Only 8 days left to file your Self Assessment! don’t panic Reply

Red help button concept.

Over 4 Million Self Assessment Returns (over 40%) will be filed in January 2017, last year the 29th January saw the highest level of filing with 50,358 returns filed between 2pm and 3pm on that day!

Its likely that many of those who haven’t yet filed their 5th April 2016 returns will either start to panic now or the panic will set in and increase in the next few days.

Here are some things to ease that panic.

What if you don’t have all the information you need for the return?

Returns which include provisional or estimated figures should be accepted provided they can be regarded as satisfying the filing requirement.

  • A provisional figure is one which the taxpayer / agent has supplied pending the submission of the final / accurate figure
  • An estimated figure is one which the taxpayer / agent wishes to be accepted as the final figure because it is not possible to provide an accurate figure for example where the records have been lost. The taxpayer is not required to tick box 20 of the Finishing your Tax Return section of the return page TR 6 (or equivalent in a return for an earlier year) where estimated figures have been used

HMRC SAM121190

Is there a reasonable excuse as to why you can’t file the return?

Here are some excuses that HMRC have accepted

  1. a failure in the HMRC computer system
  2. your computer breaks down just before or during the preparation of your online return
  3. a serious illness, disability or serious mental health condition has made you incapable of filing your tax return
  4. you registered for HMRC Online Services but didn’t get your Activation Code in time
  5. it was lost in the post HMD Response International v’s HMRC 2011 The accountant produced a contemporaneous note in his office diary for 16 May showing that he had filed the return.

What if you make a mistake?

If you make a mistake on your tax return, you’ve normally got 12 months from 31 January after the end of the tax year to correct or amend it.

What if you don’t know where to send the payment?

For all those struggling to work our whether to make a bank transfer to HMRC Shipley or Cumbernauld

Your payslip tells you which HMRC account to use. If you’re not sure, use HMRC Cumbernauld. You must use your UTR as the payment reference.

Sort code Account number Account name
083210 12001039 HMRC Cumbernauld
083210 12001020 HMRC Shipley

If you make a Faster Payment this will clear the same day if the amount is within your bank’s limits.

https://www.gov.uk/pay-self-assessment-tax-bill

What if you don’t know how much to pay because of payments on account?

You can check the amount by logging onto HMRC or by asking your accountant to check with their Agent Login.

If you make payments on account you will have made payments in January 2016 and July 2016 towards the final payment to be made in January 2017.

What are the penalties for missing the deadline?

HMRC have tool to help you estimate the penalties and interest

https://www.gov.uk/estimate-self-assessment-penalties

steve@bicknells.net

How do you leave the Flat Rate Scheme? 1

Businesswoman Leaving Job vector

In the next few weeks and months many small businesses will leave the VAT Flat Rate Scheme.

The reason why Flat Rate is going see an exodus is because of Low or Limited cost traders will see their Flat Rate increased to 16.5% in April.

So for example

If your sales are £5,000, the VAT is £1,000, total £6,000 x 16.5% = £990 VAT payable, so HMRC have let you keep £10!

It is highly likely that almost every trader will have input tax higher than £10 so therefore there is no point in being in the Flat Rate Scheme.

How to leave

You can choose to leave the scheme at any time.

To leave, write to HMRC and they will confirm your leaving date.

HM Revenue and Customs
Imperial House
77 Victoria Street
Grimsby
Lincolnshire
DN31 1DB

Ask your accountant if you need help.

steve@bicknells.net

Are you part of the ‘Gig’ economy? Reply

Concert Rock

The ‘Gig’ economy describes the growing popularity of using workers on short term contracts on an on demand basis.

gig

There of course several issues to consider:

  1. Are these workers really employees? or self employed?
  2. How should they be taxed?
  3. What rights should they have?

These issues are being considered carefully by the Office for Tax Simplification (OTS).

What we do know is that Self Employment has been growing in popularity as demonstrated by ONS statistics.

The level of self-employment in the UK increased from 3.8 million in 2008 to 4.6 million in 2015. While this strong performance is among the defining characteristics of the UK’s economic recovery, the recent rise in self-employment is the extension of a trend started in the early 2000s.

Full-time and part-time workers each account for around half of the rise in the absolute number of self-employed workers, but the growth rate of the part-time mode has been much stronger. Part time self-employment grew by 88% between 2001 and 2015, compared to 25% for the full-time mode. As a result, part-time self-employment accounts for 1.2 percentage points of the 1.6 percentage point increase in the self-employment share of all employment between 2008 and 2015.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/articles/trendsinselfemploymentintheuk/2001to2015

What is also interesting is the split between male and female

self-employed-chart

Statistically Self Employed earnings are lower than those who are employed, however, Self Employed earnings are masked by fluctuating work patterns and the use of tax planning for example cars and expenses.

What are your views on the ‘Gig’ economy? is it good for Britain?

steve@bicknells.net

 

Business Connections Newsletter – January Reply

bicknell-news-7-jan-2017

Did you see our January Newsletter:

  • How can I stop my Flat Rate VAT bill going up in April? Choose the right VAT scheme now!
  • What tax allowances can childminders and parents claim?
  • Why Property Investors are rushing to form Limited Companies?
  • It’s a new year, let’s get networking

Click on this link to get a copy http://eepurl.com/cwT4n5

Sign up to our mailing list http://eepurl.com/b6k7HH

steve@bicknells.net

What is your plan for 2017? Reply

Business Diagram

Now 2017 is in full swing, its time you thought about your business plan.

Before you do anything, sit down and think about

  1. How and where your income will come from
  2. What your Costs and Profit will be
  3. What your cash requirements are
  4. Which business structure will work for you and assess what tax you will need to pay

If you have a plan statistics show you are likely to make 20% more profit!

 

accountants-smaller

steve@bicknells.net

Why are property investors rushing to form limited companies? Reply

Hand writing the text: Property News

During October to December 2016, 69% of all new Buy to Let purchase applications were made by Limited Companies according to Mortgages for Business.

The percentage of remortgage applications in company names also increase to 31% in Q4 up from 23% in Q3 last year.

The total number of lenders offering Buy to Let finance to limited companies remained stable at 14 and the total number of products available rose slightly from 195 in Q3 to 198 in Q4.

This is despite the fact that lenders are still charging higher rates of interest for companies, often 1% extra.

I think lenders will very soon be forced to bring rates into line as competition amongst lenders increases.

The main driver has been the Restriction of Mortgage Interest Tax Relief

2017/18 75% of the interest can be claimed in full and 25% will get relief at 20%

2018/19 50% of the interest can be claimed in full and 50% will get relief at 20%

2019/20 25% of the interest can be claimed in full and 75% will get relief at 20%

2020/21 100% will get only 20% relief

For a 20% tax payer that’s fine but for higher rate taxpayers its a disaster that will lead to them paying a lot more tax

These rules will not apply to Companies, Companies will continue to claim full relief.

Companies have many other advantages too:

  • Stamp Duty on Shares is 0.5% so if you own each property in a separate company you can sell the shares rather than selling the company
  • Holding properties in separate companies makes it easier for lender to take a charge over the business assets
  • Companies are better for Inheritance Tax Planning enabling the company shares to be given away in stages
  • Corporation tax is 20% and falling which means if you want to grow you portfolio you will retain more of the profit for re-investment

Companies have to be the way forward for investors.

Ask your accountant!

steve@bicknells.net

 

Are my costs Capital or Revenue expenditure? Reply

Stress business woman

It makes a big difference to your tax whether you can offset costs as revenue expenditure or remove costs because they are capital expenditure

HMRC published a guide on this in September 2016 and have circulated in in their Agent Alert Self Assessment Special January 2016.

https://www.gov.uk/government/publications/hmrc-capital-vs-revenue-expenditure-toolkit

The Toolkit is really useful and covers lots of problem areas:

  • Acquisition, improvement and alterations to assets – highly relevant to property investors
  • Legal and Professional – including how to handle unsuccessful property purchases – which are a capital cost – and Business Owner Training Costs
  • Finance Costs
  • IT Costs – including websites
  • Intangible assets – such as Goodwill

steve@bicknells.net

When does a SSAS/SIPP property become residential? Reply

foreman builder and construction worker with blueprint in indoor apartment

This question comes up a lot, the definitive answer is in the HMRC pension manual…

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm125200#IDAYYPQB

Property converted or adapted as residential property

The definition of residential property is a building or structure that is used or suitable for use as a dwelling. It does not therefore apply to property, including land, which is not residential property when the investment-regulated pension scheme acquires it. But the building or structure may become residential property whilst owned by the pension scheme as a result of being subsequently subject to development.

Whilst it is in the course of construction, conversion or adaptation such land and property is not residential property because during that period it is not suitable for use as a dwelling.

Land and buildings being converted are treated as residential property from the point when they become suitable for use as a dwelling.

In any specific case this point should be determined by taking a common sense approach to the facts and circumstances.

Essentially the question to be answered is: would a person normally live in that dwelling?

The point at which this occurs will normally be when the works are substantially completed. In the case of UK property this is likely to be when the certificate of habitation is issued.

A property that is sold before the development or conversion is substantially completed never becomes residential property.

steve@bicknells.net

Why don’t Partnerships pay SDLT on land transfers? Reply

 

strategies

With the introduction of interest rate restrictions from 2017/18 for individual Property Investors there has been a lot of interest in incorporating property businesses.

Technically property investment isn’t a business although HMRC seem to have blurred the lines with their Making Tax Digital documents which describe Property Investment as a Business.

The recent clarification from the Ramsay case has meant that even investors with a small portfolio are likely to qualify for incorporation tax relief provided the landlord is sufficiently active in managing their properties. Claiming Incorporation Tax Relief rolls forward the capital gain into the company.

So that leaves SDLT and re-financing costs as the next major hurdles.

The rules on SDLT for Partnerships are in the Finance Act 2003 Schedule 15 and amendments in the Finance Act 2006 Schedule 24.

http://www.legislation.gov.uk/ukpga/2003/14/schedule/15

http://www.legislation.gov.uk/ukpga/2006/25/schedule/24

It is complicated but essentially it comes down to the following formulae

MV x (100 – sum of lower proportions (SLP))%

What this means is that if the land being put into the partnership is effectively retained by the transferor-partner (or persons connected with the transferor) after the transaction, you basically end up with:

MV x (100-100) = £0

So a husband and wife partnership owning 50% each could transfer the property to a company for 50% of the shares each and in theory there would be no SDLT charge.

To qualify as a Partnership or LLP:

  1. You need to be registered with HMRC
  2. You need a partnership agreement
  3. You need separate bank accounts
  4. Leases and Agreements need to be in the name of partnership

HMRC also require that any restructuring is for Commercial Reasons and not to avoid tax, otherwise it will be caught by anti tax avoidance rules.

steve@bicknells.net

 

 

 

2016 was our best year ever! Reply

wordpress-2016

If your business doesn’t have a blog, I recommend that you start one in 2017.

The key reasons why you need a blog are:

  1. It helps you and your business to become the ‘go to expert’
  2. It massively increases inbound traffic and raises your social media profile
  3. Its an opportunity to give back and to help your audience resolve common problems

wordpress-2016-insights

wordpress-2016-referrers

steve@bicknells.net