Leonherman Blog

Inheritance tax to be made simple!

About time to we hear you say, the Office of Tax Simplification (OTS) have undertaken a detailed review of Inheritance Tax (IHT), which I think we can all agree is a complicated tax. Their report is likely to lead to future changes to the rules. We will keep you posted as the changes may require you to amend your Will or to review your financial planning.

We have experienced many misconceptions about how the tax operates, particularly in connection with gifts. One of the proposed changes is to shorten the period for lifetime gifts to be exempt from 7 to 5 years. The OTS also recommended replacing the current £3,000 annual allowance, marriage allowances and the exemption for regular gifts out of income with a £25,000 personal allowance each year, so far so good….

No tax free CGT uplift on death

Although the Office of Tax Simplification were only tasked with simplifying inheritance tax, they also considered the interaction with Capital Gains Tax. Many asset transfers can have both CGT and IHT implications. Currently there is no CGT on assets transferred on death and the recipient inherits the asset at its market value.

The suggestion is that capital gains tax uplift on death distorts decision making relating to assets that benefit from an exemption from Inheritance Tax. Currently when an individual holds such an asset that has risen in value, and is considering transferring it during their life, they are often advised to retain it until death rather than giving it away during their lifetime, because of the tax benefits.

For example when a business is retained until death, any potential capital gains are wiped out and there is no Inheritance Tax to pay. This could then lead to an asset being retained and transferred to the next generation at a time that is right for the business.

We will monitor the progress of this proposed change as it is likely to have significant implications on family businesses and your succession planning.

If you are concerned about how these proposed changes may affect you, please get in touch or call 0161 249 5040

Posted in Uncategorized

Email issues – please call us

Due to an IT upgrade that has overrun, we are not receiving external emails.

We hope to be up and running by the end of the day.

Please call on 0161 249 5040.

Thank you for your patience.

Posted in Office News

Off-payroll working rules to go ahead

The “off-payroll” working rules to the private sector will be in operation from 6 April 2020. This will mean workers providing their services through personal service companies and also the end user organisations that engage such workers, will be required to determine whether the worker would have been an employee if directly engaged and hence the new rules apply to the services provided by the worker via his or her personal service company.

The draft Finance Bill issued for consultation on 11 July includes the current CEST

(Check Employment Status for Tax) online tool would be improved before the proposed start date.

However “small businesses” will be outside of the new obligations, with services supplied to such organisations being able to continue to be dealt with under the current IR35 rules, with the worker and his or her personal service company effectively self-assessing whether the rules apply to that particular engagement.

The definition of “small business” is linked to the Companies Act 2006 definition, with the business satisfies two or more of the following conditions:

  • Annual turnover of £10.2 million or less
  • Balance Sheet total of £5.1 million or less
  • 50 employees or less

The liability for tax and national insurance will be the responsibility of the entity, paying the personal service company. However, if HMRC are unable to collect the tax from that entity, the liability will pass up the labour supply chain, thus encouraging those entities further up the supply chain to carry out due diligence.

Please get in touch on 0161 249 5040 if you would like to discuss how the proposed changes are likely to impact you and your business.

Posted in Ask the Expert, News

Everything you need to know about MTD…..

Are you ready for MTD (Making Tax Digital)?

MTD is now live and this means all VAT registered businesses (with a turnover of £85k and above) will be required to submit all future VAT returns using compatible software.

This comes into effect for the first full VAT return following the 1 April 2019, but please be warned that you will need to register for MTD and this can take at least 7 working days to be activated if you pay by direct debit or up to 72 hours if you don’t pay by direct debit.

Once you have set up your MTD account you can no longer use your present online VAT account, so any VAT returns outstanding before MTD compliance is required should be completed and submitted before setting up your MTD account.

This table below shows the sign up windows for the first quarters falling within MTD for those paying by direct debit.

First MTD for VAT return     Sign up period starts      Sign up period end 
Apr/May/Jun 2019 15 May 2019 29 July 2019
May/Jun/Jul 2019 17 June 2019 28 August 2019
Jun/Jul/Aug 2019 15 July 2019 26 September 2019

 

What do I need to do?
You are 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.

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.

Posted in Ask the Expert, News

Growing your business 

How do you scale up your business and take it to the next level?

Businesses that are looking to grow in terms of market access, revenues, and number of employees, by adding value, identifying and realising new opportunities in a competitive environment are the life blood to a healthy UK economy.

Organic versus inorganic growth

Businesses can grow in one of two ways. You can focus on organic growth – growing gradually through increased sales and market share. Alternatively, you can grow through inorganic growth strategies such as through an acquisition or a merger with another business.

Commit to growth

Growing a business takes a huge amount of time and effort, so you need to ensure that your management team is committed to growing the business. You and your team will need to create realistic growth targets and develop plans and concrete actions of how growth will be achieved.

Upskill your team

Your management team will have a given level of expertise. However, delivering a growth strategy may require an expanded skillset. Take the time to identify the skills required to realise your growth strategy. Do you have people with good management experience, an understanding of the relevant technology, good financial skills and a background in change management? If not, you will need to upskill your current team or hire in experienced professionals to help drive growth.

Collaborate

In order to grow your business you will need to create partnerships with people and professionals outside of your business. Consider your routes to market and identify potential service providers, partners, suppliers and key clients who you can work with in order to form alliances, which will drive the growth of your business.

If you are focused on expanding into new markets, you will need to create collaborative business relationships with sales partners and suppliers in those markets and may need to create formal agreements with these new business partners.

Here at Leonherman we have many years of experience working with businesses across a range of sectors and a variety of sizes, with the single aim to work with them to achieve their goals, including working alongside them to grow their business.

Get in touch to understand how we can work with you on 0161 249 5040

Posted in Ask the Expert, News

MTD (Making Tax Digital) is offically live!!

This means all VAT registered businesses (with a turnover of £85k and above) will be required to submit all future VAT returns using compatible software.

This comes into effect for the first full VAT return following the 1 April 2019, but please be warned that you will need to register for MTD and this can take up to 7 working days to be activated if you pay by direct debit or up to 72 hours if you don’t pay by direct debit. Once you have set up your MTD account you can no longer use your present online VAT account, so any VAT returns outstanding before MTD compliance is required should be completed and submitted before setting up your MTD account.

What do I need to do?
You are 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.

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.

Posted in News

Extracting profit from your business

The start of the new tax year means that shareholder/directors may want to review the salary and dividend mix for 2019/20. The £3,000 employment allowance continues to be available to set against the employers national insurance contribution (NIC) liability. Please note there is no entitlement for the allowance if only a solitary Director is liable to employers NIC.

Please note: Where the only employees are husband and wife there would generally be no PAYE or employers NIC on a salary up to the £12,500 personal allowance.

There would however still be employees NIC at 12% on the excess over £8,632 (£166 per week) which would be £464 on a £12,500 salary, leaving £12,036 net.

Taxation of Dividend Payments in 2019/20

Traditional advice would then be to extract any additional profits from the company in the form of dividends.

Total dividends up to the top of the basic rate band (now £37,500) attract tax of 7.5% after the £2,000 dividend allowance has been used. Where husband and wife are 50:50 shareholders they would each pay £2,663 tax on dividends of £37,500 assuming they have no income other than a £12,500 salary, leaving £34,837 net of tax. So a combination of £12,500 salary and £37,500 in dividends would result in net income of £46,873 (93.7%).

Ensure dividend payments are legal

The Companies Act requires that companies may only pay dividends out of distributable profits. This means that in the absence of brought forward reserves the company would need to have profits after corporation tax of £75,000, in the above example.

Overall the combination of salary and dividends suggested above would result in net of tax take home cash of £93,746 for the couple out of profits before salaries and corporation tax of £117,593 (20.3% overall tax). This still compares very favorably with the amount of tax and NIC payable if the couple were trading as a partnership.

 

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 Ask the Expert, News

Xero’s standard and premium plan prices are increasing

From 1 August 2019, Xero’s standard and premium subscription prices are changing in the UK. There’s no change to starter plans.

Since the last change to the UK plan prices in 2016, Xero have constantly invested in research, development and innovation – but they are now increasing their prices. The price of Xero’s standard and premium subscriptions are increasing by £2 and £2.50 respectively.

Starter Standard Premium
Current £10 p/m £22 p/m £27.50 p/m
Change No change +£2 +£2.50
From 1 August £10 p/m £24 p/m £30 p/m


All pricing excludes VAT

Xero is constantly investing in award-winning innovation – continually adding new features and enhancing existing ones to streamline and simplify day-to-day operations. Ongoing improvements they’re making help you manage money on the move across any device, get paid up to 50% faster with online payment services – and they’ve added new bank feeds with leading UK fintechs.

If you would like to make the best use of Xero to ensure it is helping to support your business, get in touch with us. Leonherman are partners of Xero and can assist you to buy and use the software – call us on 0161 249 5040 or email partners@leonherman.co.uk

Posted in News

How to be effective at multitasking?

In today’s fast-paced business world, you would struggle to get through the working day without multitasking, but are you causing more harm than good?  

Businesses are becoming leaner by reducing employee numbers, focusing on efficiency and increasing the demand on staff. An increased workload forces us to multitask, which may be effective for a short period of time, but over the long term, can cause stress.

Multitasking is not about “piling on the work” to the point of exhaustion. It’s about training the brain to channel energy in an efficient and effective manner so you can accomplish more in less time. One of the keys to learning how to multitask effectively is to actually slow down, in order to accomplish more. 

Here are some tips to help you to be more effective at multitasking:

Set Priorities

Think of your brain as a computer, if you have numerous windows open so you can quickly jump from program to program, you may find that your computer crashes a lot, due to the strain. The same thing happens in your brain. When you’re performing multiple tasks that require your undivided attention, your brain gets overloaded, as it can only process information from one channel at a time. Therefore, do not multitask if something requires your full attention.

Useful tools

You can’t remember everything, so make lists and write things down. By having a central to-do list is helpful. Diarise time in your calendar for set tasks, like you would a meeting. To ensure you allocate the time to work on tasks rather than just being reactive to the here and now.

Shift multitasking to single tasking

Your brain cannot multi-task all the time. So, occasionally, stop multitasking and allow yourself time to focus on one thing. At the end of this “rest period”, you’ll feel refreshed, alert, and ready to tackle more tasks – and you’ll do so with fewer mistakes.

Take regular breaks

Avoid working through lunch and make sure to take a short break in the morning and afternoon. Take a walk around the building, sit outside, or do whatever you like for a few minutes to clear your head and give your brain a rest. Taking this time out during the day can actually make you more productive.

 

We hope you found these tips useful, please feel free to share them and to check back on our blog for more useful hints and tips along with changes in legislation and tax advice.

Leonherman has many years of experience working with businesses of all shapes and sizes; we work with you to ensure you stay on track to achieve your goals, get in touch or call 0161 249 5040

Posted in News

Use your data efficiently

It is coming up to a year since GDPR came into force on 25th May 2018 and we are finding that businesses are capturing more information than ever before. The most successful businesses are analysing that information and are focused on building their strategy around customer and market data.

Data management strategy

To create a data-driven business, this needs to start with your culture and people. You need to encourage the right behaviours among your staff. You can have the best software in place, but if the data being put into it isn’t correct or up to date it is pointless. It might help to create a training programme, which ensures your staff are capturing data properly, on the right systems and in a way that allows your business to gain useful insights from that data.

Analyse

There is no point in capturing data if you can’t analyse it. Your need to manage data well and don’t jump straight into rolling out software and technology. Take the time to define the needs of the business and build your systems around that. Define what you need to know in order to drive sales, increase profitability or retain existing clients.

Your data should seek to provide answers to your questions in order to add value to your business.

Use the data

Once you can capture data you need to look at ways to use the data to improve your business. For example, use customer data to improve your business development and marketing efforts. Reduce costs or to manage your supply chain more efficiently. You can even use data driven insights to help improve cash-flow by improving your debtor days and cash management across your business.

Remember, most businesses (and therefore, most of your competitors) are not very good at managing their data. If you can capture, analyse and utilise data throughout your business more effectively than they can, you will have a significant competitive advantage.

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