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April 2012

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To April’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

This month we have lots of advice about what to do at your year end.

Please contact us for advice in your own specific circumstances. We’re here to help!
April 2012
· What to do at Your Year End
· How much to Pay Yourself
· Get your MYOB Payroll Tables
· VAT Changes
· April Question & Answer Section
· April Key Tax Dates
What to do at Your Year End
Many companies have a year end of 31st March.  This year end conveniently coincides with the personal tax year. This makes it clear what a proprietor will have received from their firm or business in a personal tax year. So many businesses are currently planning how to improve their tax position with both personal and business taxes. How should you prepare for the imminent year end?

For example one key tax opportunity this year end relates to those spending larger amounts on capital equipment. From the beginning of April 2012 you are only entitled to claim 100% tax relief on £25,000 worth of capital expenditure per year. For the year end 31st March 2012 you could claim £100,000. It is therefore better to incur capital expenditure (or at least commit incur capital expenditure) before 31st March this year. If the £25,000 limit is going to be exceeded next year you should take particular care to advance capital expenditure into 2011/12 that otherwise might be incurred in 2012/13.

There are several sources of information about the year end.

1. Guidance on Tax matters on our website
We have a guide here on the tax saving opportunities that are possible before the year end.

2. Acclivity

Acclivity (American MYOB) has a full up to date briefing on end of period procedures which you could also use to guide you.  Bear in mind that some of the nomenclature is aimed at the North American market rather than the UK.  However, all the procedures are more or less the same. 

Their seven stage procedure though is quite comprehensive. The main difference between Tricks of the Trade and the Acclivity guide is Task 3 ‘Providing Information to your Accountant’ is usually best done with print outs and pdfs of the final balances and some of the control reports. These reports then should confirm the balances on the control reports.  Don’t use the Caseware export as recommended by the instructions.  This is only used by the minority of small firm accountants in the UK.  Other programmes such as Iris, VT, Sage and KeyTime are more popular in the UK.

3. How to prepare your business for year end  

A full set of period end and year end procedures are given in the online guide we provide for MYOB and AccountEdge users. This is called Tricks of the Trade. Management accounts are usually run as either a quarter (or as a month); these are covered in section 20. You should prepare for the year end itself at section 21.  

4. Tax Planning at Your Year End 
If you want to deflate your profits legitimately in the current year and so reduce your corporation tax, make sure you do the following.
1. Do a thorough stocktake. However be very careful to devalue all of the items that can be legitimately valued at lower than they originally cost
2. Incur Expenditure. You need to at least make commitments to pay in advance of the year end to allow a proportion of the cost to be regarded as incurred in the current year
3. Deferred income. If you’ve received money that is in the nature of an advance or a deposit from a customer make sure you notify us that you wish to defer it until the following year.
4. Bad Debt provision. Make sure that your debts are all current. Those that aren’t can be subject to a provision for the following year in case they are not paid.
5. Advancing capital expenditure
6. Accruing any bonus pay
7. Accruing any holiday pay due but not yet taken at the year end
8. Allowing for Class1A Insurance on P11d benefits for 2011/12 that haven’t yet been declared to the HMRC.
9. Committing money for recruitment commission, advertising and promotional

Finally any year end corrections should be fed back into the database that you use.  This is why your accountant needs unfettered access to your raw data at every year end.

If you need advice on period end procedures please feel free to telephone us on 01422 847500.
How Much to Pay Yourself top
Get your MYOB Payroll Tables and other Functions
As the director and shareholder of your own company you can decide how much salary to pay yourself each month, in order to use your personal allowance in the most tax efficient way. As a director of your personal company you do not have to pay yourself the national minimum wage unless you have an employment contract with your company.

From 6 April 2012 the tax free personal allowance is £675 per month (£8,105 per year), so you could take a salary at that level and pay no income tax. However, the monthly thresholds for paying class 1 national insurance (NI) are: £634 for employees and £624 for employers. If your salary is £675 gross per month, your company needs to deduct NI of £4.92 and pay employer’s NI of £7.04 on top.
Read More
UK and other payroll tax tables can now be imported into UK MYOB datafiles!

UK-compatible pay calculations can now be configured within all versions of MYOB Accounting between 13 and 18 (2004 – 2009).

The tables are provided by for £35 sterling. You can obtain spare blank and template payslips and envelopes from Simple Accounting Ltd at for free.

Other functions through MYOB
There is also a wide variety of software programs that can be issued alongside MYOB and related programs.  The MYOB Usergroup is keeping a track on programs that you can use to help you. 
hese include: Webshop, consolidation, budgeting, reporting, CRM, mobile linking, hotels and advanced stock control. Read More
VAT Changes top
April Question & Answer Section top
The Government has decided to tidy up some of the areas of VAT law where a different rate of VAT may be charged on very similar goods or services.

Food & drink
All food eaten on the premises of the supplier; ‘eat-in’ purchases, are subject to standard rate VAT (20%). However, the consumption area for the food may be a communal area shared with other retailers, or tables and chairs on the pavement, neither of which are technically on the retailer’s premises. In these cases the rules are to be redefined so that such areas adjacent to the retailer’s premises will count as ‘eat-in’ areas, and the food sold to be eaten there will be standard rated.

Take-away food is subject to zero-rate VAT, unless it is hot food designed to be eaten straight away such as fish and chips. Some retailers argue that the food is only hot because is has been freshly baked, so charge zero-rate VAT. The law is to be clarified so that all hot food to take-away, other than freshly baked bread, will be subject to standard rate VAT. Read More
Q. I am about to move abroad, for what I hope will be a permanent relocation. Can I continue to contribute to my tax-free ISAs in the UK? Answer

Q. If a company pays for private medical insurance for its employees and the contract is between the employer and the insurance company, is there a tax charge on the employees? Can the company deduct the cost of the insurance from its profits? Answer

Q. I bought an investment property about 6 years ago and after expenses I have a surplus of about £250 per month. I have never declared this income or paid tax on it. How do I go about putting this right? Answer
April Key Tax Dates top
5 – End of 2011/12 tax year. Last day to use up your annual exemptions for capital gains tax, inheritance tax and ISA’s.

14 – Return and payment of CT61 tax due for quarter to 31 March 2012

19 – PAYE/NIC and CIS deductions due for month to 5/4/2012 or quarter 4 of 2011/12 for small employers.

30 – Additional daily penalties start of £10 per day up to a maximum of £900 for failing to file self assessment tax return due on 31 January 2012 (2010/11 tax return)
Need Help? top
New Clients Welcome top
Please contact us if we can help you with these or any other tax or accounts matters.

In addition, if there’s anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
If you are not already a client and are interested in becoming one, we would love to discuss how we can help and provide you with a competitive quote for our services.

See details of our Business Companion Service.
About Us top
Simple Accounting Limited offers a cost effective Business Companion service to business owners who use MYOB, Mamut, Acclivity, Solar Accounts, Quickbooks or Clearbooks. We offer a range of accountancy services despite being specialists.

‘All clients using these software packages can benefit from our support. Visit our website for a look at the resource on offer.’

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