John’s Spring Blog 2016

Well it hardly feels like Spring as I write this blog.  We are told by the meteorological office that Spring runs March, April, May but with the continuing rain, heavy winds and even cold weather it sure feels like Winter, however Easter is only two or three weeks away.  In the Christian calendar we are in what is called Lent, 40 days up to Easter, recreating the 40 days that Jesus spent in the wilderness.

Of course the resurrection of Jesus at Easter reminds us of new life which takes us to the appearance of the spring lambs in the fields very shortly and encourage us to think that Summer is on its way.

For those of you who run a small business I am not sure you regard the new tax year as something to be desired with the introduction of the new dividend tax of 7.5% tax on the dividends you draw out of the business up to the basic rate threshold, although the first £5000 is tax free as part of the basic rate band.  This tax will become due and payable as part of a self-assessment for the year ended 5^th April 2017 and probably not due for payment until January 2018 at the latest.

A piece of news from HM Revenue & Customs, which has hit the national press is the digital account and the need to file information on a quarterly basis.  HM Revenue & Customs describe it as affecting companies, partnerships and individual tax payers who are self-employed and those who let out a property.  The idea of filing information quarterly is to collect tax from you more quickly.  The intention is this would be implemented by 2020 although at the present time many accountancy bodies and business associations are lobbying the Chancellor for some sort of threshold below, which quarterly reporting is not required.  We will wait and see what happens.  Certainly difficult times ahead.

In our office we have been grappling with the new accounting standards, which have come in – commercial organisations are now subject to the Financial Reporting Standard 102 and FRSSE 2015, which will mean different changes in the layout of your statutory accounts and disclosure requirements.  A very small business does have the option of switching to what is called micro accounting, Financial Reporting Standard 105, which does reduce disclosure although the amount of time which my firm would need to spend on your accounts is not that significantly reduced.  Certainly if you are a small company and you would like to use micro accounting, then do let me know.  In some ways I am against it as it does give reduced accounts and disclosure information to the client as to how their business is progressing and how their income and expenditure is allocated and spent within the financial statements.

If your concern is only really the bottom line of tax payable then micro accounting may be for you.

As far as Charities are concerned we have this one year gap interlude where Charities have to report under the Financial Reporting Standard for small entities  SORP January 2015, which does bring a few different disclosures from the old SORP 2005.

However from accounting periods beginning 1^st January 2016 Charities move over to their own FRS 102 SORP which does bring more significant changes.

As a firm we are tending to move Charity clients to FRS 102 sooner than later as it seems little point in just using reduced disclosure for one year, it would be far better to get clients used to the new standard.

 If you’re a buy to let landlord then obviously the changes which will come into effect in April 2016 are somewhat horrific.  Thankfully the reduction in the amount of mortgage interest tax available for deduction does not start to kick in until April 2017 and is phased in over a few years, so if you are a higher rate tax payer and you find that the loss of this interest relief will bring a net loss in your buy to let calculations then you do have some time to consider changes such as incorporation.

The introduction of the new additional stamp duty for second homes is also a big factor in all of these considerations.

Another major issue commencing in April is that you can now receive £1000 worth of interest tax free.  Banks and building societies are moving to paying interest gross.  This does begin to take away the benefits of ISA’s if you are a small tax payer.

Our office staffing remains fairly constant at the present time although Mike continues to be away with a long term illness, which does bring an extra challenge to the rest of us.  Sebastian has settled well into the office as a right hand man to me and accounts manager working alongside Nicholas.  I am pleased to report that Tina has recently completed stage 3 of the association of accounting technician examinations and is going to move onto stage 4 later in the year.  Jacob is making great progress in his ACCA studies and hopes to move to the professional stage in the Summer. 

One of the great changes in our office in the coming weeks is the move to a paperless office!  I am sure this will not happen overnight but the introduction of new software does enable us now to save everything digitally without the necessity of lots of files.  One of the great benefits of this new system is I will no longer have to carry large files home or to clients premises saving considerable expense in Osteopath/Chiropractor bills!

I hope this Newsletter finds you well.  If you have any particular problems in areas of taxation please do not hesitate to let us know.  Speak to either myself, Nicholas or Sebastian.