2011 budget analysis   Leave a comment

2011 Budget News and Analysis
Individuals
Personal Allowances
These allowances represent the amount of an individual’s income in the tax year that is not subject to income tax. Some people are eligible for several allowances such as the personal allowance, and married couples allowance. The married couples allowance is available to married persons and civil partners, but only where at least one person of the couple was born before 6 April 1935.

The personal allowance for 2011/12 will increase by £1,000 to £7,475, but the 40% tax threshold will reduce to £35,000 (see below). This ensures that higher and additional rate taxpayers do not benefit from the increased personal allowance in this year. From 6 April 2012 the personal allowance will be increased again by £630 to £8,105, and in that year the 40% threshold will be reduced further to £34,370.

Personal allowances are withdrawn at certain income thresholds, indicated below, and cannot be claimed by non-domiciled individuals who elect to have their foreign income and gains taxed on the remittance basis for the tax year.

The 2011/12 personal allowances are…

Under 65 – £7,475
65-74 – £9,940
75 and over – £10,090
Minimum married couples allowance* – £2,800
Maximum married couples allowance* – £7,295
Blind person’s allowance – £1,980
Income limit for allowances for those aged 65 or more – £24,000
Income limit for allowances for those aged under 65 – £100,000

* given where one partner was born before 6/4/1935, and only as 10% reduction in tax.

Income Tax Rates
The tax rates for 2011/12 have been frozen at the 2010/11 levels but the threshold at which the 40% tax rate is applied is reduced to £35,000. This introduces a subtle tax increase as it pulls more taxpayers into the 40% tax bracket, and increases the amount of income subject to tax at 40%.

The 2011/12 rates and bands are…

Savings rate* (10%) – 0 to £2,560
Basic rate (20%) – 0 to £35,000
Higher rate (40%) – £35,001 to £150,000
Additional rate (50%) – over £150,000

* Only applies if non savings income is below this amount

There is currently no clear measure by which an individual can determine whether they are treated as resident for tax purposes in the UK. The Government intends to introduce a legal test of residence with effect from April 2012.

Tax Credits
The main changes to Tax Credits as it applies to the self-employed, is the change in the income disregard from £25,000 in 2010/11 to £10,000 in 2011/12.

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. The reduction in this threshold is likely to adversely affect families with fluctuating incomes, such as the self-employed. In the future, in order to avoid a claw-back of tax credits, the claimant will need to finalise their self-employed profit figures as close to the tax year end as possible.

Pension Contributions
The level of contributions that can be made with full tax relief to a registered pension scheme is to be reduced from £255,000 to £50,000 per pension input period (PIP) falling in the tax year. However, this cap can be expanded by bringing forward unused relief from the previous three tax years, up to a maximum of £50,000 from each year. If the annual allowance is exceeded the taxpayer must pay an annual allowance charge on the excess at their marginal rate of income tax.

The Lifetime Allowance will reduce from £1,800,000 in 2011/12 to £1,500,000 in 2012/13.

Individual Savings Accounts (ISAs)
The ISA savings limits applicable in 2011/12 for those over 18 are:
Overall limit – £10,680
Cash up to – £5,340
Balance in stocks and shares up to – £10,680

The rules that govern what type of expenditure qualifies for this relief will also be revised with effect from 2012 to make it easier for small companies to claim this relief.

Employers NIC
When business owners and accountants are asked what single action could simplify the tax system, most suggest merging income tax and NI. This message has finally been heard by the Government, who will start consulting on how the operation of NI and income tax could be combined.

This does not mean these two taxes will be merged. The Government has stated that NI will not be applied to savings, dividends or pensions. The likely changes will involve aligning the rules and mechanics of collecting the two taxes. However, don’t expect big changes any time soon!

From 6 April 2011 the rates and thresholds for the main NI contributions were already known with most increasing by 1%. The main figures for 2011/12 are:

Lower Earnings Limit (LEL) for Class 1 NICs – £102/week
Employer’s class 1 above £136/week not contracted out – 13.8%
Employee’s class 1 not contracted out from £139 to £817/week – 12%
Employee’s additional class 1 above £817/week – 2%
Self-employed class 4 from £7,225 to £42,475 per annum – 9%
Self-employed class 4 additional rate above £42,475 per annum – 2%
Self-employed class 2 – £2.50 per week
Voluntary contributions class 3 – £12.60 per week

Approved Mileage Rates
Where an employee uses his or her own car for business journeys their employer can pay them an approved mileage allowance payment (AMAP), free of tax and NIC.

This AMAP rate has been stuck at 40p per mile since about 2002, and at current petrol prices many employees who need to use their car for business cannot afford to do so. The AMAP will increase to 45p per mile from 6 April 2011 for the first 10,000 business miles per year, any additional miles can be reimbursed at 25p per mile. If the employer does not pay the full AMAP rate the employee can claim the additional amount in tax relief from HMRC.

The tax free AMAP can also be paid by charities to volunteers. The self-employed, who have turnover below the VAT registration threshold (£73,000 from 1 April 2011), may also use the AMAP rate as a substitute for motor expenses claimed in their accounts.

Where an employee carries a fellow employee as a passenger on a business journey, an additional 5p per mile tax free can be paid. The rate will also now apply to volunteer drivers who take other volunteers on business/ charity related journeys.

Car Benefit
The tax charge for personal use of a company car is based on a percentage of the list price of that car when new.

From 6 April 2011 the percentages are all increased by 1% for those in the 15% to 35% range but with 35% kept as the maximum. The taxable benefit of using a car with CO2 emissions of 121-129g/km is 15% of the list price. This percentage increases by 1% for each additional 5g/km of CO2 emissions to a maximum of 35% for cars with CO2 emissions of 225g/km or more.

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 £18,000. This value will increase to £18,800 from 6 April 2011. The maximum taxable benefit of receiving fuel for personal use will increase from £6,300 (for 2010/11) to £6,580 (for 2011/12).

VAT
VAT Rates and Thresholds
There were few changes announced for VAT. The rates and thresholds are as follows from 1 April 2011:

Lower rate – 0%
Reduced rate – 5%
Standard rate – 20%
Registration turnover – £73,000 (up from £70,000)
Deregistration turnover – £71,000 (up from £68,000)

Online Filing
It will be compulsory for all VAT registered businesses to file their VAT returns online from 1 April 2012. At present only businesses who became VAT registered from April 2010 or those with turnover of £100,000 or more must file VAT returns online. Also from 1 August 2012 all requests to register or deregister for VAT will have to be made online.

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Copyright © 2011 A & C Chartered Accountants

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Posted March 24, 2011 by a&c chartered accountants in Managing Diretor

BUDGET 2011 – WHAT TO EXPECT?   Leave a comment

23 MARCH 2011 – BUDGET – WHAT TO EXPECT?

Changes to CGT: There has been speculation that there may be changes to CGT and, in particular, the rates but we are not convinced anything is going to change so soon after the new rates which were only introduced with effect from June last year.
Nevertheless, the Chancellor will need to confirm the CGT rates of 2011/12 and set the annual exemption.

Rates of income tax:
There has been much criticism of the 50% top rate of income tax that the Coalition inherited from Labour and which only begun in April 2010, the month before the Coalition came to power. The public finances are not going to permit any immediate change but there is pressure to set out a roadmap for these and other taxes to mirror the Corporate Tax roadmap that was published last November.

Personal allowances:
It is currently at £6,475 in 2010/11 and it has already been announced that it will increase to £7,475 in 2011/12. There is some speculation that the Chancellor might announce future increases at the time of the Budget.

The review of domicile and a statutory residence test: T
he review of the taxation of non-domiciled individuals was announced in the Coalition Agreement but we don’t think any developments will be announced at the time of the Budget nor do we believe there will be announcements about any developments on a statutory residence test which also remains under discussion.

VAT: We can expect an announcement of the VAT registration thresholds for next year.

Tax avoidance
There will undoubtedly be some announcements in the Budget about specific measures to stop particular avoidance schemes. On 9 March 2011 there was an announcement that measures will be introduced to stop schemes which exploit the plant and machinery leasing provisions.
The review into a potential General Anti Avoidance Rule (GAAR) is currently ongoing and will report its findings at the end of October 2011. So there will be no substantive announcement on this in the Budget.

Corporate tax
A major proposal is a gradual reduction in the headline rate of corporation tax over the lifetime of the present Parliament from 28% to 24% from April 2014.

Capital allowances
In Finance Bill 2011 the writing down allowance for eligible expenditure on plant and machinery will come down from 20 to 18% and to 8% for the special rate pool from April 2012. The annual investment allowance will come down to £25,000 from April 2012 having been increased in Finance Act 2010 from £50,000 to £100,000 from April 2010.

Furnished holiday lettings
Relief for Furnished Holiday Lettings was to have been withdrawn from April 2010 but after much consultation a new scheme is to be introduced, in Finance Bill 2011, which will also cover the EU and EEA areas and so be compliant with the EC Treaty. In the main, in order to qualify, properties must be available for letting to the general public for 210 days and be let for 105 days. The new rules will apply from April 2012.

Pensions relief
Finance Bill 2011 will limit relief for payments towards pensions to £50,000 in any year from 2011. Any unused allowance can be carried forward for three years. The lifetime allowance is to be reduced from £1.8 to £1.5 m from 2012. The requirement for members of registered pension schemes to take out an annuity once they reach the age of 75 is to be removed.

Paul
A&C CHARTERED ACCOUNTANTS – MANCHESTER
http://www.ac-accounts.co.uk
paul@ac-accoutns.co.uk
0161 962 1855

Posted March 20, 2011 by a&c chartered accountants in Managing Diretor

VINCE CABLE SAYS AUDIT THRESHOLD TO INCREASE   Leave a comment

THE GOVERNMENT TO INCREASE THE AUDIT THRESHOLDS
THIS WILL SAVE SMALL AND MEDIUM SIZE BUSINESS TENS OF MILLIONS OF POUNDS
17/3/2011
Vince Cable announced to change the law to simplify small company audit rules, saving UK companies up to tens of millions in unnecessary audit fees
BUT
Whilst raising the audit threshold for SMEs will reduce their regulatory burden, it cannot be at the expense of the quality of financial information. One of key recommendations on access to finance is the need for business to improve the quality of their financial management.
The question we therefore need to answer is whether the value that an audit delivers to businesses and investors justifies the time and cost or can it be treated as just a regulatory burden?
It will come as no surprise where I stand on this. I believe high quality, trusted financial information is important in building business confidence. Over the coming weeks and months, we need to argue the case on behalf of all those rely on audit to achieve this.
AS CHARTERED ACCOUNTANTS WE ARE HERE TO HELP
PLEASE GIVE US A CALL
Paul
A&C Chartered Accountants
0161 962 1855
http://www.ac-accounts.co.uk
paul@ac-accounts.co.uk

Posted March 20, 2011 by a&c chartered accountants in Managing Diretor

THE BUDGET IS ON 23 MARCH 2011   Leave a comment

23 March 2011 – Budget
The Chancellor, George Osborne to introduce his first annual Budget statement on 23 March 2011.
His speech will reflect the changes to the economy since the emergency Budget on 22 June 2010.
With the cuts in public expenditure, ongoing redundancies in the public sector opinion and lack of available public funds opinion is divided regarding the extent to which the Chancellor will announce measures to boost the economy.
We will update our blog during the late afternoon on Budget day and will add further news and analysis as the announcements and the associated press releases are reviewed and interpreted.
This include up-to-date news updates which will provide initial insights regarding key announcements.
Paul
http://www.ac-accounts.co.uk
0161 962 1855

Posted March 20, 2011 by a&c chartered accountants in Managing Diretor

Our client wins nationwide award!   Leave a comment

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First of all on behalf of everyone here at a&c chartered accountants we would like to Congratulate our clients, Bohdan and Paula at Nicole Photography for winning best photographer award in the ‘Wedding Ideas Awards 2011’ competetion. On the 14th January 2011 Wedding Ideas magazine, the UK’s best selling handbag sized bridal monthly, announced the 17 winners of the Wedding Ideas Awards 2011. These awards are the only consumer wedding awards, voted for solely by readers of Wedding Ideas magazine through an online voting system. Over 8000 online nominations were received from readers, from which five nominees were shortlisted in each of the 16 categories.
Bohdan and Paula collected the award at a ceremony at London’s Brewery venue with over 300 guests attending. The winners were also published in the Awards Special issue of Wedding Ideas magazine, on 26th January 2011.

We continue to wish you all the success, and once again a big congratulations from us all at a&c chartered accountants.

Visit Nicole Photography’s website now at http://www.nicolephotography.co.uk

tax return deadline 31/01/2011   Leave a comment

If you still haven’t sent in your tax return to the tax man, you need to act quickly to avoid a £100 penalty.

Any outstanding 2009/10 returns must be filed online by 31 January 2011. If you submit your return after this date, you could receive a £100 late-filing penalty.

we can do this online for you without you needing to worry about registering online etc

Posted January 9, 2011 by a&c chartered accountants in Uncategorized

YOU HAVE BEEN WARNED – THE TAX MAN WILL BE INSPECTING BUSINESS RECORDS FOR THE SME SECTOR   Leave a comment

you need to act now.

if you are in business you need to keep proper books of accounts. An obvious statement, but I can honeslty say not many businesses do.

Do not worry we are here to help. It is never too late to get your house in order.

For the SME sector we have develeped a very simple system based on completing a simple spreadsheet, which instantly produces, vat returns, managment accoutns and balance sheet and help you decide how much tax to put aside based on you profits. an example included at http://www.ac-accounts.co.uk

Posted January 9, 2011 by a&c chartered accountants in Uncategorized