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.

Preparing for Tax Season UK 2017?

Tax season is to start. Be prepared in advance to save money on Tax using these tips below:

Have You Used Your 2016/17 ISA Allowance?

Your maximum annual investment in ISAs for 2016/17is  £15,240.  Your investment needs to be made before 6 April 2017.  In addition, have you thought about investing for your children or grandchildren by setting up a Junior ISA? In the 2016/17 tax year, you can invest £4,080 into a Junior ISA for any child under 18.

Consider Other Tax Efficient Investments

If you are looking for investment opportunities, have you considered the Enterprise Investment Scheme (EIS)? These investments in certain qualifying companies allow you to set off 30% of the amount invested against your tax bill as well as capital gains tax (CGT) deferral.  An even more generous tax break is available for investment in a qualifying Seed EIS company where income tax relief at 50 per cent is available. In addition, it is possible to obtain relief against your 2016/17 capital gains. Both EIS and Seed EIS also provide a CGT exemption when the shares themselves are sold after 3 years.  Note however that qualifying  EIS and Seed EIS companies tend to be risky investments so professional advice should be taken. A 30% income tax break is also available by investing in a Venture Capital Trust.

Year End Capital Tax Planning

Have you used your 2016/17 £11,100 annual capital gains exemption?  Consider selling shares where the gain is less than £11,100 before 6 April 2017. Also, if you have any worthless shares, consider a negligible value claim to establish a capital loss. You may even be able to set off that capital loss against your income under certain circumstances.

As far as inheritance tax (IHT) planning is concerned, all individuals have a £3,000 annual allowance which means that gifts up to that amount each year are exempt from IHT. If you haven’t used your £3,000 allowance from 2015/16 you can make gifts of up to £6,000 without the gift being liable to IHT.

Also, consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT. Gifts out of your surplus income are not subject to IHT if properly structured.

Buy New Equipment Before 6 April?

If you are running a business and making up accounts to 5 April, consider buying plant and machinery to take advantage of the Annual Investment Allowance (AIA) of £200,000.  The AIA provides a 100% tax write off for equipment used in your business. This tax relief extends to fixtures and fittings within business premises such as electrical, water and heating systems. There is also 100% tax relief if you buy a new car that emits no more than 95g CO2 per kilometre and an increasing number of cars now fall below that limit.

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

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!