting April 2017!

New Rules For IR35 Workers In The Public Sector Start  6 April 2017

There are significant changes that commence on 6 April 2017 for workers in the public sector supplying their services via their own personal service companies or other intermediaries.

From 6 April 2017 the public sector employer or agency that engages the worker will have to review the employment status of the worker and decide whether or not to deduct tax and national insurance from payments to the worker even though he or she invoices for the services through their own company.

An online tool called “The Employment Status Service” is expected to be made available by the end of February 2017 and can help them make that decision. The tool can be used if the worker uses either an employment agency, or other third-party to get work.

These changes come on top of the restrictions on the tax deductibility of travelling expenses for IR35 workers that came into effect on 6 April 2016.

Please contact us if you want to discuss whether or not these rules affect you or your organisation.

Making Tax Digital To Start In April 2018 

Legislation to introduce Making Tax Digital (MTD) will be included in the Finance Bill 2017 and despite many objections that it was too soon, the new system of quarterly reporting will commence in April 2018 for the self-employed and property landlords.

There were 1200 responses to the consultation documents issued in summer 2016 and a number of changes have been made to the original proposals.

Much of the detail will be introduced by secondary legislation and there will be further consultation on a number of measures but the key proposals are:

Businesses will be allowed to use spreadsheets to keep their accounting records.

Businesses eligible for three line accounts will be able to submit a quarterly update with only three lines of data (income, expenses and profit).

Free software will be available to businesses with more straightforward affairs.

Businesses will not have to make and store invoices and receipts digitally.

There will be no late filing penalties in the  first year of the new system.

The deadline for finalising taxable profit for a period will be the earlier of:

• 10 months after the last day of the period of account, or
• 31 January following the year of assessment in which the profits for that period of account are chargeable

Businesses and property landlords with a turnover up to £150,000 will be able to prepare accounts on a cash basis

Digital quarterly reporting for companies and larger partnerships will not be introduced until April 2020. These changes will have a significant impact on how you keep your business accounts and communicate with HMRC. Please contact us to discuss the impact of these changes on the way that you keep your accounts.

New Company Loss Relief Rules Start On 1 April 2017

New rules that will allow greater flexibility in the way that companies obtain relief for losses will apply to losses incurred from 1 April 2017 onwards.

These rules have been introduced to encourage  companies to diversify as the losses may be available to offset against profits of another activity in a future period and even those of a company in the same group.

The proposed new rules were consulted on last summer and are included in the latest Finance Bill.

Although there will be greater flexibility for “new” losses arising after 1 April 2017, “old” trading losses incurred prior to that date  will continue to be restricted and will only be available to be offset against future profits from that same trade. The new rules are very complicated and we will of course work with you to ensure that your company obtains relief for  losses in the most advantageous way.

Buying A Company With Losses 

The new flexible loss relief rules coming into effect from 1 April 2017, will make the purchase of a loss-making company attractive. For many years there has been anti-avoidance to block the use of such losses and it is proposed that these rules will continue to apply.

The draft clauses in Finance Bill 2017 will continue to block such losses where within a five year period there is both a change in the ownership of the company and a major change in the nature or  conduct of the trade carried on by the acquired company.

Don’t Lose Your Personal Allowance!

For every £2 that your adjusted net income exceeds £100,000, the £11,000 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%.

The restriction applies between £100,000 and £122,000 adjusted net income. Another way that you could avoid this trap would be to agree with your employer to sacrifice some of your salary in exchange for a tax free benefit in kind. These rules are changing from 6 April 2017 but employer pension contributions and childcare vouchers will continue to be effective.

Solving Problems Not Just Symptons

Regardless of the type of business that you manage, problem solving is undoubtedly part of your day job. However are you solving problems or just the symptoms of problems?

No matter how good a manager you are, nor how hard you work, you’ll end up in trouble if you spend your time solving symptoms rather than actual problems. It is often not easy to determine when an issue is in fact a problem that needs to be solved and when it is a symptom of deeper trouble in the business.

What’s the real problem?

A problem is a holistic failure of something you are trying to accomplish. Treating symptoms wastes time, money and resources. In the business world of problems and symptoms, often what you first think is a problem, is really only the symptom – it’s not the real issue. If you focus on that symptom without uncovering the real problem you are wasting your time. You need to discover what’s causing the issue.

To find this out you might need to discuss the issue with different people across your business. Keep in mind the focus of the conversation is to find the root cause of the issue, rather than find “someone to blame”. The goal must be to strengthen the business by eliminating a problem or making a system or process better.

How long has the problem existed?

Problems usually occur in one of three ways; the same old problem, something brand new or the old problem but manifested in a different way. If the problem’s been around for a long time, perhaps there’s a deeper issue embedded within your business. If this is the case you need to deal with the underlying issue.

Does the problem serve a function?

Is the problem worth fixing or is it just a mild annoyance that doesn’t really impact the way the business functions? If it is worth fixing then you should do that as soon as you can realistically do so.

Once you understand the real, underlying, root cause of the issue, you can begin to design a solution. That solution may require rethinking the processes and procedures in your business. It might even entail a reorganisation of aspects of the firm. Whatever the solution you develop, you will need to think through the steps required to successfully implement and evaluate it in order to eliminate the problem.

Contact us if you have any questions or need business help:
PJ | ☎ 020 89310165 | ☏ 07900537459 | ✉ info@apjaccountancy.com

Blurring The Line Between Work And Life!

Technology is a double-edged sword which is blurring the line between home and the office. In some ways, this adds more flexibility in terms of how we can all manage our time but it also means more calls, more email and more meetings.

Work-Life Balance

 Technology also means that we frequently have to switch between work and life. It’s no longer the case that we switch off from work when we leave the office. Rather, we go home and are constantly switching back and forth between family and work roles, dipping into work-related social media even as we are cooking dinner or having a drink with friends.

Smartphones have really impacted our ability to manage our time. As such, it can be helpful to switch your phone off from time to time. You need to allow yourself some time away from the chaos: the calls, texts, emails and social media alerts. Whether you're spending a night out with your partner or grabbing lunch with a friend, you don't need to obsess over work at every moment. If you turn off your device on weekends or the odd evening, you won't feel the constant need to check on business matters.

Working hard is tiring. The demands of the modern working environment can often make you feel that you need to be “always on”.

Time is a limited resource and in order to make the most of your time it is important to manage your energy levels in order to allow your mind and body to perform. No matter how accessible we are to our clients and our work responsibilities, we can't make more time. As such it is necessary to make the most of our time by being more effective when we are in “working mode” but it is essential that we allow time to replenish our energy. Sleep, exercise, eating properly and having a good social life are essential to success in business. Giving yourself time to recharge ensures that you will be more alert and more effective when you are working.

In order to be more efficient and effective in how you use your time, it is imperative that you create a realistic schedule. You can only do one thing at a time. As such, you should create your to do list in your calendar (Outlook, Google, IOS etc.), allowing enough time to get things done.

It’s also important to build in some flexibility so that you can respond to unexpected demands as and when they arise. Your approach to scheduling should also prioritise and allow time for your health, family and hobbies. After all – we work to live, we don’t live to work!

Stop Selling, Start Helping Your Clients to Buy!

Increasing your sales isn’t all about selling. Instead you should focus your energy on helping your customers to make a buying decision. Customers are more in control of their buying decisions than ever before. They have a wealth of alternatives and information available online, and interactive access to sources they trust via social media. They don’t want to be pushed into a sale, but they are happy to be pulled in by what is important to them.

If you want to help your customers to buy, you need to spend more time understanding what motivates their buying decisions. This means understanding the buying process.

The buying process begins with customers understanding that they have a need for a product or service. The stimulation for that need may have come from the obsolescence of an existing product or service or perhaps a desire to acquire a significant one off, high value, purchase.

At this stage, two groups are responsible for attracting these potential customers - the marketers (who raise awareness of your products / services) and the people involved in the previous sale (who generate recommendations from existing customers).

The next phase of the buying process involves your sales team directly. Customers seek people they can trust. Trust is enabled by the provision of a referral from an existing customer who has had a good experience; the presence of a strong, reputable brand; or the level of service received from a business.

In terms of your sales team, having conversations with customers helps to develop rapport. Asking open questions which cannot be answered with a yes or no engenders trust. The opposite, closed questions, when strangers first meet, sound like and feel like an interrogation and should be avoided. Good sales people know how to start a conversation and build rapport with clients. If your sales team can’t seem to do this, perhaps they need some training.

The final phase is where the traditional sales approach kicks in. At this stage, the buyer is looking to determine the value of your product or service offering. Your sales process needs to demonstrate this value to the potential customer.

Customers who have developed trust in your firm and / or your sales people will place an unconscious premium on the relationship when it comes to considering perceived price versus perceived value. Once you can demonstrate value to your customer you should be able to help them to close a deal.

Developing A Culture Of Accountability

One of the toughest balances to achieve within any business is between building a culture that gives people the autonomy to get on with their job while maintaining an environment of accountability.

There is a fine line between managing and micromanaging  and it tends to be quite subjective. Some team members will welcome day to day management and guidance while others might rather be left alone to get on with their job. As such, it is necessary to create systems and processes which allow the management team to maintain awareness of what is going on across the business without people feeling like someone is constantly checking on them.

Everyone in the firm should have annual goals which align with the overall objectives of the firm and are communicated to everyone across the business at the start of the year. Each individual should then be tasked with agreeing what their personal goals should be with their manager. These should cascade down from the overall objectives of the business. Ideally you should aim to agree between five and eight goals for each team member.

Once everyone’s objectives have been set, you and your management team should set up quarterly meetings with each of your staff to discuss progress towards achieving each objective. You should let your team member lead the meeting, explaining the progress they have made towards each goal and what they intend to do in the next quarter in order to keep moving forward. As a manager you should ask open questions such as “What went well? Which areas could be improved upon?” or “Do you need any additional resources in order to achieve your goals?” This will provide the opportunity to assist the individual towards successfully achieving their goals but in a way that doesn’t feel like they are being micro managed.

Finally, each team in your business should have a weekly meeting with an agenda designed to allow everyone to update what happened last week and what is planned for the next week. This provides an opportunity for managers / team leaders to drive objectives forward. In order to encourage accountability, at each weekly meeting, every team member should be required to give a 3-minute update on where they are against their objectives.

In order to make this approach work, the managers in your firm should be accountable for the objectives and their teams should be responsible for delivering them. In order to communicate progress across the business and increase transparency, each manager should produce a quarterly update, which can be shared across the firm. This could take the form of a simple email to all staff. This type of communication also allows the managers to outline what is coming up in the next quarter and solicit help / resources if required.