Leonherman Blog

Proud to be supporting Wood Street Mission

Wood St Mission v1

Once again we are supporting Wood Street Mission this year, in the run up to Christmas 2018, supporting local families less fortunate than ourselves to have a memorable Christmas for their children.

The 2017 event was hugely successful and we have been working together again with our clients and team here at Leonherman to achieve an even bigger gift haul for local children in 2018.

It has not been possible without your support.

Fundraising efforts have included; a pumpkin carving competition (yes we began in October), guess the number of sweets in the jar, donations of gifts and cake sales.

There is still time to support this worthy cause, so feel free to pop in if you are passing all donations are greatly received.

Posted in News, Office News

Information overload leads to bias decision making

Information Overload

Most people these days have too much information and not enough time. We don’t have the time to weigh up every facet of every decision. This tends to encourage us to take shortcuts where we can, meaning we often go into a meeting or a negotiation with an idea as to what the outcome might be.

This is known as “confirmation bias” where our natural tendency is to seek out information or to look at things in a way that confirms our preconceptions.

It is almost impossible to be unbiased in our day to day lives. The key to managing our this is awareness. For example, if you feel uncomfortable about the facts surrounding a particular decision, try to tune into what is driving that emotional response. Are you uncomfortable because you think you are right and the facts prove you wrong?

Will the outcome of the decision making process result in a positive outcome for the business? If so, try to park your personal feelings on the subject and go along with the decision that is best for the business and the whole.

When making bigger business decisions, you should involve a team of people so that alternative options can be considered. Having a different view to others in the room is healthy. Debate should be encouraged – especially when it comes to business decisions. Encourage those around you to share alternative views and invite others to play devil’s advocate.

You should avoid leading questions. If you want to make unbiased decisions, you need to gather data, analyse that data and move forward on the basis of what the data tells you rather than what you would like the answer to be.

 

Leonherman has many years of experience working with businesses of all shapes and sizes; we work with you to ensure you are making the right decisions for both the short and long term, helping you to stay on track and one step ahead get in touch or call 0161 249 5040

Posted in News

How to get clients to pay you on time

Debtors

You’ve done the work and you invoiced the client 60 days ago, yet you are still waiting to get paid 30 days after payment was due.

Is it time to chase for payment?

Nobody wants to be chasing clients for payment. However, this is business and you are entitled to be paid for the work that you have done. Unless your firm is a bank, you are not in the business of providing credit to your clients.

So what should you do?

Manage expectations

Set out your invoicing and payment terms with your clients early on. If you are dealing with a new client, you should consider asking for 50% of the cost upfront before you start doing work for them. Talking about your payment terms up front with your client will help to avoid any awkward conversations further down the line.

Discounts and interest charges

Some firms offer clients a discount for settling invoices early. You could offer your clients a 5% discount if they pay an invoice within 10 working days. Conversely, you could charge clients 5% interest for payments that are over 60 days late. You can set this out in your payment terms at the very beginning of an interaction with a client.

Regular reminders

You should create a standard email that you can send out to clients as a payment reminder. Your email should be firm but not aggressive.

Set out that payment is due and make it easy for your client to click a link through to an online payments page, should they want to settle their bill immediately. You could even set automated reminder emails that go out to clients 10, 20 and 30 days after the initial invoice date.

Your clients are busy people. Sometimes they forget to process invoices and they might be a bit behind on their admin work.

Sometimes a gentle nudge is all that is needed in order to receive payment. You need to strike a balance between regular follow up and maintaining a good relationship with your clients, so that they come back to do business with you again in the future. Firm but fair is best.

If this doesn’t work and you are no closer to receiving payment, you may need to seek external help.

Get in touch if you are in this situation, as part of our role as your Business Adviser we will work with you to find the best solution for you and your business.

Posted in Ask the Expert, News

A summary of the Autumn Statement

Budget 2016

The Chancellor Philip Hammond yesterday delivered his third budget, he began by saying; “This is a budget that shows the British people that the hard work is paying off.”

He went on to say; “As the UK prepares to leave the EU, the government is taking further steps to ensure a positive future by investing in public services, supporting businesses and boosting living standards across the country.”

Here are the main points:

Personal Tax:

  • Tax free personal allowance to rise from £11,850 to £12,500 in April 2019
  • Higher rate income tax threshold to rise to £50,000 in April 2019
  • The National Living Wage will increase from £7.83 to £8.21 per hour from April 2019

Business:

  • Corporation Tax will be cut to 17% by 2020
  • VAT threshold for small businesses to remain at £85,000 until 2022
  • A reminder that the Tax free dividend allowance was reduced from £5,000 to £2,000 in April 2018
  • £900m in business rates relief for small businesses
  • Business rates with a rateable value of £51,000 or less to be cut by a third over 2 years
  • £650m to rejuvenate high streets (though Chancellor stated “the change our high streets face is irreversible”)
  • Apprenticeship levy contributions by small firms to be reduced to 5%
  • Private Finance Initiative (PFI) contracts to be abolished
  • New Digital Services Tax to be introduced on UK revenues for tech giants from April 2020 (2%)
  • From the 1st April 2020, if you are surrendering R&D credits to get a cash refund there is a limit to the refund, which is 3 times the amount of PAYE and NIC liability for that year

Brexit:

  • Extra £500m for preparations for leaving the EU
  • A commemorative 50p coin to mark the UK’s departure from the EU
  • Spring Statement next March could be upgraded to full Budget if needed

Transport:

  • Opening the use of e-passport gates at airports to USA, Canada, New Zealand, Australia and Japan
  • Air passenger duty to be indexed in line with inflation
  • £420m to tackle potholes, bridge repairs and other minor works in this financial year

Housing:

  • Stamp Duty abolished for all first time buyers of shared ownership properties valued up to £500,000
  • New partnerships with housing associations in England to deliver 13,000 homes
  • £500m for the Housing Infrastructure Fund, enabling 650,000 homes to be built

Pensions and Savings:

  • The lifetime allowance for pension savings will increase in 2019-20, rising to £1,055,000
  • The band of savings income that is subject to the, 0% starting rate will be kept at its current level of £5,000 for 2019-20
  • The adult ISA annual subscription limit for 2019-20 will remain unchanged at £20,000.

Healthcare and NHS:

  • Extra £20.5bn for the NHS over next 5 years
  • £2bn extra per year for mental health services
  • Extra £700m for Councils for care for the elderly and disabled
  • £10m for air ambulances

If you have any questions on how the Autumn Budget will affect you get in touch or call 0161 249 5040

Posted in Benefits, News

Class 2 National Insurance for the Self Employed to remain

Self-employment on the rise

Back in 2016 the government consulted on a proposed abolition of Class 2 National Insurance contributions (NICs) for the self-employed. This flat rate contribution, currently £2.95 a week is payable by the self-employed in addition to Class 4 contributions based on the level of profits. The flat rate contributions were due to cease on 5 April 2019 but will now continue “for the life of this parliament”.

In order to maintain their NI Contribution record, many self-employed individuals voluntarily continue to pay Class 2 contributions despite their profits being below the £6,205 small earnings exemption. Having a full NI contribution history helps maximize an individual’s entitlement to State Benefits. For example full State Pension entitlement requires 35 years contributions.

With the abolition of Class 2 NICs, those with low profits or making losses would need to make voluntary Class 3 contributions (currently £14.65 a week, £761.80 a year) in order for that year to count as a contribution year.

Check you contribution history

In order to maximise entitlement to full State Benefits a full contribution record is required. It is possible to check your National Insurance record online to see:

  • What you’ve paid, up to the start of the current tax year (6 April 2018)
  • Any National Insurance credits you’ve received
  • If gaps in contributions or credits mean some years don’t count towards your State Pension
  • If you can pay voluntary contributions to fill any gaps and how much it will cost

 

We recommend that you seek the advice from a qualified accountant before making any tax planning decisions to ensure you have a tax plan that suits you get in touch or call 0161 249 5040

Posted in News

September Newsletter – Making Tax Digital is coming

News

Read all about our latest news at Leonherman, including business advice, information on the services we offer to make your life easier and any internal news here:

September 2018 Newsletter – Making Tax Digital is coming

If you would like to receive our newsletters directly to your inbox get in touch or call 0161 249 5040

Posted in News

Tax relief on pensions for Higher Rate tax payers set to be cut

Pensions

There has been a lot of speculation in the news over the weekend leading up to the Autumn Budget, that the Chancellor Philip Hammond is considering cutting higher-rate pension tax relief in a bid to find extra money for the NHS.

It is believed that the £38 billion paid out every year in the form of pension tax relief could fund the extra NHS spending.

With the focus being aimed at those who can afford to put tens of thousands of pounds into pension schemes each year. It is commonly agreed that around 40% of the £38 billion goes to the top 10% of earners, which includes all those who earn £46,351 a year or more.

The Chancellor has been tasked with finding £20 billion in his November Budget to fund the extra NHS spending pledges made by Prime Minister Theresa May earlier this year. 

If you believe that this change could affect you, it is worth getting in touch with your IFA before November or contact us on 0161 249 5040 if you don’t have one as we work with a number that we can recommend.

Posted in Ask the Expert, News

Join our team

We are hiring

There is a great opportunity that has arisen to join the Tax Team at Leonherman.  We are recruiting for an experienced tax consultant who will be able to deal with both corporation tax and personal tax compliance and also assist the Tax Manager and the partners with adhoc advisory work.

Ideally we would like someone who is ATT qualified or qualified by experience.  This role would suit someone who lives around the Chorlton, Didsbury or South Manchester area.

We would consider part time working depending on experience.

Please get in touch to find out more on 0161 249 5040 or email your CV to partners@leonherman.co.uk 

No agencies please

Posted in Office News

Making Tax Digital is coming – The end of the Tax return

 

MTD Head in the sand

What is “Making Tax Digital”? 

Making Tax Digital (MTD) is a government initiative to modernise HMRC’s tax system, with the aim of making the whole process of administrating tax simpler and more efficient. With the aim being that all of your tax information will be in one place (your digital account) and you will be able to pay tax based on your business activity during the year. Enabling you to upload and update your tax account in real time.

Will it affect me? 

If you own a business, are self-employed and pay income tax, national insurance, VAT or corporation tax then it is likely you will be affected. Meaning you will be required to keep track of your tax affairs digitally using MTD compatible software, and to update HMRC at least quarterly via your digital tax account. Eventually this will abolish the annual tax return. This will be the law and there will be penalties for non-compliance.

What do I have to do? 

You will need to open and log into your digital account. Everyone will be allocated one through a Government Gateway. Then you will need to ensure your accounting software can update this account at least quarterly. For most businesses, this means a move away from desktop and onto Cloud based accounting software. You are required to choose digital software to maintain your business records and to provide updates of information to HMRC. You will be prompted to send summary updates directly to HMRC – quarterly updates will need to be submitted within a month of quarter end, and an end of year activity report will be due within nine months of the end of the accounting year. As your accountant, we are here to advise you on the software you will need and how to comply with the new quarterly reporting requirements.

When is all this happening? 

MTD starts with businesses above the VAT threshold limits (currently £85,000) for accounting periods commencing on or after 6 April 2019. Those affected will be required to keep digital records for VAT purposes. By 2020 it is most likely all other businesses will have to comply. 

So, what’s the good news?

We work with a number Cloud software providers to find the best solution for you, ensuring you have a fully compliant accounts package, the benefits of using an online accounts package include:

  • It’s in the Cloud so you can get a clear view of your finances any time any place;
  • Run your business from work, home or on your mobile;
  • It automatically grabs bank receipts and payments in real time; and
  • You can use your mobile to photograph purchase invoices and expenses and upload these to the software;

What’s next? 

We will be contacting all of our clients throughout 2018 to prepare you and get you ready for Making Tax Digital. There are many software options available to you, please get in touch to allow us to find the best solution for you and to help you with this transition by calling us on 0161 249 5040.

 

Useful links from HMRC:

https://www.gov.uk/guidance/agents-use-software-to-send-income-tax-updates

https://www.gov.uk/guidance/help-and-support-for-making-tax-digital

https://www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat/vat-notice-70022-making-tax-digital-for-vat

Posted in Ask the Expert, News

IR35 rules being reviewed for the Private Sector

Business people walking in the city

As mentioned in the Autumn Budget, the Government has opened a consultation into a possible extension of the rules that currently apply to “off-payroll” workers in the public sector to the private sector. This consultation is being undertaken at the same time as the consultation into employment status.

The IR35 rules introduced in 2000 are intended to ensure that people working through a Personal Service Company (PSC) who would have been employees if they had been engaged directly, pay broadly the same Income Tax and National Insurance Contributions (NICs) as if they were employed. However, it is estimated by HMRC that only 10% of individuals working in this way apply the rules properly, costing the Exchequer hundreds of millions of pounds in lost tax revenues every year.

Is it working in the public sector?

In April 2017, the Government reformed the rules for engagements in the public sector, and early indications are that this has resulted in an increase in public sector compliance. The April 2017 change requires the public sector body or agency, not the worker, to decide whether or not the IR35 rules apply and then deduct income tax and national insurance from payments to the worker.

There are however concerns that many of such workers are being treated as quasi-employees incorrectly. The consultation document states that there is evidence that some public authorities did have difficulties implementing the reform, both understanding the new rules and resolving disputes with contractors. HMRC have introduced the Check Employment Status for Tax service (CEST) software on their website to assist employers in reviewing workers’ contracts.

Options being considered for the private sector

As well as the possible extension of the rules that currently apply to the public sector, the consultation is requesting views on other options.

One alternative would be to require engagers to carry out due diligence into labour providers in their supply chain to ensure that they are compliant with employment and tax laws. This is already a requirement for gangmasters and other labour providers.

One suggestion apparently rejected was to create a new corporate structure referred to as a “freelance limited company” that would offer a simplified tax treatment, limited liability, a restriction on the frequency of dividend payments, and a requirement for the worker to be paid a minimum salary.

Another proposal rejected was to introduce a flat-rate withholding tax, similar to the Construction Industry Scheme for off-payroll engagements.

The consultation period ends in August and it is anticipated that the Chancellor will make an announcement about future proposals in the Autumn Budget.

We recommend that you seek the advice from a qualified accountant before making any tax planning decisions to ensure you have a tax plan that suits you.

Please get in touch if you wish to discuss whether these changes will affect you and your workforce or call 0161 249 5040

Posted in News