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New Zero Rate Tax Bands Confirmed...

New Zero Rate Tax Bands Confirmed…

Now that sounds exciting but in reality it isn’t.

The finance Bill 2016 was published in December and confirmed George Osborn’s announcements earlier in the year that from 2016-17 onwards individuals will be entitled to some new tax free investment allowances…

The so called Personal Savings Allowance (PSA)
which covers such income as bank interest will be:

£1,000 for basic rate taxpayers
£500 for 40% tax payers and
£Nil for 45% tax payers.
The Personal Savings Allowance will be deducted from the basic rate tax band.

Excuses for not filing a tax return...

Life can be unpredictable and there are genuine excuses why tax returns are late particularly in the light of recent flooding.  In fact HMRC have opened a hot line to give practical help and advice to people affected by severe weather and flooding – 0800 904 7900.

However some excuses are just plain laughable so here are the top 10 unsuccessful excuses used in penalty appeals:

  1. My tax papers were left in the shed and a rat ate them
  2. I’m not a paperwork-orientated person – I always relied on my sister to complete my returns but we have now fallen out

CHANCELLOR ATTACKS RESIDENTIAL LANDLORDS...

In the Summer Budget the Chancellor announced a restriction on the deductibility of interest from rental income for individual landlords of residential property. This restriction will be phased in from 2017/18 to 2020/21, and it may make letting uneconomic for landlords whose businesses are relatively highly geared (high percentage of mortgage to market value).  Although it was presented as a tax on wealthier tax payers because it was announced that mortgage interest would only be allowed at the 20% tax rate, it has transpired that the mechanism of switching from an expense deductible from profit to a tax credit deductible from the tax payable has pushed those who are currently only paying 20% tax into becoming 40% tax payers after 2017-18.

Without other resources from which to reduce borrowings some landlords may be forced to sell some or all of their let properties but this will almost certainly give rise to significant Capital Gains Tax liabilities which could effectively wipe out their equity. 

The latest attack on property investors is a proposed 3% increase in Stamp Duty Land Tax.

Excuses for not filing a tax return...

Life can be unpredictable and there are genuine excuses why tax returns are late particularly in the light of recent flooding.  In fact HMRC have opened a hot line to give practical help and advice to people affected by severe weather and flooding – 0800 904 7900.

However some excuses are just plain laughable so here are the top 10 unsuccessful excuses used in penalty appeals:

  1. My tax papers were left in the shed and a rat ate them
  2. I’m not a paperwork-orientated person – I always relied on my sister to complete my returns but we have now fallen out

Advice for Start-Ups-Part 5a: Accounting for Bookeeeping...

Next on our list in the Advice for Start-ups series is a look at what you need to do when it comes to accounting and bookkeeping for your business. Such is the breadth of the subject, we have actually broken this down into Part 5a and Part 5b, in an attempt to keep you wide awake for what comes next in the series. Before we begin, let’s recap. We have so far looked at Part 1: Taking the Plunge, with advice how to get started, got a little technical in Part 2: Who Am I?, which helps you decide on an entity, picked out a few skills it is important to develop in Part 3: What Does it Take to Succeed? and enjoyed (sorry, endured) a look at tax in Part 4: Tackling Tax. Let’s continue with theme of numbers and look at Part 5a and accounting.

When most people start a business it is because they have a talent, whether that be as a salesman, or simply in the field they have chosen. Good examples would be a mechanic for instance, or a solicitor. These people look to build their business around this talent and the belief they have in the service or product they can supply. So they should too. Unfortunately what many of these people will avoid, in most cases to the detriment of their own growth, is keeping accurate books. Books are effectively a score sheet, letting you know how well things are going, or warning you if things start to take a downward turn.

Not only are they so important for personal use, but financial statements and records are also likely to be the deciding factor for banks, landlords and investors as to whether you are a reliable option for credit, property, or a loan. Tax authorities and governing bodies pay careful attention to your records too, for obvious reasons, so keeping them in line can help keep you out of trouble. Really, the necessity for well-organised financial records cannot be overemphasised. They are your guide to the business decisions of tomorrow, keeping you on the road to success and helping you to avoid straying from the path.