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Latest News From CKLG Accountants

Budget 2018: At a glance

October 31, 2018

In a low-key budget speech, is Philip Hammond preparing our local economy for a new chapter?  

Most individuals can expect to pay less Income Tax although those who are self employed and operate through their own company can expect an increase in Income Tax and National Insurance from April 2020. 

There’s more Stamp Duty relief for first time buyers purchasing a shared equity home up to £500,000 but those who have spent time away from their home during their ownership period may realise an unexpected Capital Gains Tax liability when sold by virtue of the Chancellor changing the rules on main residence relief from April 2020.

To encourage longer-term investment in our local businesses, from April 2019, individuals will need to meet the qualifying conditions for Entrepreneurs’ Relief for two years, twice as long as previously, to claim the 10% tax rate. 

From January 2019, our local businesses will benefit from immediate tax relief on plant and machinery purchases of up to £1m for a couple of years and a reduction in their apprenticeship levy to 5%.  High Streets will be rejuvenated by slashing business rates for independent shops, pubs and restaurants; especially those providing public conveniences. A new 2% Digital Services Tax may be introduced in April 2020 for established ‘tech’ giants.

Is the era of austerity finally coming to an end?

This budget relies on a Brexit deal being reached.  If not, expect the Spring Statement to be upgraded to a full budget.


Planning for succession

October 29, 2018

It is never too early to start planning for the succession of your family business; maybe one child will leave the nest to follow their dreams and return to the family business with valuable practical business experience whilst others would prefer to have a distant involvement as minority shareholders (or sleeping partners) or no involvement at all.

There are many issues that will need to be discussed and addressed over a number of years to ensure your business continues to thrive for the next generation and beyond.  Directors and Partners should prepare a family constitution which addresses;

  • where the family want to be over a specified period of time, their aims and objectives as well as recognising the conflict that may hinder their plans
  • who does what in the business, how long should they carry out that role for and recognising when other support is required
  • succession, exit and retirement plans

There is normally a transitional period where the control of the business steadily passes to the next generation.  Successors will welcome guidance and support especially when large decisions are made but this transitional period can often last a number of years and conflict may occur. 

There will also be financial decisions to be made;

  • will the older generation be relying on the business to provide for them in their retirement?
  • will the business need to be restructured to give the next generation control?
  • are all your children to be treated fairly but not necessarily equally?

Most of the taxes will need to be considered at every stage.  Don’t shy away from using trusts if protection is required.    

Handing over the family business is complex and risky, call Lawrence at CKLG on 01223 810100 to discuss your succession plans.    


Selling your business

September 24, 2018

Selling a business is probably the biggest transaction you’ll undertake during your life and most will expect to pay Capital Gains Tax (CGT) at the Entrepreneurs’ Relief (ER) rate of 10%. 

Each sale is structured differently and the consideration could be in different forms; some of which may enable you to defer a CGT bill.  But knowing that our tax laws are ever changing, is this a sensible move? Our advice would be to plan ahead to ensure there are no nasty surprises when the disposal takes place and beyond; will you and your business qualify for ER and is your lifetime limit available? 

Be aware that;    

  • If you sell the assets of your unincorporated business (or your partnership interest) to others for solely cash but some of the payment is deferred, CGT could be payable before you receive the balancing payment.
  • If you operate your business through a company, the purchaser may want its assets rather than your shares. Generally speaking, this route is not as attractive to the vendor and often results in higher tax charges. Could your company be restructured beforehand to achieve a share sale?
  • If you are offered a combination of cash and shares in the purchasing company as consideration, it may be possible to defer some of CGT payable but will you and the new company qualify for ER in the future? 
  • If some of the consideration offered is contingent and unascertainable (e.g. an earn-out arrangement), ER will not be available in full. If not structured correctly, some could be treated as remuneration.

Lawrence and his friendly team of advisers at CKLG can assist you review the structure of your business prior to its sale, consider ER and support you through the sales process (and beyond). 

Please call our business services team on 01223 810100. 


Declaring overseas income deadline 30 September

September 11, 2018

All overseas income must be declared to HMRC by 30 September 2018 or risk high penalties from October 2018

Did you know that HMRC receives vast quantities of data from letting agents, land registry records and platforms such as Amazon, Apple and Airbnb? HMRC has access to more information and technology than ever before!  They can piece together networks and spending patterns to detect and pursue underpaid tax. 
 
This is why HMRC run incentives and campaigns offering individuals and business the opportunity to come forward and pay any unpaid tax they owe, before HMRC come to them. Moreover, with the global crackdown on tax evasion, the days of sheltering assets overseas are very much a thing of the past.  New ‘information sharing’ powers under the Common Reporting Standard mean that HMRC now receive data about overseas cash and assets held by UK individuals in over 100 jurisdictions. 
 
If you have overseas assets producing income or gains not previously declared to HMRC, you have until 30 September 2018 to make a full disclosure under the Worldwide Disclosure Facility and put things right going forward. From October 2018, new penalties come into force; including a penalty of 200% of the tax due and penalties based on the overseas asset value.  Details of deliberate defaulters may also be published.
 
Now is the time to bring your tax affairs up to date.  If you do need to make a disclosure to HMRC, we can help you through this process.  

Call CKLG on 01223 810100 and ask to speak to one of our private client tax specialists.  


Thinking of starting a new business?

July 17, 2018

You’ve researched your market, prepared a business plan and organised your finances; the next step is to discuss the right business structure. Don’t assume you will be better off operating as a company, this involves additional administration, costs and more layers of taxation. Consider all the options

If you want to captain your own ship, become a Sole Trader. If two or more individuals are keen to run a business together, consider a Partnership. Either way, post-tax profits generated are yours to keep. Both Sole Traders and Partners are personally liable for the business debts but operating a ‘Limited Liability’ Partnership (LLP) will enable Partners to restrict their liability to broadly capital contributed. Sole Traders and Partners are self-employed. They must register with HMRC for Self-Assessment and pay Income Tax and National Insurance. A ‘nominated partner’ must also register the Partnership and file its Tax Returns.
Directors of Limited Companies face increased reporting and management responsibilities.

A company has a separate legal entity and a shareholder’s liability is normally limited to the amount unpaid on their shares; although often lenders require personal guarantees. During its life, there are different layers of tax:

  • Corporation Tax payable by the Company on income and capital profits at 19%
  • Income Tax on money withdrawn, for personal use, as salary and dividends 
  • Tax on liquidation

Whichever business structure you chose, you’ll need to keep meticulous records of business income and expenses. You must register for VAT if turnover exceeds £85,000 and operate a PAYE scheme for all directors and employees.

Tax relief for loss-making Sole Traders and Partnerships in early years of trading can aid cash flow prior to incorporation although commercial requirements and personal objectives will often determine your business structure.

Call our business services team  to discuss your options on 01223 810100.


Tax benefits from letting a furnished holiday property

July 10, 2018

The pros and cons of letting furnished holiday accommodation

When furnished holiday property is let on a commercial basis for short periods, the owner can benefit from tax reliefs which wouldn’t otherwise be available to residential landlords, providing certain conditions are met.

However, there are also several disadvantages associated with letting property as holiday accommodation whether or not the furnished holiday letting conditions are met.

Mythbusters

The property doesn’t have to be located in a recognised holiday area to qualify as a furnished holiday letting. It may be situated in most parts of the UK, aside from the Isle of Man or Channel Islands, or in another country within the European Economic Area (EEA).

The furnished holiday letting business can be conducted through a company, by an individual, or by a partnership, but some tax advantages are only open to individuals and partnerships. For example, capital gains tax (CGT) is not paid by companies, so
the reliefs relating to CGT are not relevant to companies.

Advantages

HMRC regards furnished holiday lettings as a trade, which qualify for the following tax reliefs that don’t apply to other types of lettings;

  • increased pension contributions
  • capital allowences 
  • reduced capital gains
  • joint ownership

Read more

 

 


Suspicious emails claiming to be from HMRC

July 5, 2018

We’ve had a number of our clients forward what sometimes appears to be a legitimate email from HMRC offering a tax refund.  The email often contains a link to a website or an attachment designed to trick you into disclosing personal and payment information.  We’ve also heard of bogus text messages being sent and direct messages through social media – such as Twitter.

HMRC are also aware of an automated phone call scam which tells you HMRC is filing a lawsuit against you and requests you press a number to speak with a caseworker to make a payment.    

HMRC will never send notifications by e-mail about tax refunds; nor will they ask for personal or financial information when they send text messages.  HMRC have also confirmed that automated phone calls are scams and you should end the call immediately.  Also, HMRC never use social media to offer a tax refund, request personal and financial information.       

HMRC ask us to report all HMRC related phishing emails, bogus text messages, unknown social media accounts and phone calls to phishing@hmrc.gsi.gov.uk before deleting the message; do not open or download any attachments or click any links in emails or text messages as they may contain malicious software or direct you to a bogus website. 

Sadly, it’s often the elderly and vulnerable people who are targeted.  Be vigilant and if in doubt, call one of our friendly advisers on 01223 810100 for help.


Making Tax Digital, is your business ready?

June 12, 2018

From April 2019, legislation will require businesses above the VAT threshold to set up a digital tax account and file quarterly returns online. Preparation starts now, with businesses and accountants moving online to improve efficiency, boost profitability and make the transition painless.

Listen again to Sarah Tucker and Chloe Saberton discussing 'Making Tax Digital' on Cambridge Radio 105 and what you need to do to ensure your business is up to speed.

 


Proud sponsors of the Cambridge County Polo Club

June 5, 2018

You may not know this about us, but we love horses at CKLG Accountants, which is why this year we are sponsoring the Cambridge County Polo Club during their 2018 summer polo season. Our partnership with Cambridge County Polo Club makes perfect sense to us, and it's a privilege to be supporting a local family run business whilst also enjoying a little bit polo action. 

"The Cambridge County Polo Club are proud to welcome CKLG Accountants on board as a club sponsor for the 2018 Polo season. We look forward to working with Katie and her team." Jonathan Roth, Cambridge County Polo Club.

 


Making tax digital for VAT registered businesses

May 3, 2018

 

Making Tax Digital (MTD) will transform the way tax is administered.

From 1 April 2019, VAT registered businesses with turnover exceeding the VAT threshold of £85,000 should record all transactions digitally using MTD compatible software.  You will no longer be able to submit your VAT Returns through the VAT portal; instead they will be submitted to HMRC through their Application Programming Interface (API) via your software, bridging software or API enabled spreadsheets. You must also be able to receive information from HMRC using the API.  

From April 2019, if you reach the VAT registration threshold, MTD will also apply from the date of your VAT registration.  If, however, your turnover falls below the VAT threshold, MTD must continue.  Once you’re in, you’re in! 

Although not legislated for, it is intended that there will be a ‘soft landing period’ whereby HMRC will not charge penalties for incorrect digital record keeping and data transfer.  It is thought that HMRC may accept some data being transferred manually for one year but the submission of the VAT return must be completed via API. 

Businesses undergoing formal insolvency procedures, those run by religious societies whose beliefs are not compatible with electronic communication as well as the ‘digitally excluded’ (i.e. by age, disability or remoteness of location) will be exempt from MTD for VAT. 

It is intended that MTD for Income Tax and Corporation Tax will apply from April 2020. 

MTD is not changing what you do; it’s how you do it.  Please call Alex or Chloe at CKLG on 01223 810100 if you need help transitioning your manual bookkeeping into digital form or assistance in determining if your software is compatible with MTD.


Are your tax affairs up to date?

April 16, 2018

Ever feel like you are being watched?

Did you know that HMRC receives vast quantities of data from letting agents, land registry records and platforms such as Amazon, Apple and Airbnb? HMRC has access to more information and technology than ever before!  They can piece together networks and spending patterns to detect and pursue underpaid tax.  

This is why HMRC run incentives and campaigns offering individuals and businesses the opportunity to come forward and pay any unpaid tax they owe, before HMRC come to them.  For example, the HMRC Let Property Campaign offers landlords the opportunity to declare rental income they missed off their Tax Returns; maybe because they did not realise they had a tax liability.  HMRC discount penalties for an unprompted disclosure; an incentive to go to HMRC before they find you. 

Moreover, with the global crackdown on tax evasion, the days of sheltering assets overseas are very much a thing of the past.  New ‘information sharing’ powers under the Common Reporting Standard mean that HMRC now receive data about overseas cash and assets held by UK individuals in over 100 jurisdictions.  

If you have overseas assets producing income or gains not previously declared to HMRC, you have until 30 September 2018 to make a full disclosure under the Worldwide Disclosure Facility and put things right going forward.  

From October 2018, new penalties come into force; including a penalty of 200% of the tax due and penalties based on the overseas asset value.  Details of deliberate defaulters may also be published. 

Now is the time to bring your tax affairs up to date.  If you do need to make a disclosure to HMRC, we can help you through this process.  Call CKLG Accountants on 01223 810100 and ask to speak to one of our private client tax specialists.  


Reducing your inheritance tax burden

March 16, 2018

We’ve heard the Chancellor taking stock of the British economy in his Spring Statement.   It was brief; 20 minutes of discussion around growth and productivity, public finances and new tax consultations on VAT, Corporation Tax and Trusts.   

In January 2018, the Chancellor wrote to the Office of Tax Simplification to review Inheritance Tax (IHT).  Simplification, smoother processes and a review of routine estate planning opportunities is on the cards!

Did you know that the

  • £3,000 annual IHT gift exemption has been the same since 1981?
    This would be around £11,000 had it increased with the cost of living.
  • IHT-free allowance on death has been £325,000 for the last 9 years?
    Had it risen by inflation, it would be over £400,000.  

It’s no wonder booming house prices and rising stock markets have increased the IHT take. 

To help ease your IHT burden 

  1. Consider IHT exempt gifts of capital and spare income during your lifetime. 
  1. Larger sums can be given away but remain ‘potentially chargeable to IHT’ until 7 years have lapsed; be mindful of other tax implications. 
  1. The ‘Residence Nil Rate Band’ may help if you leave your family home to your descendants. It’s an additional IHT free sum of £125,000 from April 2018 (capped at £175,000 from April 2020) but it’s complex and not available to everyone. 
  2. Consider funding your retirement by cashing in ISAs which are liable to IHT rather than spending pension savings which may be exempt.
  3. Bank Business and Agricultural Property Reliefs by gifting qualifying assets.

There are over 200 tax consultations in progress. Those alongside changes to your family circumstances make it important to plan ahead; call CKLG on 01223 810100 and ask to speak to one of our private client tax specialists.    


Spring Statement 2018: At a glance

March 15, 2018

Tuesday's Spring Statement saw Chancellor Phillip Hammond taking stock of the British economy. It was a brief affair; 20 minutes of discussion around growth and productivity, public finances and a handful of new tax consultations.

In time, we may see changes to VAT, Corporation Tax payable by big tech companies and the taxation of trusts being made simpler, fairer and more transparent. A consultation on the introduction of a levy on ‘single use’ plastic is expected to address the huge concern over the damage plastic does to our environment. 

On 19 January 2018, the Chancellor wrote to the Office of Tax Simplification to order a review of Inheritance Tax. Simplification and smoother processes; combined with a review of routine estate planning (including gifting) is also on the cards.

 

There are over 200 consultations already in progress; please call us on 01223 810100 to discuss how these could affect you.


CKLG Accountants sponsors Newmarket Hockey Club

February 22, 2018

We are delighted to be sponsoring Newmarket Hockey Club and their training bibs this season.
We're also very much looking forward to cheering on our very own Stef Heslop and Sarah Haird in their upcoming matches.

Visit the Newmarket Hockey Club website for match fixtures and club updates

 


VAT on rewards for crowdfunding

February 6, 2018

If you have used a crowdfunding arrangement to raise money for your business, you may need to account for VAT on the reward packages offered to your investors. The VAT treatment varies according to exactly what the investor is entitled to receive as a reward. 

HMRC treats the rewards as pre-payments, or as vouchers to exchange for your products or services. The voucher is treated as being “sold” to the investor either when the money is invested, or when the reward is given. There may be a long period between these two events, so it is essential to look at the detail of the transaction in each case. 

Our VAT experts can help you get the VAT reporting right for your business from day 1, please conatct us on 01223 810 100.

 


Gifts liable to Inheritance Tax

February 3, 2018

When you make a significant donation to an organisation, rather than an individual, you should check whether any inheritance tax (IHT) is payable on that gift. Contrary to popular belief IHT is payable on gifts made during a person’s lifetime, if the gift is not covered by a specific exemption.

There are exemptions for gifts made to; political parties, charities, housing associations, and made for national purposes or maintenance of historic buildings. The gift may fall within your annual exemption of £3,000, or be covered by your nil rate band of £325,000. In other circumstances IHT at 20% may be due.

Please contact us to discuss any inheritance tax planning concerns you have.


Are you making the most of your tax allowances

January 23, 2018

With the end of the 2017/18 tax year fast approaching CKLG Accountants Cambridge are pleased to be able to share with you our Year End Tax Guide. The Guide highlights the potential tax planning measures that you may wish to consider or take for yourself or your business before 5 April 2018.

  • Personal Allowances and Relief's
  • ISA's
  • Pension Contributions
  • Inheritance Tax
  • Capital Gains
  • Corportation Tax
  • Entrepreneurs’ relief

Download our Year End Tax Guide 2017/18


Are you able to claim the Marriage Allowance?

January 17, 2018

Where an individual does not have sufficient income to utilise their Personal Allowance (PA) in full, the Marriage Allowance enables them to transfer 10% of their PA to their spouse or civil partner. It is only available if both individuals were born after 5 April 1935 and neither spouse is a higher rate taxpayer.

The Personal Allowance for the current 2017/18 tax year is £11,500. Therefore, the Marriage Allowance is worth £230 for this year (£1,150 x 20%). However, it has to be specially claimed and many people have been put off by the online application process. In fact, you can claim the allowance by calling HMRC on 0300 200 3300, or can make the claim in writing.

Once the claim has been accepted, it remains in place for future tax years while the marriage continues, unless the claim is revoked. The claim for Marriage Allowance can also be backdated to cover all years from 2015/16 if the couple were married in those earlier years.

 


UK Tax Rates for 2018/ 2019

January 15, 2018

Make sure you are fully aware of any changes to UK tax rates, reliefs and allowances affecting you and your business for 2018/ 2019.

Download our Tax Card for 2018/ 2019


Tax changes to your dividend allowance

January 9, 2018

For the current 2017/18 tax year, the first £5,000 of dividends you receive are taxed at 0%, as that amount is covered by your Dividend Allowance. This allowance will be reduced from £5,000 to £2,000 with effect from 6 April 2018.  This may affect the amount of tax you pay on the dividends you receive in the 2018/19 tax year. 

Where your company’s shares are held by a number of your family members, to take advantage of the Dividend Allowance, you may need to review this share structure and amend it if necessary before 6 April 2018. Changing share ownership can give rise to tax charges, so please ask us for advice before cancelling or issuing new shares.