Archive for April, 2017

A note for driving instructor clients E and learner drivers

Thursday, April 27th, 2017

The Driver & Vehicle Standards Agency has released its response to a consultation with the industry to “Improve the car driving test”. In their conclusion they say:

“This paper reports the outcome of the Driver and Vehicle Standards Agency’s (DVSA) consultation about changes to the car driving test. The consultation was held between 14 July and 25 August 2016. The consultation paper contained proposals for 4 changes to the way the driving test is conducted.

These are:

 

  • increase the independent driving section of the practical driving test from 10 to 20 minutes
  • provide the option for the directions in the independent driving section to be followed by using a sat nav, in addition to the current practice of following road signs
  • modify the way in which manoeuvres are delivered, so that they are undertaken during the natural course of the drive – the exercises undertaken would be updated for modern driving conditions
  • ask one of the 2 vehicle safety questions while on the move instead of at the start of the test.

 

There was broad support for the proposals. We've received the final presentation with the findings from a trial of the new test undertaken by the Transport Research Laboratory (TRL). This identifies improvements delivered by the new test. Taking into account the outcome of the consultation and the TRL research, the new test will be introduced for learner car drivers from 4 December 2017.”

This will prove to be a busy year for instructors as existing learner drivers try to pass their driving test before the 4 December. And, instructors will need to update their skills to teach drivers the new rules.

Donald’s Blog – Another Fine Mess?

Wednesday, April 26th, 2017

Making Tax Disastrous – another fine mess.

A blog – by Donald Parbrook, Chartered Tax Adviser, 26th April 2017

Yesterday, the Government withdrew various key sections of the Finance Bill in order to get it through Parliament before the election. It’s probable that some of what was withdrawn can be rushed through between the election and the summer, or brought in during the Autumn. However, this embarrassing removal of key legislation is surely not a good reflection on Mr Hammond – who must be recovering from his hopeless Budget attempt to increase national insurance in a breach of a manifesto commitment.

Of course, the blame for this latest hiccup is being passed to Her Majesty’s Official Opposition who in failing to allow the Finance Bill to pass without challenge, have potentially put at risk measures that will supposedly increase taxes and reduce avoidance.

But I do wonder if the Chancellor has been quietly relieved to be able to postpone the introduction of “Making Tax Digital”? If he had changed the implementation timetable again in other circumstances he’d have faced great criticism. Doing something this way, allows him to avoid blame for rushing in a profound change to the tax system before any pilots have been completed and when many sensible heads are counselling against the change being made at all.

The proposed “Making Tax Digital” system will see businesses file quarterly tax returns containing basic financial information. This is the most profound change in the reporting requirements businesses face for a generation (or at least since Self Assessment was introduced).
For “MTD”, the official launch date is April 2018 for larger partnerships and sole traders. And I just wonder if the timetable is to be pushed back. The Government must be looking for a “face saving” exit if not from the entire proposal certainly from the timetable.

It has to be noted that the House of Lords Economic Affairs Committee has an inquiry under way and the Chairman recently stated that minor changes to only bring in larger businesses in 2018 “didn’t go far enough”. The Office for Budget Responsibility has expressed doubts about the HMRC’s forecast financial benefits.

The news that the Finance Act won’t contain the enacting legislation after all is interesting as firms like ours have already invested time in drawing up a strategy to support clients. We have a list of clients who we think are affected in 2018 and 2019 and we have prepared written material and a strategy on how to help them through software recommendations or processing/transitional support. All of this is now up in the air.

One supposes that the Conservatives will be re-elected but perhaps there will be a reshuffle and, perhaps, a new Chancellor might decide that MTD may be put where it belongs (in the bonfire with other past silly ideas from HMRC that reflect a fundamental lack of understanding of small businesses, many of whom are not run with accountants and software packages and some who aren’t even in areas with sufficient broadband speed in rural areas). I hope so as whilst MTD may well create extra work and fees for firms like Milne Craig, I really don’t see the state requiring quarterly tax returns from the owner managed business sector as proportionate intrusion in your life.

I am often asked why I haven’t been writing the number of blogs I used to write and the simple truth is that Scottish politics has become rather too hot to handle. I fear whatever I might write if I stray “off piste” into non-tax areas will be potentially disagreeable to some of my clients, almost all of whom I am rather keen to keep.

However, it is worth saying that businesses do not want the uncertainty of another referendum.

If you doubt this I recommend you review this link from a survey a rival recently carried out:
http://www.frenchduncan.co.uk/news/french-duncan-news/indyref2-survey-results/

It’s rather unequivocal.

From a purely practical perspective, I think we Scots have a straight choice here between

1. Voting for the SNP MPs with the consequence Scotland again has next to no MPs involved in the Government in London and accept we get a new Independence referendum. OR

2. Voting for whichever candidate you think will beat the SNP in your constituency if you don’t want that outcome.

I entirely respect your preference – really I do. And, frankly, I’m more depressed than anything that we appear to have the tax outcome I predicted after the 2014 vote which is that Scotland is becoming a special semi-autonomous high tax region of the UK.

I now pay more council tax, more income tax and much higher LBTT (stamp duty) than the equivalent person in the north of England. I don’t resent it personally – but the direction of travel towards higher taxation, the uncertainty over Indy2 and apparent consolidation of more left wing policits into Scottish life seems to me to be bad for business and investment decisions. We have to be more attractive, not less attractive than England on these issues. Our beautiful scenery is great, but it has to be matched with a business friendly climate and that means constitutional certainty would be good.

Where to start?

Well, the first thing might be to accept the punitive taxation on property transactions via LBTT (stamp duty) is a “laffer curve” matter – not a laughing matter – and to cut the rates in order to increase the yield to Holyrood to the maximum efficient level. Might I suggest 5% top rate? It would send a signal, that Scotland is interested in efficient and fair taxation, not punishment of success and the politics of envy.

As ever the views expressed here are those of Donald Parbrook, and not of the firm or his co-directors.

26th April 2017

New accounts filing regulations for smaller companies

Tuesday, April 25th, 2017

Companies house recently published the following news story.

Changes to UK company law removed the option for small companies to file abbreviated accounts for accounting periods starting on or after 1 January 2016.

Small companies

If you are a small company, you have 4 options for filing your accounts:

1. Micro-entity accounts

  • You must meet at least 2 of the following:
  • turnover is no more than £632,000
  • balance sheet total is no more than £316,000
  • average number of employees is no more than 10

2. Abridged accounts

  • You must meet at least 2 of the following:
  • turnover is no more than £10.2 million
  • balance sheet total is no more than £5.1 million
  • average number of employees is no more than 50

3. Full accounts with us and HMRC

These joint accounts are suitable for small companies who are audit exempt and need to file full accounts to us and HMRC. You can also file your tax return with HMRC at the same time.

4. Dormant company accounts

These accounts are suitable for companies limited by shares or by guarantee that have never traded and can be filed using our WebFiling Service.

How to file your accounts

 

Micro-entity accounts:

To file micro-entity accounts you need to sign-in to our WebFiling service and choose the micro-entity accounts type.

 

Abridged accounts:

We’re working on a replacement service that will enable you to file abridged accounts on Companies House Service. We expect to launch it this year.

 

Currently, there are 2 options for you to consider:

  • Use the Companies House-HMRC joint filing service. You’ll need a Government Gateway account and you can file your tax return to HMRC at the same time.
  • Use third party software. This service benefits those who file regularly.

 

Clients will be relieved to know that we will choose the appropriate filing method and format for them.

What are your responsibilities to pay the National Minimum Wage

Thursday, April 20th, 2017

The current state defined wage rates are divided between the National Living Wage (NLW) – this is currently set at £7.50 per hour and only applies to workers aged 25 years and over – and the NMW for workers under 25 years.

The NMW hourly rates are currently:

  • Age group 21 to 24 – £7.05
  • Age group 18 to 24 – £5.60
  • Age group under 18 – £4.05
  • Apprentices £3.50

Apprentices are entitled to the apprenticeship rate if they are either:

  • Aged under 19
  • Aged 19 or over and in the first year of their apprenticeship.

Workers are not entitled to the NMW until they reach the school leaving age. This depends on where you live:

England

You can leave school on the last Friday in June if you’ll be 16 by the end of the summer holidays.

You must then do one of the following until you’re 18:

  • stay in full-time education, for example at a college
  • start an apprenticeship or traineeship
  • spend 20 hours or more a week working or volunteering, while in part-time education or training

Scotland

If you turn 16 between 1 March and 30 September, you can leave school after 31 May of that year.

If you turn 16 between 1 October and the end of February, you can leave at the start of the Christmas holidays in that school year.

Wales

You can leave school on the last Friday in June, as long as you’ll be 16 by the end of that school year’s summer holidays.

Northern Ireland

If you turn 16 during the school year (between 1 September and 1 July) you can leave school after 30 June.

If you turn 16 between 2 July and 31 August, you can’t leave school until 30 June the following year.

Tax free capital gains

Wednesday, April 19th, 2017

Is there such a thing as a tax-free capital gain? In fact, there is… Every UK resident tax payer is allowed to make tax-free gains of up to £11,300 during the current tax year, 2017-18.

Additionally, you can sell personal possessions and make a gain of up to £6,000 without paying capital gains tax (CGT). This includes a sale of the following items:

  • jewellery
  • paintings
  • antiques
  • coins and stamps
  • sets of things, e.g. matching vases or chessmen

You’ll need to work out your gain to find out whether you need to pay tax.

Finally, you won’t need to pay CGT on disposals of:

 

  • Gifts to your husband, wife, civil partner or a charity
  • Your car, unless you have used it in your business
  • Anything with a limited lifespan, e.g. household furniture
  • Gains on the sale of ISAs or PEPs
  • Sale of UK government gilts and Premium Bonds
  • Betting, lottery and pools winnings

And your home can be sold free of any CGT consideration as long as you have not let part the property at any time during your ownership, or you have not elected for a second property to be considered your principal private residence for tax purposes during the same period.

Further considerations to bear in mind:

  • When you inherit an asset, Inheritance Tax is usually paid by the estate of the person who’s died. You only have to work out if you need to pay Capital Gains Tax if you later dispose of the asset.
  • You may have to pay Capital Gains Tax even if your asset is overseas. There are special rules if you’re a UK resident but not ‘domiciled’ and claim the ‘remittance basis’.
  • You have to pay tax on gains you make on residential property in the UK even if you’re non-resident for tax purposes. You don’t pay Capital Gains Tax on other UK assets, e.g. shares in UK companies, unless you return to the UK within 5 years of leaving.

Switch to our mobile site