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Turn your New “Tax” Year Resolutions into Powerful Goals

Turn your New “Tax” Year Resolutions into Powerful Goals

NEW YEAR RESOLUTIONS AND NEW GOALS TO SAVE TAX

At this time of year, we think about New Year’s resolutions when it’s also a good time to start planning our tax affairs before the end of the tax year on 5 April. You could maximise your ISA allowances for the 2017/18 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2018 as your unused annual pension allowance is lost after three years. If you’re looking to do some inheritance tax planning, you could review / make your Will in the light of recent changes in the IHT nil rate band. 

PENSION PLANNING

For most taxpayers, your maximum pension contribution is £40,000 each tax year, although this depends on your earnings. This limit covers both contributions by you and your employer. And you can carry forward any unused allowance for a particular tax year for three years, and you can add it to the relief for the current year, but it then lapses if don’t use it. If you are a higher rate taxpayer, your net cost of saving £10,000 in a pension is only £6,000, but this higher rate relief may not last forever. 

PASSING ON THE FAMILY HOME

You may have noticed new inheritance tax rules for passing on the family home started on 6 April 2017. You should take this into consideration when drafting your Will and we can work with your solicitor to make sure your Will is tax efficient. From 6 April 2017, if your residence is left to direct descendants, an additional nil rate band of £100,000 is now available on death. This is on top of the normal £325,000 nil rate band and will increase over the next 4 years to £175,000 in 2020. This additional relief is however restricted If your assets exceed £2 million. The rules are fairly complicated, but we can review your personal circumstances to ensure you take advantage of all the relief you’re entitled to.

DOWNSIZING TO A SMALLER PROPERTY

The new inheritance tax relief for passing on the family home is protected even when you downsize to a smaller property. For example, if you are a married couple currently living in a large house worth £500,000 and you downsize to a flat worth £250,000, you could give away some of the proceeds during your lifetime and yet still benefit from inheritance tax relief based on your higher valued property.  You could even sell up completely and move into a rental property and still get your inheritance tax relief!

MAKING REGULAR GIFTS OUT OF SURPLUS INCOME

While on the subject of inheritance tax planning, you could consider setting up a standing order to family members, as such regular gifts can be outside of the scope of inheritance tax, providing they are made out of your surplus income and not out of your capital. You would then need to demonstrate that you’re left with sufficient income after tax and living expenses to maintain your normal lifestyle. Unlike your £3,000 annual inheritance tax allowance, there is no monetary limit for regular gifts out of income, provided the conditions are satisfied. Again, we can review your personal circumstances to assess whether you’re able to take advantage of this tax relief.

TAX RELIEF FOR ENERGY SAVING TECHNOLOGY

You could save on energy. Over the years, there’s been a generous 100% tax break for businesses that install energy saving technology in their premises. This is in addition to the £200,000 annual investment allowance for plant and machinery. This also includes energy efficient boilers and energy saving lighting systems. This is set out in the government’s energy-saving technology list. The list is updated each year. From last year’s Autumn Budget, new technologies were being added, but certain items such as Biomass fired warm air heaters would no longer qualify from 1 April 2018. Where the expenditure has the effect of creating or increasing a loss for corporation tax purposes, your company can obtain a repayable first year tax credit. This credit, based on the amount of the loss attributable to the energy-saving technology spend, reduces to 2/3 of your corporation tax rate from 1 April 2018. Thus, the relief reduces from 19% to just 12.67% from 1 April 2018.

RELIEF FROM ADDITIONAL 3% SDLT CHARGE
You could save on Stamp Duty Land Tax, as much of the focus in the Autumn Budget on Stamp Duty Land Tax (SDLT) concerned the abolition of the duty if you are a first time buyer with a property of up to £300,000. There were also welcome news, if you are involved in other property transfers, where the 3% supplementary SDLT charge potentially applies, and when an interest in a second property is acquired. The 3% supplementary charge will now not apply, where a court order issued on a divorce or dissolution of a civil partnership prevents someone from disposing of their interest in a main residence or a spouse buys property from their spouse. There are a couple of other situations where the 3% supplement does not apply. Please check with your solicitor. 

ADVISORY FUEL RATE FOR COMPANY CARS

You could save on fuel. These are the suggested reimbursement rates for your employees’ private mileage using their company car from 1 December 2017. Where there has been a change, previous rates are shown in brackets.

Engine Size

Petrol

Diesel

LPG

1400cc or less

11p 7p

1600cc or less

9p

1401cc to 2000cc

14p (13p) 9p (8p)

1601 to 2000cc

11p

Over 2000cc

21p 13p (12p) 14p (13p)

Note: For hybrid cars, you must use your petrol or diesel rate. You can continue to use your previous rates for up to 1 month from the date the new rates apply.   

NO INDEXATION OF COMPANY GAINS AFTER DECEMBER 2017

You could save on company gains. Indexation allowance was introduced in the 1970s to provide relief from paying tax on inflationary gains based on increases in RPI. The relief was abolished in 1998 for individuals and trusts, and replaced with taper relief. However, it was retained for companies. The Autumn Budget announced that indexation for corporation tax would cease for disposals from January 2018 onwards, although indexation up to December 2017 would be retained. Although the change will apply to all chargeable assets owned by companies, it will have a significant impact on property investment companies where indexation allowance acted as a shelter from inflationary gains.  

DIARY OF MAIN TAX EVENTS – JANUARY / FEBRUARY 2018 

Date

What’s Due

1/01

Corporation tax payment for year to 31/3/17 (unless quarterly instalments apply)

19/01

PAYE & NIC deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay electronically)

31/01

Deadline for Self-Assessment tax return for 2016/17 if filed online. Also the due date for 2016/17 balancing payment and 50% payment on account of 2017/18 tax.

1/02

Corporation tax payment for year to 30/4/17 (unless quarterly instalments apply)

19/02

PAYE & NIC deductions, and CIS return and tax, for month to 5/02/18 (due 22/02 if you pay electronically)


Lotuswise Chartered Accountants and Business Consultants can help you with your tax. Provide us with your information and we will help you plan your affairs to minimise your tax and help you set aside sufficient funds now and in 2018. So please 
contact us now.

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Tax, Festive Season and New Year

Tax, Festive Season and New Year

Stay on top of your tax in the New Year

Lotuswise Chartered Accountants and Business Consultants would like to help you stay on top of your tax in 2018 and wish you a joyous Festive season and a Happy New Year filled with health, happiness, and spectacular success!

 

Dates For Your Diary – Dec 2017 / Jan 2018

Date What’s Due
1/12 Corporation tax for year to 28/02/2017 unless quarterly instalments apply.
19/12 PAYE & NIC deductions, and CIS return and tax, for month to 5/12/17 (due 22/12 if you pay electronically).
30/12 Deadline for filing 2016/17 tax return online in order to request that HMRC collect outstanding tax via the 2017/18 PAYE code
1/01 Corporation tax for year to 31/03/17.
19/01 PAYE & NIC deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay electronically).

31/01

 

 

Self-Assessment tax return for 2016/17 due, together with balancing payment and 50% payment on account of 2017/18 tax.

 

Lotuswise Chartered Accountants and Business Consultants can help you with your tax. Provide us with your information and we will help you plan your affairs to minimise your tax and help you set aside sufficient funds now and in 2018. So please contact us now. 

 

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Theresa May: Brexit offer – off the table if no deal

Theresa May: Brexit offer – off the table if no deal

The return from Brussels

Last week, Theresa May told us that Britain’s offer of a £40bn Brexit fee will be “off the table” if there is no final deal on a future UK partnership with the EU. Returning from Brussels last week with a draft agreement on preliminary separation affairs, we watched the Prime Minister in the Commons, facing a little over 100 minutes of MPs’ tough questioning on the terms of the deal agreed in the first phase of Brexit negotiations. Mrs May then informed us that the UK has approved a £35bn-39bn financial arrangement; and measures to protect the rights of EU citizens living in the UK; as well as committing to no hard border on the island of Ireland. The PM saluted a “new sense of optimism” in Brexit talks, including “good news” for both Leavers and Remainers who aspire to a “smooth and orderly” exit from the EU. Reiterating that “nothing is agreed until everything agreed”, we heard Mrs May anticipating that there may still be troubles ahead. 

No money without a final trade deal

Prominently, we felt that the Prime Minister implied that Britain would not be handing over billions of pounds to the EU without a final trade deal from phase two of the talks. She revealed: “This offer is on the table in the context of us agreeing the partnership for the future, agreeing the next stage. If we don’t agree that partnership, then this offer is off the table.” We thought her statement conflicted with that of her Chancellor Philip Hammond the previous week, who maintained it was “inconceivable” the UK should walk away from financial obligations in the event of unsuccessful discussions.

Labour’s Position

We then observed Labour leader Jeremy Corbyn blame Mrs May for having “scraped through” phase one of Brexit, as he also remarked apparent clashes were occurring in the Government over the exact conditions of last week’s agreement. We then saw him remarking that Brexit Secretary David Davis had previously created confusion over the validity of Friday’s deal, especially since he had claimed it was not enforceable, 24 hours earlier.  Mr Corbyn also hailed Mrs May to review her “unnecessary exit date deadline” of 29 March, 2019 from the EU Withdrawal Bill – the Government’s flagship Brexit legislation. “I’m sure the whole House, and indeed I think probably the whole country, would rather get the best possible deal a little bit later, if that meant a better deal for people’s jobs and the economy.”

Brexit Date

Yet, we learnt that Mrs May Government’s aim is to proceed with their plan to pen the Brexit date into law. We also noted that in spite of recent Labour’s more relaxed tone and approach to Brexit to include membership of the EU’s single market and customs union, the PM blamed them for adopting 12 different standpoints on the nation’s departure. Then unexpectedly, we saw the Prime Minister being commended on her deal by both Conservative Leavers and Remainers, with ex-minister Robert Halfon applauding Mrs May’s “Zebedee-like qualities of resilience”, referring to the Magic Roundabout’s character.

EU Nationals and The Irish Border

Then we observed the Prime Minister also being recognised for writing an open letter to EU nationals on Monday, in which she told those already living in the UK: “I want you to stay.” We also noted that Nigel Dodds, DUP’s Westminster leader, whose party supports Theresa May’s government, applauded Mrs May’s “personal devotion” to changing the text of the agreement to put any concerns to rest in Northern Ireland.

Henry VIII Powers and Conservative Rebellion

We also noticed that a few Tory Brexiteers feared that Britain could be brought into line with EU rules after Brexit to resolve the Irish border challenge. We also watched Philip Davies, Leave supporter, disagreeing on the Brexit bill. By then we realised that by agreeing on the establishment of a new committee to examine ministers’ use of alleged Henry VIII powers in the bill, the Government further tried to lessen Brexit disagreements within the Tory party, as well as the possibility of a potential Conservative uprising regarding the EU Withdrawal Bill. 

BBC News Update 14/12/17 : PM is off to Brussels after losing the EU vote

Theresa May is due at a summit in Brussels, hours after Conservative rebels in the Commons defeated the government in a key Brexit vote. MPs backed an amendment giving them a legal guarantee of a vote on the final Brexit deal struck with Brussels. One rebel, Stephen Hammond, was sacked by the prime minister as a party vice chairman in the aftermath of the vote. Other EU member states could decide to move forward to trade talks with the UK at their two-day summit.

Kamal Ahmed: Brexit transition deal is ‘urgent’, say MPs
What the EU Withdrawal Bill will do
MEPs vote on Brexit: What we learned

Mrs May lost by just four votes, as MPs backed an amendment to the EU Withdrawal Bill by 309 to 305 – her first Commons defeat as prime minister. Labour leader Jeremy Corbyn said it was a “humiliating loss of authority” for the prime minister. What difference does this defeat make?
It will not derail Brexit but MPs who voted against the government hope it will give them a bigger say in the final deal Theresa May strikes with Brussels…

 

Lotuswise Chartered Accountants and Business Consultants deal with a number of international clients who are directly or indirectly affected by the challenges that Brexit will bring. If you have any concerns related to future international trade including but not limited to cross-border VAT, tariffs, cash flow and your business, please contact us as soon as possible.

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The Budget November 2017 – Building a Britain fit for the future

The Budget November 2017 – Building a Britain fit for the future

We watched our Chancellor Philip Hammond’s second budget, as he committed to spending more on infrastructure projects and stimulating the housing market. This time round, he had to put on a good performance to keep his job, after criticism following his Spring Budget. His jokes were better this time, but there was very little good news on the tax front and some worrying economic figures, particularly the growth forecasts. We already knew about a stamp duty holiday for first-time homebuyers, as this was hotly tipped prior to the Budget but, nevertheless, we were surprised that the duty for such buyers was abolished for purchases up to £300,000. 

SDLT Relief For First-Time Buyers 

If you are a first-time buyer, and to help you get onto the property ladder and stimulate the housing market, our chancellor announced that, for property purchases completed on or after 22 November 2017, there would be no SDLT payable if the purchase price is below £300,000.  His will be a permanent measure rather than a temporary holiday, as if you are claiming the relief, you will pay no SDLT on the first £300,000 of the consideration and 5% on any remainder. No relief will be available to you where the total consideration is more than £500,000. And if you are buying a property in joint names, it must be the first property owned by all purchasers.

Personal Tax Allowance and Higher Rate Limit Increased 
Our Chancellor reminded us that his government is committed to increasing your personal allowance to £12,500 in 2020 and the higher rate tax threshold to £50,000. However, your personal allowance for 2018/19 was only increased in line with inflation to £11,850 and the higher rate threshold to £46,350. Up to 10% of your personal allowance (£1,185) may be transferred to one spouse or civil partner, if unused and the transferee is a basic rate taxpayer. This transfer will now be available on behalf of deceased spouses and civil partners, and your claim may now be backdated for up to four years where the entitlement conditions were met.

No Changes in Tax or NIC Rates 
Your basic rate of income tax and higher rate remain at 20% and 40% respectively and the 45% additional rate continues to apply to income over £150,000. Although Class 2 National Insurance contributions (NIC), if you are self-employed, are being abolished from 6 April 2019 and “merged” with Class 4 contributions. We note that the Chancellor did not dare mention an increase in the current 9% Class 4 rate this time! We had heard rumours that the dividend rate might be increased. But your dividends will continue to be taxed at 7.5%, 32.5% and then 38.1% depending upon whether they fall into the basic rate band, higher rate band or the additional rate.  Your annual ISA investment limit increased to £20,000 from 6 April 2017 and will remain at that level for 2018/19. Your dividends on shares held within an ISA will continue to be tax free.

IR35 “OFF-Payroll” Rules May Be Extended to Private Sector 
Although not mentioned in the Budget speech, we observed that the other documents released on Budget day mention the possible extension of the rules for personal service companies in the public sector to workers in the private sector. Our government will consult in 2018 on how to tackle non-compliance with the intermediaries’ legislation (commonly known as IR35) in the private sector. The legislation which currently only applies in the public sector ensures that individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a company.

Changes to Diesel Company Cars 
Company car benefits are based on CO2 emissions data which has encouraged employees to choose diesel cars due to lower CO2 emissions. Our government is trying to reduce the number of diesel cars and will increase the current 3% diesel supplement to 4% from 6 April 2018. As previously announced radical changes to your company car benefit rules are being introduced in 2020. The benefit in kind, if you use electric and hybrid cars, with a range of 130 miles or more on the electric motor, is being reduced to just 2%. That means that your taxable benefit for such a car with a list price of £30,000 would be just £600 a year. Where, you, as an employer, allow staff to charge their own electric car at work, there will be no taxable benefit. 

EIS Tax Relief Increased For Investment In Tech Businesses 

Our Government will double the amount that you, as an individual, may invest under the EIS in a tax year to £2 million from the current limit of £1 million, provided any amount over £1 million is invested in one or more knowledge-intensive companies. Your annual investment limit for knowledge-intensive companies receiving investments under the EIS and from VCTs will be increased from the current limit of £5 million to £10 million. The lifetime limit raised by such companies will remain the same at £20 million.  

R&D Tax Relief Increased 

He further announced that the rate of the R&D expenditure credit is being increased from 11% to 12%, in order to support business investment in R&D. This relief is available to companies that do not qualify for the more generous relief available to SMEs. 

VAT Registration Limit Frozen 

As for the VAT registration, the limit normally increases in line with inflation each year, however it has now been frozen at £85,000 until 1 April 2020. At the same time, the deregistration limit remains at £83,000. We had heard rumours that the VAT threshold would be reduced, so more businesses would be required to charge VAT on their sales. Our country currently has the highest VAT registration threshold in Europe. The introduction of Making Tax Digital (MTD) for VAT in April 2019 will apply to businesses above the registration limit, and freezing or reducing the threshold will bring more businesses in the scope of MTD. 

Business Rates Relief For Small Businesses 

We know that there has been much lobbying from the small business sector to reduce business rates. Our Chancellor stated that 600,000 small businesses currently benefit from small business rates relief. In order to support the licensed trade from April 2017, pubs with a rateable value up to £100,000 are able to claim a £1,000 business rates discount for one year. This relief has now been extended until March 2019. 

Mileage Allowance For Buy To Let Landlords 

Another measure hidden away was the proposal that, if you are a buy-to-let landlord, you will be able to claim 45p a mile for necessary visits to your rental properties. This will be as an alternative to claims for capital allowances and deductions for actual expenses incurred, such as fuel.
 

Dates For Your Diary – Dec 2017 / Jan 2018
 

Date What’s Due
1/12 Corporation tax for year to 28/02/2017 unless quarterly instalments apply.
19/12 PAYE & NIC deductions, and CIS return and tax, for month to 5/12/17 (due 22/12 if you pay electronically).
30/12 Deadline for filing 2016/17 tax return online in order to request that HMRC collect outstanding tax via the 2017/18 PAYE code
1/01 Corporation tax for year to 31/03/17.
19/01 PAYE & NIC deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay electronically).
31/01

 

 

Self-Assessment tax return for 2016/17 due, together with balancing payment and 50% payment on account of 2017/18 tax.

  

Lotuswise Chartered Accountants and Business Consultants can help you with your tax. Provide us with your information and we will help you plan your affairs to minimise your tax and help you set aside sufficient funds now and in future. So please contact us now. 

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Reasons why you should consider an apprenticeship for your business

Reasons why you should consider an apprenticeship for your business

Whether your business is small or large, the opportunity to embrace an apprentice into your team is readily available, yet rarely taken by small businesses. They are available to large and small firms, with the former (per a wage bill more than £3 million) being subject to a mandatory Apprenticeship Levy, and the latter being entitled to the co-invested scheme, and possibly additional funded support (employing fewer than 50 employees).

From May 2017, companies not paying the Levy will pay 10% towards the cost of the co-investment scheme, and the Government pay the other 90%.  You can search for the most relevant and beneficial courses and training providers by visiting find apprenticeship training. Once you are ready to move forward and recruit, you can post vacancies on recruit an apprentice for free. By doing this, the vacancy will also be advertised on other popular recruitment sites, enabling your post to reach even more potential candidates.

As a Levy-paying business, you must register with the Apprenticeship Service to be able to access the funds and spend them on relevant training. Apprenticeships are an increasingly attractive option for businesses of all sizes wanting to bring new talent and ideas into their teams.
 

Here are a few reasons why you should consider an apprenticeship for your business:

 

1. Increase the size of your team while keeping staff and recruitment costs down

Your average apprentice must be paid at least the minimum wage during training, but their salary will increase in conjunction with training progress and accreditation.  This provides you with a low-cost option to grow your business team with staff developed and trained to best suit your company’s needs.

2. Develop new talent to meet your needs

By recruiting from the apprentice pool, you have so many options in which to coach, develop and mould, to meet the needs of your business.  Naturally, this is a balanced against a limited amount of experience in the work force. However, by focussing on the key needs of your business and teaching business processes from the start, it can lead to your apprentice’s own innovative ideas to surface in time.

3. Give your team new skills, energy and time

Having an apprentice join your busy team can offer flexibility for existing employees and free-up time to focus on more involved and high-profile tasks with more responsibility. 

4. Provide young people with a career opportunity.

An apprenticeship offers a young person the opportunity to start a career in a sector of their choosing, and to help your business grow with skills needed for the future.  Providing this nurturing opportunity can help increase your employee loyalty, and hold on to your highly skilled staff which you can continue to invest in and up-skill.

In a report by the National Apprenticeship Service, it was found that employers with an established Apprenticeship programme reported that, “productivity in their workplace had improved by 76% whilst 75% reported that apprenticeships improved the quality of their product or service”.

 

Lotuswise Chartered Accountants and Business Consultants can help you get started and help your business succeed and thrive, to find out how, please contact us.

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Your Furnished Holiday Letting Business and IHT Relief

Your Furnished Holiday Letting Business and IHT Relief

Furnished Holiday Business & Inheritance Tax (IHT)

Your furnished holiday letting business is not a business for IHT relief. If you own a furnished holiday letting business, this will be treated as a trade for most tax purposes. For example, capital allowances are available on furniture, and CGT entrepreneurs’ relief is available on disposal of your business.

 

Recent Ruling

However, a recent tax case has determined that a holiday letting business in Cornwall did not qualify for inheritance tax business property relief. 

Despite the provision of a range of services to customers, the judge agreed with HMRC that the business was wholly or mainly that of making or holding of investments and, as such, ineligible for any relief from inheritance tax.

 

From 6 April 2017

Note that, the restricted deduction for interest that started to apply to buy-to-let businesses from 6 April 2017, does not apply to furnished holiday lets. There are special rules you need to follow for your rental business to qualify as furnished holiday lettings; in particular, your property must be available for letting for 210 days a year, and actually let for 105 days. 

 

Lotuswise Chartered Accountants and Business Consultants can help you figure out your tax for your holiday lettings, so please contact us  as soon as possible. 

 

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You May Have To Pay More Tax On Your Dividends In January 2018

You May Have To Pay More Tax On Your Dividends In January 2018

The Rules

The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends. You might then be part of the many taxpayers who will have to pay more tax on those dividends on 31 January 2018.

 

From 6 April 2016 

Up until 5 April 2016, the 10% dividend credit meant that as a basic rate taxpayer, you paid no tax at all on dividend income as the 10% tax on dividends was covered by the 10% tax credit. For example, where a basic rate taxpayer received £9,000 dividends, this would be treated as £10,000 gross income but the 10% tax of £1,000 would be covered by the £1,000 tax credit. From 6 April 2016 the same £9,000 dividend would now be taxed at 7.5% once the £5,000 dividend allowance has been used making £300 tax due on 31 January.

 

Higher Rate Taxpayer 

If you are a higher rate taxpayer receiving dividends, the loss of the 10% tax credit means that the full 32.5% rate applies to dividends in excess of the £5,000 allowance. Thus, if, as a higher rate taxpayer, you received £30,000 of dividends, £25,000 of those dividends would be taxed at 32.5% meaning £8,125 due on 31 January 2018. Last year the tax on the same dividends would have been £7,500 after deducting tax credits.

 

Lotuswise Chartered Accountants and Business Consultants can help you figure out tax, therefore if you can let us have all of your tax documents, we can let you know how much tax you need to pay next January so that you can set aside sufficient funds, so please contact us  as soon as possible. 

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Top 3 Barriers to Smash for Business Success

Top 3 Barriers to Smash for Business Success

There are more than ½ million new start-ups each year, with last year alone having a record number of 657,790, as found by the Centre for Entrepreneurs (CFE).  However, almost shockingly, it is estimated that 1 in 5 of those will fail in the first year, and more than half will fail in the first 5 years.

Although there is a vast array of technology available to aid drive business performance and scale, the same re-occurring barriers are the ones taking their small business victims. The following article will consider the top three barriers to small business success.

 

Running out of money – Cashflow

As with all small businesses, whether established or new, there is a huge focus on accelerating business growth, and finding your first of many new clients.  However, the need to win at all costs can have detrimental impact on various aspects of your business. This may include payment terms becoming longer than anticipated, margins not being maximised and project scope creeping wider, to name but a few.  It is key for the longevity of your business to ensure that you are on top of increasing overheads, managing the flow of preferential credit and payment terms such that it benefits your business rather than your supplier.  Having a positive cash-flow is the first barrier to smash.

 

Losing your best people

Staff retention is key to the success of any business, and being able to hold onto talented, committed people is no easy task. It can be especially difficult in growth markets where the potential rewards with a competitor may be highly attractive, making it vital to offer appealing package remuneration to aid staff retention. This could be achieved with share options, equity, bonuses, healthcare, pensions and more.

It may be prudent to consider other means of reward which are not just payment related, but also recognition. This may encourage your top staff to take on more challenging and exciting opportunities within the business and not look elsewhere.

With recruitment costs being an added expense for any company, retaining good people is key to building a solid foundation for your business. Having positive referrals from current staff and customers can also help to keep a healthy pipeline of talent, not only for today but also for future succession and expansion planning for your company.  A solid recruitment and staff retention plan is key to ongoing success.

 

Not knowing your business 

It goes without saying that knowing your numbers on your business is key to success.  Also, being passionate about what you do and how you do it.  The adage “the shoe maker should stick to making shoes” has never been so appropriate, and knowing your market, having the expertise around you as well as being tight in terms of knowing your daily business’s performance will be a step in the right direction to avoid the pitfalls.  If you do not have all the answers, then take external advice from professionals who are experienced in your field to help make the right decisions on time consuming and complex areas like fundraising, intellectual property, and staff incentivisation.

 

Smashing these three barriers will help your business survive, and keeping to these business practices will in turn help your business thrive. Lotuswise Chartered Accountants and Business Consultants can help your business succeed, to find out how, please contact us.

 

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Marketing – Three steps to brand building

Marketing – Three steps to brand building

Marketing – Three steps to brand building

Whether you’re a start-up or a small to large enterprise business, the power of your brand can make the difference between companies surviving and thriving. How you go about developing your brand needs to form part of your overall strategy versus being an after- thought. Overtime the brand you develop will be part of the value for what the business is worth. 

A brand is centered on the emotions you wish customers to think about you, how they will describe you and includes characteristics of your business, demonstrated through everything you and your team do, from talking to customers to preparing content to share. There are many advice channels online to help in building a brand, but to keep it simple, we have boiled it down to the three corner stones.


1.
What’s your Business Mission?

Being clear on what you want for the business to achieve in the long term is the clarity needed to start formulating the brand identify, being clear and concise as well as a story to help those around you connect with your mission.

As an example, take the inspirational mission statement of Amazon:

“It’s our goal to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”.

Reading through, it is inspirational, clear and concise as to what the business aims to achieve. It is also calling out what the business wants to be known for, in this case being customer centric and providing variety of choice of goods.

Once you have your mission statement, the key step is to communicate it to the wider world and making sure your marketing channels are aligned and your people truly believe and share the mission with confidence and that it can be delivered, e.g. expertise, value for money, speed, efficiency.

 

2. Research and Protect your Brand

Clearly understand who your customers are and what’s important to them from the brand. Ask existing clients and employees what they feel about the brand from their experience to-date, forming part of your market research. With the fast pace of opinions being shared on social media it is important to monitor comments and respond to customers accordingly and in doing so protecting your brand at all cost.

A great example of protecting the brand and in doing so going the extra mile for customers was Virgin Media, when after a husband who thought he had lost a

voicemail recording of his late wife he had kept for more than 10 years, described the

moment the telecoms giant restored it as “wonderful”. It took the company a team of 11 engineers and three days to track down; however, the positive impact via social media was warm felt and shared globally. A situation that if one turned a blind eye could’ve had serious negative brand impact.

 

3. Build your Brand and Visual identity

Bring your brand to life through creating a solid first impression. Don’t rush or try this yourself as it is recommended to work with a designer to help with the logo. Once defined, roll out the identity, look and feel into all you do, the vehicles driven, uniform, email signatures, tone of voice in all communications linked to the brand identity etc. To ensure your brand consistently delivers customer value, translate this into the end to end customer journey, having an easy to navigate customer website, easy to navigate and purchase items, supported by response to queries and after sales care.

 

Lotuswise Chartered Accountants and Business Consultants can help your business in many ways, to find out how, please contact us  as soon as possible. 

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Turn your New “Tax” Year Resolutions into Powerful Goals

Turn your New “Tax” Year Resolutions into Powerful Goals

NEW YEAR RESOLUTIONS AND NEW GOALS TO SAVE TAX

At this time of year, we think about New Year’s resolutions when it’s also a good time to start planning our tax affairs before the end of the tax year on 5 April. You could maximise your ISA allowances for the 2017/18 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2018 as your unused annual pension allowance is lost after three years. If you’re looking to do some inheritance tax planning, you could review / make your Will in the light of recent changes in the IHT nil rate band. 

PENSION PLANNING

For most taxpayers, your maximum pension contribution is £40,000 each tax year, although this depends on your earnings. This limit covers both contributions by you and your employer. And you can carry forward any unused allowance for a particular tax year for three years, and you can add it to the relief for the current year, but it then lapses if don’t use it. If you are a higher rate taxpayer, your net cost of saving £10,000 in a pension is only £6,000, but this higher rate relief may not last forever. 

PASSING ON THE FAMILY HOME

You may have noticed new inheritance tax rules for passing on the family home started on 6 April 2017. You should take this into consideration when drafting your Will and we can work with your solicitor to make sure your Will is tax efficient. From 6 April 2017, if your residence is left to direct descendants, an additional nil rate band of £100,000 is now available on death. This is on top of the normal £325,000 nil rate band and will increase over the next 4 years to £175,000 in 2020. This additional relief is however restricted If your assets exceed £2 million. The rules are fairly complicated, but we can review your personal circumstances to ensure you take advantage of all the relief you’re entitled to.

DOWNSIZING TO A SMALLER PROPERTY

The new inheritance tax relief for passing on the family home is protected even when you downsize to a smaller property. For example, if you are a married couple currently living in a large house worth £500,000 and you downsize to a flat worth £250,000, you could give away some of the proceeds during your lifetime and yet still benefit from inheritance tax relief based on your higher valued property.  You could even sell up completely and move into a rental property and still get your inheritance tax relief!

MAKING REGULAR GIFTS OUT OF SURPLUS INCOME

While on the subject of inheritance tax planning, you could consider setting up a standing order to family members, as such regular gifts can be outside of the scope of inheritance tax, providing they are made out of your surplus income and not out of your capital. You would then need to demonstrate that you’re left with sufficient income after tax and living expenses to maintain your normal lifestyle. Unlike your £3,000 annual inheritance tax allowance, there is no monetary limit for regular gifts out of income, provided the conditions are satisfied. Again, we can review your personal circumstances to assess whether you’re able to take advantage of this tax relief.

TAX RELIEF FOR ENERGY SAVING TECHNOLOGY

You could save on energy. Over the years, there’s been a generous 100% tax break for businesses that install energy saving technology in their premises. This is in addition to the £200,000 annual investment allowance for plant and machinery. This also includes energy efficient boilers and energy saving lighting systems. This is set out in the government’s energy-saving technology list. The list is updated each year. From last year’s Autumn Budget, new technologies were being added, but certain items such as Biomass fired warm air heaters would no longer qualify from 1 April 2018. Where the expenditure has the effect of creating or increasing a loss for corporation tax purposes, your company can obtain a repayable first year tax credit. This credit, based on the amount of the loss attributable to the energy-saving technology spend, reduces to 2/3 of your corporation tax rate from 1 April 2018. Thus, the relief reduces from 19% to just 12.67% from 1 April 2018.

RELIEF FROM ADDITIONAL 3% SDLT CHARGE
You could save on Stamp Duty Land Tax, as much of the focus in the Autumn Budget on Stamp Duty Land Tax (SDLT) concerned the abolition of the duty if you are a first time buyer with a property of up to £300,000. There were also welcome news, if you are involved in other property transfers, where the 3% supplementary SDLT charge potentially applies, and when an interest in a second property is acquired. The 3% supplementary charge will now not apply, where a court order issued on a divorce or dissolution of a civil partnership prevents someone from disposing of their interest in a main residence or a spouse buys property from their spouse. There are a couple of other situations where the 3% supplement does not apply. Please check with your solicitor. 

ADVISORY FUEL RATE FOR COMPANY CARS

You could save on fuel. These are the suggested reimbursement rates for your employees’ private mileage using their company car from 1 December 2017. Where there has been a change, previous rates are shown in brackets.

Engine Size

Petrol

Diesel

LPG

1400cc or less

11p 7p

1600cc or less

9p

1401cc to 2000cc

14p (13p) 9p (8p)

1601 to 2000cc

11p

Over 2000cc

21p 13p (12p) 14p (13p)

Note: For hybrid cars, you must use your petrol or diesel rate. You can continue to use your previous rates for up to 1 month from the date the new rates apply.   

NO INDEXATION OF COMPANY GAINS AFTER DECEMBER 2017

You could save on company gains. Indexation allowance was introduced in the 1970s to provide relief from paying tax on inflationary gains based on increases in RPI. The relief was abolished in 1998 for individuals and trusts, and replaced with taper relief. However, it was retained for companies. The Autumn Budget announced that indexation for corporation tax would cease for disposals from January 2018 onwards, although indexation up to December 2017 would be retained. Although the change will apply to all chargeable assets owned by companies, it will have a significant impact on property investment companies where indexation allowance acted as a shelter from inflationary gains.  

DIARY OF MAIN TAX EVENTS – JANUARY / FEBRUARY 2018 

Date

What’s Due

1/01

Corporation tax payment for year to 31/3/17 (unless quarterly instalments apply)

19/01

PAYE & NIC deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay electronically)

31/01

Deadline for Self-Assessment tax return for 2016/17 if filed online. Also the due date for 2016/17 balancing payment and 50% payment on account of 2017/18 tax.

1/02

Corporation tax payment for year to 30/4/17 (unless quarterly instalments apply)

19/02

PAYE & NIC deductions, and CIS return and tax, for month to 5/02/18 (due 22/02 if you pay electronically)


Lotuswise Chartered Accountants and Business Consultants can help you with your tax. Provide us with your information and we will help you plan your affairs to minimise your tax and help you set aside sufficient funds now and in 2018. So please 
contact us now.

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Tax, Festive Season and New Year

Tax, Festive Season and New Year

Stay on top of your tax in the New Year

Lotuswise Chartered Accountants and Business Consultants would like to help you stay on top of your tax in 2018 and wish you a joyous Festive season and a Happy New Year filled with health, happiness, and spectacular success!

 

Dates For Your Diary – Dec 2017 / Jan 2018

Date What’s Due
1/12 Corporation tax for year to 28/02/2017 unless quarterly instalments apply.
19/12 PAYE & NIC deductions, and CIS return and tax, for month to 5/12/17 (due 22/12 if you pay electronically).
30/12 Deadline for filing 2016/17 tax return online in order to request that HMRC collect outstanding tax via the 2017/18 PAYE code
1/01 Corporation tax for year to 31/03/17.
19/01 PAYE & NIC deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay electronically).

31/01

 

 

Self-Assessment tax return for 2016/17 due, together with balancing payment and 50% payment on account of 2017/18 tax.

 

Lotuswise Chartered Accountants and Business Consultants can help you with your tax. Provide us with your information and we will help you plan your affairs to minimise your tax and help you set aside sufficient funds now and in 2018. So please contact us now. 

 

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Theresa May: Brexit offer – off the table if no deal

Theresa May: Brexit offer – off the table if no deal

The return from Brussels

Last week, Theresa May told us that Britain’s offer of a £40bn Brexit fee will be “off the table” if there is no final deal on a future UK partnership with the EU. Returning from Brussels last week with a draft agreement on preliminary separation affairs, we watched the Prime Minister in the Commons, facing a little over 100 minutes of MPs’ tough questioning on the terms of the deal agreed in the first phase of Brexit negotiations. Mrs May then informed us that the UK has approved a £35bn-39bn financial arrangement; and measures to protect the rights of EU citizens living in the UK; as well as committing to no hard border on the island of Ireland. The PM saluted a “new sense of optimism” in Brexit talks, including “good news” for both Leavers and Remainers who aspire to a “smooth and orderly” exit from the EU. Reiterating that “nothing is agreed until everything agreed”, we heard Mrs May anticipating that there may still be troubles ahead. 

No money without a final trade deal

Prominently, we felt that the Prime Minister implied that Britain would not be handing over billions of pounds to the EU without a final trade deal from phase two of the talks. She revealed: “This offer is on the table in the context of us agreeing the partnership for the future, agreeing the next stage. If we don’t agree that partnership, then this offer is off the table.” We thought her statement conflicted with that of her Chancellor Philip Hammond the previous week, who maintained it was “inconceivable” the UK should walk away from financial obligations in the event of unsuccessful discussions.

Labour’s Position

We then observed Labour leader Jeremy Corbyn blame Mrs May for having “scraped through” phase one of Brexit, as he also remarked apparent clashes were occurring in the Government over the exact conditions of last week’s agreement. We then saw him remarking that Brexit Secretary David Davis had previously created confusion over the validity of Friday’s deal, especially since he had claimed it was not enforceable, 24 hours earlier.  Mr Corbyn also hailed Mrs May to review her “unnecessary exit date deadline” of 29 March, 2019 from the EU Withdrawal Bill – the Government’s flagship Brexit legislation. “I’m sure the whole House, and indeed I think probably the whole country, would rather get the best possible deal a little bit later, if that meant a better deal for people’s jobs and the economy.”

Brexit Date

Yet, we learnt that Mrs May Government’s aim is to proceed with their plan to pen the Brexit date into law. We also noted that in spite of recent Labour’s more relaxed tone and approach to Brexit to include membership of the EU’s single market and customs union, the PM blamed them for adopting 12 different standpoints on the nation’s departure. Then unexpectedly, we saw the Prime Minister being commended on her deal by both Conservative Leavers and Remainers, with ex-minister Robert Halfon applauding Mrs May’s “Zebedee-like qualities of resilience”, referring to the Magic Roundabout’s character.

EU Nationals and The Irish Border

Then we observed the Prime Minister also being recognised for writing an open letter to EU nationals on Monday, in which she told those already living in the UK: “I want you to stay.” We also noted that Nigel Dodds, DUP’s Westminster leader, whose party supports Theresa May’s government, applauded Mrs May’s “personal devotion” to changing the text of the agreement to put any concerns to rest in Northern Ireland.

Henry VIII Powers and Conservative Rebellion

We also noticed that a few Tory Brexiteers feared that Britain could be brought into line with EU rules after Brexit to resolve the Irish border challenge. We also watched Philip Davies, Leave supporter, disagreeing on the Brexit bill. By then we realised that by agreeing on the establishment of a new committee to examine ministers’ use of alleged Henry VIII powers in the bill, the Government further tried to lessen Brexit disagreements within the Tory party, as well as the possibility of a potential Conservative uprising regarding the EU Withdrawal Bill. 

BBC News Update 14/12/17 : PM is off to Brussels after losing the EU vote

Theresa May is due at a summit in Brussels, hours after Conservative rebels in the Commons defeated the government in a key Brexit vote. MPs backed an amendment giving them a legal guarantee of a vote on the final Brexit deal struck with Brussels. One rebel, Stephen Hammond, was sacked by the prime minister as a party vice chairman in the aftermath of the vote. Other EU member states could decide to move forward to trade talks with the UK at their two-day summit.

Kamal Ahmed: Brexit transition deal is ‘urgent’, say MPs
What the EU Withdrawal Bill will do
MEPs vote on Brexit: What we learned

Mrs May lost by just four votes, as MPs backed an amendment to the EU Withdrawal Bill by 309 to 305 – her first Commons defeat as prime minister. Labour leader Jeremy Corbyn said it was a “humiliating loss of authority” for the prime minister. What difference does this defeat make?
It will not derail Brexit but MPs who voted against the government hope it will give them a bigger say in the final deal Theresa May strikes with Brussels…

 

Lotuswise Chartered Accountants and Business Consultants deal with a number of international clients who are directly or indirectly affected by the challenges that Brexit will bring. If you have any concerns related to future international trade including but not limited to cross-border VAT, tariffs, cash flow and your business, please contact us as soon as possible.

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The Budget November 2017 – Building a Britain fit for the future

The Budget November 2017 – Building a Britain fit for the future

We watched our Chancellor Philip Hammond’s second budget, as he committed to spending more on infrastructure projects and stimulating the housing market. This time round, he had to put on a good performance to keep his job, after criticism following his Spring Budget. His jokes were better this time, but there was very little good news on the tax front and some worrying economic figures, particularly the growth forecasts. We already knew about a stamp duty holiday for first-time homebuyers, as this was hotly tipped prior to the Budget but, nevertheless, we were surprised that the duty for such buyers was abolished for purchases up to £300,000. 

SDLT Relief For First-Time Buyers 

If you are a first-time buyer, and to help you get onto the property ladder and stimulate the housing market, our chancellor announced that, for property purchases completed on or after 22 November 2017, there would be no SDLT payable if the purchase price is below £300,000.  His will be a permanent measure rather than a temporary holiday, as if you are claiming the relief, you will pay no SDLT on the first £300,000 of the consideration and 5% on any remainder. No relief will be available to you where the total consideration is more than £500,000. And if you are buying a property in joint names, it must be the first property owned by all purchasers.

Personal Tax Allowance and Higher Rate Limit Increased 
Our Chancellor reminded us that his government is committed to increasing your personal allowance to £12,500 in 2020 and the higher rate tax threshold to £50,000. However, your personal allowance for 2018/19 was only increased in line with inflation to £11,850 and the higher rate threshold to £46,350. Up to 10% of your personal allowance (£1,185) may be transferred to one spouse or civil partner, if unused and the transferee is a basic rate taxpayer. This transfer will now be available on behalf of deceased spouses and civil partners, and your claim may now be backdated for up to four years where the entitlement conditions were met.

No Changes in Tax or NIC Rates 
Your basic rate of income tax and higher rate remain at 20% and 40% respectively and the 45% additional rate continues to apply to income over £150,000. Although Class 2 National Insurance contributions (NIC), if you are self-employed, are being abolished from 6 April 2019 and “merged” with Class 4 contributions. We note that the Chancellor did not dare mention an increase in the current 9% Class 4 rate this time! We had heard rumours that the dividend rate might be increased. But your dividends will continue to be taxed at 7.5%, 32.5% and then 38.1% depending upon whether they fall into the basic rate band, higher rate band or the additional rate.  Your annual ISA investment limit increased to £20,000 from 6 April 2017 and will remain at that level for 2018/19. Your dividends on shares held within an ISA will continue to be tax free.

IR35 “OFF-Payroll” Rules May Be Extended to Private Sector 
Although not mentioned in the Budget speech, we observed that the other documents released on Budget day mention the possible extension of the rules for personal service companies in the public sector to workers in the private sector. Our government will consult in 2018 on how to tackle non-compliance with the intermediaries’ legislation (commonly known as IR35) in the private sector. The legislation which currently only applies in the public sector ensures that individuals who effectively work as employees are taxed as employees, even if they choose to structure their work through a company.

Changes to Diesel Company Cars 
Company car benefits are based on CO2 emissions data which has encouraged employees to choose diesel cars due to lower CO2 emissions. Our government is trying to reduce the number of diesel cars and will increase the current 3% diesel supplement to 4% from 6 April 2018. As previously announced radical changes to your company car benefit rules are being introduced in 2020. The benefit in kind, if you use electric and hybrid cars, with a range of 130 miles or more on the electric motor, is being reduced to just 2%. That means that your taxable benefit for such a car with a list price of £30,000 would be just £600 a year. Where, you, as an employer, allow staff to charge their own electric car at work, there will be no taxable benefit. 

EIS Tax Relief Increased For Investment In Tech Businesses 

Our Government will double the amount that you, as an individual, may invest under the EIS in a tax year to £2 million from the current limit of £1 million, provided any amount over £1 million is invested in one or more knowledge-intensive companies. Your annual investment limit for knowledge-intensive companies receiving investments under the EIS and from VCTs will be increased from the current limit of £5 million to £10 million. The lifetime limit raised by such companies will remain the same at £20 million.  

R&D Tax Relief Increased 

He further announced that the rate of the R&D expenditure credit is being increased from 11% to 12%, in order to support business investment in R&D. This relief is available to companies that do not qualify for the more generous relief available to SMEs. 

VAT Registration Limit Frozen 

As for the VAT registration, the limit normally increases in line with inflation each year, however it has now been frozen at £85,000 until 1 April 2020. At the same time, the deregistration limit remains at £83,000. We had heard rumours that the VAT threshold would be reduced, so more businesses would be required to charge VAT on their sales. Our country currently has the highest VAT registration threshold in Europe. The introduction of Making Tax Digital (MTD) for VAT in April 2019 will apply to businesses above the registration limit, and freezing or reducing the threshold will bring more businesses in the scope of MTD. 

Business Rates Relief For Small Businesses 

We know that there has been much lobbying from the small business sector to reduce business rates. Our Chancellor stated that 600,000 small businesses currently benefit from small business rates relief. In order to support the licensed trade from April 2017, pubs with a rateable value up to £100,000 are able to claim a £1,000 business rates discount for one year. This relief has now been extended until March 2019. 

Mileage Allowance For Buy To Let Landlords 

Another measure hidden away was the proposal that, if you are a buy-to-let landlord, you will be able to claim 45p a mile for necessary visits to your rental properties. This will be as an alternative to claims for capital allowances and deductions for actual expenses incurred, such as fuel.
 

Dates For Your Diary – Dec 2017 / Jan 2018
 

Date What’s Due
1/12 Corporation tax for year to 28/02/2017 unless quarterly instalments apply.
19/12 PAYE & NIC deductions, and CIS return and tax, for month to 5/12/17 (due 22/12 if you pay electronically).
30/12 Deadline for filing 2016/17 tax return online in order to request that HMRC collect outstanding tax via the 2017/18 PAYE code
1/01 Corporation tax for year to 31/03/17.
19/01 PAYE & NIC deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay electronically).
31/01

 

 

Self-Assessment tax return for 2016/17 due, together with balancing payment and 50% payment on account of 2017/18 tax.

  

Lotuswise Chartered Accountants and Business Consultants can help you with your tax. Provide us with your information and we will help you plan your affairs to minimise your tax and help you set aside sufficient funds now and in future. So please contact us now. 

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Reasons why you should consider an apprenticeship for your business

Reasons why you should consider an apprenticeship for your business

Whether your business is small or large, the opportunity to embrace an apprentice into your team is readily available, yet rarely taken by small businesses. They are available to large and small firms, with the former (per a wage bill more than £3 million) being subject to a mandatory Apprenticeship Levy, and the latter being entitled to the co-invested scheme, and possibly additional funded support (employing fewer than 50 employees).

From May 2017, companies not paying the Levy will pay 10% towards the cost of the co-investment scheme, and the Government pay the other 90%.  You can search for the most relevant and beneficial courses and training providers by visiting find apprenticeship training. Once you are ready to move forward and recruit, you can post vacancies on recruit an apprentice for free. By doing this, the vacancy will also be advertised on other popular recruitment sites, enabling your post to reach even more potential candidates.

As a Levy-paying business, you must register with the Apprenticeship Service to be able to access the funds and spend them on relevant training. Apprenticeships are an increasingly attractive option for businesses of all sizes wanting to bring new talent and ideas into their teams.
 

Here are a few reasons why you should consider an apprenticeship for your business:

 

1. Increase the size of your team while keeping staff and recruitment costs down

Your average apprentice must be paid at least the minimum wage during training, but their salary will increase in conjunction with training progress and accreditation.  This provides you with a low-cost option to grow your business team with staff developed and trained to best suit your company’s needs.

2. Develop new talent to meet your needs

By recruiting from the apprentice pool, you have so many options in which to coach, develop and mould, to meet the needs of your business.  Naturally, this is a balanced against a limited amount of experience in the work force. However, by focussing on the key needs of your business and teaching business processes from the start, it can lead to your apprentice’s own innovative ideas to surface in time.

3. Give your team new skills, energy and time

Having an apprentice join your busy team can offer flexibility for existing employees and free-up time to focus on more involved and high-profile tasks with more responsibility. 

4. Provide young people with a career opportunity.

An apprenticeship offers a young person the opportunity to start a career in a sector of their choosing, and to help your business grow with skills needed for the future.  Providing this nurturing opportunity can help increase your employee loyalty, and hold on to your highly skilled staff which you can continue to invest in and up-skill.

In a report by the National Apprenticeship Service, it was found that employers with an established Apprenticeship programme reported that, “productivity in their workplace had improved by 76% whilst 75% reported that apprenticeships improved the quality of their product or service”.

 

Lotuswise Chartered Accountants and Business Consultants can help you get started and help your business succeed and thrive, to find out how, please contact us.

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Your Furnished Holiday Letting Business and IHT Relief

Your Furnished Holiday Letting Business and IHT Relief

Furnished Holiday Business & Inheritance Tax (IHT)

Your furnished holiday letting business is not a business for IHT relief. If you own a furnished holiday letting business, this will be treated as a trade for most tax purposes. For example, capital allowances are available on furniture, and CGT entrepreneurs’ relief is available on disposal of your business.

 

Recent Ruling

However, a recent tax case has determined that a holiday letting business in Cornwall did not qualify for inheritance tax business property relief. 

Despite the provision of a range of services to customers, the judge agreed with HMRC that the business was wholly or mainly that of making or holding of investments and, as such, ineligible for any relief from inheritance tax.

 

From 6 April 2017

Note that, the restricted deduction for interest that started to apply to buy-to-let businesses from 6 April 2017, does not apply to furnished holiday lets. There are special rules you need to follow for your rental business to qualify as furnished holiday lettings; in particular, your property must be available for letting for 210 days a year, and actually let for 105 days. 

 

Lotuswise Chartered Accountants and Business Consultants can help you figure out your tax for your holiday lettings, so please contact us  as soon as possible. 

 

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You May Have To Pay More Tax On Your Dividends In January 2018

You May Have To Pay More Tax On Your Dividends In January 2018

The Rules

The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends. You might then be part of the many taxpayers who will have to pay more tax on those dividends on 31 January 2018.

 

From 6 April 2016 

Up until 5 April 2016, the 10% dividend credit meant that as a basic rate taxpayer, you paid no tax at all on dividend income as the 10% tax on dividends was covered by the 10% tax credit. For example, where a basic rate taxpayer received £9,000 dividends, this would be treated as £10,000 gross income but the 10% tax of £1,000 would be covered by the £1,000 tax credit. From 6 April 2016 the same £9,000 dividend would now be taxed at 7.5% once the £5,000 dividend allowance has been used making £300 tax due on 31 January.

 

Higher Rate Taxpayer 

If you are a higher rate taxpayer receiving dividends, the loss of the 10% tax credit means that the full 32.5% rate applies to dividends in excess of the £5,000 allowance. Thus, if, as a higher rate taxpayer, you received £30,000 of dividends, £25,000 of those dividends would be taxed at 32.5% meaning £8,125 due on 31 January 2018. Last year the tax on the same dividends would have been £7,500 after deducting tax credits.

 

Lotuswise Chartered Accountants and Business Consultants can help you figure out tax, therefore if you can let us have all of your tax documents, we can let you know how much tax you need to pay next January so that you can set aside sufficient funds, so please contact us  as soon as possible. 

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Top 3 Barriers to Smash for Business Success

Top 3 Barriers to Smash for Business Success

There are more than ½ million new start-ups each year, with last year alone having a record number of 657,790, as found by the Centre for Entrepreneurs (CFE).  However, almost shockingly, it is estimated that 1 in 5 of those will fail in the first year, and more than half will fail in the first 5 years.

Although there is a vast array of technology available to aid drive business performance and scale, the same re-occurring barriers are the ones taking their small business victims. The following article will consider the top three barriers to small business success.

 

Running out of money – Cashflow

As with all small businesses, whether established or new, there is a huge focus on accelerating business growth, and finding your first of many new clients.  However, the need to win at all costs can have detrimental impact on various aspects of your business. This may include payment terms becoming longer than anticipated, margins not being maximised and project scope creeping wider, to name but a few.  It is key for the longevity of your business to ensure that you are on top of increasing overheads, managing the flow of preferential credit and payment terms such that it benefits your business rather than your supplier.  Having a positive cash-flow is the first barrier to smash.

 

Losing your best people

Staff retention is key to the success of any business, and being able to hold onto talented, committed people is no easy task. It can be especially difficult in growth markets where the potential rewards with a competitor may be highly attractive, making it vital to offer appealing package remuneration to aid staff retention. This could be achieved with share options, equity, bonuses, healthcare, pensions and more.

It may be prudent to consider other means of reward which are not just payment related, but also recognition. This may encourage your top staff to take on more challenging and exciting opportunities within the business and not look elsewhere.

With recruitment costs being an added expense for any company, retaining good people is key to building a solid foundation for your business. Having positive referrals from current staff and customers can also help to keep a healthy pipeline of talent, not only for today but also for future succession and expansion planning for your company.  A solid recruitment and staff retention plan is key to ongoing success.

 

Not knowing your business 

It goes without saying that knowing your numbers on your business is key to success.  Also, being passionate about what you do and how you do it.  The adage “the shoe maker should stick to making shoes” has never been so appropriate, and knowing your market, having the expertise around you as well as being tight in terms of knowing your daily business’s performance will be a step in the right direction to avoid the pitfalls.  If you do not have all the answers, then take external advice from professionals who are experienced in your field to help make the right decisions on time consuming and complex areas like fundraising, intellectual property, and staff incentivisation.

 

Smashing these three barriers will help your business survive, and keeping to these business practices will in turn help your business thrive. Lotuswise Chartered Accountants and Business Consultants can help your business succeed, to find out how, please contact us.

 

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Marketing – Three steps to brand building

Marketing – Three steps to brand building

Marketing – Three steps to brand building

Whether you’re a start-up or a small to large enterprise business, the power of your brand can make the difference between companies surviving and thriving. How you go about developing your brand needs to form part of your overall strategy versus being an after- thought. Overtime the brand you develop will be part of the value for what the business is worth. 

A brand is centered on the emotions you wish customers to think about you, how they will describe you and includes characteristics of your business, demonstrated through everything you and your team do, from talking to customers to preparing content to share. There are many advice channels online to help in building a brand, but to keep it simple, we have boiled it down to the three corner stones.


1.
What’s your Business Mission?

Being clear on what you want for the business to achieve in the long term is the clarity needed to start formulating the brand identify, being clear and concise as well as a story to help those around you connect with your mission.

As an example, take the inspirational mission statement of Amazon:

“It’s our goal to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online”.

Reading through, it is inspirational, clear and concise as to what the business aims to achieve. It is also calling out what the business wants to be known for, in this case being customer centric and providing variety of choice of goods.

Once you have your mission statement, the key step is to communicate it to the wider world and making sure your marketing channels are aligned and your people truly believe and share the mission with confidence and that it can be delivered, e.g. expertise, value for money, speed, efficiency.

 

2. Research and Protect your Brand

Clearly understand who your customers are and what’s important to them from the brand. Ask existing clients and employees what they feel about the brand from their experience to-date, forming part of your market research. With the fast pace of opinions being shared on social media it is important to monitor comments and respond to customers accordingly and in doing so protecting your brand at all cost.

A great example of protecting the brand and in doing so going the extra mile for customers was Virgin Media, when after a husband who thought he had lost a

voicemail recording of his late wife he had kept for more than 10 years, described the

moment the telecoms giant restored it as “wonderful”. It took the company a team of 11 engineers and three days to track down; however, the positive impact via social media was warm felt and shared globally. A situation that if one turned a blind eye could’ve had serious negative brand impact.

 

3. Build your Brand and Visual identity

Bring your brand to life through creating a solid first impression. Don’t rush or try this yourself as it is recommended to work with a designer to help with the logo. Once defined, roll out the identity, look and feel into all you do, the vehicles driven, uniform, email signatures, tone of voice in all communications linked to the brand identity etc. To ensure your brand consistently delivers customer value, translate this into the end to end customer journey, having an easy to navigate customer website, easy to navigate and purchase items, supported by response to queries and after sales care.

 

Lotuswise Chartered Accountants and Business Consultants can help your business in many ways, to find out how, please contact us  as soon as possible. 

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