Hills & Peeks are pleased to announce that Chris Martin will be joining us as a Business Administrator Apprentice on 26th March 2018.
Chris will be replacing Emma in reception and will be the first point of contact for all clients.
Chris will book in appointments for Leigh, take messages and direct any queries to another member of our team who will be able to help you. We would like to ask for your patience whilst Chris settles in and learns the ropes and gets to know people.
Emma’s role is changing and she will be moving upstairs to join the accounts production team.
Our office will be closed from 12.30pm Thursday 21st December and will re-open on Tuesday 2nd January 2018.
To all our clients, Hills and Peeks wish you a very merry Christmas.
From April 2017: new announcements
• Package of measures to give some relief to those small businesses particularly badly affected by business rates revaluation.
• Threshold for simplified ‘cash basis’ accounting for self-employed businesses raised from VAT registration threshold to £150,000 for 2017/18, and extended to landlords.
From April 2017: previously announced
• Income Tax rates and allowances confirmed as announced at Budget 2016: tax-free personal allowance will be £11,500, threshold for 40% tax will be £45,000.
• National Insurance thresholds for employers and employees made consistent at £157 per week.
• Tax and National Insurance advantages of ‘salary sacrifice’ schemes withdrawn, apart from arrangements involving pensions, childcare, Cycle to Work and ultra-low emission cars.
• New £1,000 tax-free allowances for trading and property income apply for 2017/18 tax year.
• New tax-free childcare arrangements to be introduced on a trial basis and rolled out to all taxpayers over the coming year.
• Tax advantages of foreign domiciled status will be lost for those resident in the UK for 15 of the last 20 years, and UK property held by a foreign domiciled individual through offshore structures becomes chargeable to Inheritance Tax.
• ISA investment limit rises from £15,240 to £20,000 per year, of which £4,000 can be in the new ‘lifetime ISA’.
• Public sector employers become responsible for tax due from individuals working for them through personal service companies and similar arrangements where there is an underlying employment relationship.
• Limit on pension contributions for those who have already made a flexible income drawdown from a money purchase pension scheme will fall from £10,000 per year to £4,000 per year. Limit for those who have not made such a drawdown remains £40,000.
• Main rate of Corporation Tax falls to 19% from 1 April 2017.
• Benefit of VAT Flat Rate Scheme almost completely withdrawn for businesses spending less than 2% of their turnover or less than £1,000 per year on goods, excluding capital goods, food, vehicles and fuel.
• Reforms to restrict interest relief and amend the rules for brought forward losses for corporation tax.
• From 1 June 2017, Insurance Premium Tax rises from 10% to 12%.
April 2018: new announcements
• ‘Making Tax Digital’ reforms require businesses and landlords with turnover above the VAT registration threshold (£85,000 for 2017/18) to make quarterly online reports updating their tax position; businesses below the threshold will not be affected until April 2019 (when turnover threshold will be £10,000).
• Class 4 National Insurance Contributions rate on profits between lower threshold and upper limit (for 2017/18: £8,164 to £45,000) rises from 9% to 10% (and from 10% to 11% in April 2019).
• Nil rate band for dividend income, introduced at £5,000 for tax year 2016/17, reduced to £2,000 for 2018/19.
April 2018: previously announced
• Class 2 National Insurance Contributions for self-employed abolished.
In the UK, a business can opt out of a VAT registration if its annual turnover is less than £81,000, but it must register for VAT if its turnover exceeds £83,000. The difference between those figures is there to prevent businesses from falling in and out of the compulsory VAT zone over a few pounds.
If your business is VAT registered, but your turnover (excluding VAT) is now below £81,000, you can cancel your VAT registration. You may pick the date from which the deregistration takes effect, such as the last day of the month or quarter. But this date can’t be any earlier than the day on which you apply to HMRC to deregister.
When your business ceases to trade, you can cancel your VAT registration from the day you stop trading, but that is the only occasion on which the VAT registration can be cancelled with retrospective effect.
You can cancel your VAT registration online, or by completing a form VAT7 to sign and send to HMRC. We can help you with this.
But before you make the final decision to deregister from VAT, we should discuss your future plans. If you expect your sales to increase in the medium term, you may have to register for VAT again, so cancelling your current VAT registration may not be worthwhile.
After your VAT registration has been cancelled you won’t be able to recover VAT suffered on your business purchases.
The VAT flat rate scheme (FRS) allows small businesses to simplify their VAT records and, in many cases, keep a slice of the VAT they collect on behalf of the Government. Unfortunately, there has been abuse of the FRS, so HMRC is changing the rules.
From 1 April 2017, it will be more difficult to make money out of the FRS. A VAT registered business which spends less than 2% of its gross turnover, or less than £1,000 per year on goods, will have to use an FRS percentage of 16.5%. The ‘goods’ counted for this test don’t include food and drink for the employees, motor expenses, or capital items.
The high percentage of 16.5% means the business will have to pay over almost all of the VAT it collects, with no deductions permitted for VAT incurred on purchases. Businesses which operate in the knowledge and service sectors are unlikely to benefit financially from using the FRS after 1 April 2017, although the simplification for VAT records remains.
If your business supplies services (anything from hairdressing to consultancy services) and you use the FRS, we should talk about whether you should remain within the FRS and, in some cases, whether you should even remain VAT-registered.
Some employers offer their employees a choice about elements of their remuneration package, such as taking a company car or a car allowance. When cash earnings are swapped for a benefit in kind, both the employer and the employee may be better off, if the benefit attracts lower National Insurance Contributions (NIC) than a cash payment.
The Government believes it is missing out with these salary sacrifice arrangements, so the law is to be changed such that NIC will be charged at the higher of the value of the cash foregone and the value of the benefit received. Where the employee is not given a choice of salary or a benefit, they won’t be affected.
The new rules will have to be applied to salary sacrifice arrangements which are renewed or modified after 5 April 2017. Where the benefit received is a car, school fees or accommodation, the new NIC rules must take effect from 6 April 2021, but for other benefits the new NIC rules must apply no later than 6 April 2018.
The following benefits are excluded from these new NIC rules; pension contributions, pensions advice, childcare, cycle-to-work schemes and ultra-low emissions cars.
If your employees enjoy a choice of salary or benefits, we should talk about how this change in the law can be implemented by your business.
HMRC is about to start updating tax codes more frequently from April 2017.
This will help HMRC collect the tax due more quickly. Any underpayments of tax identified for 2016/17 will be collected through the 2017/18 tax codes. But the same tax codes will also be used to collect potential tax underpayments for 2017/18.
As a result, the employee could experience a double hit on their 2017/18 PAYE code, and pay more tax in that year. However, no employee should have more than 50% of their earnings deducted through PAYE.
As an employer, you will have to deal with more PAYE codes being issued for your employees, and it will be important to keep up with those changes. Employees should be advised to contact HMRC directly if they don’t agree with their tax code.
Do you still pay your PAYE by cheque? If so, you may have received a letter or call from HMRC asking you to switch to online or telephone banking, or to pay by debit or credit card.
We agree with HMRC that electronic payments are safer and more secure than sending a cheque through the post, as it avoids the risk of the physical cheque being intercepted and fraudulently cashed. However, electronic payments are also at risk of misdirection if you make a mistake when typing the bank details or payment reference.
The easiest way to pay VAT is to set up a direct debit. This allows HMRC to take the amount due from your business bank account 10 days after the end of the month that follows the VAT quarter. The correct amount of VAT will be collected on time each quarter, if there are sufficient funds in the account, until you cancel the direct debit.
However, you need to set up a new direct debit for each PAYE payment due, using the 13-character accounts office reference number, and enter the year and month for the particular payment. This is not worth the hassle.
You need to remember to pay the PAYE due by the 22nd of each month, if you pay electronically, or by the 19th of each month if paying by cheque. Not all banks will allow an advance payment to be scheduled for a weekend or bank holiday, in which case the payment must be made on the preceding Friday.
If your business pays less than £1,500 in PAYE per month, you can ask to pay the PAYE quarterly. We can make this request for you.
The national minimum wage (NMW) is increasing again, but this time the new rates take effect from 1 April 2017 instead of in October. This will be the second compulsory pay rise in just over six months for some of your younger employees.
The good news is that in future all increases in the NMW and living wage will take effect from 1 April each year.
It is important to identify which workers should receive which level of NMW, and how the amount per hour should be calculated. Certain high-profile employers have fallen foul of the rules when their staff worked unpaid overtime. Every worked hour must be counted for the NMW calculations.
Any underpayment of NMW could land you with a penalty of up to 200% of the underpaid amount, up to £20,000 per worker, with a minimum penalty of £100 per worker.
Your business could also be publicly named if the amount due exceeds £100. The bad publicity generated by HMRC won’t explain that the underpayment of NMW was due to an innocent mistake in the calculations – even if it was.
|The new hourly rates are:
|For pay periods starting after
||25 & over (living wage)
||21 to 24
||18 to 20
|1 April 2017
|1 October 2016
Two new levies on employers come into effect in April 2017.
The Apprenticeship Levy is a charge set at 0.5% of your total payroll costs. It will be payable alongside PAYE and reported to HMRC on your monthly RTI returns. Employers will get an annual allowance of £15,000 to set against the Apprenticeship Levy. This means you will only have to pay the levy to the extent that your payroll costs exceed £3 million per year.
The immigration skills charge is an annual charge of £1,000 (£364 for smaller businesses) for each skilled worker you sponsor to come to the UK from a country outside the European Economic Area. This charge will only apply to permanent workers on a Tier 2 visa and there are exemptions for graduate trainees. If you employ such workers, you will have to pay this charge alongside other visa charges to the Home Office, not to HMRC.