Time to renew tax credits

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HMRC is urging customers who haven’t already renewed their tax credits to do so in the next week or risk having their payments stopped.

The deadline to renew your tax credits, including child tax credits and working tax credits, is 31 July 2017.

Missing the deadline will mean your tax credits will stop and you may have to pay back the payments received since 6 April 2017.

Last year, 410,000 customers had their payments stopped or altered due to missing the deadline to inform HMRC of any changes to their circumstances.

These include changes to working hours, income and childcare costs and can be renewed either online, by telephone or paper form.

Further help and information on renewing tax credits is available via the HMRC website.

Rachel McLean, interim director general of customer services at HMRC, said:

“We know life can be hectic so the start and stop feature allows customers to begin and complete their renewal on a day and time convenient for them.

“I urge customers who have yet to renew their tax credits to do so as soon as possible, thereby avoiding having their payments stopped. The deadline is fast approaching.”

Contact us to discuss tax credits. Get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment.

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UK inflation drops

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The Consumer Prices Index (CPI) measure of inflation unexpectedly fell to 2.6% in June, down from 2.9% in May 2017.

The rate of inflation fell for the first since April 2016, although it remains higher than the rates seen over the last 4 years.

Last month’s fall was largely down to a further drop in fuel prices, which fell for the fourth month in a row according to the Office for National Statistics.

Suren Thiru, head of economics at the British Chambers of Commerce, said:

“With UK economic conditions softening, it is crucial the Monetary Policy Committee holds its nerve on interest rates, particularly during this period of heightened political uncertainty.

“Raising rates too early could undermine consumer and business confidence, stifling UK growth further.”

Mike Cherry, national chairman at the Federation of Small Businesses, added:

“Confirmation that rates bills will rise in line with CPI rather than RPI from 2020 will go some way to supporting small firms that are struggling against sharp hikes in the future.

“Given that operating costs are now at their highest in 4 years, and against a backdrop of unprecedented political and economic uncertainty, help is needed now.”

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Pension age to increase

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Workers born between 6 April 1970 and 5 April 1978 will have to remain in employment for an extra year after the government announced it will increase the state pension age to 68.

The decision means an estimated 5.8 million workers – or 1 in 7 – will have to work an additional year before they qualify for the state pension.

However, those born on or before 5 April 1970 will not be affected by the change.

The proposal follows recommendations made by John Cridland CBE in March 2017.

Cridland’s review highlighted that by 2036/37, annual spending on the state pension would have increased by 1% of GPD on 2016/17.

To translate this into figures, this would equate to around £20 billion or a tax rise of £725 per household.

David Gauke, secretary of state for work and pensions, said:

“As life expectancy continues to rise and the number of people in receipt of state pension increases, we need to ensure we have a fair and sustainable system that is reflective of modern life and protected for future generations.

“Combined with our pension reforms that are helping more people than ever save into a private pension and reducing pensioner poverty to a near record low, these changes will give people the certainty they need to plan ahead for retirement.”

Contact us to discuss the state pension. Get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment

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Making Tax Digital delayed until ‘at least 2020’

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The government has delayed its Making Tax Digital (MTD) plans for an estimated 3 million small businesses and landlords.

MTD will initially be available on a voluntary basis, so businesses with an annual turnover below the VAT threshold (currently £85,000) can choose when to move to the digital accounting system.

Under the new timetable outlined by HMRC:

  • only businesses with a turnover above the VAT threshold will have to keep digital records (for VAT purposes only) from 2019
  • businesses and landlords will not be required to keep digital records, and update HMRC quarterly, for other taxes until at least 2020.

As VAT already requires quarterly returns, no business will need to provide any more information to HMRC more regularly than they do now.

All businesses will have at least 2 years to adapt to the changes before being asked to keep their tax records digitally.

These changes are expected to be passed through Finance Bill 2017, which is set to be announced sometime after parliament returns on 5 September 2017.

Mel Stride, financial secretary to the Treasury and paymaster general, said:

“We have listened very carefully to their concerns and are making changes so we can bring the tax system into the digital age in a way that is right for all businesses.”

Mike Cherry, chairman of the Federation of Small Businesses, added:

“This promises to make the rollout far more manageable for all small firms.

“We look forward to receiving more detail from the Treasury on requirements for those small firms above the threshold that will have to comply from 2019.”

Contact us to discuss your digital accounting needs. Get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment.

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Landlords hit by mortgage interest relief changes

Landlords with one property could be pushed into a higher tax bracket.

The National Landlords Association (NLA) polled 754 landlords and found that 16% with a single property said they will move into a higher income tax bracket – a 7% increase from Q4 2016.

Changes to relief on finance costs on residential properties was brought in on 6 April 2017, restricting costs to the basic rate of income tax.

These include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages.

This means that landlords will only be able to deduct a share of finance costs when calculating rental profits.

This is being phased in over 4 years:

Tax year Percentage of costs deducted from profits Percentage of costs available a basic rate reduction
2017/18 75% 25%
2018/19 50% 50%
2019/20 25% 75%
2020/21 0% 100%

NLA estimates that a landlord with a single property would need to increase rent by more than 11% to continue getting the same yield from the property. This equates to a rise of £116 per month for the average rental property.

Richard Lambert, chief executive officer at the NLA, said:

“Single property landlords are responsible for providing a huge proportion of the UK’s private rented homes, and these findings show that, slowly, more and more are waking up to the fact their tax bills could be significantly higher in the coming years.”

Contact us today to discuss your tax obligations. For a free hour-long, no-obligation consultation please get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment.

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P11D and P11D(b) Deadline

The deadline to report your business’ benefits and expenses for the 2016/17 tax year is 6 July 2017.

This is a mandatory procedure for employers and requires completing 2 forms – P11D and P11D (b).

If you haven’t downloaded the forms, they can be accessed via the HMRC website.

Each employee given expenses or benefits must be provided with a P11D form for their tax records.

P11D (b) is a separate form and is used to report class 1A national insurance contributions (NICs) due on expenses and benefits.

Class 1A NICs needs to be paid no later than 19 July 2017.

When completing your P11D form, the following format is obligatory:

  •  use Arial font size 11 (if printed)
  •  sort by employee, not benefit type
  •  include your employer reference
  •  include employee’s name and national insurance number
  •  put an employee’s expenses and benefits on the same line
  •  include P11D letter codes next to each benefit.

If you have registered with HMRC before 6 April, you can deduct and pay tax on most expenses through your payroll – exempting you from completing a P11D.

However, a P11D (b) form is still required on any class 1A NICs you owe.

Talk to us about your reporting obligations.

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Flexible work increase

Almost two thirds (65%) of private sector employers think flexible working will increase over the next 5 years, according to Aviva.

The study of 500 employers and 2,000 employees found 51% of businesses said flexible working increases productivity and 68% said it improved staff satisfaction.

Of those who currently work flexibly, 37% were happier at work and 34% were able to manage their responsibilities outside of work more effectively.

Flexible working also improved retention and recruitment with 63% of workers more likely to stay with an employer who offers flexible benefits.36% saw flexible working as a key factor when considering a new job.

Flexible working options most valued by workers:

  • working from home (23%)
  • working longer hours over shorter number of days (22%)
  • working flexible hours across the week (19%).

Gareth Hemming, director of SME insurance at Aviva, said:

“Businesses may need to rethink the way their employees work and should consider the benefits flexible working could bring in meeting business goals.

“It can also support employees looking to manage their work-life balance better as they juggle work with busy lives, looking after family young and old, managing health or even wanting more time to pursue other interests.”

Talk to us about how flexible working can benefit your business. Get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment.

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SME Confidence falls for first time since Brexit

Confidence among small businesses fell for the first time since the EU referendum back in June 2016, according to the Federation of Small Businesses (FSB).

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The latest quarterly Small Business Index dropped 5 points, down from +20 in Q1 2017 to +15 in Q2.

Operating costs for SMEs also increased sharply to 66% in Q2, up from 53% in the same period last year.

52% saw the domestic economy as a threat to expansion plans, while concerns over consumer demand (30%), labour costs (24%) and tax burdens (17%) were also raised.

Further findings:

  • SMEs in East Midlands (+35), Wales (+31) and London (+25) had the highest confidence, while enterprises in Yorkshire (+14), the North West (+9) and Scotland (-4) were the least confident
  • small firms in communication (+43) and manufacturing (+36) were the most confident in Q2, compared to those in arts (-4) and retail (-9).

Mike Cherry, national chairman at FSB, said:

“Small businesses were feeling more pessimistic even before the general election. Now alongside increasing inflationary pressure, a business rates revaluation and rising labour costs, they have a whole new wave of political uncertainty to contend with.

“For decades we’ve heard governments discuss the need to create a balanced economy. It’s time for meaningful action.

“Too many small businesses, particularly in the North, are being held back by derisory investment in infrastructure, connectivity and skills.”

Contact us to discuss your business. Give us a call on 01273 206 445 or email info@mcpwh.com to arrange an appointment.

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Firms ‘unprepared’ for post-Brexit labour market

Almost half of businesses (47%) have unrealistic expectations on the post-Brexit immigration system, according to a study.

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The Resolution Foundation surveyed 503 companies who employ EU workers and found only 17% expect no change to the current immigration system, while 30% expect the current system to be retained for EU nationals offered jobs in the UK.

Furthermore, 46% do not see any changes in the number of EU workers recruited for their business over the next 12 months. Britain is due to exit the EU at the end of March 2019.

24% expect to increase the number of migrant workers they employ, whereas 26% may see a decrease in the number of staff they employ from the EU.

Torsten Bell, director of the Resolution Foundation, said:

“It’s not just government that needs to step up preparation for Brexit. Many British firms are totally unprepared for this change, particularly when it comes to migration.

“Now is the time for both firms and government to focus on how we navigate that journey and the changes to our labour market it brings.”

Talk to us about how Brexit may affect your business. Get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment.

 

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Rejected contracts see SMEs miss out

Nearly half (47%) of small businesses lost out on up to £10,000 in the last year due to turning down work contracts and orders, according to a new study.

 

 

Out of 501 companies surveyed by Hitachi Capital Invoice Finance, 26% snubbed contracts worth up to £5,000 while 21% rejected contracts worth between £5,001 and £10,000.

Almost 1 in 5 (19%) turned away work because of unfair demands from customers, whereas only 8% rejected contracts due to lack of finances.

More established companies were less likely to reject contracts or orders, but reputable firms would lose more money than less established companies when they did turn away work.

Some of the reasons for companies turning down contracts and orders included:

  • contracts were priced too cheaply/would not bring in enough cash
  • customers’ unreasonable demands
  • lack of finances/didn’t want to risk taking out a loan.

A further 66% have not invested personal funds into their company in the last 12 months, whereas 60% did so with their personal savings.

This disproportionally affected start-ups, with 50% investing in their personal savings compared to just 20% of established companies.

Comparing different regions, companies in Wales, London and Northern Ireland turned away the most work.

The North East and the East Midlands saw a higher percentage of businesses reject less work than the year before.

Contact us to discuss your business finance. Get in touch on 01273 206 445 or email info@mcpwh.com to arrange an appointment..

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