For those of you running your business through a Limited Company, just a reminder that the new tax on dividends starts on 6.4.16.
Each person will receive a tax free allowance of £5000 for dividends. Tax rates will then be 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers, and 38.1% for additional rate taxpayers.
Consider taking a dividend before 6.4.16 but be careful that this doesn’t push you into the higher rate in 2015/16, as you could end up paying 25% in 2015/16 as opposed to 7.5% in 2016/17.
We have recently worked with a few of our clients to help make VAT registration work for them.
As a small business VAT registration whether compulsory or voluntary can be a daunting task but what if you could vastly reduce the work involved and even profit from registering?
If your turnover is less than £150,000 then you can use the flat rate scheme. Under the scheme you still charge VAT to your customers in the normal way but instead of knocking off VAT on your purchases a percentage of your VAT inclusive turnover is paid to HMRC. The flat rate percentage varies by trade but for example using a 10% flat rate, on £1,000 of sales, VAT of £200 would be charged and only £120 would be payable to HMRC, therefore retaining £80.
If you are below the VAT registration threshold but most of your sales/services are to other VAT registered businesses then you could benefit the most.
Please contact us to discuss this further if it is of interest.
With the introduction of the Employment Allowance last year, and the personal allowance increasing to £10600 on 6.4.15, the optimal salary for 2015/16 where the director has no other income will be £10600. Athough this will result in the director paying some employees N.I (12% of £10600-£8060 = £304.80), his corporation tax bill is reduced by £508 (20% of £10600-£8060). The employers N.I. (13.8% of £10600-£8112 = £343.34) will be fully cancelled by the Employment Allowance which is up to £2000.
Net dividends of no more than £28606 for the year will keep the director inside the 40% tax threshold. Net dividends of £28606 = gross dividends of £31784. Adding in the salary of £10600 gives gross income of £42384. The 40% tax threshold for 2015/16 is £42385.
On the 31st May Dan will be taking part in ‘Ride the Ride’ which is a 68 mile bike ride from Edwinstowe to Skegness. The ride has been organised to raise money for the Andrew Duffil Fund (Andy is a close friend of the family who suffered a serious head injury from a motor accident in December 2013) and has been setup to assist with Andy’s care and rehabilitation.
If you are able to help this great cause by sponsoring Dan even just a small amount your support would be greatly appreciated by all concerned. Please contact us at the office for details.
With Auto Enrolment starting in less than 12 months for some of our clients we will be contacting all clients operating PAYE in the near future.
For reference please find attached a copy of our Auto Enrolment – Update for Employers.
Income tax – for 2013/14 the personal allowance increases to £9440 for those aged under 65, £10500 for 65-74’s, and £10660 for those aged 75 and over. The next £32010 will be subject to tax of 20%, income between £41450 and £150000 will be taxed at 40%. Income over £150000 will be taxed at 45%. Where income exceeds £100000, the personal allowance is reduced by £1 for every £2 of income above £100000.
National Insurance – for the self-employed, class 2’s increase from £2.65 to £2.70 per week from April 2013. Class 4’s are 9% on profits between £7755 and £41450. For employees, the rate is 12% of earnings between £149 and £797 per week, and 2% above £797. Employers N.I. is 13.8% on employees earnings above £148 per week.
Corporation tax – from 1.4.13 the small companies rate remains at 20% (on the first £300k of profit). The large companies rate drops from 24% to 23% from April 2013, 23% to 21% from April 2014, and 21% to 20% from April 2015. Large companies are those where profits exceed £1.5m. There are marginal rates of tax on profits between £300k and £1.5m.
VAT – from 1.4.13 the registration limit increases from £77000 to £79000.
Capital allowances – the Annual Investment Allowance increased from £25000 to £250000 from 1.1.13 for a period of 2 years only. Writing down allowances remain at 18% (main rate) and 8% (lower rate including cars above 130 g/km CO2 emissions). A rate of 100% is available for cars below 96g/km and certain energy efficient plant.
Capital Gains Tax – the annual allowance for individuals increases to £10900 from April 2013. The CGT rate remains at 18% (or 28% if the gain takes you into the higher rate band). The Entrepreneurs relief rate stays at 10% for the sale of businesses for the first £10 million of lifetime gains.
Inheritance tax – the nil rate band of £325000 (£650000 for married couples and civil partners) remains the same.
Business mileage – rates remain the same at 45p for the first 10000 miles, and 25p per mile on those miles exceeding 10000.
ISA’s – for 2013/14 the cash allowance is £5760 per person.
Future – the personal allowance is set to increase to £10000 in April 2014. A National Insurance subsidy for employers of up to £2000 will commence in April 2014.
The biggest change to payroll procedures for over 60 years will come into force from April 2013.
Employers will be required to submit online to HMRC after each payroll run. Those employers who currently pay weekly may want to consider moving to a monthly basis
The submission will be similar to that currently performed at year end (P35).
One man limited companies will be included in the requirements.
If we don’t currently run payroll for you and you think you will require assistance please get in touch as soon as possible.
Just a reminder that the annual investment allowance (allowing 100% claim in year 1) on capital equipment (excluding cars) reduces from £100,000 to £25,000 with effect from April 2012. If you are therefore planning on purchasing any large capital items in the near future it would be best to do so in March rather than April.
The new NMW rates from 1.10.11 are as follows:
16-17 years old – £3.68 per hour
18-20 years old – £4.98 per hour
21 and over – £6.08 per hour
Apprentices – £2.60 per hour – aged under 19, and those 19 and over but in the first year of their apprenticeship.