fbpx
 

This month’s newsletter includes articles that highlight the following tax and business issues: salary v dividend changes, details of the personal savings allowance, changes to the advisory fuel rates, and details of emerging markets in the EU.

Our next newsletter will be published Thursday, 5 November 2015.

 

Whitefieldtax.co.uk
Accounts and Tax Deadlines
Feedback and Social Media
On the move!
Salary v dividends conundrum
Personal Savings Allowance (PSA)
Advisory fuel rates from 1 September 2015
Emerging markets in the EU?
Tax Diary October/November 2015
 

 

Whitefieldtax.co.uk Practice News
 

Please keep in touch with us via our website whitefieldtax.co.uk

You can subscribe via RSS Facebook Twitter and Google+

Recent articles include:

You can see all of last months articles here: https://www.whitefieldtax.co.uk/2015/09/

 
 

 

Accounts and Tax Deadlines Practice News
 

A further reminder the deadline for getting accounts and tax return information for 2014/15 to us was 30 September.

After this date we have to charge a late presentation surcharge of £100+vat.

This applies to business year ends of 31 March 2015, 5 April 2015 or earlier, and to 14/15 Self Assessment information.

Filing deadlines are:

~ companies with 31 March 2015 year ends, 31 December at Companies House (£250 penalty if late) and 31 March 2016 at HMRC

~ self assessment and accounts for sole traders / partnerships, 31 January 2016 (penalties for late submission)

You can send Self Assessment information to us electronically: https://www.whitefieldtax.co.uk/web/self-assessment-data-request/

You can send accounts information to us electronically:  https://www.whitefieldtax.co.uk/guidance-on-year-end-procedures/

Once we have completed them, you can also approve your accounts electronically:  https://www.whitefieldtax.co.uk/web/approve-annual-accounts-online/

 
 

 

Feedback and Social Media Practice News
 

We welcome feedback from our clients via our website.  Alas some historic feedback was lost when our site migrated.

Facebook page reviews are welcome as well – five stars preferred!

Also we are on:

Twitter

Facebook

LinkedIn and

Google+

Please like/follow/say hello if its your thing!

Also our sister business Yinspire Yoga would welcome Facebook, Twitter and Google+ love if its going 🙂

 
 

 

On the move! Practice News
 

The Whitefield office is on the move soon, a mile or so up the road, back to the old Garbetts office, the new owners of Garbetts having vacated.

There is a major refurbishment taking place, but we hope to be in before or around Christmas.

Phone numbers and web will remain the same, we will let you know when the postal address changes.

For clients using us as Registered Office, we will take care of changing this at Companies House.

 
 

 

Salary v dividends conundrum Income Tax
 

In the last two editions of this newsletter we have outlined the impact of the changes to the taxation of dividends that will commence 6 April 2016.

This month we want to continue to look at this major change as it affects the shareholder directors of private limited companies.

For 2015-16 any dividends drawn by shareholders that form part of their income taxed at the standard rate, will attract no personal tax on amounts taken. If the dividends form part of their income taxed at 40% or 45%, then the additional personal tax due is calculated as 32.5% or 37.5% respectively – of the gross dividend received – less the present 10% tax credit.

As previously discussed, from 6 April 2016, the way dividends are being taxed will change. The 10% tax credit is being abolished and each individual will have available a flat rate dividend allowance of £5,000. Any dividends received by an individual in excess of £5,000 will be taxed as follows:

  • 7.5% if your dividend income is within the standard rate (20%) band
  • 32.5% if your dividend income is within the higher rate (40%) band, and
  • 38.1% if your dividend income is within the additional rate (45%) band

A director shareholder who presently receives a £27,000 net dividend as part of their remuneration package, and all of this income falls to be part of their standard rate band, then no additional tax is payable. With no change in strategy, for 2016-17 the same dividend will create an extra personal tax liability of £1,650.

This amount will usually form part of the director’s Self Assessment underpayment for 2016-17 and be due for payment 31 January 2018. On the same date the director will be required to make a payment on account for 2017-18; accordingly, the extra tax of £1,650 coverts into tax payable of £2,475 on 31 January 2018 (£1,650 plus 50% of this amount as payment on account for 2017-18), with a further 50% or £825 payable as a second payment on account 31 July 2018.

Should you compensate for this tax increase by increasing your salary? The answer would generally be no, as that would mean 12% employees’ NICs and 13.8% employers’ NICs. It may be possible to offset any additional employers’ NICs due by claiming the £2,000 Employment Allowance (£3,000 from April 2016, but beware new restrictions from this date for “one-person” companies).

Unfortunately, in most, if not all cases, where dividend income is a significant part of your remuneration package, this change in legislation is likely to mean that you will pay more personal tax from April next year.

Interestingly, a higher rate tax payer receiving the same £27,000 cash dividend will only be £400 worse off.

It should also be noted that the £5,000 allowance is not an exemption but a nil rate tax band. The full dividends still count as income e.g. for calculating the effect on personal tax allowances.

There are limited planning options, including changing the scale of dividends taken before 6 April 2016. We will be looking at this further for our clients early next year, and providing personalised advice.

 
 

 

Personal Savings Allowance (PSA) Income Tax
 

From April 2016, you won’t have to pay tax on interest received up to £1,000 (if you are a standard rate taxpayer), or £500 if you pay tax at the higher rate.

Therefore, to be eligible for this new allowance in 2016-17:

  • Your taxable income needs to be less than £42,700 a year to qualify for the £1,000 PSA, or,
  • Your income needs to be between £42,701 and £150,000 to qualify for the £500 PSA.

To facilitate this change, from April 2016 banks and building societies will stop automatically taking the 20% Income Tax from the interest earned on your non-ISA savings accounts.

Readers who receive substantial interest on their non-ISA savings should take this latter fact into account. For 2016-17 their investment income could create an increase in underpayments in their tax position as they will receive their interest gross, no tax deducted. For example, there will be those who haven’t had to pay tax to HMRC because all their income was taxed at source. This group may be required to pay their tax separately in future.

This could particularly affect certain pensioners and the like benefitting from the £5000 nil “savings rate” of tax applying for 2015-16 only.

 
 

 

Advisory fuel rates from 1 September 2015 Employee Benefits
 

Changes to these rates from 1 September 2015 are:

  • Petrol: engine size 1400cc or less – 11p per mile
  • Petrol: engine size 1401cc to 2000cc – 14p per mile
  • Petrol: engine size over 2000cc – 21p per mile
  • LPG: engine size 1400cc or less – 7p per mile
  • LPG: engine size 1401cc to 2000cc – 9p per mile
  • LPG: engine size over 2000cc – 14p per mile
  • Diesel: engine size 1600cc or less – 9p per mile
  • Diesel: engine size 1601cc to 2000cc – 11p per mile
  • Diesel: engine size over 2000cc – 13p per mile

These rates can be used to calculate the recovery of VAT input tax on the cost to a business of mileage payments made to employees, or to calculate the amount an employee needs to reimburse an employer for the private fuel used by a company car.

 
 

 

Emerging markets in the EU? General
 

If you are considering, or already are, selling your products and services in the EU, you may want to read the following recent announcement published on the UK Government website.

“Emerging Europe offers opportunities for all UK companies ranging from novice to experienced exporters, and across multiple sectors.

Emerging Europe is made up of 11 markets and over 120 million consumers located in Central and Eastern Europe (CEE). This region offers:

  • increasingly affluent consumers
  • economic growth at double the rate of western Europe
  • widespread use of the English language
  • low risk compared with other Emerging Markets further from the UK
  • easy accessibility from the UK – just 2 to 3 hours flying time on low cost airlines

UK exports are worth over £16 billion, with goods exports doubling over the past decade, and services exports – over £4 billion – trebling.

What is Emerging Europe?

Markets of Emerging Europe are at differing stages of development, but all offer long-term growth prospects for UK companies. The markets are:

  • Austria
  • Bosnia and Herzegovina
  • Bulgaria
  • Croatia
  • Czech Republic
  • Hungary
  • Poland
  • Romania
  • Serbia
  • Slovakia
  • Slovenia

Benefits of doing business in Emerging Europe

The markets offer UK companies a number of advantages including:

  • ease of developing business relationships as located close to UK with access via large number of budget airlines
  • ideal for Small and Medium Enterprises (SMEs) on tight budgets
  • supply chain opportunities in support of strategically important industries
  • opportunities resulting from £170 billion European Union (EU) Structural and Cohesion funds for 2014 to 2020
  • UK’s positive image as a reliable business partner and increasingly as a source of innovative products and services and new technology

Opportunities

There are opportunities across a range of sectors. These include:

  • advanced manufacturing
  • defence and security
  • energy
  • healthcare and life sciences
  • infrastructure
  • services (financial and professional services, e-commerce and traditional retail)”
 
 

 

Tax Diary October/November 2015 General
 

1 October 2015 – Due date for Corporation Tax due for the year ended 31 December 2014.

19 October 2015 – PAYE and NIC deductions due for month ended 5 October 2015. (If you pay your tax electronically the due date is 22 October 2015.)

19 October 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2015.

19 October 2015 – CIS tax deducted for the month ended 5 October 2015 is payable by today.

31 October 2015 – Latest date you can file a paper version of your 2015 Self Assessment tax return.

1 November 2015 – Due date for Corporation Tax due for the year ended 31 January 2015.

19 November 2015 – PAYE and NIC deductions due for month ended 5 November 2015. (If you pay your tax electronically the due date is 22 November 2015.)

19 November 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 November 2015.

19 November 2015 – CIS tax deducted for the month ended 5 November 2015 is payable by today.