Landlords can claim a special tax allowance of up to £1,500 per property for expenditure on energy-saving insulation. This includes loft, wall, floor or hot water system insulation installed in residential properties.
This is a one-off allowance for expenditure made before 6 April 2015. It cannot be claimed by those who are claiming rent a room relief or if there is commercial letting of furnished holiday accommodation.
See the details here:
New tax incentives for childcare have been announced. To be eligible, families will have to have all parents in work, with each earning less than £150,000 a year and not already receiving support through Tax Credits or Universal Credit.
The relief will be 20% of the costs of childcare up to a total of childcare costs of £6,000 per child per year. The scheme will therefore be worth a maximum of £1,200 per child.
The scheme will be phased in from autumn 2015. For the first year of operation, all children under five will be eligible and the scheme will build up over time to include children under 12.
The current system of employer supported childcare will continue to be available for current members if they wish to remain in it or they can switch to the new scheme. Employer supported childcare will continue to be open to new joiners until the new scheme is available.
The Government will consult on the detail of the new scheme but it is expected that parents will be able to open an online voucher account with a voucher provider and have their payments topped up by the Government. Parents will be able to use the vouchers for any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.
The existing system of employer supported childcare is offered by less than 5% of employers and used by around 450,000 families. It provides an income tax and national insurance contributions (NIC) relief. The maximum relief is an exemption from income tax and NIC on £55 a week. This relief is per employee so if both parents are in employment the maximum exemption is £110 per week. In the new scheme the limit is per child.
Follow the link for more information
Under this scheme, for a limited period and subject to meeting certain conditions, new businesses may qualify for a deduction of up to £5,000 from the employer NICs that would normally be due – for each of the first ten employees they take on.
The NICs you are entitled to withhold under the scheme does not have to be repaid at a later date.
The NICs holiday is voluntary – you do not have to take advantage of the scheme. If you decide not to apply or you do not meet the qualifying conditions, you must simply calculate Class 1 employer NICs in the normal way and pay them to HM Revenue & Customs (HMRC) with your monthly/quarterly payment.
Business location – why it’s important
You can only apply for the NICs holiday if your principal place of business is located within designated areas of the UK at the time your business starts up. The included countries and regions are:
•Northern Ireland
•Scotland
•Wales
•East Midlands
•North East
•North West
•South West
•West Midlands
•Yorkshire and Humber
The NICs holiday is available to new businesses that start up during the period from 22 June 2010 to 5 September 2013.
For further information follow the link.
http://www.hmrc.gov.uk/paye/intro/nics-holiday/index.htm
If you are unsure whether your business falls within a qualifying region, you can check by reading more about this in the guide on checking your business location.
In these uncertain times, businesses are at risk from a whole range of factors including changes in consumer demand, increases in operating costs and let’s not forget the banks! Businesses have never needed support as they do now.
That’s why we have decided to start up a monthly coffee morning open to local businesses and individuals in the hope we can offer guidance, financial advice, answer your queries and give you the support you need.
We have a tax specialist that can advise you on Tax planning, personal tax, corporation tax and inheritance tax. We also have a network of professionals we can put you in touch with if you require specialist advice in banking and insurance
Come and visit our friendly team at the The Paine Suite in the Nostell Estate! As well as offering free advice, we also offer free parking, free coffee and not to mention free cake!
Salary vs Dividend
One major benefit of incorporation is the ability to extract profits by way of dividends. The main advantage is in National Insurance savings as no NICs are payable on dividends, whereas a salary payment would attract employee NICs of 12% or 2% and employer NICs of 13.8% (2012/13 figures).
Dividends also come with an associated tax credit (the dividend is deemed to be paid net of the 10% tax credit). Dividends are taxed at a rate of 10% up to the basic rate limit, which is matched by the tax credit, so no additional tax is payable on dividends until the basic rate limit is exceeded. The dividend higher tax rate is 32.5% and the dividend additional tax rate is 42.5%. A payment of salary will attract tax at the taxpayer’s marginal rate of income tax (20%, 40% or 50% as appropriate).
However, unlike salary payments and employer NICs, dividends are not deductible when calculating corporation tax profits and must be paid out of after-tax profits.
A dividend can only be paid if there are sufficient retained profits. In addition, various company law requirements must be met.
The best results will depend on the circumstances as the decision whether to take remuneration or dividends will depend on the interaction of various factors – respective rates of income tax, corporation tax and National Insurance contributions, any other income that the taxpayer has and whether the company has sufficient retained profits.
Example:
Tony is the director and sole shareholder of a company. He has profits of £25,000 and wants to know whether to take a salary or a dividend. It is assumed that tony has received a small salary equal to his personal allowance.
Salary
| Profits |
25,000 |
||
| Less Employer’s NIC |
(3,031) |
||
| Available to pay as salary |
21,969 |
||
| Less Income Tax @ 20% |
(4,393) |
||
| Less NIC @ 12% |
(2,636) |
||
| Retained by shareholder |
14,940 |
||
There is no corporation tax to pay as taxable profits are reduced to nil after deducting salary of £21,969 and employer NIC of £3.031)
Dividend
| Profits |
25,000 |
||
| Less Corporation Tax @ 20% |
(5,000) |
||
| Distributed as a dividend |
20,000 |
||
| Income Tax |
0 |
||
| Retained by shareholder |
20,000 |
||
The gross dividend (£20,000 x 100/90) of £22,222 does not take the shareholder’s income above the basic rate limit so no additional tax is payable on the dividends. The tax on the dividend (£2222) is fully matched by the associated tax credit In this case; dividends are clearly more beneficial than a salary. Tony retains £20,000 of the profit by taking a dividend and only £14,940 if a salary is taken.
This guide is produced for general guidance only. Please seek professional tax advice before undertaking any tax planning measures as personal circumstances can differ and other considerations may need to be taken in to account before acting. Tax rules and legislation are constantly changing always seek professional advice before proceeding.
Even the smallest business can host an annual, tax-free social function for its entire staff, including the directors and their partners. As long as the cost per head is less than £150, employees are not taxed for having a good time, well not yet anyway, and the company benefits from full tax relief on the expense incurred.
Remember, however, that the figure of £150 is an exemption, not an allowance. If the £150 figure is exceeded, the whole amount becomes taxable for inclusion on the P11D.
Strictly speaking, all benefits are subject to tax and NICs, unless there is a specific exemption.
However, sensible practical administration of the tax system determines that benefits of a trivial nature (for example, a seasonal gift of a turkey or an ordinary bottle or two of wine) should not be treated as a benefit.
Anything more lavish in quality or quantity remains chargeable. Helpfully, there is no monetary limit to determine what a trivial benefit is.
Follow the link for more information: http://www.hmrc.gov.uk/guidance/480_chapter5.pdf
By transferring assets into joint names prior to a sale, you can utilise your spouse’s or civil partner’s annual capital gains tax exemption as well as your own if he or she as not used it. For 2012/13 the annual exemption is £10,600 which means that a couple can make gains of up to £21,200 before paying any capital gains tax.
Transfers between spouses and civil partners are treated as a no gain/no loss transaction and hence the spouse/civil partner steps in to the shoes of the other holder, taking over their base cost and length of ownership.
This can be especially useful when selling investment properties, although stamp duty land tax consideration need to be taken in to account.
Example
Mr Smith (a higher rate taxpayer) sells shares in 2012/13 and realises a taxable gain of £20,200.
He utilises his annual exemption and pays tax on £9,600 @ 28% = £2,688.
If Mr Smith had transferred the ownership in to joint names prior to the sale then Mr and Mrs Smith would each have a taxable gain of £10,100, which would be covered by the annual exemption of £10,600
By using their annual exemptions £10,600 each) they would incur no tax on this gain, thus leaving them £2,688 better off.
This guide is produced for general guidance only. Please seek professional tax advice before undertaking any tax planning measures as personal circumstances can differ and other considerations may need to be taken in to account before acting. Tax rules and legislation are constantly changing always seek professional advice before proceeding.
Under the Approved Mileage Allowance Payments (AMAP) scheme employers can pay employees tax free mileages rates when they use their own car for business. Provided that the amounts paid do not exceed the rates set by HMRC, no tax liability arises and there is nothing to report on the P11d.
However, many employees are unaware that if their employer pays them a rate that is less than the approved rate they can claim a tax deduction for the shortfall. The approved rates for 2012/13 for cars and vans are 45p per mile for the first 10,000 business miles in the tax year and 25p thereafter.
Example
An employee who uses his own car for work and in 2012/13 undertakes 9,000 business miles. His employer pays a miles allowance of 30p per mile. The employee receives a mileage allowance of £2,700 during the year.
However, at the approved rate of 45p per mile for the first 10,000 business miles, the employer could pay him a tax free allowance of £4,050 (9,000 miles @ 45p per mile). This is known as “the approved amount”.
The employee can claim a tax deduction of £1,350 for the shortfall between the approved amount (£4,050) and the amount he is actually paid (£2,700). If the employee pays tax at the higher rate 40%, this will save him £540.
From October 2012, National Minimum Wage rates will rise for apprentices and for workers over the age of 20.
About the National Minimum Wage
.
New rates from October
The new rates will come into force on 1 October 2012, as follows:
If your employer provides you with accommodation, they can count some of its value towards your NMW pay. This is called the accommodation offset. From October, the maximum that employers can count towards NMW pay will be £4.82 – a rise of 9p.
Follow the link for more information; http://www.direct.gov.uk/en/Nl1/Newsroom/DG_201426
National Insurance contributions are worked out separately for each employment and self-employment, without taking account of any other earnings on which NICs are payable.
This means that where a person has more than one job or has income from both employment and self-employment, they may end up paying National Insurance contributions in excess of the annual maximum for the year.
Where it looks likely contributions will be paid in excess of the annual maximum, contributions can be deferred. An application for deferment for Class 1 contributions is made on form CA72A
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=wSIijBPFNOs&formId=407
And an application to defer Class 2 and/or Class 4 contributions is made on form CA72B
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=4_bCNCQuyao&formId=409.
