Category Archives: Hogbens Dunphy Quarterly

Tax Diary of Main Events

Date What’s Due
19 September PAYE & NIC deductions, and CIS return and tax, for month to 05/09/17 (due 22/09/17 if you pay electronically))
01 October Corporation tax for year to 31/12/16 unless quarterly instalments apply
05 October Deadline for notifyingHMRC of chargeability for 2016/17 if not within self-assessment and receive income or gains on which tax is due, for example rental income or CGT on the sale of a second property.
19 October PAYE & NIC deductions, and CIS return and tax, for month to 5/10/17 (due 22 October if you pay electronically)
01 November Corporation tax for year to 31/1/17 (unless quarterly payments apply)
19 November PAYE & NIC deductions, and CIS return and tax, for month to 5/11/17 (due 22 November if you pay electronically)
01 December Corporation tax for year to 29/2/17 unless quarterly instalments apply
19 December PAYE & NIC deductions, and CIS return and tax, for month to 5/12/17 (due 22 December if you pay electronically)
30 December Deadline for submitting your tax return online if you would like your outstanding tax for 2016/17 collected through payroll (limits apply). If you would like to pay your tax this way, please ensure we receive your tax information in good time to meet the 30 December deadline. Note that the absolute deadline for filing your self-assessment tax return online is 31 January 2018.

Brexit – We are Living in Turbulent Times

With elections in the UK, France and Germany this year, and Brexit negotiations underway, there may be turbulent times ahead. Europe is entering uncharted waters and predictions on currency and the stock market vary from one economist to another. We are in uncharted waters.

Post Brexit, some experts were predicting markets would collapse along with the pound. Britain’s economy defied expectations and bounced from the initial shock with a speed and extent that caught many investors unaware.

Most analysts now expect the triggering of Article 50 will have little immediate influence on markets. However, the specifics of the Brexit deal itself are crucial – markets could suffer if negotiations prove difficult, although prospects for global growth look positive, with the low pound helping UK businesses take advantage of it.

So, what can you do to minimise this disruption to your business and to you personally?

Planning the future of your finances is never easy, and the slow but ongoing global recovery combined with the unknown from Brexit makes any prophecy doubly suspect.

Preparing for uncertainty may be the only solution. Maintaining a diverse investment portfolio, looking at ways to make the most from cash savings and fixing your mortgage while rates remain low are all sound ideas.

To discuss any aspect of your financial plan in the light of Brexit, please talk to us; we can help you prepare a business plan and build in various scenarios and make sure you are prepared for any turbulence.

We can also introduce you to a wealth management specialist to advise on your personal finances.

Remember “A sailor without a destination will never get a favourable wind”.

Additional IHT Relief for Passing on Family Home Started 6 April 2017

For deaths on or after 6 April 2017, there is now an additional £100,000 inheritance tax (IHT) allowance where the family home is passed on to direct descendants. This was originally announced on 8 July 2015 and that date is relevant where the deceased has downsized to a lower value property.

This additional relief increases to £175,000 in 2020, and where the relief was not used on the death of the first spouse, it is available on the death of the surviving spouse.

This means that after 6 April 2020, a married couple can potentially pass on assets worth up to £1,000,000 without paying IHT as there would be £350,000 relief against the value of the family home, in addition to the combined £650,000 nil rate bands (2 x £325,000).

As mentioned in previous newsletters, it may be necessary to review your will and estate planning to ensure that you take full advantage of this new relief.

Snap Election Means Shorter Finance Act Passed

The original Finance Bill published after the Spring Budget ran to nearly 700 pages. After the announcement of the General Election on 8th June, a significantly shorter Finance Bill was passed with many of the more detailed and more controversial measures being deferred to a later Bill.

Among the tax changes that didn’t make the cut, was the legislation to introduce Making Tax Digital. Many hope that the deferral of this  legislation to the next Finance Bill may mean that the planned start date in April 2018 will also be deferred. There will certainly be more time for proper debate of the proposed changes and the Treasury Select committee still has a number of reservations about the speedy implementation of such a significant change to the UK tax system.

Watch this space!

Tax Diary of Main Events

Date What’s Due
19 July PAYE & NIC deductions, and CIS return and tax, for month to 05/07/17 (due 22/07 if you pay electronically)
31 July 50% payment on account of 2017/18 tax liability due
01 August Corporation tax for year to 31/10/16 (unless quarterly payments apply)
19 August PAYE & NIC deductions, and CIS return and tax, for month to 05/08/17 (due 22/08/17 if you pay electronically)
01 September Corporation tax for year to 30/11/16 (unless quarterly payments apply)
19 September PAYE & NIC deductions, and CIS return and tax, for month to 05/09/17 (due 22/09/17 if you pay electronically)

Tax Free Dividend Allowance to be Reduced to £2,000

In the March 2017 Budget, Chancellor Phillip Hammond announced measures to limit the rise in tax-driven incorporation.

The £5,000 tax free dividend allowance introduced by George Osborne will be reduced to just £2,000 from 6 April 2018. Mr Hammond claimed that many smaller owner-managed businesses have incorporated as limited companies mainly for tax reasons. Typically the director/shareholders of such businesses have paid themselves in dividends and paid less tax than similar unincorporated businesses.

Currently, once the dividend allowance has been used, the remaining dividends are taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate. There are rumours that these dividend rates may also be increased in future years.

Although the cut in the tax-free dividend allowance is clearly aimed at owner managed companies, it will also impact on those with substantial share portfolios.

Mr Hammond reminded us in his speech that the annual ISA investment limit increases to £20,000 from 6 April 2017 and that dividends on shares held within an ISA continue to be tax free.

Should We Give Shares to Children and Pay £5,000 Dividends Tax Free?

The introduction of the £5,000 tax free dividend allowance has tempted many family company shareholders to give shares to other family members so that they can be paid £5,000 a year tax free. (Note that this allowance reduces to £2,000 from 6 April 2018).

Such a strategy needs to be carefully structured as there can be Capital Gains Tax on the gift of shares, and HMRC may also seek to tax the dividend as employment income under certain circumstances. The dividend will also be taxed on the parents if received by a child who is a minor.

If you are considering giving shares to other family members and then paying dividends, please come and talk to us first so that we can deal with this correctly.

New Trends in Online Search

The online world is constantly evolving. As such, the way that people use online search engines such as Google, Yahoo, Bing, etc. is changing all the time. Businesses need to keep up to date with these changes so that customers and potential customers can continue to find them online. Here are some of the big new trends that businesses need to be aware of.

People are now accessing their devices with their voice, using “digital assistants” such as Siri or Cortana to search online. This is becoming more common as voice recognition technology continues to improve.

Messaging apps
People are now spending more time using messaging apps than on social media. This includes apps such as WhatsApp, Snapchat, WeChat, etc. Usage levels of messaging services overtook social media in 2015. Since then, usage has continued to grow.

Look around the next time you are on a train or standing in a queue. You will notice that most people are staring at their smartphone screen, surfing the web and searching for information online. Since the arrival of the smartphone a few years back, mobile has become the primary channel through which people access the internet. One of the most significant consequences of this shift has been that we access the web much more often but for shorter periods of time.

Connected devices
According to a recent survey, people now own an average of 3.64 connected devices. This is going to keep on growing, particularly with the rise of the “Internet of Things” (IOT) and online digital assistants such as the Amazon Echo, Siri, etc.

What should you do next?
How you choose to take advantage of these trends depends on the type of business that you have and the customers that you are targeting.

Perhaps you should consider setting up a Snapchat or WhatsApp account for your business so you can tap into these marketing channels. If you haven’t already done so, perhaps it is time for your company website to be redesigned with “responsive” technology so that it resizes appropriately for smartphone screens, tablets, etc. Maybe there are new ways for Siri or Cortana to access your firm’s services? Now is the time to consider these trends and how leveraging them could be advantageous to your business.

Digital Tax is Coming – Be Prepared for the Change!

Her Majesty’s Revenue and Customs (HMRC) has issued plans to make businesses file quarterly information with them. How individuals and businesses interact with HMRC is changing.

Keeping your financial records will become increasingly digital and most businesses, the self-employed and landlords will need to use software or apps to keep business records – the days of manual record keeping will be over!

There are exemptions, but for most businesses with turnover above £10,000 you will need to start planning for Digital Tax now.

So, what’s the good news?

We’ve teamed up with a major Cloud software company to provide our clients with the best possible fully compliant accounts package, and there are significant benefits to your business if you use our recommended package:

  • It’s on the cloud so you can get a clear view of your finances any time any place
  • You will never need to do back- ups of your accounting software ever again
  • Run your business from work, home or on your mobile
  • It automatically grabs bank receipts and payments in real time
  • Use your mobile to photograph purchase invoices and expenses and upload these to the software
  • Automatically generate and submit VAT returns and other reports with one click!

Just suppose you could see your results, who owes you money, who you owe and your business bank balance 24/7 from your smart phone!

Over the next few months we will be contacting all our clients to discuss the new HMRC rules and to demo how easy the new system is. In the mean- time, if you are “Good to go”, call us and we will be delighted to help you comply with Digital tax and streamline take your business to a whole new level.

Are You Ready for the New EU Data Protection Laws?

Data protection laws are changing!

The General Data Protection Regulation (GDPR) comes into effect on the 25 May 2018. It’s a single set of rules that is designed to protect the personal data of individuals in their private, professional or public life.

The regulation will change the way your business can collect, use and transfer personal data. You will need to know where data is stored and you may even need to change the way data is collected and how you respond to requests about personal data you hold.

For SMES this means you will need to take some steps to demonstrate you’ve taken the GDPR seriously as there are significant sanctions and penalties for non- compliance, including fines of up to 4% of a business’s turnover.

What do you need to do now to make sure you are compliant?

A good start would be to look at your current approach to managing customer data and what and where it is held and document this. Then:

  1. Appoint someone in your business as the lead contact to manage the GDPR
  2. Identify any areas where customer data is not adequately protected or managed
  3. Review back up, disaster recovery and archiving processes for weaknesses
  4. Make sure everyone in the business knows about the new rules and your procedures
  5. Protect data on mobile devices in the same way as you would do in the business, and use encryption to prevent data if the device is lost or stolen
  6. Ensure everyone knows their responsibilities to protect personal data
  7. Document and regularly review your new procedures.

The new regulations apply to all businesses that hold personal data whatever the size. If you would like to know more and get a copy of our GDPR checklist for SMEs then please contact us.