Self-employed Class 2 National Insurance will not be scrapped

The government has decided not to proceed with plans to abolish Class 2 National Insurance Contributions ( NICs) from April 2019.

Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.

In a written statement to MPs, Robert Jenrick, Exchequer Secretary to the Treasury, stated that:

“This change was originally intended to simplify the tax system for the self-employed. We delayed the implementation of this policy in November to consider concerns relating to the impact on self-employed individuals with low profits. We have since engaged with interested parties to explore the issue and further options for addressing any unintended consequences.”

A significant number of self-employed individuals on the lowest profits would have seen the voluntary payment they make to maintain access to the State Pension rise substantially. Having listened to those likely to be affected by this change we have concluded that it would not be right to proceed during this parliament, given the negative impacts it could have on some of the lowest earning in our society.”

Internet link: Parliament written statement

 

The benefits of filing your tax return today

As we say goodbye to a lovely bright summer, now is a good time to shine the light on your finances and file your tax return early to avoid the winter blues.

The one good thing about the tax return deadline is that it always remains the same, which means that a little bit of organisation and the help of your accountant, you should be able to avoid facing penalties by maintaining easily accessible and up-to-date records of your income and expenses throughout the year.

Yet people still leave it until the last minute – 2.6 million taxpayers had still not filed their return two days before the 31st January 2018 deadline.

File now, pay later

Calculating your tax liabilities and filing your return now will allow you time to start budgeting and managing your cash flow, and to plan for paying any tax you may owe. Speeding through your tax return at the last minute increases the risk of mistakes being made, and HM Revenue & Customs has declared it will – and does- issue fines for errors. If you pay your tax bill late, HMRC will charge you interest and possibly even late payment penalties. Filing your tax return early does not mean you are obliged to pay any tax liability before the 31st January.

Get a tax refund sooner

Refunds of tax can often arise for employees or directors when HMRC has made errors with its tax codes. Also, it is not unusual for building subcontractors operating under the Construction Industry Scheme to receive tax refunds.

Therefore, the earlier you file your tax return, the sooner any refund you may be eligible for will be processed. So why wait until January when refunds usually take longer to be issued as this is HMRC’s busiest time?

We can help file your tax return 

Tax has become an ever-changing and increasingly complex field and unless you have expert knowledge, you may be left bewildered and miss out on all the reliefs you are eligible for. Without the help of an advisor, you could end up paying too much tax without realising, or accidently pay too little and risk an investigation.

So why wait, call our Tax Partner Simon Odam  01932 868 444 today, beat the deadline and be safe in the knowledge that you can be relaxed about your tax.

 

Team – WT

Wellden Turnbull staff thoroughly enjoyed participating in the Mundays 5km Fun Run on the 9th May 2018 in Bushy Park. This annual event raises awareness and money for The Princess Alice Hospice.

Team WT achieved some great times and there was a fantastic team spirit from all participating. Well done everyone, see you next year!

HMRC nets record £5.3bn in inheritance tax

The revenue authority’s inheritance tax take has increased by 13% compared to the £4.7bn collected in 2016-17.

HMRC collected a record £5.3bn in inheritance tax in the year to February 2018, according to a private client law firm.

The inheritance tax threshold freeze at £325,000 has meant that more families are being subject to tax bills on their inheritance following several years of residential property price inflation.

No one wants their children or other dependants to have to pick up hefty inheritance tax bills, so it is important to plan ahead as early as possible how to pass wealth onto children and grandchildren. We can help you with this.

Family and Children Tax Planning

Wellden Turnbull Budget Seminar

The Wellden Turnbull budget seminar with Dominic Raab, MP for Esher and Walton and Robin John, tax partner at Wellden Turnbull was held at the Cobham Curve on Friday 24th November.  Dominic gave a presentation on the state of the UK economy and key budget measures.  Robin John spoke about the budget including sources of revenue and where the money goes! Did you know debt interest is the fourth biggest expenditure!  Robin also spoke about potential new taxes for non UK owners of UK commercial property.

Delegates received responses to a wide variety of questions ranging from VAT, stamp duty and issues relating to Brexit.

If you would like to watch Robin’s presentation please click here

Employee mileage claims

In most businesses an element of business travel is involved, employees and employers can be confused about how to reimburse employees (or even themselves) for the fuel they use to travel for business purposes.  The guidance I am outlining below only applies to employees using their own cars – company cars have different rules.  We are also only dealing with fossil-fuelled cars here (including hybrids) rather than purely electric vehicles (which include electric cars with a small petrol motor to charge the battery to get you home such as the BMW i3).

Wellden Turnbull Limited is a professional firm of accountants based in Cobham, Surrey.  We specialise in Small and medium-sized businesses and have a number of specialities including Tax planning, Statutory compliance, and day-to-day business assistance.   If you require assistance with this or any other subject area please contact either me or one of my team for tailored advice.

Corporate tax deductions

This is a tax-deductible expense, which makes (I will use a Limited Company for my examples) up part of the taxable profit at the end of a year – importantly this means that you do not need to make any claims to HMRC in order to get the tax deductions.

In order to get the corporate tax deduction, HMRC requires you to use the official mileage rates. The way to do this is a simple formula:

<miles travelled> x <mileage rate> = <amount to reimburse to employee>.

For example, if I travel 100 miles in a car, I would claim 45 per mile which would mean I would be reimbursed £45 and the company would get a taxable deduction of £45.

Most people who are office-based will find that the above example will apply.  Some people, such as mobile workers, or salespeople may travel significant distances every tax year (6 April – 5 April).  If it is the case that they travel over 10,000 miles then every mile over 10,000 must be reclaimed at 25p per mile rather than the higher 45p per mile.

VAT reclaims

If your company is VAT registered then you may be able (there are certain conditions which mean you cannot reclaim the VAT) to reclaim the VAT on the mileage reclaim.  In order to reclaim VAT, in most circumstances, a VAT receipt for fuel will be required alongside the claim.

You will not be entering this VAT receipt into your accounting records, nor will you reclaim the VAT detailed on that receipt.  This is evidence that the fuel used has been purchased ‘VAT paid’.

Frustratingly, the VAT element is not as simple as the Corporate tax deduction.   HMRC says that only a certain element of the 45p (being the fuel element, as the whole amount is a combined fuel and wear and tear allowance) is within the scope of VAT – meaning you can claim it back in your VAT return.

You, again, will need a different set of VAT mileage rates from HMRC (https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016)

This is to calculate the VAT element of the mileage reclaim – 45p/25p is considered the Gross (or total including VAT) amount of the reclaim.

Furthermore, you will need more information about your car, specifically the cylinder size (usually the engine size but be careful as manufacturers can sometimes round 1,990cc to 2l when advertising) and fuel type (Petrol/Diesel/LPG).

I will use 2 examples here: one petrol and one diesel.

Petrol Car – 1.4l (1,390cc)

If I travel 100 miles in this car, I apply for (with a VAT receipt) and receive my reimbursement of £45 – nothing more to do from an employee/director side here.

The company records this a little differently:

  1. we need to work out the VAT element of the gross amount :
    <number of miles> x <VAT fuel rate> = deemed fuel gross amount inclusive of VAT;
    100 x 11p = £11.
  2. We need the VAT element of this:
    <Gross amount> x ( <VAT rate in whole numbers>/ <VAT rate in whole numbers + 100>) = VAT element
    £11 x (20/120) = £1.833333 (round up to the nearest penny for VAT)so £1.84.
  3. split the original £45 into Net (pre-VAT total) and VAT:
    Net = £45 – £1.84 = £43.16
    VAT = £1.84
    Gross = £45.
    You should include these on the respective parts of your VAT return by recording the VAT/Net split appropriately in your accounting software.

For completeness, here is the same example with Diesel cars:

Diesel Car – 2.2l (2,100 cc)

If I travel 100 miles in this car, I apply for (with a VAT receipt) and receive my reimbursement of £45 – nothing more to do from an employee/director side here.

The company records this a little differently:

  1. we need to work out the VAT element of the gross amount:
    <number of miles> x <VAT fuel rate> = deemed fuel gross amount inclusive of VAT;
    100 x 12p = £12.
  2. We need the VAT element of this:
    <Gross amount> x ( <VAT rate in whole numbers>/ <VAT rate in whole numbers + 100>) = VAT element
    £12 x (20/120) = £2.
  3. split the original £45 into Net (pre-VAT total) and VAT:
    Net = £45 – £2 = £43
    VAT = £2.00
    Gross = £45.
    You should include these on the respective parts of your VAT return by recording the VAT/Net split appropriately in your accounting software.

Other points to note

  • As a matter of course, employees should keep a mileage log – you can only claim for business mileage – this does not include a commute to a permanent place of work.   Here our employees tend to go out to client sites for a week or so, so would record each day trip on their expense claim detailing the start and end point of their trip and the miles they are claiming.  It would be wise to assume anyone checking your mileage claims will sense check them against google maps or an online route planner.
  • Mobile workers may want to keep a mileage log diary in their car – a photocopy of the appropriate page attached to a monthly mileage claim is sufficient.
  • If you start your journey from home you MUST remove the miles you would usually do to get to work.  For business mileage claims, you should assume your starting point is your main place of work.  If you are visiting a site that is closer to home than your office is then there is no mileage claim to be made.
  • When checking against a route planner, it does not take precedence over the miles travelled.  A standard route calculated by a computer, after the event, will not take into account diversions or traffic.  But remember that a reasonable route from Heathrow Airport to Gatwick Airport by car would not include a stopover in Glasgow. That doesn’t mean to say that if you were called to Glasgow halfway on your way to Gatwick that you wouldn’t include the additional diversionary miles in your now new mileage claim to Scotland, which google maps wouldn’t reproduce in a route plan.
  • Always document your expense claims – they make up part of your statutory accounting records and every tax-deductible expense must have reasonable supporting documentation – any expense that doesn’t may be reclassified as personal expenditure or loans by the tax man.
  • If you are reclaiming the VAT, get a VAT receipt for fuel, and make sure it is current.  you are trying to support the purchase of the fuel you have used, so a receipt from 2 years ago will not be considered appropriate evidence.
  • You cannot mix and match company fuel allowances and employee mileage claims.  They are mutually exclusive.  If you have a company car with a fuel allowance, you cannot reclaim anything and the tax is dealt with differently.  If your company car is unavailable and you need to use a privately owned car, then in that instance this guidance applies to you – you must not reclaim petrol receipts as you may do with your company car.
  • Don’t forget that using a car for business purposes falls into a different insurance category – if you only have Social, Domestic, Pleasure and Commuting cover then you are not covered for business travel and are effectively driving around uninsured.
  • The mileage allowance covers an element of wear and tear – not just fuel.  This is a contribution towards tyre/brake wear, servicing costs, insurance etc.

Finally

HMRC have outlined what they consider to be acceptable tax deductions for mileage reimbursements.  That does not mean you cannot pay whatever rate you choose (if you pay less then you may have an issue with staff going forward, so I would recommend you consider these to be the minimum rates).  You can pay more generous rates, however, you will only get a tax deduction on the proportion of those rates as detailed above.  depending on the number of miles and additional generosity, you and your employees may have other tax issues to consider.

The general guidance above is given without prejudice, and should not be taken as advice that applies to your circumstances.  Every company/business is different and there are complexities in the rules that I have not covered.  Wellden Turnbull Limited accepts no responsibility as to how you use or apply the information above.

All of the points I have outlined above are for guidance on the principles only, the rates used were up to date on the day of writing but you should refer to official sources for up-to-date rates.  The advice given is based on the tax rules at the date of writing and may not be updated.

If you want to share my guidance, please feel free to do so using the original link to my website and give me credit for the work.

24/10/2017 – Oli Spevack FCCA ACA, Partner

Wellden Turnbull Limited,
Munro House,
Portsmouth Road, Cobham,
Surrey KT11 1PP

E: o.spevack@wtca.co.uk
D: 01932 584 439
T: 01932 868 444

A week’s work experience

We were delighted to welcome Grace to Wellden Turnbull for a week’s work experience.  Grace hopes to study Accountancy at university, before embarking on a career as an accountant.

My week on work experience

On the 10TH July 2017, I started my work experience at Wellden Turnbull Chartered Accountants. Coming into the experience, I had no idea what to expect, but was quite excited about it all.

On Monday, I spent most of my day getting to know everyone and learning where everything was. This includes my own desk, the printer and of course the kitchen. I immediately felt welcomed by everyone and was looking forward to getting to know everyone a bit more in the upcoming week. Also on that day, I had my first piece of work. This involved me using excel, which I was not too experienced on. This meant I was able to extend my knowledge, not only with more of an understanding of the business, but also skills on the computer which I will be able to use later in life.

On Tuesday, I spent my first day in one particular department. Here, I was with Ellie, working in Accounts and Audit. My first hour was spent shadowing Ellie. By doing this, I was learning exactly what it’s like being an accountant. This enabled me to gather a real understanding into what goes on, on a day to day basis within the firm. Next, Ellie gave me some work to complete in order to get some accounts started. This work was all on software called Caseware. This, to begin with, was completely alien to me, but after a quick tutorial from Ellie I was on my way to finishing the job she had planned for me. This, again, allowed me to gather knowledge into not only the business, but also the software that I may need in my future career.

The following day I was in the same department, Accounts and Audit, but instead was with Emma. Here, I was looking through spreadsheets and trying to analyse the numbers and bits of data I was given. This required an eye for detail and lots of concentration, areas I usually tend to fall on. However, this seemed more of a challenge and for that reason I actually ended up pushing myself and trying my hardest. All of which are skills I would need when it comes to working in any job, particularly those of an accountant.

Thursday came and I was moved to another department, the Tax department. On this day, I spent my day doing some work for Richard. Coming into work on Thursday, I was beginning to realise just how tiring full time work can be. But due to everyone’s friendly attitude and lively mentality I really was enjoying it. On Thursday I was given the job of looking through bank statements from a particular client of Wellden Turnbull’s and was making sure all the numbers put in, were correct. After going through pages and pages of different amounts of payments, my next step was to put all of this into a spreadsheet. However, due to a typical technical difficulty this was not possible. However, this actually made me realise what exactly can happen in an office and how this can impact the time frame in which you can complete a given task. Due to this Helen then gave me some further work regarding all the graduates who are applying for trainee positions within the firm. This gave me an insight into exactly what kind of grades I would be competing with and what types of degrees are available to me, considering I am coming very close to sending off my personal statement.

My last day arrived and it was actually quite sad to see it start coming to an end. My final day was spent with Bobbi who worked in Credit control. With her, I was working on finding and printing all the invoices which need to be sent off to any clients who currently owe the company money. This allowed me to gather an understanding to yet another piece of software, advance. I then focused on getting everything into a letter, stamped and then sent off. This was done both manually and by hand.

Overall, I have really enjoyed my work experience. My entire week has managed to set me off with skills, that are not only required in what I want my future career path to be, but also in everyday life. I have spent my week with some really lovely people who have been kind enough to spend time with me and help broaden my knowledge of the business. The experience as a whole has taught me a lot and I hope to be able to showcase some of my new skills when I head off to university.

Equality and Diversity

Diversity data survey –

Wellden Turnbull is committed to encouraging equality and diversity among our workforce and eliminating unlawful discrimination.

We do not discriminate against anyone on the grounds of age, colour, race, ethnic or national origin, sex, sexual orientation, religion or disability.

The organisation is also committed against unlawful discrimination of customers or the public.

Wellden Turnbull always aims to treat everyone with respect, consideration and for each employee to feel respected and able to give their best.

We have just completed our annual diversity data survey.  We are pleased to confirm the results of the survey reflect our company policy on equality and diversity.

 

 

Self assessment – Top ten late filing excuses 2016

It’s that time of the year again, and you should either have submitted, or be in the process of submitting your 2015-16 self assessment tax return in time for the deadline in 15 days time (31 January 2017).  Remember you need to have paid any tax that is due by the same deadline!

At Wellden Turnbull our specialist tax department is in full swing helping our clients meet their self assessment filing deadlines – so if you find yourself thinking of a creative excuse as to why your return is late, give us a call to see if we can help minimise the pain of your tax return going forward. Late tax returns and payments of tax attract penalties and interest, regularly mounting up to more than the cost of a professional preparing your tax return for you – it really is a no brainer. To find out more about our personal tax services click here.

HMRC have released the top 10 excuses used last year by tax payers for late returns – so in reverse order there they are:

  1. “My tax return was on my yacht…which caught fire”
  2. “A wasp in my car caused me to have an accident and my tax return, which was inside, was destroyed”
  3. “My wife helps me with my tax return, but she had a headache for ten days”
  4. “My dog ate my tax return…and all of the reminders”
  5. “I couldn’t complete my tax return, because my husband left me and took our accountant with him. I am currently trying to find a new accountant”
  6. “My child scribbled all over the tax return, so I wasn’t able to send it back”
  7. “I work for myself, but a colleague borrowed my tax return to photocopy it and lost it”
  8. “My husband told me the deadline was the 31 March”
  9. “My internet connection failed”
  10. “The postman doesn’t deliver to my house”

 

The full HMRC post can be read here