Well it hardly feels like Spring as I
write this blog. We are told by the meteorological
office that Spring runs March, April, May but with the continuing rain, heavy
winds and even cold weather it sure feels like Winter, however Easter is only
two or three weeks away. In the
Christian calendar we are in what is called Lent, 40 days up to Easter, recreating
the 40 days that Jesus spent in the wilderness.
Of course the resurrection of Jesus at
Easter reminds us of new life which takes us to the appearance of the spring
lambs in the fields very shortly and encourage us to think that Summer is on
For those of you who run a small
business I am not sure you regard the new tax year as something to be desired
with the introduction of the new dividend tax of 7.5% tax on the dividends you
draw out of the business up to the basic rate threshold, although the first
£5000 is tax free as part of the basic rate band. This tax will become due and payable as part
of a self-assessment for the year ended 5th April 2017 and probably
not due for payment until January 2018 at the latest.
A piece of news from HM Revenue &
Customs, which has hit the national press is the digital account and the need
to file information on a quarterly basis.
HM Revenue & Customs describe it as affecting companies,
partnerships and individual tax payers who are self-employed and those who let
out a property. The idea of filing
information quarterly is to collect tax from you more quickly. The intention is this would be implemented by
2020 although at the present time many accountancy bodies and business
associations are lobbying the Chancellor for some sort of threshold below,
which quarterly reporting is not required.
We will wait and see what happens.
Certainly difficult times ahead.
In our office we have been grappling
with the new accounting standards, which have come in – commercial
organisations are now subject to the Financial Reporting Standard 102 and FRSSE
2015, which will mean different changes in the layout of your statutory
accounts and disclosure requirements. A
very small business does have the option of switching to what is called micro
accounting, Financial Reporting Standard 105, which does reduce disclosure
although the amount of time which my firm would need to spend on your accounts
is not that significantly reduced. Certainly
if you are a small company and you would like to use micro accounting, then do
let me know. In some ways I am against
it as it does give reduced accounts and disclosure information to the client as
to how their business is progressing and how their income and expenditure is
allocated and spent within the financial statements.
If your concern is only really the
bottom line of tax payable then micro accounting may be for you.
As far as Charities are concerned we
have this one year gap interlude where Charities have to report under the Financial
Reporting Standard for small entities SORP
January 2015, which does bring a few different disclosures from the old SORP
However from accounting periods
beginning 1st January 2016 Charities move over to their own FRS 102
SORP which does bring more significant changes.
As a firm we are tending to move Charity
clients to FRS 102 sooner than later as it seems little point in just using
reduced disclosure for one year, it would be far better to get clients used to
the new standard.
If you’re a buy to let landlord then obviously
the changes which will come into effect in April 2016 are somewhat
horrific. Thankfully the reduction in
the amount of mortgage interest tax available for deduction does not start to
kick in until April 2017 and is phased in over a few years, so if you are a
higher rate tax payer and you find that the loss of this interest relief will
bring a net loss in your buy to let calculations then you do have some time to
consider changes such as incorporation.
The introduction of the new additional
stamp duty for second homes is also a big factor in all of these considerations.
Another major issue commencing in
April is that you can now receive £1000 worth of interest tax free. Banks and building societies are moving to
paying interest gross. This does begin
to take away the benefits of ISA’s if you are a small tax payer.
Our office staffing remains fairly
constant at the present time although Mike continues to be away with a long
term illness, which does bring an extra challenge to the rest of us. Sebastian has settled well into the office as
a right hand man to me and accounts manager working alongside Nicholas. I am pleased to report that Tina has recently
completed stage 3 of the association of accounting technician examinations and
is going to move onto stage 4 later in the year. Jacob is making great progress in his ACCA
studies and hopes to move to the professional stage in the Summer.
One of the great changes in our office
in the coming weeks is the move to a paperless office! I am sure this will not happen overnight but
the introduction of new software does enable us now to save everything
digitally without the necessity of lots of files. One of the great benefits of this new system
is I will no longer have to carry large files home or to clients premises
saving considerable expense in Osteopath/Chiropractor bills!
I hope this Newsletter finds you
well. If you have any particular
problems in areas of taxation please do not hesitate to let us know. Speak to either myself, Nicholas or Sebastian.