Monthly Archives: October 2013

Employers can save £2000 a year

A new bill is going through the parliamentary process which will save employers £2000 a year in Employers National Insurance contributions.  This represents a help to the smaller businesses and should work as an incentive for smaller businesses to take on staff without the initial burden of Employers National Insurance.

In a letter from MP David Gauke, all employers will be able to take part and HMRC will deduct the first £2K from their bill over the course of the tax year using a new Employment Allowance.  This is to take effect from 6th April 2014 and will be operated as part of the normal Payroll RTI processes.

David Gauke says “The Government believes that small businesses are the lifeblood of our economy and we want to do what we can to support them.  The Employment Allowance will reduce the cost of taking on new staff, supporting small businesses that have an ambition to grow by hiring their first employee or expanding their workforce.”  Up to a third of employers will pay no Employer NIC at all.

We do not have the exact details yet of how this will work in practice but you can read more on an HMRC satellite website www.employmentallowance.com

 

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Child Benefit for Higher Earners – Is it worth it?

When is Child Benefit not a benefit?

If you or your partner receive Child Benefit and one of you earns £50K or more, that individual will now have to pay a Child Benefit Charge, through a Self Assessment Tax Return.  The charge could be as high as, or more than the benefit you received and will be payable along side your Income Tax in the next return.

Many higher level earners will already be submitting an annual tax return, but for those who do not, if you are getting Child Benefit you will now have to register under Self Assessment rules.

The charge began on child benefit received from 7th January 2013.   For earners in the above gross income bracket, the charge would equate to about 3 months of childcare (to 5th April 2013).   However, from 6th April, the next year will be the complete 12 months and it would make sense to stop your Childcare Benefit immediately if you have not done so already to avoid or reduce these charges.

If the higher earner has an annual income less than £50K in the tax year then you will not be affected by this new legislation.

you can read more about this, or stop your Child Benefit, now here http://www.hmrc.gov.uk/childbenefitcharge/

 

 

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Self Employed vs Limited Company

One of the most often asked questions is  ‘What business form should I use?’

Most people only consider how much money a Company can save them.  However there are many considerations to look at before making a decision.

Advantages:

  • Limited liability – as long as the company is run properly your personal finances are kept safe if the business fails
  • The Company’s name is protected
  • Employees can acquire shares
  • The payment of taxation is only once per year with no payments on account (assuming
  • a company not paying the full rate of corporation tax)
  • Can help with succession planning and sale of business
  • Customers may have a higher perception of a company than of a sole trader.

Disadvantages:

  • The requirements for record keeping are more stringent
  • The ability to withdraw funds from the company by the Director need careful consideration
  • If it is an existing business incorporating – there may be trade associations to re-apply to or to comply with
  • Administration expenses tend to be higher than a sole trader/partnership
  • Accountancy fees tend to be higher due to extra work required to be completed
  • Some company information will be accessible by the public
  • Possible Audit needed dependent on size of company, or requirement by lender or
  • regulation

Overall a company can be the right decision for many businesses, if you are unsure why
don’t you arrange for a short consultation with one of our Accountants to discuss it.

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