It’s the end of the year and its time to enjoy and be in the Christmas spirit. It’s not long until we get to enjoy the food and drinks to last to the New Years celebrations. It is one of our favourite times of the year here at Cross Accounting. The darker evenings are given a little colour with the neighbourhood Christmas lights. While this is the time of giving and enjoying yourself, we would like to remind you of the financial aspect over the festive period.

 

Without trying to put out a negative mood, we do want to address the reality of credit card bills and debt and the very high interest charges they carry.

 

We have been speaking to a number of liquidators in the last couple of months and all have mentioned that it is this time around were people use their credit cards or store cards the most. This would make sense as we get ready to buy gifts and as the High Street stores accommodate their opening hours for the Christmas rush.

 

A survey by uSwitch finds that Britons borrow an average of £452 each at Christmas. Heading in to the New Year, this can cause a bit of a problem for some.

 

It is perfectly fine to go out and spend for loved ones and friends, but please stick to your budget. You want to end 2018 on a high and have the best possible start for the New Year.   

 

Let’s start the New Year in the best way possible. With positivity and new inspirations to keep both your personal life and business life in prosperity for 2019.

 

We would like to wish you a Merry Christmas and a prosperous 2019, from all at Cross Accounting Service.

The Budget 2018 has been released. The chancellor has put together how money will be spent for the forthcoming future. It is looking positive as there are predictions that the economy will grow as the forecast for 2019 raised from 1.3% to 1.6% and annual forecasts raised to 1.4% in 2020 and 2021, 1.5% in 2022 and 1.6% in 2023.

 

This Government has prioritised getting people into work as the best way to help people is to provide them with stability and a pay packet every month. Since 2010 over 3.3 million more people are in work and predicting 800,000 more jobs by 2023.

 

To provide the jobs, you will need businesses, and therefore the Chancellor has vowed to back another 10,000 entrepreneurs by extending Start-Up Loans funding to 2021 and following representations from the FSB, extending the New Enterprise Allowance. Which will provide mentoring and support for benefit claimants to get their business ideas off the ground.

UK to be in the digital era

Digital Platforms delivering search engines, social media, and online marketplaces have changed our lives. Digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business and to make this fair, there has been an introduction of UK Digital Services Tax.

This will be a narrowly-targeted tax on the UK-generated revenues of specific digital platform business models. It will be carefully designed to ensure it is established tech giants – rather than the tech start-ups - that shoulder the burden of this new tax.

The Digital Services Tax will only be paid by companies which are profitable, and which generate at least £500m a year in global revenues in the business lines in scope.

The tax will come into effect in April 2020 and is expected to raise over £400m a year.

Help for the High Street

There is also support for the High Street retail businesses. With many small retail businesses struggling to cope with the high fixed costs of Business rates, in 2016 there was an introduction of business rates relief measures worth £12bn.

Going further, at the next revaluation in 2021, rateable values will adjust to reflect changes in rental values. This will help retail businesses as for the next two years, up to that Revaluation, for all retailers in England with a rateable value of £51,000 or less, this will cut their business rates bill by one third.

That’s an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafes.

Stamp Duty and Housing

The Budget is committed to keeping family homes out of Capital Gains Tax, but some aspects of Private Residence Relief extend it beyond that objective and is to provide relief for people who are not using the home as their main residence.

From April 2020 Lettings Relief will be limited to properties where the owner is in shared occupancy with the tenant and reduce the final period exemption from 18 months to 9 months.

All first-time buyers purchasing shared equity homes of up to £500,000 will be eligible for first-time buyers’ relief, an increase since the last budget abolished Stamp Duty for first-time Buyers on properties up to £300,000. This relief will be made retrospective so any first-time buyer who has made such a purchase since the last Budget will benefit.

Personal Allowance Thresholds

Delivering higher wages for those in work is core to the chancellor. The poorest 20% have seen their real incomes grow faster than the richest 20% and the proportion of jobs that are low paid is at its lowest level for 20 years. This is largely due to the National Living Wage introduced in 2016.

From April the National Living Wage will rise again, by 4.9%, from £7.83 to £8.21, handing a full-time worker a further £690 annual pay increase, with the ultimate objective of ending low pay in the UK.

In April 2018, the personal allowance is the current of £11,850 and £46,350 for the Higher Rate Threshold. However, from April 2019 the Personal Allowance is raised to £12,500 and the Higher Rate Threshold to £50,000, a year earlier than planned.

A tax cut for 32 million people and £130 in the pocket of a typical basic rate taxpayer.

With the leaves turning brown, darker evenings, it is time to bring out the quilts and cosy up in front of the fire as Autumn is here. It is one of our favourite times of the year as the horrors of Halloween and the blasts of Bonfire night approach. A great time to spend with family and friends to have fun.

 

During this time, you want to avoid a fright and get the benefits of filing your tax return as early as possible. This will ease any pressure off as it is one task out of the way and you can solely focus on your business, giving it the final push to end 2018 on a high. The deadline of 31^st January never changes and HMRC reported last year that an estimated 2.6 million people had not filed their tax return two days before the deadline.

 

You risk an automatic £100 fine if you miss the deadline and there are more consequences for more delayed time. If your tax return becomes more than 3 months late then £10 daily penalties will accumulate. This is a situation you do not really want to be in as the penalties can be massive.

 

It really helps filing your tax return earlier, just because you do this early does not mean that the tax liability will have to paid over straight away. It is still the normal due date of January, so you have plenty of time to budget for however much you may need to pay over to HMRC. If you are due any refunds, then you will also get this earlier, where as any returns done in January, will take a lot longer for HMRC to process any refunds as it is their busiest time.

 

With a bit of organisation, you can get your paperwork in order and get your tax return over and done with all the while enjoying your Christmas and New Year’s plan stress free. You could pay too much or even too little tax, so the help of an advisor is vital. Contact us on www.crossaccountingservice.co.uk if you have any concerns regarding you tax return as we are always here to help.

The summer months are coming to an end as autumn closes in. Everyone is returning from their summer break, the children will be heading back to school its back to business.

 

It’s always great to plan ahead, so this time we talk about the new Making Tax Digital (MTD) that HMRC are set to introduce from April 2019, this has been going back and forth in consultation for some time now, HMRC now have communicated the requirements.

 

This will be mandatory for businesses registered for VAT with a turnover above the VAT registration threshold of £85,000. Businesses will need to keep VAT records digitally and their VAT returns using MTD compatible software. This will start from their first VAT period starting on or after 01 April 2019.

 

If you submit a quarterly return for the period 01 March to 31 May 2019 then you will have to comply with MTD rules for the period starting 01 June 2019. Businesses under the VAT threshold will not have to operate MTD but can choose to do so voluntarily, which we would recommend.

 

Going forward the use of compatible accounts software will be mandatory. The use of spreadsheets can no longer be used.   

 

HMRC are trying to reduce the number of VAT inspection on businesses that are complying and MTD will make this clearer for all. If you’re struggling and not understanding what to do and how to be ready for the April 2019 deadline, do not panic and contact us, as we are always here to help.

Welcome to our latest blog. Summer has been in full swing here and we have now had great weather for several weeks. There are lots of activities that happen during the summer months and its always great to support your local businesses.

 

This time of year, we are noticing a larger number of people investing towards a property. This may be a change to the current house or a house to rent. Whatever the reason may be, you might need help financing in the way of a mortgage.

 

So, what is a mortgage? A mortgage is a loan taken out to buy a property. The loan is secured against the property until it is fully paid off. If you can’t keep up with repayments, the mortgage provider can repossess the house so its extremely vital to crunch the numbers and know if a mortgage is right for you.

 

Many factors are taken in to consideration to approve a mortgage. Proving your income is usually the deciding factor as the lender needs to know you can repay the mortgage. Here at Cross Accounting we provide our clients with their SA302 to prove their earnings. You can obtain the last three years proof of earnings if you file for self-assessment through your HMRC’s online account, with a tax year overview.   Mortgage companies like to see you are on time when paying your taxes.

 

Many banks have an online calculator to estimate the interest payment you will need to make, it does help you budget for the new property.

 

We are authorised and can help obtain a mortgage, please do get in touch to discuss your situation and see how we can help you. A house is one of the largest single purchase you’ll likely make so you want to take care and get it right from the beginning.

All the important rates and threshold for the tax year 2021/2022

 

National Minimum Wage

This takes effect from 01 April 2021 and all workers are entitled to.

 

Category of worker	Hourly rate
Aged 23 and above	£8.91
Aged 21 to 22	£8.36
Aged 18 to 20	£6.56
Under 18 (but above compulsory school leaving age)	£4.62
Apprentices aged under 19	£4.30
Apprentices aged 19 and over (but in the first year of their apprenticeship)	£4.30

 

Please note the age rate bracket has changed from previous years also.

 

PAYE Tax Rates and Threshold

These rates depend on the amount of income you earn.

 

Personal allowance	£12,570
Basic tax rate – 20%	£12,571 – £37,700
Higher tax rate – 40%	£37,701 - £150,000
Additional tax rate – 45%	£150,000+

Employment Allowance

 

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.

 

Employment Allowance

£4,000

 

Statutory Sick Pay (SSP)

 

The same weekly SSP rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

 

Number of qualifying days in week	1 day to pay	2 days to pay	3 days to pay	4 days to pay	5 days to pay	6 days to pay	7 days to pay
1	£96.35
2	£48.18	96.35
3	£32.12	£64.24	£96.35
4	£24.09	£48.18	£72.27	£96.35
5	£19.27	£38.54	£57.81	£77.08	£96.35
6	£16.06	£32.12	£48.18	£64.24	£80.30	£96.35
7	£13.77	£27.53	£41.30	£55.06	£68.83	£82.59	£96.35

 

Dividend Allowance

You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance.

 

Dividend Allowance

£2,000

Mileage Allowance

The allowed deductible rate per mile for business use.

 

Type of vehicle	Rate
Car	45p (for the first 10,000 business miles, then 25p for each subsequent mile)
Motorcycle	24p
Cycle	20p

It has been great to see the UK finally move in a positive direction out of lockdown. While we can look forward to restrictions loosening, we need to remember the financial new rules coming in April. It is always this time of year when the financial rules start to come in to place, the budget will be announced this week, and we will digest this for you to see what kind of economical shape we will be in, so keep your eyes for that one.

 

IR35 (Off Payroll Working)

 

The long overdue of IR35 also known as off payroll working, was initially announced to come in, in April 2020, however due to the pandemic, this has been pushed back to April 2021.

 

This will affect you if you are in the private sector from any industry and provide a service through an intermediary such as your own limited company, a partnership or an individual who is on self-assessment and the client could constitute an employer/employee relationship.

 

So, why are these rules coming in?

 

The rules are coming into level the playing field and to make sure that workers who would have been an employee if they were providing their service directly to the client, pay broadly the same tax and national insurance contributions as employees. You could claim travel expenses and other expenses before, which would lower your tax liability, now this will not be allowed.

 

If you are a worker and your client is in the private sector, it is your responsibility to decide your own employment status for each contract. Things that will help decide your employment status are;

·         Who has the control? Can you reject certain projects and decide your working days?

·         Do you use your own tools?

·         Do you have public liability insurance?

 

If you are a worker and your client is in the public sector like a school or library, it is their responsibility to decide your employment status. You should be told of their decision; we have seen a large number of the larger companies starting to make changes to their arrangements with their subcontractors in preparation for this.

 

Reverse Charge VAT

 

If you are in the construction industry, there are changes coming in from

1^st March 2021 to the way you apply VAT to your invoices. If you are VAT registered in the UK, and supply building and construction industry service, if the following applies for you, then you will have to use the reverse charge;

·         Your customer is registered for VAT in the UK

·         Payment for the supply is reported within the Construction Industry Scheme (CIS)

·         The services you supply are standard or reduced rated

·         You are not an employment business supplying either staff or workers, or both

·         Your customer has not given written confirmation that they do not make onward supplies of the building and construction services supplied to them, also known as an end user.

 

So, that might have been a bit of jargon and hard to follow, so let us break this down in simpler terms.

 

Example 1

If Alpha Ltd are selling a standard or reduced rated service for building and construction to Joe Bloggs (this can be a company as well), and Joe Bloggs is VAT and CIS registered and has not given Alpha Ltd written confirmation that he is an end user, then the reverse charge VAT must be used.

 

Alpha Ltd bills Joe Bloggs;

Net - £1,000

VAT - £0

Gross - £1,000

(Reverse charge applies)

 

Example 2

If Alpha Ltd are selling a standard or reduced rated service for building and construction to Joe Bloggs, and Joe Bloggs is not VAT registered, then the reverse charge must not be used, and VAT must be charged as normal.

 

Alpha Ltd bills Joe Bloggs;

Net - £1,000

VAT - £200

Gross - £1,200

 

The services you may provide that are subject to reverse charge are;

·         constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services

·         installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure

 

Please click here for the full list of services.

 

What you will need to do

 

If you are needing to use reverse charge VAT then you will need to verify some of your customers information. You will need to verify;

·         If your customer has a valid VAT number – (Click here to verify)

·         If your customer is reporting under CIS. (This can be verified using the construction industry scheme online service)

Sole trader:

o   Name

o   Unique taxpayer reference

o   National Insurance number

 

Company:

o   Name of Company

o   Company’s unique taxpayer reference

o   National Insurance number

 

·         Ask your customer to confirm whether they are an end user or intermediary supplier (you will need written confirmation)

 

 

These rules will be enforced by HMRC, so you will have to take care to do this correctly. If you are facing problems with your own subcontractors with IR35, or if you are not sure whether this reverse charge VAT applies to you, please get in touch with us. This can be complicated to get your head around. 

Full list of services for when you must and must not use the reverse charge.

 

When you must use the reverse charge

You must use the reverse charge for the following services:

·         constructing, altering, repairing, extending, demolishing or dismantling buildings or structures (whether permanent or not), including offshore installation services

·         constructing, altering, repairing, extending, demolishing of any works forming, or planned to form, part of the land, including (in particular) walls, roadworks, power lines, electronic communications equipment, aircraft runways, railways, inland waterways, docks and harbours, pipelines, reservoirs, water mains, wells, sewers, industrial plant and installations for purposes of land drainage, coast protection or defence

·         installing heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems in any building or structure

·         internal cleaning of buildings and structures, so far as carried out in the course of their construction, alteration, repair, extension or restoration

·         painting or decorating the inside or the external surfaces of any building or structure

·         services which form an integral part of, or are part of the preparation or completion of the services described above - including site clearance, earth-moving, excavation, tunnelling and boring, laying of foundations, erection of scaffolding, site restoration, landscaping and the provision of roadways and other access works

When you must not use the reverse charge

Do not use the charge for the following services, when supplied on their own:

·         drilling for, or extracting, oil or natural gas

·         extracting minerals (using underground or surface working) and tunnelling, boring, or construction of underground works, for this purpose

·         manufacturing building or engineering components or equipment, materials, plant or machinery, or delivering any of these to site

·         manufacturing components for heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection systems, or delivering any of these to site

·         the professional work of architects or surveyors, or of building, engineering, interior or exterior decoration and landscape consultants

·         making, installing and repairing art works such as sculptures, murals and other items that are purely artistic signwriting and erecting, installing and repairing signboards and advertisements

·         installing seating, blinds and shutters

·         installing security systems, including burglar alarms, closed circuit television and public address systems

It has been a tough past 12 months for everyone. A lot of our plans have been ruined due the ongoing pandemic and we are still not sure when we are expecting better days. We should not let 2021 be a repeat of 2020. The best plan is to move forward and move better.

 

We are one month down and 11 more to go, although we are probably keeping count on the number of lockdown days we are in. 2021 shouldn’t be another year of standstill, this should be the year to plan.

 

There is support out there available for the economic environment to soften the blow. The furlough scheme is still available at 80% to help cover wages for non-working staff. The Welsh government has helped with the economic resilience fund. For full details of the grants, click here to see what is available.

 

Is there something you have been wanting to do for your business, but have held back on doing so? You should write down your goals and set a plan to achieve this. We need to make 2021 a positive stepping stone to achieve the most we can for our business. Is there a sales target you want to hit? Is there software or machine you want to purchase? Writing down what you will need for this is the best way to plan.

 

You should sort out your goals in short term and long term. What is it that you want to achieve in the next month, or 6 months, or 1 year or 5 years?         Click here for a great template that you can work off to get started.

 

Set your Goal what do you want to achieve in one years time, 3 years time,

or 5 years time.      WRITE IT DOWN

 

Then piece together what you need to do in small manageable tasks what you need to do to achieve this goal.   It does not even have to be a goal for the business, but a personal goal that the business can help you materialise.

 

Watch your costs, time runs away with us so easily, and so do the costs. Make sure you are tracking these. If you need to renew a contract, do so. 

It’s a telephone call, it’s a form. What have you got to lose? But to gain you will.  Don’t be afraid to negotiate even with the large companies.

 

What you want to say at the end of this year 2021, I not only lived through a pandemic and survived it, but I made something of my year that is 2021.

 

We have to plan and overcome this pandemic, we have to strive to progress.

If you want help with budgets or cashflow, get in touch with us and we can discuss on 02920 653 995. You can find all our latest information on www.crossaccountingservice.co.uk

If you have sold an asset that has increased in value, then Capital Gains Tax will be due. It is the gains that you will pay tax on and not the amount of money received. When Capital Gains Tax is due, it is more than often, when a house has been sold. Although Capital Gains Tax will be due when you have sold a painting, stocks and shares, sale of a business etc…

So, for example, if you have bought a house for £120,000 and sold it for £190,000 then Capital Gains Tax will be due on £70,000. You do not pay any Capital Gains Tax if you have sold a house that is your main home and residence. You also do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.

 

Your tax-free allowance also known as the Annual Exempt Amount for Capital Gains for this current tax year (2020/2021) is £12,300.

You do not pay Capital Gains Tax on assets you give or sell to your husband, wife, or civil partner, unless,

• You separated and did not live together at all in that tax year
• You gave them goods for their business to sell on

 

If they decide to sell later, they may have to pay tax on any gain. Their gain will be calculated on the difference in value between when you first owned the asset and when they sold it. They should keep a record of what you paid for the asset. 

The rules have changed from April 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

Rent

800

800

0

 

 

 

 

 

 

Mobile

50

55

5

 

 

 

 

 

 

Travel

20

50

30

 

 

 

 

 

 

Gas and Electricity

100

95

-5

 

 

 

 

 

 

Total Expense

970

1,000

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income - Expense

1630

1,600

-30

 

 

 

 

 

 

 

These tips will keep you motivated and more importantly give you an idea of where your finances lay, helping you to quickly identify if there are rainy days ahead.

If you need expert tailored advice, please do get in touch as we are always happy to help.

The new financial year is in full swing, and it’s when the new rates and regulations kick in. Your personal allowance has changed along with other vital thresholds that take effect when it comes to completing your tax return.

 

Personal Allowance

The new year brings the new personal allowance at £12,500 for the year. So, what is your personal allowance? Personal allowance is the amount of income in which you do not have to pay tax on. You will pay tax on anything over the £12,500, the table below will display what percentage of tax you pay in each band.

 

Tax Rate	Taxable Income	Band
0%	£0 - £12,500	Personal Allowance
20%	£12,501 - £50,000	Basic Rate
40%	£50,001 - £150,000	Higher Rate
45%	£150,000 +	Additional Rate

 

You do not get a personal allowance on taxable income over £125,000. Any income above this threshold and tax will be due on all amounts to the respective band.

 

Dividend Allowance

As well as the personal allowance, the dividend rate has also changed. Just like a personal allowance, you also have a dividend allowance. Dividends that fall in within your personal allowance do not count towards your dividend allowance.

 

The tax you pay depends on which Income Tax band you’re in.

 

Tax Rate	Band
0%	Dividend Allowance of £2,000
7.5%	Basic Rate
32.5%	Higher Rate
38.1%	Additional Rate

 

Example

Say you were to get £4,000 in dividends in the 2019 to 2020 tax year. The dividend allowance is £2,000, so this means you pay tax on £2,000 (£4,000 minus £2,000) of your dividends. Your other taxable income is £30,000. Add this to your dividends of £4,000 and your total taxable income is £34,000. You pay a rate of 7.5% on £2,000 of dividends because your total taxable income is within the basic tax band.

 

National Minimum Wage

If you employ staff, then you are probably aware that the National Minimum Wage rate has also changed. It is a legal requirement to pay the NMW as an employer.

 

Year	25 +	21 to 24	18 to 20	Under 18	Apprentice
1st April 2019	£8.21	£7.70	£6.15	£4.35	£3.90

 

For all the rates mentioned, they usually change every year, typically in April. You must be aware of these rates to make the most out of completing your tax return and to fulfil your legal obligation. There are many other allowances and rates, but the ones mentioned are the usual ones that affect everyone. If you are worried about whether you are in the right tax band or not sure if you’ve used up all of your allowance, please visit our website on www.crossaccountingservice.co.uk or call us on 02920 653 995 where a member of staff can assist. We are always happy to help.