Budget 2014
With many forecasters predicting a quiet budget, you would think there’s not much to report. Think again. There is a vast amount of change incorporated. This blog sets out the main changes, and some of the points for action that SMEs may want to consider…. General taxation 1.1 Tax thresholds The tax free threshold rises to £10,000, with a further increase to £10,500 in April 2015. The NIC threshold for both employee and employer contributions increases to £153 per week (£663 per month or £7,956 per annum) Action: If you have adopted the traditional low salary/ dividend reward structure you’ll need to adjust the amounts to keep to the most efficient split. 1.2 Savings rate From 2015, the Chancellor has abolished the 10% rate for the first £2,880 of savings income, has made it tax free. He has also extended the band to £5,000. From April 2015, company owners may…
George’s Marvellous (?) Medicine
Introduction George Osborne has just delivered his last Budget speech before the election. As it stands, the election is too close to call, so who knows if he’ll get another opportunity. This was a highly political budget, but included a huge number of changes. I’ll attempt to summarise those changes, and list some action points. Overview The budget has been delivered against a background of higher growth, and lower inflation. This has given the Chancellor a large degree of room for manoeuvre. He has used this to announce a wide range of changes, while continuing to reduce the expected deficit. He now expects to return to a surplus in 2018/19, meaning the national debt will eventually start to fall then. These figures have been based on reasonable growth forecasts of an average of 2.4% per annum over the next Parliament. Changes affecting individuals Income tax The increase in the personal…
Taking advantage
Introduction A lot has been written about the fall in oil prices, the low inflation expected in the UK, and the deflation now being recorded in the Eurozone. Deflation is considered to be a dangerous thing. The argument goes something like this. Prices fall, and consumers decide to wait before buying anything, in the hope that prices fall further. While this may sound like good news, it puts retailers and manufacturers under pressure. Their profits are lower, and in turn, they look to cut back on investment, and costs. Costs include wages, which mean employees have less to spend, which means they hold off on major purchases, thus reinforcing the cycle. Japan, in particular has experienced a couple of decades of very slow economic growth, caused in part by this kind of deflation. As a consequence, it has lost its global reputation for innovation, and in turn market share for…
Work ON, not IN!
[Originally a guest post on www.owenjonesdesign.com] Introduction It is a real problem when you are doing something you love isn’t it? You set up your business because you are good at something, or you are passionate about it, or both, but you never seem to make progress. You are busy doing what you love, but somehow it’s not as rewarding as you’d thought it would be. Very often, that is because you are working IN, and not ON your business. What’s the difference? If you are going to reap the rewards of your hard work, then you’ll need to balance these two aspects. Before you can do that, you need to understand what they are. Working in the business This is basically doing the stuff for clients/customers that the business was set up to do. For Owen, this is producing high quality design ideas, and implementing them as part of…
Avoiding that “Monday feeling”
Mondays happen on a regular basis. For most people, Monday is the day we get back after a couple of days off. Problem is, other people have also had time off, and some of them will have remembered something over the weekend they want you to do. And their first opportunity to ask you is… …Monday morning. Here a few tips to help you set up your week for success. Expect and plan for the unexpected. You WILL get interrupted. So leave some time for those interruptions. I can remember an instance where we had a potential client walk in off the street with his accounts under his arm. We had capacity for someone to see him, so my boss at the time took the meeting, and we ended up with a client who is still with the firm, over 25 years later! If you can get in early, use…
A new source of funding?
Introduction The new pension rules give a great opportunity for some tax free cash. The additional flexibility that kicks in next year is to be welcomed, but there are opportunities NOW. The preconditions You do have to be over 60 years of age in order to benefit, but I am told by one financial adviser that you may be able to get access to your funds earlier in “special circumstances”. One surprising aspect of this is that you do not need a large pension pot in order to benefit. In fact, if you have less than £10,000 in a pension fund, you can take all of it now, under the “triviality” rules. These have been with us for many years, but the limit was only increased from £2,000 this month. This applies even if your total pension savings exceed the £30,000 limit. If your total pension’s savings are less than…
Mixed partnerships – a thing of the past?
Introduction Mixed partnerships have been a good way in which to retain the benefits of self-employed status for business owners, while reducing the tax burden on businesses. While there have been some attempts to limit the benefits (e.g. the ban on mixed partnerships getting the 100% AIA for plant and machinery investment), HMRC have been unable to upset the arrangements. Until now….. It was announced in the 2013 Autumn statement, and draft legislation issued shortly thereafter, to close down what HMRC describe as a structural weakness that has allowed businesses to artificially reduce their tax liabilities. However, there are some very good reasons for having a mixed partnership. For example, retaining post-tax profits in a partnership will have incurred income tax and NIC if taken from the individual partners own profit share. This could reduce the available capital by up to 25% compared to funding it from a corporate partner’s…
A Government give-away (with conditions)
Introduction One of the goods things to come out of recent budgets is the new holiday for Employer National Insurance Contributions (“NIC”). The Employment Allowance allows small and medium enterprises (“SME”) to deduct up to £2,000 from their employer NIC payments. The details The holiday is worth up to £2,000 per annum. This starts on April 6th 2014, and must be claimed by qualifying employers. HMRC are expecting employers to take the deduction as early as possible, so many will see the benefit on 19 May 2014 (when the first payment is NOT made. You can only claim it once, even if you run more than one PAYE scheme. If you are part of a group, only one company can claim the allowance. Who cannot claim? The main exclusions are companies and organisations that provide “public sector” services. These include: NHS services General Practitioner services the managing of housing stock…