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Flat Rate VAT Scheme and capital expenditure

If you use the Flat Rate VAT scheme then you can, in addition, reclaim the VAT on a single purchase of capital expenditure where the amount of the purchase, including VAT, is £2,000 or more.

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This all sounds fairly straightforward. Beware, however,  that if goods are purchased from one supplier at one time then they count as one purchase BUT if they are from different suppliers at different times then they will be separate purchases (even if they are used in conjunction with one another) and each must be £2,000 or more in order to qualify. So, for example, a company installs a new computer system and buys the various components and software from different suppliers then these may not qualify for a VAT reclaim if the individual purchases from each supplier are less than £2,000—EVEN IF the total cost of the computer installation is over £2,000.

HMRC’s VAT Notice 733, para 15.3 provides examples of what qualifies as a single purchase.

End of tax year fast approaching!

The tax year end of 5 April is fast approaching which means that it is time to think about maximising your tax position. There are a number of possible tax planning issues that you might wish to consider and we have included a few of the more popular ones below:

YEAR END PENSION PLANNING

Take advantage of the pension carry forward rules in order to benefit from any unused relief. The maximum amount that can be contributed to your pension is currently £40,000 per annum (£50,000 per annum up until 5 April 2014) but it is possible to use the previous 3 year’s relief if not already used. If you have not used previous years’ pension relief then it may be worth paying a large pension contribution before 5 April 2015 in order to make use of the pension relief available.

GET READY FOR THE NEW FLEXIBLE PENSION RULES

For those aged 55 and over and with a SIPP or other money purchase scheme, the new flexible pension rules commence on 6 April 2015. The new rules allow you to withdraw as much or as little income as you like from your fund but the income drawn will be taxed at your marginal tax rate.

AVOID LOSING YOUR PERSONAL TAX ALLOWANCE

For every £2 that your adjusted net income exceeds £100,000, the £10,000 personal tax free allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%.

MAKE CHARITABLE PAYMENTS UNDER GIFT AID TO SAVE MORE TAX

Higher rate taxpayers can make charitable payments under Gift Aid to obtain additional tax relief. The charity will also be able to reclaim the basic rate tax from HMRC.

YEAR END CAPITAL GAINS TAX PLANNING

Have you used your 2014/15 annual exemption of £11,000? Consider selling shares where the gain is less than £11,000 before 6 April 2015. Also, if you have any worthless shares consider a negligible value claim to establish a capital loss. You may even be able to set off the capital loss against your income under certain circumstances.

TAKE ADVANTAGE OF YOUR 2014/15 ISA ALLOWANCES

Your maximum annual investment in ISAs for 2013/14 is £15,000. Your investment needs to be made before 6 April 2015. In addition, have you thought about investing for your children or grandchildren by setting up junior ISAs or pensions? In the 2014/15 tax year, you can invest £4,000 into a Junior ISA for any child under 18 who does not have a Child Trust Fund.

INHERITANCE TAX PLANNING BEFORE 6 APRIL 2015

Have you made use of your annual inheritance tax exemptions? The general annual exemption is £3,000 per donor (plus last year’s £3,000 exemption if you did not use it). Also consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT.

OTHER TAX EFFICIENT INVESTMENTS

If you are looking for investment opportunities, have you considered the Enterprise Investment Scheme (EIS), which offers income tax relief of 30 per cent as well as

capital gains tax relief when you buy shares in certain qualifying companies? An even more generous tax break is available for investment in a qualifying Seed EIS company where income tax relief at 50 per cent is available. It is possible to shelter 50% of your capital gains in 2014/15 and there is a capital gains tax exemption when the shares are sold. Note however that qualifying Seed EIS companies tend to be risky investments so professional advice should be taken. A 30% income tax break is also available by investing in a Venture Capital Trust.

THE £2,000 NATIONAL INSURANCE EMPLOYMENT ALLOWANCE CONTINUES FOR 2015/16

The £2,000 “employment allowance” introduced in 2014/15 continues to be available for 2015/16. Note that this allowance provides relief from paying employers NIC on the first £2,000 of contributions. The £2,000 allowance is set against employers NIC on a cumulative basis during the tax year. The allowance is available to most employers, although those under common control are restricted to just the one £2,000 allowance. Husband and wife companies with no other employees charged to national insurance may find it tax efficient to change the mix of salaries and dividends to take advantage of the £2,000 allowance. From 6 April 2015 it may be advantageous to increase directors’ salaries to the new £10,600 personal allowance instead of the NIC threshold of £8,060 (£155 a week).

AND NO EMPLOYERS NIC FOR THOSE UNDER 21 FROM 6 APRIL 2015

A Government policy to reduce the number of school leavers not in employment, education or training is to abolish employers NIC for those under the age of 21. This exemption starts 6 April 2015 and will not apply to those earning more than the Upper Earnings Limit (UEL), Employers NIC will be charged as normal beyond that limit.

The notes above only provide an outline of the possible tax planning ideas, if you require further details or advice then please do not hesitate to contact us.

This blog was complied by Ashley Barrowclough.

Friday Favourites – Favourite Tipple

Today we ask The Balance Team what is their favourite tipple

Alex                 Rum and Coke

Ashley             Cider

Austen            Coke Zero

Carolyn            Gin and Tonic

Chris                Strongbow dark Berries

Claudia            Lime and Soda

Deb                   Port

Jacob               Staropramen

Jane                 Bacardi and Coke

Jo                     Lime and Soda

Josh                 Rekorderlig

Karen               White Wine

Linda               Bacardi and Coke

Malcolm          Red Wine

Phil                  Any lager

Rachel             Schloer

Compiled by Deb Bradley

Balance help with the Entice Project

Linda Jacobs, client manager at Balance Accountants will be at Shelley College on the 23rd June doing a talk to students about future careers. This is part of the Entice Project that Balance have been involved with since it started. The aim of the project is to help our community prosper by bringing together local business and talented students through an apprenticeship scheme that really works, Balance have already taken on a member of staff through the Entice Project. “At Balance we believe that the Entice Project is really important for the benefits  it provides to both students (prospective employees) and businesses (prospective employers).” says Linda Jacobs.

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Friday Favourites – Favourite Huddersfield Restaurant

Today we ask the Balance Team what is their favourite restaurant in Huddersfield

Ashley             La Las
Austen             Lion’s Kitchen
Carolyn            Jannat
Chris                 Toby Carvery, Ainley Top
Claudia            tbc
Deb                  Bradley’s (no relation)
Jacob               Thai Sakon
Jane                 Eric’s
Jo                     La Las
Josh                 Pizza Hut
Karen               The Farmer’s Boy
Linda               Marimonte
Malcolm          Marimonte
Phil                  Nandos
Rachel             don’t have one

Compiled by Deb Bradley

R&D TAX CREDIT RATE INCREASED

The recent budget delivered by George Osborne was very detailed and doesn’t make for very interesting reading. We have therefore selected some of the more important aspects that might affect you and your business. We will deliver these in daily bite size chunks with the first one below:

Budget Blog 1

R&D TAX CREDIT RATE INCREASED Companies that are small and medium sized enterprises (SMEs) carrying out qualifying research and development can currently claim a corporation tax deduction of 225% of their qualifying spend. This means that £100,000 spend would result in a £225,000 reduction in taxable profits, potentially saving £45,000 corporation tax (at 20%). However, if the company is loss making this benefit may not be received until future years when profits are made. In order to improve the cash flow of these loss- making SMEs, the tax rules allow the company to surrender the loss attributable to the enhanced R&D spend for a tax refund. This has been increased from 11% to 14.5% with effect from 1 April 2014. So the £225,000 (based on £100,000 spend) would result in a refund of £32,625. Contact us if you would like to discuss whether your company could qualify for R&D tax relief.

Local Rugby league stars touchdown at Balance Accountants!

With the new Superleague season just getting into full swing, these 3 Huddersfield Giants players dropped into Balance Accountants for a quick financial check up to ensure that their financial wellbeing is in the same prime condition as their physical fitness.

Proprietor Ashley Barrowclough pictured with Giants stars Leroy Cudjoe, Jermaine McGillvery and Michael Lawrence

Balance Accountants act for a number of Superleague players from clubs on both sides of the Pennines but proprietor Ashley Barrowclough is quick to point out that Balance are big Huddersfield Giants fans and are always especially pleased to see their favourite Giants stars calling into the office.

Murder & Mystery at Balance Accountants

1 November 2013 marked 20 years of Ashley’s ownership of Balance Accountants and we wanted to celebrate but couldn’t think what to do. Then someone came up with the idea of a murder mystery weekend. Well it was different from anything we had done before so we decided to give it a go.————and what an excellent time we had!!!

After an afternoon of swimming, spa and Jacuzzi plus some generous alcoholic consumption, we dressed up in our 1920’s gear and the murder mystery began. After much frivolity and a superb 3 course meal, it was revealed that Lacey had committed the murder——to be fair, up to that stage nobody really had a clue who had done it, but that only added to the fun that we had.

Next morning, after a hearty breakfast and surprisingly few hangovers, we all headed home with memories of 1920’s Chicago, Al Capone and an extremely good time spent in great company!!!!!

Balance at Kirklees Business Conference

For the third year running Balance attended the Kirklees Business Conference at the John Smiths Stadium.

Our stall continues to be very eye catching, as usual we brought our bright yellow boards which grabbed a fair bit of attention.

Debs holding down the stall!

We met many interesting people and had some good conversations. We also attended some of the seminars run as part of Kirklees Business week, the social media seminar was a highlight. We would like to thank everyone who came to the stand to talk to us and we hope to see you and many new faces next year.

Married couples allowance to be re-introduced

David Cameron has recently announced that there will be a new married couples allowance from April 2015. This is not the first time that there has been a married couples allowance, the previous one having been phased out in the late 1990’s following the introduction of separate taxation of husband and wife (although a form of married allowance still remains for married couples where one spouse was born before 1935).

The new allowance will work by allowing a married person to transfer up to £1,000 of their existing personal tax allowance to their spouse. This will only be possible, however, where neither spouse is a higher rate tax payer. Clearly therefore, it will only create a tax benefit if one spouse does not have sufficient income to use up the full amount of their personal allowance. If this is the case then they will be able to transfer the unused portion of the allowance (up to £1,000) to their spouse.

David Cameron later tweeted that the tax benefit will also be available to civil partnerships.

On review, it appears that the introduction of the married couples allowance will not have a significant financial impact. It is reported that it will only apply to around 25% of the UK’s married couples and the maximum annual savings will only be £200. It seems most likely therefore that it is more of a political statement, reinforcing Tory views on marriage and family values.




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