Against a backdrop of slower forecast growth and rising inflation, businesses can take comfort from the fact that the Chancellor still forecasts that the UK economy will have the fastest growth rate amongst major economies. Positive growth and rising employment are forecast for the next five years. However, the Government’s previously stated aim of achieving a budget surplus by 2019 has been diluted. It now aims to continue reducing the surplus until 2020 and balancing the budget as soon as possible after that. Key measures which will impact business and personal finances are summarised here to help you assess the impact for yourself and your firm:
Lower Corporation Tax on the horizon
Currently set at 20% corporation tax will be cut to 17% by 2020. The Gov.uk website reports that this is “by far the lowest in the G20 and benefitting over 1 million businesses”.
Investment for productivity
A new £23 billion fund, the National Productivity Investment Fund, will help to boost productivity investing in: transport infrastructure, housing, digital communications, and research and development. This includes £27 million for a new expressway linking Cambridge and Oxford.
Funds for housing infrastructure
A new Housing Infrastructure Fund makes £2.3 billion available for housing infrastructure projects such as roads, to support the building of 100,000 new homes where there is greatest demand. A further £1.4 billion is to be used for 40,000 new affordable homes, with £1.7 billion to accelerate house-building on public sector land.
More R&D funds
There will be £2 billion extra per year for investment in research and development by universities and businesses by 2020-21, such as artificial intelligence, industrial biotech and robotic.
Fast fibre-optic broadband roll-out
£1 billion will be available for private sector investment into the roll-out of full-fibre broadband by 2020-21, as well as for trialling 5G networks.
SME growth fund
Small businesses have long been recognised by Government as driving innovation and growth. In this budget, £400 million has been earmarked for investment in innovative small businesses with growth potential, aiding up to £1 billion in new investment.
Investment in future transport options
£390 million investment in future transport technology has been outlined, to include driverless cars and renewable fuels.
Support for the very rural businesses
Rural rate relief goes up from 50% to 100% in April 2017. This tax benefit is designed to support rural businesses operating where less than 3,000 live and applies to businesses which are the only village shop/post office or the only pub/petrol station with a rateable value of up to £8,500 or £12,500 respectively.
Higher tax on products for insurers
From 1 June 2017, the rate of Insurance Premium Tax charged to insurance companies will go up from 10% to 12%.
No more letting agent fees
The Government intends to ban letting agent fees, payable by tenants, which cover activities such as drawing up tenancy agreements and checking tenant status. Consultation is due to begin imminently. These fees cost renters an average of £223 per rental.
Minimum hourly pay rates for 25 year olds
The National Living Wage for those aged 25 goes up from £7.20 per hour to £7.50 per hour from April 2017. A full-time worker on the National Minimum Wage will see their pay increase by £1,400 per year.
Minimum hourly pay rates for under 25s
The National Minimum Wage for those younger than 25 goes up too from April 2017:
- Age 16 -17 from £4.00 per hour to £4.05
- Age 18 – 20 from £5.55 per hour to £5.60
- Age 21 – 24 from £6.95 per hour to £7.05
- Apprentices from £3.40 per hour to £3.50
Increase in untaxed earnings
The amount you can earn before tax will rise from its current level of £11,000 to a Personal Allowance of £11,500 in 2017-18. The threshold for paying the higher rate tax will go up from its current level of £43,000 to £45,000 by 2017-18.
Tax advantages of some salary schemes removed
Certain salary sacrifice schemes, will no longer get preferential tax treatment, such a mobile phone provided as a benefit in kind. Instead they’ll be taxed as if they were a cash income. Current schemes in place before April 2017 can remain the same for up to a year, and for up to four years if they relate to cars, accommodation and school fees. Some schemes will be exempt from this change, they are: pensions, pensions advice, Cycle to Work scheme, ultra-low emission cars and childcare.
New savings bond with guaranteed interest rate
For savers, a new 3-year NS&I Investment Bond will be available from spring 2017, expected to offer a rate of return of 2.2%.
No change on fuel duty
This tax remains frozen for the seventh year in a row, saving individual motorists an estimated £130 a year on average.
Your next steps
For financial management help, including tax advice please contact Tarrant Green & Company. You can email firstname.lastname@example.org or call +44(0)1438 869 644.
Massive changes are taking place in the way the tax department, HMRC, is organised. It’s all part of the transformation initiative at HMRC called ‘Building our Future’. The move is designed to reduce usage of phone, post and face-to-face services by shifting customers to using online services instead. Cost-cutting has not been given a reason for the reorganisation, but costs will be cut. At Tarrant Green & Company we’re concerned that this will impact on a public service that is already failing to hit targets.
What’s going on?
There have already been several major reorganisations within HMRC since the Inland Revenue merged with Customs & Excise in 2005. So what’s happening and what’s the likely impact?
- Over the next 5 years HMRC will close 137 offices around the country, this includes the closure of 43 offices in London and the South East.
- Staffing levels continue to be reduced but no figures have been made available. Around 11,000 staff in personal tax were cut between 2010 -11 and 2014-15, leaving around 60,000 staff.
- Operations will be concentrated into 13 regional hubs located in Newcastle, Manchester, Liverpool, Leeds, Nottingham, Birmingham, Cardiff, Belfast, Glasgow, Edinburgh, Bristol, Croydon and Stratford. These will open from 2016-17 to 2010-21.
- A number of transitional sites will remain open for up to 12 years in Reading, Ipswich, Portsmouth, Washington and subject to lease agreements, East Kilbride.
- The organisation will change at a high level too, four divisions will become three which will be a new customer strategy and tax design group, a customer service group and a customer compliance group – which in fact deals with non-compliance and enforcement! This change begins from 1 October 2016 and should be completed by December 2016.
What does it mean?
In effect, local offices which could be visited for face-to-face queries will no longer exist. It’s all part of the digitisation of the service, with the move to online transactions. Doubtless, online transactions can be quick and convenient. But for anyone with a question, getting a response to their query by phone or post could find this difficult. Anyone who is in dispute with the tax office could find things much harder yet.
HMRC point out that ten years ago just 38,000 tax returns were filed online – today, it’s 8.75 million. Yet despite the logic of their digitisation strategy, HMRC already has a problem with its service standards, as borne out by a review by the National Audit Office (NAO) in July. This cannot be resolved by online services alone. Anyone who has ever tried to resolve a tax issue with the tax office will know how difficult it can be to get a response or clear advice.
Poor service is a real problem
Demand for advice from HMRC has not reduced in line with provision of digital services. In fact, the NAO criticised HMRC for withdrawing frontline staff in personal taxation before their digital strategy was working which resulted in a virtual meltdown in 2014 with staff having to be diverted from PAYE tax administration to cope with the demand. In the first half of 2015-16 call waiting times trebled. At the peak of demand in October 2015, during deadline week for paper tax returns, call waiting times for people calling about self-assessment peaked at 47 minutes. Over 25% of people abandoned their calls due to the excessive waiting times. The NAO also highlighted the increased burden in telephone charges which customers faced. The cost more than doubled from £63m in 2012-13 to £97m in 2015-16.
A recent NAO survey of customers using HMRC services discovered:
- 58% rated the service as good or excellent
- 21% rated the service as poor or terrible
- 21% rated it as average
Satisfaction was highest amongst those who’d used the online service most recently and lowest amongst those who has been in contact by phone. The fact that one in five customers rate the service as poor shows the scale of the problem.
Get the support you need
At Tarrant Green & Company we’ve supported many individuals and businesses with their tax affairs. This includes Personal and Company Tax Returns and advice on tax planning. We also support clients during HMRC investigations and represent them at HMRC Commissioners hearings. If the turmoil at HMRC is causing you difficulties, then do talk to us about our tax advice service. We’re there to help you get things right from the outset and avoid unnecessary hassle. In situations where there is an issue to resolve we’re at hand to help you get the best outcome.
For advice, please email email@example.com or call +44(0)1438 869 644.
As an employer, you can get up to £2,000 a year off your National Insurance bill with the Employment Allowance. This allowance has been available since April 2014 and targets support at small business. It was designed to offset the costs of National Insurance Contributions when employing four full-time staff on the National Minimum Wage.
Businesses have been able to use this allowance to cut the National Insurance Contributions they pay on employee’s wages by up to £2,000.
From April 2016 Employment Allowance will be £3,000
In this summer’s budget, the Chancellor, George Osborne, announced that the Employment Allowance will rise to £3,000 from April 2016. This is to offset the additional costs that small businesses will incur when the National Living Wage is introduced. In effect, a business will be able to employ four full-time staff on the National Living Wage without incurring any employer’s National Insurance Contributions.
Caution: If director is the only employee, no more allowance
There are some exclusions. The allowance will be withdrawn from companies where the director is the only employee. The reason for this is because the Employment Allowance is meant to support recruitment, rather than to help people offset their current tax liabilities.
90,000 businesses to enjoy zero National Insurance Contributions
The new National Living Wage of £7.20 per hour will be compulsory for workers aged 25 from April 2016 and the government plans to increase the rate to reach £9 per hour by 2020.
By providing the new £3,000 Employment Allowance limit, it’s calculated by the Treasury that up to 90,000 employers will benefit with their employer National Insurance Contributions liability reduced to zero.
For accountancy support email firstname.lastname@example.org or call +44(0)1438 869 644.
New research by AAT this year has revealed that it costs businesses £10bn to comply with the UK tax regime. But small and medium businesses shoulder the greater part of the burden. The AAT survey of 500 businesses, uncovered that SMEs spend around £9.9bn each year on tax compliance compared to £100m paid by larger firms.
When it comes to your own business we offer taxation advice and practical, cost-effective help. Just call 01438 869 644 or email email@example.com
Small and medium enterprise tax compliance
Whilst SMEs may (by definition) have up to 250,000 staff, the average number of employees is actually just up to four people. Despite this micro scale SMEs pay a disproportionately high amount to comply with the tax regime and this work also takes proportionately longer compared to big businesses.
- average 4 staff
- £4,376 on average in tax compliance costs
- 2 hours per week spent on tax compliance
Large businesses tax compliance
Although they employ over 250,000 people and often a great many more, the compliance costs for large businesses are proportionately lower.
- 250,000+ staff
- £8,900 on average in tax compliance costs
- 6 hours per week spent on tax compliance
Tax is too complex and time-consuming
SMEs believe that the tax system is overly complex.
- 70% say far too much time is needed to handle tax issues.
- 70% think that the UK tax system is too complicated.
The areas of tax which AAT members believe are most in need of simplification to help UK businesses are:
- Tax relief
- Capital gains
- Corporation tax
- Income tax.
Ease the compliance burden
Chartered Accountants Tarrant Green & Company can advise on a host of tax issues and help clients to comply with their tax obligations, shouldering some of the tax compliance burden. This includes:
- Advice on tax planning for individuals, partnerships and limited companies
- Preparation & filing of Personal Tax Returns
- Preparation and filing of Company Tax Returns
If you’d like any help then do get in touch on 01438 869 644 or email firstname.lastname@example.org
When you buy tangible assets for your business like premises and products you know exactly what you’re getting. But when it comes to something intangible, such as really good financial guidance for your business, it’s not quite so easy. Did you know that anyone can set up as an accountant without necessarily getting qualified first?
Effective advice on your finance and tax affairs can give your business an advantage in the market place. So what should you look for, and what does Tarrant Green provide?
A licence to practice
Find out whether your accountant is a member of a professional body such as The Institute of Chartered Accountants in England and Wales (ICAEW). This way you’ll know that they’ve completed several years of in-depth training, and probably much more, plus they have practical experience. Members are committed to continued professional development to ensure their knowledge remains up-to-date. ICAEW Chartered Accountants are bound by a code of ethics and if they offer professional services to the public, they’ll hold a practising certificate and professional indemnity insurance
Senior partner, Tarrant Green, is a Chartered Accountant and Member of the ICAEW, as well as other professional bodies.
Start-up advice and raising finance
If you’re starting up a new venture, or expanding an existing one, there are many sources of finance available and each have their pros and cons. Make sure your potential accountant can give you an objective assessment of your options – from sale and lease back and peer to peer lending, to grants, factoring and even employee shareholding (such as the John Lewis model).
At Tarrant Green & Company we support emerging new businesses through the ICAEW Business Advice Service – your first meeting is free.
Tax returns under control
Legally, personal and company tax returns must be filed. A good accountant will make this information-gathering and form-filling exercise as pain-free as possible. So find out how your accountant will approach this. Do they handle everything at an accountant’s rate at the year end, or do they help you to put book-keeping support in place to keep your costs low. And when you provide all the required information, will they prepare the return in good time so you know what tax you owe, or will you have to keep chasing until you finally find out your tax liability and submit your return close to the deadline. It’s worth asking, as it happens all too often.
Completing tax returns becomes cost-effective and trouble-free with Tarrant Green & Company.
Accounting and taxation can be very complex indeed. But with the help of someone suitably qualified, this knowledge will be used to provide you with straightforward guidance. Check that your prospective accountant has expertise to provide the type of tax advice you need.
Tarrant Green represents clients in HMRC tribunals due to extensive tax know-how.
Find out what experience your prospective accountant has of different accounting systems. Whilst there are many different systems, Sage is a big player. An accountant with expertise not just of Sage but of other systems besides is likely to be able to dovetail their service more effectively.
Tarrant Green has experience of these accounting and admin systems: Sage™; VT Accounts; KashFlow; Intuit Quickbooks; Opsis; Thomson Reuters Elite™ (Legal); Quill Pinpoint (Legal); Eclipse® Proclaim Case Management; Taxcalc®.
Practical commercial experience
Ask questions to establish how well your potential accountant can apply knowledge to provide practical answers. Give them a scenario where you took tax advice in the past and see if they come up with the same solution – or an even better one.
Our senior partner, Tarrant Green, knows finance, and he’s also provided Interim Management on request, with experience spanning over 20 years.
Availability of your accountant
Often businesses complain that they choose an accountant and then can’t get hold of them when they need support. Calls may be passed down the line to a junior, who is not able to handle the query successfully. So find out in advance how your accountant will support you and your business.
Once appointed, Tarrant Green is your Chartered Accountant; he’s pro-active and responds quickly – in person.
With the cost of professional membership fees rising each year its worth knowing that you can claim back the tax.
- If you need to be a member of a professional body – or sometimes several – in order to do your job, or if it’s helpful for your work. In this case you can legitimately reclaim tax on fees or subscriptions.
- If you paid the fees or subscription yourself (rather than your company paying)
- If your membership is not a life membership subscription.
HM Revenue and Customs (HMRC) operate a list of approved professional organisations.
Check whether your professional body, association or institute is amongst them.
For support or advice on personal taxation email email@example.com or call +44(0)1438 869 644.