Is Gold good for your Pension? Reply

Gold has always been about wealth preservation – it does well in a time of crisis.

There are lots of ways to invest in Gold:

  • Gold Bars
  • Gold Funds
  • Gold Shares

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/8635523/How-to-invest-in-gold.html

The chart below shows how Gold Prices have increased over the last 10 years

Gold has been one of the best performing asset classes over the last few years, with annual returns averaging around 17% each year for the last 11 years.

http://www.goldmadesimple.com/

Have you got any in Gold in your pension?

steve@bicknells.net

£30,000 Tax Exempt Ex Gratia Payments Reply

Ex Gratia payments are normally linked to Compromise Agreements, see example

http://www.compromiseagreementslimited.co.uk/templates/template

The use of Ex Gratia payments in relation to terminating employment need to be handled carefully as highlight in this article

http://www.payandbenefitsmagazine.co.uk/pab/article/legal-comment-employers-warned-about-ex-gratia-payments-12322121

Getting the terminology right is critical, Earnings, Wages, Holiday Pay, Bonuses, Payment in Lieu of Notice are likely to be taxable. Ex Gratia payments won’t be, if the following apply:

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. Any excess over £30,000 is subject to income tax as normal, but is not subject to any NICs. Two or more payments made in respect of the same employment, or different employments with the same employer, are aggregated for the purpose of the £30,000 limit.

Ex gratia payments, made where the employer is under no legal obligation to do so, and awards from the Employment Tribunal in respect of wrongful or unfair dismissal, can fall within the £30,000 exemption as can payments made on redundancy whether statutory, non-contractual or even contractual.

http://www.out-law.com/en/topics/tax/employment-tax/taxation-of-termination-payments/

Compromise Agreements can sometimes be a good alternative to formal Disciplinary or Redundancy processes.

steve@bicknells.net

HMRC Tax Targets and Campaigns Reply

HM Revenue & Customs’ (HMRC’s) campaigns provide opportunities for people to voluntarily put their tax affairs in order. They do this by identifying a group to target and gathering information and intelligence that can be used to encourage and influence that group to come forward. Once a campaign closes, HMRC then uses that same information and intelligence to follow up with action that can include criminal investigations, aimed at those who choose not to pay what they owe.

http://www.hmrc.gov.uk/campaigns/news.htm

As a result of a recent campaign a Plumber in Ringwood, Hampshire was sentenced to 4 years in prison, follow this link to read the full story

http://www.accountingweb.co.uk/article/hmrc-secures-plumber-conviction/527556

Accountingweb have been tracking the campaigns, so far 77,616 checks have been carried out and £36.3m tax recovered

http://www.accountingweb.co.uk/article/hmrc-task-force-tracker/521073

So which campaigns are coming up in the next few months:

  1. Direct Selling – aimed at those selling products to customers away from retail premises, this includes selling door to door, at parties or to friends and relatives. Sellers are sometimes called ‘Agents’.
  2. Missing Tax Returns – aimed at Individuals who have been requested to provide or should be submitting Self Assessment Returns but haven’t http://www.hmrc.gov.uk/sa/need-tax-return.htm (Company Directors are required to submit returns)
  3. Trade Campaigns – aimed at those working in the Home Improvement, Maintenance and Repair sectors
  4. e Marketplaces – aimed at those who sell on line (such as online auctions) and don’t disclose their income http://www.hmrc.gov.uk/campaigns/emarket.htm

If you are in one of these target groups, now is time to makesure your tax affairs are in order.

steve@bicknells.net

 

Things you should know about Asset Revaluations Reply

It’s a fundamental concept of accounting that the accounts must give a ‘True and Fair’ view of the state of affairs of the company at its year end.

In order to achieve this a company may need to revalue its fixed assets, it could be Plant or Property, larger companies will refer to International Accounting Standards and Financial Reporting Standards but most SME’s use FRSSE http://www.frc.org.uk/documents/pagemanager/asb/FRSSE/FRSSE%20Web%20optimized%20FINAL.pdf

Accounting Explained gives a good summary of the entries related to revaluations http://accountingexplained.com/financial/non-current-assets/revaluation-of-fixed-assets

Here are some things you need to know:

  1. Revaluing Assets does not create a tax liability
  2. Revaluing Assets does not create a profit (it creates a revaluation reserve)
  3. Depreciation Rates may need to be reviewed (as they could be too high if you need to revalue regularly)
  4. Revaluation will increased the Net Worth of your business
  5. The Directors can revalue the assets but the value needs to be carefully worked out as an arms length market value

steve@bicknells.net

Can your business pass the HMRC IR35 Business Entity Tests 3

The Term “IR35” became established following a Budget press release issued by the Inland Revenue on 23rd September 1999. That press release was called “IR35”. At its simplest, IR35 is the way in which the taxman closed a loophole that was allowing many contractors and freelance professionals to avoid paying large amounts of Tax and National Insurance.

All Freelancers, Consultants and Consultancy Companies need to carefully consider the new HMRC tests released on the 9th May 2012.

Here are the 12 tests, scores shown in()

  1. Business premises (10)
  2. PII (2)
  3. Efficiency (10)
  4. Assistance (35)
  5. Advertising (2)
  6. Previous PAYE (minus 15)
  7. Business plan (1)
  8. Repair at own expense (4)
  9. Client risk (10)
  10. Billing (2)
  11. Right of substitution (2)
  12. Actual substitution (20)

A score less than 10 is high risk and a score more than 20 is low risk. Fail the test and it could cost you a great deal in tax.

http://www.hmrc.gov.uk/ir35/guidance.pdf

steve@bicknells.net

 

How to Issue and Transfer Shares in an SME 4

When you first form a limited company, the formation agent will arrange the issue of the Subscriber Shares.

Following that you can allocate new shares using Form 88(2)

http://www.companieshouse.gov.uk/forms/generalForms/882Revised2005.pdf

Before the Companies Act 2006 companies had authorised share capital so before issuing shares:

  1. Check the Memorandum and Articles
  2. Check any Shareholder agreements

As your company grows, the shareholders may need to transfer shares to new shareholders. To do this you need to:

  • Inform Companies House on the next Annual Return (you can only tell companies house who the shareholders are on an annual return so it could be a while before companies house get to know the the shareholders have changed)
  • Your Bank and Professional Advisers will need information on changes to Shareholders

Your shareholders need to be aware that if they give away shares or make a gain from selling shares they may be liable for Capital Gains Tax, however, they may be entitled to tax relief like the Entrepreneurs Tax Relief and that each year there is an exempt amount of capital gains for individuals.

steve@bicknells.net

£12.6 Billion in Unclaimed Tax Relief and Refunds 1

At a time when HMRC are writing to employees who have underpaid tax because they were on the wrong tax code for 2011/12, it might be worth giving some thought to unclaimed tax reliefs

Here’s the top ten list of our biggest tax wastes:

Area of Tax Wastage Amount of Wastage
Income-related Tax Credits £7.26 billion
Tax relief on pension contributions £2.45 billion
Tax relief on charity donations £997 million
Savings on Inheritance Tax £448 million
Making use of ISAs £403 million
Child Benefit £401 million
Avoiding penalties for late filing of tax return £307 million
Savings on Capital Gains Tax £133 million
Making use of Employee Share Schemes £118 million
Income tax and Personal Allowances  £83 million
Total £12.6 billion

Source: unbiased.co.uk

http://www.lovemoney.com/news/household-bills/tax/11323/six-easy-ways-to-pay-less-tax

£12.6 billion is an incredible amount of money and I am sure many people aren’t even aware that they could be claiming tax relief or refunds, so why not check what you could claim and makesure your tax is right.

steve@bicknells.net

 

 

 

 

Trade away your Overdrawn Directors Loan 2

For those who haven’t heard of Bartercard.

Bartercard is the World’s largest business to business Trade Exchange servicing over 75,000 trading members across 6 countries with the World’s largest computerised Barter Network

http://www.bartercard.co.uk/about

Basically members exchange goods and services instead of cash and a Trade Pound has the same value as a Pound Sterling.

Bartercard is reported in your accounts in the same way as a Bank Account.

My Bartercard contacts tell me that currently one of the most popular ways to use Bartercard is to repay Directors Loans, the Director sells or auctions personal items, selling via Bartercard is easy and members are always keen to buy, they then use the Trade Pounds to repay the Directors Loan.

I know you might say why don’t you just sell for cash, which you could do, but because some products such as electrical items are in short supply in Bartercard, on the auction site (much like EBay) they will almost certainly be sold for a premium price.

Once you have paid off your directors loan you may be eligible for a Corporation Tax refund. https://stevejbicknell.com/2012/01/02/pay-off-your-directors-loan-and-reclaim-corporation-tax/

steve@bicknells.net

 

Self Assessment Tips for Subcontractors 3

The construction industry has a large number of self employed subcontractors covering most trades, they often work for a variety of Contractors on multiple sites, which generally means that each year they need help with their self assessment returns.

Here are some suggestions to help:

1. If you are paid net of deduction makesure you have a complete set of Payment Deduction Statements http://www.hmrc.gov.uk/forms/cis-payment-deduction-statement.pdf these statements show how much tax has been deducted and you will be able to use these statements to reclaim that tax on your self assessment return, often the CIS deductions will mean that too much tax has been paid

2. Travel – Self employed workers claim all of their travel and motoring costs and exclude a % for private use

3. Clothing & PPE – gather together all the receipts you have for specialist clothing and PPE

4. Vehicles, Tools, Plant and Equipment – these items of expenditure may be eligible for Capital Allowances and the Annual Investment Allowance (£25,000 for 2012/13) if you have any private use then this will need to be assessed and excluded

5. Other Expenses – You will need details of Insurance, Accountancy, Materials, Bank Charges, Phones, Stationery, and anything else you spent money on

It might seem boring but collecting the information noted above could save you thousands.

steve@bicknells.net

 

Ways to Save National Insurance Reply

I have always thought that National Insurance (NI) is a strange tax compared to PAYE because:

  1. For normal employees it isn’t cumulative its based on their earnings in a month or week (although Driectors can opt for Cumulative)
  2. It only applies between the ages of 16 and retirement
  3. Its applied at different rates to the Self Employed and there are 4 classes of NI

But the thing that seems totally bizarre to me is that for each job you have you get new NI limits, so if you had a variety of part time jobs you might not pay any National Insurance because your earnings were below the threshold in them all.

This also applys if you are Director, you get a new cumulative limit with each employer.

The current main Class 1 rates are 12% for employees and 13.8% for employers

http://www.hmrc.gov.uk/rates/nic.htm

If you’re employed you pay Class 1 National Insurance contributions. The rates are:

  • if you earn more than £146 a week and up to £817 a week, you pay 12 per cent of the amount you earn between £146 and £817
  • if you earn more than £817 a week, you also pay 2 per cent of all your earnings over £817

http://www.direct.gov.uk/en/moneytaxandbenefits/taxes/beginnersguidetotax/nationalinsurance/introductiontonationalinsurance/dg_190048

Apart from having multiple jobs or changing jobs here are a few ways that you can save NI:

  1. Salary Sacrifice https://stevejbicknell.com/2011/10/22/salary-sacrifice-could-save-45-8-in-tax-and-ni-how-does-it-work/
  2. Special NI Holiday Schemes https://stevejbicknell.com/2011/10/15/holiday-pay-without-any-national-insurance-to-pay/
  3. Regional Employer NI Holiday – save up to £50,000 https://stevejbicknell.com/2011/10/08/reduce-your-ni-bill-by-50000/
  4. Benefits in Kind – for example Gym membership or Assets placed at the employees disposal – Tax and Class 1A NI is payable but the employee doesn’t pay NI – basically any of th brown boxes on the P11D https://stevejbicknell.com/2011/11/07/tax-free-fitness/https://stevejbicknell.com/2012/04/14/directors-loan-vs-private-use-of-company-assets/

steve@bicknells.net