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Harmonea work with a number of professions in the following areas:

  • Copywriters
  • HR
  • Insurance
  • IT
  • Mortgages
  • Pensions
  • R & D Tax Credits specialists
  • Social Media
  • Specialist coaches
  • Therapists

If you would like an introduction to any of these people, please let us know as we will be pleased to do an introduction for you.

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What is reportable on a P11D

  • Assets transferred to an employee – this could cover things like computers, televisions, furniture etc
  • Assets available to an employee at their home such as television, computer, broadband. They don’t have to be reported if solely for business use or personal use is insignificant.  Mobile phones are now exempt
  • Pecuniary payments which would include paying personal bills, rent, parking fines for their own cars, speeding fines for all cars and payment of professional subscriptions unless the professional body is on HMRC’s list of approved bodies
  • Mileage – can claim 45p for up to 10,000 miles, over that should claim 25p. Anything over that should be reported.
  • Company cars – only exemption are pooled cars which must be available to all employees and stay on the premises at night
  • Fuel – The most straightforward way of dealing with fuel is to pay for it personally and claim it back under the advisory fuel rate. Fuel cards are reportable with the employee then claiming the business part back.  Alternatively you could be given a car allowance through the payroll and be taxed at source.
  • Vans – Only reportable if there is unlimited private use and fuel. Normal commuting is acceptable
  • Beneficial loans – these include season ticket loans, credit cards and overdrawn director’s loan accounts. The overdrawn director’s loan account is reportable on a P11D in the year it occurs if it over £10k and still outstanding 9 months and one day after year end unless interest is paid at the official rate for every day outstanding.
  • Private medical insurance
  • Various expenses – Entertaining is a bit of a mine field. A birthday present would be deemed to be a “trivial expense” (ie under £50 on any one occasion), the annual Christmas party is OK up to £150 per head as long as everybody is invited but going to Costa for an appraisal is reportable.  The rules around subsistence are £5 for breakfast if you leave home before 6am, £5 for a meal if at least 5 hours on business, £10 for 2 meals for 10 hours on business and a late meal rate of £15 for finishing work after 8pm.  The cost must have actually been incurred.  These are only available for staff whose working patterns do not usually fall this way.  There is a maximum of 3 meals per 24 hours and you can no longer stay with family and friends and still claim the allowance.
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Your Dividend Questions answered

Types of shares

When a company is incorporated at Companies House, it must have at least one share.  Most commonly shares are in £1 increments although this is not compulsory.  One penny, 25p, 50p and £5 per share are not unusual.  Ordinary A shares come with full voting rights.  Not all shares carry voting rights.  Typically, A shares do and the others don’t.  ‘Alphabet shares’ can be issued and it is most usual to have A shares for the directors and B shares for example, to the spouses, partners, children or employees.  Corporate entities can also be shareholders.  It is acceptable for one individual to hold more than one class of share in a company.

 

Who can be a shareholder?

If you are over the age of 16, you can be a shareholder.  You do not need to be a director to be a shareholder, nor do you need to be a shareholder if you are a director.

 

Who is entitled to receive dividends?

If you are a shareholder of a limited company and the company declares a valid dividend, you are entitled to receive a dividend should a dividend be issued to your class of share.  Just because you are a shareholder, it does not guarantee you will receive a dividend. 

 

How often can dividends be issued?

A company can only pay a dividend if it has distributable reserves.  This means it has made a profit after tax has been deducted.  Dividends can be taken at any time but it is advised to take no more frequently than quarterly.  Quarterly, half yearly or annually are all acceptable.  Doing so more frequently may be construed as salary by HMRC and be liable to personal income tax and national insurance at the prevailing rates.  Issuing a dividend monthly for £1200 and a salary of £987 is not realistic.  Profits rise and fall from month to month.  In the example below a company makes modest profits and every quarter calculates how much can be extracted in dividends.  You will see that the profits rise and fall over the course of the year and in this example, a total of £3807 can be taken in dividends over the course of the year.

 

 

Jun-

17

Jul-

17

Aug-17

Sep-17

Oct-

17

Nov-17

Dec-17

Jan-

18

Feb-18

Mar-18

Apr-

18

May-18

Annual figs

SALES

£3,000

£3,250

£1,200

£1,750

£2,400

£2,500

£1,200

£1,750

£4,000

£2,700

£2,550

£2,700

£29,000

COST OF SALES

£50

£50

£50

£50

£50

£50

£50

£50

£50

£50

£50

£50

£600

GROSS PROFIT

£2,950

£3,200

£1,150

£1,700

£2,350

£2,450

£1,150

£1,700

£3,950

£2,650

£2,500

£2,650

£28,400

EXPENSES

£2,000

£2,500

£1,200

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£2,000

£23,700

NET PROFIT

£950

£700

£50

£300

£350

£450

£850

£300

£1,950

£650

£500

£650

£4,700

CT @ 19%

£181

£133

£10

£57

£67

£86

£162

£57

£371

£124

£95

£124

£893

PROFIT AFTER TAX

£770

£567

£41

£243

£284

£365

£689

£243

£1,580

£527

£405

£527

£3,807

AMOUNT AVAILABLE AS DIVIDEND

   

£1,296

   

£405

   

£648

   

£1,458

£3,807

 

Put simply, dividends are profit (sales minus expenses) after tax provision (19%) calculated on a quarterly basis.  It is not necessary to issue a dividend if you don’t want to but if you do, the guidance in this notice should be used.

What is the process for declaring a dividend?

The bookkeeper/business owner prepares the management accounts which shows CT provision and calculates the dividends available for distribution.  A meeting is held and it is agreed what dividends will be issued.  Take the example above.  In Q1 a profit of £1296 was available.  Let us say there are 3 classes of share.

John holds 1 A share and 1 C share

Janet holds 1 B share

Susan holds 1 D share

 

At the meeting, it is agreed to issue 100% of the profits equally between the 4 classes of share

 

25% of £1296 is £324 per share category.

 

In this example, John gets £648 and Janet and Susan each get £324.  Minutes and dividend vouchers need to be issued to John, Janet and Susan each time a dividend is issued.

 

Let us suppose in Q2, the dividend is only issued to the B share holder.  100% of the dividend (£405) goes to Janet.

 

John could use any combination he wants to distribute the dividends.

 

 

What is the tax implication on dividends?

For the year ending 5/4/18, each shareholder is entitled to receive £5000 tax free in dividends.  For the year ending 5/4/19, each shareholder is entitled to receive £2000 tax free.  Each shareholder is required to submit a personal tax return declaring their dividend income.  Dividends over the initial tax free allowance are taxed at 7.5% up to £34,500, the dividends are taxed at 32.5% with no national insurance contributions currently required.

 

What would you advise?

Doing your bookkeeping on a regular basis and producing and acting upon management accounts is crucial.  With MTD (Making Tax Digital) coming in in April 2019, it will be necessary for companies to submit their accounts on a quarterly basis to HMRC.  By doing your bookkeeping regularly, you will ease the pain of having to do this.   If you need more help or advice concerning dividends or bookkeeping, please contact us for an exploratory meeting.

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Payroll service

We can run your payroll for you and save you the worry of meeting HMRC’s strict compliance rules and missing important deadlines. When we run your payroll, whether it is weekly, monthly or 4 weekly we will email you the following documents;

  • Payslips either to you or direct to your employees
  • Payroll journal showing all deductions and additions,
  • Information regarding PAYE payable for that period and details of where to pay it
  • Any pension payments for that period

Our fees for payroll from April 2019 are as follows;

Employees and new scheme

  • To set up a payroll scheme £50 + VAT
  • To run a new payroll scheme for up to 2 employees £10 + VAT a month
  • To run a payroll scheme for up to 4 employees £20 + VAT a month
  • To run a payroll scheme for up to 4 employees with pension administration £40 + VAT a month
  • For payroll schemes with over 4 employees – details on request
  • For a new employee £50 + VAT
  • For a leaver £50 + VAT
  • For a mid-year start £50 + VAT
  • To close a scheme £50 + VAT
  • To opt a company out of auto enrolment £50 + VAT
  • P11D £75 + VAT
  • Year end £50 + VAT

 

Auto-enrolment for setting up new scheme

  • For 1 or 2 directors £100 + VAT
  • Between 3 and 10 people £250 + VAT
  • 10 or more people £500 + VAT
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Childcare Vouchers and Tax- Free Childcare

Childcare voucher schemes allow an employee to receive childcare vouchers in lieu of up to £55 per week of their wages and no tax or national insurance will be paid on this.  However, this scheme was closed to new applicants with effect from 4th October 2018 (although the scheme continues to run for successful applicants prior to that date, provided certain conditions are met).

The government has introduced a new childcare scheme, called Tax-Free Childcare.   This could provide up to £500 every 3 months, up to £2000 per year, to help with childcare costs for each child.  The funds must be used for approved childcare.  Therefore, the childcare provider must be signed up to the scheme.

To qualify for Tax-Free Childcare, the claimant and partner must be in work for 16 hours a week. Single claimants may also apply. It is possible to claim if on sick leave, annual leave or parental leave (although it is not possible to claim for the child for whom the parental leave is being taken).   If the claimant is not working but the partner is, then it may still be possible to qualify if in receipt of certain benefits or allowances.

Child(ren) are eligible up to 1st September following their 11th birthday.  Adopted children are also eligible, but foster children are not.  If a child is disabled, then it may be possible to qualify for Tax-Free Childcare for longer.

It is possible to receive Tax-Fee Childcare at the same time as receiving 30 hours free childcare if eligible for both.  However, it is not possible to receive Tax- Free Childcare at the same time as receiving Working Tax Credit, Child Tax Credit, Universal Credit or childcare vouchers (if already in receipt of childcare vouchers prior to 4th October 2018).

The HMRC website has a “childcare calculator” link, designed to help work out whether Tax – Free Childcare is the best option, as opposed to other benefits.  It is also possible to apply online for Tax – Free Childcare, again through the HMRC website.

Please contact Tracy if you would like any further information on this.

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Personal Tax Accounts

HMRC are keen for individuals to set up their own personal tax account. It should take about 10 minutes and you will need to identify yourself, so have your NI number to hand and a copy of either your P60 or latest payslip. Once you have set yourself up you can use the account to;

  • check your Income Tax estimate and tax code
  • fill in, send and view a personal tax return
  • claim a tax refund
  • check and manage your tax credits
  • check your State Pension
  • track tax forms that you’ve submitted online
  • check or update your Marriage Allowance
  • tell HMRC about a change of address
  • check or update benefits you get from work, for example company car details and medical insurance
  • find your National Insurance number

If you are self employed you can use it to;

  • find out your Unique Taxpayer Reference (UTR)
  • read any secure messages
  • file your Self Assessment
  • see and print your tax calculation
  • appeal a Self Assessment late filing penalty
  • tell HMRC you’re no longer self-employed
  • see your HMRC Annual Tax Summary online
  • apply to reduce your payments on account if your circumstances change
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When do I need to pay my Corporation Tax?

Annual Accounts and Corporation Tax

After the end of its financial year, your private limited company must prepare:

You need your accounts and tax return to meet deadlines for filing with Companies House and HM Revenue and Customs.

Action                                                                         Deadline

File first accounts with Companies House               21 months after the date you registered with Companies House

File annual accounts with Companies House           9 months after your company’s financial year ends

Pay Corporation Tax                                                      9 months and 1 day after your ‘accounting period for Corporation Tax ends

File a Company Tax Return                                         12 months after your accounting period for Corporation Tax endsFacebooktwitterredditlinkedinmail

Employment matters

Taking on employees can be a real headache and the legislation can be a mine field.  Have your employees all got up to date contracts?  Do you need some help and support?  Get in touch with us and we can introduce you to some of our excellent contacts.

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Rates and Thresholds from April 2019 to March 2020

Below are some of the changes to rates and thresholds, as advised by HMRC.  These will become effective from April 2019.

 

Personal Allowance                £12,500 per year.

Basic Tax Rate                         20% on annual earnings above the personal allowance, up to £37500.

Higher Tax Rate                      40% on annual earnings from £37501 to £150,000.

Additional Tax Rate                45% on annual earnings above £150,000.

 

The threshold above which both employers’ and employees’ national insurance contributions will begin is £8,632 per year, or £719 per month.

The new minimum wage rates from 1st April will be :-

Age 25 and above                                                                                                 £8.21

Age 21 to 24 inclusive                                                                                          £7.70

Age 18 to 20 inclusive                                                                                          £6.15

Aged under 18, but above compulsory school leaving age                           £4.35

Apprentice under 19 years old                                                                           £3.90

Apprentice over 19 years old, but in first year of the apprenticeship        £3.90

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Making Tax Digital Update (MTD)

Who is affected?

VAT registered businesses with a turnover of over £85,000 are affected from April 2019.   Businesses with a VAT turnover of under £85,000 will not need to register for MTD until 2021 as it currently stands.

 

Key dates

As of 1st April tax has gone digital and your VAT return will need to be submitted by MTD rules

Quarter ending in June VAT return needs to be submitted by 7th August

Quarter ending in July VAT return needs to be submitted by 7th September

Quarter ending in August VAT return needs to be submitted by 7th October

 

What you need to do

You will need to maintain your records digitally which could be in an accounting software such as QuickBooks or Xero.  If you are using a spreadsheet you will need to use a bridging software to submit your VAT return. 

 

If in doubt, please speak with us.  There is a 12 month “soft landing” where fines will not be levied but this does not mean you don’t have to do it for 12 months.  You must make all reasonable attempts to submit your VAT returns under the new guidelines.

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