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September 2015

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To September’s Tax Tips & MYOB News.

Important: Our Bank Details are changing.
Please note that from Monday 21st September 2015 our sort code is changing to 60-83-01.

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September 2015
· Asset Register
· The future for intermediaries
· When tips are taxable
· Paying inheritance tax
· September Questions and answers
· September Key Tax Dates
Asset Register top
Clients sometimes ask us if they need to keep an asset register. 

Annual Investment Allowance (AIA) allows us to reclaim the full cost of all operational assets against your Corporation Tax (CT).  Since AIA it has been far less important to track the depreciation against individual assets for smaller firms.  The reason is that depreciation is applied in aggregate while the asset costs are usually given full tax relief up front. The income from any sale of an asset is fully taxable.

There is an issue about the calculation of deferred tax.  This is the tax chargeable to the accounts on the net book value (NBV) of assets which could be sold in advance of being fully depreciated.  That’s a real mouthful isn’t it?  Welcome to my world.  But with relatively small aggregate NBVs and low CT rates this issue is less and less important.  We tend to avoid the issue by depreciating in line with the tax treatment anyway.

Upshot is that the classic fixed asset register is not a lot of use for a smaller company.  Operational asset lists are mainly important for security and insurance purposes.  If you had to make an insurance claim then it would be fine to base it on the cost printouts of past Capital expenditure from your Accountedge system. 

The following are important:
  • Keep the paperwork:  Make sure that the original paper invoices for significant purchases are filed somewhere.
  • Record your asset purchases in complete detail in your Accountedge / MYOB software. 
  • Register of properties: Keep a list of the property that you or your company own incl details about lettings, agricultural or business uses.  We have a standard model which you can copy.  In particular we need to be able to see original probate/purchase costs, past improvement costs and linked mortgage values outstanding.  
The future for intermediaries top
When tips are taxable top
The Summer Budget 2015 contained an announcement that the government is to consult on proposals to improve the effectiveness of the existing intermediaries’ legislation, commonly known as IR35. The reason for this review was given as the perceived unfairness that two people could be doing the same job and pay very different levels of tax depending on how they are engaged. A consultation document has now been published (Intermediaries Legislation (IR35): discussion document), which sets out the rationale for change, the options to be discussed and the likely next steps. Because of the interaction between allowances available and rates paid in the corporate and personal tax systems, and the absence of NICs on investment income Read More Confusion often arises regarding tips and gratuities as the tax and NIC treatment depends on how they are paid to the recipient.

Cash tips handed to an employee, or left on the table at a restaurant and retained by that employee, are not subject to tax and NICs under PAYE, but the employee will need to declare the income to HMRC – HMRC often make an adjustment to the employee’s PAYE tax code number to reflect the amount likely to be received during a tax year so any liability is collected via the payroll. By contrast, if an employer passes tips to employees that are either handed to him (or the employees) or left in a common box/plate by customers, the employer must operate PAYE on all payments made. Read More
Paying inheritance tax top
September Questions and answers top
Various rules exist for determining the time for payment of inheritance tax (IHT). In certain circumstances it will be possible to pay in instalments, and it is even possible to settle a liability by transferring ownership of assets to the Crown (for example, a valuable painting may be donated to a national museum in lieu of an inheritance tax bill).

Unless it can be paid in instalments, IHT is generally due for payment as follows: – Chargeable lifetime transfers: Tax is due six months after the end of the month of the transfer. But if the transfer is made between 6 April and 1 October in any year, the tax is due at the end of April the following year.
– Estates: The personal representatives must pay the tax at the time that the IHT account is sent to HMRC, and this depends on the length of time it takes to sort out the estate.
– PETs: Tax due on a potentially exempt transfer (PET) that becomes chargeable because of the transferor’s death within seven years needs to be paid six months after the end of the month in which the death occurs. Read More
Q. I have recently registered for VAT. What is the difference between ‘normal’ and ‘cash’ accounting? Answer

Q. I bought my flat in 2008 and lived in it until 2013 when I moved into my now wife’s house. The flat was in negative equity so we kept it and rented it out. Now that the housing market has improved we have decided to sell it. We plan to use the proceeds to buy my wife’s parent’s house jointly with my wife’s sister and her husband. If we reinvest the profits on the sale of my flat in my wife’s parent house, will we avoid paying any capital gains tax? Answer

Q. I am thinking of starting my own business and can’t decide whether to incorporate straight away or not. I will need to make a substantial investment in my business so it is likely that I will make a loss in the first, and maybe even second, year of trading. Is loss relief the same for sole traders and limited companies? Answer
September Key Tax Dates top
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/9/2015

30 -Closing date to claim Small Business Rate Relief for 2014/15 in England
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, Acclivity, Mamut, Solar Accounts, Quickbooks or Clearbooks.

‘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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