Strategies for saving tax ahead of the 5 April year end

With the end of the 2017/18 tax year approaching, now may be the ideal time to think about strategies to help mitigate your tax liability. There are many different options to consider so do contact us for further advice.

Reducing your personal tax liability…

Are you making the most of your tax-free personal allowance (PA)? Individuals are entitled to their own PA, which is set at £11,500 in 2017/18. Therefore, if your spouse or partner has little or no income, you could stand to benefit by spreading your income more evenly to ensure that each PA is being fully utilised.

Some married couples may also be eligible to transfer 10% of their PA to their spouse under the Transferable Tax Allowance, or ‘Marriage Allowance’. It means £1,150 may be transferred in 2017/18, which could help to reduce a couple’s tax liability by up to £230 in this financial year. Certain rules apply.

And despite relatively low interest rates, for many individuals ISAs are still an attractive tax-free way to save. For 2017/18, the overall subscription limit for ISAs is £20,000, of which no more than £4,000 can be deposited into a Lifetime ISA. With a range of ISAs to choose from, you have until 5 April 2018 to make your 2017/18 ISA investment.

… and your business’s tax bill

Are you maximising claims for capital allowances? The majority of businesses are able to claim a 100% Annual Investment Allowance on the first £200,000 of expenditure on most types of plant and machinery (except cars). In many cases, a purchase made just before the end of the current accounting year will mean that the allowances are available a year earlier than if the purchase was made just after the year end.

Business owners may also wish to consider tax-efficient ways in which they can extract profit from their business. There are many ways to achieve this. Some may opt to take dividends instead of a salary or bonus, as these are paid free of national insurance contributions. Others may wish to talk to us about incorporating their business, while employer pension contributions can be another tax-efficient means of extracting profit.

As always, it is important to seek our advice before taking action. For more information on tax-saving strategies to implement ahead of the 5 April 2018, please visit the Hot Topics section of our website.

Our new app – Tax Ready – is now available to download!

Our brand new smartphone app – Tax Ready – is now available to download on Apple, Android and Windows devices!

Created with business owners and managers in mind, Tax Ready provides key tax rates and convenient access to a range of useful tax tools, news and tips in one app.

The app comes with tools such as mileage and expense trackers – which make it easy to keep a track of your claims whilst on the move.

To find the app, search ‘Tax Ready’ in your app store. It’s completely free to download and use.

We hope you find it a useful and informative resource.

Business groups respond to Brexit customs papers

Some of the UK’s leading business groups, including the Confederation of British Industry (CBI), the British Chambers of Commerce (BCC) and the Institute of Directors (IoD) have responded to the publication of Brexit customs position papers by the Department for Exiting the European Union.

The government states that it is seeking to secure a new customs arrangement which ‘facilitates the freest and most frictionless trade possible’ between the UK and the EU. Its newly published paper outlines two customs approaches: a ‘highly streamlined’ customs arrangement between the UK and the EU, and a new customs partnership with the EU.

The ‘streamlined’ approach would seek to continue some of the existing customs arrangements between the UK and the EU, as well as reducing or removing barriers to trade by establishing new arrangements. Meanwhile, the new customs partnership would ‘remove the need for a UK-EU customs border’.

Responding to the publication of the papers, Josh Hardie, CBI Deputy Director General, said: ‘Companies will welcome the progress government has made . . . in publishing these papers. Over the past year, businesses have been providing policymakers with the evidence, ideas and solutions to make a success of Brexit.’

Dr Adam Marshall, Director General of the BCC, called for clarity on future customs arrangements, stating: ‘Business needs to see the government’s resources focused on the conclusion of a successful customs deal with the EU. At this stage, it is critically important to keep a number of different options open in order to achieve this goal.’

Meanwhile, the IoD welcomed the government’s ‘first concerted push on trade after Brexit’. The Institute’s Allie Renison said: ‘This is a hugely positive step from government in putting pen to paper to spell out its objectives for customs arrangements with the EU after Brexit. The paper outlines options for a transitional period and for the longer term, proving that both are crucial to achieving a smooth and orderly exit.’

A second Brexit customs paper has outlined proposals to ensure that existing trade in goods and services can continue after the UK leaves the EU in 2019. It calls for goods already on the market to be allowed to remain on sale in both the UK and the EU, ‘without restrictions’.

FSB urges Low Pay Commission to delay National Living Wage rise

The Federation of Small Businesses (FSB) has called on the Low Pay Commission (LPC) to consider whether forthcoming rises in the National Living Wage (NLW) rate may need to be put on hold if the economy cannot bear the pace of change.

The NLW rose in April 2017, and presently stands at £7.50. The government has pledged to bring the NLW to £9 per hour by 2020. However, the Office for Budget Responsibility (OBR) has estimated that this will ‘fall short’, and may only reach £8.75 an hour by this time. The FSB has stated that any risk to the UK economy should be ‘built into the next NLW increase’, which is scheduled for April 2018 – suggesting that the NLW should rise to no higher than £7.85 next year.

The FSB is concerned that the NLW does not currently take into account the state of the UK economy and inflationary issues, and has highlighted a ‘string of recent poor economic statistics and continued uncertainty’ as reasons for the LPC to consider delaying the planned rises.

The call followed the FSB’s publication of new research, which revealed that 64% of small firms affected by the NLW have recorded lower profits in order to meet the April 2017 rise, while 39% have had to put up prices to meet the demands of the NLW.

Commenting on the issue, Mike Cherry, FSB National Chairman, said: ‘Small employers have demonstrated their resilience in meeting the challenges set by the NLW, with many cutting their margins or even paying themselves less to pay their staff more.

‘In sectors where margins are tight, small firms are resorting to more drastic measures to cope with the NLW.

‘It’s vital that the NLW is set at a level that the economy can afford, without job losses or harming job creation. Cost pressures on small businesses are building, and with most recent economic indicators underperforming, we are now facing the reality that the NLW target may need to be delayed beyond 2020.’

The LPC is set to make its NLW recommendations to the government in the Autumn.

Business Groups React to Taylor Review of Employment

Business groups have reacted to the recommendations of the Taylor Review into modern-day employment practices, which sets out the key principles for providing ‘fair and decent work for all’.

The review suggests that a national strategy is needed to help provide security in such areas as wages, quality of employment, education and training, working conditions, work-life balance and the ability to progress at work.

Recommendations for the government include implementing strategies to ensure that workers don’t get ‘stuck at the living wage minimum’, initiating a review focusing on providing employees with ‘good work’, and avoiding an increase in the non-wage costs involved in employing an individual, such as the Apprenticeship Levy.

The review also highlights the so-called ‘gig’ economy, recommending the creation of new ‘right to request’ guaranteed hours, and the introduction of the term ‘dependent contractor’ to replace the term ‘worker’, with the aim of capturing those who are currently classed as self-employed, but who work for firms which have a ‘controlling and supervisory’ relationship with their workers.

Business groups have given mixed reactions to the report’s findings, with many welcoming the focus on labour market flexibility, but also warning that some areas, including the plans to rewrite employment status tests, are a cause for concern.

Commenting on the report, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: ‘The world of work is changing, and it is only right that employment law and practice change with it. Matthew Taylor has rightly recognised that the UK’s flexible labour market is a great source of strength and competitive advantage, but has also recommended some common-sense changes where grey areas have emerged in recent years.’

However, the Trades Union Congress (TUC) warned that the review ‘is not the game-changer needed to end insecurity and exploitation at work’.

Recommended App – Zoom

ZoomLogoBlue_copyFollowing last month’s article (the first in our series of monthly app recommendations), our featured app for July is:

ZOOM

What is it?

Zoom is a video conferencing solution which can be used on your desktop, tablet or mobile. It can be used for 1 to 1 video meetings, conference calls or to host webinars.

How much does it cost?

The pricing structure is staggered for different requirements but the basic version is free.

Features

The free version enables 1 host (the person holding the meeting/the account holder) to have group video meetings with up to 100 participants, for up to 40 minutes. The host can arrange as many 1 to 1 meetings as they like (without a time limit)… The 40 minute limit only applies to group meetings of 3+.

Meeting attendees (i.e. people that the host has invited to join), don’t need a Zoom account to participate – they just need a meeting code or link to join.

If required, the meeting host can share their desktop/screen with attendees.

Why we recommend it

  • It’s quick and simple to install and use on any device. We’ve generally used it on the I Pad app – which is very intuitive and easy to navigate.
  • It has some very clever features. For example, in group meetings, the picture automatically switches to the person that is speaking (i.e. you don’t have lots of small faces on the screen at once – just the face of the person that is talking).
  • If the video link fails, or connectivity is poor for an attendee, they can dial into the meeting by telephone using a VOIP number that is generated for the meeting.
  • Scheduling meetings and inviting attendees is really easy and looks smart and professional.
  • The free version is great but the ‘small business’ version (£11.99 per month per host) also provides an affordable solution with great additional features.

 

 

Business groups call for ‘softer’ Brexit as negotiations begin

The Queen delivered her annual speech at the state opening of Parliament against a backdrop of political and economic uncertainty. This year’s speech outlined the government’s legislative plans for the next two years, following the government’s decision to cancel the 2018 Queen’s Speech in order to give MPs ‘extra time to deal with Brexit laws’.

The speech included a number of Brexit-related bills, designed to pave the way for the UK government to make future changes to UK laws. The bills also grant the UK government flexibility to accommodate trade agreements with the EU and other countries, control over the import and export of goods and the ability to end the free movement of EU citizens into the UK.

Other proposals outlined in the speech include a data protection bill designed to strengthen consumers’ rights, a national insurance contributions (NICs) bill aimed at ‘making the system fairer’, and a financial guidance and claims bill, which establishes a new statutory body to co-ordinate the provision of debt, money and pensions guidance.

The government also announced that it will issue three Finance Bills over the coming two years, in order to ‘implement Budget decisions’. Summer Finance Bill 2017 is set to outline ‘a range of tax measures’, including plans to tackle avoidance.

Ahead of the speech, leading UK business groups called on the government to secure continued access to the European single market until a final Brexit deal can be struck with the EU.

Commenting on the contents of the Queen’s Speech, Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: ‘While Brexit isn’t the top immediate priority for many businesses, firms of every size and shape want to avoid turbulence and confusion during the Brexit transition. The government’s proposed bills on trade, customs and immigration must minimise adjustment costs and maximise opportunities.’

Meanwhile, a snap poll carried out by the Institute of Directors (IoD) following the election found that business confidence in the UK economy has ‘fallen dramatically’.