Autumn Statement 3 December 2014

Key Points

Personal taxes

Tax free allowance raised to £10,600 next year.
Higher rate tax band raised to £42,385.
When someone dies, their husband or wife will be able to inherit their ISA tax free.
The inheritance tax exemption will cover aid workers who lose their lives dealing with humanitarian emergencies.

Corporate taxes

A 25pc tax on profits from activity in the UK for companies that shift profits offshore will raise £1bn over the next five years.
Business rates to be reviewed.
Tax relief for small and medium-sized businesses doubled, and a £45m package of support for exporters.
Tax credit for children’s TV producers
No employer national insurance on apprentices

Property

Stamp Duty reformed to become more progressive, introduces marginal tax rates. Changes come into force from tonight.

Up to £125,000 – no tax
Up to £250,000 – 2pc
Up to £925,000 – 5pc
Up to £1.5m – 10pc
Above that – 12pc

Stamp duty cut for 98pc of homebuyers who pay it, you pay more if you buy anything above £937,000.

Health

Confirmed £2bn a year extra spending on NHS
Extending £2,000 employment allowance to carers

Travel

Fuel duty frozen again
Air passenger duty for children under 12 abolished from next year, and for children under 16 the year after

Bank fines

£1.2bn of forex bank fines for GP services
Libor fines go to emergency services, Gurkhas, £10m for veterans with hearing problems, new helicopters and VAT refunds for search and rescue

Education

£10,000 student loans for postgraduate students doing masters degrees

Devolution

Northern Ireland to set corporation tax

December 6, 2012February 2, 2019

2012 Autumn Statement

George Osborne delivered his 2012 Autumn Statement yesterday and we have summarised the key points below:

INDIVIDUALS

The Personal Allowance is to increase from £8,105 to £9,440 from April 2013 for those aged under 65. This is part of a plan to ultimately increase the Personal Allowance to £10,000.
The band of income tax rate at 20% is being reduced from £34,370 to £32,010 from April 2013
The threshold for 40% income tax is to decrease from £42,475 to £41,450 in 2013/14 but will increase by 1% in 2014/15 and 2015/16 to £41,865 and £42,285
The 50% band currently applies where taxable income exceeds £150,000 but the rate will fall to 45% next year.
New universal credit for Income Tax is coming into effect next year as previously announces
The Capital Gains Tax annual exemption is to increase by 1% to £11,100
The Inheritance Tax exemption is to increase in 2015/16 from £325K to £329K
No new tax was implemented on property
From 2014/15, pensions lifetime allowance is to reduce from £1.5m to £1.25m and annual allowance from £50K to £40K. This restriction of pensions tax relief is a £1bn tax rise for high earners
The ISA limit extended from April 2013 to £11,520
The Basic State pension is to increase by 2.5% next year which is a rise to £110.15 per week
Tougher measures on welfare fraud are announced. Changes to welfare benefits will save £3.7bn in 2015/16
Child benefit is to increase by 1% for 2 years with effect from April 2014

BUSINESSES

Main rate of Corporation Tax cut by 1% to 21% in April 2014 (was set to be 22%), currently set at 23% for April 2013
Increase in Annual Investment Allowance for capital allowances from £25K to £250K from 1 January 2013 for 2 years. This is a huge boost for expanding businesses
A number of tax avoidance loopholes are to be closed immediately, and anti avoidance will be further tackled by an increase of 2,500 in the number of tax inspectors
New general Anti Avoidance Rule still be introduced in April 2013
£5bn to be received over 6 years from undisclosed Swiss bank accounts of UK residents
Temporary doubling of small business rate relief was to end 2011 – already extended to April 2013; now extended further to April 2014
Tax relief for employee shareholder scheme to be introduced
Consultation on new tax incentives for shale gas

OTHER ISSUES

The planned 3p rise in fuel duty from January 2013 is now cancelled.
Extra £5bn capital investment to be made in infrastructure – Northern Ireland will get its share
Broad band investment in various areas across UK
Extra £600m for scientific restructure in UK
£270m to be made available for improvements in further education in UK
£1bm to be made available to expand schools and build 100 new free schools and academies in UK

August 29, 2012April 25, 2014

Possibly a little more “something for nothing” -Enhanced Capital Allowances on Energy Saving Equipment

Previously I pointed out the potential savings that can be made and the finance available from The Carbon Trust for replacing current lighting, heating, cooling equipment etc with an energy efficient equivalent. In that article I mentioned that the cash flow savings delivered through reduced payments to your utility supplier can finance the loan repayments. This is not the whole picture. There is still a little more meat to add to the bones on this topic.

HRMC have in recent years attempted to encourage business to invest in green technology/ equipment. This has primarily been delivered through the Capital Allowance scheme.

The ‘incentive’ as provided by HMRC is the availability of Enhanced Capital Allowances to achieve tax relief on the acquisition and installation of certain certified energy saving equipment.

Check the following link to confirm that any potential equipment acquisition qualifies for Enhanced Capital Allowances before you buy http://etl.decc.gov.uk/etl/find/

The application of these Enhanced Capital Allowances effectively allow the business to claim tax relief on the full cost of acquisition and installation of this equipment in year one.

Example – assume the business spends £10,000 on energy efficient equipment and its subsequent installation. The business can then claim a reduction in its taxable profits to the extent of £10,000. This is applicable to either limited company, sole trader, or partnership businesses.

There is a further aspect to the Enhanced Capital Allowances for limited companies that we will look at next time.

April 23, 2012April 25, 2014

The Modern Accountant ????

But Accountants DO NOT blog……

This may well be true, yet here we are, accountants, and we are trying our hand at blogging!!

It has become a general consensus that accountants are not known for trying out new ideas, and as for social media and blogging well, they simply ‘do not have the time’, it is ‘not necessary’, it ‘will not increase our profits’, it ‘will not add to the quality of service for our clients’ and it is ‘not an efficient use of our time.’

While this is all true, and ok, it probably won’t help us understand our clients better, it is most likely not very proactive, and lets be honest, who NEEDS an accountant that blogs?? However, despite all this, and in a bold NEW approach, I have pondered over the last few months that maybe our clients would like to understand US a bit better!!!!

I personally have always felt, even way back in my training years, (which feels like a million years ago now but really is not!!!) that it is important to show our clients that there is an ordinary human being behind all the ‘serious’ chat, tax regulations and number crunching. Maybe even someone that dare I say it has a ‘personality of sorts’!!!

So based on all this and with a gentle push and encouragement from some of our twitter friends Helen Cousins (@xcelbusiness), Sian Phillips (@_sians) and Sage Ireland (@sageireland) we are going to attempt this blogging thing!!!

This is my first ‘introductory’ blog and I hope you will all bear with me as I try to ‘master’ this over the coming weeks.

For now i have listed below some of our earlier posts that we included previously. A couple of them were in response to a few past client queries, which actually did end up being ‘a proactive use of our time!’

In the mean time if you have any interest in a specific topic you would like to see more information on please feel free to get in touch with us!!

and we have social networks too……

Like us on facebook: JSR Chartered Accountants

connect with us on linkedIn: JSR Chartered Accountants

March 21, 2012February 2, 2019

Budget 2012: Key Points

George Osborne says his 2012 Budget will “reward work”, support working families and ‘unashamedly backs business’ but warns of need to continue his austerity drive in face of sluggish growth.

Budget 2012 Key Points:

Automatic review of state pension age to ensure it keeps pace with increasing lifespans. New single-tier state pension for future pensioners to be set at about £140 and based on contributions

Duty on all tobacco products to rise by 5% above inflation from 18:00 today – the equivalent of 37p on a packet of cigarettes. No change to alcohol duty. New duty on gaming machines at a standard rate of 20% and a lower rate for low-prize machines of 5% of net takings. No change to existing plans on fuel duty (however, please note that plans to increase Fuel by 3p from August still stand). Vehicle excise duty to rise by inflation, but frozen for road hauliers

Good news for young entrepreneurs Government considering enterprise loans for young people to start their own business.

Corporation tax cut to 24% from next month. By 2014 it will fall to 22%

From midnight, new stamp duty level of 7% for homes worth more than £2m. Any such homes bought through companies will pay 15%. Extra funding to help construction firms building new homes

CHILD BENEFIT Will be phased out when someone in a houshold has an income of more than £50,000. It will fall by 1% for every £100 earned over £50,000. Only those earning more than £60,000 will lose the entirety of the benefit

From April 2013, the 50p top rate of tax will be cut to 45p. Personal income tax allowance will be raised to £9,205 from April 2013, making people £220 a year better off. However, those aged 65 and over will no longer be entitled to the higher rate of personal allowance leaving these individuals paying around £260 more in tax per year.

It should also be noted that around 300,000 workers woll be pulled into the 40% tax bracket. Currently workers can earn £42.475 before paing tax at 40%, this limit is now to be reduced to £41,450 – This was not announced in Mr Osborne’s speech but was included in the budget document.

August 29, 2011February 2, 2019

Inheritance Tax

Inheritance Tax is one of the most despised and potentially most expensive forms of taxation. The tiny number of individuals who make any effort to reduce their IHT burden is therefore surprising. Simple steps like making a will can drastically reduce an IHT bill, and require very little work. There are a number of ways in which you can cut your inheritance tax liability – but it is important that you act now.

To find out whether or not IHT will actually affect you add up the value of all the assets in the estate – such as a house, possessions, money and investments – and deducting any debts held by you such as mortgages, including household bills and funeral expenses. Although Individual Savings Accounts and Personal Equity Plans are not taxable during your lifetime, the assets included in these ARE liable for inheritance tax. If the total value of your taxable assets exceeds the Nil-Rate Band, which is currently set at £325,000, then you should be taking action to minimise your IHT liability. It is therefore very wise to write a will, something we should all do regardless but it is particularly important in reducing an inheritance tax liability. Having a will in place can avoid leaving all your assets to the mercy of intestacy laws.

Reducing the Estate

One of the ways in which you can limit your liability is to reduce the total size of your estate. There are numerous ways of doing this. Many individuals choose to give gifts to family and friends in life rather than writing them into their will gradually reducing their estate. You may wish to think about downsizing your home in order to reduce the size of your property assets. If this is not realistic, you may also consider an equity release scheme – this will free up some immediate cash, which may be vital in retirement, and will again reduce the size of your estate.

Trusts

More commonly individuals are now turning towards trusts as an effective way of limiting their tax liabilities. Using a discretionary trust you can pass assets on to trust-holders, who are legally charged with looking after them until your death. At this point they will be passed on to your intended beneficiary. This can be an excellent way of pre-empting IHT but of also retaining your ability to determine who benefits from your estate.

However money given away before you die is still usually counted as part of your estate, hence subject to Inheritance Tax, if you die within seven years of giving the gift.

If you make large lifetime gifts, the beneficiaries could take out life insurance against the potential Inheritance Tax bill. Most gifts into trust are now subject to Inheritance Tax even if made during your lifetime, but this is an area where you would need specialist advice.

However, even if you do die within seven years of making a gift, there is a range of other exemptions worth taking into account to help lessen the tax bill:

- - - Annual Inheritance Tax Exemption. The first £3,000 given away each tax year is completely ignored as part of your estate and thus not subject to Inheritance Tax if you die. If you don’t use this in a year, you can carry it forward for one tax year (no more) and use it then.
    - Gifts to charities and political parties are Inheritance Tax free. Any gifts you make to a ‘qualifying’ charity – during your lifetime or in your will – will be exempt from Inheritance Tax
    - Give £250 each year to everyone you know. Gifts of no more than £250 to any one recipient per tax year are excluded from Inheritance Tax.
    - Gifts from income. Inheritance Tax is a tax on your assets. However if you have an income (pension or earnings for example) and you give money regularly from that which leaves you enough income not to impact your lifestyle, then it is exempt.
    - Gifts on consideration of marriage. There are limits to this though: £5,000 for a gift from a parent, £2,500 from a grandparent, £1,000 from anyone else.
    - Woodland, Heritage, Farm and Business. If you own an agricultural property that’s part of a working farm then a percentage may be exempt from tax.

Spouses

Many married couples choose simply to pass their estate on to their spouse but, while this is an understandable choice, it is often not the most tax-efficient course of action. Rather, you may wish to consider placing assets above your Nil-Rate Band into a trust, which is passed to your children, but only after the death of your spouse. This ensures that both your own and your spouse’s Nil-Rate Bands are used effectively, as any transfers between spouses are exempt from tax. If you are interested in this course of action you should consult a professional.

Finally, it should be remembered that IHT rules favour those who are married or are in a civil partnership. Currently, co-habiting couples that are not married will not qualify for the exemption granted those who have legally codified their relationship. Unfortunately, the only way to gain this exemption is by marrying or entering a civil partnership, and this may therefore be an option you may wish to consider.

Conclusion

As we all know there are only two certainties in life – Death & Taxes. However, with a little timely planning the two do not necessarily have to affect your loved ones at the same time. Take some time now to plan your will, and speak with your accountant to ensure that your assets can and will be distributed in accordance with your wishes in the most tax efficient way.

August 4, 2011April 25, 2014

Do I Really Need an Accountant?

Chartered accountants have come through a rigorous regime of training and examinations, and have wide practical experience which they can use for your benefit. They are the general practitioners of the financial world, with the expert knowledge and integrity to give you high quality advice on any aspect of your financial affairs.You will only fill in one tax return each year, chartered accountants fill in dozens, and you can benefit from that professional expertise and experience.

No-one likes paying taxes. But effective planning to reduce your tax bill requires professional advice. Don’t make decisions based on half-understood newspaper articles, or advice from a friend – they can be so wrong that they cost you money rather than saving it.

Running a business does offer some opportunities to legally save tax. But to make the best of them, you need to talk to your chartered accountant before entering into any major transactions, so that he or she has a chance to advise you on the best approach.

You also have to worry about the tax you deduct from your employees’ wages. On the whole, they are interested in their take-home pay. However, if you, with your chartered accountant’s help, find a tax-efficient way to get cash or benefits into their hands, that can reduce your overall costs.

A lot of people think that you only need a chartered accountant if you run a business. Not true. There are lots of times when you should consult a chartered accountant for your personal financial affairs. Some people have affairs that are so complex, they need to use a chartered accountant regularly to prepare their tax return and generally advise them. But even if you are not in that category, there are still plenty of times when you could benefit from an hour or two of a chartered accountant’s time.

One of the more complicated areas of taxation is the tax charge on benefits in kind, such as company cars. If your employer suggests that you might like to buy your own car and use it for work, how much extra pay would you expect to get to make the switch worthwhile. Don’t know? Your chartered accountant does.

What about a pension? Does your employer have a pension scheme? If so, is it any good? How do you know? Not all chartered accountants give financial advice, but most can give you some general unbiased information about your pension options, and can put you in touch with a reliable adviser.

What about when you change jobs? Do you know what package you should be asking for on termination, or on taking up your new job? Will the moving allowance that you get from your new employer be tax free?

These are all questions that a chartered accountant can help you with. You may face them a handful of times in your career – a chartered accountant deals with these issues regularly. Arrange a meeting to discuss the implications, get the benefit of an hour or two of a chartered accountant’s time.

When you get married, you may not think about inviting along a chartered accountant to the wedding! But it is a good idea to check up on the financial consequences. It might be a good time for parents to make gifts that are free of inheritance tax. You may find that you can reduce your tax bill by moving your savings between you. An hour with a chartered accountant before you say ‘I do’ might help to pay for the honeymoon!

Buying a house is another time when a chartered accountant could be useful. Which is better – to take a big mortgage and keep your savings invested, or use the savings to reduce the mortgage? There is no one answer that is right for everyone, you need a chartered accountant to advise you.

And finally there is death. Asking a chartered accountant for inheritance tax advice might seem morbid – but your spouse and children won’t thank you for your squeamishness. Inheritance tax can make a hard time even worse by creating financial problems. It is a particular problem for couples who aren’t married, since they cannot pass assets to each other tax free, but all families should know what the financial consequences of a death would be – and a chartered accountant can explain it to you.

So if you are considering preparing your own tax return this year or using an unqualified accountant, why not have a quick rethink. Last January we received numerous new clients who had prepared their own tax return and wanted us to have a look at it prior to submission. In EVERY case we were able to reduce their tax bill for them by using reliefs etc that they did not know existed!!!

So who knows, this year we may even be able to persuade HMRC that you have overpaid tax.

Then you won’t just be sending in your tax return – you’ll be getting tax returned!

Jonathan & Stacie Ross