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HMRC to Become Preferential Creditor Again

HMRC as a Preferential Creditor

The UK tax authority (HMRC) is set to become a preferential creditor once more, as proposed in the 2018 Budget that suggests this measure will result in an extra £185 million in taxes being recovered each year.

The HMRC lost preferential creditor status in 2002 under the Enterprise Act when it was demoted to a ranking on par with unsecured creditors, but changes effective from 6 April 2020 will provide for it to become a preferential creditor again.

Chancellor Philip Hammond, speaking in Parliament, said, “We will make HMRC a preferred creditor in business insolvencies…to ensure that tax which has been collected on behalf of HMRC, is actually paid to HMRC.”

HMRC will only become preferential for debts collected by the company on behalf of HMRC, such as VAT, PAYE and employee’s NI contributions. As a “secondary preferential creditor,” HMRC will rank after current preferential creditors, and will remain unsecured for Corporation Tax and employers’ NI contributions.

Further detail announced by HM Treasury states, “Taxes paid by employees and customers do not always go to funding public services if the business temporarily holding them goes into insolvency before passing them on to HMRC. Instead, they often go towards paying off the company’s debts to other creditors. From 6 April 2020, the government will change the rules so that when a business enters insolvency, more of the taxes paid in good faith by its employees and customers but held in trust by the business go to fund public services as intended, rather than being distributed to other creditors such as financial institutions.”

The full release from HM Treasury is available here.

For more on industry news and financial resources, contact us at info@balmerlimited.co.uk or 01280 818 777.

HAVE ANY QUESTIONS?

At Balmer Limited we have a number of staff offering you a wide range of qualifications and skill sets. For more details please contact us or call us on 01280 818777.
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Three Major Changes to Entrepreneurs’ Relief to Note

Entrepreneurs’ Relief is a valuable relief that can mean an individual pays Capital Gains Tax on the disposal of shares in their employer at 10%, instead of the 18% or 28% rate that would otherwise apply. As of October 29th, one of the most frequently asked questions we’ve received is what changes the 2018 Autumn Budget proposes in regards to it.

Below are the three biggest changes to Entrepreneurs’ Relief as provided by Croner Taxwise, and our best suggestions on how to navigate them.

1. Definition of Personal Company

The first major change affects the definition of a personal company, says tax specialist John Riseborough. This will apply where the disposal is of shares in a trading company or the holding company of a trading group. The definition of a personal company will be expanded to add a requirement that the shareholder must have a 5% interest in the distributable profits and net assets of the company for the relief to be available.

This is in addition to the existing requirements that the shareholder holds at least 5% of the share capital and that shareholding entitles them to at least 5% of the voting rights and that the individual is an employee or office holder of the company.

Be aware that this change will apply to disposals on or after 29th October 2018.

2. Qualifying Conditions

The second major change highlighted is that the qualifying conditions in all cases must be met for 2 years to the point of disposal or the cessation of trade. The previous rule allowed a 1-year qualifying period, explains Riseborough.

This is to apply to disposals on or after 6th April 2019. However, an element of protection has been put in place where businesses ceased prior to 29th October 2018.

Make sure to note that the 1-year qualifying period will be preserved.

3. Shareholding Dilution

Lastly, the third change will apply where a shareholding is diluted to fall below 5% where, prior to the dilution, the shareholding was greater than 5%. This will be subject to a genuine commercial reasons test. This would exclude, for example, debt for equity swaps or the exercise of employee share options.

Entrepreneur’s Relief would be retained on the growth in the shares up to the point of dilution. A deemed disposal will arise. However, it will be possible for the shareholder to elect for the notional gain to be deferred until the shares are actually sold.

This will apply in respect of shares held at the time of fundraising events on or after 6th April 2019, highlights Riseborough.

Make sure to stay tuned as we address more Autumn Budget Report frequently asked questions! For specific inquires, contact us at info@balmerlimited.co.uk or 01280 818 777. A special thank you to our friends at Croner Taxwise.

HAVE ANY QUESTIONS?

At Balmer Limited we have a number of staff offering you a wide range of qualifications and skill sets. For more details please contact us or call us on 01280 818777.
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Autumn Budget 2018

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The advantages of completing your self-assessment tax return early

Tax Returns can be submitted now.

If you file your tax return early, you do not have to pay any tax due before the normal deadline.
For the 2017-18 tax year any payments due will be payable on or before 31st January 2019, less any payments you have made on account in January and July 2018.

Here are the top advantages of completing your tax return early

1. Tax refunds due

If you’re due a tax refund, you can have it paid to you now rather than waiting until after the Self-Assessment Tax Return deadline 31st January 2019.

2. Better tax planning

Early completion of your tax return lets you know in advance what your tax bill is going to be, you will have more time to set  aside sufficient funds rather than having to find it all at once.

3. Time to gather paperwork

It can take time to get together everything you need to file your self-assessment tax return.  Preparing your tax return early will give you time to request missing information, and it will give you the time you need to do it all correctly and effectively.

4. Avoid penalties

Filing early will give you time to address any problems and avoid HMRC’s late filing penalties.

As you can see there are advantages to completing your tax return early. Why not get in touch with us today and start the process for submitting your self-assessment tax return

HAVE ANY QUESTIONS?

At Balmer Limited our staff have a wide range of qualifications and skills. For more details please contact us or call us on 01280 818777.
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5 Tips for managing your business and school holidays

Every parent enjoys holidays with children but for business owners school holidays can be challenging. As a business owner, you know, if you are not at work there may be no income.

Even if you have a business with employees, managing school holidays can still be difficult.  School holidays are a popular time, any employee with children of school age will want their holidays during school holidays, making this a difficult time for businesses to cover with a lot of staff away at the same time.

Some parents may have started their own business so that they could manage that work/life balance better or to provide a better lifestyle for their children.  At holiday times try not to feel guilty about the time you are not with your child, make the most of the quality time that you are with them.

We have put together some of our top tips on managing your business and school holidays. With a careful bit of planning you can have the best of both worlds and keep your clients and your children happy.

Read our top tips for working through the school holidays

Childcare

If your business can’t afford to be without you during school holidays make use of tax free childcare options. Wherever possible make plans with family and friends. Jointly sharing child care with other parents can work well.

Pre-Plan

Do all you can beforehand and pre-schedule your workload including blogs and social media so your business is uninterrupted as much as possible.   Try to plan in advance any usual meetings, scheduled appointments so you can work around time out with children as much as possible.

Employ a Virtual Assistant/Call Minding Service

This can be a valuable cost effective addition to your business.   It is important to plan this in advance, employing a VA is like taking on a key member of staff, choose the right person and you will be able to relax and enjoy your break (see our blog I need help, recruiting a Virtual Assistant).

Work in the evenings

Work around the children in the days but don’t burn out as it is important you keep the work/home life balance. If you already work in the evenings you may need to consider recruiting additional help.

Tell your clients/customers

Give all your customers notice that you will be working reduced hours over the next few weeks. This will give them the chance to discuss any requirements with you before the start of the holiday.  Also, ensure your clients know how they can contact you if the need arises.

Hopefully with the right preparation you will be able to manage your business and enjoy valuable time with your family.

Have A Happy Holiday!

HAVE ANY QUESTIONS?

At Balmer Limited we have a number of staff offering you a wide range of qualifications and skill sets. For more details please contact us or call us on 01280 818777.
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9 Common Tax Return Mistakes and How to Avoid Them

As the deadline for online returns gets even closer we have created a roundup of the 9 most common tax return mistakes that people make and how you can avoid them in the future, hopefully in time for this year but if not definitely for next.

Attempting to claim invalid expenses

HMRC have clear rules that outline what expenses you can deduct and straying from this can occur penalties. Make sure you are certain that any expenses you are planning to deduct are valid, and if you are in any doubt check with an accountant.

National Insurance Number and Unique Taxpayer Reference errors

Make sure you have entered these correctly to avoid any further issues with your tax return.

Incorrect figures

One of the most common mistakes on a tax return is incorrect figures being included in the return, make sure you double check all of your calculations before you file your return to make sure that you are paying the correct amount of tax.

Signature and date

Another one of the most common errors on a paper tax return is not signing or dating it correctly. It is such a simple mistake, but all too common.

Not declaring all income

You have to make sure that you declare all types of income including:

  • Income from employment
  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance,
  • Pension income
  • Interest, dividends from savings, bank accounts, building societies investments or Trusts etc.
  • Property income
  • Foreign income including evidence of tax already paid abroad
  • Capital gains
  • Employee share schemes
  • Dividends

If you do not declare any of these that are applicable you can receive a severe penalty and if HMRC deem it to be a deliberate error you could face prosecution.

Poor record keeping

Make sure that all of your records are up to date and complete. Ensure that you have the following in order to complete your tax return:

  • P60, P45 and P11D
  • Bank statements
  • Capital gains
  • Student loan payments
  • Expense records
  • Benefits including maternity/paternity pay, statutory sick pay, job seekers allowance
  • Pension records
  • Property income
  • Any foreign income including evidence of tax already paid abroad
  • Employee share schemes

For anyone who is self employed make sure you have up to date records of:

  • Bank statements
  • Receipts
  • Cash books
  • Invoices
  • Mileage records
  • Records of all sales, purchases and expenses
  • Money taken out of business for personal use (if applicable)
  • Personal money put in to the business (if applicable)

Missing supplementary pages

If you are including additional income that isn’t covered by your main tax return, make sure you include the supplementary pages so that HRMC can see additional information on:

  • stock dividends
  • income from property
  • employment deductions
  • share scheme income
  • life insurance gains

Missing the deadline

The deadline for paper returns is the 31st October following the end of the tax year, for electronic returns it is the 31st January after the end of the tax year. If you miss these deadlines you will have to pay penalties which increase the longer you leave it.

Trigger happy box ticking

Again, it sounds silly to even mention it, but take care when ticking boxes on your form whether in the paper or electronic format as simple errors can cause big problems.

As you can see there are several mistakes that people make when completing their tax returns, some easily avoidable. However, one way you can avoid any stress related to completing your tax return is by getting support from a qualified accountant who will have years of experience in completing tax returns effectively and efficiently.

HAVE ANY QUESTIONS?

At Balmer Limited we have a number of staff offering you a wide range of qualifications and skill sets. For more details please contact us or call us on 01280 818777.
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Autumn Budget 2017

View Online Version
  • 2018/19 Personal Allowance increases to £11,850
  • Higher Rate threshold increases to £46,350
  • VAT Threshold remains fixed at £85,000 for two years from April 2018 – press had suggested it would be reduced to £25,000
  • Increases in Living Wage, particularly for under 21’s
  • Business Rates – Government has moved to reduce future increases
  • Targeted attention on anti-avoidance measures

Read our full budget summary to see how the Autumn Budget will affect your business

At Balmer Limited we understand the issues facing individuals and owner-managed businesses and offer a full range of services allowing you the time and freedom to concentrate on the core of your business. We are on hand with clear, easy to understand, practical advice and support.

What we do
  • Year End & Management Accounts
  • Tax Planning Advice
  • Bookkeeping & Credit Control
  • Payroll & CIS Services
  • Telemarketing
  • Call Minding & Virtual Office
  • Back Office Administration
  • Business Start Ups
How we do it
  • WE are a friendly team with many years’ experience and expertise
  • WE are more than accountants
  • WE give excellent customer service
  • WE care about our clients
  • WE have established a reputation for offering a high value service at an affordable price
  • WE are your complete office
  • WE are available for out of hours appointments
For professional advice and support please get in touch

Balmer Limited on 01280 818777
Email info@balmerlimited.co.uk

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Using a Virtual Office Assistant could save you time and money

The phone has just stopped ringing. You just missed that call. Who was on the other end of the line? A cold caller? A friend? A member of your team calling to let you know they are stuck in traffic? Or was it a potential lead that could have placed a large order with your company? The difficulty these days is that we have increasing numbers of tasks and responsibilities that seem to get in our way of picking up that handset.

Missing a phone call once is one thing, missing several is another matter entirely. What is the common solution if you fall into the latter? Recruitment? Employ a new member of the team such as an office assistant or manager to help support you with administrative tasks so that you can complete other business responsibilities. However, there is another solution that could be just as, if not more, effective and efficient for your business… the virtual office assistant.

What does a virtual office assistant do?

Virtual office assistants can perform a number of different tasks including:
  • Customer services call handling
  • Booking meetings
  • Arranging appointments
  • Providing client specific information in relation to enquiries
  • Database management
  • Secretarial/PA
  • Admin including Word and Excel documents
What are the benefits of using a virtual office assistant?
  • Flexible arrangements (short term or long term)
  • No recruitment fees
  • No additional office requirements
  • No agency fees incurred
  • No overtime payments required
  • No holiday pay
  • Potential acquisition of additional skills that they may have that your current team do not

Costs of recruiting in the UK

£27,073 per year

Office Manager Salary

£2,609 per year13.8% of annual salary

Employer’s National insurance

£212 per year1% of annual salary

Employer’s Pension

£1,000

Training

£4,800calculated by the IPD Blue Chip Office Index

Office space and equipment

£35,694

Costs incurred in first year

The costs per member of staff employed will differ depending on what region of the UK you are in, what entry level and position you are recruiting for and also the skills required for you organisation.

The costs of a virtual assistant will also fluctuate dependant on the businesses that offer this service. It is clear, however, that there are significant benefits to using a virtual assistant one of which being the financial savings. Coupling that with the flexibility and lower operational requirements mentioned above, it supports the rise in these positions being used across a variety of sectors in the current business landscape.

HAVE ANY QUESTIONS?

At Balmer Limited we have a number of staff offering you a wide range of qualifications and skill sets. For more details please contact us or call us on 01280 818777.
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Could you claim up to £662 Marriage Allowance?

Marriage allowance allows you to transfer up to £1,150 of your personal allowance to your married or civil partner, possibly saving up to £230 per year (Couples living together will not qualify).

To claim Marriage Allowance you must meet the following criteria:

Be married or in a civil partnership
One of you must be a non tax payer, this will mean you earn £11,500 per year or less (£11,000 in 2016/17, £10,600 2015/16)
Your partner must be paying tax and earning between *£11,501 and £45,000 (*£11,001 and *£43,000 in 2016/17, *£10,601 and £42,385 2015/16) *figures based on Personal Allowance for the year

You both must be born on or after 6th April 1935 (if you were born before this date please see alternative tax perk below)

If you meet the above criteria and are receiving a pension you are still eligible

If you live abroad and both receive a Personal Allowance you will also be eligible

How does it work?

The non tax payer can transfer 10% of their Personal Allowance to the tax payer. This gives the tax payer a tax credit of £230 in the current year. If you have not previously claimed the Marriage Allowance you could claim up to £662. (£230 in 2017/18, £220 in 2016/17 and £212 in 2015/16).

If you claimed Marriage Tax Allowance in a previous year this will automatically be applied in the current year and you only need to inform HMRC if your circumstances change.

Be aware

In a few circumstances you may lose out by transferring your unused Personal Allowance. If you transfer your Marriage Allowance you must transfer the full 10% this could mean as a couple you are worse off. This will happen if your income is more than 90% of the Personal Allowance and your partner’s income is less than 110% of the Personal Allowance.

Apply for the Marriage Allowance:
https://www.gov.uk/apply-marriage-allowance

If you or your partner were born before 6th April 1935 you may be eligible for the Married Couple’s and Civil Partner’s Allowance. This is currently being phased out by HMRC to find out more please see HMRC guidance https://www.gov.uk/married-couples-allowance/overview

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Autumn Statement 2015

On 25th November, the Chancellor delivered his much awaited spending review and Autumn Statement 2015. The question is: Will you benefit from the proposed changes? It is important to note that many of the changes will not come into effect until next year at the earliest and certain specifics won’t be known for several weeks yet. Below is a summary of some of the key announcements:

Business Tax

RTI – relaxation for micro-employers will end on 5 April 2016. After this date, they will be required to report all payments on or before each and every pay day.

Capital Allowances – the limit for 100% relief for equipment will be reduced from £500k to £200k per annum in 2016.

Corporation Tax – from April 2015 the rate was set at 20% for all companies, this will reduce to 19% in April 2017 and 18% in April 2020.

Farmers’ Averaging Relief – in line with previous announcements, the averaging period for self-employed farmers is being extended from 2 to 5 years from April 2016. Farmers will have the option of using either averaging period.

National Insurance Contributions (NICs) – there is no employer’s NICs for employees under 21 years of age. Remember that the Living Wage is introduced from April 2016 (from £7.20 per hour).

VAT – EU regulations prevent the government from making sanitary products zero-rated. Therefore for the life of this parliament or until EU law permits zero-rating of these items, a fund of £15m per year to support women’s charities is being created (the sum equivalent to the annual VAT raised on sanitary products).

Stamp Duty

A higher rate of Stamp Duty Land Tax (SDLT) will be applied to purchases of additional residential properties above £40,000 in value e.g. second homes and buy to let properties. The rate will be 3% above the current SDLT rate.

This will not apply when buying houseboats, caravans or mobile homes, or to companies / funds making large investments in residential property.

Autumn Statement 2015Personal Tax

Dividend Income – from April 2016 the dividend tax credit will be replaced by an allowance in line with announcements made during the summer statement – further details can be found here.

Inheritance Tax – the nil rate band is frozen at £325,000 until 2021 but has been extended to £500,000 from April 2017 for family homes. There is also exemption for pension funds transferred on death before age 75.

Property Income – from April 2016, Rent-a-room relief will be increased to £7,500 pa and a new system of governing wear & tear allowances will commence.

Company Car Tax Diesel Supplement – from April 2016, the 3% differential between diesel and petrol was to be abolished but this will now be retained until April 2021 when new EU-wide testing procedures will be in place to ensure air quality standards when driving under ‘real world’ conditions.

This is a selective summary of the announcements made by The Chancellor during his Autumn Statement 2015; details of the complete statement can be found here along with a pdf of the Autumn Statement 2015 itself.

If you have any queries about your personal or business tax following these announcements, please contact Mike or Lynn for a free, confidential consultation on 01280 818776 or by email at info@balmeraccountancy.co.uk.

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