You can change your company’s year end (also known as its ‘accounting reference date’) to make your company’s financial year run for more or less than 12 months.
You can only do this for your company’s current financial year or the one immediately before it.
Changing your company’s year end will also change your deadline for filing accounts, unless you’re lengthening your company’s first financial year.
If you shorten your year end by 1 day, you will get an extra 3 months from the date of filing the notice to shorten, so for example, if your year end was 31st March and your changed it to 30th March, due to file on 31st December and filed a notice on the 31st December, you could get until the 31st March to file
The rules are in http://www.legislation.gov.uk/ukpga/2006/46/section/442
If the relevant accounting reference period is treated as shortened by virtue of a notice given by the company under section 392 (alteration of accounting reference date), the period is—
(a)that applicable in accordance with the above provisions, or
(b)three months from the date of the notice under that section,
whichever last expires.
Its time to prepare for the end of the tax year – click here for details
We have a new company Simple Probate Limited which has now been authorised by the Institute of Chartered Accountants in England & Wales to carry out the reserved legal activity on non-contentious probate in England and Wales.
Details of our probate registration are available to be viewed at icaew.com/probate under our registration number C006147902.
Probate is the legal process to obtain the right to deal with someone’s property, money and possessions (their ‘Estate’) when they die.
Please see our website for more details http://www.simple-probate.co.uk/
We have been working with Croner Taxwise for a couple of years, we now have a microsite which explains more about the benefits of our relationship http://bicknell.cronertaxwise.co.uk/
Many property investors lend to other property companies via their company, often in a Joint Venture approach because 100% LTV isn’t available.
Their property business could have losses from their trading activity but the losses can’t be offset against interest received unless its an integral part of the business.
General test – whether an integral part of the business
The general test is that interest normally rank as trade receipts only where it is an integral part of the business operations to employ capital to produce such income, for example, in the case of banks and other financial concerns.
HMRC practice regarding interest
In the particular case of interest on investments, the HMRC view is that interest on an investment may be treated as trading income if:
# the investment is for a short term and
# it is an integral feature of the trading activity to make such an investment and
# the funds deposited can be regarded as continuing to be employed in the business and to form part of the current working capital.
Investments made in the course of banking, insurance and other financial trades will normally meet these conditions.
Investments by non-financial concerns are unlikely to meet these conditions, if for example they:
# endure from one period of account to another, or
# represent capital even if it is only temporarily surplus to requirements, or
# although short term, represent part of a series of deposits which together constitute a long term setting aside of part of the capital.
The rules are in
How will yesterday’s budget affect you?
Download our report to find out Click Here
Budget Highlights 2018
• The personal allowance threshold, the rate at which people start paying income tax at 20%, to rise from £11,850 to £12,500 in April – a year earlier than planned
• The higher rate income tax threshold, the point at which people start paying tax at 40%, to rise from £46,350 to £50,000 in April
• After that, the two rates will rise in line with inflation
• National Living Wage increasing by 4.9%, from £7.83 to £8.21 an hour, from April 2019.
Off Payroll IR35
• The employer will be responsible for deduction of tax and NI for personal service companies
• Small organisations will be exempt
• The crackdown is the biggest revenue-raising measure in this year’s Budget
Support for the High Street
• Small retail businesses will see their business rates bills cut by a third for two years from April 2019, saving them £900 million.
• Local high streets will benefit from £675 million to improve transport links, re-develop empty shops as homes and offices and restore and re-use old and historic properties.
• Public lavatories will receive 100% business rates relief.
• This adds to previous reductions in business rates since Budget 2016 which will save firms over £12 billion over the next five years.
Annual Investment Allowance
• The government will increase the Annual Investment Allowance five-fold from £200,000 to £1 million to help businesses to invest and grow.
• Also, from October 2018, businesses will be able to deduct 2% of the cost of any new non-residential structures and buildings off their profits before they pay tax.
Following the success of my Making Tax Digital Seminars and I am making 3 filmed webinars for MBL on Property Tax
Furnished Holiday Lets & Serviced Accommodation – Tax Matters
Using a Company Vehicle for Property Investment – A Guide for Accountants
Option to Tax on Commercial Property Conversions – A Guide for Accountants & Tax Advisors
These are a useful guide to current tax and accounting rules and include tips on how to avoid problems.
I have recently taken out Relevant Life Insurance and this explain why.
When you are formally employed and working for a large company, you can benefit from group life schemes and death in service.
When you work for yourself however, as a contractor and company Director, you will likely be paying for life insurance out of your own pocket and taxed income.
This no longer needs to be the case.
Relevant Life Insurance was designed to afford small businesses the opportunity to benefit from the same tax breaks large corporations enjoy through group life schemes. Essentially,
a Relevant Life Policy allows for you to pay your personal life insurance through your company and as a business expense, rather than through taxed income.
Paying for your life insurance through your business in this way means that you can make significant savings:
Let’s use the example that you own your own business and pay £100 a month on life insurance from your own pocket.
If you’re a 40% taxpayer, there’s income tax and 2% employee national insurance contribution, plus 13.8% employers’ national insurance contribution.
In fact, after 19% corporation tax relief the net cost to your company works out at £158.93
If you pay £100 a month for a Relevant Life Plan you won’t pay any national insurance contributions or income tax on the premiums but you still get the 19% corporation tax relief which means the net cost is only £81.
That’s a saving of £77.93 a month or £935.16 over the year.
To qualify for a Relevant Life Insurance policy you or your client simply need to be a salaried Director or an employee of a limited company and resident in the UK.
Assuming you own the property personally and its not your main residence (and benefiting from Principle Private Residence Relief), there are 2 rates of capital gains tax 18% for lower rate tax payers and 28% for higher rate tax payers.
You also have a CGT allowance which for 2018-19 is £11,700.
As a rough guide to assessing the tax
- Work out how much you have earned – Salary, Pension, Dividends etc
- Calculate your taxable gain + Sale Price – Sale Costs – Purchase Price – Purchase Costs – Improvements
- You can then deduct the CGT allowance of £11,700 from the Gain (assuming you haven’t used against other gains)
- If the total of 1 to 3 comes to more than £46,350 you pay 28% tax on the capital gain, if the total is less than £46,350 you will pay 18% on the gain until you hit £46,350 then pay 28% once you exceed it
You can now pay CGT straight away using the HMRC online service but most people do via self assessment and pay by 31st January following the end of the tax year.