Category Archives: News

Our Staff Energy – By Ben Burns

Thinking a little differently to the usual accountancy topics, we recently completed some market research of our lovely staff here at Blue Skies.

At Blue Skies, our staff have a good level of flexibility to their hours, to assist with that balance of work/play lifestyle. But as a general picture, we generally all work the well known 9am-5pm Monday to Friday, being available for our clients as much as we can.

However, like most offices, energy levels can flag at different points in the week and we started to wonder how this was affected by food/drink/sleep/exercise etc. So we asked them how they would rate their energy levels on a scale of 1-10, and reviewed it in comparison to their caffeine, water and sleep intake.

Looking at the various charts, we can see that generally speaking, those consuming more than 6 caffeinated drinks daily had an energy level of below 5. The number of drinks consumed equally to or below 5 all had similar energy levels. So anyone who’s drinking more than 5 caffeinated drinks daily, perhaps try bringing this number down to 5 or fewer?!

The other comparatives were inconclusive, with no clear pattern to the correlation of water consumed, caffeine consumed, hours slept and their self rated energy levels. Personally speaking, after moving away from drinking so many caffeinated drinks and switching to more water daily, I’ve felt a dramatic change in my energy levels, after the initial withdrawal complaints.

Here are our averages, so you can compare yourself to how we did:

Average number of Tea, coffee or caffeinated drinks daily whilst at work = 3.2
Average number of hour sleep (not including those wild party nights on the weekend) = 6.7hrs
Average number of hours worked per week = 37.5hrs
Average number of glasses of water daily whilst at work = 3.3
Average self-rated energy levels = 6.9/10

How do your energy levels compare? Let us know as we would love to hear!
Also, if you have any tips to increase our energy numbers, we are all ears!

We hope this has been useful to you. If you would like to know more about us, please contact us here at Blue Skies!

Office Leisure – By Ben Burns

You may have noticed, Blue Skies isn’t your typical boring accountancy firm. Our managing director Steven Sykes, has a vision that we as accountants and tax advisors should just as much be friendly and approachable, as we are knowledgeable.

Over the many years Steven has worked, he has recognized the need for staff having free time and over the years, he has built up quite a few ways of ensuring they get this chance to de-stress by providing his staff with various items.

As a result of this, I’m often the envy of my friends when I explain all the benefits he provides to us here are Blue Skies. To name a few, in the office we have the following leisure facilities to use in our free time:

  • The Blue Skies camper van – a kitted out touring dream machine
  • The Blue Skies gym – a room transformed from storage into somewhere we can all break a sweat
  • The Blue Skies pool table – currently Joe Warrs is our resident champ!
  • The Blue Skies games room – A 40’ TV alongside a variety of games consoles and games
  • The Blue Skies massages – We all get to enjoy a monthly massage from a local sports masseuse
  • The Blue Skies quiet area – For when the day gets too much, we have bean bags and background music to rest our eyes

As well as encouraging us here at Blue Skies to present this ethos to our valued clients and the public, he also wants us to feel and benefit from this ethos too. We all give 100% during our time in the office, giving our clients our full attention. To make sure we are always 100% ourselves, outside of our normal working hours, we have the option to enjoy the above mentioned items.

If you work as an employee, why not suggest these as ideas for your workplace?!

Or if you run your own business, implement them and reap the rewards of a much happier, relaxed work atmosphere?!

We are often on the phones to our clients talking about the burdens and complexities of our modern day tax system. Day in, day out this can take its toll, just as many other jobs! Embrace your inner smile and break it up with some fun once in a while!

We hope this has been useful to you.
If you would like to know more about us, please contact us here at Blue Skies!

Capital Gains Tax (CGT) – When and why do I have to pay this!

By Terry Cowan

Capital Gains Tax (CGT) – When and why do I have to pay this!

So to put it simply, if you own a possession that increases in value during the time you have owned it, when you sell or dispose of that item it could be liable to Capital Gains Tax (CGT).  Such examples of these are a second home, shares, business, antiques, etc.

You don’t pay CGT on selling your car, shares held in an ISA or even if you sell your only home for a profit.

You must make a certain amount of profit on your item before you are taxed on them, and the tax rate you pay depends on whether you’re a basic-rate or higher-rate taxpayer.

There is a CGT free allowance, for the current year it is £11,300. If you don’t use your CGT free allowance, it is lost.  And you only get one CGT free allowance per financial year (financial year is the year ending 5th April).

If you sell a possession that is owned jointly, then both of the owners are entitled to the £11,300 each.
Remember if you don’t use your allowance in a tax year, it is lost for good.

To work out your profit, you will need to know how much you paid for the asset, along with any other fees attached to the purchase (for example on a house you may have paid agents fees in addition).  You then minus the total purchase cost from the sale price, leaving you hopefully with a profit.  This is the gain, that you may have to pay tax on.

If your capital gain is on an investment property such as a second home or a buy-to-let, the rates you pay tax are:

  • basic-rate taxpayers pay CGT at 18%
  • higher-rate and additional-rate taxpayers CGT at 28%

If your capital gain is on something other than an investment property the rates you pay tax are:

  • basic-rate taxpayers pay CGT at 10%
  • higher-rate and additional-rate taxpayers CGT at 20%

Remember if your gain is below the CGT free allowance currently £11,300 and you haven’t used this tax free allowance in the same financial year (from 6th April 2017 to 5th April 2018) you won’t have any CGT to pay.

If you do have CGT to pay, you must include the figures on your personal tax return.  Once your tax return has been submitted for that year, the payment will be due in the on 31st January.  You will be required to show your workings.
If you don’t complete a tax return, you can report it through the online .gov service.

So as an example, you sold your buy-to-let in October 2017 with achieved a large gain, you must complete your tax return online by  31st January 2019.  The payment will be due that same day.  In the same example, if you complete the tax return in April 2018.  The payment isn’t due until 31st January 2019.

Please note, as of April 2019 onwards, CGT on property sales will become payable within 30 days.

There are normally reliefs given to landlords when they sell a rental property.  In this case it is advisable that you seek professional tax advice, to ensure you are claiming the correct amount of tax relief.

If you are thinking of selling a possession that could well attract Capital Gains Tax but aren’t sure of your workings give us a call or send us an e-mail and we will be happy to help.

Making Tax Digital

 

 

 

 

 

 

Good news for all on the Government delay of bringing in their Making Tax Digital (MTD) regime

The original plan from the government and HMRC would have forced the smallest businesses and sole traders to start quarterly reporting from April 2017, but those below the VAT threshold (currently £85,000) will now be exempt from requirements to quarterly report until the government can reassess the plans. Massive vocal opposition to the roll out timetable from MPs, business and the influential Treasury Committee has resulted in the climb-down.

There will be a one-year delay for the wider roll out, with an April 2019 start date for businesses with a turnover above the VAT threshold (currently £85,000) to start keeping digital records but only for VAT purposes. Full-blown quarterly reporting will not start before ‘at least 2020’ according to the ministerial statement.

Changes at the Treasury after the election seem to have resulted in a more sensible approach to the whole Making Tax Digital debacle. The latest statement reads: “The Government will not widen the scope of MTD beyond VAT before the system has been shown to work well, and not before April 2020 at the earliest. This will ensure that there is time to test the system fully and for digital record keeping to become more widespread.”

The Treasury document states that under the new timetable:

  • Only businesses with a turnover above the VAT threshold (currently £85,000) will have to keep digital records and only for VAT purposes;
  • They will only need to do so from 2019; and
  • Larger businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least 2020.
  • Making Tax Digital will be available on a voluntary basis for the smallest businesses, and for other taxes
  • Businesses and landlords with a turnover below the VAT threshold will be able to opt to use the new digital reporting system but it will not be mandatory until ‘at least’ 2020.
Business annual turnover Quarterly reporting details required Old timetable New timetable
Over £85,000 and VAT registered VAT Only 1st April 2019 Still 1st April 2019
Over £85,000: all businesses and landlords (not necessarily VAT registered) Income tax and national insurance 6th April 2018 At least April 2020
£10,000 to £85,000 (threshold not yet confirmed) Income tax and national insurance 6th April 2019 At least April 2020 but voluntarily basis only
All companies Corporation Tax 1st April 2020 At least April 2020

As VAT already requires quarterly returns, no business will need to provide information to HMRC more regularly during this initial phase than they do now. All businesses and landlords will have at least two years to adapt to the changes before being asked to keep digital records for other taxes.

Tax Break tips!

By Terry Cowan

What you should be asking your employer for!

It’s very hard as a full-time employee to take advantage of tax breaks.  However there are a few out there, so why aren’t you taking advantage of them.

Childcare Schemes – If you are employed and pay for childcare, take advantage of a childcare scheme.  You can sacrifice some of your salary (before tax is deducted) to pay towards your child’s care.  It saves you quite a bit of money, especially if your child is in full time care.

Season Ticket Loan – If getting to work is costing you a pretty penny, then why not ask your employer for a tax-free loan to buy your season ticket.  Season tickets will save you a substantial amount compared to paying as you go or even paying monthly.

Pension Schemes – Your employer may already be paying into a pension on your behalf, so why aren’t you also paying into that same scheme.  The payments you make can be made from your salary before any tax has been deducted.

Cars – Your employer may have a various amount of cars at your works premises that are owned by the business you work for.  Find out if any of them are “Pool Cars”, if so, it means that with your employer’s permission, you can use the car for occasional business travel, should your car for example be in the garage.
Your employer may be willing to supply a “Company Car”, it’s always greatly tax efficient when choosing a company car to pick one with lower CO2 emissions.

Remember if you don’t need a company car, then don’t request one.  It does affect your pay.

Company Mobile or Laptop – If you find yourself using your personal mobile phone or even laptop for work purposes a lot, ask your employer if they would supply you with one dedicated solely for work purposes.  The mobile phone and laptop won’t belong to you, but it does mean you aren’t racking up your personal bills as a result of work.

The above don’t have to be supplied by your employer, but nonetheless, if you don’t ask you don’t get.

If you need any tax advice  or looking for an accountant.  Give us a call or send us an e-mail.

P11D Benefits – 2016/17

Do you have a Limited Company and are currently an employee of that Limited Company? If you are a director of a Limited Company and receiving a salary, you will be an employee. As we have now approached the end of the tax year for 2016/17, we will now be able to finalise the calculations for your P11D Benefit forms for the last tax year ending 5th April 2017.
If you have expenses which are a mixture of both business and personal use, we will be able to claim these as company expenses, as long as the expenses are detailed on your P11D for the tax year.
This can be a good way to reduce the amount you need to withdraw from your company, as instead of having to pay for these personally, the expenses can be accounted for as an allowable company expense. Otherwise, these expenses are classed as dividends and will cause you to incur additional personal tax.
For example if you are paying for your mobile bills personally and they are around £100 per month, totalling around £1,200 across the tax year, you would normally have to withdraw this amount from your company as a dividend in order to pay for the personal bills. As this amount is taxed personally in order for you to have £1,200 you would essentially need to withdraw £1,777 (including the personal tax of £1,200 x 32.5% which you will need to pay on top).
However, if we claimed for the £1,200 mobile bills through the company as an expense, this would instantly save you the £577 you would be paying on the dividends for the year. This would generate a personal tax payment on the P11D benefits of £240 though.
The employers Class 1a National Insurance due on the £1,200 mobile bills is £165.60, which does have to be paid by the Limited Company.
Although that appears to be costing the Limited Company, the mobile bills and the employers National Insurance payment then become tax deductible expenses.
Overall, the corporation tax you would be saving through the company would be £273.12 (which is £1,200 + £165.60 = £1,365.60 x 20%).
So, for this example you can see the outgoings are personal tax of £240 and employers NIC of £165.60.
However, if you didn’t choose to include the mobile bills through a P11D, you would be withdrawing an additional dividend of £1,777 across the year causing personal tax of £577, and you also wouldn’t be getting corporation tax relief for the £1,200 which would have been £240.
Looking just above, the total cost of outgoings for claiming the mobile bills would be £405.60 so overall you would actually be better off by £444.52 (£577+£273.12-£405.60) by claiming the mobile bills through the Limited Company.
For your specific industry, other expenses such as the following are allowable through a P11D:
• Spotify
• Lovefilm
• Netflix
• Cable bills
This is just among the handful of the many expenses we can claim on the P11D forms for the tax year and save you personal tax at rates of either 7.5% or even up to 32.5%.
If the expenses are not detailed on a P11D form, you will not be able to claim the amount against your corporation tax for the company accounting year.
Please send across all of your receipts and expenses up to 5th April 2017 as soon as possible, so we can ensure we have the P11D calculations ready to be submitted to HMRC by 6th July 2017.
If you have class 1a National Insurance to pay on the P11D benefits, this amount will be payable by 19th July 2017 by your Limited Company.
Don’t hesitate to contact us if you have any questions or queries regarding the types of expenses we can claim for you through the P11D benefit forms, remember there is no such thing as a silly question!

Selling a Rental Property – Capital Gains Tax Due

If you are considering purchasing a property to rent out, or currently have a rental property, this might be a nice read for you.
Once you have purchased a property to rent out, with the intention of earning income for several months, or even years, this becomes one of your business assets from which, may earn you future profits.
If you decide to sell this rental property at a later date, for a variety of different reasons such as it being something that you no longer wish to keep, HM Revenue & Customs (HMRC) will expect you to pay capital gains tax on any gain made from the sale of the business property.
HMRC should be updated within 2 years, if you do change your principal private residence (PPR) address. For example, if you purchase a new property to live in but wish to keep your old property to rent out, HMRC should be informed of the change in the PPR address within 2 years of buying the new property.
This is a very important factor, as if you have previously lived in the rental property before renting it out, the months/years the property was your principal private residence, this relief can go towards reducing down your tax bill arising from any capital gain made on the sale.
When completing the capital gains tax calculation for the sale of the rental property, there are a few things which are taken into account. Here are some of the items which will be considered and will be worth keeping a note of throughout the period of ownership (whether rented out or not):
– Purchase Date and Price of the Property
– Associated Acquisition Costs in Purchasing the property (including Stamp Duty)
– Disposal Date and Proceeds (sale date and price)
– Additional Disposal Costs
– Incidental Costs (costs spent out during the period of ownership)
– Enhancement Costs (costs spent out during the period of ownership)
You may be entitled to Principal Private Residence Relief and/or Lettings Relief, which are two reliefs you could be eligible for when selling your property and can massively reduce down the amount of tax you have to pay.
Principal Private Residence Relief is calculated using the amount of months you have owned the property, and includes months where the property was actually classed as your principal private residence. You could also be eligible for Lettings Relief and this will take into account the months that the property was rented out, throughout the period of ownership.
The remaining gain after taking all of the above into account will be subject to capital gains tax, which can be taxed at either 18% or 28% depending on the level of your other taxable income in the year of sale.
If you are thinking about selling a rental property, or want some advice on any of the above, please do give us a shout – ideally before you have already sold the property! We may be able to complete some draft calculations for you and give you a rough estimate of any future capital gains tax bill that may be due!

Mortgage Providers and Lenders

Have you recently decided to move house or perhaps renew your current mortgage to get a better rate? Being self employed, are you wondering what sort of information you will need to provide to the banks in order to stand a chance at getting a good mortgage?
Some Mortgage providers and lenders will require an Accountant’s Certificate to be completed, detailing the previous 3 years of income along with signed copies of your Accounts for the past 3 years. Just forward on the information they require to us and we will provide you with exactly what you need.
More recently, HMRC have provided a list of Mortgage Providers and Lenders which now accept 2 documents for tax years they require:
https://www.gov.uk/government/publications/mortgage-providers-and-lenders-who-accept-a-sa302-tax-calculation-or-tax-year-overview/mortgage-providers-and-lenders-who-accept-a-sa302-tax-calculation-or-tax-year-overview
This is the link which takes you to the specific HMRC website.
The 2 documents these mortgage providers and lenders require are a ‘Tax Year Overview’ and an ‘SA302’.
The Tax Year Overview can be found on your account with HMRC which we have access to and can obtain copies of these for you. They detail the amount of tax due for the tax years in question, the payments, and any outstanding balances of tax due.
An SA302 is something which details the amount of taxable income you have earned for the specific tax years in questions, and also give detail of how the income has been taxed. It also gives a breakdown of the personal tax payments due by 31st January and 31st July of the year it is for.
These 2 documents should coincide with each other and it proves to the mortgage provider that we (as your Accountant) have lodged the tax return in which the SA302 has been produced.
Some mortgage providers and lenders only prefer the original HMRC copies of the SA302’s, however the update from HMRC seen in the link above suggests that several banks have actually agreed to accept the SA302 forms which are produced by our commercial software.
This should mean a quicker turn around for you in the information you require from us to give to your mortgage providers.
If you are thinking about getting a mortgage for your property, then contact us as early as possible using the details below. We can provide you with most of the information in a flash, but unfortunately should your specific mortgage provider need information verified from HM Revenue and Customs (HMRC), then unfortunately HMRC can take a couple of weeks to provide copies of the SA302 forms – so the earlier we know, the quicker we can help you!

Grandparents entitled to National Insurance Top Up

Are you a grandparent who is looking after your grandchildren, or are your children being looked after by their grandparents while you are out working?
If you fall into this category or someone you know may fall into this category, then this following article could prove to be of some benefit to you.
HM Revenue & Customs (HMRC) are offering a National Insurance top up credit, for grandparents who care for their grandchildren of 12 years of age and under. This in turn will top up their income at retirement age. The credit to which the grandparent would be entitled, is a Class 3 National Insurance Credit and protects the entitlement to the basic state pension.
HMRC have provided a form online to apply for the national insurance tax credits and this will need to be signed by both the adult carer and the child benefit receiver.
The application form will need to be submitted to HMRC in the October following the end of the tax year in which the caring took place. For example, if you cared for your grandchildren in the tax year 16/17 which covers from 6th April 2016 to 5th April 2017, then you would need to fill out the form by October 2017 in order to receive the national insurance credits.
For the caring itself, there is no minimum amount of hours you have to care for the grandchildren to receive the credit, all you need to do is apply!
https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/NICs_iForms/1.0&template=CA9176_en_0.5.xdp
Please use the link above for the HMRC form if you feel this could be useful to yourself or someone you may know!
Of course if you have any questions or queries relating to any of the above, please don’t hesitate to get in contact with us and your team!

Class 4 National Insurance Increase Removed and Personal Allowance changes

Were you aware of the new and upcoming changes that HMRC had got lined up for the Class 4 National Insurance contributions? Would this have affected you?
HMRC have been keeping us on our toes this year with all of the upcoming changes they are putting into place, and here is a brief outline of one change which has now been reversed following the spring 2017 Budget.
The recent budget announced an increase in the amount of Class 4 National Insurance self-employed individuals would have to pay from April 2018.
Currently, the class 4 National Insurance contributions are paid within your personal tax payments you pay across to HMRC during the year through your payments on account.
The amount of NIC was due to rise from 9% to 10% from April 2018 and following this, another rise from 10% to 11% in April 2019.
How will this affect you now? From April 2018 onwards, you would have needed to be saving a higher amount of your income to put towards your future tax bills.
However, HMRC have now decided to remove this original change for the increase in the national insurance from 2018, so the amount of national insurance you will be paying at the basic rate of tax will still be 9% and won’t be set to increase. Your tax saving amount shouldn’t change for now, unless of your earnings are increasing!
The personal allowance is still set to be increasing from £11,000 to £11,500 from April 2018 and an increase to £12,500 by the time we reach April 2020. You will happy to know that this has not changed and will still be taking place in the next few years to come.
Of course, if you do have any questions or queries, or wish to discuss your tax saving % with us then please don’t hesitate to contact us.