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
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.
|From 1 August
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 email@example.com
Posted in News
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:
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.
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
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.
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
As of yesterday 1 April 2019, the national living wage has increased by 5%, equating to £8.21 an hour for employees aged 25 and over; this compares to £7.83 an hour for the 2018-2019 rate.
The national minimum wage has also increased, benefiting around 2.1 million employees. This is an increase from £7.38 an hour to £7.70 an hour for employees aged between 21 and 24, equating to an additional £580 a year for full-time employees, and a pay rise from £5.90 an hour to £6.15 an hour for those aged between 18 and 20, providing an extra £455 a year for full-time staff in this age group.
Philip Hammond, Chancellor of the Exchequer, said: “This government is dedicated to increasing the wages of the lowest paid, which is why we introduced the national living wage and have continued to increase the national minimum wage rates; benefiting millions of employees.”
“This government is committed to raising productivity performance across the income spectrum, so that the wages of the lowest paid can increase sustainably over time. While the proportion of low paid jobs is now at its lowest level for 20 years.”
You can read more on the .gov website
Posted in 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:
March Newsletter – Making Tax Digital is almost here
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Posted in News
2019 looks set to be a year filled with uncertainty for businesses.
The future is always unknown but this year more than ever businesses will need to navigate some particularly choppy waters due to market uncertainty and global political turmoil (without wishing to mention the B word).
Focus on what you can control
As a business you can always control your response, attitude, behaviour, actions and words. You can choose to be proactive and inquisitive rather than paralysed. In times of uncertainty, the best businesses step up and embrace change. When times are uncertain, your team wants you to lead the way. Bring your team with you on the journey, ask them for their opinion, include them in your planning conversations and challenge them to come up with new solutions.
Cash is king
In uncertain times, the old adage that “cash is king” carries even more weight. Cash is the lifeblood of your business and poor cash flow management kills businesses during tough economic times. Market volatility also creates opportunities. If you have cash or credit available to take advantage of these opportunities when they present themselves, you may be able to move quickly and move your business forward. As such, good cash flow management can allow you to cash in.
Embrace change and adapt
As your particular market changes, there will be opportunities for you to adapt. For example, if your customers have less budget to spend on buying products and services in your sector, it might be an opportunity for you to introduce a lower priced “value offering.” You could even go one step further and change your pricing model. For example, you could move clients to monthly retainers rather than charging a once-off annual fee.
If you depend on one big client to keep your business going, you should consider how to diversify your client base. Sometimes even giant businesses fail during tough times. If your biggest client goes out of business, you don’t want to be collateral damage. Just like in investing, the key is to have a diversified portfolio. Now could be a good time to look at trying to win some new clients in order to make your business more resilient.
At Leonherman we pride ourselves on working with our clients through the full life circle of their business to offer advice and support. Get in touch to find out how we can help you to achieve your business goals on 0161 249 5040
Posted in Ask the Expert
Yesterday the Chancellor Philip Hammond issued his spring statement, this would usually have made more of a noise within the media but with the Prime Minister also holding the latest vote on Brexit yesterday it very much took a back seat.
The key highlights for you to be aware of include:
The chancellor described the economy as being “remarkably robust” adding that it has “defied expectations”. This was supported by GDP growth rates of 1.2% this year.
Mr Hammond very much used the Spring Statement to acknowledge the cloud of uncertainty over the economy due to Brexit and stated that “The most urgent task is to lift uncertainty.”
He also warned of a sharp and sudden spike in inflation under a no-deal, due to the economy operating close to full capacity and the impact of higher prices for imports. Whereas if a Brexit deal is reached, Hammond announced, the government will hold a full spending review in the summer. This will set departmental budgets, including three-year budgets for resource spending, and will shape the priorities of the Autumn Budget.
Business and enterprise:
Mr Hammond said that he wanted to “build on the UK’s fundamental strengths”, announcing a £37 billion productivity fund, focusing on improving skills throughout the workforce.
Housing and Environment:
Mr Hammond devoted a significant part of his speech to housing and the environment, announcing £3 billion for the Affordable Homes Guarantee Scheme, which he said would support the delivery of around 30,000 affordable homes.
He also announced £717 million from the Housing Infrastructure Fund to support the construction of homes in West London, Cheshire, Didcot and Cambridge.
In conclusion there have not been any significant changes that we need to make you aware of with the focus of the government being firmly on Brexit with the Budget taking place in the autumn.
However one thing to bring to your attention is to ensure you make the most of this financial years ISA and pension allowances prior to 5th April.
Posted in News
From April 2019, the amount of money people pay into workplace pensions will rise as minimum contributions from employees are increased from 3% to 5% under auto-enrolment rules. Employers will also see their contributions go up from 2% to 3%.
To put it into perspective, someone earning around £27,000 and paying in the auto-enrolment minimum will see their personal contribution rise from about £500 this year to more than £850 in 2019/20.
The new rates are as follows:
||Employer minimum contribution
||Employee minimum contribution
||Total minimum contribution
|April 2018 (current rate)
All employers with staff in a pension scheme for automatic enrolment must take action to make sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing scheme.
However, you don’t need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment, or if you are already paying above the increased minimum amounts.
By law a total minimum amount of contributions must be paid into the scheme. If you are already using Leonherman for your payroll the increases will happen automatically.
Get in touch if you are unsure of what to do next or take a look at The Pensions Regulator website.
Posted in Ask the Expert
Many of us will have made a new year’s resolution for 2019, listing what we want to start doing e.g. to learn a new language, get in shape or spend more time with our family.
But have you thought about what you should stop doing?
Today’s blog lists 4 things that you should stop doing to ensure 2019 is your most productive:
- Stop trying to get your inbox to zero
The entire concept of getting your inbox to zero unread messages assumes that email is your top priority and therefore you should strive to do it perfectly. Email is only a tool. Your top priority should be creating and executing your business objectives, looking after your customers and growing profitability.
When it comes to managing your email, you should scan through your inbox a few times a day, pick out the priority emails and deal with those as soon as you have time to do so. It can be helpful to schedule “email time” in the morning and afternoon in order to keep your day free to deal with your meetings and other priorities.
- Stop fighting your internal clock
Some people are early birds and others are night owls. Rather than fight with your body, work with it. If you are more productive in the morning, get up early and start work. Equally, if you are a night owl, then start late and finish late. You don’t need to be seen to stay late and work all night in the office. If you want to be really successful, focus on getting things done rather than being seen to work long hours.
- Stop managing and start leading
We focus on doing things right and this has its place in any business. However, if you want to be a business leader, then stop managing and start leading. Leaders focus on doing the right things, and then involve the their team in order to ensure those things are done properly.
- Stop snacking on unhealthy things in the office
Snacking on sugary treats will give you sugar highs and lows throughout the day and won’t do much for your health. Replace cakes and sugary biscuits with fruit, nuts and healthy snacks like yoghurt.
If you can stop at least one of these things you will notice a difference in your productivity levels, so just imagine how much you can achieve if you action all of the above?
We wish you a productive 2019 get in touch to see how we can help you to achieve your goals and ambitions.
Posted in Ask the Expert