ARE YOU THINKING OF SELLING YOUR BUSINESS?

Selling a business can be a lengthy and stressful process. A sale may be considered due to pending retirement, illness, a lifestyle change, or a host of other reasons. The better and more time you have to prepare for a sale, the less stressful the experience will be.

Here at Torr Waterfield, we can help you with the process, from start to finish. Here are a few pointers to help you on your way…..

  • Review the strengths and weaknesses of your business. A SWOT analysis will help you to identify and address the weaknesses and threats, and improve the strengths and opportunities before sale
  • Consider the Key Performance Indicators (KPIs) of the business, and how these can be identified and reviewed both by you and a potential buyer
  • What do you think the business is worth and what is the minimum value you would be prepared to sell it for? Just as importantly, are there likely to be potential buyers willing to pay that minimum price?
  • Consider ways to increase sales and reduce costs in the immediate period prior to sale. A business is often valued on a price to earnings ratio or earnings multiple method, so recent increased profitability can increase its value
  • Consider the infrastructure and management profile of the business, and whether the necessary skills and knowhow are sufficient in the event of your retirement/removal
  • Consider your own tax position and ensure the sale method is the most suitable to you e.g. Entrepreneur’s Relief is available for business asset and share sales fitting certain criteria. This relief allows chargeable gains on sales to be taxed at 10%, even for higher rate tax payers. Other sales methods, such as sale of assets and goodwill, may be more appropriate
  • Consider employee issues in the event of a sale; e.g. does TUPE (transfer of employment rights) apply? How will your employees react prior to and after a sale? Do you advise them of your plans and keep them up to date with progress?
  • Ensure that the position, legal or otherwise, and potential impact on a sale of any minority shareholders or partners has been taken into account
  • Consider what may happen to the business premises; will they be part of the sale? Are they owned by your Personal Pension, in which case it may be worthwhile continuing to lease the premises to the purchaser?
  • Appoint professional advisors and expert help to assist with your valuation, to help with any legal agreements that need to be drawn up and to review your tax position prior to and after the sale

You only sell your business once, so it must be done properly to ensure you get full benefit.

If you would like to find out more about selling your business, please speak to me at Torr Waterfield

Peter Morris , Director _DSC4779

 

Shared parental leave – What are you entitled to?

Shared parental leave (SPL) allows employed parents and adopters to share leave and pay with their partner to care for children from birth until their first birthday.

  • Only employees can take SPL; they must have a partner (separated partners still qualify if sharing responsibility for care of child at the time of birth)
  • SPL allows mothers (or adopters) to shorten their maternity leave (and pay) to share the leave (and pay) with their partner in order to care for children in their first year; it is the mother’s choice whether to share leave
  • The mother can only share with one person; it is her choice provided her partner satisfies the qualifying conditions
  • Even if only one parent is entitled to SPL and/or ShPP (e.g. one is self-employed or not entitled to ShPP), the other partner may still  be entitled to SPL/ShPP if both satisfy the qualifying conditions
  • The employee taking SPL must have been employed 26 weeks by the 15th week before the expected week of childbirth and remain employed in the week before the start of SPL. Their partner must also satisfy an employment and earnings test
  • At least 8 weeks’ written notice must be given to end maternity leave and start of SPL
  • SPL can only be taken a week at a time but can start mid-week. SPLIT days can be used to work part-time by agreement with employer
  • SPL can be taken by both parents at the same time or at separate times; they must decide how to take it. The mother can remain on maternity leave while the partner is on SPL
  • SPL can be taken in up to three separate blocks (unlike maternity leave) or more if the employer agrees
  • There are detailed notice provisions which must be followed
  • Employees can work for up to 20 days during SPL (SPLIT days), as well as 10 days during maternity leave (KIT days). These must be agreed with employer.

 SHARED PARENTAL PAY (ShPP) 

Can pay be transferred as well as leave?

Yes.  Statutory maternity pay (SMP) is available to female employees from the 11th week before the expected week of birth or the actual birth if earlier.  It is paid for 39 weeks (the maternity pay period – MPP) with the first 6 weeks being at 90% of pay (and then either the flat rate of £139.58 or 90 per cent if this is lower for the remaining 33 weeks.  But, only 37 weeks is available for ShPP as the mother must take the first 2 weeks after the birth. Women who do not qualify for SMP will often qualify for maternity allowance which is paid at £139.58 or 90 per cent of average earnings if this is lower.

If you wish to discuss any of this in more detail please contact us 0116 2423400 

Becky Edwards, Payroll Manager 

Charities and Fundraising – New changes

The Fundraising Regulator fundraisingregulator.org.uk was established a year ago to oversee charity fundraising in England and Wales.  There are different rules for charities registered in Scotland.

The new body assumed responsibility for this area on 7 July 2016.

So far most people are unaware of its existence, but that should change as we proceed into 2017.  Generally the Code of Fundraising Practice will affect charities and anyone involved in their management.  The general public should however be aware of the new rules and there are schemes being drawn up to protect people from over eager charities.

The biggest effect on charities is that the Fundraising Regulator will be funded by a voluntary levy.  Charities with spending of over £100,000 on fundraising will be asked to pay between £150 and £15,000 annually, this being on a sliding scale with the top end only being relevant for a small number of very large charities; exempt charities will be charged a flat rate of £1,000.

Below the £100,000 threshold, a charity may choose to register and pay just £50.

Third party fundraising agencies and similar organisations may also sign up and pay between £100 and £1,200 annually.

Although, as already stated, this is a voluntary levy, it is important for charities to consider the message they are giving out by not being registered.  It may well influence potential donors if they feel that the charity is not abiding by the Code.  The government has also retained powers within the legislation to make the levy compulsory if the voluntary approach does not work!

Finally, the Regulator is working on a Fundraising Preference Service which should be launched this year.  This will enable individuals to register and then have control over how, or whether, charities contact them for fundraising purposes.  This is expected to work in a similar fashion to the existing Telephone Preference Service and the Mail Preference Service.

There is of course much more detail behind all of this and we will be happy to help. Please get in touch if you would like to discuss this further 0116 2423400

Neil Ford, Technical Manager Neil Ford April 2012

The New Marriage Allowance

wedding-rings-1416826

 

The marriage allowance allows you transfer £1,100 of your Personal Allowance to your husband, wife or civil partner – if they earn more than you.

This reduces their tax by up to £220 in the tax year (6 April to 5 April the next year).

In order to benefit as a couple, you (as the lower earner) must have an income of £11,000 or less.

If you are eligible for marriage allowance in the 2015/2016 tax year, you can backdate your claim to 6 April 2015 and reduce the tax paid by up to £432.

Who can apply?

You can get marriage allowance if all the following apply:

  • You are married or in a civil partnership
  • You don’t earn anything, or your income is under £11,000
  • Your Partner’s income is between £11,001 and £43,000

You can also apply for marriage allowance if you or your partner:

  • Are currently receiving a pension
  • Live abroad – as long as you get a Personal Allowance

If you or your Partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couple’s Allowance instead.

If you would like to discuss this please get in touch. 

Paula McIntosh, Administration  

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THE BENEFITS OF USING APPS

In today’s fast moving world we are all looking for ways to save time.  The majority of us carry some kind of hand held device, whether it is a tablet or simply a mobile phone on which we can organise our day to day lives.  We even provide our children with these devices to occupy them and give ourselves five minutes of peace and quiet!

Apps can be downloaded to hand held devices and are generally a cheap way to provide not only entertainment but also as a means to seek and manage information.  Where our children are happy to play games and line the pockets of the game creators of ‘Flappy Birds’ and ‘Candy Crush,’ perhaps we as adults are looking for something a little more informative and useful.

I monitor and manage important deadline dates for the clients of Torr Waterfield and I find the Companies House App an extremely useful business tool.  By searching for companies on this App I am able to instantly see information such as the following:

  • Company number
  • Date of incorporation
  • Registered Office address, along with a link to view the location on a map
  • The company accounts reference date
  • The date the last set of submitted accounts were made up to
  • The date the next set of accounts are due for submission
  • The date the last submitted annual return (now known as a confirmation statement) was made up to
  • The date the next annual return/ confirmation statement is due for submission
  • Nature of the business
  • Current and resigned company directors and secretaries and certain details about the company officers
  • History of submitted documents

This App is available to everyone, so if you think your business may find this company search facility useful then you may be interested to know that it can be downloaded for free.

As mentioned by my colleague Calum Ainge in his June 2016 blog, entitled Keep Up To Date And Download Our Free Tax App,’  the Torrwaterfield Tax App is also available free of charge and includes features such as key tax dates, tax tips, news, tax tables and it even has a tax calculator. app-phone

If you think that your business may benefit from the above Apps then all you need to do is either visit the App store or Google play and download your Apps for free.

Beth Judd, Accounts & Tax

Tax return deadlines – Are you ready?


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

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