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TAX ADVICE by Dean Flood
TAX & ACCOUNTANCY TIPS
A happy new year to all members and readers.
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Tax Return Deadlines
The new year often signals the busiest month for many accountants and tax advisers. The 31st January marks the deadline for submission of self-assessment tax returns and is also the date that all liabilities for the 5th April 2016 have to be settled by. Failure to file on time will result in penalties being issued and failure to pay on time will result in HMR&C charging interest and potentially very high surcharges. It is strongly recommended that you communicate with your professional advisors as soon as possible if you have not already.
VAT Flat Rate Scheme Charges
The VAT Flat Rate Scheme (FRS) is a popular means of administering VAT for small businesses because of its relative simplicity and potential for producing small gains for that business. HMR&C have decided that these ‘small gains’ are unnecessarily advantageous to some small businesses and therefore some sectors will see an increase in their flat rate percentage from April 2017. The government estimate that this will affect 123,000 FRS businesses. If you are using the FRS, it is recommended that you speak to your adviser about these changes.
Entrepreneur’s Relief
There are some complex rules as to the application of Entrepreneur’s Relief (ER) which should be discussed with your advisers if you are planning to sell a trading business or company. If ER is available your rate of Capital Gains Tax can be reduced to 10% which would be a significant saving if you are a higher rate tax payer. There are however some basic rules which are easily overlooked and have to be considered in advance of a business disposal especially where the disposal is of a Limited Company. The shareholder should ensure that they have at least 5% of the business shareholding and should there be more than one classification of shares, the shares held must have an equivalent level of voting rights. The individual has to have been an employee or officer of the company. Both of these conditions have to be met for the full year prior to business disposal. These are easy points for HMR&C to challenge an ER claim so please ensure they are addressed in advance.
State Pension
Most UK tax payers will now have online tax accounts with HMR&C. These can be accessed by way of registering with HMR&C through their website. The facility will permit access to the individual’s tax record but also has the benefit of providing an up to date assessment of the individuals State pension entitlement. This may be useful to many to ensure that their National Insurance Contribution profile is accurate and as to whether there are opportunities to make additional contributions to maximise State Pension Entitlement. If you haven’t set up a direct link to your tax account, the State Pension position can be checked by visiting www.gov.uk/check-state-pension
Dean Flood Chartered Certified Accountant and Partner at Rowland Hall
