Archive for the ‘Practice Information’ Category

BUYING A NEW CAR ? what can you claim ??

Thursday, August 27th, 2009

The competitive deals currently available on dealers’ forecourts are tempting a number of you to consider changing your car. The tax allowances on new cars changes dramatically on 6th April 2009 and CO2 emissions affect allowances greatly.

the rules can be summarised as:

                                                                                    2008/09                       2009/10

CO2 emissions of 110 g/km or less

First Year Allowance                                                   100%                           100% 

CO2 emissions of 111-160 g/km

Writing Down Allowance                                              25%                             20%

Annual Cap  – Maximum claimable                                £3000 pa                     £16,000

CO2 emissions of over 160 g/km  

Writing Down Allowance                                               25%                             10%

Annual Cap  – Maximum claimable                                £3000 pa                     £ 8,000

RULES ON CONTRACT HIRE 

These are also changed from 6th April 2009. This particularly affects expensive cars. For example – assuming a new car costing £20,000 with emissions of less than 160 g/km can be contract hired for £5,175 including VAT.  Should you buy or lease ?? Possible allowances are:

2008/09                       2009/10

Purchase the vehicle

Writing down allowance                        £3,000                         £4,000

Or

Contract hire for £5,175pa                              

Amount Deductible                               £3,870                         £4,838

(including VAT @ 15%)

 *Note that the writing down allowance will reduce in subsequent years in line with the written down value over the vehicle’s life.

It is complex. If you are interested in a new car, ascertain all your options then we can help you pick the best one. 

Topping-up you contributions for a State Pensions

Thursday, August 27th, 2009

The period for which National Insurance contributions will need to have been paid in order to secure a full State Pension will reduce in April 2010.

 

Meanwhile, the cost of buying extra years will increase from 6th April 2009 from £8.10 to £12.05 per week. So people expecting to retire before April 2010 with a contribution shortfall may benefit from making a top-up payment before 6th April 2009.

The first step is to get a benefits forecast from the Pension Service – Tel. 0845 300 0168

Changes to the State Pension

Thursday, July 23rd, 2009

The State Pension is still a fundamental part of peoples’ retirement plans. Over the last two years a number of changes to the basic State Pension have been announced. These include:

• increasing the basic State Pension in line with earnings, rather than prices, which means it should rise more quickly each year than it does now. This change will happen from 2012 at the earliest and by 2015 at the latest and will also apply to people currently getting their State Pension or who reach State Pension age before 6 April 2010;

• both paid and credited National Insurance Contributions (NIC) will count towards the basic State Pension in the same way; 

• reducing the number of qualifying years needed for a full basic State Pension to 30 for people who will reach State retirement age on or after 6 April 2010; 

• any number of qualifying years will give an entitlement to at least some basic State Pension;

 

• replacing the system of Home Responsibilities Protection with a weekly NI credit for people caring for children or severely disabled people and converting past years of HRP into years of credits.

• changing the way the State Second Pension (S2P) builds up, so that it will provide a simple, flat-rate weekly top-up to the basic State Pension; and 

• increasing the State Pension age for both men and women from 65 to 68 in stages between 2024 and 2046. 

It is not unknown for errors to occur due to difficulties linking national insurance contributions with pension records. However, there is any easy way to check your current pension entitlement – ask for a pension forecast. If you would like to know more about the changes or ask for a forecast, visit www. pensionsservice.gov.uk

Wills …. Wills ….. Wills

Thursday, July 23rd, 2009

Change in intestacy rules in England and Wales

 

Where a person dies intestate (ie without having left a Will) the law prescribes how the estate of the deceased is to be divided. The rules are different around the UK with England & Wales, Scotland and Northern Ireland all having different provisions.

For deaths on or after 1 February 2009 the limits to be used in England & Wales have changed. Under the new limits where the deceased leaves a spouse (or registered civil partner) and children, the surviving spouse will receive everything up to £250,000 plus all personal possessions. Anything remaining is divided equally with one half going to any children of the deceased and the other half being left so that the surviving spouse receives the income and on their death the capital passes to the children.

Where the deceased leaves a spouse but no children, the spouse will now receive the first £450,000 plus personal possessions. Anything above that will be split equally with one half to the spouse and the other half to the parents. If there are no parents there is a specified order of relatives to consider. If there are no relatives still alive the surviving spouse will take the whole estate. If there is no surviving spouse (or registered civil partner) but a surviving unmarried (unregistered) partner, they are entitled to absolutely nothing under the intestacy rules. Where the deceased has children they would take the whole estate. If there are no children the estate would pass to the parents etc of the deceased. 

It is vital that if you want to direct where your estate will go that you make a valid  Will to achieve that.

Reduce your business rates

Thursday, July 23rd, 2009

Many businesses pay more business rates than they need to because they don’t realise they could claim a discount through the small business rate relief scheme (SBRR). This scheme has been poorly promoted by the billing authorities, but it is worth applying for relief as you could reduce your rates bill by up to 50%. 

It is the size of the property occupied that determines the discount not the size of the business. Generally business properties in England with rateable values of less than £15,000 (£21,500 in Greater London) qualify for some discount. However, where one business occupies several properties, the SBRR will only apply to one main property and then only if the total rateable value of all the properties occupied is less than £15,000 (with each property having a rateable value of less than £2,200).

 

All business properties pay rates according to their rateable value multiplied by a set multiplier, which is 48.5p for 2009/10. The English SBRR applies a lower multiplier (48.1p for 2009/10) to qualifying properties, plus the following additional reductions:

Rateable value of building Relief givenLess than £5,000 Lower multiplier, then 50% reduction in resulting figure£5,000 – £9,999 Lower multiplier, then 1% reduction from 50% for every £100 of rateable value above £5,000.£10,000 – 14,999 (£21,499 in London) Lower multiplier only

 Example

Your office has a rateable value of £5,500. You are sent a business rates bill of £2,668 (£5,500 x 0.485) for 2009/10. You apply for the SBRR and receive a refund of 1,213, calculated as follows:

Rateable value at lower multiplier rate: £5,500 x 0.481 £2,645Discount for value less than £5,000: 50%Reduced by 1% x (£5,500 – £5000) 5%Final discount for small property 45% x £2,645 £1,190Final business rates for 2009/10 £1,455 

Original rates bill £2,668 

Reduction achieved: £1,213 

You need to apply for the SBRR from the billing authority that collects your business rates, but you only have to complete one form to cover all the years from 2007/08 to 2009/10. A new claim will be required from April 2010. The extended deadline forclaims for these years is now 30 September 2010. 

Vacant properties 

If your business property is vacant you can claim an exemption from business rates, but only for restricted periods, known as permitted void periods. From 1 April 2008, the permitted void period is six months for industrial properties, and three monthsfor other commercial properties. Full business rates are due on all empty properties when the permitted void period comes to an end, subject to any SBRR reductions due. However, for just one year from 1 April 2009 all empty properties with a rateable

value of less than £15,000 are fully exempt from business rates.

High Earners and “HOT” Buget topics

Thursday, July 23rd, 2009

Alistair Darling presented his second Budget on Wednesday 22 April 2009.

Having acknowledged the depth of the recession, he hinted that the Budget measures would enable the UK economy to begin to grow ‘by the end of the year’. Our round up highlights the key budget headlines likely to affect you and your business.

• From 6 April 2010 there will be a 50% top rate of tax for those with taxable income over £150,000 and in the following tax year the government has also announced its intention to restrict tax relief on pension savings for this group.

• A phased reduction of personal allowances for those with income over £100,000 is also due to impact from 6 April 2010. 

• The amount which can be invested in an ‘ISA’ account the tax free savings vehicle

is to increase by £3,000 to £10,200.

• The ability to use trade losses through relief in earlier years by both an unincorporated business and a company has been enhanced. 

• There is a temporary additional capital allowance on plant expenditure which may benefit those with higher levels of spending on plant and machinery. 

• Changes to the rules for Furnished Holidays Lettings Losses and CGT as well as a extension of the furnished holiday lettings scheme to properties in the European Economic Area.

Please contact us for further advice on any matter which may affect you.

Statutory Holiday Entitelment Update

Tuesday, March 24th, 2009

Legal minimum

From 1 April 2009 statutory annual leave entitlement increases from 4.8 weeks (24 days) to 5.6 weeks (28 days)Number of days for part time staff on pro-rota basisi.e.

if your part timer works an average of 3 days a week then 28 days / 5 * 3 = 16.8 days holiday annually (after 1 April)  If employee is working mainly part days then it maybe best to calculate holiday entitlement on hourly basis Total number of hours holiday will then depend of definition of normal workings hours stated on the contract of employment. The apportionment of these normal working hours worked by the part time employee will decide on the number of hours of annual holiday entitlement The leave year starts from eitherthe date stated on contract of employment or on written statementor else it is from date when worker began work

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.