Author: Steve Bicknell

Progressive Property Approved Accountant, Business Expert and Trainer/Speaker with Redcliffe Training, MBL Seminars and UK Training ►MD ► Bicknell Business Advisers ✸ family business providing accountancy, tax, and consultancy services to SME's and Start Ups - Xero, Sage One, QuickBooks, Freeagent, Kashflow, Hammock, Dext - Receipt Bank ✸ www.bicknells.net www.stevejbicknell.com

The end of FRSSE here comes FRS102 and FRS105

junge frau lernt für eine prüfung

The Financial Reporting Council issued amendments (27th July 2015) to the UK accounting standards, ushering in a new financial reporting framework for small and micro-entities. The changes are mainly as a result of the new EU Accounting Directive.

The key changes are:

  • FRSSE has been withdrawn
  • FRS102 – A new section has been added to FRS102 with disclosure requirements for Small Companies
  • FRS105 will be the new reporting standard for Micro-Entities

The changes come into effect from 1st January 2016.

This is a big change, are you ready for it?

steve@bicknells.net

Is a Company the best way forward for Buy to Lets?

Mosaïque de logements

The Summer Budget made this decision even more complicated!

First landlords have a lot to consider..

  1. Transferring their portfolio will probably incur Stamp Duty and Capital Gains
  2. Mortgages can be harder to find and more expensive for companies
  3. Share ownership options and objectives
  4. Company Admin, Accounts and Tax
  5. Capital Gains Allowances, ATED and IHT

But one key advantage is explained by Adrian Benosiglio, real estate tax partner at Baker Tilly (www.yourmoney.com)

For example, Mr Jones (a 45% taxpayer) has a house with net rental income of £100,000 and mortgage interest of £90,000. Currently he would pay £4,500 income tax on profits of £10,000.

From April 2020, he’ll pay £27,000* income tax. This is calculated by applying his marginal rate of tax to his rental income (£100,000 x 45%) which gives a tax liability of £45,000 and offsetting this with tax relief claimed on the mortgage interest at the lower amount of 20% (90,000 x 20%) which would give tax relief of £18,000. This would leave Mr Jones with a tax bill of £27,000 (£45,000 less £18,000). The end result would be an overall annual loss after tax of £17,000, with insufficient cash flow to make repayments on his loan.

A company is not affected by these measures and therefore would receive full mortgage interest relief. Additionally, corporation tax is charged at 20% and is due to fall to 18% in 2020. Using the above example, a company would pay £2,000 currently and £1,800 from 2020; leaving sufficient funds to make repayments.

Complicated isn’t it!

steve@bicknells.net

10 reasons why 9,966 people read this blog last month?

Blog Technical Squares

I have been blogging regularly for a few years now and last week http://www.stevejbicknell.com reached a staggering 200,000 hits and its growing in popularity every day, here are the Statistics for 2015, these are monthly numbers of views and the number that came to blog via a search engine.

Blog Stats

I think its impressive that most of the hits are driven by being found in search engines, thank you Google!

I also have a large base of followers who get my blogs by e mail or follow the blog on wordpress.

So why do people read my blog?

  1. Useful Content – I learned a long time ago that if you want followers and readers you have to write about things that will interest as wider audience as possible. My blog is about Accounting and Tax, which you might think is boring but it does affect everyone, we all pay tax! and there is plenty to blog about.
  2. Accurate Content – Its important to get the content right but even if you do make a mistake you can bet your life someone will tell you. Fortunately most readers are very helpful and will also contribute suggestions.
  3. Regular Posts – you have to post regularly, I post 2 or 3 times a week, I prepare them in advance and schedule them
  4. Variety – I try cover a wide variety of topics and my audience appreciate it, I even get special requests
  5. Pictures – Blogs without pictures, charts and graphics are boring
  6. Share – Post your blogs every where on Social Media and encourage others to do the same
  7. Pick a good title – The title will be found by search engines so try to think about what someone might search for
  8. Video – You Tube has plenty and most people would love you to link to their video as it will increase their hits as well as yours
  9. Infographics – I love infographics and I try to create my own when I have time
  10. Keep it simple – Lets face it Tax is complicated, so I try not to make the blogs too complicated otherwise I will lose followers

steve@bicknells.net

BBA-small

 

Small Business Saturday 2015 – Register Now!

Small-Business-Saturday-UK-Facebook-Banner-2015-White

The UK’s most successful small business campaign, Small Business Saturday, has been launched and this year it will be on Saturday 5th December.

In 2014, approximately 16.5 million adults supported at least one small business on Small Business Saturday, with almost two-thirds (64 per cent) of the British people aware of the campaign.

The organisers say…

We want all kinds of small businesses to get involved, so know that whether you are a family business, local shop, online business, wholesaler, business service or small manufacturer, Small Business Saturday is supporting you!

Small Business Saturday UK is a grassroots, non-commercial campaign, which highlights small business success and encourages consumers to ‘shop local’ and support small businesses in their communities. The day itself takes place on the first shopping Saturday in December each year, but the campaign aims to have a lasting impact on small businesses. In 2015 Small Business Saturday will take place on Saturday, December 5th.

Sign up and get involved https://smallbusinesssaturdayuk.com/

steve@bicknells.net

Do you need help with HMRC?

Unhappy office worker on the phone, isolated on white

HMRC aren’t easy to speak to and unless you know the tax rules its easy to make mistakes, that’s why HMRC allow you to appoint agents to help you with your tax affairs.

To appoint an agent you use form 64-8

Form 64-8 covers authorisation for individual tax affairs (partnerships, trusts, tax credits and individuals under PAYE) and business taxes (VAT, PAYE for employers and Corporation Tax). If you’re a personal representative you can use form 64-8 in certain circumstances to ask HMRC to deal directly with an agent.

There are times when you might want extra help for example with an HMRC Compliance Visit and you can appoint a temporary agent using form COMP1.

The Comp1 relates only to the appointment of an adviser to deal with a compliance check. It does not authorise us to deal with that adviser for anything outside that check. Form Comp1 does not replace or amend any existing authorisation made using form 64-8 or the online authorisation facility, or in CITEX cases a letter giving authority for the agent to act.

The temporary authorisation can be used to:

  • extend an existing authorisation, for example where there is an adviser acting for one tax under a form 64-8, and the customer wants that adviser to act for more taxes just for the purpose of the compliance check
  • appoint an adviser to deal solely with the compliance check where there is no existing adviser authorisation
  • appoint a ‘specialist’ tax adviser, for example in Specialist Investigation cases, just to deal with a compliance check. In such cases this will allow the existing adviser to continue to act for the customer in their day to day tax matters.

[HMRC CH201550]

Do you need help?

steve@bicknells.net

Will I get £30,000 tax free? Termination Payments

Dejected just fired an office worker with personal belongings in a box

Basically the current situation is that the first £30,000 of a payment which is paid in connection with the termination of employment is tax free, as long as it is not otherwise taxable as earnings. It sounds simple but can be complicated, here is a government example

 

Termination Example

The Office of Tax Simplication are currently consulting (until 16th October 2015) on changing the rules one solution is to make it more like redundancy payments, take a look at these examples

Termination 2

There will also be some anti avoidance rules that if you are re-engaged within 12 months in similar job with the same company the payments previously made would become subject to tax and NI.

It looks like we are in for some major changes, its not too late for you to have your say, click on this link

steve@bicknells.net

Is this the End of National Insurance?

Pay Packet And Banknotes

You pay National Insurance contributions to qualify for certain benefits including the State Pension.

You pay National Insurance if you’re:

  • 16 or over
  • an employee earning above £155 a week
  • self-employed and making a profit of £5,965 or more a year

The Office of Tax Simplification is currently beginning a process of looking at merging National Insurance with Income Tax.

OTS NI TOR

ACCA’s head of tax Chas Roy-Chowdhury warned that an alignment of NI and income tax rates would be crucial prior to a merger taking place.

Whilst This is Money reported…

Middle and high earners could see their tax bills jump under radical plans to merge income tax and National Insurance, a tax expert has warned.

People taking home £50,000 a year could be £230 worse off, but low earners on £20,000 would save more than £530, and those on £30,000 would come out around £380 ahead, according to snap research by Tilney Bestinvest on the potential tax shake-up.

Chancellor George Osborne wants to reduce ‘complexity’ in the tax system to make it clearer exactly how much people have to cough up, and has ordered the Office of Tax Simplification to see if there is a case for change.

This change is also likely to lead to changes to Pension tax relief reform, Your Money reported…
The government has already announced a consultation on the pension tax relief system, and I believe that a merger of income tax and NI would likely result in the floated idea of a pension with ISA-like tax treatment. This is because at present, a basic rate taxpayer gets 20% tax relief on pension payments but surely this would increase to 32% under a combined system. It seems illogical to increase tax relief at a time when they are actually trying to reduce the cost to the Exchequer. An equal tax treatment of ISAs and pensions could be a prelude to merging the two, potentially drawing ISAs into some form of limetime allowance.
steve@bicknells.net

What do FD’s want their ERP system to do? Finance Transformation

ERP CIMA

The chart (Figure 8) is an extract from the CIMA report on Improving Decision Making in Organisations, it demonstrates the huge potential to reduce costs by implementing systems and shows how the role of FD’s is changing to become business partners participating in decision making.

So how does ERP reduce cost and improve profitability

Top Tips for your ERP Implementation:

  1. Start by drawing up a specification of your requirements – what do you want to achieve with the new system, what is the scope of the system, where will cost savings be made, how could more information lead to better decision making?
  2. Get Buy In – its really important that the ERP system gets the support of the Senior Management Team and that key staff are given the chance to put forward their ideas and are involved in the project. People are often resistant to change and getting them involved early will breakdown barriers to change.
  3. Rationalise – changing systems is an ideal chance to look at how can you do things differently and stop doing things that don’t add value, this will also reduce potential customisation requirements
  4. Allocate time to the project – If you don’t allocate time to the implementation project you will regret it later but that doesn’t mean you need to do everything yourself, budget to bring in temps and consultants to help
  5. Measure the savings and benefits – make sure you achieve your goals

Below are details of the Dynamics NAV system I implemented in 2007

SJB Tekton

steve@bicknells.net

More Tax for Landlords

Mosaïque de logements

The Summer Budget 2015 was not great news for Landlords!

The 10% Wear & Tear allowance will end in April 2016 and landlords will only be able to claim for actual expenditure, this could have a ‘cap’ and restrictions, we await the full details. Many landlords will be disappointed at the loss of this useful tax relief.

From April 2017 tax relief on interest will be restricted so that by 2020 it will not be an allowable expense against profit but will attract 20% tax relief.

steve@bicknells.net