Keep up to date with all the latest tax and financial news from CKLG
Latest News From CKLG Accountants
Extra 3% SDLT payable on investment properties
February 11, 2016
If you are thinking of buying a second residential property on or after the 1 April 2016 you need to brace yourself to pay an additional 3% Stamp Duty Land Tax (SDLT) on the full price. A similar additional charge is due to be applied on second homes in Scotland.
This 3% extra tax will also apply where a landlord transfers their residential property portfolio to a wholly-owned company. The charge will not apply if the new home is replacing the buyer’s main home, at the end of the day of the transaction you only own one home, or the new property is not 100% residential.
We can help you navigate all the exceptions to this new charge, please contact us for advice.
Auto Enrolment - Workplace Pensions
February 10, 2016
Changes to the UK Pension Act in October 2012 now mean that every employer in the UK must automatically enrol eligible employees into a workplace pension. Auto enrolment applies to companies with one or more employee.
Not already enrolled? Find out your staging date here
We can guide you through the process of auto enrolment, contact us for advice on 01223 810 100
Important changes to dividend taxation
February 10, 2016
From 6 April 2016 the Dividend Tax Credit will be replaced by a new Dividend Allowance in the form of a 0% tax rate on the first £5,000 of dividend income per year.
UK residents will pay tax on any dividends received over the £5,000 allowance at the following rates:
- 7.5% on dividend income within the basic rate band
- 32.5% on dividend income within the higher rate band
- 38.1% on dividend income within the additional rate band
Dividends received on shares held in an Individual Savings Account (ISA) will continue to be tax free.
If these changes are likely to affect you please contact us on 01223 810 100 to discuss your personal tax situation.
ATED charge extended to more properties
February 2, 2016
The annual tax on enveloped dwellings (ATED) will apply to residential properties worth over £500,000 from 1 April 2016, where the property is owned by a company or similar vehicle. The value to be considered for ATED is that as at 1 April 2012, or on acquisition by the current owner, if later.
The annual tax starts at £3,500, and there are many reliefs, such as for commercially let properties. However, even where a relief applies so no tax is payable, an ATED relief form must be submitted.
We can help you complete and submit all the ATED forms.
Year End Tax Guide 2015/2016
February 2, 2016
Personal tax and allowances for 2015/ 2016
Make sure you are fully aware of the allowances and rates affecting your income, savings, investments and pensions this coming tax year.
Download our Year End Tax Guide 2015/ 2016
Contact us for tax guidance and advice
Employment allowance increases
February 1, 2016
The employment allowance is a credit available to set against national insurance contributions payable by the employer. It will increase from £2,000 to £3,000 for most employers on 6 April 2016. Public sector employers don’t qualify, and neither will one-person companies from 2016/17.
If your company employs only you and no other employees, you will lose this allowance unless you can employ another person in your company, even just for a few hours.
If you decide to remain the sole employee you must untick the claim for the employment allowance on your first RTI return for 2016/17. If we handle your payroll submissions we will do this for you.
Please contact us for advice.
Choosing your trade sector for flat rate VAT Scheme
January 20, 2016
If you opt to use the VAT flat rate scheme for small businesses, you must pick the trade sector most appropriate to the majority of your sales, and calculate VAT due using the flat rate of VAT applicable to that trade sector. It is not always easy to determine which trade sector is the most appropriate. Sometimes HMRC consider a different trade sector is a better fit.
However, you know exactly what your business does. If HMRC challenges your choice of trade sector they may not be correct. There is a particular issue with HMRC trying to re-categorise consultant engineers. Ask us to check your VAT calculations are correct.
It is also important to check that all of your customers are VAT registered before joining the flat rate scheme as this can cause problems for non VAT registered clients as they are unable to claim back the VAT for your services.
How to avoid successive farming losses
January 19, 2016
Running a profitable farming business in East Anglia is tough, and the UK tax law can make this even harder. If you make a farming loss for more than five successive years, the losses for the sixth and subsequent years are denied tax relief against your other income (sideways relief). If HMRC discover that you have too many loss years, penalties and interest may be due on underpaid tax.
This block on sideways loss relief can be overcome if you can show there was a reasonable expectation for your farming business making a profit.
We can help you defend your legitimate loss claims, but we need to talk this through before you submit the tax return for the 6th year of loss.
Please contact us for more information
Ben & Nic's Epic Journey to Rio 2016
January 13, 2016
We wanted to keep you up to date on Ben & Nic's epic journey to qualify for Team GB in the Olympics this Summer and their goal to achieve Gold at Rio 2016. It's not long now until we find out if they have made the selection for Team GB and we promise to let you know as soon as we hear anything. Good luck guys!
A New Year through Ben's eyes…it's all about hard work, focus and consistency! Read the full blog here.
Consider winding-up dormant companies
January 7, 2016
Many small company owners are tempted to leave funds within their company (taxed at 20%) rather than withdrawing the money and have it taxed as personal income (up to 45%). An alternative is to liquidate the company and pay CGT (Capital Gains Tax) up to 28% on those funds.
If you are planning to take the second option, you should consider acting sooner rather than later. The Government is going to change the law from 6 April 2016 to make you pay income tax on the liquidation proceeds rather than CGT, if you start up a similar business within two years of the liquidation.
At CKLG Accountants Cambridge we can calculate the tax payable and advice on the various options for withdrawing funds from your dormant company.
Tax relief for replacing items in let properties
January 6, 2016
From 2016/17 landlords will be able to claim a deduction from their rental income for the cost of replacing domestic items used in their let residential properties. The original cost of items provided in the properties can not be deducted, only the cost of replacing those items, on a like-for-like basis.
Domestic items are defined as; furniture, furnishings, household appliances and kitchenware, but not fixtures (items fixed to the property). The replacement cost of fixtures must be claimed as a repair to the property.
We can help you claim the right tax deductions for your let property business, conact us for advice.
Applying for R&D Tax relief
January 4, 2016
Small companies can claim R&D tax relief (a deduction of 230% of qualifying costs) if their R&D project fits within HMRC's relief conditions:
- The company has not claimed R&D tax relief before
- Annual turnover is £2 million or less
- The company has less than 50 employees
As a small company you can apply for R&D tax relief even before you start trading, but the tax history of any companies in the same group must also be considered.
If your company makes a loss, the loss can be surrendered for a payable tax credit worth 14.5% of the loss.
We can help you apply for R&D tax relief pleade contact us for advice.
RTI easement to end
December 16, 2015
Currently employers with nine or fewer employees (who were operating a payroll at 5 April 2014), can take advantage of a relaxation in the RTI reporting rules.
Those employers are permitted to submit a single full payment submission (FPS) on the last payday in the month, rather than on or before each payday within the tax month. This helps employers who pay their workers weekly rather than monthly.
This relaxation in the RTI rules will end on 6 April 2016 and it won’t be renewed. From 2016/17 onwards all employers will have to submit the FPS on or before each payday.
Contact us for help with your payroll filing obligations.
Tax-free bank interest
December 15, 2015
Bank interest can only currently be paid gross (without tax deducted) on request, and only to those people whose total income is below £15,600. From 6 April 2016 all bank and building society interest will be paid gross, but it will be potentially taxable.
To avoid taxpayers having to pay tax on small amounts of interest all basic rate (20%) taxpayers will have an annual savings allowance of £1,000. Interest falling within the savings allowance will be taxed at zero. Higher rate (40%) taxpayers will have a £500 savings allowance. Additional rate taxpayers won’t have a savings allowance, so will have to pay 45% tax on all interest they receive.
If this affects you please contact us today so we can help you calculate how much tax you will have to pay in 2016/17.
Auto-enrolment employer contributions
December 8, 2015
When you enrol your employees in a company pension scheme, in order to comply with the auto-enrolment obligations, you must also contribute a minimum of 1% of the employees’ relevant pay to the pension scheme. That minimum employer’s contribution was set to increase to 2% on 1 October 2017, and to 3% on 1 October 2018.
Those dates will be pushed back six months to April 2018 and April 2019. This will give employers some extra time to budget for the increased costs of pension contributions under auto-enrolment.
We can help you calculate how much auto-enrolment will cost your business, and help you plan for implementation.
CGT is due even when no money changes hands
December 3, 2015
If you give a let property to your son or daughter you must report that gift on your tax return, even though no money has changed hands, as there may be capital gains tax to pay.
You and your close relatives (of any age) are connected parties for capital gains tax. The transfer of assets between connected parties is deemed to occur at open market value, and the tax is calculated on the market value. There is an exemption for transfers between spouses or civil partners who are living together at the time of the gift.
We can help you calculate the tax due and make the correct declarations.
Claiming a tax refund
December 1, 2015
When completing your personal tax return you should take great care that the figures and details are accurate. This is particularly the case if you are due a tax refund.
HMRC will only be able to pay the tax repayment to you if you insert your correct bank account number and bank sort code on the tax form. A new feature in the online version of the tax return will check that the bank sort code you enter is a valid sort code, and that the format of the account number entered is correct. An error message will ask to check and amend the entries if a fault is detected.
We can help you with your personal and business tax returns. It pays to get your tax returns right first time!
VAT refunds on golf green fees
December 1, 2015
Many not-for-profit golf clubs have submitted refund claims for VAT incorrectly charged on golf green fee income, but those refunds have been withheld by HMRC pending a decision on “unjust enrichment”.
HMRC will now repay 50% or 33% of the VAT refund claimed depending on the level of fees originally charged by the club. The golf club needs to write to HMRC confirming that its VAT claim is in line with HMRC instructions in VAT information sheet 01/15. We can help you with that.
Revenue & Customs Brief 19/2015
Autumn Statement 2015: Spending Review
November 26, 2015
The promise of security for the British people was the centre piece of yesterday’s Autumn Statement. Chancellor George Osborne announced that he would protect economic security by building on the progress that he is making in rescuing the UK economy and by continuing to make the decisions needed to bring down the deficit. He will ensure that national security is protected by defending the UK’s interests abroad and by spending more than expected on defence, policing, intelligence and cyber security at home..
The Chancellor also announced that, whilst the decisions set out in his Autumn Statement were focussed on ensuring that Britain lives within its means, the OBR’s latest forecast shows an improvement of £27 billion in the public finances over the position that was forecast at the time of the 2015 Summer Budget. This means that The Chancellor has been able to use these additional anticipated funds to promise more investment, less borrowing and a smoother path to his ‘low welfare, low tax, high pay economy’. However, it remains to be seen whether the forecasted higher tax receipts materialise. It would not take much to knock the UK’s deficit reduction strategy off course and push the date of a return to surplus to after the date of the next election !
To help you see how George Osborne’s announcements yesterday may affect either you or your business, we have prepared a summary highlighting the key points.
Download our Autumn Statement summary
Paying your UK tax bill
November 25, 2015
You can pay your UK tax bill by credit card, but you will be charged a non-refundable fee of 1.5% of the amount paid. Also from 1 January 2016 HMRC will restrict the number times debit or credit cards can be used to pay the same tax bill, thus spreading a large tax bill over several credit accounts. There is no fee for using a debit card, but the restriction on using multiple cards also applies to debit cards.
If you want to spread your self-assessment tax bill over several months consider using the HMRC budget payment plan, rather than a credit card, you will need to set up a direct debit from your bank account. We can help you predict what your tax bills will be so you can budget for those payments.
VAT flat rate scheme
November 24, 2015
The VAT flat rate scheme (FRS) is supposed to be simple. When you apply to use the scheme you pick the most appropriate trade sector (from HMRC’s list) for your business. Then on each VAT return you apply the FRS percentage that relates to that trade sector, to your gross sales (sales value including normal VAT charged). You don’t worry about VAT charged on your purchases.
However, you should review your chosen trade sector each year to check it is in line with your current sales mix. If the majority of your sales is in a different trade sector you should start to use the FRS percentage relating to that sector, and tell HMRC in writing. We can help set up the flat rate scheme for your business.
Stef Heslop joins CKLG Accountants as Audit and Business Services Manager in Cambridge
November 19, 2015
We are delighted to introduce Stef Heslop, the newest member of our team at CKLG Accountants.
Stef joins CKLG Accountants Cambridge as Audit and Business Services Manager within our business services team and brings a wealth of experience from the big 4 accountancy firm EY.
She specialises in providing robust auditing and accounting services to businesses and her experience covers a range of clients, including companies in the FTSE 250 and SME’s across various industries.
Stef qualified as an accountant in 2007 with the Institute of Chartered Accountants in England and Wales and her expertise covers a broad spectrum of disciplines including:
• Financial Audits including groups and overseas subsidiaries
• Grant Audits
• Financial Reporting
• Owner managed businesses
• Corporation Tax
• R&D Tax Claims
Away from the office, Stef spends much of her time running around after 2 young children and 7 cats, and fosters many more cats before they are found permanent homes.
Stef is a highly valued member of the team and we are delighted to have her on-board.
If you require an audit or accounting services for your business, contact our business services team on 01223 810 100
November 17, 2015
Auto-enrolment - are you compliant?
Recent changes to the law mean that every employer must automatically enrol their employees into a workplace pension scheme if they:
- are aged between 22 and State Pension age
- earn more than £10,000 a year
- work in the UK
All UK employees will be entitled to a workplace pension by October 2018, so if you haven't already done so you will need to ensure that your company is providing a workplace pension scheme to your employees before this date.
The process of auto-enrolment continues to rumble on quietly with the majority of companies passing their staging dates without major incident. However, for the few that fail to comply with their workplace obligations, the consequences can be costly in time and resources.
Our guidance for auto-enrolment is as follows:
- employers should seek professional advice about the technical aspects of the auto-enrolment process
- as an employer you may have legal responsibilities that need to be completed - make sure you are aware of these
- it is the employer, not the scheme provider, who is responsible for calculating contributions and making the correct deductions from staff.
While most companies are broadly aware of what auto-enrolment means for them, it is in the details that some businesses stumble into problems.
Contact us for advice on auto-enrolment.
November 17, 2015
Payroll is one of the less glamorous aspects of being an employer.
However, it is often the mundane tasks that are the most crucial. Failing to pay your staff would quickly lead to a very unhappy workforce. While neglecting your responsibilities towards HMRC could result in penalties and investigations.
On top of all the dates and deadlines, you have to keep up with changes in your company and the law. This year has already seen some major changes to payroll legislation including:
- the introduction of shared parental leave and pay in April 2015
- real-time information (RTI) penalties for businesses with 30 or fewer employees from March 2015
- a shared personal allowance for married couples and civil partners allowing them to share up to 10% of their personal allowance
- the abolition of employers national insurance contributions for employees aged under-21 from April 2015
Although the legal landscape changes year on year, some questions crop up time and time again - contact us for advice.
We can run your payroll for you, contact us for details
Proposed changes to the UK domicile law could have implications on the amount of tax you pay
November 3, 2015
An individual whose domicile is in a country other than the UK (so-called non-dom), is deemed to have a UK domicile for inheritance tax purposes, once he or she has been tax resident in the UK for 17 out of 20 tax years. From that point all of the person’s worldwide wealth is subject to inheritance tax in the UK, unless the 17/ 20 rule is broken by moving away from the UK.
The Government is proposing to widen the deemed domicile concept to income tax and capital gains tax with effect from 6 April 2017. The revised deemed domicile rule will apply once the person has been tax resident in the UK for 15 out of 20 tax years. We can advise you on the tax implications of this change in the tax law.
Tax charge on excess pension contributions
November 3, 2015
If you and your employer collectively contributed more than £40,000 to your pension funds in 2014/15, you may be due to tax on the excess. The calculation is complicated as pension contributions made the previous three tax years must be counted to work out if there was any unused pension allowance brought forward from those years. If you are a member of a final salary scheme, the input amount for that scheme also needs to be calculated using a special formula.
We can help you work out if a tax charge is due, and make the correct declaration on your personal tax return for 2014/15.
High taxes ahead for landlords
October 27, 2015
If you own and let residential property in your own name you should brace yourself for a series of tax increases from 2017/18 onwards. The Government’s proposed tax changes will affect every mortgaged landlord who pays 40% or 45% tax and theywill pay more tax under the new plans.
Landlords who pay high levels of mortgage interest will be hit the hardest, as a proportion of your mortgage interest will be disallowed as a deduction from rents. If you currently pay no tax on your rental income as you make a loss after finance charges are deducted, you may pay tax on the same rents in the future.
We can help you explore solutions to this problem, but there are no quick fixes, so a long term plan will be needed.
VAT rules for DIY builders
October 22, 2015
The VAT scheme for DIY builders is designed for people who build their own homes, to allow them to reclaim VAT on certain costs, and end up in the same VAT position as a commercial builder who is permitted to reclaim VAT on his materials.
To reclaim the VAT on materials you must intend to live in the property you are building as your own home. If the home is to be sold as a commercial venture you should register for VAT and zero-rate the sale of the property, like any other builder. You must be careful when completing the claim form (VAT431NB) so not to claim for ineligible items or to give the wrong impression of your intentions regarding the building.
We can help you submit an accurate VAT claim.
Planning a major disposal before Autumn Statement
October 21, 2015
If you are planning a major disposal that seeks to take advantage of a long standing tax relief, you should consider exchanging contracts before 25 November 2015 – the date of the next Autumn Statement. It is quite possible that the Chancellor will announce changes to tax reliefs on that day which will take effect immediately.
The type of transactions which could be vulnerable to an immediate change in the law include:
- sale of farm land (not a whole farm) at a profit;
- transfer of shares to family members to trigger a disposal for entrepreneurs’ relief;
- incorporation of a property business.
Please contact us for guidance on entrepreneurs’ relief
State Pension Entitlement
October 13, 2015
People who receive the new flat rate state pension from 6 April 2016 won’t be able to pass on part of that pension to their spouse on death.
If you will reach state retirement age after 5 April 2016, you will need to have paid national insurance contributions (NIC) for 10 compete years to receive any state pension. You will only receive the maximum pension if you have paid 35 full years of NIC.
If you are under pension age but currently not earning, you may be entitled to an NIC credit which will boost your entitlement to the flat rate state pension. NIC credits are given automatically in some cases (e.g when claiming Carer’s Allowance) but they need to be claimed in other cases.
We can help you check whether you are eligible for NIC credits.
Interest deductions for let property
October 13, 2015
Individual landlords (not companies) will face restrictions on the amount of interest and other finance costs they can deduct from rental income from April 2017. The tax deductible amount will be reduced by 25% each year, until no deduction is permitted from April 2020.
Instead the landlord will receive tax credit (reduction in tax liability) equivalent to 20% of the restricted interest costs. The effect on your tax position will depend on the level of debt your lettings business holds. We can help you estimate the extra tax payable, which could be considerable.
State Pension top-up
October 12, 2015
From Monday 12 October, the Government is offering millions of people the chance to get a higher income in retirement, through top-ups to their state pension.
If you were born before 6 April 1951 (6 April 1953 for women) you have a limited period in which to boost your entitlement to your current state pension. From now until 5 April 2017 you will be able to buy extra entitlements of up to £1300 a year, for life.
The drawback is the extra pension has to be purchased in one lump sum. The exact amount that needs to be paid to receive each extra £1 per week of pension depends on your age at the time you make the payment. The purchase of the extra entitlement should be viewed as an investment, and you may need to take independent advice.
We can help you think through the tax implications and practicalities of making this investment decision.
Alcohol reseller scheme opens for registration Oct 1st
October 8, 2015
The alcohol wholesaler registration scheme (AWRS) will be compulsory for all alcohol wholesalers and retailers from 1 April 2017, but registration for the scheme opens on 1 October 2015.
The long registration period is to allow HMRC time to review all the applications to join the scheme to check if they are “fit and proper persons” to be accepted. The conditions for this test include not having a criminal conviction and also:
- no outstanding, unmanaged tax debts or a history of poor payment; and
- no persistent failures to comply with any HMRC record keeping requirements.
If this applies to you we can help you meet both of those tax and accounting related conditions.
Your P800 calculation may be wrong
October 8, 2015
HMRC is currently sending form P800 tax calculations to many people who are taxed under PAYE, but who have overpaid, or underpaid tax for 2014/15.
Some P800 forms were issued before the P11Ds for 2014/15 were processed, so the tax computation omits benefits reported on the latest P11D, or it may include benefits and expenses reported on the P11D for 2013/14. In other cases inaccurate amounts of tax underpayments for earlier years may be included.
If you think this may affect you, we can help you check your P800 calculation and raise any problems with HMRC.
Inheritance tax implications on death
October 8, 2015
It is unfortunate that when a loved one dies, their partner may be denied benefits and tax relief if the couple were not married or in a civil partnership. For example any assets passed to the bereaved unmarried partner may be subject to inheritance tax, where the value of the estate exceeds the nil rate band of £325,000. Also there is no transfer of the unused inheritance tax nil rate band to the survivor of an unmarried couple.
No-one likes to think about their own demise; but death doesn’t make an appointment, it can arrive on any day. Talk to us about taking measures to make your loved ones financially secure after your death.
Ben Saxton & Nicola Groves crowned Nacra 17 European Champions in Barcelona
October 6, 2015
We are so proud of our clients Ben Saxton and Nicola Groves who sailed to victory this weekend in the Nacra 17 European Championships.
Ben, world champion in this class in 2013, and his current crew mate Nicola Groves took the European gold in Barcelona after finishing fifth in the Medal Race. Ben and Nic now have their eyes firmly fixed on qualifying for Team GB in the 2016 Olympics in Rio.
“It was a fantastic medal race and a really good battle with the Aussies. We’re really chuffed with the way we closed out the race when it mattered, and we’ve had a great week,” Groves enthused.
Saxton added: “The race today was fun – we had good breeze, Nic did a good job and Maurice Paardenkooper our coach did a great job of preparing us. We sailed OK to come fifth and that’s made us European Champions, so we’re really happy!”
Saxton and Groves joined forces in the mixed multihull event a year ago, with Groves having transitioned from the 49erFX. This represents their first major event victory together, adding to their silver medal at the ISAF Sailing World Cup Miami in January.
“We’ve been working hard over the summer and in the build up to this event with our coach Maurice, and it’s great to see that it’s starting to pay off. We had good speed in our new boat and showed level heads today in the medal race so we’re happy with the progress we’ve made together.”
The duo will take a short break before returning to training in Weymouth and Portland later this month ahead of further training blocks in Rio during the autumn and winter.
Elsewhere at the European Championships, fellow British Sailing Team crews Tom Phipps-Nikki Boniface and Lucy Macgregor-Dave Evans concluded their events in 11th and 14th places respectively.
For full results from the Nacra 17 Europeans, visit http://www.nacra17barcelona2015.com/