2018 Budget – Businesses

Whilst there was no immediate change to the current corporation tax rate of 19% there was confirmation of the intention to reduce the rate to Keith Roberts accountant Lancashire 17% from 1 April 2020. Something to look forward to!

For those businesses with significant investment in plant and machinery planned for the next couple of years, there was welcome news with the increase in the Annual Investment Allowance (AIA) to £1m for the two calendar years 2019 and 2020. It might therefore be worth considering delaying some expenditure to the New Year in order to qualify for AIA where your expenditure in 2018 already exceeds the present £200,000 limit.

Do you remember Industrial Buildings Allowances? These were phased out in the late noughties but it seems they have made a come back in the form of a new Structures & Buildings Allowance (SBA) which is introduced at a WDA rate of 2% on new non-residential buildings. This applies not only industrial buildings but also offices and farm buildings. It starts for all construction contracts entered into on or after budget day and is also available to commercial property landlords.

On the down side From April 2019 the plant and machinery that qualifies for special rate allowances will receive relief at 6% rather than 8% currently. This also applies to integral features of buildings.

Finally, for this blog at least, the £3,000 per year employment allowance will in future only apply to those employers with a NIC bill of less than £100,000 in the previous tax year.

Click here to see our full budget report.

For more detail on the contents of the budget click here.

If you have any questions about how the new budget may affect you and your business, please contact us on 01254 583515 or fill in the contact form below.

Paying Employer National Insurance Contributions for Apprentices Under 25

Paying employer National Insurance contributions for apprentices under 25

From 6 April 2016, if you employ an apprentice you may not need to pay employer Class 1 NI contributions on their earnings below £827 a week (£43,000 a year).

They must be under 25 years old and following an approved UK government statutory apprenticeship framework (frameworks can differ depending on the UK country).

You can check that your apprentice is in a statutory apprenticeship using the following link https://www.gov.uk/government/publications/removal-of-apprenticeship-framew…

Evidence needed

If your apprentice meets the conditions above, you’ll need to have evidence to be able to apply the relief. This can be either:

  • written agreement between you, the apprentice and a training provider
  • in England and Wales, evidence that the apprenticeship receives government funding

Written agreement must show:

  • the government apprentice framework or standard
  • a start and (expected) end date for their apprenticeship scheme

If the training provider hasn’t signed the written agreement, they’ll need to give you a document that shows:

  • they’re an approved (recognised) training provider
  • the training your apprentice is undertaking, and any training already done

Alternatively, in England and Wales, you can provide evidence of government funding of the apprenticeship. This could be the declaration to receive apprenticeship incentive payments, or the employer payment schedule to the provider.

You could be the employer and a trainer if you’ve been approved by the Skills Funding Agency in England, or hold a contract for the delivery of Apprenticeships in Wales.

NICs category letters to use.

Category letter: Apprentice conditions =H

Apprentice standard rate contributions – if your apprentice is under 25 and in an approved apprenticeship framework G or If your apprentice is a foreign-going mariner and is under 25

If your employee is under 21 and meets the same conditions as an apprentice under 25, use the H or G categories.

When the statutory apprenticeship stops or your apprentice turns 25 you’ll need to use a new catergory letter.

The apprentice rate only applies to payments which are liable for Class 1 secondary NICs.

What you can tell your employees

Employees will continue to pay the standard rate of Class 1 NICs through their salary. They won’t see any reduction in their payments. It’s employers who’ll benefit from this change.

The employee’s entitlement to contributory social security benefits, including the State Pension won’t be affected and neither will their entitlement to statutory payments. Existing employees may notice a change to the National Insurance category letter on their payslip.

If you have any queries about the above please get in touch on 01254583515 and we will be happy to help or fill in my quick contact form below and we will get back to you within the day.

Investment Schemes: Company and Investor Perspectives

At Egan Roberts we provide year round tax advice on income tax, capital gains tax, inheritance tax trust and estates and non-domiciliary tax issues.
If you are interested in growing your business or making an investment, the below investment schemes may be available to you.

Enterprise Investment Scheme (EIS)

The company’s perspective

An EIS raises money for your company to help grow your business.

It offers tax reliefs to individuals who buy new shares in your company.

You can receive up to £5 million per year up to a company lifetime maximum of £12 million. However this does include any amounts received from other venture capital schemes.

Can my company apply?

If your company is less than 10 years old, has less than 250 full time employees and less than £15 million of assets, you may be eligible.

All conditions of application for EIS are set out here.

The investor’s perspective

An investor can receive the following incentives:

  • Income tax relief being 30% of the investment up to a maximum investment of £1 million.
  • Capital gains tax exemptions
  • Inheritance tax exemptions
  • Reinvestment relief
  • Loss relief

Note: If your income tax liability is lower than the 30% relief, you must relinquish the excess relief.

Seed Enterprise Investment Scheme (SEIS)

Similar to the EIS, if your company is less than 2 years old, has less than 25 full time employees and less than £200,000 of assets, you may be able to receive up to £150,000.

All conditions of application for SEIS are set out here.

The investor can receive income tax relief of 50% of their investment up to a maximum investment of £100,000.

Reinvestment relief, loss relief and capital gains tax relief are also available with a SEIS.

An overview of venture capital schemes for investors is available here.

If you would like to get in touch, please use the contact form below, visit our website www.egan.co.uk or call us on 01254 583515.

Getting prepared for the General Data Protection Regulation

From 25th May 2018, the new General Data Protection Regulation (GDPR) will come into force. It will affect any businesses which hold personal data on customers or employees based within the EU. The fines for non-compliance with the new law are up to €20m or 4% of your global annual turnover. Although that sounds scary, don’t panic! The information in this blog will help you in your preparations for GDPR compliance.

Holding Information

A good place to start is to document the following:

• What data you hold
• The reason why you hold it
• Who is responsible for it
• Where and how it is stored

Think about the data you wouldn’t want to be disclosed. The use of encryption will reduce the risk of data breaches. If the proper standards of encryption are used, it will for the most part render the data useless to an attacker.

Communicating Information

You will need to review your current privacy notices. With GDPR, when obtaining personal data you must give the following:

• Your identity
• Your intended use of their information
• Your lawful basis for processing the information
• Your data retention periods
• The individual has the right to complain to the ICO if they think there is a problem with how you are handling their data
All of this is usually expressed in a privacy notice.

Business-to-business emails should be targeted toweards a person’s role, not at the specific person.

Business-to-consumer emails however should be targeted to the individual providing you have consent prior to contacting them.

You musn’t email people who have been asked not to be contacted, unsubscribed or opted-out in some way.

Consent

Consent to process data must meet the GDPR standards of being ‘specific, granular, clear, prominent, opt-in, properly documented and easily withdrawn’.

Consent cannot be assumed from silence.

Access Requests

You will have a month to comply with access requests as opposed to the current 40 days.

For most requests, you cannot charge for complying with the request unless it is thought to be excessive.

If you refuse a request, you must tell the individual why and that they have the right to complain.

You should plan how you are going to deal with access requests and the right to be forgtten within the timescale.

Data Breaches

You will only need to notify the ICO of a breach if it is likely to result in a risk to the rights and freedoms of individuals; for example damage to reputation, financial loss or discrimination. In high risk situations, those directly involved must also be notified.

To reduce the impact of breaches, as well as the use of encryption, you should be prepared. Rehearse and have contingency plans in place for a worst case scenario.

Most importantly, inform everyone in your business of your new data protection policy.

Data Protection Officers

Your business needs a designated person to take responsibility for data protection compliance. They must have the knowledge, support and authority to carry out their role.

If you would like to contact us, please use the contact form below, call us on 01254 583515 or visit our website www.egan.co.uk

HMRC Investigations: What to Expect

Whether you are the chief executive of a multi-million pound company or a small business owner, HMRC may open an investigation if they suspect false reporting or underpayment of tax.

Triggers

Reasons for you or your business drawing the attention of HMRC are:

  • HMRC receives a tip-off
  •  your business regularly receives payments in cash
  • tax returns are consistently filed late
  • you operate in a sector HMRC has specifically targeted
  • you are randomly selected
Taxes

The taxes investigated by HMRC include but are not limited to:

  • Income tax
  • Capital gains tax
  • Corporation tax
  • Landfill tax
  • National insurance
  • VAT
Stages

There are three levels of an investigation; random, aspect and full.

As above, HMRC have the ability to choose to investigate your business completely at random.

An aspect investigation means HMRC is concerned about a particular part (or parts) of your accounts. This could include something as straightforward as forgetting to include all of your savings income within your self-assessment tax return. An aspect investigation can be upscaled to full at the discretion of HMRC.

A full investigation is when HMRC considers there to be a significant risk of error in your tax return. This would include a comprehensive review of your records including personal finance records as well as business-related.

The process

1. HMRC will initially contact you via letter or phone call with a query. They will specify what information they require for the investigation.

2. You will be expected to supply the information HMRC require which may include obtaining replacement copies of documents if you no longer have them.

3. Informing HMRC at this point of any mistakes you have knowingly made will benefit you further down the line.

4. HMRC will formally begin their investigation

What happens next?

Some common resolution include:

Underpaid tax

You will have 30 days to settle the underpayment with HMRC.

Failure to do so will result in a penalty ranging from 20% to 100% of the extra tax due.

The severity of the penalty depends on whether the underpayment was due to a lack of reasonable care, a deliberate error or deliberate and concealed errors.

Overpaid tax

If you have paid too much tax, HMRC may send you a rebate through the post.

If they do not, you will need to make a claim for a repayment.

Deliberate wrongdoing

If HMRC believe you have committed fraud, you may be subject to criminal proceedings.

You may also be charged a penalty depending on why you underpaid tax, how soon you informed HMRC of any mistakes and whether you were fully co-operative during the investigation.

Resolution

A decision notice will arrive in the post explaining the assessment and any penalty details.

Alternatively, HMRC may issue a contract settlement which legally binds you to pay the money that is owed to HMRC.

Tips to avoid an investigation

Nothing can prevent a random investigation but the following tips will help you to avoid becoming under HMRC’s microscope.

  • Maintaining accurate records
  • Putting money aside to cover your tax bill and pay it on time
  • File your tax returns accurately
  • Explain any changes or unusual transactions from one year to the next

If you are under HMRC investigation or have any questions please contact us via the contact form below or call us on 01254 583515.

Take a look at our blog outlining what accounting records you should keep.

Enquiry About My Tax

If you think there might be anything amiss with your Tax, or you’re setting up a new business and don’t want to get in any uncomfortable positions with HMRC, contact us for a free meeting to discuss your situation and how we may be able to help now and in the future.

Excuses and Expense Claims: What not to Submit

At Egan Roberts Accountants based in Ribchester, Lancashire we can advise you as to whether your ‘excuses’ and expense claims are reasonable or whether they just won’t cut it with HMRC.

We’ve shared with you below some of the recent claims submitted to HM Revenue and Customs (HMRC).

Late Tax Return Excuses

1. I spilt coffee on it.
2. My ex-wife left my tax return upstairs, but I suffer from vertigo and can’t go upstairs to retrieve it.
3. My wife has been seeing aliens and won’t let me enter the house to file my return.

Less recent excuses also include:

1. My husband ran over my laptop.
2. My dog ate my tax return.
3. My tax papers were left in the shed and the rat ate them.

All of the above will not be seen as ‘reasonable’ and are likely to suffer a £100 penalty which can be significantly increased the later your return is filed.

Expense Claims

Interesting expense claims have included:

1. A three piece suite for my partner to sit on when I’m doing my accounts.
2. Hotel room service for candles and prosecco.
3. £4.50 for sausage and chips meal for 250 days.

Unsurprisingly, all of these claims were rejected by HMRC.

Need more information?

Follow the links below for some guidance on reasonable excuses and expense claims.

Reasonable Excuse

Self-employed Expense Claims

Alternatively, if you would like to get in touch with us, please use the contact form below, visit our website www.egan.co.uk or call us on 01254 583515.

Enquiry About My Tax

If you think there might be anything amiss with your Tax, or you’re setting up a new business and don’t want to get in any uncomfortable positions with HMRC, contact us for a free meeting to discuss your situation and how we may be able to help now and in the future.

Gift It or Keep It? The Capital Tax Implications

At Egan Roberts Accountants based in Ribchester, Lancashire we can provide you with year round tax advice on capital gains tax and inheritance tax.

Capital Gains Tax (CGT)

CGT is the tax payable on the ‘gain’ you have made from selling an asset which has increased in value.

The gain (proceeds less cost) is reduced by your annual exempt amount of £11,100.

Any remaining gain is taxed at 10% if you are a basic rate tax payer or 20% if you are a higher rate tax payer.

Gift Relief

If you have given the asset away or received less than market value proceeds, you may be able to claim gift relief.

This means the amount chargeable to CGT is the real proceeds you have actually received.

However, this only defers the CGT. The amount of gift relief claimed will become chargeable when the donee sells the asset.

So by reducing your gain, the donee will have a bigger gain later.

More information on gift relief is available here.

Entrepreneur’s Relief (ER)

There are certain criteria which must be met for you to qualify for ER.

The full list is set out here.

In summary, if you are selling all or part of your sole trade or partnership, you must have owned the business for at least 12 months prior to the sale. If you are selling shares (of which you hold at least 5% of total shares), the company must be trading and you must be an employee or officer of the company.

ER reduces the CGT rate to 10% regardless of whether you are a higher rate tax payer.

Gifts to Spouses / Charity

Any assets you gift or sell to your spouse or civil partner are not subject to CGT unless you separated and did not live together for the whole tax year or you have them goods for them to sell on as part of their business.

CGT is not charged on assets given to charity. You may pay some CGT if you sell an asset to charity for more than you paid for it but for less than market value.

Find further information about this here.

Inheritance Tax (IHT)

Lifetime Gifts

If you make a gift during your lifetime to a person, this is known as a PET (potentially exempt transfer), meaning no IHT is payable on the gift.

However, if the donor dies less than 7 years after making the gift, IHT then becomes chargeable at 40%.

Death Estate

If you leave the asset as part of your death estate rather than selling it or gifting it, IHT may be payable at 40%.

Items left to your spouse/civil partner/charity are exempt from IHT.

The value of your remaining estate chargeable to IHT could be reduced with the use of business property relief.

Everybody has a nil rate band of £325,000 which also reduces the amount chargeable to IHT.

This £325,000 is reduced by the gross chargeable transfers of any gifts made within the 7 years before death.

If your spouse did not use all or some of their nil rate band on their death estate, the amount unused can be transferred to you in addition to your £325,000.

The remaining value is then subject to IHT at 40%.

If you would like to get in touch with us, please use the contact formbelow, visit our website www.egan.co.uk or call us on 01254 583515.

What worries do you have about a HMRC enquiry?

What is Tax Fee Protection Service?

HMRC tax and VAT investigations can be daunting, disruptive and expensive. Egan Roberts Fee Protection will assist you every step of the way to answer HMRC’s questions and to demonstrate you are paying the correct amount of tax. This requires the expertise, time, flexibility and expense of your accountant on your behalf and such costs are not included in your regular annual fees.

Just as you take out contents insurance to protect your home or business, our Tax Fee Protection Service protects you against the unforeseen costs incurred by Egan Roberts when dealing with a HMRC enquiry.

Why do I need Tax Fee Protection Service?

All business and personal taxpayers are at risk of enquiry. HMRC activity has been at unprecedented  levels for a number of years to the point where enquiries are commonplace.

Even if the tax man finds no errors, the accountancy costs in dealing with HMRC can still be substantial.

For a modest amount you can enjoy peace of mind that Egan Roberts can deal with the tax authorities on your behalf and you will not be subject to any additional expense. These costs will be covered by Egan Robert’s policy.

What’s excluded?

  • Criminal prosecutions and fraud
  • Enquiries that have commenced prior to subscribing to the service
  • Routine compliance work, e.g. preparing tax returns.

In the event of a Tax or VAT enquiry

Please speak to us straight away, immediate professional advice can make all the difference. Egan Roberts will deal with the claim on your behalf.

The next step

To ensure you are protected in the event of HMRC Enquiry and to receive the necessary representation from Egan Roberts without any concern over the amount of additional fees that will be incurred, please return the enclosed reply slip or contact us without delay.

Contact us

What every small business owner should be aware of when paying HMRC?

Paying HMRC

The Post Office service or personal credit cards will no longer be accepted when paying HMRC from the 15th December 2017 and 13th January 2018 respectively.

Not to worry! There are still various other ways of making payment which HMRC say will save you time and expense. These include:

  • Direct debit
  • Online or telephone banking (including Faster Payments, Bacs and CHAPS)
  • Debit/Corporate Credit card online or by telephone

Specifically for Self-Assessment you can also set up a budget payment plan to give you control over the payments you make.
Making weekly/monthly payments will be more manageable for most people and saves you from being hit with a hefty tax figure on the deadline.

Taxpayers who are unable to pay their tax bill on time may be entitled to pay by instalments or be granted additional time to pay.

You will need to contact HMRC with details of your income, assets etc. and HMRC will decide whether you are entitled based on your circumstances. Interest will be charged on the amount you pay late and HMRC will expect you to pay your tax bill straight away if you don’t meet their criteria.

More information concerning the above can be found at https://www.gov.uk/topic/dealing-with-hmrc/paying-hmrc.

Contact us if you would like to know more about the above

What Accounting Records Should I Keep?

As Chartered Accountants and Financial Advisors based in Lancashire, a question we often get asked here at Egan Roberts is what accounting records we need in order to complete your year end accounts and tax returns.

The most important thing is to be as organised as possible. Accounting software packages such as Xero make this much easier for you.

At Egan Roberts, we are all Xero Certified Advisors to help and support you through your Xero journey. Some may call us Xero Heroes.

Records must be kept for a minimum period of 6 years. Xero has the ability to digitally store images of your invoices and can feed directly through from your bank. This makes record keeping for such long periods of time much easier and will no longer clutter up your spare room!

If HMRC open a tax enquiry into your business within the last 6 years, Egan Roberts offer a fee protection scheme which acts as a type of insurance against any additional work we may need to undertake to assist with the enquiry. See our more detailed blog here for more information about this service.

If you would like to speak to us about any of the above, please call us on 01254 583515 or visit our website www.egan.co.uk