"Beware of little expenses; a small leak will sink a great ship" - Benjamin Franklin

Welcome all to our blog, and the February focus on accounts issues that affect small business owners.

Here we’ll update with any relevant info and tips that may be of use to you and your business.

With the impending introduction of the living wage later this year, this month I'll be reviewing what this means for small businesses, as well as touching on the introduction of the right to rent obligations and planning for Capital Gains Tax (CGT).

So let's get started... 

National Living Wage (NLW)

April 2016, all workers aged 25 or over must be paid the new NLW of £7.20 per hour. This compares with the current National Minimum Wage (NMW) for this age group of £6.70 per hour.

Workers aged less than 25 years must continue to be paid the NMW. The current rates are:

• Apprentices £3.30 per hour
• Under 18s £3.87 per hour
• 18 – 20 £5.30 per hour
• 21  to 24 £6.70 per hour

Above age 24 the new NLW rate must be applied.

For employers with significant numbers of workers aged over 24 this will represent a 7.5% increase in the cost of labour. Contrast this with a reported annual increase in real wages of 2.7% in April 2015.

HM Treasury have created a National Living Wage website that sets out employers’ responsibilities - just click here for more info.

 
Capital Gains Tax planning

You might be aware that you can make chargeable gains of up to £11,100 in the tax year 2015-16 and pay no CGT. This exemption cannot be transferred to a future tax year or carried back to a previous tax year if it is not utilised.

You might also remember that it is no longer feasible to sell shares before 6 April 2016 in order to crystallise a CGT loss or a gain that is covered by the above exemption, if those shares, or part of them, are reacquired within 30 days of the disposal. However, it is still possible to reacquire holdings, within the 30 days period, if you use an ISA or self invested personal pension (SIPP) to make the buy-back.

Transfers of chargeable assets for CGT purposes are exempt between spouses and civil partners. Also, the annual exemption is available to both parties. This combination means that couples may be able to share the gain on a disposal of assets and reduce their overall CGT charge.

This strategy, of transferring partial ownership to a spouse, can also reduce an overall CGT charge if the transferring partner/spouse is due to pay CGT at the higher 28% rate (as their gains fall to be taxed in the higher rate tax band) and the receiving partner/spouse would only be liable to pay CGT at 18% (as their share of a transferred gain would fall into their free basic rate band).

And don’t forget - CGT is assessed and payable as part of your Self Assessment. You will also have to pay any other underpayment of Income Tax for 2015-16 and your first payment on account for 2016-17.

If you own assets that are subject to CGT on disposal, and you, and possibly your spouse, are struggling to fully utilise your CGT annual exemption, or you would like to discuss ways to minimise any CGT payable, please call to discuss your options.

Right to rent

On 1 February 2016, the responsibility for ensuring that tenants have a right to live in the UK was passed from the Home Office to landlords, the so-called right to rent checks.

The following guidance pointers were issued by the Home Office - there are four basic steps:

 

 

1. Find out who will live in the property
2. Check that these people have the correct documentation to stay in the UK
3. Retain a copy of the documents and record the steps you took to check them
4. Keep the copies throughout the tenancy period and for at least one year afterwards

Unless you follow these procedures, and if an illegal immigrant is found living in your property, there is a possibility that you will be liable to a civil penalty of up to £3,000.

Landlords letting certain exempt properties will not be affected by the right to rent regulations. These include:

• Accommodation arranged by local authorities or NHS bodies
• Care homes, hospitals and hospices
• Social housing, including private properties let to social tenants
• Hostels and refuges
• Tied accommodation
• Student accommodation
• Long leases

As a landlord, you can soften the impact of these regulations by asking any agents that manage or let your property to carry out the checks for them. You should have this agreement in writing.

If a tenant sub-lets the property without you knowing, they are responsible for carrying out checks on any sub-tenants. They will be liable for any civil penalties if they don’t do the check correctly.

 

and finally... DATES FOR YOUR TAX CALENDAR:

1 February 2016 - Due date for Corporation Tax payable for the year ended 30 April 2015.

19 February 2016 - PAYE and NIC deductions due for month ended 5 February 2016. (If you pay your tax electronically the due date is 22 February 2016)
19 February 2016 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2016.
19 February 2016 - CIS tax deducted for the month ended 5 February 2016 is payable by today.
1 March 2016 - Due date for Corporation Tax due for the year ended 31 May 2015.
2 March 2016 – Self Assessment tax for 2014/15 paid after this date will incur a 5% surcharge.
19 March 2016 - PAYE and NIC deductions due for month ended 5 March 2016. (If you pay your tax electronically the due date is 22 March 2016)
19 March 2016 - Filing deadline for the CIS300 monthly return for the month ended 5 March 2016.
19 March 2016 - CIS tax deducted for the month ended 5 March 2016 is payable by today

 

That's all from me this month - I hope you found the information above of use! As always if you have any questions don't hesitate to get in touch.

 
 

 

 

 

 

 

 

 

Rupert Carthy

Director