National Minimum Wage – HMRC names offenders

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HMRC have taken to naming and shaming those not paying the full national minimum wage.  If you are a sole trader, partnership or any kind of company with shares, or operating a social enterprise with a profit motive, then you cannot avoid NMW by classifying your workers as voluntary.  The latest rates (from 1.4.16) are: […]

Tax free perks for directors and employees

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The tax free perks we see most often used by small business owners are pensions, child care vouchers, mobile phones, bicycles and annual parties. Pension payments for directors and employees For owner managed businesses it is better to pay company pensions (employer contributions) than personal pensions (employee contributions).  This is because employer contributions avoid any […]

Making tax digital update – August 2016

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HMRC have issued some further details on their making tax digital strategy.  Partnerships, sole traders, self-employed and landlords with turnover over £10,000 will have to report quarterly.  The time-scale is yet to be announced but some staging will take place starting with those with the higher turnover.  Software will be needed but likely that some […]

VAT input claims – sufficient evidence

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A recent case has reminded of the need to have proper purchase invoices in order to support VAT input tax claims.  In P Brookes v CRC, Upper Tribunal (Tax and Chancery Chamber), 6 April 2016 the taxpayer had claimed input tax on costs for which he had no purchase invoices.   The taxpayer then belatedly obtained […]

Contractors working for public sector bodies and agencies

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HMRC are consulting on the implementation of new rules that will require public sector bodies to consider whether IR35 applies to contractors providing services to it.  If IR35 the public body will have to make relevant deductions from the payment to the contracting company.  Up to now IR35 has always been assessed by the contractor’s […]

HMRC – Making Tax Digital

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HMRC have published further information about their Making Tax Digital strategy.  The includes: Taxpayers should not have to give HMRC information that it already has, or should be able to get from elsewhere — for instance, from employers, banks, building societies and other government departments. Taxpayers will see the information that HMRC holds through their […]

Corporate losses

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For losses arising on or after 1 April 2017, when carried forward to future years the loss can be set against any income, including other trades and capital losses.  Currently, and until 31 March 2017, losses carried forward to future years can only be set against profits in the same trade. Similarly, group relief (setting […]

EC Sales List 31-Mar-16

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Don’t forget that if you have made any EC sales during the quarter ended 31 March 2016 that you need to report these to HMRC on an EC Sales List (ECSL).   You can submit your ECSL through HMRC Online Services here, it is possible that you may need to enrol for the service if […]

National Minimum Wage – From October 2016

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The national living wage (£7.20) applies to workers aged 25 and over from 1 April 2016. From October 2016 the new NMW rates will be : the adult hourly rate (for 21-24 year olds) will increase from £6.70 to £6.95; the rate for 18 to 20 year olds will increase from £5.30 to £5.55; the […]

Corporation tax and loans to participators

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The corporation tax rate for all companies is set to fall from 20% currently, to 19% from 1 April 2017. The rate was set to fall to 18% from 1 April 2020.  In the Summer 2016 Budget it was announced the rate will instead reduce to 17% from 1 April 2020. The tax charge on […]

VAT thresholds

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The VAT registration thresholds increase by £1000 from 1 April: Registration threshold from 1 April 2016 = £83,000 (based on past 12 months or next 30 days) De-registration threshold from 1 April 2016 = £81,000 (based on expected turnover next 12 months) All figures are in our tax rates table. David Wilsdon

Class 2 National Insurance (self employed)

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Class 2 National Insurance (“the stamp” in old money) stopped being collected by direct debit from 6 April 2016.  It is now collected as part of the self assessment bill for sole traders and partners. The March 2016 budget announced that Class 2 National Insurance will be scrapped from 6 April 2018.  In the Government’s […]

IR35 when working for public sector

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Broadly IR35 (the Intermediaries Legislation) requires personal service companies (usually single person company) to pay the director a salary of at least 95% of some types of turnover.  This applies to turnover which would be employment income were it not for the personal service company sitting between the worker and the client. The March 2016 […]

Student Loan Plans

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From April 2016 there will be 2 student loan plan types known as Plan 1 and Plan 2.   Each plan will have a different threshold before loan repayments are made.   For the tax year beginning 6 April 2016, the thresholds will be £17,495 for Plan 1 and £21,000 for Plan 2.   HMRC […]

Further Changes to ISAs

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The current £15,240 ISA limit is frozen for 2016/17. The Junior ISA limit remains at £4,080 for 2016/17. The Chancellor announced that the ISA allowance will increase to £20,000 from 6 April 2017 and that from the same date there will be a new “Lifetime ISA” account where investors aged between 18 and 40 who […]

Pensions (no major changes after all)

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Despite widespread predictions in the media and tax press, there has not been further restrictions in tax relief on pensions or the tax free lump sum. From 6 April 2016 the pension fund lifetime allowance will be reduced from £1.25million to £1million. Transitional protection for pension rights already over £1million will be introduced alongside this […]

LISA (new, if you’re lucky enough…)

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LISAs or Lifetime Individual Savings Accounts will be available from 6 April 2017.  These will allow up to £4,000 to be saved, on top of which government will give you back the basic rate tax you had paid earning the £4,000.  Thus £4,000 becomes £5,000 in the LISA.  Unfortunately they won’t give you back the […]

Entrepreneurs’ relief (ER) for external investors

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Entrepreneurs’ relief (ER) will be extended to external investors in unlisted trading companies. This new investors’ relief will apply a 10% rate of CGT to gains accruing on the disposal of ordinary shares held by individuals. These shares must be subscribed for by the claimant and acquired for new consideration on or after 17 March […]

Gift Aid Small Donations Scheme extended

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The Gift Aid Small Donations Scheme (GASDS) allows charities to treat small donations such as those in collecting boxes as if Gift Aided. With effect from 6 April 2016 the maximum annual donation amount which can be claimed through GASDS will be increased from £5,000 to £8,000 allowing charities and Community Amateur Sports Clubs to […]

Barter Transactions

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It has long been held that tax is based on monetary values.  Where no money changes hand, for example in a barter transaction, tax is due on the market value of the goods or services each party supplies.  There can be VAT, PAYE, NI, and business tax on the transaction. For example, if a sports […]

2016-17 Tax code change due to new dividend tax

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As discussed in other posts, from 6 April 2016 dividends will attract an additional 7.5% tax on top of taxes previously in place. HMRC have decided to try to collect some of the additional tax due through tax codes which apply to salaries. To do this HMRC will estimate dividends for 2016/17 based on figures […]

Investments

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At Green Accountancy we are not independent financial advisers and cannot give advice on whether to invest or not, or what to invest in. We can advise on the tax consequences of investments. Investments into ISAs do not attract tax relief.  However the income generated within the ISA will be tax free.  The maximum investment […]

Dividend tax from 6 April 2016

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A reminder that the way dividends are taxed is changing from 6 April 2016.  For more information see our Dividends Tax fact sheet.  For some it may be advantageous to increase dividends prior to the changes.  For example if dividend levels are projected to be similar in 2015/16 and 2016/17 it may be beneficial to […]

Closing Limited Companies

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New rules come into force from 6 April 2016 which may increase tax on closure of a limited company after that date.  Broadly speaking, many company closures that would currently trigger a capital gains tax charge will from 6 April 2016 instead trigger a much higher income tax charge. If you are thinking of closing […]

Big Company Tax

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Aside from opinions on the rights and wrongs of the Big Company Tax situations, we thought a few facts may be of interest. Government revenue in 2014/15 was made up of Income tax 32%; National Insurance 21%; VAT 22%; Duties 11%; and Corporation Tax 8%.  Green Taxes, Capital Gains Tax, Stamp taxes and other receipts […]

Employment Allowance

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A reminder that the employment allowance will be £3000 this coming year (2016/17) up from £2000.  However for the first time, single person employers will not be eligible for the employment allowance this year. David Wilsdon

Income exempt from tax

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A basic tax tip in everyone’s book is to take advantage of the sources of income exempt from tax.  Unfortunately, though perhaps predictably, such income is fairly limited.  The following are generally exempt from income tax: Income from ISAs Most dividends from Venture Capital Trusts Income from National Savings Certificates (NS&I) (not National Saving Accounts) […]

HMRC cash back on green equipment purchases

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It is widely known that most business equipment attracts full tax relief in the year of purchase these days.  This is under the relatively generous annual investment allowance (AIA) that gives full relief for most equipment purchases.  The AIA is broadly up to £200,000 per year per business. However if your company has tax losses […]

Register now to use the Payrolling Benefits in Kind online service if you want to start or continue payrolling in the 2016 to 2017 tax year

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From 6 April 2016 PAYE legislation is changing. If you intend or already payroll benefits and expenses you must register them with HMRC using the online Payrolling Benefits in Kind (PBIK) service. If you use this service and payroll benefits and expenses you won’t have to report them on a P11D. If you do not […]

Auto Enrolment – On and after your staging date

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The Auto Enrolment staging dates for many businesses is approaching. Below summarises the key points you should be aware of. Key points Your staging date is when the Automatic Enrolment duties come into force for your business. You’ll need to identify what your duties are for each member of staff on your staging date or […]

Keeping you safe

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HMRC have issued the following note about bogus emails Most of us think we would know how to recognise genuine contact from HMRC, and be able to tell if it’s a phishing or bogus email.  Whether it’s for tax credits or PAYE notices and reminders HMRC will never ask you, or your clients, to disclose personal or […]

End of year PAYE return reminder

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Under RTI the end of year form P35 was replaced by the Final Full Payment (FPS) submission. Send your final FPS on or before your employees’ last payday of the tax year (5 April) instead of the old 19 April deadline. Remember to put ‘Yes’ in the ‘Final submission for year’ field in your payroll […]

Does your company operate in an Enterprise Zone?

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If your company is located in one of the 30 or so enterprise zones, there are significant Government incentives to encourage investment. Enterprise zones include Didcot Growth Accelerator, Science Vale at Chalgrove, Enterprise M3 at Farnborough and Royal Docks City of London. HMRC have added to their online guidance, showing sites within enterprise zones that […]

Hurry – buy whilst the VAT reduced rate lasts…

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The European Court have ruled that the UK blanket reduced VAT rate for energy saving materials is unlawful.  The UK government are likely to make restrictions to the reduced VAT rate rules in Finance Act 2016.  We don’t have further details yet.  Clearly if you are thinking of buying (or if you currently sell) reduced […]

National Living Wage

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A reminder that from April 2016, the national living wage will be £7.20 an hour for workers aged 25 and older. The minimum wage will still apply for workers aged 24 and under. For full details of all national minimum wage (NMW) rates check https://www.gov.uk/national-minimum-wage-rates Note that all workers including interns generally have to be […]

HMRC direct recovery of debt (DRD)

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Following on from my post regarding directors potentially be liable for company debts, particularly to HMRC. HMRC now have a new power to collect debts due from individuals, businesses and companies directly from their bank accounts. To use these powers, all of these conditions must be met: Condition A – the total debt must be […]

Employment Allowance

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For the past two tax years (2014-15 and 2015-16) most employers have been able to reduce their employers national insurance bill by £2000. We have applied this to all clients that we prepare payroll for. For the next tax year (2016-17) the employment allowance increases to £3000. However there will be a restriction which prevents […]

Directors’ liabilities

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It has historically been quite unusual for directors to be found liable for any of their company’s debts. New rules will allow unpaid creditors more scope, lower costs, and more benefit in suing directors. For example, if a company becomes insolvent and ceases to trade, and owes HMRC money (PAYE, VAT, Corporation tax) it is […]

Gift aid on charitable giving

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HMRC have recently highlighted that charities can only claim gift aid on cash donations. If your charity receives goods there is no gift aid available at that point. However, HMRC make clear that when the goods are sold, the donor can be offered the cash generated, and if the donor chooses to allow the charity […]

Exemption for trivial benefits in kind

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The government intend to legislate that trivial benefits in kind, where the cost to the employer is no more than £50, will not need to be reported in future and will be exempt from tax. HM Revenue and Customs raised concerns that some directors of family companies might abuse the new rules and have insisted […]

Restricting relief on closure of company

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One of the anti-avoidance measures announced in the Autumn Statement on 25 November was to potentially end the 10% capital gains tax rate (with the benefit of entrepreneurs’ relief) on distribution of capital from a company. This is a much lower rate than the rate of income tax on dividend payments, particularly when the new […]

Undisclosed Offshore Income

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If you have undisclosed offshore holdings or investments, for example: offshore bank accounts overseas assets like property, eg a holiday let shares or other interests in an offshore company or trust inherited money from overseas You have until 31st December 2015 to disclose these. After that date a penalty could be charged up to 200% […]

Research and Development tax relief: Advance Assurance

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From November 2015 HMRC introduced Advance Assurance for companies that claim Research and Development (R&D) tax relief. If your company carries out R&D for itself or other companies, it could qualify for Advance Assurance. This means that for the first 3 accounting periods of claiming for R&D tax relief, HMRC will allow the claim without […]

Scottish Rate of Income Tax

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From the 6 April 2016 the Scottish rate of income tax will come into effect. This will mean that some of the Income Tax collected under the Scottish rate will fund the Scottish government and the rest will fund the UK government. This will affect all individuals living in Scotland, and all employers with employees […]

Corporation Tax Return Filing Deadlines

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There can be no late filing penalty for corporation tax returns if the return is filed with HMRC by the date on which the accounts are due at Companies House. There have been cases where HMRC have incorrectly raised a penalties based on tax return due dates being earlier than Companies House accounts due dates.   […]

Advisory Fuel Rates from 1 December 2015.

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These rates only apply to employees using a company car.  These rates apply from 1 December 2015. You can use the previous rates for up to 1 month from the date the new rates apply. Engine size     LPG – amount per mile 1400cc or less    7 pence 1401cc to 2000cc    9 pence Over 2000cc   […]

HMRC clearance on salary sacrifice

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You can ask HMRC Clearances Team to confirm the tax and NICs implications of a salary sacrifice arrangement once it is in place. However, this is not a requirement.   HMRC would want to see: evidence of the variation of terms and conditions (if there is a written contract) payslips before and after the variation […]

No employment allowance for single person companies

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Single person companies will not be able to claim the employment allowance from April 2016. The employment allowance is a reduction of employers national insurance of up to £3,000. It is not yet clear whether taking on a new employee, perhaps part time or short term, will be sufficient to reinstate the allowance.

Errors on VAT Returns

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If you make an error on a VAT return then you simply adjust for it on the next VAT return, providing the error does not exceed £10,000.   However, if HMRC were undertake a VAT investigation and found the error was caused due to not taking ‘reasonable care’ then they could still charge a penalty. […]

Mileage allowance – Reclaiming VAT

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If an employee or director uses their own vehicle for allowable business journeys the company can pay them a tax free allowance to compensate them for this. Reclaiming VAT If the company is VAT registered then they may be able to reclaim some input tax (VAT on purchases) in relation to this payment. VAT is […]

Dispensations – Required Checking Systems

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We routinely get a dispensation in place for our payroll clients. This is a notice from HMRC that removes the requirement for the employer to report certain expenses at the end of the tax year on forms P11D or P9D. In order to have the dispensation in place HMRC require that your company has systems […]

PAYROLLING OF BENEFITS IN KIND

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Legislation to require employers to report Benefits in Kind in real time as opposed to the end of year form P11D was included in the first Finance Act of 2015. However, there are concerns amongst accountants that this should not be mandatory until 2017/18 at the earliest, as many employers are only just getting to […]

Autumn Statement

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Not too much affecting our clients significantly in today’s Autumn Statement.  Some points of interest: The much heralded U turn on tax credits has been broadcast far and wide.  Most media seem to then ignore the Chancellors next sentence “Tax credits are being phased out anyway as we introduce universal credit”. From April 2019 capital […]

National Living Wage (NLW)

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The adult National Minimum Wage (NMW) rate is currently £6.70. From 1 April 2016 a new National Living Wage (NLW) for workers aged 25 and above will come into force which will initially be set at £7.20. For employee aged 21 to 24 the NMW will still apply.

Do you need a tax return?

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There are many reasons why you may need to complete a self assessment tax return. The most common reasons we see are: Being self-employed. Being a company director. Having rental income. Made a Capital Gain. For example disposing of shares. Having dividend income. Having foreign income. Having income over £50,000 and you or your partner […]

VAT de-registration cannot be back dated

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A recent First-tier tribunal has upheld HMRC’s position that a trader cannot ask to be de-registered from VAT from an earlier date. If you find you may be better off de-registering from VAT (usually because some or all of your customers cannot reclaim VAT) and you are below the VAT de-registration threshold (currently £80,000) then […]

Termination Payments Under Review

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A further consultation taking place this summer is into the simplification of the tax and national insurance treatment of termination payments. There is a widespread but mistaken belief among employees and employers that the first £30,000 of any pay-off is not subject to income tax and NICs. This often leads to difficulties when employees discover […]

Consultation on Changes to Personal Service Companies (IR35)

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In the Summer 2015 Budget the government announced that HMRC would start a dialogue with businesses on how to improve the effectiveness of the existing intermediaries legislation. HMRC will engage with stakeholders over the next few months to explore options to make the legislation more effective in protecting the Exchequer and leveling the playing field […]

Tax Relief For Replacing Furniture In Let Properties

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The government announced in the Summer Budget that from April 2016, the current 10% Wear and Tear Allowance for furnished lettings will be replaced with a relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings in the property. This will give relief for capital expenditure […]

Calculating holiday entitlement

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An area of your business which may need some clarification is when you are calculating holiday entitlement of your employees. An important thing to note is that employees cannot be paid “holiday pay” on top of normal pay. Instead, holiday has to actually be taken off work. In effect, the employee is effectively paid as […]

Let Property Campaign

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The Let Property Campaign gives individual landlords who are letting out a residential property in the UK or abroad, the opportunity to bring their tax affairs up to date. Landlords need to notify HMRC of their intention to take part and then have 3 months to make their disclosure and pay what they owe. Individuals […]

Changes Affecting Non-Domiciled Taxpayers

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The Chancellor announced a number of important changes to the tax treatment of individuals who are resident but not domiciled in the UK. Such individuals currently benefit from a number of tax advantages such as exemption from UK inheritance tax (IHT) on assets situated outside the UK and in some cases only being taxed on […]

Inheritance Tax And The Family Home

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The Chancellor has confirmed the introduction of an additional inheritance allowance that will be available in addition to the current £325,000 nil rate band which will, when fully phased in, allow a couple to pass on the family home tax free up to a value of £1,000,000. The additional allowance, which will also be transferrable […]

Pension Tax Relief Restricted For Higher Earners

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As mentioned in the Conservative party manifesto, tax relief for pension contributions is to be restricted for those with income in excess of £150,000 a year. We were told that this is intended to fund the increase in the inheritance allowance for passing on the family home. The current £40,000 pension annual allowance will be […]

Corporate Tax Rate To Be Cut To 18%

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The current UK corporation tax rate of 20% is the lowest rate in the G20, the 20 major trading nations. This rate continues to apply until 2017 when it has been announced that the rate will be reduced to 19% and then 18% in 2020. This appears to make trading via a limited company more […]

New “National Living Wage” Tax Credit Changes

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The most radical announcement by the Chancellor on 8th July was a significant reduction in the amount the government plans to spend on tax credits and other State benefits. At the same time he announced that there would a new national living wage to be paid by employers, rising to £9 an hour by 2020. […]

Scam emails

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Always be suspicious of any email mentioning a refund from a “tax credit office agent”. Look out for links to fake version of the GOV.UK website. Never provide details or similarly sensitive information on the basis of an email request. HMRC’s director general of benefits and credits, Nick Lodge, HMRC, said the department never asks […]

Dividend Tax – Summer Budget 2015

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From April 2016 Dividend Tax Allowance of £5,000 a year meaning that the first £5000 of dividends received will not be taxed. However the tax credit attaching to dividends is to be abolished and a new dividend tax rate 7.5% for basic rate taxpayers, 32.5% for higher rate and 38.1% for additional rate. We calculate […]

Online booking system

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If you like Timely, our online appointment booking system, and think that you could make good use of it in your business please click https://app.gettimely.com/Register/Referral/9617″.

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