We all know there is a referendum tomorrow; what none of us know is what will be the long term impact on the UK. What Mark Twain surmised, and possibly Disraeli before him, that there were three types of lies: Lies, Damn Lies and Statistics. We have certainly been fed a lot of those recently.
Whatever the outcome we can be sure that life will go on and that we will be governed one way or another by the stupendously long UK tax legislation as well as ever more complicated corporate legislation designed for ever greater transparency.
In this newsletter we will be recapping the mainstream changes in taxes this year as well as looking at a very important new piece of corporate responsibility which affects everyone.
Practical tax changes for 2016/17
- Tax free personal allowance is £11,000, between this figure and £43,000 you are taxed at 20%.
- Higher rate tax 40% starts at £43,000.
- Additional rate 45% starts at £150,000.
Remember between £100,000 and £122,000 you are taxed at an effective rate of 60% as you gradually lose your personal allowance.
First £1000 of savings income (e.g. bank interest) is tax free to basic rate tax payers; for higher rate tax payers this is first £500; there is no allowance for additional rate (45%) tax payers.
There is a new dividend tax rate despite the Chancellor promising not to put up Income Tax in the election manifesto. The first £5000 of dividend income is tax free then an additional 7.5% dividend tax will apply.
Capital Gains Tax
In a surprise move the Chancellor brought down the CGT rates to 10% (from 18%) for basic rate tax payers and to 20% (from 28%) for higher and additional rate tax payers.
However for selling residential property the old rates of 18% and 28% still apply.
Auto enrolment for pensions
The date for the mandatory enrolling of employees into a pension scheme is fast approaching for all small businesses.
This means that you will have to set up a pension scheme and then offer your employees a chance to join the scheme. Even if they do not join the scheme you will have to enrol them again 3 years later.
You may well have had a letter informing you, as an employer, of your ‘staging’ date. If so we can assist you in setting up your scheme. If you haven’t had the letter and want to know when you will need to set the scheme – just give us a call and we will tell you.
If you have any queries about these rates or how the changes may affect you please contact Mark on 01273 447040.
All current and historical tax rates can be found HERE.
Persons with Significant Influence
Effectively from 30 June new legislation takes over whereby Directors of Companies and Partners of LLPs must maintain a register of people with significant influence over the businesses affairs. For the vast majority of businesses this is fairly straight forward and similar to maintaining the register of directors and shareholders.
- Persons of significant control (PSC) are defined as:
- Holding directly or indirectly more the 25% of the shares,
- Holding directly or indirectly more the 25% of the votes,
- Right directly or indirectly to appoint or remove the majority of the board,
- Right to exercise, or actually exercises, significant influence or control,
- Holding significant interest or control over a trust or a firm which itself satisfies one of the 4 conditions above.
Points 1 to 3 seem fairly straight forward although ‘indirect’ may be confuse matters and 5 is similar but would need more digging around.
Point 4 brings back memories of a ‘shadow director’ someone who hides their identity from public view but really controls the company’s actions. There is often a reason people do this but from now on the directors are criminally liable if they do not disclose such an individual in PSC register.
LLPs are similar.
PSC register will now be part of the new style annual returns as of 30 June 2016 and so will be on public record at Companies House when you file your next annual return.
However you should still keep your PSC register at your registered office as anyone with proper purpose is allowed to view it! You can charge them £12 for the privilege.
Chariot House provide a comprehensive payroll service including pension auto enrolment.
If you want any advice on these matters please contact Laura on 01273 447040.
Office for Tax Simplification
The OTS is to become a permanent fixture once the current Finance Bill is enacted.
It was set up in 2010 to, presumably, make the UK tax system easier to understand and administer. In that time the UK tax code has grown by over 50% to an incredible 17,000 pages. Its very complexity leads to more opportunity of avoidance – the exact thing the government tells us it wants to eradicate.
Compare this to the Hong Kong tax code, widely held as the most efficient in the world, which is a mere 276 pages long.
This is just a précis of the new rules – if you would like further advice please call Mark Partridge on 01273 447040