U-Turn On Self Employed Class 4 NIC Increases

The Chancellor has announced on 15 March that he would not be going ahead with his Budget proposal to increase the National Insurance Contribution rates for self-employed people. 

In the Budget of 8 March 2017, he announced that Class 4 NIC rate for the self-employed would rise by 1% to 10% in 2018/19 and by a further 1% in 2019/20. The proposed increases provoked a widespread outcry, not least because the Conservatives 2015 election manifesto stated “we can commit to no increases in VAT, Income Tax or National Insurance.”

A week later, perhaps appropriately on the Ides of March, the Chancellor issued a letter to MPs saying that there would be no increase to Class 4 NICs “in this Parliament”. However, the abolition of Class 2 NICs will still go ahead from April 2018, meaning that the self-employed will generally see their NICs bill fall from 2018/19.

At Prime Minister’s Questions, Mrs May has said that the government would review areas of difference in the treatment of the employed and self-employed following a forthcoming report of modern working practices being prepared by Martin Taylor.  Mrs May’s comments reiterated a point made by the Chancellor, who also wrote in his letter that “The cost of the changes … will be funded by measures to be announced in the Autumn Budget.”

2017 Spring Time Budget Update

The Spring Budget brought good news and some bad news for businesses. A summary of key points are as follows:

  • UK economy to grow 2% rather than 1.4%, the Chancellor says.
  • In 2018 growth is forecast to slow to 1.6%, before picking up to 1.7%, then 1.9%, and back to 2% in 2021
  • Inflation is forecast to hit 2.4% this year, according to the Office for Budget Responsibility.
  • No business losing small business rate relief will see their bill increase next year by more than £50 a month
  • 90% of local pubs will have a £1,000 discount on their business rates bill
  • On tax avoidance he announces tackling abuse of foreign pension schemes, Introducing UK VAT on roaming telecoms services & Implementing new financial penalties for professionals who enable a tax avoidance arrangement that is later defeated by HMRC
  • Lower National Insurance contributions from self-employed workers is forecast to cost public finances £5bn this year alone.
  • NI contributions will rise for the self-employed by 1% to 10% from April next year. That will then rise again to 11% in 2019
  • He announces that he will reduce the tax-free dividend allowance for directors/shareholders from £5,000 to £2,000 with effect from April 2018
  • A further 650,000 people expected to be in employment by 2021

 

Please download our budget summary under our publications page

CHANGES TO SAGE SOFTWARE LICENCES

From the 1st April 2017, sage will not longer offer perpetual licences (one off payment for complete ownership)  for upgrades, all customers will be moved onto subscription contracts on a pay monthly basis.

Will you be affected?

The programs affected will be :

  • Essentials
  • Accounts
  • Accounts Plus
  • Accounts Professional
  • Sage Cover Online / Extra / Premium (where clients don’t have an existing contract in place)

Will you be supported?

Sage will be withdrawing support for the following products :

  1. Sage 50 v2013 – unsupported from 31st Jan 2017
  2. Sage 50 v2014 – unsupported from 31st Mar 2017
  3. Sage 50 v2015 – support begins to be withdrawn from 1st Mar 2017

 

What you need to do:

If you would like to upgrade your sage product on a perpetual licence, you will need to do so before 31st March 2017.

Alternatively, now may the best time for you to consider changing to a cloud based bookkeeping package.

Clay Shaw Thomas can help you make the right choice for your business, if you would like to discuss  your options in further detail please contact me on melaniej@clayshawthomas.com or telephone 01656 867167.

Finance Wales Micro Loans

Finance Wales are providing a more streamlined process for their micro loans of up to £10,000. Eligible Welsh small and medium sized businesses can apply for the micro loans from the Welsh Government’s Wales Micro Business loan fund. There is now a two day streamlined application process for Welsh businesses that have been trading for more than two years.

However there is also a micro loan fund for up to £50,000 if Welsh businesses have not been trading for two years.

Please go to:  http://www.financewales.co.uk/thisistheyear/growing-a-business/micro-loans-under-%C2%A310,000.aspx for more information and where you can apply online via the website or email.

If you have any other business finance needs or require advice please contact 01656 867167.

5 QUESTIONS TO ASK YOURSELF ABOUT PLANNING YOUR FINANCES

 

  1. What are you trying to achieve from your planning, both in business and in life?

Perhaps a happy and fulfilling retirement, buying a holiday home abroad, protecting your family/business or ensuring your estate passes to the next generation efficiently.

 

  1. Are you on track to achieve your goals?

You may be contributing to a pension, have a couple of old protection policies and be topping up your Cash ISA each year, but do you know what the end result of this will look like? Are you contributing enough? Or too much? Do your protection policies cover the right things and for the right amounts?

 

  1. What is stopping you from achieving your goals; or, what could stop you from achieving them?

How long would your savings last if anything were to happen to you or another member of your family? Does your business rely on a handful of key staff members that generate income/new business?

 

  1. Are you planning efficiently?

We are able to help you make the most of the current legislation, in order to make sure that you keep more of what you earn or make it work harder for you . Furthermore, in retirement we are able to develop a bespoke tax efficient income strategy to meet your needs.

 

  1. Are you making the most out of your business?

You could enhance your planning by using your business to fund things like your pension and some of your protection policies; this could save you more tax than you might think.

 

If you would like to talk to one of our team about your finances and creating a financial plan, please get in touch. Contact details can be found on our Meet the Team page or by contacting us via  info@cstwealth.co.uk or 01656 867167.

 

This article is for information only and does not constitute financial advice. Please contact your usual adviser at CST Wealth Management Ltd if you have any questions relating to your own personal circumstances or if you would like to make an appointment to discuss your financial plan. Contact details can be found on our Meet the Team page or by contacting us via  info@cstwealth.co.uk or 01656 867167.

The Financial Conduct Authority does not regulate tax advice.

CST Wealth is the trading name of CST Wealth Management Ltd which is authorised and regulated by the Financial Conduct Authority.

PENSION FREEDOM OR PENSION HEADACHE?

The media has provided a constant flow of news about the new pension income freedoms. If you haven’t heard, everyone at retirement age is now entitled to draw as much or as little from their pension as they like. The popular concern in the press is that people will go and withdraw everything and buy a house, or buy a car; we on the other hand believe that those who have worked hard to build a fund will spend their pension wisely. However, it might not be as easy as you think to access your funds and many pension providers have not updated their schemes to allow all of these new rules.

  • Have you checked if your pension will offer flexible income?
  • Will they be able to tailor an income strategy to meet your needs?
  • Have you nominated a beneficiary for your pension in case you were to die?
  • Did you know that some providers will only pay a cash lump sum to your beneficiary on your death, potentially causing a tax charge rather than the pension being passed on to your beneficiary as a pension?

Many of our clients are now asking us to conduct pension reviews for them to ensure that their pension will offer them the best possible retirement. Speak to us today to find out more.

This article is for information only and does not constitute financial advice. Please contact your usual adviser at CST Wealth Management Ltd if you have any questions relating to your own personal circumstances or if you would like to make an appointment to discuss your financial plan. Contact details can be found on our Meet the Team page or by contacting us via  info@cstwealth.co.uk or 01656 867167.

The Financial Conduct Authority does not regulate tax advice.

CST Wealth is the trading name of CST Wealth Management Ltd which is authorised and regulated by the Financial Conduct Authority.

 

Get Paid Faster with Xero Add-On’s

Xero is Clay Shaw Thomas’ chosen online accountancy system. Xero is an online accountancy software system that is safe and secure and you can update your accounts anytime, anywhere.

There are over 1,000 Xero Add-On’s that integrate easily with your accounts and make your life a lot easier. Here we look at two of the best payment add on’s  Xero can offer.

  • PayPal (Global)
  • GoCardless (UK) – actually uses a direct debit process rather than credit card payments and you don’t even need a merchant account.

PAYPAL

One of the favorite features in Xero is the bank reconciliation and what makes it so appealing to users is not just the game-like feel to it, but the daily automatic feeds from major banks in the UK.

PayPal users out there will be excited to hear that you can now receive daily automated feeds from your PayPal account into Xero – for free. However there is a cost for your transactions currently at 3.4% +20p per transaction

If you use multiple currencies in PayPal, then you can import each currency separately using Xero’s multi-currency capability. To keep your accounts clean, Xero will only import transactions that change your PayPal balance – so you don’t need to deal with credit card purchases on your PayPal account or with currency conversions.

Cost

3.4% +20p per transaction

GO CARDLESS/DIRECTLI

Take invoice payments online through GoCardless and automatically reconcile them with Xero. Instant, free setup, and low transaction fees

GoCardless makes collecting by Direct Debit easy for everyone from one-man bands to multi-national corporations.

Directli’s role is to manage the payment handshake between Xero and GoCardless—generating invoices remains within Xero. Using Directli enables Xero users to automate the routine of invoice payment processing and settlement to your bank account, using variable amount (pre-auth) Direct Debit.

Payment collections through the system are processed via pre-auth as the process can be automated without your customers having to do anything beyond their initial mandate approval (customers must have an email address).

Cost

£99 per year + 1% transaction fee (capped at £2)

Is it that Simple? 51 sleeps to the Tax Return deadline

It’s just 51 sleeps to the Tax Return deadline. It may seem a long way away but it’s time to dig out the payslips, bank statements, income statements, as well as the expenses receipts you have stored around your home, handbag, wallet, car and in that kitchen drawer that’s never opened.

It is simple – to avoid the late filing penalty your tax return needs to be filed electronically by midnight 31st January 2015 (30 December 2014 if you owe less than £3000 and want HMRC to collect the tax through your tax coding).

However we’ve all been guilty of leaving it to the last minute to provide tax return information to get the tax return prepared  but the late filing penalty is due whether or not you have to pay any tax. So let’s get it done!

There are far more important things to do around this time of the year but making sure your tax return is filed as early as possible allows you to budget for the winter festivities.

Can we make the process easier? You can use our online portal ‘Docsafe’ to send us your information or by all means pop all your information into a bag and drop it to us. Either way we will handle it all for you. Get in touch today if you need assistance and we’ll be more than happy to help!

Autumn Statement

With the General Election looming next year there was always going to be something in this Autumn statement to appeal to the voter. The Chancellor, George Osborne, whilst emphasising the success of his polices and relative strength of the UK economy did make some unexpected giveaways:

– Stamp Duty is to be reformed, with the ‘residential slab system’ being abolished and replaced with a sliding charge: 0% up to £125,000, 2% up to £250,000 and 5% up to £925,000. Whilst this seems a fairer system it means that anyone paying more than £937,000 for a property will be saddled with a bigger stamp duty bill from today. A buyer of a £2.5 million home will have to pay £38,750 extra, while a £10 million mansion will attract £413,750 more tax. Looks like I won’t be putting in an offer on Downton Abbey after all!

– ISAs to retain their tax-free status when inherited by a husband or wife after the death of their spouse or civil partner. Great news for savers allowing them to pass on more of their hard earned cash.

– Increases were also announced to the R&D tax reliefs available for small and large firms

– The personal tax allowance will increase to £10,600 next year, instead of increasing to £10,500. The higher rate tax allowance increases for the first time in five years to £42,385 next year, with a target of reaching £50,000 by 2020. Higher-rate taxpayers will save an average of £172 next year – just enough for my wife to buy another pair of shoes. It’s a shame that they didn’t introduce tax relief on high heels – I would save a fortune! (on my wife’s purchases obviously)

– National Insurance contributions on payments to young apprentices under the age of 25 will be abolished

 

However, it was no surprise that tax evasion and avoidance featured heavily again in this year’s speech. Those using tax avoidance schemes remain firmly in the government’s sights as the statement includes measures to strengthen anti-tax-avoidance legislation and provide additional resources to HMRC to tackle tax avoiders. Measures introduced include:

– Entrepreneurs Relief no longer available on the disposal of goodwill to a close company to which the seller is related. A valuable relief that will impact on incorporation tax planning.

– A 25% tax on profits from activity in the UK for companies that shift profits offshore will raise £1bn over the next five years. That’s another £1 on the price of a coffee…

– Non-domiciled individuals who have been in the UK for 12 of the last 14 years will have to pay an increased charge of £60,000 to retain the status of being tax on a remittance only basis. Those resident in the UK for 17 out of the last 20 years will be charged £90,000.

 

Time will tell whether these measures will appeal to the voters, as always with any budget statement there will be winners and losers.

Contact us today if you wish to receive a full copy of our 2014 Autumn Statement

Employment Allowance

Employers can reduce the amount of National Insurance contributions (NICs) they pay for their employees by up to £2,000. This is called the ‘Employment Allowance’.

Employment Allowance can be claimed from 6 April 2014.

You won’t have to pay any employer National Insurance contributions at all if you usually pay less than £2,000 a year.

Up to 1.25 million businesses and charities will benefit from Employment Allowance. Around 450,000 businesses and charities won’t have to pay any employer National Insurance contributions at all.

Eligibility

Employment Allowance is for nearly all employers that pay Class 1 National Insurance contributions on their employees’ and directors’ earnings. This includes:

  • businesses
  • charities
  • community amateur sports clubs

There are a small number of businesses and organisations that can’t claim Employment Allowance.

How to claim

You can claim through your payroll software, or alternatively contact us if you need any assistance and we will be able to guide you through the process.