April 2019

tax tips & finance e-newsletter

In this issue

Tax Rates 2019/20
No Tax Changes announced in Spring Statement
Personal Service Company Changes from April 2020
Disguised Remuneration Loan Charge Starts April 2019
The National Minimum/Living Wage Increase
Building a Data-Led Strategy
Creating a High Performance Organisation
Exam Success

Tax Rates 2019/20

A copy of our 2019/20 Tax Rates Card is now available to download.

Download the 2019/20 Tax Rates Card

Many of the figures are fundamental to our business and personal lives. We are sure that you will find it a useful point of reference throughout the coming tax year and below we have listed just a few examples of how it can be used.

Personal tax rates

The personal allowance is increased to £12,500 from 6 April 2019. We have also summarised the income tax rates and bands which apply to all types of income

Buying property

If you buy a property in the UK the tax you pay is different depending on where you live. Stamp Duty Land Tax applies in England and Northern Ireland, Land and Buildings Transaction Tax is payable in Scotland and Land Transaction Tax in Wales. The amount and availability of First-Time Buyers Relief varies depending on where you live.

Asset sales

If you sell an asset such as land, capital gains may be due. Our tax rates highlight the main rates and reliefs so that you can consider the tax bill that may arise.

 

Rates for businesses

If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. The Annual Investment Allowance has increased from 1 January 2019 to £1,000,000 per annum. We have summarised the main allowances that are available.

Rates for employees

There are increases in the percentage charges for company car benefits again this year. Our website explains how these are computed to help ensure that you are paying the correct amount of tax.

Travel is a daily part of business life. If you drive your own car on business, HMRC allow certain tax free mileage allowances to be paid. If you are paid less than these rates, you may be entitled to a tax refund. Our website highlights the rates.

These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call away.

No Tax Changes announced in Spring Statement

Despite the continuing uncertainty surrounding Brexit the Chancellor delivered his Spring Statement on 13 March.

The purpose of this statement is to update the House of Commons and the country on the state of the economy; it is not intended to include any major tax announcements, and none were made by the Chancellor.

As already announced, the personal allowance and the higher rate tax threshold will increase on 6 April 2019. The personal allowance rises to £12,500 and the basic rate band to £37,500, which means that for most taxpayers the higher rate tax threshold will be £50,000. These thresholds were due to come into effect from 6 April 2020 but the Chancellor announced that the start date would be brought forward by one year. Note that the limits will then remain the same for 2020/21.

Download a summary of this year’s Spring Statement

Personal Service Company changes from April 2020

In the Autumn Budget the Chancellor announced that the "off payroll" workers rules that currently apply in the public sector would be rolled out to the private sector in 2020.

The government have now issued a consultation paper that sets out proposed tax and national insurance changes that will impact on those supplying their services through personal service companies.

End users will be required to determine whether the rules apply to the services provided by the worker via his or her personal service company. This will be a significant additional administrative burden on the large and medium-sized businesses who will be required to operate the new rules. The current CEST (Check Employment Status for Tax) online tool would be improved before the proposed start date.

No change for “Small” Employers

“Small” businesses will be outside of the new obligations and services supplied to such organisations will continue to be dealt with under the current IR35 rules with the worker and his or her personal service company effectively self-assessing whether the rules apply to that particular engagement.

The definition of “small” has been widely awaited and the Government have confirmed that it intends to use the existing Companies Act 2006 definition. That is where the business satisfies 2 or more of the following features:

  • Annual turnover of £10.2 million or less
  • Balance Sheet total of £5.1 million or less
  • 50 employees or less

The new obligations to determine whether the rules apply, deduct tax and national insurance, and report payments under RTI will apply to the agency or intermediary making payments to the personal service company where the end user is large or medium-sized. There will be an obligation to pass details of the status determination up and down the labour supply chain.

The liability for tax and national insurance will be the responsibility of the entity paying the personal service company, however if HMRC are unable to collect the tax from that entity the liability will pass up the labour supply chain thus encouraging those entities further up the supply chain to carry out due diligence to police compliance.

Please contact us if you would like to discuss how the proposed changes are likely to impact on your business.

Disguised Remuneration Loan Charge starts April 2019

This new charge will apply to certain loans to directors and employees that are still outstanding at 5 April 2019 and new arrangements put in place after that date.

The charge affects arrangements involving loans made via Employee Benefit Trusts (EBTs) and similar disguised remuneration schemes adjudged by HMRC and the courts to be tax avoidance and liable to PAYE and National Insurance Contributions.

There are new reporting and payment obligations that come into force for employers using such schemes from 5 April 2019. Where the employer does not pay the tax and national insurance the liability can be passed to the individual who benefited from the loan.

Where the individual concerned had taxable income in the 2018/19 tax year of less than £50,000 they will be able to repay the liability over 5 years, and spread over 7 years if their 2018/19 taxable income of less than £30,000.

The National Minimum/Living Wage Increase

On 1st April 2019 the National Minimum Wage (NMW) and National Living Wage (NLW) will rise for anyone classed as a worker. Workers over 25 years old will see the biggest increase in 4 years as the hourly pay increases by 38 pence.

Hourly rates from 1st April 2019 will increase to the following:

Year25 and over21 to 2418 to 20Under 18Apprentice
April 2019£8.21£7.70£6.15£4.35£3.90

Building a Data-Led Strategy

Businesses are capturing more information than ever before. The most successful firms are analysing that information and are focused on building their strategy around customer and market data.

Data management strategy

To create a data-driven business, you need to have a data management strategy. This needs to start with your culture and people. You need to encourage the right behaviours among your staff. It might help to create a training programme, which ensures your people are capturing data properly, on the right systems and in a way allows your business to gain useful insights from that data.

Analytics

There is no point in capturing data if you can’t analyse it. Your business needs to manage data well and it needs to value data analytics. Don’t jump straight into rolling out software and technology. Take the time to define the needs of the business and build your analytics systems around that. Define what you need to know in order to drive sales, increase profitability or retain existing clients. Then feed these questions into your data analytics strategy.

Your analytics should seek to provide answers to these questions in order to add value to your business.

Now that your people and systems are in place, your business will be in a better position to collect data, analyse it and use the outputs to improve company performance with data driven insights.

 

Look for opportunities to use data

Unless you have data, you are just another person with an opinion. Look out for ways to use data to improve your business. Use customer data to improve your business development and marketing efforts. You can use data to reduce costs or to manage your supply chain more efficiently. You can even use data driven insights to help improve cash-flow by improving your debtor days and cash management across your business.

Remember, most businesses (and therefore, most of your competitors) are not very good at managing their data. If you can capture, analyse and utilise data throughout your business more effectively than they can, you will have a significant competitive advantage

Creating a High Performance Organisation

High performance organisations stimulate more effective employee involvement and commitment in order to achieve increased profits, improved productivity and higher levels of customer loyalty.

We are living in uncertain times. The highest performing businesses will, by their very nature, ride out the storm more effectively than their competitors. So how do you create a high performance organisation?

A truly high performance business will deliver higher levels of productivity, customer satisfaction, sales and will have increased employee retention. The backbone of a high performing business is a resilient workforce. You need to build a team that is highly motivated, high performing and consists of people who look forward to coming to work every day because they feel they are a part of the company and the bigger picture.

In addition to hiring the right people, you need to create a culture that allows your team to perform at a high level. It all starts with communication. You need to communicate the vision, strategy, values and beliefs of your business in order to create a shared purpose. They need to buy into your vision for the company so that they feel invested in its future success.

Next, you need to empower your people. Set their high level objectives and communicate these to each member of your team. Explain how each objective contributes to the overall success of the business. Now step back and give your people the space to get on with working towards those objectives. Be present and available for when they need to escalate issues. Set regular team meetings but never micro-manage. It is also important to create appropriate reward strategies so that your high performing people feel rewarded for their commitment, and remain motivated.

Remember, perfection is not attainable, not even in the very highest performing organisations. However, if you aim for perfection, you might just end up a notch below that, which is where a high performance business should be.

Exam Success

We are pleased to announce that Jodie Wan has passed her exams to qualify as a Chartered Accountant (ACA).

Jodie joined Humphrey & Co in 2012 and undertook the firm's apprenticeship programme qualifying as an Accounting Technician (AAT) in August 2014. Jodie has now achieved her Chartered Accountancy qualification (ACA) and is also a qualified Tax Technician (ATT). Jodie assists Partner Greg Penfold in the Dental and Medical team.

“I am proud of everything that I have achieved and I am very grateful for all the support that Humphrey & Co has given me along the way. I look forward to using the knowledge I have gained from my qualifications to assist our clients even further with their accounting and tax needs.” said Jodie.

Senior Partner Anthony Smith comments:

“I am delighted that Jodie has reached this milestone in her career, she continues to impress us with her technical skills and the way she diligently interacts with our clients, it is well deserved. The pace of change in the profession has never been quicker, but we continue to invest heavily in our staff training and development to ensure we remain one of the leading advisors in the area.”