When to register for VAT
If or when you register for VAT, you need to charge VAT on any goods and services you provide that are subject to VAT and will also allow you to reclaim some or all of the VAT you suffer on your purchases.
All businesses must register for VAT if their UK turnover of taxable goods and services exceeds the VAT threshold in the previous 12 months (currently £79,000) or expect to exceed the VAT threshold in the following 30 days alone. If you register, you can deregister later if you can show HMRC that your taxable turnover will fall below the deregistration threshold (currently £77,000).
However, even if the turnover is below the VAT threshold, there can be advantages to voluntary VAT registration especially if you are providing services to other VAT registered businesses or if you sell zero-rated goods, as it enables the business to claim back the VAT paid on it’s purchases and expenses.
Whether you register online or by post it can take HMRC several weeks to process VAT registrations and issue a VAT registration number. During this period you must account for VAT from the date when VAT registration was required which means you will need to keep proper VAT records and account for and pay VAT online. Certain rules apply to how invoices are raised and you should seek advice.
Once registered the business may be able to reclaim VAT spent on equipment bought in the previous four years and services up to six months ago. You must have proper VAT records but would suggest you take advice if you think you wish to take advantage of this.
Employment Allowance - up to £2k for employers
As announced by the Chancellor in his 2013 Budget, from 6th April 2014 the new Employment Allowance comes into effect. This will allow most employers who pay Employer’s National Insurance to be able to claim up to £2,000 against these costs.
This allowance is deducted from the first £2,000 of Employer’s National Insurance in the 2014/15 tax year. So if your 5th May 2014 Employer’s National Insurance liability is greater than £2,000 you can claim the full allowance in that month. Only a few employers are excluded and group companies will only be entitled to the allowance once across the group.
Employers who do not have any Employer’s National Insurance costs may miss out on this allowance. However, for some small shareholder owned companies, with some careful planning, they can change the way they pay themselves slightly and benefit from an overall tax saving of up to £180 per year.
This is a good tax cut for the majority of employers and especially if their annual Employers National Insurance bill in more than £2,000. If you need assistance claiming your Employment Allowance then contact us for free advice.
You can follow Tony Rookes of Southgates, Chartered Certified Accountants on twitter - @southgatesACCA.
Annual Investment Allowances - time to spend?
Have you taken account of the maximum Annual Investment Allowance (AIA) available and invested in new plant and machinery for maximum tax benefits, writes Tony Rookes, a partner at accountancy firm Southgates, Chartered Certified Accountants.
The government had previously reduced the AIA to just £25,000 from 6th April 2012 but from 6th April 2013 (1st April 2013 for Companies) it was increased to £250,000. But what is AIA?
The AIA is a capital allowance which offers tax relief at 100% of the qualifying expenditure, including plant and machinery, in the year it is purchased. This £250,000 is pro-rata for periods which are not 12 months or for periods that span the 5th April. These allowances are available to most businesses and individuals provided the activity is a trading activity, commercial property letting or leasing business. Employees can also claim this allowance should they use their own assets as part of their employment.
There are a few exclusions and if you operate through a group structure or have a number of associated (related) companies then the annual amount is split across these companies. The purchase of cars and certain other assets will not qualify for this allowance. You should take advice on this prior to purchasing.
If you have taken advantage of the whole allowance then any additional expenditure will attract the usual writing down allowances of a flat rate 18 % or some types of expenditure may only qualify for writing down allowance of 10 per cent such as electrical or cold water systems, thermal insulation and long-life assets.
This allowance does not affect the usual treatment of repairs expenditure which is normally an allowable deduction against income and so full tax relief is given immediately.
Although this allowance is expected to last until 5th April 2015, if your year end is 5th April 2014, or 31st March 2014 for Companies, then you should take advice on the amount of Annual Investment Allowance available to you or your company and consider whether there are any pieces of plant or equipment your business needs to enable you to obtain the maximum relief available.
Macmillan Cancer Support donation
This Christmas we wanted to show our appreciation for the continued support of all our clients and rather than send out small gifts we have chosen to make a donation to Macmillan Cancer Support charity. The charity is close to the heart of Andy who this year saw at close hand the amazing work done by Macmillan nurses and therapists. Further information about the a Macmillan Cancer Support charity can be viewed on their website.
George Osborne's Autumn Statement
George Osborne delivered his Autumn Statement last week and rather than just give us details of his spending he actually gave announced some tax changes which will take effect in 2014 and 2015. Some of these tax changes had been announced earlier and some were simply extending current initiatives but still, it was a bit of good news before Christmas. I have highlighted a few of the points raised in the statement.
He reaffirmed that the personal allowance will increase to £10,000 from 6 April 2014, but unfortunately the age allowances for those born before 6 April 1948 are to remain the same as they are at present. He did announce that from 6 April 2015 there is to be a transferable element of the personal allowance for married couples where married couples and civil partners will be able to transfer up to £1,000 of their personal allowance to their spouse. There are restrictions on the transfer as it can only take effect if both members of the couple are basic rate taxpayers or pay no income tax for the year.
Although the relief is already in place, Mr Osborne announced that small business rates relief is to be extended to 31 March 2015 and that from April 2014 all businesses will be able to spread the payment of their business rates over 12 months instead of the usual 10. There will also be a cap of 2% on the increase in business rates for the year to 31 March 2015.
With the high street suffering an increased number of empty properties he announced that the business rates on a property will only be charged at 50% of the full rate for the first 18 months. This will apply if a business moves into a retail premises between 1 April 2014 and 31 March 2016 which had been empty for 1 year or more.
As I’m sure you are all aware, the State Pension Age is to be aligned at 65 for men and women who reach that age in the next few years. The age is then to rise to 66, and increase to 67 for those that reach that age after 2034. Mr Osbourne announced that the government is reviewing the future pension age and is likely to accelerate the State Pension Age to age to 69 for people who are currently in their early 30's.
I would like to take this opportunity to wish you all a peaceful Christmas and a Happy and Prosperous New Year from myself and all at Southgates.
Has there ever been a better time to buy equipment for your business?
If you buy an asset such as a vehicle, plant and machinery or other equipment for use in your business you may be able to claim a capital allowance for that expenditure. Capital allowances have been around for many years and the aim is to give tax relief for the reduction in value of qualifying assets that you buy for business use. This is done by allowing you to write off their cost against the taxable income of your business, provided certain conditions are met. These capital allowances are available to sole traders and partnerships, as well as companies and other organisations liable for Corporation Tax.
It’s been an interesting and sometimes quite exciting time (for an accountants anyway) at Southgates over the last few months. We have thought for some-time that the ‘logo’ we used on our letterheads and some adverts had become a little ‘dated’. With the introduction of Andy Guy as a partner in 2011 and the young dynamic team that is developing within our office we felt a change was needed. We had some great ideas of what we wanted and involved the whole of our team to help contribute to, and shape the new look of the firm.
Why leave it until the last minute?
The 31st January 2014 seems a long way off, but based on experience it will soon be here! What’s more there is Christmas in between!! This is the deadline to electronically submit your 2013 Self Assessment Tax Return to HM Revenue and Customs (31st October 2013 if submitting a paper version). Not everyone needs to worry about this date but for those who are self-employed, have untaxed income, are directors of companies or are higher rate tax payers it should be etched on the brain.
The Pensions Act 2008 established new duties that mean employers will need to provide employees with access to a workplace pension scheme that meets certain minimum standards. They’ll need to automatically enrol some of their employees and others may ask to join. Although this is not of immediate concern, there are advantages for employers to start to think about providing a scheme earlier to avoid that big surprise when it becomes a legal requirement in January 2016 for small employers. We will be looking into this in more detail in the near future.
Are you ‘LinkedIn’? Not quite the business version of Facebook but still a useful tool to build up those business contacts and to enable you to get your message across about the goods or services your business provides. I can only see it getting more powerful in the future. Search on LinkedIn and see who you can find.
Apprenticeships are work-based training programmes which are designed around the needs of employers. This nationally recognised qualification can be used to train both new and existing employees. With most of the training ‘on the job’ at your premises it is ideal for small businesses. Additional training is provided to apprentices by local colleges or by a specialist trainers. Grants are also currently available to small businesses which will pay up to £1,500 if they haven’t taken on an apprentice in the last 12 months and now do so (up to a maximum of 10 apprentices).
The demands on employers never stops
Over the last few weeks, we employers have had to cope with RTI, the biggest change in the PAYE system since its introduction and had to ensure our PAYE year end returns were submitted on time. All of this is with the threat of penalties hanging over us if we got it wrong. Now, just when we thought is was safe to go back to running our businesses, the 2012/13 P11D submission deadline comes along to bite us.
Most employers will be vaguely aware of “benefits in kind” but probably only give it a brief thought when ticking the ‘none’ box of the P35 year end return. However, it is something that we should not treat lightly. It’s not just cars and health insurance that need to be disclosed. There are many other employee perks that need to be considered.
For an employee who earns more than £8,500 per year and all directors the employer will need to report to HM Revenue & Customs things such as staff entertaining of £150 per employee, use of company assets, certain loans to employees, personal expenses and some child care costs paid by the employer.
The one benefit in kind that we are probably all aware of is the company car. When provided by the employer, whether with or without fuel, the business will need to report this even if it is mainly used for business purposes. The rate is dependant on a number of factors, not least the CO2 emission and list price of the car.
The one benefit that is a little harder for an employer to ascertain and one most likely to be looked at by HMRC is the employee’s use of a van. If there is any significant private use of the van, other than ‘home to work’ journeys then this will need to be reported as a benefit in kind.
If employers are in any doubt as to whether they need to make a return to HMRC they should take professional advice as the deadline for making the return is 6th July 2013. And yes……there are penalties if you get it wrong.