Stockport based accountancy practice Clarke Nicklin are committed to ensure that businesses can save tax wherever possible. This month’s May’s Tax Tips & News i sdesigned to keep you one step ahead of the taxman.
Second Income:
The Taxman is reaching out to employees with second incomes; which could be anything from selling home-made items, to working as a self-employed consultant. All of the income and expenses from that second source of income should be declared to HMRC, and the correct tax must be paid where a profit has been made. The Second Incomes Campaign provides a means to declare any “forgotten” second income with minimal fuss and penalties. All the tax due must be paid alongside any interest; this will be calculated from the date the tax was originally due to be paid. Read More
Second Homes:
If you have more than one home, – properties actually used as your home – you can elect for one of those properties to be your tax-exempt main home. Once this election is made, it can be changed at any time, and this allows you to manage the tax you pay when disposing of your properties.
However, from April 2015 the ability to elect for one property or another to be tax-exempt may well be removed. This is because the Government wants to tax overseas residents on the profits they make when they sell their homes in the UK. Read More
Tax Nudge:
A “nudge” in this context is a piece of advice or an arrangement designed to encourage you pick the option the Government wants to you to choose, such as contributing to a pension, or eating healthier foods.
In this case the nudge is information about the average profit ratios businesses in your business sector make, as reported on their tax returns. Working out these average profit ratios is called “benchmarking”.
The Taxman is writing to a sample of traders in selected trade sectors quoting benchmarked profit ratios for those sectors. He asks the trader to review his turnover and expense figures before completing the 2013/14 tax return, with a view to ensuring the reported net profit (also known as bottom line) lies in a range around the benchmarked net profit ratio. Read More
Flat Rate VAT Scheme:
The flat rate VAT scheme for small businesses is designed to reduce administration hassle for the businesses that use it, not to reduce the amount of VAT the business pays over to HMRC, but that is often a side effect of using the scheme.
You can use the flat rate VAT scheme if you have an annual turnover up to £150,000 (net of VAT). Once registered to use the scheme, you must apply VAT to your sales at the rates required for the particular product or service (20%, 5% or zero). However, when completing the quarterly VAT returns you ignore any VAT paid on purchases, apart from large assets costing over £2000. You calculate the VAT to be paid over to HMRC as a flat percentage of your gross sales, with the percentage used determined by the trade sector which most of your sales fall into. Read More
May Key Tax Dates:
02 – Last day for car change notifications in the quarter to 5 April – Use P46 Car
19 – Deadline for Employers’ 2013/14 end of year PAYE Returns (P35, P14, P38 & P38A). Penalties for non-submission.
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/5/2014
31 – Deadline for copies of P60 to be issued to employees for 2013/14