Archive for January, 2009

Tough Times !! Check your benefits

Wednesday, January 21st, 2009

We have found and added to our website a link to a simple, quick benefits checker to make sure your claiming all you can … look in links or news !!!

Filing deadlines

Friday, January 9th, 2009

Filing deadlines

Companies with accounting periods beginning on or after the 6 April 2008 should note the following changes to the filing deadlines with Companies House.

  1. Private companies and LLPs – the delivery deadline has been reduced by one month from 10 to 9 months.
  2. Public companies – the delivery deadline has been reduced by one month from 7 to 6 months.

Consequential changes include:

  • Full calendar months for filing periods have been introduced. Where the accounting period ends on a month end date the accounts filing period will end on a month end date. (Except for the first accounting period)
  • Qualifying companies can still file abbreviated accounts.

Company late filing penalties increasing from 1 February 2009

Friday, January 9th, 2009

Small limited companies are required to file a copy of their accounts each year with Companies House. If you file even one day past the filing deadline you will be penalised. The new late filing penalties which will be levied from 1 February 2009 are increasing dramatically! The new fines for private companies are:

  • Not more than 1 month – £150 (presently £100)
  • More than 1 month but not more than 3 months – £375 (presently £100)
  • More than 3 months but not more than 6 months – £750 (presently £250)
  • More than 6 months – £1,500 (presently £500 between 6 to 12 months, £1,000 over one year)

The new fines for public companies are:

  • Not more than 1 month – £750 (presently £500)
  • More than 1 month but not more than 3 months – £1,500 (presently £500)
  • More than 3 months but not more than 6 months – £3,000 (presently £1,000)
  • More than 6 months – £7,500 (presently £2,000 between 6 to 12 months, £5,000 over one year)

Additionally if you were late filing in the previous year (and the previous financial year had begun on or after 6 April 2008) the above fines are doubled.The new fines also apply to flat management and dormant companies.The message is clear. If you are responsible for the management of a limited company make sure you give yourself plenty of time to prepare and file accounts on time.

House builders renting property- VAT Problem !

Friday, January 9th, 2009

House builders renting property

Many building firms are now holding completed residential property which is proving difficult to sell in the current property market. One solution is to rent out this property for a short period in the expectation that property prices will recover. Ordinarily most of the VAT paid on construction costs is recoverable. Unfortunately rents received from the letting of residential property are an exempt supply for VAT purposes. Accordingly a builder who both constructs and lets residential property is considered to be a “Partially Exempt” trader. Potentially a proportion of the VAT recovered on the construction work may have to be paid back! The builder may have to:

  • adjust the VAT recovered on his submitted VAT returns
  • restrict the VAT to be recovered on current and future VAT returns
  • or do both

Fortunately there is an escape route! If the amount of input tax which can be attributed to the exempt rental income is below a defined “de minimis” amount, no adjustment to past or future returns is required – VAT input tax can be recovered in full. Provided the exempt input tax is below:

  • £625 per month, on average, up to £7,500 per year; and
  • is not more than half of total input tax ,
  • then the exempt input tax is de minimis and recoverable in full.

If you are a house builder, and considering the rental of residential building stock, do contact us at an early stage so we can help you through the partial exemption calculations which are tedious and complex.

Happy New 2009 – taxing times

Friday, January 2nd, 2009

ahhh, so you have had flu at Christmas, eaten too much and feel a bit down about the economy.. you need a new years resolution…

as the deadline for the online submission of 2008 tax returns draws closer it is vital that you affairs are up to date and that you are prepared for the tax due on 31st January.


State Pensions

Friday, January 2nd, 2009

State Pensions  From April 2009, the cost of buying extra years to qualify for the basic state pension will jump by more than £200.  

Pensions seem to be all bad news these days, and recent weeks have produced two more dismal developments. The first is the widely reported scandal that 95,000 former public sector workers face pension cuts following a blunder in Whitehall. The second stems from a little-noticed piece of small print in the recent pre-Budget report. This merits further attention, because it will make boosting a shortfall in your state pension entitlement dramatically more expensive.

 There is little you can do about civil service blunders, but if you act fast there is still time to top up your state pension on the cheap. Don’t delay, because after April the cost will increase by around 50%. The state will provideThe phrase ‘basic state pension’ is misleading. It suggests everybody gets that basic amount, but they don’t. 

The amount you actually get will depend on the National Insurance (NI) contributions you have made during your working life. To get the full amount of £90.70 a week for a single person and £145.05 a week for a couple, you must have built up enough “qualifying years” before reaching state pension age (currently 65 for men and 60 for women, steadily rising to 65 for women between 2010 and 2020). 

A qualifying year is a tax year where you have earned enough to pay NI contributions. This is currently at least £4,680 if you are employed, or £4,825 if self-employed. Many people, mostly women, who have given up work to raise children or care for ill or elderly relatives, may also be treated as having paid or being credited with NI contributions. 

Currently, men normally need 44 qualifying years and women 39 years to get the full basic state pension. So you have to put in the hours. That will ease from 6 April 2010, when the number of qualifying years shrinks to a less daunting 30 years. 

All change If you fall shy of the maximum, you will only get a proportion of the basic state pension, depending on the number of years assembled, and whether you retire before 6 April 2010 or after. You can get further details from the website.To check if you are heading for a shortfall, order a state pension forecast from the Future Pension Centre on 0845 300 0168 or by writing to: Future Pension Centre, The Pension Service, Tyneview Park, Whitley Road, Newcastle upon Tyne NE98 1BA. The Pension Service has further details.I ordered my state pension forecast a few years ago, and unlike most pension documents, it was relatively clear and easy to understand. In fact, I recommend it to everybody. 

Topping idea If you’re heading for a state pension shortfall, you can buy extra years in the scheme by making voluntary additional Class 3 NI contributions. 

Currently, qualifying year will cost you £421. In return, you get at least an extra £107 on your state pension, every year for the rest of your life, according to calculations by Laith Khalaf, pensions analyst at IFAs Hargreaves Lansdown. He also calculates that buying extra years pays off within just three or four years of retiring. You might even get more, depending on your sex and when you retire. That is a pretty handy rate of return, provided you don’t pop your clogs within a year or two of hanging up your boots. 

Better still, you avoid the investment risk of putting money into stocks and shares, via a personal pension or an Isa. That’s because the government, or rather the taxpayer, shoulders the risk. January salesIf that sounds convincing, don’t hang about. Your state pension forecast could take a month or two to arrive, so order it today. 

Why the hurry? Because the Pre-Budget report revealed that, from April 2009, the cost of buying extra years will rise dramatically from £421 a year to £627 a year. This is designed to offset the cost of reducing the number of qualifying years to just 30 years. Cynics might also say that the Ministers have realised that extra years have been a bit of a bargain, and raised prices accordingly.Laith Khalaf says the new rate is still a good deal, but obviously, it is much better if you snap it up now. Think of it as picking up a bargain in the New Year sales. 

You can pay voluntarily NI contributions to cover missing years all the way Back to 1996. Not everybody should be buying extra years in the basic state pension. If you are retiring after 6 April 2010 with more than 30 qualifying years, you will get the full basic state pension anyway. 

Women who have given up work to raise a family or care for a relative may be able to top up their state pension for free by claiming Home Responsibilities Protection instead. And if you expect to claim means-tested benefits such as the pension credit in retirement, buying extra years will only lose you benefits.You also have to buy enough extra years to exceed the minimum 10 years, otherwise you still won’t get a penny in basic state pension. 

Mix and match With stock markets and property markets falling, and final salary pension schemes turning a deep shade of red, buying extra years in the basic state pension looks increasingly attractive. 

It isn’t without dangers. Many analysts fear the basic state pension is unaffordable, given the ageing population and the rapidly increasing government debt, and could be trimmed at some point. That’s why you should also be saving into an occupational, personal pension and Isas, and maybe property too. Because even if you qualify for the full amount, the basic state pension is, well, rather basic.