Is tax relief available
for training costs when setting up a new trade in a limited company?
We have been asked this question a number of times recently.
Corporation Tax Relief is generally available for officer and employee training costs. Income Tax Relief and National Insurance Relief is also available to officers and employees who receive work-related training.
Where a limited company provides training to officers and/or employees a corporation tax deduction is available as long as the expenditure meets the basic requirement of being wholly and exclusively for the purpose of the trade. In most cases, the company will be providing training so employees can better perform their duties in the trade or to advance the companies trade and a deduction will be available.
Employees (including officers) are subject to income tax on any benefit received, however exemptions for income tax and national insurance are available for ‘work-related’ training.
Where a company provides training costs to any officer or employee which is not work-related, for example, a company manufacturing widgets sending its Finance Director on a candle making course, the costs of the training is not work-related and is therefore taxable as a benefit in kind for the director. The benefit is reportable on the director’s p11d.
The cost of the candle making course is, however, a deductible expense for corporation tax purposes, as it is part of the Finance Director’s remuneration package, and their employment is wholly and exclusively for the purpose of the company trade.
This guidance does not apply to sole traders or partnership businesses.If anyone has any questions regarding training costs please do get in touch.
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. 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. You can upload and
update your tax account in real time.
Will it affect me?
If you own a business, you are
self-employed and you pay income tax, national insurance, VAT or corporation
tax then it is quite likely you will be affected. This means you could 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 the current 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 (Cloud) 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 and tax agent, we
can 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
We will be providing information to our
clients in the coming year via newsletters, blogs or direct emails to prepare
you and get you ready for Digital Tax well in advance. In the meantime, if you
want to discuss how this affects you and your business please contact us.
What are we doing for you?
We have a dedicated page detailing what Making Tax Digital means for businesses. For
those of you who do not currently keep digital records, we are providing
support by helping you convert to one of our packages on the Xero accounting
platform. This is a very simple software
to operate and is fully MTD compliant.
Have a look at our Xero page for a more detailed list of benefits and
then please do contact us and we will build a package that suits you and
business and covers all your needs in the modern environment.
HMRC have seen a sharp increase in the number of scam emails
and text messages that claim members of the public have received a tax rebate,
only for their bank account and personal details to be handed over to cyber criminals.
Criminals are sending these phishing emails now to coincide
with the period in which HMRC issues genuine tax refunds through the post (if
you are entitled to a refund, you can expect a legitimate letter from HMRC
between June and October). Criminals also use other periodical events such as
the self-assessment deadline in order to catch out members of the public that
believe the emails they have received are legitimate
We would therefore like to highlight a few points to users
of our App and website, which could prevent personal data from getting into the
HMRC will never use text or emails to tell you
about a tax rebate or penalty or ask for personal or payment information.
Genuine financial organisations like HMRC and
banks will never contract somebody asking for their bank details, passwords or
PIN. Emails received out of the blue should also be treated as suspicious.
HMRC have created a guide focusing on phishing
emails and bogus contact. Here’s the
From the amount of snow fallen over the past 24 hours and from some of the pictures and stories on social media, you’d be forgiven to confuse the south of England with scenes from Pyongyang and the recent Winter Olympics.
Our Dibden employees haven’t managed to make it to our Southampton office in the middle of the New Forest today (02 March 2018), however a few local Salisbury Team members have made it to the city centre. Our Directors are also working, but with the only possible mode of transport in to work for them being a sled or possible snow mobile, they’ve decided to work from home.
Whilst the 2017 tax return deadline has now passed, you can
be sure there are some people who have not filed their tax return. It’s
therefore not a surprise to hear every year HMRC receive some creative excuses
as to why returns have not been submitted on time.
Here are just a few:
1. My tax return was on my yacht…which caught fire.
2. A wasp in my car caused me to have an accident and my tax return, which
was inside, was destroyed.
3. My wife helps me with my tax return, but she had a headache for ten days.
4. My dog ate my tax return…and all of the reminders.
5. I couldn’t complete my tax return, because my husband left me and took
our accountant with him. I am currently trying to find a new accountant.
couldn’t file my return on time as my wife has been seeing aliens and won’t let
me enter the house.
been far too busy touring the country with my one-man play.
ex-wife left my tax return upstairs, but I suffer from vertigo and can’t go
upstairs to retrieve it.
business doesn’t really do anything.
spilt coffee on it.
If you want a hassle-free experience filing your
tax return next year, get in touch!
Numeric Accounting kicked off their festive
celebrations with a trip to Beaulieu National Motor Museum on Friday 8th
December for a ‘Night at the Movies’ themed Christmas party. A few pictures
from the night are below, however a few will stay on heavily password protected
smartphones for the benefit of some staff/directors.
“BUILDING A BRITAIN FIT FOR THE FUTURE”
This was the main theme of
the Chancellor Phillip Hammond’s second budget as he committed to spending more
on infrastructure projects and stimulating the housing market. He had to put on
a good performance to keep his job after criticism following the Spring Budget.
His jokes were better this time but there was very little good news on the tax
front and some worrying economic figures, particularly the growth forecasts. A
stamp duty holiday for first-time homebuyers was hotly tipped prior to the
Budget but nevertheless it was still a surprise that the duty for such buyers was
abolished for purchases up to £300,000.
SDLT RELIEF FOR FIRST-TIME BUYERS
In an attempt
to help first-time buyers get on the property ladder and stimulate the housing
market the chancellor announced that for property purchases completed on or
after 22 November 2017 there would be no SDLT
payable if the purchase price is below £300,000.
This will be a permanent measure rather than a
temporary holiday. Those claiming the relief will pay no SDLT on the first
£300,000 of the consideration and 5% on any remainder. No relief will be
available where the total consideration is more than £500,000. It should be
noted that were a property is bought in joint names it must be the first
property owned by all purchasers.
PERSONAL ALLOWANCE AND HIGHER RATE LIMIT INCREASED
The Chancellor reminded us that the government
are committed to increasing the personal allowance to £12,500 in 2020 and the
higher rate tax threshold to £50,000. However, the personal allowance for
2018/19 was only increased in line with inflation to £11,850 and the higher
rate threshold to £46,350.
that up to 10% of the personal allowance (£1,185) may be transferred from one
spouse or civil partner to the other if unused and the transferee is a basic
rate taxpayer. This transfer will now be available on behalf of deceased spouses and civil partners,
and the claim may now be backdated for up to four years where the entitlement
conditions were met.
NO CHANGES IN TAX OR NIC RATES
The basic rate of income tax and higher rate remain at 20% and 40%
respectively and the 45% additional rate continues to apply to income over £150,000.
Class 2 National Insurance contributions (NIC) for the self-employed are being
abolished from 6 April 2019 and "merged" with Class 4 contributions
the Chancellor did not dare mention an increase in the current 9% Class 4 rate
had been rumours that the dividend rate might be increased, but dividends continue
to be taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends
fall into the basic rate band, higher rate band or the additional rate.
annual ISA investment limit increased to £20,000 from 6 April 2017 and remains
at that level for 2018/19. Dividends on shares held within an ISA continue to
be tax free.
IR35 “OFF-PAYROLL” RULES MAY BE EXTENDED TO PRIVATE
mentioned in the Budget speech the other documents released on Budget day
mention the possible extension of the rules for personal service companies in
the public sector to workers in the private sector.
government will consult in 2018 on how to tackle non-compliance with the
intermediaries legislation (commonly known as IR35) in the private sector. The
legislation which currently only applies in the public sector seeks to ensure
that individuals who effectively work as employees are taxed as employees, even
if they choose to structure their work through a company.
CHANGES TO DIESEL COMPANY CARS
benefits are based on CO2 emissions data which has encouraged employees to
choose diesel cars due to lower CO2 emissions. The government is trying to
reduce the number of diesel cars and will increase the current 3% diesel
supplement to 4% from 6 April 2018.
previously announced radical changes to the company car benefit rules are being
introduced in 2020. The benefit in kind for electric cars and hybrid cars with
a range of 130 miles or more on the electric motor is being reduced to just 2%. That means that the taxable benefit for such a car with a list price of £30,000
would be just £600 a year. Where the employer allows staff to charge their own electric
car at work there will be no taxable benefit.
EIS TAX RELIEF INCREASED FOR INVESTMENT IN TECH
The Government will double the
amount that an individual may invest under the EIS in a tax year to £2 million
from the current limit of £1 million, provided any amount over £1 million is
invested in one or more knowledge-intensive companies.
annual investment limit for knowledge-intensive companies receiving investments
under the EIS and from VCTs will be increased to £10 million from the current
limit of £5 million. The lifetime limit raised by such companies will remain
the same at £20 million.
R&D TAX RELIEF INCREASED
The rate of the
R&D expenditure credit is being increased from 11% to 12%, in order to
support business investment in R&D. This is the relief available to those
companies that do not qualify for the more generous relief available to SMEs.
VAT REGISTRATION LIMIT FROZEN
registration limit normally increases in line with inflation each year, however
the limit has been frozen at £85,000 until 1 April 2020. At the same time the
deregistration limit remains at £83,000.
had been rumours that the VAT threshold would be reduced so that more
businesses would be required to charge VAT on their sales. The UK currently has
the highest VAT registration threshold in Europe.
that the introduction of Making Tax Digital (MTD) for VAT in April 2019 will
apply to those businesses above the registration limit. Freezing or reducing
the threshold will bring more businesses within the scope of MTD.
BUSINESS RATES RELIEF FOR SMALL BUSINESSES
has been much lobbying from the small business sector to reduce business rates.
The Chancellor stated that 600,000 small business currently benefit from small
business rates relief.
In order to support the licensed trade from April 2017, pubs with a rateable value up
to £100,000 are able to claim a £1,000 business rates discount for one year.
This relief has now been extended until March 2019.
MILEAGE ALLOWANCE FOR BUY TO LET LANDLORDS
measure hidden away was the proposal that buy-to-let landlords will be able to
claim 45p a mile for necessary visits to their rental properties.
will be as an alternative to claims for capital allowances and deductions for
actual expenses incurred, such as fuel.
OF MAIN TAX EVENTS
2017 / JANUARY 2018
1/12 - Corporation
tax for year to 30/04/2017 unless quarterly instalments apply.
19/12 - PAYE & NIC
deductions, and CIS return and tax, for month to 5/12/17 (due 22/12 if you
30/12 - Deadline
for filing 2016/17 tax return online in order to request that HMRC collect
outstanding tax via the 2017/18 PAYE code
1/01 - Corporation tax
for year to 31/05/16.
19/01 - PAYE & NIC
deductions, and CIS return and tax, for month to 5/01/18 (due 22/01 if you pay
31/01 - Self-Assessment
tax return for 2016/17 due, together with balancing payment and 50% payment
on account of 2017/18 tax.
As you know from April 2016 Limited Companies in England & Wales were required to keep an up to date register of Persons with Significant Control (PSC). Also from 30th June last year it also became necessary to update Companies House with this information using the Confirmation Statement (form CS01), previously known as the Annual Return.
On 26th June this year we had a new Anti-Money Laundering Directive (4AMLD) brought in to lower the occurrence of money laundering and terrorist financing in the UK. Immediately this brings a change to ensure that the PSC register is kept accurate and up to date. From this date any changes to the PSC register need to be updated at Companies House within 28 days of the change taking place.
So if a company has a change in director/shareholder or structure, and this results in a change in the PSC details held i.e. a new PSC is created or an existing one removed, there is a change in the percentage/nature of control or influence of a PSC, or even just a change in personal details of an existing PSC, then the register must be updated within 14 days of the change, with a further 14 days to update Companies House using form PSC01 or PSC09 as appropriate. It is no longer appropriate to update Companies House once per year using the form CS01.
If you require any help or further guidance in this area then please do let us know.
7:30pm on Saturday saw the start of a crazy night out away from the office for the team at Numeric Accounting. It was agreed that an 80's Summer Party on board a disco boat with Blue Funnel, out of Ocean Village, Southampton, was definitely worth a go. And it turned out to be a fantastic fun time for everyone.
The evidence has now emerged and please see for yourself:
Now that the 2017 finance act has been published we are happy to confirm the tax rates, bands and allowances to be used for individuals, for the current tax year ended 5 April 2018.
The personal allowance has been increased to £11,500 but as in previous years, the allowance is reduced by £1 for every £2 by which income exceeds £100,000 i.e. those with income of £123,000 or more will loose theirs. The marriage allowance, which allows people to transfer 10% of their personal allowance to their spouse/civil partner as long as the recipient is not a higher or additional rate taxpayer, is therefore £1,150. Claiming the marriage allowance is worthwhile where not to would mean personal allowance is wasted. The allowance give a total £230 saving for the one benefiting.
The married couples allowance (which is not the same thing as the marriage allowance) is available to married couples and civil partners where one or both were born before 6 April 1935. The allowance is set at £8,445, but reduced by £1 for every £2 by which income exceeds £28,000 until it reaches £3,260.
The tax-free savings allowance remains at £1,000 for basic rate taxpayers and at £500 for higher rate taxpayers. Those paying tax at the additional rate do not receive a savings allowance.
The new rules for the taxation of dividends (from April 2016) saw all taxpayers being entitled to a dividend allowance regardless of the rate at which they pay tax. This allowance is unchanged at £5,000, however we now know the plan is to reduce it to £2,000 from 6 April 2018.
Moving on to tax rates & bands for 2017/18 it is worth noting that basic rate income tax remains at 20%, higher rate at 40% and the additional rate is still 45%. For the UK (but excluding Scotland) the basic rate band is set at £33,500 and the additional rate of tax applies to taxable income exceeding £150,000.
Finally dividends in excess of the dividend allowance (above) are still taxed at 7.5% where they fall within the basic rate band, 32.5% at higher rate and 38.1% if within the additional rate band.
Capital gains tax
It is good news all around for CGT with the annual exempt
amount increasing to £11,300 for the tax year ended 5 April 2018. In addition to this the new favourable tax rates remain unchanged at 10% to the extent that total income and gains do not exceed the
basic rate band, and 20% where total income and gains exceed the basic
rate band. Unfortunately the higher
rates of 18% and 28% respectively which apply to gains on residential property remain unchanged also.
If you need advice in this area then we are here to help.