Ilkley-based small business specialist, Julia Forrester of TaxAssist Accountants, gives advice on recent changes on tax & accountancy matters:

Employment Allowance – single director companies

Question
My brother and I run a company together- we’re the only directors and shareholders. We don’t have any other staff members. We our company still be eligible for the Employment Allowance?
Answer
The Employment Allowance was introduced to incentivise employers. It is offset against the employer’s secondary National Insurance. Previously it has been £2,000 but from April 2016 the allowance rises to £3,000.

Unfortunately, another business type has been added to the list of those excluded from claiming the allowance. Limited companies with a single director, and no other employees, will not be able to benefit from the employment allowance from 6thApril 2016.

As your company has two directors, you should be able to continue to claim the employment allowance.

Register of people with significant control

Question
My wife and I have our own small limited company. We’ve had a letter from Companies House about a register of people with significant control. Is there something we need to do?
Answer
From 6th April 2016 companies, Societates Europaeae (SEs) and Limited Liability Partnerships (LLPs) must keep a register of individuals or legal entities that have control over them. This is in addition to keeping other information, such as a register of members and a register of directors.

Under the new rules, companies will be expected to:

  • Identify the people with significant control (PSCs) over the company and confirm their information;
  • Record the details of the PSC on the company’s own PSC register;
  • From 30th June 2016 onwards, provide this information to Companies House as part of the annual Confirmation Statement (formerly the Annual Return); and
  • Update the information on the company’s own PSC register when it changes, and update the information at Companies House when the next Confirmation Statement is made

The PSC register will help to increase transparency over who owns and controls UK companies and will help inform investors when they are considering investing in a company. It will also support law enforcement agencies in money laundering investigations.

Failure to provide accurate information on the PSC register and failure to comply with notices requiring someone to provide information are criminal offences, and may result in a fine and or a prison sentence of up to two years.

VAT registration threshold

Question
I’m a growing business and I’m aware that my turnover could mean that I need to register for VAT soon. Could you tell me what the threshold is please?
Answer
Since April 2015, the VAT registration threshold was £82,000.

As announced in the recent Budget, the VAT registration threshold from April 2016 will be £83,000 on the last 12 rolling months.

If your turnover is hovering around the registration threshold, it is really important that you update your bookkeeping records regularly, so that you can quickly identify when your turnover breaches the threshold. That way you will register on time and not incur any late registration penalties. And you can start accounting for VAT, so you’re not facing any large, backdated payments to HM Revenue & Customs.

If you would like any advice or help regarding VAT registration, the VAT schemes available to you and how to manage your affairs once you become VAT registered, please do not hesitate to get in touch with us.

Annual investment allowance

Question
I own a manufacturing business and therefore, our company spends a lot on equipment and vehicles each year. Could you tell me what the Annual Investment Allowance is for the forthcoming year please?

Answer
The Annual Investment Allowance (AIA) provides a 100% tax write off for the cost of most plant and machinery acquired by businesses, except for cars which have separate rules.

In Budget 2014 the Chancellor announced that the allowance would be increased to £500,000 for expenditure incurred between 1st April 2014 and 31st December 2015 (from 6th April 2014 for unincorporated businesses). Thereafter, it was due to plummet to just £25,000.

But in the emergency Summer Budget 2015, it was announced that it would instead only fall to £200,000 for a 12-month period from 1st January 2016.

There is lots to consider when investing in plant, machinery and vehicles in terms of ownership, finance, VAT and tax relief. Discussing your plans ahead of the purchase, should ensure that you’re fully-aware of the tax position and that we can look for the optimum solution.

Julia specialises in managing tax and accountancy affairs for small businesses. For more information about the topics covered above contact:

01943 968232

juliaforrester@taxassist.co.uk