Welcome to the latest edition of our newsletter, which we hope will be of interest.
The Partners and Staff would like to take this opportunity to wish you all a Happy Christmas and a peaceful and prosperous New Year.
GOOD NEWS IF YOU ARE MOVING
In an Autumn Statement surprise, the Chancellor announced that Stamp Duty will be cut for 98% of people who pay it, with only the highest value residential properties attracting more duty than previously. The new rates came into effect from 4th December 2014.
Under the old rules, Stamp Duty Land Tax was paid at a single rate on the entire property price within each tax band, so if you bought a house for £185,000, the Stamp Duty would be calculated at 1% on the full amount – a total of £1,850. Under the new rules, no Stamp Duty is payable until the property price goes over £125,000 and the rate of Stamp Duty is then graduated in much the same way as Income Tax.
Using the above example of a house costing £185,000, no Stamp Duty would be payable on £125,000 and 2% would be payable on the remaining £60,000. The total Stamp Duty payable is, therefore, £1,200, a saving of £650.
THE GIFT THAT KEEPS ON GIVING
It may be a few months until 5th April 2015, but don’t leave it too late to start thinking about how you can maximise your money in this tax year.
For those facing high personal tax bills, there are very few ways to reduce such liabilities. However, one relief that does remain and where it is not only the charity that benefits, is Gift Aid.
If you are facing an exceptionally high tax bill for this current tax year (2014/15) and are paying tax at more than the basic rate, your tax liability will be reduced by making Gift Aid payments.
This is because Gift Aid increases your basic rate band and so reduces the amount of Income Tax payable at the higher rate. It has even more of an impact where your income exceeds £100,000 and is, therefore, suffering a restriction of your personal allowance (a 60% tax rate!) or you are subject to the High Income Child Benefit Charge.
It is also possible to make a donation to charity after the tax year and claim it against tax in the previous tax year. This could be beneficial if, for instance, you were a higher rate tax payer in 2013/14 but a basic rate tax payer in 2014/15.
The claim to relate Gift Aid back to the previous tax year must be made in your Tax Return and the donation must also be paid before the Return is filed with HMRC.
AUTO ENROLMENT – What you need to know
Auto Enrolment is the biggest change to work place pensions for generations, with all organisations being required to ensure that employees are put into a pension scheme by their employer as a matter of course in order to encourage pension saving. If they do not want to be in the pension scheme, they must actively choose to opt out.
What does it mean for employers?
Auto Enrolment duties come into force from your ‘staging date’. By this date, you must have set up a pension scheme, enrolled all workers and be ready to process. The Pension Regulator will write to each employer twelve months and then again three months prior to the staging date which is as follows:
Employers with 50 to 249 people: between 1st April 2014 and 1st April 2015.
Employers with fewer than 50 people: between 1st June 2015 and 1st April 2017.
Workers eligible to be Auto Enrolled:
- Are aged between 22 and State Pension age
- Earn more than £9,440 a year (£10,000 in 2014/15)
- Work in the UK
Employees who don’t meet the criteria above are able to opt into the pension scheme you are using for Auto Enrolment and must be put in if they ask.
How much are the contributions?
Contributions are based on contributions from employer and employee. The combined minimum contribution starts at 2% of a worker’s gross earnings, of which at least 1% must be paid by the employer. Over time, the minimum contributions will increase and by October 2018, the minimum contribution will be 8%, made up of at least 3% from the employer and 4% from the employee and 1% tax relief.
The contributions payable relate to earning bands ranging from £5,772 up to a maximum of £41,865. There is, therefore, a ceiling for total payments under Auto Enrolment.
What changes need to be made?
You will need to make the following changes for Auto Enrolment:
- Set up a pension scheme or modify an existing one.
- Make any necessary changes to payroll to handle the new requirements.
- Put systems in place to monitor the ages and earnings of your staff.
- Communicate with your employees to inform them of Automatic Enrolment and how it will affect them.
- Budget for higher payroll costs for the employer contribution payable to each eligible employee.
Auto Enrolment represents a significant change for employers. Those best prepared are already adjusting and planning in order to be ready for Auto Enrolment by the staging date.
31st January 2015 – is the deadline for filing your 2014 Tax Return – if you have yet to let us have the information to prepare your Return, time is running out!
Please, please, let us have your Tax Return information as soon as possible, so that we can minimise the last minute rush and be more pro-active in dealing with your tax affairs
6th July 2015 – 2014/15 Form P11D filing deadline.
31st July 2015 – Second payment on account for 2014/15.
31st October 2015 – Deadline for filing 2015 ‘paper’ Tax Returns. The online filing deadline remains 31st January 2016.
Jessica Da Cunha
Joined us in August 2013 straight from school, with a diploma in accounts, having previously completed her work experience with us. She is currently studying for the ACCA qualification.
She is a keen netball player and her team ‘Saints’ have been storming through their division in the Surrey Netball League this season. Having won 4 out of a possible 5 matches it is looking as though they are in with a chance of moving up at the end of the year, with only 1 point between them and the team in 1st place. Fingers crossed for them!
Congratulations to Carol Hollingshead
On 5th October Carol took part in the Palace to Palace cycle ride from Buckingham Palace to Windsor Castle, raising £250 for The Prince’s Trust. The ride was 45 miles long and took 3 hours with a particularly challenging last 10 miles over two very long hill climbs. Apart from the fact that she was unable to sit down for a week afterwards, she was very pleased with her achievement!
This newsletter has been produced for the general information of our clients, professional contacts and friends of the firm. It is intended to give a brief summary of issues which we consider may be of interest and is correct at the time of going to press. However, clients are advised to contact us specifically for advice before acting, or refraining from acting, in respect of any matter, based on the information contained herein.
Myrus Smith Chartered Accountants is registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales [ICAEW].