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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 As the benefit is being withdrawn as an income tax charge in households where there is an income of over £50,000 a year this will have an impact on the tax returns that are due to be filed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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From 1 April 2012 employees will not be able to claim unfair dismissal until they have been on the payroll for two years, rather than one year previously. The change is part of a package of employment law reforms designed to give firms more confidence to hire staff – by making it easier to dismiss staff if the appointment does not work for any reason.
As part of the reforms, from April 2013 employees will have to pay a fee to bring a case to a tribunal to try and deter weak or malicious claims. The fees are likely to be between £150 and £1500 depending on the size of the claim. If the employee wins, the fees would be refunded.
Before taking any action it is always worth checking with an employment lawyer to ensure you have followed the correct procedures

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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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10% TAX BREAK TO END By: Gordon

If you are thinking of winding up your company and qualify for Entrepreneurs’ Relief then you have until 28 February 2012 to act to obtain the 10% CGT tax break under ESC 16
This is only viable if you have retained reserves over £25,000 as the new rules allow this sum to be classified as capital
Please contact Haxton, Chartered Accountants for a review as soon as possible

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5% INFLATION By: Clare

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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The updating of the H M Revenue & Customs penalty regime is shortly to include late filing and late payment of VAT. The changes are dependent on HMRC’s amendments to their computer systems and therefore the exact date is unknown as yet. The new penalties will replace the current default surcharge regime, which can result in no penalty if no further returns are late within a year.
Late Filing Penalty
The new penalty for the first late VAT return is £100 even if the subsequent filing of the return results in a repayment. At the point of the first late return the penalty period starts. This is initially one year, but each further late return will extend the penalty period to the anniversary of the most recent penalty period.
The penalty for a second late return is £200, third is £300, fourth is £300 and fifth and subsequent returns are £400.
Returns that are more than 6 months late will also attract an additional penalty of 5% of the VAT due and an additional 5% will be charged if a return is more than 12 months late.
Late payment penalty
Late payment penalties of 2% – 5% are also due on the second and subsequent late payments with in a penalty period.
This new structure will greatly increase the amount of penalties that small businesses pay when they are late with their VAT returns and payments. The message from HMRC is if you don’t want to pay then submit returns and payment by the due date.
We will keep you updated with developments and dates when they are known, but in the meantime, if you require any further explanation, please contact Haxton Chartered Accountants.

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The Institute for Fiscal Studies has been carrying out a review of our tax system and has concluded that it is “overly complex and frequently unfair”
The IFS has proposed an extension of VAT to nearly all spending, including food, saying that the zero rating of certain products was an inefficient means of redistribution and causes an overly complex system.
Other proposals are :-
• The removal of taxation on standard bank and building society accounts,
• The abolition of stamp duty,
• the taxation of petrol and diesel being replaced by congestion charging
• More consistent carbon emission taxation.
• They have also, again, called for a merger of national insurance and income tax.
They have made it clear that this is an aspiration for the tax system over the next 10 to 20 years, with a gradual move towards the new system.
For help and guidance on all areas of taxation call Haxton Chartered Accountants West London.

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