Tax Tips

Tip of the week

Look to your existing client base for your future expansion. They are the ones who believe in you. If asked, they will be pleased to recommend you to others. Therefore ASK THEM.

Of course you must look after your existing client base. This should be at the core of your existence and the heart of your marketing effort.

We grow by 20% per annum approximately. 95% of our growth comes from our existing client referrals. We continue to thank you for that.

Top 5

  • Become a Limited Company and only pay 20% tax instead of a sole traders tax of 29%
  • Consider Flat Rate VAT if you don’t have to compulsory register for VAT.
  • Use nursery scheme vouchers
  • Invest in a pension
  • Make use of tax efficient investments such as companies raising funds under the SEIS/EIS scheme.

IHT

  • Regular gifts from income are exempted from IHT. Unlike one-off gifts that are greater than £3,000, which remain liable for 7 years.
  • A potentially exempt transfer may not reduce the IHT bill if you die within 7 years. Use a discount gift scheme instead.
  • Business Property Relief can reduce IHT by up to 100%. Any loans for the business should be secured against non business property (i.e. a home to increase BPR).

VAT

  • Not sure what items VAT is charged on? Post, travel, congestion charge, penalties and fines, and insurance are exempt.
  • You could be saving money on your VAT bill by changing to the flat rate VAT scheme.  Call us to see if it applies to you.
  • Have you considered the annual VAT scheme as an alternative to submitting quarterly VAT returns? Also if you are currently on the scheme, did you know that you can pay over 10 instalments (click here for more information)

Personal

  1. Advantages of buying mobile phones for your staff.
  2. Buy to let tax advice
  3. Life policies
  4. Are you affected by the changes to child benefit?
  5. Thinking of selling your business?
  6. Fund your child through university

 Tax Rates

Tax Rates
2012-13 2013-14 2014 – 15 2015 – 16
Income Tax
Personal Allowance                    8,105.00                9,445.00                  10,000.00              10,600.00
PA   (65-74)                  10,500.00              10,500.00                  10,500.00              10,600.00
PA (75+)                  10,660.00              10,660.00                  10,660.00              10,660.00
Income Limit for age allowances                  25,400.00              26,100.00                  27,000.00              27,700.00
Basic Rate 20% 0 – 34,370 0 – 32,010 0 – 31,865 0 – 31,785
Higher Rate 40% 34,371 – 150,000 32,011 – 150,000 31,866 – 150,000 31,786 – 150,000
Additional Rate 50% 45% >150,000 >150,000 >150,000 >150,000
National Insurance
(Weekly)
Lower Earnings Limit (Class 1)                   107.00              109.00                111.00                      112.00
Primary Threshold                        146.00              149.00                153.00                      155.00
Upper Earnings Limit (Class 1)                        817.00              797.00                805.00                      815.00
Primary Class 1 (Between PT & UEL) 12% 12% 12% 12%
Primary Class 1 (Over UEL) 2% 2% 2% 2%
Class 1A & Secondary Class 1 13.8% 13.8% 13.8% 13.8%
Class 2 Rate                              2.65                  2.70                            2.75                          2.80
Class 2 Earnings Exemption                    5,595.00            5,725.00                    5,885.00                5,965.00
Class 3 Rate                          13.25                13.55                  13.90 14.1
Class 4 Lower Profit Limit                    7,605.00            7,755.00              7,956.00 8060
Class 4 Upper Profit Limit                  42,475.00          41,450.00            41,865.00 42835
Class 4 Rate (Between LP & UP) 9% 9% 9% 9%
Class 4 Rate (Over UP) 2% 2% 2% 2%
Other Useful rates
Mileage (First 10,000) Cars 45P 45P 45p 45p
Mileage (Over 10,000) Cars 25P 25P 25p 25p
Mileage (Passenger) 5p 5p 5p
Mileage (Motorcycle) 24p 24p
Mileage (No cap) Bicycles 20P 20p 20p
Compulsory VAT Registration              77,000.00                  81,000.00              82,000.00
Flat Rate Scheme (VAT600FRS) Must not exceed £150,000 exc VAT before registering but
can stay on it until exceed £230,000 & get a 1% reduction in first year
Cash Accounting Scheme Can join before income exceeds £1.35 Million and can stay on until
income exceeds £1.6 million
Annual Accounting (VAT600AA) The same criteria as the cash accounting scheme – Make 9 monthly or
three quarterly payments and a balancing one at the end of the year
From Oct 2013 From Oct 2014 From Oct 2015 From Oct 2016
NMW (Under 18) 3.72 3.79 3.87 4.00
NMW (18 – 20) 5.03 5.13 5.30 5.55
NMW (21 – 24) 6.31 6.50 6.70 6.95
NLW (25 and Over) 7.20
Apprentice (Must spend atleast 1 day at college)  2.68 2.73 3.30 3.40
Capital allowances have changed to 18% (main pool) and 8% (special rate) from 06/04/2012
SSP (£88.45/PW) 3 QD (Including non working days) must earn over £112/pw gross
Not paid for first 3 days and not paid in excess of 28 weeks worth SSP
Employee should complete the form SC2 when self-certificating
SMP SMP is 52 Weeks and made up ordinary (first 26 weeks) and additional (next 26 weeks) leave
SMP is paid for 39 weeks and broken down as follows:
First 6 weeks – 90% gross earnings
Remaining 33 weeks – as bove or £139.58, whichever is lower
Usually starts from up to 4 weeks before the baby is due
Give a MATB1 to the employer up to 19 weeks before the birth
Student loan repayments are calculated at 9% on income over £17,335 or £21,000 depending on the payment plan

 

If you want further information on any of the tax tips please email us at matthew@pomfrey.co.uk.

 

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