Get documents about "Happy Homes
Description
Happy Homes
Shared by: asafwewe
-
Stats
- views:
- 27
- posted:
- 3/9/2010
- language:
- English
- pages:
- 4
Document Sample
Committed to your Success
68 Liverpool Road • Stoke-on-Trent • Staffordshire • ST4 1BG • Telephone 01782 847952 • Fax 01782 744357
e-mail: info@geens.co.uk • www.geens.co.uk
Registered to carry on audit work and regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities
Business News
Pensions Update AUTUMN 2009
Following the recent budget, Alistair Darling
announced new rules for the availability of
higher rate tax relief on pension contributions
Happy Homes??
for high income individuals. The press focus on MPs second homes
From April 2011 tax relief will be restricted earlier in the year has thrust the capital gains
for individuals with an annual income of over tax (CGT) position on the sale of homes
£150,000. Relief will be tapered so for those generally into the limelight, so what does
earning over £180,000 relief will be worth
just 20%. To stop floods of contributions
tax law actually allow?
the government has immediately restricted First, to be exempt the property must not have been
higher rate tax relief for high income purchased for the sole reason of making a profit and,
individuals. second, the dwelling must be an individual's only or
main residence throughout the period of ownership. Example
These rules apply to anyone whose income
in the current or previous two tax years is Charles has owned a main residence in
The exemption is for one property per person or
over £150,000 and includes earnings from Leicestershire for the last eight years. Fed up
married couple (including a registered civil partnership)
all sources such as dividends and building with commuting he buys a flat in central London
only; so if another residence is acquired an election
society interest. and elects for this to be his main residence.
can be made as to which property is to qualify and
Exactly five years later he sells his home in
which is not. The election can be made within two
In essence anyone with income of over Leicestershire. This is exempt for the first eight
years of a change in the number of residences
£150,000 making total pension contributions years as it was his main residence and for the
available.
(including employer contributions) exceeding last three years of ownership. So 11/13 of the
£20,000 will be subject to a tax charge of For example in a situation where, on marriage, each gain will be exempt from capital gains tax. If, two
20% if they change their normal, ongoing party owns his or her own property, an election can years later, he sells the London flat and moves
regular pension savings that were being be made within two years of the marriage as to which elsewhere, the whole of that gain will be exempt.
made prior to 22nd April 2009. Payments residence is the main qualifying one. As many couples
had to be made at least quarterly to count are unaware of the need for an election to be made, The main residence exemption can be complex and
as regular, new salary sacrifice arrangements they miss the cut off date. In that situation HMRC and often causes a good deal of misunderstanding.
made after 22nd April will not be effective. not the couple have the right to decide which property
There is also a new is exempt based on the facts presented. This article only deals with one aspect. There are
protected allowance of further considerations such as:
£30,000 for infrequent Is it ever possible for two properties to be • selling off part of the garden;
contributions such eligible for exemption? • restricting the exemption on properties with large
as annual designed grounds;
to be fairer to The answer is potentially yes because where an
• using part of the property for another purpose; and
individuals such owner does actually reside in more than one property
• letting out part/the whole of the property for
as the self for some time during the period of ownership, the
periods during ownership.
employed. last three years of ownership is generally treated as
exempt as well as any period of actual occupation as It is strongly recommended that you contact us for
a main residence. In some cases that will mean that further advice before carrying out transactions in
the entire gain on both residences is exempt. property.
Last chance
Increasing saloon
the flow
HMRC have now published details of
the new disclosure initiative, announced
provisionally in the Budget 2009. This
'New Disclosure Opportunity' (NDO) is
aimed at taxpayers who have undeclared
income and gains from offshore accounts
and assets. An incentive of capping any
additional penalty at 10% is offered in
Effective cashflow management is orders. Giving your suppliers exchange for full voluntary disclosure and
as critical to business survival as incentives such as large or regular settlement of any tax liabilities. In fact no
providing services or products. Below orders may help but make sure penalty will apply where the outstanding
are some of the key methods to you have a market for the orders tax does not exceed £1000.
help reduce the time gap between you are placing.
expenditure and receipt of income. A previous opportunity in 2007 that
• Alternatively consider reducing allowed taxpayers to settle tax arrears on
Customer management stock levels and using just-in-time undeclared offshore income also attracted
systems. an additional penalty of only 10%. At
• Define a credit policy that clearly
sets out your standard payment Asset management the time of that amnesty, HMRC wrote
terms. to certain taxpayers offering the 10%
Buying plant such as rate as a result of information they had
• Issue invoices promptly. equipment and vehicles managed to obtain about account holders
outright can result in a huge of offshore bank accounts with five of the
• Consider offering discounts for drain on cash so consider High Street banks (Lloyds TSB, HBOS,
prompt payment. alternatives such as leasing or HSBC, Barclays and RBS). The potential
buying them on hire purchase. threat of being found out prompted tens
• Compile an aged debtor list to of thousands of individuals to disclose
identify specific invoices that are If you are VAT registered with a resulting yield of £400m to HMRC.
overdue. and you do decide to buy
a major piece of plant, So why a second opportunity?
• Implement a process for chasing consider buying at the
outstanding payments - this could end rather than the start HMRC and other foreign tax authorities
involve a reminder letter, followed of a VAT period. This can have worked hard over the last few years
by a telephone call. improve cashflow because to increase co-operation in an attempt to
the VAT outlay on such further reduce tax evasion. It is reported
• Calculate the “debtor days” so that purchases, which is generally that HMRC now have authority to seek
you can monitor your business’s recoverable, can then be set information about offshore assets and
overall performance in collecting against the VAT you need to accounts from a much wider range and
debts month by month. account for on your sales, thus volume of financial institutions (other
reducing the net VAT liability banks, building societies and brokers)
• Consider exercising your right to payment. than previously. This increases the odds
charge penalty interest for late
in their favour of identifying undeclared
payment. Taxation management income and gains.
• Negotiate deposits or staged You may be liable for several
payments for large contracts. different taxes including PAYE,
Higher penalties
income tax, corporation tax and The 10% penalty restriction will not apply
• Sell your invoices to a third party in VAT. It is essential to keep good to those to whom either HMRC or the
return for a percentage of the total. records to help you calculate your banks wrote in 2007 and who chose not
liability and complete your returns to disclose at that time. Instead those
Supplier management accurately. This is vital not only for individuals who now make a full disclosure
Considering alternative suppliers who cashflow management but to avoid will attract a penalty of 20%.
may provide goods or services at a further costs in the form of HMRC
lower cost is not always beneficial penalties! If a taxpayer does not disclose it is clear
to the business. Cost reviews are that HMRC intend to use the full extent
of course essential to ensure the A Business Payment Support Service of their enhanced powers to identify
business is spending its money (BPSS) has been launched by defaulters and to vigorously pursue all
competitively. Information about lower HMRC to help businesses outstanding liabilities. In such cases the
costs can be used as a negotiating struggling to meet tax, national minimum penalty level is expected to be
tool with existing suppliers but service insurance or other payments 30% rising potentially to 100%.
and quality are also key aspects of owed to HMRC. HMRC staff will
supplier management. review your situation and discuss The NDO will run from 1 September 2009
temporary instalment payment until 12 March 2010. However taxpayers
It is no good for example changing arrangements tailored to your need to notify their intention to disclose by
telephone suppliers if the level of business circumstances. 30 November 2009.
service causes business disruption.
Instead consider the following: If you are concerned that you The actual disclosure must then be
may not be able to pay amounts submitted:
• Negotiate better terms of that are owed or will soon be owed
settlement with suppliers. to HMRC, you can either contact • on paper between 1 September 2009
the BPSS direct or contact us for and 31 January 2010 or
• Discuss with your key suppliers assistance on how it can operate.
ways to reduce overall costs • electronically from 1 October 2009 to
through the size or timing of 12 March 2010.
Getting your chips for free
The payment of subsistence expenses is a However, many industries, conscious of cost
frequently misunderstood area that affects all control and to ensure consistency amongst
sizes and forms of business. Getting it wrong can employees, rather than reimburse actual costs
be costly for both employee and employer. prefer to use standard meal allowances in their
expense policies and therein lies the potential
The first step is to ensure that subsistence costs hazard! Without prior agreement with HMRC
are attributable to business travel. A critical such payments are likely to be treated as round
concept is that such costs are necessary and sum expense allowances and therefore additional
that additional costs are actually incurred during • the employee should have incurred a cost on a
pay. This would then attract both income tax and
the course of a journey or whilst at a temporary meal (food and drink) after starting the journey
National Insurance Contributions (NICs).
workplace. so if an employee does not buy a meal or
takes a packed lunch from home there is no
So how can we ensure these
HMRC's own guidance states "Once it is entitlement to a tax and NIC free payment.
accepted that the employee has incurred
payments are tax and NIC free?
If a business wants to pay scale rates to its
allowable subsistence expenses, you do not Earlier this year HMRC introduced an advisory employees it can only do so tax and NIC free
need to take into account the costs saved as a system of benchmark scale rates for subsistence if it has a HMRC dispensation. We can assist
result of the business travel. For example, if the payments. The aim being to give a measure of you in making such an application or when
employee needs to eat in a restaurant while on a certainty and consistency between businesses. relevant, reviewing your existing dispensation
business trip you can permit a deduction for the Employers can use this to make subsistence arrangements.
full cost of the meal and should not make any payments to employees who incur allowable
adjustment for the costs saved by not eating at business travel expenses free of tax and NICs. The benchmark rates
home".
The advisory system which was implemented
on 6 April 2009 covers benchmark scale rates Qualifying travel period Amount
for day subsistence payments. If an employer (up to)
wishes to pay subsistence to employees who At least five hours – the one £5
have to stay overnight they can either reimburse meal rate
the actual cost incurred by the employee or
agree a tailored scale rate to cover meals and At least ten hours – the one £10
other expenses in a dispensation with HMRC. or more meal rate
What conditions apply? There are also breakfast and late evening meal
rates for use in exceptional circumstances only.
The key qualifying conditions are: These are not intended for employees with
regular early or late work patterns and conditions
• the travel must be in the performance of an
are specified.
employee’s duties or to a temporary place of
work; Please contact us for further information if you
• the employee should be absent from his normal consider this may be of interest to you.
place of work or home for a continuous period
in excess of five or ten hours; and
Ten step guide to preventing and detecting fraud
The risk of fraud to businesses is 3. Consider which areas of your also include other key areas. 9. Watch out for any notable
at its greatest in times of economic organisation could be at risk, For example, ordering goods, change in cashflow when an
downturn. Big companies can be then plan and implement stock control and despatch in a employee is away from the
badly shaken by fraud; small ones appropriate defences. business where stock includes office, for example on holiday or
can be destroyed. attractive consumer goods. through sickness. This could be
4. Target the areas where most of
an indicator of fraud.
Given the wide range of fraud that your revenue comes from and 6. Always retain a degree of
can be committed, what steps where most of your costs lie. control over the key accounting 10. Prepare budgets and monthly
could you take to minimise the risk Develop some simple systems functions of your business. Do management accounts
of fraud being perpetrated within of internal control to defend not pre-sign blank cheques and compare these against
your organisation? these areas. Effective controls other than in exceptional your actual results so that
include: circumstances and ensure that you are aware of variances.
Consider these top ten tips for the corresponding invoices are Taking prompt investigative
– segregating duties
detecting and preventing fraud. presented with the cheques. action where variances arise
– supervision and review could make all the difference
7. Be on the lookout for unusual
1. Begin by recruiting the by closing the window of
– arithmetical checks requests from staff involved in
right people to work in your opportunity afforded to
the accounting function.
organisation. Make sure that – accounting comparisons fraudsters.
you check out references 8. Watch out for employees who
– authorisation and approval If you require any assistance in
properly and ensure that any are overly protective of their
protecting your business please
temporary staff are also vetted, – physical controls and counts. role - they may have something
contact us.
particularly if they are to work in to hide. Similarly watch out for
key areas. 5. Wherever possible avoid having disaffected employees who
only one person responsible for might be bearing a grudge or
2. Ensure that you have a clear
controlling an entire area of the those whose circumstances
policy that fraud will not be
organisation. change for the worse or
tolerated within the organisation
inexplicably for the better!
and ensure that this is This in particular includes the
communicated to all staff. accounting function but will
Terminal tax Out with the old…
advances...
Sitting at your computer terminal
to do your online tax filing will
in with the NEW
become an everyday feature for
If your business van reminds you of the era of 'Steptoe and Son' or 'Only Fools and Horses'
all sizes and forms of business
over the next two to three maybe it's time to take advantage of a government backed incentive scheme, which is
years. Certain returns made aimed at trading in old vehicles for new lower emission ones.
by larger businesses already
have a compulsory online filing The scheme is available for personal and business The new vehicle you want to buy must be:
requirement but this is gradually purchases and applies to cars as well as vans. The
being extended across the taxes • a car or small van weighing up to 3.5 tonnes
incentive comes in the form of a £2,000 subsidy -
to all businesses. £1,000 per vehicle from the Department for Business, • first registered in the UK on or after the 18 May
Innovation and Skills, matched by a further £1,000 2009
PAYE subsidy from the manufacturer. No subsidy is available • declared new at first registration in the UK with no
at all if the manufacturer has not joined the scheme former keepers
The online filing rules here
but as 41 have joined there is plenty of choice. Some
depend on whether the business • a UK specification vehicle.
manufacturers and dealers are even offering an
has more or less than 50
additional subsidy or discount. When trading in your old vehicle for a new vehicle the
employees. A business with more
registered keeper for both vehicles must be the same.
than 50 employees is already
Are you eligible?
filing the Employer Annual Prompt action is recommended to take advantage
Return online, (the forms P35 The vehicle being traded in must: before the £300 million of funds set aside run out!
and P14s). In addition there is Even if the funds last, they are only available until
a requirement to file certain ‘in • be a car or small van weighing up to 3.5 tonnes 28 February 2010. Please contact us if you would like
year forms’ online - such as the information on the VAT and capital allowance aspects
• have been registered in the UK on or before
relevant parts of a P45 or a P46. of any proposed new purchases.
31 August 1999
These forms are used when an
employee leaves or starts. • be registered with the DVLA or DVA in the
business's or individual's name
For a business with fewer than 50
employees, the end of 2009/10 • have been registered to you or the business
will mean compulsory filing for continuously for 12 calendar months before the
the first time of the Employer order date of the new vehicle
Annual Return. Compulsory • have a UK address on the registration
online filing of the ‘in year forms’ certificate (V5C)
will then apply from 6 April 2011.
• have a current MOT test certificate
VAT before the date of order for the
new vehicle (or within 14 days of
If turnover is more than expiry at the time of order)
£100,000, you will have to file
your VAT return online and pay • have a current tax disc when
electronically for accounting the order for the new vehicle is
periods that start on or after placed (or within 14 days of expiry
1 April 2010. This will also apply at the time of order)
for any new VAT registrations on
• be insured when the order for the new vehicle
or after 1 April 2010, regardless
is placed.
of the turnover.
Corporation Tax
From 1 April 2011, for any
accounting period ending after
Fundraising help from HMRC!
31 March 2010, all companies will Gift Aid is a way for charities or • apply to HMRC to make Gift Aid income. We have worked with
be required to file the company Community Amateur Sports Clubs repayment claims charities to develop the toolkit
tax return (including supporting (CASCs) to increase the value of which should reduce administrative
documentation) online. monetary gifts from UK taxpayers • understand the rules of the Gift burdens. Our aim is to make
by claiming back the basic rate tax Aid scheme Gift Aid easy for all charities and
Whilst the change is some way paid by the donor. It can increase Community Amateur Sports
away, it's a good idea to consider • fill in the Gift Aid repayment
the value of donations by a quarter Clubs by providing the tools and
whether your software will be forms
at no extra cost to the donor. guidance to help them at every
able to handle the new Extensible step”.
Business Reporting Language • understand what records you
Gift Aid is worth nearly £1 billion a
(XBRL) data format, particularly need to keep.
year to charities and their donors. The toolkit can be obtained by
if you are thinking of investing in David Richardson Director of calling HMRC Charities on 08453
new software in the near future. HMRC Charities have a ‘Gift Aid Charities, Assets and Residence at 020 203 or emailing charities@
Toolkit’ on CD-ROM to help your HMRC said: hmrc.gov.uk
If you would like further charity or CASC run an effective
information on how we can assist Gift Aid scheme. The toolkit offers “I hope that the toolkit will
with online filing, do contact us. a beginner’s guide to the Gift Aid encourage more charities -
scheme and provides a step-by- especially the smaller ones - to
step guide to help you: take up Gift Aid and boost their
Disclaimer - for information of users: This newsletter is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed
legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this newsletter can be accepted by the authors or the firm.
