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Business As Usual During Covid 19

Xero Gold Partner Status

What it means to be a Xero Gold Partner…

Sutherland Black have been awarded Xero Gold Partner status.

Sutherland Black have been using Xero since 2007; connecting people with their numbers anytime, on any device, anywhere in the world. Have look at our service here.

And it’s no secret that although we are an accountancy practice we are technology addicts – constantly searching for new ways to improve our clients’ business.

Who Can Get Gold Partner Status?

Xero partner firms like Sutherland Black are classified under the partner program according to a points system – they reflect the number of customer files that a partner has access to through Xero.

Points are designed to reflect the complex nature of a file and are weighted accordingly. The Partner system is designed to recognise advisors who scale within Xero’s network, and it’s there to help small and medium sized businesses to better identify and connect with the advisor that suits their needs.

Xero Gold Status is an achievement that reflects our level of experience with our customers using Xero. It’s an achievement we are intensely proud of.

Xero Gold Partner Status benefits you!

As Gold Partners with Xero, we’re able to use our status to help more small and medium businesses, in a more in-depth way, as our Xero expertise deepens. You can be certain that we have the very best level of knowledge and experience to help you get the most from Xero and other Xero Partner software. We ensure you have the most up to date advice, add-ons and software updates.

It means that we can get your business setup on Xero easily and efficiently, provide you with training and ongoing support with a programme designed to both simplify and add value to your business.

Add On Apps

Xero has an incredible range of add-on software apps in the Partners network. They include a variety of Inventory, Data Extraction Software, Scheduling, Cash Flow Forecasting apps and many more. You can search for a relevant app here.

As your accountant, we understand your business and we have a solid understanding of your numbers for growth and success. Add value to your business by fast-tracking and simplifying your business processes. We can help by advising, implementing and integrating these apps with Xero to really take your business to the next level.

An entire team…not just one accountant

As a Xero Gold partner we have a team of Xero certified advisors, not just one.

Just to recap… as Xero Gold Partners we can;

  • help you get setup in Xero
  • assist you in migration of your data and setup of cloud applications
  • provide training in using the software
  • guide you in how to use the functions in Xero to better understand how your business is performing; and
  • advise you of the range of Xero add-ons that may benefit and add value to your business
  • As Xero Gold Partners we can help in all aspects of Xero implementation for your business.

Get in contact if you want to know how we can help.

New Court Ruling on Company Vans vs Company Cars

It is usually beneficial for tax purposes that a vehicle in a business is classified as a commercial vehicle rather than a car. A new court ruling is not good news for people who run dual purpose vehicles.

The Court of Appeal have now ruled on the tax status of certain vehicles provided to employees of Coca Cola. The court has upheld the HMRC view that vans with windows and a second row of seats behind the driver are not goods vehicles but motor cars for benefit in kind purposes. Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

At the original Tax Tribunal it was decided that modified VW Kombi vans failed this test whereas modified Vauxhall Vivaro vans did fall within the definition of goods vehicles. However the Court of Appeal has now ruled that the Vauxhalls should also be taxed as motor cars for P11d benefit in kind purposes. This means that where the vehicle is available for private use the taxable benefit will be based on the original list price multiplied by a percentage based on the vehicle’s CO2 emissions.

The decision means that employers may need to reconsider providing such vehicles. They may also need to rectify the P11d reporting in respect of earlier years and we await further guidance from HMRC.

What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for recovery of input VAT.

If you would like advice on which vehicle will be most tax efficient for your business please don’t hesitate to get in touch.

September Changes To Furlough Scheme

The CJRS grant claim changes again on the 1st of September. Please talk to us if you would like us to help estimate your claim.

  • From 1 September CJRS will pay 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work.
  • You will still need to pay your furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. You will need to fund the difference between this and the CJRS grant yourself.
  • The caps are proportional to the hours not worked. For example, if your employee is furloughed for half their usual hours in September, you are entitled to claim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).
  • You will continue to have to pay furloughed employees’ National Insurance (NI) and pension contributions from your own funds.

You can find ourt which employees you can put on furlough and claim for through the Coronavirus Job Retention Scheme here.

Corona Update 27th March 2020

Corona Information For Businesses as at 27th March 2020

Job Retention Scheme

  • Employers can claim a grant of up to 80% of salaries of employees who would have been laid off during this crisis. This is subject to a cap of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.
  • Employers must designate affected employees as ‘furloughed workers’ and notify the employees of this change.
  • To qualify for this scheme: workers should not undertake work while furloughed.
  • Employers submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.  The portal is not available yet.
  • HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
  • Employers can claim for:
    • full-time employees
    • part-time employees
    • employees on agency contracts
    • employees on flexible or zero-hour contracts
  • Workers must have been on your payroll on 28 February 2020.
  • The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
  • Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
  • Employees who are shielding in line with public health guidance can be placed on furlough.
  • There is an updated information page here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Self-employment Income Support Scheme

  • You can claim 80% of your trading profits up to £2,500 per month for three months
  • It is a grant which means it is not repayable although will have to be accounted for in your next set of accounts
  • You must be Self- employed or a member of a partnership
  • Your 2019 tax return must have been submitted (although if it hasn’t you have four weeks to do so (23rd April 2020 deadline)
  • You must be trading or would be if it were not for the Corona Virus
  • You must intend to trade in the tax year 20/21
  • You must have made losses due to Covid -19
  • Your trading profits must be less than £50,000 (this is an average of last three years profits) and more than half of your total taxable income
  • The grant will be paid directly into your bank account in one payment
  • You cannot apply for this scheme HMRC will contact you if you are eligible
  • You can read full government information here:   https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

VAT
You do not need to make any VAT payments during the period 20 March 2020 to 30 June 2020.

  • This is a deferral of tax and not an exemption.
  • This is an automatic offer with no applications required.
  • VAT deferred during this period will have to be paid by the end of 2020.
  • It will still be necessary to submit all VAT returns as normal.

Income Tax
Anyone in the Self Assessment tax regime can defer payment of their July 2020 payment on account

  • Payment will be deferred until the 31 January 2021.
  • This is an automatic offer with no applications required.
  • It will still be possible to have the payments on account reduced for the July payment if you expect profits to be reduced

IR35 & off-payroll working

  • HM Treasury have said they intend to postpone the introduction of the Off-payroll working rules to the private sector.
  • The extension of the off-payroll working rules was due to commence on 6 April 2020. The start date is now be deferred to 6 April 2021.

See IR35 changes postponed

Business Rates

  • Existing small business rate relief continues to apply, this provides full relief for businesses using a single property with a rateable value of £12,000 or less.
  • A business rate holiday applies to retail, hospitality and leisure businesses in England for the 2020/21 tax year.
  • Pubs are given a rates discount of £5,000.

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.
Cash grants: via local authorities

  • A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
  • A one-off grant of £10,000 to around 700,000 businesses currently eligible for SBRR or Rural Rate Relief.

Funding for the scheme will be provided to local authorities by the government in early April. Guidance for local authorities on the scheme will be provided shortly.

The situation in Scotland is slightly different for Business rates and the local authority grants.  I have summarised the situation in Scotland below:
The non-domestic rates reliefs and grant funding measures announced by the chancellor only apply only in England. They do not apply in Scotland.

  • 1.6% rates relief for all non-domestic properties.
  • 100% rates relief for retail, hospitality and leisure businesses
  •  Retail, hospitality and leisure businesses with a rateable value between £18,001 and up to and including £50,999 will be able to apply for a one-off grant of £25,000.
  • If your business is in receipt of the Small Business Bonus Scheme Relief you can apply for a one off £10,000 grant.
  • You can also get this grant if you applied for Nursery ReliefBusiness Growth Accelerator or Disabled Relief but are eligible for the Small Business Bonus Scheme.
  • You can only apply for one grant – even if you own multiple properties.
  • You will need to fill out an application for these grants which will be available on your local council website

SMEs: Coronavirus Business Interruption Loan Scheme

  • A new Coronavirus Business Interruption Loan Scheme will be delivered by the British Business Bank.
  • This is aimed at small and medium-sized businesses to access bank lending and overdrafts.
  • The scheme is covered by the government and will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs.
  • The government will not charge businesses or banks for this guarantee and the Scheme will support loans of up to £5 million in value.
  • The scheme will be open for six months with loan terms of up to 3 years.
  • Businesses can access the first twelve months of that finance interest-free, as the government will cover the first twelve months of interest payments.
  • To be eligible businesses must:
    • Be UK based with annual turnover of up to £45 million.
    • Generate more than 50% of their turnover from trading activity.
    • Have a borrowing proposal which would, were it not for COVID-19, be considered viable by the lender to enable your business to trade out of any short-to-medium term difficulties. The scheme became available from 23 March 2020. Details of the first set of lenders providing access to the scheme can be found here.
  • More details will be announced in the coming days. Businesses are advised to approach their existing lender and to apply through the lender’s own website in the first instance. They can then try other lenders if their own lender cannot help.

Business taxes: Time to Pay

  • All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
  • These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
  • It is essential to contact HMRC and make a Time To Pay agreement before the tax debt becomes due.

If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Insurance
Standard business interruption policies are unlikely to cover a pandemic. You need to check your policy wording and contact your insurer.

HMRC late payment interest rate cut
HMRC interest rates for late payments will be revised after the Bank of England interest rate reduction to 0.1%.
These changes will come into effect on:

  • 30 March 2020 for quarterly instalment payments
  • 7 April 2020 for non-quarterly instalments payments

Repayment interest rates remain unchanged.
The rate for underpayments of quarterly instalments is reduced to 1.25% from 23 March 2020. Added 24/03/2020.

Landlords & Tenants
New measures have been announced which apply to private or social accommodation. Added 21/03/2020.

  • Landlords will not be able to start proceedings to evict tenants for at least a 3 month period.
  • Landlords whose tenants are experiencing financial difficulties due to coronavirus will receive a 3 month mortgage payment holiday.
  • At the end of this period, landlords and tenants are expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.

 

2019/20 Salary Dividend Planning – Save Tax !

It is a long established practice that small businesses who are structured as a Limited Company might pay themselves a small salary and dividends to potentially save tax.

However in the run up to this tax year there have been multiple legislative changes that have affected the most tax efficient way of doing this. So all small Limited Companies should be reviewing their remuneration strategy with their accountant to check that it is still the best way forward.

Salary Level:

  • The abolition of the Employer’s Allowance for one Director Companies has actually simplified the issues around what is the best salary to take.
  • There is no point in paying additional National Insurance in order to save a smaller amount of tax.
  • Therefore in the majority of cases small business owners should be paying themselves a salary of £8,632 a year.

The advantages of this are:

  • No National Insurance,
  • A year’s credit toward the State Pension (now need 35 years)

Dividends:

  • The Dividend Tax allowance has been reduced to £2,000 from April 6th 2018

New Scottish Tax Bands:

  • There are new Scottish tax bands from the 5th April 2018 which along with the dividend allowance and the savings allowance make planning remuneration even more complex than it was before.

There are a number of ways of mitigating dividend tax including transferring shares to your spouse, Company Pension contributions and employing members of your family where they are actually doing proper work for your business.

Give us a call if you would like a review of your remuneration strategy.

Client Focus – Automatic Protection Ltd

Automatic Protection Ltd in Biggar have been a client of ours since 2013. They were established in January 2001 by Father and Son team Neil and Stuart Harrison. Based in the border town of Biggar, South Lanarkshire, APL has over 45 years of experience in the fire and security industry with unparalleled expertise in Automatic Fire Extinguishing & Fire Suppression systems. See more details at: http://www.autoproltd.co.uk

 

Making Tax Digital Latest

Making Tax Digital – The Short Version

Making Tax Digital sounds complex but in the first phase all that it means is that all VAT registered businesses must be submitting VAT returns straight from Software starting in April next year.

Making Tax Digital – The Slightly Longer Version

HMRC’s Making Tax Digital initiative is edging ever closer. So with just six months to go until it comes in here is a review of where we are.

Here is HMRC’s take on it https://www.gov.uk/government/publications/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready/making-tax-digital-how-vat-businesses-and-other-vat-entities-can-get-ready

Whilst the later phases are still clouded in confusion, the initial phase which covers VAT is now coming and clients will need to submit their VAT returns straight from software. No more totting up invoices on a calculator and then typing the VAT return numbers in to the HMRC VAT portal. It isn’t even clear if a spreadsheet will suffice.

So the bottom line is that in practice all VAT registered businesses should be converting to electronic book keeping by the end of 2018 to be ready for the change. Clients using old unsupported versions of Sage will either have to upgrade to the latest version or even better convert to a cloud accounting package.

Many of our clients wont notice the difference as the are already on Xero, Freeagent or Kashflow either supported by us or with us doing their book keeping. However the few that are still calculating VAT returns manually and then giving us a shoe box at the end of the year will need to convert as soon as possible.

If you are unsure about what you need to do give us a call and we will point you in the right direction.

There is more detail on Making Tax Digital here from the Tax Institute. https://www.tax.org.uk/policy-technical/technical-news/making-tax-digital-vat-main-issues-consideration

IR35 2018 update

First introduced in 2000 the IR35 rules (more correctly known as the intermediaries legislation for income tax) have forever since been a source of stress and worry for contractors. Someone who works in a “Personal Service Company” is supposed to do a self assessment as to whether they are caught by the legislation that in effect says that they are a disguised employee. If so they then have to pay a deemed payment to themselves through PAYE as described here: https://www.gov.uk/guidance/how-to-calculate-the-deemed-employment-payment

The practical upshot is that if the deemed payment is applied then the contractor ends up paying the Employer’s and Employee’s National Insurance. Not a scenario most would want. So many contractors assume they are outside IR35 and proceed as such.

Contractors can use HMRC’s CEST tool to try and determine their status. But this tool is potentially not always accurate. HMRC lost yet another tribunal recently https://www.ipse.co.uk/our/news-listing/defeat-puts-to-pasture-hmrc-s-argument-about-moo.html where CEST may well have not reported the answer that the judge found.

Another change came in April 2017 when the Government brought in rules to tighten up the use of contractors in the public sector. The IR35 status decision in Public Sector contracts is now made by the client, not the contractor. The risk of getting the status wrong now resides with the client. This might seem good for the Contractor but in practice has led to the reduction of Public Sector contracts that are available.

If this all seems opaque then there is possibly more to come. The Autumn budget 2017 contained the information that the Government would be consulting about extending the new Public Sector IR35 rules to the private sector. So watch this space!

If you would like common sense advice on a potential or existing contract that you have please give us a call or fill in the contact form below.

 

Class 2 NI Not Abolished After All!

The government announced the abolition of Class 2 NI last year.

https://www.gov.uk/government/consultations/consultation-on-abolishing-class-2-national-insurance-and-introducing-a-contributory-benefit-test-to-class-4-national-insurance-for-the-self-employed/the-abolition-of-class-2-national-insurance-introducing-a-benefit-test-into-class-4-national-insurance-for-the-self-employed

However as is so often the case the law of unintended consequences kicked in and this week the government announced that Class 2 would not be abolished after all.

One of the consequences of this change was that people with self employed profits below £5965 (18-19 rate) would not receive a credit for that year towards their state pension. Currently a person needs 35 years of National Insurance credit to get the new flat rate state pension. https://www.gov.uk/new-state-pension/how-its-calculated

In this case a person would have to pay Class 3 National Insurance at a rate nearly 5 times the rate of Class 2! So for example if a person was starting a business and made losses in the first year they would either not get a credit towards their state pension or have to pay £761.80 (18-19 rate) in Class 3 contributions.

The U Turn has widely been reported as the reversal of a tax cut for the self employed https://www.independent.co.uk/news/uk/politics/philip-hammond-tax-cut-self-employed-scrap-conservatives-national-insurance-contributions-nic-class-a8526236.html

However for low paid Self Employed workers paying Class 2 NICs is an essential method of ensuring they get the full state pension.

New Partnership With Tide Bank

When we take on a new client who is setting up a business there is often a frustrating delay while they have to go to a traditional bank to set up a bank account. This process can take weeks.

Sutherland Black are pleased to announce a new partnership with Tide, one of a new breed of online banks, who can set up a Business Account in hours rather than weeks.

We have our own dedicated page for account setups where clients will get a discount off the already low charges.

Click here to go to our dedicated partner account setup page.

If you want to read more about how Tide can help your business have a look at their website here: www.tide.co

Please leave us your details and we will contact you within 24 hours