Tax return deadlines – Are you ready?

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tax-return-imageAs you may know, the tax return deadline is getting closer with the final date of submission and payment for electronically submitted tax returns being 31 January 2017.

Collect tax through PAYE code:

When filing a tax return you can opt to pay your overdue tax by collecting it through PAYE (This means your tax code would bechanged to collect the tax each month straight from your wages). If this is something that you are interested in, the tax return deadline is brought forward to 30 December 2016. The advantage of this is that your tax will be collected over 12 months rather than a single payment on 31 January 2017.

Please note: This only applies if the tax you owe is less than £2,000.

Late submission of tax return:

If your tax return is submitted late there are different types of penalties that you will face depending on how late it is:

Time scale Amount due
After 31 January 2017 Flat rate of £100
Three months after deadline £10 per day for 90 days (maximum £900)
Six months after deadline The higher of £300 or 5% of the tax due
Twelve months after deadline The higher of £300 of 5% of tax due

These are all on top of the previous penalty, for example if you file your tax return on 31 May 2017 you will owe £100 for the first three months plus 31 days x £10 per day = £310 meaning your total penalty would be £410 on top of the tax that is due on your late return.

In serious cases HMRC could request for you to pay 100% of the tax due on top of the original tax- meaning you would be paying double the tax you owe.

There is an option to appeal against these penalties if there is a reasonable excuse that can be provided.

Late payment of tax:

If the tax is paid late HMRC can charge interest on the tax due; at the minute this stands at 2.75% (from 23 August 2016).

As well as interest, there are also late payment penalties:

Time scale %of tax paid late
Over 30 days late 5%
Over 6 months late Further 5%
Over 12 months late Further 5%

As you can see there are many penalties that can arise if your tax return is not submitted and paid on time, therefore please try and get your tax return information to us as soon as possible so that these can be avoided.

If you would like any more advice on tax return submission, payment or calculations, please get in contact.

Jessica Cooper, Accounts & Tax 

Autumn Statement 2016

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On Wednesday 23 November 2016 our new Chancellor of the Exchequer, Philip Hammond, delivered his first (and last) Autumn Statement. 4221396001_5220447677001_5220145961001-vs

“No other major economy makes hundreds of tax changes twice a year, and neither should we” – this is perhaps the most welcome measure announced in the Autumn Statement.  In recent years the Autumn Statement has been a mini-Budget, meaning that many, sometimes significant, tax changes were being announced twice a year.  This has been problematic in terms of giving taxpayers a reduced degree of certainty regarding planning their tax affairs (plus it means I have to write an extra blog each year) so for this announcement alone, Philip Hammond gets a ‘thumbs up’ from me!

Following the spring 2017 Budget, the Budget will be delivered each autumn – spring will be reserved for a statement from the Office of Budget Responsibility to respond to their previous forecast.  The odd tweak of fiscal policy may be made each spring, if economic circumstances require it – personally I think this option has been retained so the Government are able to be more flexible in response to the future impact of Brexit (you can infer from that what you will…I’m taking it as that they have no idea what the impact will be).  I’m also hoping that an autumn Budget will give more time for us all to absorb the changes before they come into force the following April.

Our full Autumn Statement roundup can be found on our website here, but below are the main points that I think are relevant to our clients and their businesses.  A lot of the announcements aren’t new, but are instead Philip Hammond confirming that he plans to keep some of his predecessor’s policies.

Personal Tax Rates and Allowances

The personal allowance is currently £11,000 and will increase to £11,500 from April 2017.  The reduction in personal allowance for those with higher income (‘adjusted net income’ over £100,000) remains so that, from April 2017, there will be no personal allowance available where ‘adjusted net income’ is over £123,000. 

The higher rate threshold will increase from £43,000 currently to £45,000 from April 2017, for those who are entitled to the full personal allowance.

Philip Hammond confirmed his intention to keep George Osborne’s policy to increase the personal allowance to £12,500, and the higher rate threshold to £50,000, by the end of this Parliament.

Corporation Tax Rates and Allowances

The new corporation tax rates from April 2017 to March 2021 were announced at the Budget and have now been enacted – the rate will be reduced from 20% to 19% from April 2017 and a further 2% to 17% from April 2020, which will be welcomed by small and large businesses alike.

Again, this was announced in the Budget but has been kept by the new Chancellor – corporate losses (excluding capital losses) arising after 1 April 2017, when carried forward, will be able to be used against future profits from other streams.  Currently there are restrictions on how the losses can be relieved, which is restrictive for certain types of business.

National Insurance Contributions (NIC)

Previously payable by the self-employed, Class 2 NIC is being abolished from April 2018 – we knew this was coming, however what we didn’t know was how self-employed taxpayers would get entitlement to basic state pension and other contributory benefits and allowances, as payment of Class 4 NIC (also paid by the self-employed) has not in the past been ‘contributory’.  From April 2018, Class 4 NIC will become ‘contributory’ and those paying it will be entitled to state pension etc.  Those with income below the Small Profits Limit (£5,965 in 2016/17) will be able to pay Class 3 NIC, currently £14.10 per week to ‘top-up’ their entitlement.  There will no longer be the option for these individuals of voluntarily paying Class 2 NIC, for which the current rate is a mere £2.80 per week!

The Office for Tax Simplification are tasked with – you guessed it – making tax simpler.  One of their recommendations that is being implemented is the alignment of the thresholds at which employees and employers pay Class 1 NIC.

Other Payroll Matters

Having only been increased in October 2016, The National Living Wage is increasing from £7.20 to £7.50 from April 2017 and smaller increases to the National Minimum Wage are also coming in – full details on our website here

I mentioned in a blog post on 11 October 2016 that the Government have been consulting on the use of salary sacrifice schemes and on Wednesday, the Chancellor outlined the changes to be introduced from April 2017.  Salary sacrifice arrangements (other than relating to pensions, childcare, cycle to work and ultra-low emission cars) entered into after this date will no longer enjoy tax and national insurance savings – however agreements entered into before this date will remain tax and NI-free until April 2018, so subject to the administrative hurdles that have to be jumped for an effective salary sacrifice, there’s still some mileage left in them yet!

Philip Hammond continues George Osborne’s assault on company car drivers with a further 2% increase in the percentage applied to each band of company car from April 2018, and a further 3% from April 2019.  From April 2017, pure electric cars will be charged at 9%, rising to 13% in April 2018 and 16% in April 2019 – a huge increase from the 7% benefit in kind in the current year.  I can only assume this is a reaction to the amount of employers who have provided these cars to employees, and benefited from the low rate.  I do find it a little disappointing that tax incentives are introduced to encourage certain behaviours (such as the provision of electric cars) and then as soon as people actually take the Government up on their offer, it effectively gets withdrawn – this is especially harsh when it relates to company cars as many of these will be leased over a number of years and therefore the business and employees are stuck with the cars that no longer afford them the low tax charges that were in place when the vehicles were first provided.

VAT Flat Rate Scheme Anti-Avoidance

 Businesses registered for VAT under the flat rate scheme pay over VAT at a specific rate (currently between 4% and 14.5%) as determined by their type of business – it simplifies the accounting for VAT as these businesses pay VAT over to HMRC at a lower rate than the 20% they charge to customers, but do not reclaim VAT on most expenses.  For many small businesses, this can be both time-saving and money-saving.  From April 2017 a new 16.5% rate will apply to businesses with limited costs (i.e. labor-only businesses) using the flat rate scheme.  The details on which businesses will be affected by this are on our full Autumn Statement update here

Making Tax Digital

HM Revenue & Customs are consulting on various measures intended to bring the UK tax system into the digital age.  A major change is that from April 2018, most self-employed taxpayers and landlords will be required to keep their records digitally, update HMRC at least quarterly, plus submit a year end declaration.  While HMRC are keen to emphasis that this does not mean five tax returns per year, we eagerly await the details on how the proposals will work in practice when HMRC issue their response to the consultations in January 2017.

If you want to discuss any of this further then please get in touch here.

Katie Kettle, Chartered Certified Accountant

Technical Manager

 Katie Kettle Colour

VAT on Company Vehicles

If you are looking to buy a car through your VAT registered business then there are several things to consider; it can be a great tax saving idea however you must consider all of the implications. The most important point is that the VAT on the purchase of the vehicle can only be claimed back if it is used 100% for business purposes, meaning no private usage at all.

A good example of this would be a pool car. A pool car is available for use by any employee for solely business purposes during working hours and is kept on site when not in use.

You may also be able to claim all the VAT on a new car if it’s mainly used:

  • as a taxi
  • for driving instruction 


The same rules apply for commercial vehicles such as vans, lorries and tractors. As long as they are solely used for business use then the VAT can be reclaimed.

If the vehicle is not used 100% for business then you need to consider the other tax consequences such as a personal tax benefit in kind and an employer National insurance charge.

Please note a daily commute to your regular place of work is not considered as business use according to HMRC guidance.

Leasing a car

If you lease a car, you can usually claim back 50% of the VAT. You may be able to reclaim all the VAT if the car is used only for business and is not available for private use, or is mainly used as a taxi or for driving instruction.

Self-drive hire cars

If you hire a car to replace a business car that’s off the road, you can usually claim 50% of the VAT on the hire charge.

Additional costs

You can usually reclaim the VAT for:

  • all business-related running and maintenance costs, eg repairs or off-street parking
  • any accessories fitted for business use

You can do this even if you can’t reclaim VAT on the vehicle itself.

If you are considering buying a vehicle for your business or would like more details then please feel free to contact us. 

Calum Ainge, AccountantDSC_5428

Some good news from HMRC – that makes a change!

Trivial benefits provided by employers – ITEPA 2003, s 323A


gift-1420683.jpgNormally if something is trivial you would ignore it, however in this case trivial is in the eye of HMRC, not the director or employee!

From 6 April 2016 an employer can give an employee a present without putting it on a P11d (Return of Benefits) and there will be no tax or national insurance payable on it by either the employer or employee. The bonus for the employer is that they can also claim income tax or corporation tax relief on the gift as well as having a happy employee.

Sounds too good to be true, well there are some conditions:-

  • the trivial benefit must cost no more than £50
  • the benefit must not be a reward for services or in any way contractual
  • the benefit must not be cash or a cash voucher

Directors are employees so will be able to enjoy this as well. There is however a £300pa cap for them, which, if they are higher rate tax payers, would save £126 in tax & NIC if they had the gifts rather than salary.

HMRC have helpfully given the following examples (taken from their employment manual)

Example A

Employer A takes a group of employees out for a meal to celebrate a number of birthdays. Five employees attend the meal at a total cost to employer A of £240. Individual employees make different menu and drink selections. Rather than undertake a detailed analysis of the bill you should accept that the cost per head is £48, reflecting an average amount of £240/5. The benefit of the meal can be covered by the exemption since the cost for each individual does not exceed the trivial benefit financial limit.

Example B

Employer B provides each of its 100 employees with a turkey at Christmas and the total bill comes to £4,500. There are a variety of sizes. Because the employer has made a bulk order, the turkeys have not been priced up individually but would cost in the region of £40 to £60 each. Employees are able to choose which bird they have. Rather than undertake a detailed analysis of the individual benefits, you should accept that the cost per head is £45, reflecting an average amount of £4,500/100. The benefit can be covered by the exemption since the cost for each employee does not exceed the trivial benefit financial limit.

Example C

Employer C provides each member of its 25 strong work-force with a bottle of wine at Christmas. The total bill comes to £1,000. This reflects 20 bottles of wine that cost £15 per bottle provided to each of its employees, and 5 bottles of wine provided to each of its directors that cost £140 per bottle. In this case it is not impracticable to determine the cost of the individual benefit and the actual cost per item should be applied in determining whether the monetary limit has been exceeded for each employee and director. The benefit of the £15 bottles of wine can be covered by the exemption since the cost does not exceed the trivial benefit financial limit but not the benefit of the £140 bottles provided to the directors.

So just off to enjoy my wine which the directors are about to buy me because they are in a good mood and not because I am wonderful employee…………. 

If you wish to discuss this further please do hesitate to contact us on 0116 2423400 or click here. 

Denise Burley, Accounts & Tax

Thinking of buying commercial property?

Before any purchase takes place you should always take advice as tax sacommercial-buildings-5-1508697.jpgvings are there to be made. In many cases the contract drawn up by solicitors will need to be worded carefully to ensure tax savings can be considered.

The Capital Allowances Act 2001 entitles a purchaser to claim tax relief in respect of the proportion of the expenditure that relates to eligible assets – known collectively as fixed “plant and machinery”.

Here are a few key points:

  • Capital allowances are available on second-hand property.
  • Optimising capital allowances improves cash flow.
  • Failure to comply with the rules can mean that qualifying expenditure is nil.

Capital allowances give tax relief for property owners. There are several types of allowances, applicable to different asset categories. The principal forms, found in all commercial properties are plant and machinery and integral features.

All too often, capital allowances are left unclaimed for several years. The reason for this may be a lack of awareness (by both clients and their advisers). This is not the case at Torr Waterfield, so whenever you are thinking about buying commercial property contact your account manager   before any purchase takes place so we can ensure you don’t miss out on potential tax savings.

If you would like to discuss this further please contact us. 

Mark Cunnold, Accountant & Client Manager Mark Cunnold 2 April 2012

A Year out

In 1995 my husband and myself decided to take a year out to travel around the world.

At the time I worked for British Telecom who were kind enough to give me the time off, which meant I had a job to come home to. My husband gave up his job but he did have another job offer for when he came home. We both had two jobs and worked all the hours we could to save up the money for our trip.

When I told my dad I remember he wasn’t very impressed, we had a house, he said we should be settling down to start a family not travelling the world.

We sat down and worked out a rough itinerary of where we wanted to go then went to a travel agent. We said want to go here, here, here and here – what flights can they do for us. A couple of places we were going to involved flying in to one place and travelling over land to fly out from somewhere else.

September 1995 – We were dropped off at Heathrow ready for our adventure, one backpack each with roughly what we thought we might need, and our round the world plane tickets.

The first place we were heading to was Delhi, India, we had no accommodation booked, my dad would have gone nuts if he had known so we didn’t tell anyone. We used the Lonely Planet guide which they call the travellers bible, it is, it has everything you need to know, people who have travelled write it so it has alot of information about things you probably wouldn’t know about.

The places we visited after India were Nepal (Annapurna range Himalayas), Kashmir, Singapore, Taman Negara National Park, Krabi, Koh Phi Phi, Bangkok, Hong Kong, China (Xian, Yangtze River, Tiananmen Square), Australia, New Zealand, Fiji, Hawaii (Pearl Harbour), Los Angeles (where we had some friends arrive from England to finish our trip with us), New York, Washington D.C, Chicago, Alaska (Denali National Park), Canada (Jasper and Banff National Park), San Francisco, Mexico, Yosemite National Park, Death Valley, Las Vegas and the Grand Canyon.

We ended back in Los Angeles were we sold our car, said goodbye to our friends and then made the long journey back to the UK, back to our home and jobs.

It was great to see everyone when we came home because you do miss people especially when it is someone’s birthday or Christmas. We absolutely loved our year out, I think it taught us a lot about ourselves, when visiting other counties you learn to appreciate what you have at home and are grateful for it, you have to learn to be organised with travel, accommodation everything really. You also have to learn respect for other country’s beliefs and cultures.

I found it quite difficult to settle back into normal life after such an amazing year out, but I can honestly say I would recommend it to everyone, it was definitely worth the experience. I learnt a lot which I think I still use today, patience, understanding, caring, being organised, being respectful and listening to people.

Linda Sampson, Credit Control thailand-national-park-2-1386659.jpg

We like to think we’re not your average accountants.

At Torr Waterfield we pride ourselves on steering away from the typical stereotype of ‘old boring accountants’.

Elbert Hubbard, the American writer, publisher, artist and philosopher is credited with this quote:

“The typical accountant is a man, past middle age, spare, wrinkled, intelligent, cold, passive, non-committal, with eyes like a cod-fish; polite in contact but at the same time unresponsive, calm and damnably composed as a concrete post or a plaster of Paris cast; a petrification with a heart of feldspar and without charm of the friendly germ, minus bowels, passion or sense of humour. Happily they never reproduce and all of them finally go to Hell” 

We think Elbert Hubbard is wrong!

For one, our team is certainly not dominated by middle aged men. We have an ever increasing team of 35+ people with male and female at an almost equal ratio. We have a mixed bag of ages including, yes, your middle aged man, but we have trainees and apprentices also. This summer we took on two apprentices in business administration and have had two new trainees join the accounts team recently.

We like to socialise at Torr Waterfield whether it be a cheeky pint in the pub on a Friday or one of our many team building activities. We aim to all go out together quarterly and have previously been to laser quest, virtual golf, held a bbq and most recently we went to Nottingham dog racing.  These activities really help our office work as a unit and allow staff to communicate with each other more than just on a day to day basis.

We love Leicester!

We’re also Leicester lovers, whether it is Leicester City Football Club or Leicester Tigers and even local bands like The Moderators. The team were thrilled that Leicester won the premier league and we celebrated by all attending the Parade and wearing blue in the office. When local band The Moderators perform it is always a date that goes in the diary for many of the team. Mark Cunnold is an avid follower and loves nothing more than having a good old mosh at their gigs.

Want to know even more about us?

On our website we have a meet the team section.  Click here and see which director used to get paid £10 a night to body bop and break-dance in a Blackpool nightclub in the summer?

Hollie Crown, Office Manager

Hollie Crown 2 April 2012 

‘The Windermere Way’ – Torrwaterfield’s Team Challenge for 2016

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The Windermere Way is a 45 mile walk around England’s largest lake, including a total ascent of 7,300ft.

15 members of Team Torrwaterfield took part in the challenge this year, to raise money for http://www.lampadvocacy.co.uk , our charity of the year.

The challenge was every bit as tough as we expected; we had sore feet, aching muscles and lots of blisters all round.

Thanks to everyone that sponsored us – we smashed our £2,000 target and are currently just short of £2,500.  It is not too late to show your support using our sponsorship page https://www.givey.com/tw2016lwc

We are now looking for suggestions for the 2017 challenge!

Here are a few photos from the 2 days:

The Start: 

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Great Views: 

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Start of Day 2:

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Go on Tom:

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Top of Wansfell:

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Overlooking Ambleside: 

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The Lake:

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The End: Completed ! 

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Stuart Caney, Accounts & Tax 

Could you and your employees save money through salary sacrifice?

Salary sacrifice is an agreement between an employer and employee to reduce the employee’s cash salary entitlement, usually in exchange for a non-cash benefit – think of it as swapping salary for something else.  This happens as part of a change to the employee’s contract.

How does this save money?

Shifting remuneration from cash to non-cash benefits can remove the PAYE and National Insurance (NI) liability on the amount shifted.  The employee saves tax and NI, and the employer saves NI – there are savings for both parties, which can be substantial and are certainly not to be too eagerly dismissed.

What types of benefits can currently be effectively provided through salary sacrifice?

Common types are:

  • Employer supported childcare (see our recent blog on this specific subject here)
  • Pensions
  • Cycle to work scheme
  • Mobile phones
  • Car parking

Is this too good to be true?

My Dad always used to say to me “if it sounds too good to be true, it probably is” – in this case it’s “yes” and “no”.  The Government are aware that salary sacrifice schemes have been used in the past for all sorts of things that aren’t really the intended use.  They are currently consulting on removing the tax and NI advantage for certain salary sacrifice arrangements.  They want to encourage employers to provide certain benefits, therefore the proposed changes are not set to affect employer provided pensions, employer supported childcare, or cycles/cyclist safety equipment – these are set to stay for the foreseeable future.

Things to consider

  • A salary sacrifice arrangement can’t reduce an employee’s cash earnings to below the National Minimum Wage
  • Earnings related payments, such as overtime rates and payrises etc can be based on the notional salary or the new reduced cash salary – this must be made clear to the employee
  • Salary sacrifice reduces the amount of pay that is subject to NI and could affect an employee’s entitlement to contribution-based benefits such as Incapacity Benefit and State Pension, statutory pay such as Statutory Sick Pay and Statutory Maternity/Paternity/Adoption Pay and tax credits
  • Check with your pension provider or financial advisor that your workplace pension scheme allows salary sacrifice

For more information on salary sacrifice, just click here https://www.gov.uk/guidance/salary-sacrifice-and-the-effects-on-paye or contact us on 0116 242 3400.

Katie Kettle,  Technical Manager Katie Kettle Colour

How much will your business rates be in 2017? — Steve J Bicknell

Business rates are charged on most non-domestic properties, like: shops offices pubs warehouses factories holiday rental homes or guest houses If your property has a rateable value below £18,000 (£25,500 in Greater London) you’re considered a small business. Even if you don’t qualify for small business rate relief, your business rates will be calculated using […]

via How much will your business rates be in 2017? — Steve J Bicknell