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The BBC is still in the spotlight over the way it pays some of the presenters. It would appear that many are paid through personal services companies, which can lead to a reduction in national insurance contributions. The BBC are reviewing the tax arrangements in an effort to reassure licence fee payers that they are paying the correct and appropriate amounts of tax and national insurance.
The IR35 anti-avoidance legislation should ensure that the same amount of tax is paid by these personal service companies, but HMRC is consulting on proposals to tighten IR35 compliance by requiring organisations engaging people through these companies to deduct income tax and national insurance from the fees it pays.
For more information please contact Haxton Chartered Accountants.

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It makes sense to protect a business by providing life cover in the event of the death of the business owner. A relevant life policy is a life plan, taken out on the life of an employee by an employer to provide death in service benefits. This type of policy is ideal for protecting directors who work day to day in a business as they qualify as employees. A relevant life policy will usually be a cheaper and possibly the only way of providing life cover for these small businesses. It is also cheaper than the individual entering into a contract personally.

The plans are restricted to providing life cover only and cannot contain a waiver, critical illness or income protection benefits. They must cease before the employees 75th birthday.

Policy premiums are paid by the company, which are usually an allowable deduction, without being treated as a benefit in kind.
Payments are treated as a business expense, thereby reducing the corporation tax liability.
There is no national insurance liability for employer or employee
No liability to income tax for the employee.
Benefits paid are tax free if paid to the nominated beneficiary
Payments for not form part of an individual’s annual or lifetime allowance.

For more details please contact us at Haxton Chartered Accountants.

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HM Revenue & Customs are concentrating on and targeting people who are evading tax, they have many tools in their box to help them do this.

They are using the information we send them more actively. If you submit self employment accounts that show a turnover over the VAT threshold then you are likely to get a call asking why you are not registered for VAT.

If you have an advert for a property rental and do not include this income in your self assessment return they may write and ask you why it is not included.

They are also using a task force approach to target specific industries and they have found this to be particularly beneficial, with as much as £50m of outstanding tax being collected from the 12 taskforces launched in 2011/12. Plumbers and electricians are amongst those already targeted and those that have been found to be under declaring their income have been prosecuted.

Restaurants, property rentals, taxi firms and London’s market traders are the most recent targets for investigation. Tax advisers are encouraging those who have evaded tax to consider a voluntary disclosure to reduce the cost of penalties to 10% or 20% from a possible 100% of the tax due.

If you need accountancy help to comply with the accounting or disclosure requirements or you have been contacted by H M Revenue & Customs please contact Haxton Chartered Accountants.

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HM Revenue & Customs have confirmed that the total number of top-rate taxpayers has increased to 4.1m, up from 3.8m last year. More than 300,000 people are now paying the 50% additional rate. Furthermore, it is anticipated that by 2014 five million workers will pay higher rate tax
The total number of people liable to pay tax is expected to drop from 30.1m to 29.7m as the lowest-paid are removed from the tax system as a result of an increase to their personal allowance.
There have been calls for a 25% or 30% tax band to restore incentives and fairness for the ‘squeezed middle’ if the tax system is to be fair across the whole income spectrum.
For further help and advice please contact Haxton Chartered Accountants.

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The changes to child benefit have been well publicised in the press. They will take effect from 7 January 2013. As the benefit is being withdrawn as an income tax charge in households where there is an income of over £50,000 a year this will have an impact on the tax returns that are due to be filed before the end of next January.
Where an income is between £50,000 and £60,000 the charge will apply gradually and where there is an income of over £60,000 they will no longer gain from child benefit. The partner with the higher income will be liable for the charge and this will have to be reported in the self assessment tax return. Alternatively the claimant can choose not to receive the benefit and then the tax charge will not apply.
These changes mean that households that breach the child benefit threshold will pay much higher marginal rates of tax depending on the number of children they have claimed for in the past. There may be scope for tax planning depending on your circumstances.
For further information please contact Haxton Chartered Accounts.

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In the build up to online filing only newly-registered businesses and those with turnovers of more than £100,000 have had to submit their VAT returns online, as well as pay electronically. Now all VAT periods starting on or after the 1st of April 2012 must be all filed online and paid electronically.

To do this you need to register for HMRC online services found on their website and enroll for online VAT. Other benefits include an automatic acknowledgment that your VAT return has been received for peace of mind, and reminders for when it is next due.

If you haven’t already registered we recommend that you do so as soon as possible to avoid late penalty fees and interest.

For further information and advice please contact Haxton Chartered Accountants.

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With the announcement of the 2012 budget, what does this mean for the small business?
With the change in corporation tax being reduced from 26% to 24% in April 2012 it is definitely a step in the right direction and if the Treasury’s proposals go to plan it should eventually reach a low 20%. This is fantastic for encouraging new business to move to the UK and relieving the tax burden on an existing business, however for small businesses with profits not exceeding £300,000, you currently only pay 20% and will not see any benefit.

In addition to this with the increase in business rates, smaller companies are expected to feel the strain, with no change to employer’s national insurance contribution to help ease the burden of employing people it all adds up.

It’s not all bad news, from April 2013 companies with revenue of up to £77,000 are now expected to be able to change the way they calculate their tax payments from the cash they receive and not the amounts invoiced, this will greatly benefit cash flow. If successful the Treasury will consider raising this to £150,000 seeing many more businesses benefit.

For any questions please don’t hesitate to contact us at Haxton.

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The Consumer Prices Index (CPI) fell to 5% in October. This is down from a rate of 5.2% in September, and is as a result of drops in the prices of food, fuel and air transport.

The Retail Prices Index (RPI), which includes mortgage interest, also fell from 5.6% to 5.4%.
The Bank of England’s target is 2% for CPI, and they are still hopeful that the rate of inflation will drop to below this level in 2012.

The prolonged period of high inflation has made it difficult for savers to keep up with rising prices. At the moment there are no standard savings accounts which allow savers to ensure that savings keep up with inflation according to Moneyfacts.

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Whilst the banks are battling with each other to sell mortgages of £1m plus, the self employed borrowers, who have their own limited companies are struggling to secure mortgages.
Many directors of owner managed limited companies will choose to take a small salary and retain profits in the company, but they are finding that they are being refused loans by high street banks. Mortgage brokers have found that most banks and building societies only recognise income that is withdrawn from the business, with retained profit being ignored. This is mainly due to the process becoming much more automated and there is not the opportunity to supply figures for retained profits.

For help and advice please contact Haxton Chartered Accountants.

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The new Junior ISA launched on the 1st November, allowing an investment of up to £3600 per year on behalf of a child under the age of 18. They will be available to any child resident in the UK born on or after the 3rd January 2011 and replace the Child Trust Fund scheme. Funds put into this investment will not be accessible until the child is 18 and could prove an ideal method of saving for the growing cost of higher education.

The benefit from a parent’s point of view is that the parents will not face any personal tax charges which apply in respect of standard savings for minor children.

For help and advice please call Haxton Chartered Accountants.

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