As the director and shareholder of your own company you can decide how much salary to pay yourself each month, in order to use your personal allowance in the most tax efficient way. As a director of your personal company you do not have to pay yourself the national minimum wage unless you have an employment contract with your company.

From 6 April 2012 the tax free personal allowance is £675 per month (£8,105 per year), so you could take a salary at that level and pay no income tax. However, the monthly thresholds for paying class 1 national insurance (NI) are: £634 for employees and £624 for employers. If your salary is £675 gross per month, your company needs to deduct NI of £4.92 and pay employer’s NI of £7.04 on top.

If you take a lower salary of just over the NI lower earnings threshold of £464 per month you will get the NI credit, so your wages count towards your state pension entitlement, but you don’t pay any tax or NI and neither does the company. However, at that annual salary level (£5,568) you will be ‘wasting’ £2,537 of your tax free personal allowance. At £624 per month there will be no NI to pay and you only have £617 of unused personal allowance, so this is likely to be more beneficial.

As a director’s salary is an allowable expense for Corporation Tax purposes it is always beneficial to pay yourself a salary but talk to us first about the best salary level for you. The correct procedures also need to be in place when paying a salary and we will also need to take into account your other sources of income, as you may be using your personal allowance elsewhere.

If you are self-employed your business may well be based at your home address, although you perform the majority of your work at your customers’ sites. This can apply to a range of trades from plumbers to computer consultants, and even medical professionals.

In order to claim the costs of travelling to your customers’ sites against your taxable profits, you need to show that your trading activity does not cease when you arrive home. The following records should help prove this:

- Precise records of all journeys to your customers’ sites, including the date, the mileage, and any public transport tickets and parking receipts.

- A diary of the time spent working on proposals, quotes and other business related paperwork at your home address.

- Business-related paperwork such as invoices and quotations should show your home address as the business base.

- Any insurance policy you need for your business should show your home address as the operational base for the business.

- Where your business is operated through a company, having the registered office for that company at the home address can also help. HMRC will be able to see these details, but you can hide them from prying eyes on the Companies House register.

You can also make a claim for the cost of running your business from home, so speak to us to see what can and cannot be claimed as a business expense.

There has been a certain amount of panic in the contractor community about a statement buried deep in the Budget documents about the reform of IR35. It says:

“The Government is bringing forward a package of measures to tighten up on avoidance through the use of personal service companies and to make the existing IR35 legislation easier to understand. This will include HMRC strengthening specialist compliance teams, simplifying the way IR35 is administered, and consulting on proposals which would require office holders/controlling persons who are integral to the running of an organisation, to have PAYE and NICs deducted at source.”

This does not mean that everyone who is an office-holder (ie director or company secretary) of their own personal service company will have to be paid via PAYE. The proposed law change is aimed at the following situation:

A is an office-holder of PLC, such that he personally holds a position on the board of PLC, or has a controlling role within PLC. Instead of being paid a salary by PLC, A has agreed that his own personal service company (L Ltd), will send PLC an invoice for the time he spends on PLC business. PLC may be a large company, or a public department, or a local authority. In this case PLC will have to pay A through its payroll. PLC will not be permitted to pay A through L Ltd.

This change in the law will not affect genuine freelance workers or contractors who do not take up positions on the boards of their customers.

Get in touch if you need any advice on operating a personal services company.

The Government has decided to tidy up some of the areas of VAT law where a different rate of VAT may be charged on very similar goods or services.

Food & drink

All food eaten on the supplier’s premises; ‘eat-in’ purchases, are subject to standard rate VAT (20%). However, the consumption area for the food may be a communal area shared with other retailers, or tables and chairs on the pavement, neither of which are technically on the retailer’s premises. In these cases the rules are to be redefined so that such areas adjacent to the retailer’s premises will count as ‘eat-in’ areas, and the food sold to be eaten there will be standard rated.

Take-away food is subject to zero-rate VAT, unless it is hot food designed to be eaten straight away such as fish and chips. Some retailers argue that the food is only hot because is has been freshly baked, so charge zero-rate VAT. The law is to be clarified so that all hot food to take-away, other than freshly baked bread, will be subject to standard rate VAT.

Soft drinks designed to rehydrate, slake thirst or give enjoyment, are subject to standard rate VAT. However, some sports drinks are claimed to have nutritional values (e.g. protein enhancers), rather than the usual thirst-quenching properties of a soft drink. Hence the manufacturers have zero-rated those drinks. The law will be changed to ensure that all sports drinks are standard rated just like other soft drinks.

Land and buildings

The letting of a discrete area of land can be exempt from VAT, if the owner has opted to exempt the land or building. Self-storage lock-ups can fall into this exemption. However, other storage facilities where the customer does not have right of entry to a discrete area cannot be exempt from VAT. The law is to be changed to ensure that self-storage facilities are subject to standard rate VAT, whether or not the owner of the facilities has opted to exempt the whole building from VAT.

Miscellaneous items

Rental of hairdressers’ chairs have previously been exempt from VAT in certain cases, but will now always be subject to standard rate VAT.

Sales of caravans will be subject to standard rate VAT, but residential caravans designed and constructed for year-round living will be zero-rated for VAT.

Approved changes to listed buildings are zero-rated for VAT, but repairs to those buildings are standard rated. This encourages the building owners to alter their protected buildings rather than repair them. The law will be changed so all building materials and building services supplied for alterations of listed buildings will be standard rated.

These changes will generally take effect from 1 October 2012, but where the contract for work on a listed building had been signed by 21 March 2012, the zero rate will continue to apply.

If your business is involved in any of the above areas, please talk to us about how to apply the correct rate of VAT on all your sales.

Q. I am about to move abroad, for what I hope will be a permanent relocation. Can I continue to contribute to my tax-free ISAs in the UK?

A. To open an ISA you must be resident and ordinarily resident in the UK for tax purposes. This broadly means that you normally live in the UK. There are exceptions for members of the military and government employees who are sent to work abroad. Once you have emigrated, you will not be permitted to open a new ISA, or contribute to ISAs already held. Also the interest paid on the ISAs you already hold may be taxable in the country you live in.

Q. If a company pays for private medical insurance for its employees and the contract is between the employer and the insurance company, is there a tax charge on the employees? Can the company deduct the cost of the insurance from its profits?
A.Where the employees earn £8,500 or more a year, or are directors, there is a tax charge for the individuals based on the cost to the company of the insurance. There are exceptions to this tax charge for eye-tests required by health and safety legislation, annual medical checks or health screenings. The company can deduct the cost of the insurance from its profits, as it is part of the cost of employing staff.

Q. I bought an investment property about 6 years ago and after expenses I have a surplus of about £250 per month. I have never declared this income or paid tax on it. How do I go about putting this right?
A. The Taxman is running a series of campaigns to encourage people to come clean about unpaid tax, the latest of which is aimed at people who sell through online markets. Although this is not your situation, you can make a disclosure of your rental profits. You will have to work out how much tax you owe and the interest due on that late paid tax, but we can help you with this. There will also be a penalty to pay, but as you are volunteering the information without being asked, the penalty should be minimal. The penalty could possibly be about 10% of the tax due.

5 – End of 2011/12 tax year. Last day to use up your annual exemptions for capital gains tax, inheritance tax and ISA’s.

14 – Return and payment of CT61 tax due for quarter to 31 March 2012

19 – PAYE/NIC and CIS deductions due for month to 5/4/2012 or quarter 4 of 2011/12 for small employers.

30 – Additional daily penalties start of £10 per day up to a maximum of £900 for failing to file self assessment tax return due on 31 January 2012 (2010/11 tax return)

Personal Allowances
The big news for individuals is that the personal allowance will increase to £9,205 from 6 April 2013, so you have to wait another year for that extra tax-free income. The personal allowance has already been increased by £630 from 6 April 2012 to £8,105, and the other allowances are increased as indicated below.

A source of complexity for older taxpayers is the application and withdrawal of age-related allowances, which are currently given when the taxpayer reaches age 65. These age-related allowances are withdrawn when the taxpayer’s total income exceeds £25,400 (for 2012/13).

From 6 April 2013 those who reach age 65 on or after that date will not receive an age-related allowance, but will instead be entitled to the standard personal allowance of £9,205. This allowance is expected to rise to £10,000 in April 2014 or 2015. The existing age allowances given to people born before 6 April 1948 will be frozen at current rates as shown below.

Personal allowances for 2012/13…

Under 65 (standard allowance): £8,105 (2013/14 – £9,205)
65-74: £10,500 (2013/14 – £10,500)
75 and over: £10,660 (2013/14 – £10,660)
Minimum married couples allowance*: £2,960 (2013/14 – TBA)
Maximum married couples allowance*: £7,705 (2013/14 – TBA)
Blind person’s allowance: £2,100 (2013/14 – TBA)
Income limit for allowances for age related allowances: £25,400 (2013/14 – TBA)
Income limit for standard allowances: £100,000 (2013/14 – £100,000)

* tax relief given at 10% where one partner was born before 6/4/1935.

Income Tax Rates
The tax rates for 2012/13 have not been changed from those applicable in 2011/12 (see below), but the threshold at which the 40% tax rate is applied is reduced to £34,370.

The reduction in the 40% threshold is balanced by the increase in personal allowance by £630. This means that in 2011/12 you start to pay 40% tax when your total income before allowances exceeds £42,475. In 2012/13 the 40% tax threshold is set at exactly the same amount: £42,475, before deduction of personal allowances. You can increase your own personal 40% threshold, by making donations under Gift Aid or paying personal pension contributions in the tax year.

Rates for 2012/13
Savings rate* (10%) – 0 to £2,710
Basic rate (20%) – 0 to £34,370
Higher rate (40%) – £34,371 to £150,000
Additional rate (50%) – over £150,000

* Only applies if non savings income is below this amount.

The rate on dividends remains at 10% for basic rate taxpayers, 32.5% for higher rate and 42.5% for additional rate. All come with a 10% tax credit.

Rates for 2013/14
There was much speculation before the Budget about the removal of the 50% rate that applies to taxable income above £150,000. This 50% additional rate remains in place for 2012/13, but will be reduced to 45% from 6 April 2013. The Government has also published most of the other tax rates and thresholds for 2013/14 as follows:

Savings rate* (10%) – 0 to £2,770 (estimate)
Basic rate (20%) – 0 to £32,245
Higher rate (40%) – £32,246 to £150,000
Additional rate (45%) – over £150,000

* Only applies if non savings income is below this amount

The rate on dividends will be 10% for basic rate taxpayers, 32.5% for higher rate and 37.5% for additional rate. All come with a 10% tax credit.

Child Benefit
Another area of speculation was the withdrawal of child benefit from families where at least one parent pays tax at 40% or higher.

The Chancellor listened to reason and has decided to taper the withdrawal of child benefit where the higher earner’s net income (after losses but before allowances), exceeds £50,000. For every £100 of income over £50,000, a tax charge will apply equivalent to 1% of the child benefit received by the family. This will lead to the complete withdrawal of child benefit at £60,000 of net income. This tax charge is to apply from 1 January 2013, and will be collected through PAYE and self-assessment from the higher earning partner in the family.

If you, or your partner, are currently in receipt of child benefit you don’t have to do anything now. HMRC will be writing to all those affected by this change later in 2012. However, please discuss with us how you could re-arrange the distribution of income within your family, to reduce the affect of the withdrawal of child benefit. Any action in this area should be taken as soon as possible to ensure the new arrangements are in place for the full tax year 2012/13.

Tax Credits
The following summarises the rates and thresholds that will be cut or frozen in 2012/13 compared to 2011/12.

Child Tax Credit
Family element – £545 (2011/12 – £545)
First income threshold – £15,860 (2011/12 – £15,860)
Second income threshold – withdrawn (2011/12 – £40,000)

Working Tax Credit
Basic element – £1,920 (2011/12 – £1,920)
Couple and lone parent £1,950 (2011/12 – £1,950)
30 hour element – £790 (2011/12 – £790)
Childcare element:
Maximum costs for one child – £175 per week (2011/12 – £175 per week)
Maximum cost for all children – £300 per week (2011/12 – £300 per week)
Percentage of costs covered – 70% (2011/12 – 70%)
First income threshold – £6,420 (2011/12 – £6,420)
Withdrawal rate – 41% (2011/12 – 41%)
Income rise disregard – £10,000 (2011/12 – £10,000)
Income fall disregard – £2,500 (2011/12 – N/A)

The income disregard provides a buffer for changes in income, so overpayments of tax credits do not arise where income varies within this threshold year on year. This affects families with fluctuating incomes, such as the self-employed. If you are in this position you need to finalise your profit figures as close to the tax year end as possible and provide those figures to the Tax Credits office without delay.

There are also changes to the tax credit rules from April 2012, which affect the number of hours the adults in the family must work to qualify for working tax credits. Lone parents are not affected by these changes.

Cap on Tax Reliefs
The Chancellor wants to deal with wealthy individuals who take advantage of tax reliefs that have no annual limits, such as relief for trading losses, charitable donations, and capital allowances. He is proposing that from April 2013 all such tax reliefs will be capped at the greater of £50,000 per year or 25% of the taxpayer’s gross income. If this idea becomes law it could significantly affect loss-making businesses that are not conducted through a company.

Enterprise Investment Schemes
From 6 April 2012 there are two schemes which you can use to achieve tax relief for investing in small unquoted companies: the seed enterprise investment scheme (SEIS) and the enterprise investment scheme (EIS). The tax relief given under each scheme is shown below for 2012/13:

Rate of income tax relief: SEIS – 50%, EIS – 30%
Annual maximum investment qualifying for income tax relief: SEIS – £100,000, EIS – £1,000,000
Capital gains tax relief on investment: SEIS – 18% or 28%, EIS – deferred relief

Both the company and the investor have to qualify in order to receive tax relief under SEIS or EIS. The rules for both schemes are very complicated, so please talk to us before deciding to use either scheme.

Pension Contributions
In spite of much speculation about a reduction in tax relief for contributions to registered pension schemes, there has been no change in the tax relief rates or annual allowance for 2012/13. The annual allowance is the limit on pension contributions that attract tax relief, whether those contributions are paid by the individual, his employer, or calculated as a deemed rise in the value of a final salary scheme.

Each individual has a personal annual allowance of £50,000, plus unused annual allowance brought forward from the previous three tax years. If the value of the contributions made to the pension scheme exceed the taxpayer’s annual allowance, an annual allowance tax charge applies on the excess contributions, set at the taxpayer’s highest rate of income tax.

Annual allowance: 2012/13 – £50,000 (2011/12 – £50,000)
Lifetime Allowance: 2012/13 – £1,500,000 (2011/12 – £1,800,000)

Independent Savings Accounts (ISAs)
The ISA savings limits applicable in 2012/13 for those over 18 are:
Overall limit – £11,280
Cash up to – £5,640
Balance in stocks and shares up to – £11,280

For those aged 16 & 17:
Overall limit – £5,640
Cash up to – £5,640
Balance in stocks and shares up to – nil

For Junior ISA:
Overall limit – £3,600
Cash up to – £3,600
Balance in stocks and shares up to – £3,600

CGT
There has been no change in the rates or thresholds for capital gains tax (CGT):

The rates for 2012/13 are…

Annual exemption – £10,600
Annual exemption for most trustees – £5,300
Rate for gains in basic rate band – 18%
Rate for gains above basic rate band – 28%
Rate for gains subject to entrepreneurs’ relief – 10%
Lifetime limit for entrepreneurs’ relief – £10,000,000

Overseas Owners
Currently only UK resident individuals pay CGT on gains, even when the property is located in the UK. The Government is considering how CGT can be applied to gains made on residential property in the UK, when the owner is resident in another country. Any changes will apply from April 2013 at the earliest.

Employee Shares
If you acquire shares through an approved share option scheme run by your employer, you must pay CGT on gains made when you sell those shares, after deduction of your annual exemption. The CGT will be charged at 18% or 28%, as the conditions for the entrepreneurs’ relief rate of 10% are unlikely to be met. The Government is considering changing the rules for approved share option schemes so the 10% rate can apply to shares acquired by employees. Any changes will apply from 6 April 2013 or later.

Inheritance Tax
The inheritance tax (IHT) nil rate band remains frozen until 2014/15. This is the amount of a person’s estate that is free of inheritance tax. However, for deaths occurring on and after 6 April 2012, when at least 10% of their estate has been left to charity, a reduced rate of IHT applies to the chargeable estate. Gifts made to charities are exempt from IHT.

The limits and rates for 2012/13 are…

Nil rate band: £325,000 (2011/12 – £325,000)
Rate payable on death: 40% (2011/12 – 40%)
Rate payable when 10% of estate left to charity: 36% (2011/12 – 40%)
Rate payable on lifetime gifts to certain trusts: 20% (2011/12 – 20%)

Stamp Duty
You pay stamp duty when you purchase a property in the UK. There has been a lot of talk about how some people have avoided paying SDLT on high value homes. The tax avoidance scheme usually involves an off-shore company.

To deal with such schemes the Government has introduced new rates of SDLT on purchases of residential property valued at over £2 million:

- 7% charge on purchases by individuals from 22 March 2012; and
- 15% charge on purchases made on or after 21 March 2012, by companies, collective investment schemes, or partnerships where a member is a company or a collective investment scheme

An annual tax charge may also be applied to the value of residential property held by certain companies, where each property is worth over £2 million. Any such charge will apply from April 2013.

Simplification
The Government wants to simplify the accounts small businesses (partnerships and sole-traders) have to prepare for tax purposes. It is consulting on whether preparing accounts on a cash basis would be easier, and standard allowances could be used for the business use of vehicles and the proprietor’s home. Any changes are likely to apply from April 2013 or later.

Corporation Tax
The small profits corporation tax rate remains the same at 20% for the year from 1 April 2012.

However the main rate for large companies is reducing from 26% to 24% and will be 22% by the year from 1 April 2014.

Capital Allowances
The rates and thresholds of the main capital allowances will apply as follows for 2012/13…

Main pool: writing down allowance: 18% (2011/12 – 20%)
Special rate pool: writing down allowance: 8% (2011/12 – 10%)
Annual Investment Allowance (AIA) cap: £25,000 (2011/12 – £100,000)

NI
For 2012/13 the main rates and thresholds for NI contributions are:

Lower Earnings Limit (LEL) for Class 1 NICs – £107/week
Employer’s class 1 above £144/week not contracted out – 13.8%
Employee’s class 1 not contracted out from £146 to £817/week – 12%
Employee’s additional class 1 above £817/week – 2%
Self-employed class 4 from £7,605 to £42,475 per annum – 9%
Self-employed class 4 additional rate above £42,475 per annum – 2%
Self-employed class 2 – £2.65 per week
Voluntary contributions class 3 – £13.25 per week

The Government is consulting on how to integrate the administration of income tax and NI for employers and the self-employed. Any changes are unlikely to take effect until 2014 or later.

Share Schemes
The Government wants to encourage more employees to acquire shares in the companies that employ them. Small and medium sized companies can use the Enterprise Management Incentive share option scheme (EMI) to grant share options to employees, but there is a £120,000 cap on the value of share options each employee can acquire. The Government plans to raise this cap to £250,000 as soon as possible.

Cars and Car Fuel
Car Benefit

The tax charge for the private use of a company car is based on a percentage of the list price of that car when new, the percentage being based on the vehicle’s CO2 emissions.

From 6 April 2012 cars with CO2 emissions in the band 76-99g/km will be taxed at 10% of list price. Those with CO2 emissions of 100g/km will be taxed at 11% of list price, with the percentage increasing in 1% steps for each additional 5g/km. From 6 April 2013 the 10% list price band will reduce again to 76-94g/km. A car with CO2 emissions of just 115g/km will then be taxed at 15% of list price.

From 6 April 2014 the 11% of list price will apply to cars with CO2 emissions in the band 76-94g/km, with a 1% step up for every addition 5g/km of CO2. From 6 April 2015 the minimum percentage of list price will be 13%, and from 2016 the minimum percentage of list price increases to 15%.

Fuel Benefit

Where a company car driver receives free fuel, the taxable benefit is calculated as the percentage of the list price for the car applied to a set value, currently £18,800. This will rise to £20,200 from 6 April 2012. The maximum taxable benefit of receiving free road fuel for private use will increase from £6,580 (for 2011/12) to £7,070.

The taxable benefit when fuel is provided for private use in a company van is frozen at £550 for 2012/13.

The VAT rates remain unchanged at…

Lower rate: 0%
Reduced rate: 5%
Standard rate: 20%

The registration and deregistration limits from 1 April 2012 are…

Registration turnover: £77,000 (1 April 2011 – £73,000)
Deregistration turnover: £75,000 (1 April 2011 – £71,000)

Changes from 2013
The following changes to the VAT rules will be made in 2013…

- The standard rate of VAT will apply to the supply and installation of energy saving materials in non-residential buildings used for non-business purposes by charities. Currently the lower rate of VAT applies
- The invoicing rules will be simplified
- Exemptions will be introduced for commercial Universities
- Cable-car rides will attract the reduced rate of VAT, where each cable car holds fewer than 10 passengers.

Proposals
The Government is consulting on the existing VAT law in the following areas, so expect changes in the future…

- Hot take-away food
- Sports nutrition drinks
- Self storage
- Hair-dressers’ chair-rental and
- Alterations to listed buildings.

Thinking of Starting a business! top If you have just started your business or if you are thinking of starting a business then we are the accountants for you. Our pro-active accounting services start from just £49 + VAT a month and can help give you the peace of mind that you are setting up your new business in the right way. What’s more may of our services include unlimited support so you can call us any time to ask advice. We have a free guide on our website to starting a business or alternatively give me a call on 01622 671 835 and arrange a free no-obligation meeting Spreading Household Income This is a good time to look forward to 2012/13 and assess who will be earning what in your family. The level of personal allowances (tax free income) have increased significantly over the last two years, and are expected to increase again in 2012/13 to at least £8,105 per person. This allowance cannot be transferred between family members, so if some people in your family are earning less than this, their personal allowance is going to waste. Strategies you may consider to avoid wastage of the personal allowance include: - Employing your spouse or children in your business, perhaps on a part-time basis. - Transferring an income-producing asset, such as a let property or savings account into the name of the lower earning spouse. - Taking on a family member as a partner in your business, so they can share some of the profits. - Ensuring the higher earner makes all the Gift Aid donations to charities from the family. These changes should be made as soon as possible to gain the maximum advantage in 2012/13. The strategies need to be implemented correctly so please contact us for advice before proceeding. Remember the Government plans to withdraw child benefit in 2013 from parents where either person pays tax at 40% or higher. To retain your child benefit (worth at least £1,055 per year) you need to ensure your taxable income is below the 40% threshold, which is set at £34,370 after allowances for 2012/13. Tax Efficient Investments top Most allowances for tax efficient investments are fixed for each tax year and cannot be carried over to the next year if not used. If you have money to invest you may want use your allowance for 2011/12, or in some cases wait until 2012/13 when new rules and new limits apply. Here is a brief summary of the 2011/12 and 2012/13 investment limits: EIS Investors who subscribe for shares under the Enterprise Investment Scheme (EIS) can currently receive income tax relief at 30% of up to £500,000 invested in one year. This annual cap will rise to £1 million from 6 April 2012. However, any amount can be invested in EIS shares to defer tax due on a capital gain made in the period up to three years before the EIS shares were acquired, or to up to one year later. An investment in EIS shares can be treated as if it was made in the previous tax year, to apply the income tax relief against the taxpayer’s tax due for the earlier year. The conditions companies need to meet to raise funds using EIS are also being relaxed from April 2012. These conditions are still very complex so talk to us first before making a decision to use the EIS scheme. SEIS The Seed Enterprise Investment Scheme (SEIS) is a new scheme due to start from 6 April 2012, subject to the law being passed by Parliament. This will operate like a mini version of the EIS, but the scheme will only be available for five years. The maximum investment by a taxpayer in one tax year will be £100,000, with income tax relief given at 50% of the invested amount. Any gains made on the SEIS shares will also be tax free as long as the investment conditions are not broken and the shares are held for at least three years. In addition if you make a capital gain in 2012/13 (on any asset), you can invest that gain in SEIS shares and achieve 100% tax exemption on that gain. Thus the maximum tax relief for investing in SEIS shares could be 78% of the amount invested. VCT Investing in shares issued by a Venture Capital Trust (VCT) will give you 30% income tax relief on the amount invested, capped at £200,000 per tax year. This investment limit is not expected to increase in 2012/13. Dividends and gains from the VCT are tax free if the VCT shares are held for at least five years. ISA Individual Savings Accounts (ISAs) can be taken out as cash only accounts (maximum £5,340) or stocks and shares accounts up to £10,680. These limits are for 2011/12. The investment limits for 2012/13 are £5,640 for cash only accounts and £11,280 for stocks and shares. You can now open a Junior ISA (up to £3,600 per year) for children aged under 18, who do not already have a child trust fund account in their name. Individuals who are aged 16 or 17 can also open a standard cash only ISA in addition to the Junior ISA. Getting Back On Track This service is perfect for the businesses where things have got a little bit out of hand and the owners are unsure how things got like that. The GBOT service is set over four weeks and we work in your business to offer help, guidance and practical solutions in order to help you to: identify why things are going wrong and how to change manage cash flow give you a structure to get you organized get you started on the path to decent cash flow get control of your businesses This service is available for existing clients and for those who want help but don’t want to change accountants. The Price for this is £999 and if included as part of one of our Accounting Services the cost can be spread over 12 months. Read more on our additional services page or contact me for more details Working from Home top If you work from home as an employee or director of your own company, or for any other employer, you can claim £3 per week (tax free) to reimburse you for the costs of running your home as your work-base. This claim needs to be made to your employer directly, not to the Taxman. If the additional costs of running your home while you work there exceed £3 per week you can put in a higher claim for the costs incurred, but you do need to back-up that claim with copies of energy bills etc. You also need to work out the additional costs quite precisely, which can be tricky, but is possible if you are methodical. We can help you calculate the amount to claim and advise on what evidence you need to keep. If you just claim the flat £3 per week, you don’t have to provide any calculations or evidence in the form of bills. The Taxman has just announced that the £3 per week expense limit for working at home is to increase to £4 per week from 6 April 2012. It was last increased from £2 to £3 per week on 6 April 2008, so an increase is well over-due. Is it time to go online with your bookkeeping? I wanted to know what my clients and other accountants thought of on line bookkeeping so I posted the question in The Accsys Networks Linkedin group.  Overall most people were positive and a few people suggested Xero and a few other solutions. I trialled all the available solutions and I felt Xero rose above the other packages available. I have now been using Xero the online bookkeeping package now for 6 months and I have to say I am converted for several reasons. Xero uses automatic bank feeds which means transactions are automatically imported and matched to invoices and accounts. Posting the transaction becomes a case of checking and clicking OK. This reconciles the bank and posts the transaction at the same time. Then there is the joy of being able to produce an invoice from wherever you are in the world and emailing it directly from within the package. Another feature that makes online bookkeeping so valuable is collaboration. Offline accounting systems make it difficult to help, support and check on my clients data. On line bookkeeping removes a real barrier between accountants and clients and allows real time access to clients bookkeeping. This means that problems that may have been stored up in the past can now be dealt with much sooner. Read more on our Xero Page Capital Exemptions and Losses top You can make up to £10,600 of capital gains in 2011/12 and pay no tax on that amount, as it should be covered by your annual capital gains exemption. If you have not used this annual exemption in 2011/12, check whether you can make any disposals which will crystallise gains before 6 April 2012. Individuals who have non-domicile status may not qualify for this annual exemption. The annual exemption limit will be frozen in 2012/13 at £10,600. Any unused exemption for 2011/12 cannot be carried forward or passed on to a spouse. However, you can pass assets to your spouse or civil partner tax free. Then on the sale of the asset your spouse’s annual exemption can be set against the gain. The gift of the asset to your spouse must be done well in advance of the sale, with the correct legal documents drawn up. Take legal advice if you are not sure how to change the ownership of an asset. If you have assets that have reduced in value so they are now worth almost nothing, you can make use of that loss by making a negligible value claim. If you submit the claim in 2011/12 you can ask for the loss to be treated as arising in 2009/10 if the asset was also virtually worthless at that earlier date. This is useful, as capital losses can generally only be carried forward, not backwards. March Question & Answer Section top Q. I’ve received a £100 fine for not submitting my tax return, but I don’t remember receiving a form to complete. All my income is taxed under PAYE, so surely I don’t need to complete a tax form, do I? A. You should first ring the Self Assessment helpline on 0845 900 0444. Have to hand your NI number and your unique taxpayer reference number (UTR), if you know it. The Tax Officer will confirm whether you need to complete a tax return for the year to 5 April 2011 or not. If you do need to complete a tax return for that year you should do that online, if you submit a paper form now you will receive an even higher penalty. We can help you submit your return online, if one is due. Q. I hold the lease of a property comprising of a shop on the ground floor and offices above. The shop is vacant and only one of the offices is let. I’ve received a good offer from a property developer to purchase the lease of the whole building. If I invest in another commercial let property can I rollover the gain and avoid paying tax on the sale of the lease? A. It is possible to rollover gains made on land and buildings used by trading businesses or which are let to trading businesses that are connected to the building owner. However, letting of property is not regarded as a ‘trade’, so you can’t rollover the gain you make on selling the lease of this building. Even if your own trading company occupied a part of the building, rollover relief would only be available on the proportion of the building it occupied. Q. My bakery shop is VAT registered, but I don’t add VAT to the bread and cakes I sell. I’m going to start selling take-away filled rolls, fizzy drinks and hot pies. Will I have to charge VAT on these items? A. Most food is zero rated for VAT, which for a VAT registered business such as yours, means you add no VAT to your bakery products but you can reclaim VAT on your business purchases. However, once food is supplied in the course of catering, or as hot food to eat straight away, the standard rate of VAT (20%) may apply. The rules of what must be standard rated and what should be zero rated are quite complicated, and are set out in detail in the VAT notice 701/14: Food. We can advise on what products you should apply standard rate VAT to.

]]> http://www.accsysltd.co.uk/blog/accsys-accountants-march-newsletter/feed/ 0 http://www.accsysltd.co.uk/blog/its-a-risky-business/ http://www.accsysltd.co.uk/blog/its-a-risky-business/#comments Wed, 22 Feb 2012 09:23:17 +0000 Will Wood BA ACA http://www.accsysltd.co.uk/?p=1203 TS Elliot once wrote “Only those who will risk going too far can possibly find out how far one can go.”

You can’t run your own business without taking risks and if you get too hung up on them you won’t do anything but it’s important to minimise the chance of the biggest risks putting an end to your dream.

Here is a list of some key business risks:

• The risk of running out of cash
• Over reliance on anyone, You, key Staff, Customers or Suppliers
• Is there a partnership or shareholders agreement in place?
• Is there an IT strategy and does it cater for all IT developments?

This list isn’t exhaustive by any means but it can be a good start so why not spend an hour this week looking at the risks in your business and produce a plan to help combat them.

I appreciate that you haven’t always got the time to spend working on your business and this is where we can help.

We are more than just accountants and we have a range of services, listed on our additional services pages, that can help your business.

If you are in the process of closing down your company, or are thinking of doing so, you need to know about the change in the tax law from 1 March 2012.

If your company contains significant value, you will want to extract the cash and assets in the most tax efficient manner. Until now you could ask the Taxman to apply concession C16 to the payments made during an informal winding-up up of the company. Concession C16 allows the payments made to shareholders (known as distributions) to be taxed as capital gains. Shareholders who were also officers or employees of the company may be able to claim entrepreneurs’ relief on those gains, which means the gain is taxed at just 10%.

Concession C16 is generally granted when the company has paid all its creditors, including the Taxman, and the owners promise not to start-up the same business in a different company. Concession C16 will cease to apply from 1 March 2012, and will be replaced by a new law as follows:

- Where the distributions are more than £25,000 in total, all those distributions will be subject to income tax (at rates of 25% or 36.11%), in the hands of the shareholders.

- Where the total value of the distributions to the shareholders of the company is no more than £25,000, the entire amount will be taxed as capital gains (at 10% where entrepreneurs’ relief applies, or at 18% or 28% otherwise).

- Payments made as part of an informal winding-up on or after 1 March 2012, will be subject to the new law even if permission to use concession C16 was previously given.

- It doesn’t matter on what date the company is finally dissolved or struck-off, it is the date on which the distribution is made that counts.

If your company holds significant value and you want to close it down, you can opt to use a formal liquidation. This will allow all the distributions to be treated as capital gains and for the lower tax rates to apply. However, a registered liquidator may charge a fee of £5000 or more to undertake the liquidation.

PAYE and other payroll deductions need to clear Taxman’s bank account by 19th of the month, if paid by cheque. Electronic payments can arrive by 22nd of the month, or the last banking day before that date.

If you use the faster payments service (FPS) to make your PAYE payment, the amount transferred will clear the Taxman’s bank account the same or next day. However, there are limits on the amounts that can be transferred per day and per transaction using FPS, which vary from bank to bank. So check what limit your bank applies.

Late payments of PAYE will result in an automatic penalty of up to 4% of the PAYE that was paid late. You are permitted to make one late payment of PAYE during the tax year, but two or more late payments will mean that a penalty will be charged after the end of the year.

In addition, if you have still not paid after six months you may have to pay a further penalty of 5 per cent. A further penalty of 5 per cent may be charged if you have not paid after 12 months. These apply where only one payment in the tax year is late.

The Taxman has already issued many penalties for late payment of PAYE in 2010/11, and some of these penalties have been calculated incorrectly. If you receive a penalty notice, please ask us to check it as soon as it arrives. Any appeal must be submitted within 30 days.

We are members at the Wrotham Business Over Breakfast Networking club (BOB).

BoB Clubs creates a secure and successful networking environment for members to cooperate and exchange referrals.  Members actively seek and create opportunities for each other.

You and your business will thrive during your professionally structured meetings where you feel welcome, trusted and respected, whilst building confidence and potential business and profits.

You are encouraged to focus on quality referrals, not quantity, leaving you free to network without any undue pressure.

Constant support is on hand to help you save time, earn more money and beat your competition.

If you would like to come along as a guest please give me a call on Tel: 01622 671 835.

If your business is registered for VAT in the UK and you sell to VAT registered customers in other EU countries you are required to submit an EC sales list (known as ECSL or form VAT 101), to HMRC. If you move your own goods to a branch or subsidiary of your business in another EU country, you may also have to complete an ECSL for that period.

The ECSL is generally submitted quarterly, but businesses that export goods totalling more than £35,000 (excluding VAT) per quarter must complete an ECSL every month. If your business only sells services to other EU countries you can continue to submit a quarterly ECSL, but you can opt to submit monthly ECSL forms.

When you complete box 8 on your VAT return, the Tax Office will automatically send you an ECSL form to complete. The paper ECSL form must be submitted within 14 days of the end of the reporting period. You can complete the ECSL online, in which case you have 21 days from the end of the period to submit the form. Note that this deadline is well before the deadline for your regular quarterly VAT return.

We can help you submit ECSL forms, either on paper or online. Talk to us about the work involved.

When we set up our accountancy service we asked ourselves a few key questions:

• Why should a pro-active accountancy service cost the earth?
• Why should there be uncertainty over the amount you pay for your accounts?
• Why shouldn’t our clients get more from their accountants?

We couldn’t see a good reason not to change the way we approached offering our services so we came up with our entry level accounting service, Compliance, which starts at just £49 + VAT a month.

This fixed fee service includes Accounts, All Tax Returns including Personal Tax, Annual Returns and Telephone support.

If you want more then our Compliance Plus Service stating at just £99 + VAT a month includes our promotional activities where we actively promote your business online via the Accsys Referral Network.

Finally we have created a host of additional services to help your business whether its Payroll, Bookkeeping or our range of Business Improvement Services we are here to help.

Q. What records do I need to keep to claim travelling expenses? Do I also need to keep receipts for petrol?

A. You should record the date, destination and distance of each business journey you drive in your own car. It is good practice to record the total on your car’s milometer at the start and end of each journey. Your employer can pay you up to 45p per mile for each business related journey you drive. Business journeys do not include normal commuting between your home and your permanent workplace. If your employer is VAT registered it will be able to reclaim VAT on part of the mileage allowance you receive, if you provide VAT receipts to the value of the fuel used. The VAT receipts do not have to exactly match the dates of your journeys. When travelling by public transport keep the receipt for the ticket.

Q. I’ve always calculated my business income for a full year to 30 April. On my tax return for 2010/11 I’ve recorded my business profits, income and expenses for the year to 30 April 2010. But when I rang the Tax Office with a query the adviser told me that my accounts should always be drawn up to 5 April. Have I been doing it wrong for 20 years?

A. The adviser at the tax office is wrong. You can draw up your business accounts to any date you please. The year end of 30 April gives you a long delay between the end of your accounting year and the date on which you need to pay tax on the profits for that period.

Q. A friend told me I’d pay less tax if I held my let properties through a company. Is that true?

A. The answer depends on whether you need to get your hands on the proceeds from your lettings business and your current highest tax rate. Let’s assume you need the cash and your highest tax rate is 40%.

If the properties are in a company, the company will probably pay tax at 20% on the rental profits. But its tax rate could be up to 27.5% if the annual profits exceed £300,000, or you control a number of companies. When you extract the profits from the company as dividends you will pay a further 25% income tax. So for rental profits of £100, you will end up with £60 in your hands.

If you hold the properties personally, and pay tax at 40%, for every £100 of rental profits you will receive £60 in your hands. No different to holding the properties in a company. However, if you had not extracted the profits from the company until a later year when you are a basic rate tax payer you would then be paying less tax. It can also be beneficial to keep the profits in the company to re-invest in further properties. The company may pay tax of 20% on the gain it makes when it sells the let properties. If you sell the properties you will probably pay tax at 28%, but you will be able to set-off a tax-free allowance of £10,600 against the gain, which is not available to the company. You may have to also pay further tax when extracting the profits out of the company.

2 – Last day for car change notifications in the quarter to 5 January – Use P46 Car

19/22 – PAYE/NIC and CIS deductions due for month to 5/2/2012

29 – Talk to us about year end and pre-budget planning

First 5% penalty surcharge on any 2010/11 outstanding tax due on 31 January 2012 still unpaid

The check list is designed to cover most of the routine items that the small and medium size business owner should be looking out for. There are often more ideas that a pro-active accountant can come up with so please talk to us about your own personal circumstances.

The check list should take no more than 20 minutes to complete. You can then arrange to meet with us in person to go through any areas where tax saving opportunities have possibly been identified.

Click Here to download our Tax-Busting Checklist

RTI is a new way of submitting payroll data to the Tax Office. Instead of sending the PAYE information in annually after the end of the tax year, all employers will have to submit the payroll data on-line on every occasion the payroll is run.

This will allow the Taxman to understand who is being paid what amounts, and what PAYE is due, on a real-time basis. The details of employees’ pay will be passed to the Department for Work & Pensions, to allow the amount of Universal Credits (which are replacing Tax Credits from October 2013) paid to workers to be adjusted on a monthly basis.

RTI will be compulsory for all employers and pension providers by October 2013.Before payroll data can be accepted under the RTI system it must be ‘clean’.

That means having an accurate date of birth, full official name (not just initials or nick-name) and correct National Insurance number, for each and every employee. If the data for one of your employees does not agree to that on the Tax Office computer, the submission of the payroll data under RTI may fail, and you may get fined.It will take some time to check the details of every employee on a large payroll, so it would be best to start this task as soon as possible.

If you use our cost effective Payroll solution we will ensure you are fully compliant. If you are still running your own payroll then why not let us do it at just £3.50 per payslip with no hidden extras it makes sense to outsource.

Online VAT Filing Compulsory

top

Are you already filing your VAT returns online? If not, then you need to prepare to switch to online filing as this will be compulsory for all VAT registered businesses from 1 April 2012. Don’t leave this task until the last minute as it can take a few weeks to receive the unique user ID you need from the Tax Office.

You will also have to create a password and set up a system to pay the VAT you owe.You will no longer be able to pay the VAT due by cheque. You have to pay by electronic means. This includes using a direct debit, bank-transfer such as CHAPS or BACS, a personalised bank giro payment slip paid in at a bank (these need to be ordered in advance), or a debit card or credit card over the internet.The good news is that Tax Office has now instructed its bank to accept tax payments by the faster payment service. This means the tax or VAT due will take less than a day to clear from your account to the Taxman’s bank account.

Before relying on this shorter timescale, check whether your bank account is set-up to use the faster payment service and if any money limits apply. Many bank accounts can only pay out up to £10,000 by electronic payments in one day.

If your VAT bill exceeds that cap you may have to spread the payment over several days, or talk to your bank about other transfer methods.We can file your VAT electronically on your behalf once you have completed the necessary authority forms from HMRC.

We will also require all your VAT information in good time before the due date for the VAT return, so we can calculate the VAT due and tell you what to pay to ensure the return and payment is received by HMRC before the deadline.

The Taxman has formed a number of task forces to investigate certain business sectors, where he believes tax rules are being ignored.A summary of the current work of those task forces is listed below, but bear in mind that each task force will move on to a new geographical area once the first area has been investigated.

London Properties

This task force is investigating commercial property deals in Greater London, where the VAT rules may not have been applied correctly. Where they find such a case, the tax officers will review the entire tax compliance of the property owner, across all taxes

Landlords

HMRC are targeting landlords with three or more let properties in the North West of England and North Wales. Have you or your family correctly declared all of your rental income?

Construction Industry

The targets are self-employed builders (including small companies) in the North West of England and North Wales. The task force is looking for under-declared sales (such as cash jobs) and over-claimed expenses (where there are no supporting invoices). Remember to keep every receipt for purchases and keep a log of all business mileage. We can help you by advising what expenses are allowable to claim against your income.

No Tax Return Submitted

This task force is currently operating in the South East of England, looking for businesses who have not submitted tax returns for corporation tax, VAT, PAYE or income tax.

Tax rates and thresholds for 2012/13 have been announced as follows:

Income Tax Personal Allowances

Under 65: £8,105

65-75: £10,500

75 and over: £10,660

Minimum marriage allowance: £2,960

Maximum marriage allowance: £7,705

Blind person’s allowance: £2,100

Income limit for those aged 65 or more: £25,400

Income limit for under 65 personal allowance: £100,000

Income Tax Rates

Savings rate* (10%): £0 – 2,710

Basic rate (20%): £0 – 34,370

Higher rate (40%): £34,371 to 150,000

Additional rate (50%): Over £150,000

* Rate does not apply where other income exceeds the savings rate threshold.

Different tax rates apply for dividend income as follows:

Basic rate (10%): £0 – 34,370

Higher rate (32.5%): £34,371 to 150,000

Additional rate (42.5%): Over £150,000

NI

The rates and weekly thresholds for NI contributions will be:

Employer’s class 1 above primary threshold (above £144): 13.8%

Employee’s class 1 not contracted out (from £146 to £817): 12%

Employee’s additional class 1 (above £817): 2%

Self-employed class 4 (annual figures from £7,605 to £42,475): 9%

Self-employed class 4 additional rate (above £42,475 per year): 2%

Self-employed class 2: £2.65 per week

Voluntary contributions class 3: £13.25 per week

Capital Gains Tax

Tax rates for individuals

Up to basic rate band: 18%

Above basic rate band: 28%

Annual exemption: £10,600

Corporation Tax

From 1 April 2012:

Profit of £0 – £300,000: 20%

Profit of £300,000- £1,500,000: 26.25%

Profit of £1,500,000 and over: 25%

These rates apply where there are no associated companies.

A. If permission is granted from the Taxman in advance (called a C16 clearance), the funds the company distributes to the shareholders during the winding-up process will be treated as a capital gain and taxed at 10% where entrepreneurs’ relief applies.

However, the law will change on 1 March 2012. From that date where more than £25,000 is distributed to shareholders in anticipation of the winding-up of the company, the entire amount of the distributed funds will be treated as income and taxed like dividends. That means entrepreneurs’ relief cannot apply and the rate of tax due on the distribution will leap from 10% to 25% or more. The capital gains treatment can still be achieved if the company is put into formal liquidation, but that is likely to cost £7,000 or more. So if you want to wind-up your company and it holds more than £25,000, get those funds paid out by 1 March 2012.

Q. My energy bills have soared since I started using a room in my home as the base for my company’s business, as I have to have the heating on all the time. I’ve heard that my company can pay up to 1/3 of my gas bills tax-free, is that true?

A. Your company can pay you (as the company’s employee) £3 per week, £156 per year tax free, for working at home and no evidence has to be provided to support that payment.

If you can prove your heating bills increased because you heating the property while working there, when otherwise it would be empty and not heated, then your company can pay that extra heating cost to you tax free. However, if the Taxman asks you will need to provide copies of the gas bills for a period before you worked at home compared to a similar period when you have worked at home, to prove the increase in costs. The Taxman may also want to see a schedule of the days you work at home and days when you work at clients’ premises. This type of claim is referred to as ‘use of home as office’ which can also cover other costs incurred in running your business from home. Contact us for further guidance.

Q. I received a letter yesterday addressed to my new company, asking for a payment of £320 to register the company on the ‘Intercom VAT Registry’. Should I pay this fee? Is it compulsory?

A. Do not make any payment or respond to this letter. It is a known scam. The ‘Intercom VAT Registry’ does not exist and it is not an official EU body as the letter suggests. If you are ever suspicious about letters or emails your business receives, check them against the list of known fraud on the Action Fraud website: http://www.actionfraud.org.uk/. We are more than happy to check any suspicious correspondence you receive, so contact us if you are unsure of the legitimacy of any letters or emails sent to you.

We are proud to be the accountants for Able Canopies Limited.

They have grown over the last few years from a local business based in Essex to a national company with four regional offices employing 60 staff.

We have been there at every step of the way providing support and guidance from help with Management Accounts and Pricing to implementation of their systems,  helping them achieve ISO9001 and opening their additional offices.

Able Canopies use our Business Adviser Service which has helped them manage the growth they have experienced.

Business Adviser is the ultimate aid in growing your business. It implements proven strategies to help your business achieve its full potential

This isn’t for every business you must be ready for growth and ready for our help to achieve the results. Because getting the finances right is fundamental, our Financial Controller service is included but the Business Adviser service goes much further, it helps achieve the growth your business is ready for.

This service is to help turn your business ambitions into a reality.

It starts with our business review programme that creates an action plan for the whole business. Then we go to work on the business.

What’s included?

• All annual compliance requirements completed by an agreed date within an agreed budget.
• Annual Financial Statements.
• Tax Returns (Corporation, PAYE, Self-Assessment as necessary)
• Our 100% never miss a deadline guarantee (Tax, accounts, Payroll etc)
• Compliance work can create opportunities especially in the tax
  planning area, we can provide options for you and clearly outline each
  one;
• We can also make suggestions for your business to assist you to gain the best possible tax situation.
• Meet every month to discuss your progress
• A telephone call at least once a month to keep track of progress
• Unlimited calls and emails

With additional financial control:

• Advice on cash flow and how to track cash.
• Advice on credit control how to ensure you collect 100% of your money.
• Advice on pricing your services.
• Preparation of financial forecasts
• Help with identifying your KPi’s
• Business re-organisation ensure your business is organised in the correct way.
• A regular newsletter to keep you up to date on all relevant tax and business issues.

Building your business by:

• A strategic review of the business to create a plan of where you are going and how you are going to get there.
• Business re-organisation ensure your business is organised in the correct way
• Preparation of a financial plan for the business
• Preparation of a marketing strategy including SEO advice
• Consultation with an IFA to discuss your personal situation
• Review of your business systems and processes and starting to map them
• Review of your sales process
• Review and planning of your HR processes
• Use of Accsys Tool Kit – spread sheets for Pricing, tracking, cash flow and many many more

Promote your business with:

• An enhanced Google friendly listing on our business directory
• Membership to our referral network
• Inclusion in our social media promotion plan

Business Adviser starts from £399 plus VAT per month.

1 – Due date for payment of Corporation Tax for the year ended 31 March 2011

14 – Return and payment of CT61 tax due for quarter to 31 December 2011

19/22 – PAYE/NIC and CIS deductions due for month to 5/1/2012 or quarter 3 of 2011/12 for small employers

31 – Deadline for filing 2011 Self Assessment personal, partnership and trust Tax Returns – £100 first penalty for late filing even if no tax is due or tax due is paid on time.

Balancing self assessment payment due for 2010/11.

Capital gains tax payment due for 2010/11.

First self assessment payment on account due for 2011/12.

Interest accrues on all late payments.

Half yearly Class 2 NIC payment due.

Plus you will get these benefits:

1. Your fee will be genuinely fixed and spread over 12-months. We don’t work on timesheets so we guarantee not to issue an unexpected invoice over and above your monthly fee.
2. Our services come with unlimited email and telephone support so you can call us at any time to discuss any matter without incurring extra fees.
3. We are interested in what goes on in your business and routinely give advice on pricing, ca sh flow and organising the business.
4. You get to take full advantage of our Referral Network which promotes our clients on LinkedIn, Twitter, Facebook and our on-line business directory www.accsysnetwork.co.uk. We actively look for business opportunities for your business.

This offer is not open to personal tax only and payroll only clients. It can only be used where there is a genuine commercial relationship with an accountant. So if a family member does your accounts for a favour we can’t help …sorry.

If you wish to find out more visit www.accsysltd.co.uk/save25/ or call us on 01622 671 835 to arrange a free no obligation meeting.

Businesses who occupy small commercial premises receive some generosity with an extension to the business rates relief scheme to 1 April 2013 (already extended for a year to 1 October 2012). Different business rates relief schemes apply in England, Wales and Scotland so ask your local authority what relief applies to your building. Occupiers of larger business premises may be able to defer payment of up to 60% of the increase in business rates for up to two years.

Other key tax announcements for businesses and individuals were:

1. New anti-avoidance rules for employer asset backed pension contributions, effective from 29 November 2011.
2. State pension age rises to 67, to be phased in over two years from April 2026.
3. Freeze in the couple and lone parent elements of working tax credit in 2012/13.
4. No increase in child tax credit above the rate of inflation, as had been announced.
5. Capital gains exemption to be frozen for 2012/13.
6. Research & Development tax credit for larger companies given above the profit line rather than as a tax reduction, to apply from 2013.
7. New Seed Enterprise Investment Scheme (SEIS) from April 2012, giving income tax relief of 50% for investments of up to £100,000 in start-up businesses.
8. Exemption from CGT when gains realised in 2012/13 are reinvested under SEIS in the same tax year.
9. 100% capital allowances in certain new Enterprise Zones, not in all zones.
10. Main rate of corporation tax will reduce to 25% from April 2012.

Further detail on the new tax rules and rates will be announced on 6 December 2011, so we will cover any significant items for small businesses in our January 2012 newsletter.