Wellden User, Author at Wellden Turnbull Accountants

Government outlines productivity plans

July 13, 2015 Posted by Wellden User

A comprehensive plan to improve the productivity of UK businesses has been published by the Treasury.

The policy document identifies 2 areas that the government regards as key to stimulating productivity in the UK: long term investment and a dynamic economy.

Long term investment

The government has the aim of cutting £10 billion of red tape by 2020. Long term investment will be generated through tax reform, innovation and upgrading infrastructure:

Business investment
Lower corporation tax rates, lower personal taxes and more generous capital allowances will support long term business investment.
Skills
Increasing emphasis on apprenticeships and building a globally-recognised university system will combat the skills shortage.
Infrastructure
Upgrading transportation, energy and digital infrastructure is essential to bringing the UK economy into the 21st century.
Innovation
The government will continue to invest in scientific and technological innovation.

A dynamic economy

Labour market reforms, increased support for exports and deregulation have been identified by the government as essential to promote a dynamic economy:

Market reform
Planning permission reforms, lower state welfare and more employee benefits such as free childcare have been outlined by the government.
Finance
A New Bank Unit within the Financial Conduct Authority and Prudential Regulation Authority will ensure finance is provided for productive investments.
Competition
The government has committed itself to cutting £10 billion of red tape and exporting £1 trillion worth of goods and services by 2020.

Business Secretary Sajid Javid said:

“This is a bold and ambitious plan, to achieve our vision of a more dynamic economy, with a business environment that fosters long-term investment, raising our living standards and become the best of all the major economies by 2030.”

Daniel Godfrey, chief executive of The Investment Association, said:

“It is crucial that Britain solves its productivity problem so that the economy can deliver rising standards of living and healthier public finances.”

Talk to us today about improving your business processes.

Dividend tax credits replaced by new allowance

July 10, 2015 Posted by Wellden User

Dividend tax credits will be replaced with a new £5,000 tax-free allowance from April 2016, the Chancellor George Osborne announced during his Summer Budget statement.

Under current rules dividend income is reduced with tax credits. Basic rate taxpayers currently pay no tax on dividend income while higher rate taxpayers are charged 25% and additional rate taxpayers 30.55%.

From April 2016, investors will pay no tax on dividend income below £5,000 but income exceeding the allowance will be taxed at the following rates:

Basic rate taxpayers: 7.5%
Higher rate taxpayers: 32.5%
Additional rate taxpayers: 38.1%.

The dividend allowance will be in addition to the £1,000 personal savings allowance for income such as bank interest.

Sean McCann, chartered financial planner at NFU Mutual, urged investors to review their stocks and shares portfolio:

“A new £5,000 tax-free allowance on dividends sounds great but there will be winners and losers. Basic rate taxpayers won’t be any better off. In fact, basic rate taxpayers with more than £5,000 in dividend payments will start paying tax on their dividend income.

“What is clear from today’s announcement is that anyone with stocks and shares should review their investments to make sure they aren’t paying any more tax than they have to.”

However, Anthony Thomas, chairman of the Chartered Institute of Taxation’s Low Incomes Tax Reform Group, welcomed the move:

“For some the new dividend allowance will offer a useful simplification, although it is possible that some people on modest incomes will now have to start paying tax on their dividend income and be brought into self-assessment in order to collect what is due from them.

“That apart, the dividend allowance together with the £1,000 personal savings allowance will encourage more individuals to save outside of the constraints of an ISA.”

Contact us to discuss what the Summer Budget 2015 means for you and your business’ finances.

Summer Budget Summary 2015

July 9, 2015 Posted by Wellden User

Free from the constraints of coalition government George Osborne has just delivered his second budget of the year, and the first Conservative budget in almost two decades.

In this Summer Budget, Mr. Osborne has set-out to implement some of the Tory party’s election pledges, whilst revealing the full scale of cuts ahead for both public services and welfare payments.

Recognising that not everything within this budget is necessarily of relevance or importance, Wellden Turnbull Director ‘Robin John’ took a moment to summarise what the measures could mean for you and your business, including the following:

Dividend Tax
Effective Tax Rate
Non-Domiciled Individuals
Foreign Owned Residential Property
Tax Depreciation for Goodwill
Buy-To-Let Landlords

Click on the video above to hear what Robin John has to say about the Summer Budget.

Summer Budget 2015: First Reactions

July 8, 2015 Posted by Wellden User

The Chancellor George Osborne has delivered the first all-Conservative Budget statement in almost 20 years. Here is a collection of snap reactions from the UK’s leading business groups:

Federation of Small Businesses

John Allan, national chairman of the FSB, said that the Chancellor has unveiled a “mixed bag of proposals”:

“There was further support to reduce corporation tax, fix the annual investment allowance and boost regional growth, where investment in roads will be particularly well received.

He agreed with the emphasis placed on boosting productivity but voiced concern about the introduction of a national living wage:

“However, even though offset by a welcome increase in the employment allowance, some will find the new national living wage challenging. Changes to the treatment of dividends will also affect many of our members.”

Confederation of British Industry

CBI director general John Cridland agreed that it was a “double-edged” Budget for businesses:

“Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver.”

British Chambers of Commerce

John Longworth, director general of the BCC, was more positive about the Chancellor’s statement and praised his “genius balance of politics and economics”:

“The Chancellor has confirmed that Britain is open for business. Firms across the UK will cheer not just the new permanent Annual Investment Allowance, further Corporation Tax reductions, and lower National Insurance for small businesses, but also commitments to childcare and higher education that help them employ Britain’s best.”

He added that businesses will want assurance that the move to create a national living wage would follow an “evidence-based approach that will minimise the impact on small businesses for whom the adjustment will be harder.”

Institute of Directors

Simon Walker, director general of the IoD, said that the Chancellor’s announcement of a new living wage was “dramatic” but argued that businesses have been sufficiently compensated in other areas:

“In return [for a national living wage], companies have been provided with a cut to corporation tax and an increase in the employment allowance. We should not understate the boldness of this move, and many businesses will have been taken by surprise, but the IoD accepts that after several years of slow wage rises, now is the time for companies to increase pay.”

To read the announced changes in full, please click here to download a free copy of our Summer Budget Summary

Standard annuity rate hits 2015 high

July 2, 2015 Posted by Wellden User

The standard annuity rate has increased 5.6% since the 12 May 2015, research by My Pension Expert has found. This is the highest standard annuity rate in 2015 so far.

The research shows that a 64 year-old with a £100,000 pension would earn £303 a year more than they would have 7 weeks ago.

The best available income on 12 May was £5,370, compared to a possible £5,673 on 30 June. This adds up to an extra £6,060 over the course of the average 20-year retirement.

My Pension Expert attributes the rising rate to an increase in gilt yields. The yields on gilts, which are linked to annuities, rose in June after policymakers hinted at a future rise in interest rates.

The figures will come as good news for standard annuity holders which have seen rates plummet since the government’s pension reforms were announced. Rates fell 10% between August 2014 and January 2015 before hitting an all-time low in April 2015.

Scott Mullen, director at My Pension Expert, said:

“The 5.5% rise in the standard annuity rate is great news for those considering purchasing an annuity, as it could lead to a significant increase in their retirement income. It demonstrates just how volatile the market is and why it requires constant monitoring if you’re to make the most of your pension funds.”

Contact us to discuss your options in retirement.

Flat rate state pension causes confusion

June 25, 2015 Posted by Wellden User

A third of over 50s say they do not have a clear idea about whether they will be better or worse off under the new flat rate state pension, according to Saga.

The insurance provider surveyed 10,010 people aged 50 and over about the introduction of the flat rate pension system in April 2016 and how they feel the changes will affect them. The results show significant confusion about how the new system will work and the effects on people’s standard of living.

The key findings of the survey are:

25% think the new system will be generous
16% think they will definitely receive the new pension
33% think they will definitely not receive it
7% knew how to make extra national insurance top up payments to secure a better pension.

People will be eligible for the new state pension if they are a man born after 6 April 1951 or a woman born after 6 April 1953 who has at least 10 qualifying years on their national insurance record. The government hopes the new system will boost the retirement income of the low-paid and self-employed, who typically fair less well with the current system.

Commenting on the research, Saga’s Paul Green said:

“Our research shows great confusion about changes to the state pension. Whilst there are a minority of people who are savvy who know how to make the most of what is on offer, it should not just be for [sic] savvy few to benefit.

“The government needs to do much more to raise awareness of the ways that people can boost their state pension.”

Get in touch with us today to start making the most of your pension.

Start-ups to hit record number in 2015

June 24, 2015 Posted by Wellden User

The number of new start-ups starting business in 2015 is expected to reach a record 600,000, according to StartUp Britain.

Figures from the Centre for Entrepreneurs, which administers the scheme, show that annual start-up rates have increased each year from 2011.

According to the Centre for Entrepreneurs, there were:

440,600 new start-ups in 2011; and
581,173 in 2014.

The campaign is estimating that this trend will continue and lead to a record 600,000 new businesses setting up this year.

The government-backed national enterprise campaign, which is now entering its fourth year of operation, will begin a national tour to inspire and support budding entrepreneurs. The tour is set to visit 25 locations across the country and will consist of opportunities for one to one advice and workshops on a variety of topics.

Matt Smith, director of StartUp Britain, said:

“Since StartUp Britain launched in 2011 we have seen record breaking numbers of people each year starting businesses, showing that the entrepreneurial spirit within Britain continues to grow.”

Contact us today to talk about starting your business

Summer Budget must provide stability and certainty, says CBI

June 22, 2015 Posted by Wellden User

The chancellor should use the Summer Budget on Wednesday 8th July to ensure that businesses of all sizes have the stability they need to drive growth, the Confederation of British Industry (CBI) has said.

The director general of the CBI, John Cridland, used a meeting with the chancellor to put forward a number of potential measures for inclusion in the Budget. The proposed measures are focused on boosting investing, sealing in deficit progress and creating jobs.

The CBI is calling for:

a plan to boost productivity through increasing firms access to long-term capital
the introduction of a business tax roadmap to provide clarity on the range of current business taxes
details on the fiscal rules regarding future deficit reduction
an increase in the Annual Investment Allowance to £250,000 from 2016.

John Cridland said:

“Firms of all sizes, especially ambitious, disruptive and growing ones, need to see the government build on welcome steps in the last Parliament to support investment.

“It should now act now to promote stability and certainty in tax policy through a commitment to introduce a roadmap which covers all business taxes.”

We can help you with your business tax. Contact us today.

HMRC relaxes PAYE late filing penalties

June 18, 2015 Posted by Wellden User

HMRC will begin relaxing automatic late filing penalties for people who send PAYE information late, officials have indicated.

The revenue said it would take a ‘proportionate approach’ instead of issuing automatic penalties in the event that an employer reports PAYE information late.

Investigations will now be concentrated on ‘the more serious defaults on a risk-assessed basis’. The move will allow HMRC to focus on serious cases of non-compliance, and to invest resources in educating employers on compliance issues.

The decision reflects the conclusions of a policy document published by HMRC in February 2015. The report argues that small automated penalties are costly and resource intensive for the revenue to pursue, and detract from its ability to pursue serious compliance failures.

The news comes after a leaked HMRC memo revealed that the revenue would no longer be investigating each individual late filing of self-assessment returns. Officials will now waive the £100 late filing penalty if people provided a ‘reasonable excuse’ on appeal.

Colin Ben-Nathan, chairman of the Chartered Institute of Taxation’s Employment Taxes Sub-Committee, welcomed the announcement:

“The requirement on employers to send PAYE information in ‘real time’ has proved difficult for some employers to comply with, especially the smallest and those whose employees have unpredictable working hours. It has imposed new and sometimes onerous obligations on employers.

“HMRC are right to have taken a pragmatic approach so far to the levying of penalties, initially not imposing them at all for smaller firms and now promising to concentrate on the most serious defaults.”

We can manage your payroll for you. Contact us today for more information.

Business rates review must create ‘fair’ system, says CB

June 12, 2015 Posted by Wellden User

The government’s ongoing business rate review must aim to create a ‘simple, fair and competitive system’, the Confederation of British Industry (CBI) has said.

The business organisation argued that the current system limits investment and impedes competition. It said a new system should be refocused onto promoting investment-led growth.

The CBI is calling for:

More frequent property valuations
This will create a fairer system capable of reacting quickly to the changing economic environment. The CBI suggests introducing a 3-year evaluation period.
Raising rates in line with the consumer price index (CPI) instead of the retail price index
This will ensure that business rates do not rise faster than the official CPI inflation rate. According to the CBI, the change would save ratepayers £1.5bn.
Exempting properties with a rateable value under £12,000 from paying business rates
This will remove the cost of business rates for many small businesses. The CBI also argues that this would also enable efficiency savings which could be reinvested into improving the system.

Katja Hall, deputy director general of the CBI, said:

“The current business rates system harms businesses by relying on a decades-old model that no longer reflects economic conditions. That’s made life tough for retailers in particular.

“These reforms are long overdue so it’s good that the government is following through on its commitment to look closely at how it can help alleviate the most onerous aspects of business rates.”

We can help you plan your business taxes. Contact us for more information.

Retired households face higher tax bills

June 10, 2015 Posted by Wellden User

Retired households face an average annual tax bill of £6,500, research by Prudential has found.

Analysis of data from the Office for National Statistics reveals that pensioners pay thousands in direct and indirect taxes each year.

The figures show that the average retired household income rose to £21,800 in the 2012/13 tax year. However, the amount of tax paid by retired households also increased and pensioners are now paying over 30% of their income to the taxman.

In the 2012/13 tax year:

the average retired household paid £3,900 in indirect taxes and £2,600 in direct taxes
indirect taxes (including VAT and duties) accounted for 60.2% of the average retired household’s tax bill
direct taxes (including income tax and council tax) made up 39.8% of the average tax bill
VAT was the biggest tax item, accounting for 8.2% of the average tax bill
income tax accounted for 7.4% of the average tax bill.

The Treasury estimates that the newly introduced pension freedoms could lead to an increase in tax revenue of £320 million during the 2015-16 tax year and £1.22 billion in 2018-19. The research highlights this as further proof that people approaching retirement need to factor tax into their plans.

Stan Russell, retirement income expert at Prudential, said:

“Retired households make a major contribution to the Exchequer every year whether it is in direct or indirect taxes and clearly it is not possible to avoid all taxes simply because you’ve stopped working. It’s a stark reminder that not all the income you receive in retirement will be yours to spend as you like.

“Irrespective of the new pension rules and their tax implications, the fundamental principles remain true – the best way to secure enough income for a comfortable retirement is to save as much as possible as early as possible in your working life.”

We can help you minimise your tax liability in retirement. Contact us today