FINANCIAL ADVICE by Dean Flood

TAX TIPS by Dean Flood

The issue of Brexit is clearly dominant in the news and financial press, if only temporarily side-lined by the exit of the England team from the Euros. However life goes on and tax compliance remains.

This quarter’s review therefore covers a couple of possible tax saving opportunities.

VAT and the Flat Rate Scheme

Dean Flood Chartered Certified Accountant and Partner at Rowland Hall

As well as having a compulsory requirement to register for VAT once turnover exceeds the registration thresholds, businesses do have the option of registering voluntarily for VAT. Assuming that the charging of VAT to customers is not detrimental to a business’s competitiveness, the voluntary registration should be considered. In the first instance it would allow the business to recover input VAT on purchases. Secondly, the business may wish to register under the Flat Rate Scheme which can be used for businesses with VAT exclusive turnover up to £150,000. The Flat Rate Scheme is quite simple to administer and can in fact mean that businesses could make a modest profit from operating the scheme. Speak to your tax advisor as to whether this may be a beneficial move for your business.

Small Gifts to Employees

HMR&C have now simplified the rules in relation to small gifts to employees. Under the new legislation, employers are permitted to purchase gifts for their employees up to the total of £300 per employee each tax year, as long as individual gifts do not exceed £50 each and are in the form of a gift that cannot be readily exchanged for cash. This would

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include gift vouchers where cash refunds or change paid in cash is not available. Also the gifts cannot be as a reward for performance.

The gifts are tax deductible for the business and are not assessed for tax on the employee. For smaller owner managed companies, where employee numbers may be limited to family members, the above does provide a small means to receiving some tax free benefit from the business as it applies equally to directors as well as other employees.

Interest on Company Loans

Some companies operate on a basis whereby working capital is provided by way of a short or medium term loan of monies from the directors themselves. Recent changes to the manner in which investment income is taxed has given rise to the possibility of those directors receiving some tax free interest on those loans should the loan values be of a sufficient amount. Speak to your tax advisor if your director’s loan account is continually in credit.