Inheritance Tax

Inheritance tax set to double in two decades

A report by the Resolution Foundation predicts the size of inheritances will more than double over the next two decades and will peak in 2035.

Source: The Times (30/12/2017), The Guardian (30/12/2017), Financial Times (30/12/2017) The Daily Telegraph (30/12/2017)

We provide expert advice on the potential costs of failing to plan your estate taxes in good time. Stephens give practical support, working towards holding on to your family assets after a lifetime of hard work. Reducing the tax take from 40% to potentially Zero. Start the process now. Set out your objectives and wishes clearly and allow Stephens to put them into practice.

Let us explore the options with no obligation.

Tax Changes

Small firms unaware of impending tax changes

A report commissioned by HMRC reveals widespread ignorance among small businesses about the government’s "making tax digital" proposals. Seven in ten small businesses and landlords are not aware of the impending shake-up, which will oblige them to digitise their tax records and update HMRC four times a year. The proposals affect an estimated 1.6m companies, 2.4m self-employed people and 900,000 residential landlords.

One in four firms said they would only comply under the threat of fines, and a third said they expect complying to be difficult.

Source: The Times (18/12/2017)

We at Stephens can advise on how to comply with these new rules and switch away from paper records or help to convert your spreadsheets quickly and at reasonable cost. Don't leave it too late. Free initial discussion here at Stephens.

lower vat threshold

Businesses could face lower VAT threshold

The Office for Tax Simplification has proposed that businesses charge VAT when their turnover hits around £20,000, rather than the current £85,000, claiming many small businesses resist expansion beyond this point and that the threshold, one of the highest of any country in the world, is expensive. Responding to the idea, Edwin Morgan, of the Institute of Directors, said: “We're hoping this month's Budget will simplify or cut taxes rather than raising them. Many of our members started out as entrepreneurs, and we know small businesses need all the help they can “Our small business owners should be spending their time and money growing their firms, not navigating an array of different VAT schemes and an inconsistent list of exemptions as long as your arm.”

Source: Daily Mail (04/11/2017), The Daily Telegraph (04/11/2017)

Employment Status

More than third of UK self-assessment taxpayers under-report income

Analysis by the Institute for Fiscal Studies estimates that more than a third of self-assessment taxpayers under-report their income, with taxi drivers and B&B owners the worst offenders, while almost 60% of self-employed people are under-reporting. "Audits bring in tax directly, but also change taxpayers' behaviour.” Tax is lost due to a "failure to take reasonable care" and “simple error” by self-assessed taxpayers.

Source: Financial Times (27/10/2017) The Guardian (27/10/2017) The Times (27/10/2017)

We at Stephens anticipate an increase in the number and scope of self-employed tax enquiries. It is estimated HMRC are losing 10Bn a year from under-reporting of profits and that extra cash will draw more resources into tax enquiries. We can help to avoid these enquires. Simple checks and allowing an accountant to submit your tax returns drastically reduces your chances of being picked out of the list.

SMEs dodging tax

SMEs dodge the most tax

Figures from HMRC show that SMEs are responsible for 51% of the £5.2bn "tax gap" between what is owed and what is paid. The Revenue divided small companies that avoid tax into four categories: the "unthinking evader" who engages in habitual "low-level evasion”, "invested evaders", who see tax evasion as an "unfortunate financial necessity", "lifestyle evaders" – seeking a better way of life, and "systematic evaders", who engage in more complex schemes and consider their misconduct as "integral to the business model". All four categories were found to believe that they had little chance of being caught and few had "any understanding of the potential scale of financial penalties", HMRC said.

Source: The Times (11/10/2017)

It is for this reason that the government are putting more resource into detecting and prosecuting tax evaders. We at Stephens can undertake a free review of your tax affairs and discuss what you may consider "fair play" and advise on the best ways to avoid that dreaded tax enquiry.

Employment Status

Employment shift threatens tax base

The ICAEW, has warned that the shift away from traditional employment patterns poses a threat to the UK’s tax base. She says that nearly 18% of tax income is through NI, with a significant sum coming from employers’ NICs. However, as increasing numbers of people adopt self-employed contracts, NIC receipts will fall. If workers base themselves at home, office workspaces can be smaller, leading to lower business rates bills. “We must take a longer term look at our shrinking tax base, before it is too late,”

Source: City AM (03/10/2017)

Here at Stephens we constantly see people who are looking at self-employed contracts with former, often the same "employers". It is a growing trend and we can help to explain how these contracts can be a great way to develop the skills to run and grow a real business. The lower tax take from self-employed is a reality and you can benefit, as Morgan Stanley once said "You must pay taxes. But there's no law that says you gotta leave a tip."

Marriage Tax Allowance

Two million couples missing out on tax break

Nearly half the couples eligible to claim marriage tax allowance - worth £230 a year - are still failing to do so, HMRC has said. A Freedom of Information request to HMRC by Royal London revealed 2.2m couples are claiming it from 4.4m eligible. The figure is up on a quarter last year and HMRC says it has simplified the application process, but Steve Webb, the director of policy at Royal London, said the take-up was "shockingly low".

We at Stephens can arrange for the claim and backdate it up to two years as well. Call us to arrange a free discussion.

IoD - Tax-free Pension

IoD calls for tax-free pension access to entrepreneurial retirees

The Institute of Directors says the government should consider allowing retirees tax-free access their pensions to fund their own start-ups. It found in its report, The Age of the Older Entrepreneur, that 53% of its members over the age of 50 identified themselves as entrepreneurs. The IoD said that many business people had experience that could lead to many more years of productive work. "The government should consider introducing tax incentives to encourage people to pursue their ideas and invest in training, so that they can continue to have fulfilling working lives beyond the age expected by previous generations."

The Times (07/09)

IHT receipts surge

IHT receipts surge

The latest official figures from HMRC show total inheritance tax receipts are up by 6% to £11.2bn on the same time last year and are rising faster than at any time since 2010. NFU Mutual said IHT receipts have risen by over 20% in the first four months of the tax year, indicating a more aggressive approach from the taxman. NFU Mutual’s Sean McCann commented: “The extra scrutiny from tax officials means those who haven’t taken professional advice or planned early could be caught out. This could have a catastrophic effect on family wealth. IHT is one of the more complex taxes and there are plenty of traps to fall foul of – as many families appear be finding out.”

The Scotsman, (24/08)

We at Stephens can review your potential exposure to IHT and set in place plans to reduce or avoid, legally, the tax on family wealth which, after all, is already taxed during our lifetime.

HMRC - crackdown

Crackdown on avoidance targets smaller firms

A tax avoidance crackdown on smaller firms brought in an extra half a billion pounds in corporation tax for HMRC in 2016-17. The research found that Investigations raised £474m – 5% more than in 2015-16. The research said more SMEs were being targeted to close the tax gap.

The Mail on Sunday (27/08)

Stephens can advise on ways to avoid the enquiry in the first place. Clients who engage a professional accountant to interact with HMRC are statistically much less likely to be investigated.

News Autumn Statement 2015

Autumn Statement 2015 - more bad news for property investors

Buy-to-let attack. In the Summer Budget 2015, the Chancellor attacked buy-to-let investors by announcing that over a period of four years starting on 6 April 2017 tax relief at higher rates will be phased out for interest on loans used to purchase buy-to-let residential properties. And in his Autumn Statement, he announced two further measures that will adversely affect buy-to-let investors.

3% stamp duty rise. From 1 April 2016 (not 6 April), there will be a 3% increase in stamp duty for buy-to-let residential properties and second homes over £40,000. The brief guidance so far issued by HMRC states that it will apply to both individuals and companies but it is looking at a possible exemption for companies owning more than 15 residential properties

Note. The 3% rise is applied to all current stamp duty rates including the 0% band, so on a £200,000 property the stamp duty rises from £1,500 to £7,500 (£125,000 x 3% + £75,000 x 5%).

Tip. We advise clients looking to purchase a buy-to-let property imminently that they should aim to complete the purchase by 31 March 2016 to avoid the additional 3% stamp duty.

HMRC - HM Revenue & Customs

HMRC - hello, is anybody there?

Following damning statistics showing record delays, HMRC’s phone services are to be improved. In the meantime is there a way to get a quicker response?

Automated chaos. If you’ve phoned HMRC recently you’ll know about the mostly useless automated messages and the endless menus that follow. You might even have heard “We are currently experiencing high call volumes please try later...” click! Or been left hanging on the line so long that you start to wonder if there’s anyone there. Frustratingly this is now the norm rather than the exception.

Statistics. You can’t have missed the press headlines announcing that nearly 50% of calls to HMRC go unanswered. It’s a scandal that’s gone on for too long and the government has bowed to pressure and agreed to commit £45 million to improve matters. But it won’t happen overnight. So here are a few tips to help you keep your sanity in the meantime.

Tip 1. Pick your time. If possible aim to call between 8.00am and 11.00am on weekdays. This is apparently the least busy time for calls. Avoid calling near closing time, which on weekdays is 8.00pm.

Tip 2. Don’t call if you don’t need to. If you’re just notifying HMRC of a new address or another non-urgent matter, write instead.

Tip 3. Use e-mail where possible. HMRC has a few dedicated e-mail services for handling certain types of question ranging from tax code queries to VAT. You’ll receive a speedier response than a letter, plus you usually receive an immediate acknowledgement meaning HMRC can’t issue its stock excuse of “Oh! we didn’t get your letter, send it again please.”

Tip 4. As a last resort ask your accountant to call for you. They can call HMRC’s agent priority line. This has more available manpower dedicated to it, but isn’t intended for use by the public.

TAX Reduction

AIA made permanent at £200,000

Permanent increase to £200,000. The AIA was introduced in April 2008 as a tax incentive for businesses to invest in new equipment, machinery etc. It allows businesses, regardless of size, to deduct the full cost of plant and machinery (excluding cars) from their profits in the year of purchase, rather than being spread over ten years or more. Currently, the AIA applies to expenditure up to an annual limit of £500,000 but this was due to reducing to just £25,000 from 1 January 2016. However, in his Summer Budget 2015, the Chancellor announced that the AIA would only be reduced to £200,000 from 1 January 2016 and would be maintained at that level on an ongoing basis.

Directors & Shareholders Shaking Hands

Director shareholders hit hard in Summer Budget

Dividend tax credit to be removed. For many years dividends have come with a 10% tax credit which means that there’s no additional personal tax to pay on dividends received by basic rate taxpayers - the basic rate of tax on dividends is currently 10%. However, the Summer Budget has announced that, from 6 April 2016, this tax credit will disappear and be replaced with a tax-free dividend income allowance of £5,000. Any dividends received above this will be taxed at 7.5% (up from the current effective rate of 0%) for basic rate taxpayers, 32.5% (up from the current effective rate of 25%) for higher rate taxpayers and 38.1% (up from the current effective rate of 30.1%) for higher rate taxpayers.

Example. A one-man company client who has annual profits after corporation tax of £30,000. Our advice for 2015/16 was for them to take an annual salary of £10,600 to cover their personal allowance with the remaining £19,400 as dividends. Under the current rules the client has no personal tax to pay. Under the new rules, from April 2016, the director will suddenly have a personal tax bill to pay of £1,080 ((£19,400 - £5,000) x 7.5%) - quite a shock for many clients.

Action. If the company has sufficient retained profits, we will aim to maximise the dividends taken up to 5 April 2016 to take advantage of the lower tax rates.

Note. Although trading as a limited company will no longer be as attractive from a tax-saving point of view we are confident it is still more beneficial than being self-employed and paying unnecessary National Insurances.

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"We have recently moved to Stephens Accountants and it’s the best decision we could have made. Looking for a new accountant can be a little daunting but we were put at ease with their very approachable and friendly attitude. They have helped us and explained things we weren’t quite sure about when it came to our Year End. They were very knowledgeable about the accounts software that we use which made it so much easier. All in all, we’re happy."

Julie Wombwell, Accounts & Payroll Manager. Cottage Woodcraft Ltd.

"Stephens Accountants have been our accountant since we first established in business. In this time Sean & his staff take care of all of our accountancy needs leaving us to take care of our business. I can also rest knowing that our business is in safe hands & if we need to that Sean & his team are there to answer any Tax/financial or business related questions we may have. We have used various accountants for other projects in the past & find that none of them come close to personal, professional service that Stephens Accountants provide. We are proud to call Stephens Accountants our accountants & look forward to doing many years of business with them. "

Sallyann Wheeler & Craig Gallimore A & S Catering Services.

"I've been using Stephens Accountants for the past year since my last accountant let me down, and I've been very impressed with the service I've received. The companies professionalism and understanding was impressive from the start. Stephens have been very proactive in dealing with any issues that have arisen during my time with them. Highly recommended."

Simon Brayshaw. POP Architectural Ltd.

"Stephens Accountants Limited are a helpful, friendly, approachable and professional company, they speak in terms that I understand, any questions or queries that I may have are promptly and efficiently answered, I would have no hesitation in recommending them to anyone."

Nigel Martin. N.M.P.S. Nigel Martin Packaging Services.

"We are very happy with the service received from Stephens Accountants. The promptness of response and helpfulness has been great in our first year of trading."

Julie Stead/Russ Smales. Russcott (Yorkshire) Ltd.

"Accountancy speak into understandable language. The team is a pleasure to work with."

"I am so impressed with Stephen's accountancy. They make it so simple. I simply plug in the sales and purchases invoices and cash receipts, send across a backup and Stephen's do the rest. All the bank reconciliation and management accounts. And generally on the same day. Since using their services I always feel up to date and have the confidence to take managerial decisions in the running of the business. They are knowledgeable, informative and very nice people."

Jacqui Brooks. The New Inn Public House (Walton) Ltd.

"We have recently moved to Stephens Accountants and it’s the best decision we could have made. Looking for a new accountant can be a little daunting but we were put at ease with their very approachable and friendly attitude. They have helped us and explained things we weren’t quite sure about when it came to our Year End. They were very knowledgeable about the accounts software that we use which made it so much easier. All in all, we’re happy."

Julie Wombwell, Accounts & Payroll Manager. Cottage Woodcraft Ltd.

"Stephens Accountants have been our accountant since we first established in business. In this time Sean & his staff take care of all of our accountancy needs leaving us to take care of our business. I can also rest knowing that our business is in safe hands & if we need to that Sean & his team are there to answer any Tax/financial or business related questions we may have. We have used various accountants for other projects in the past & find that none of them come close to personal, professional service that Stephens Accountants provide. We are proud to call Stephens Accountants our accountants & look forward to doing many years of business with them. "

Sallyann Wheeler & Craig Gallimore A & S Catering Services.

"I've been using Stephens Accountants for the past year since my last accountant let me down, and I've been very impressed with the service I've received. The companies professionalism and understanding was impressive from the start. Stephens have been very proactive in dealing with any issues that have arisen during my time with them. Highly recommended."

Simon Brayshaw. POP Architectural Ltd.

"Stephens Accountants Limited are a helpful, friendly, approachable and professional company, they speak in terms that I understand, any questions or queries that I may have are promptly and efficiently answered, I would have no hesitation in recommending them to anyone."

Nigel Martin. N.M.P.S. Nigel Martin Packaging Services.

"We are very happy with the service received from Stephens Accountants. The promptness of response and helpfulness has been great in our first year of trading."

Julie Stead/Russ Smales. Russcott (Yorkshire) Ltd.

"Accountancy speak into understandable language. The team is a pleasure to work with."

"I am so impressed with Stephen's accountancy. They make it so simple. I simply plug in the sales and purchases invoices and cash receipts, send across a backup and Stephen's do the rest. All the bank reconciliation and management accounts. And generally on the same day. Since using their services I always feel up to date and have the confidence to take managerial decisions in the running of the business. They are knowledgeable, informative and very nice people."

Jacqui Brooks. The New Inn Public House (Walton) Ltd.

"We have recently moved to Stephens Accountants and it’s the best decision we could have made. Looking for a new accountant can be a little daunting but we were put at ease with their very approachable and friendly attitude. They have helped us and explained things we weren’t quite sure about when it came to our Year End. They were very knowledgeable about the accounts software that we use which made it so much easier. All in all, we’re happy."

Julie Wombwell, Accounts & Payroll Manager. Cottage Woodcraft Ltd.

"Stephens Accountants have been our accountant since we first established in business. In this time Sean & his staff take care of all of our accountancy needs leaving us to take care of our business. I can also rest knowing that our business is in safe hands & if we need to that Sean & his team are there to answer any Tax/financial or business related questions we may have. We have used various accountants for other projects in the past & find that none of them come close to personal, professional service that Stephens Accountants provide. We are proud to call Stephens Accountants our accountants & look forward to doing many years of business with them. "

Sallyann Wheeler & Craig Gallimore A & S Catering Services.

"I've been using Stephens Accountants for the past year since my last accountant let me down, and I've been very impressed with the service I've received. The companies professionalism and understanding was impressive from the start. Stephens have been very proactive in dealing with any issues that have arisen during my time with them. Highly recommended."

Simon Brayshaw. POP Architectural Ltd.

"Stephens Accountants Limited are a helpful, friendly, approachable and professional company, they speak in terms that I understand, any questions or queries that I may have are promptly and efficiently answered, I would have no hesitation in recommending them to anyone."

Nigel Martin. N.M.P.S. Nigel Martin Packaging Services.

"We are very happy with the service received from Stephens Accountants. The promptness of response and helpfulness has been great in our first year of trading."

Julie Stead/Russ Smales. Russcott (Yorkshire) Ltd.

"Accountancy speak into understandable language. The team is a pleasure to work with."

"I am so impressed with Stephen's accountancy. They make it so simple. I simply plug in the sales and purchases invoices and cash receipts, send across a backup and Stephen's do the rest. All the bank reconciliation and management accounts. And generally on the same day. Since using their services I always feel up to date and have the confidence to take managerial decisions in the running of the business. They are knowledgeable, informative and very nice people."

Jacqui Brooks. The New Inn Public House (Walton) Ltd.

"We have recently moved to Stephens Accountants and it’s the best decision we could have made. Looking for a new accountant can be a little daunting but we were put at ease with their very approachable and friendly attitude. They have helped us and explained things we weren’t quite sure about when it came to our Year End. They were very knowledgeable about the accounts software that we use which made it so much easier. All in all, we’re happy."

Julie Wombwell, Accounts & Payroll Manager. Cottage Woodcraft Ltd.

"Stephens Accountants have been our accountant since we first established in business. In this time Sean & his staff take care of all of our accountancy needs leaving us to take care of our business. I can also rest knowing that our business is in safe hands & if we need to that Sean & his team are there to answer any Tax/financial or business related questions we may have. We have used various accountants for other projects in the past & find that none of them come close to personal, professional service that Stephens Accountants provide. We are proud to call Stephens Accountants our accountants & look forward to doing many years of business with them. "

Sallyann Wheeler & Craig Gallimore A & S Catering Services.

"I've been using Stephens Accountants for the past year since my last accountant let me down, and I've been very impressed with the service I've received. The companies professionalism and understanding was impressive from the start. Stephens have been very proactive in dealing with any issues that have arisen during my time with them. Highly recommended."

Simon Brayshaw. POP Architectural Ltd.

"Stephens Accountants Limited are a helpful, friendly, approachable and professional company, they speak in terms that I understand, any questions or queries that I may have are promptly and efficiently answered, I would have no hesitation in recommending them to anyone."

Nigel Martin. N.M.P.S. Nigel Martin Packaging Services.

"We are very happy with the service received from Stephens Accountants. The promptness of response and helpfulness has been great in our first year of trading."

Julie Stead/Russ Smales. Russcott (Yorkshire) Ltd.

"Accountancy speak into understandable language. The team is a pleasure to work with."

"I am so impressed with Stephen's accountancy. They make it so simple. I simply plug in the sales and purchases invoices and cash receipts, send across a backup and Stephen's do the rest. All the bank reconciliation and management accounts. And generally on the same day. Since using their services I always feel up to date and have the confidence to take managerial decisions in the running of the business. They are knowledgeable, informative and very nice people."

Jacqui Brooks. The New Inn Public House (Walton) Ltd.