Day: June 19, 2012

Simpler Income Tax for the Simplest Small Businesses

HMRC issued a consultation paper on the 27th March inviting comments until 22nd June 2012.

From April 2013, the Government proposes to introduce a voluntary cash basis for small businesses to calculate their income tax along with simplified arrangements for some business expenses.

The proposals are, that those who choose to use the new regime will be taxed on the basis of their receipts less allowable payments for expenses, rather than needing to spend their time doing accounting designed more for big business.

The Government is exploring proposals that small businesses with receipts of less than £77,000 would be eligible to use the cash basis, and that they could continue to use it until their receipts rise to more than £150,000 in any year.

Some accountants are concerned that this will mean they lose business as their services won’t be needed but others are concerned that the self employed could end up paying the wrong tax because of issues such as pre-trading expenses.

Soon we will find out the results.

steve@bicknells.net

 

 

 

Did you issue shares to Employees or Directors? Form 42 due 6th July

HMRC F0rm 42 – Employment-related securities – covers most situation where you issue shares to employees or directors, however, you may not need to complete the form in some circumstances:

  1. On Company Formation
  2. Allotment of shares prior to starting to trade
  3. Shares issued to Directors before the company starts to trade
  4. Transfers of shares in the normal course of the domestic, family or personal relationships
  5. Flat Management Companies
  6. Members’ clubs (formed as companies)
  7. Share for share exchange
  8. Rights Issues
  9. Bonus Issues
  10. Scrip Dividends
  11. Dividend reinvestment plans (DRIPs)
  12. Shares acquired independently by employees

Examples of what you must report:

  • The gift or purchase of shares by employees or directors.
  • The grant or exercise of options granted to employees or directors.
  • Anything that changes the value of the shares held by employees or directors.
  • The sale of employees’ or directors’ shares for more than their market value.
  • Cash cancellation payments to employees or directors.

Penalties

Penalties are not imposed automatically, the company is warned of their failure to make a report on a minimum of two occasions before the case is referred to the tribunal. The penalties can be £300 per responsible person and £60 per day outstanding.

Here is a link to the 2012 Form 42 http://www.hmrc.gov.uk/shareschemes/form42-2012.pdf

 

steve@bicknells.net