Forecasts Show Interest Rate May Not Rise – Accountants in Cambridgeshire

Forecasts Show Interest Rate May Not Rise – Accountants in Cambridgeshire

This week at Phebys, Accountants in Cambridgeshire, we’re bringing you the lowdown on whether or not the Bank of England will be raising the interest rate at their Monetary Policy Committee meeting next month.

According to a forecast by the EY Item Club, a forecasting body, the Bank of England should refrain from raising interest rates next month. Bank governor Mark Carney, however, says that rates could still be expected to rise in the “relatively near term”, with many analysts still expecting the rate to be raised in November.

According to the EY Item Club, however, such a raise could risk damaging the United Kingdom’s “fragile economic outlook”. The EY Item Club has therefore implored the Bank of England to wait another year before raising the interest rate benchmark from 0.25% to 0.5%.

This recommendation has arisen after the British Chambers of Commerce and the ratings agency Standard and Poor’s suggested economic growth was not strong enough to justify raising interest rates.

The EY Item Club, which utilises the same forecasting model as the Treasury, has predicted that growth in UK GDP would slow to 1.5% this year and 1.4% in 2018.

It is expected by many that the Bank Monetary Policy Committee will raise interest rates at the next meeting, to be held on the 2nd November, but the EY Item Club is urging for the committee to wait until the economy has picked up further before doing so.

According to Howard Archer, Chief Economic Adviser to the EY Item Club, “While it is understandable that the Monetary Policy Committee will want to gradually normalise interest rates from their current ‘emergency levels’, we believe it would be better to do so once the economy is on stronger footing.”

Interest rates in the UK have not been raised since July 2007, prior to the financial crisis. Since then, they have been kept low in order to boost the economy through public spending, by limiting the cost of borrowing whilst reducing the incentive to save.

The Bank of England cut the interest rate further, from 0.5% to 0.25%, in an effort to restimulate the economy following the country’s vote for Brexit.

However, recent low unemployment rates and high inflation have made a rise in interest rates more likely in the very near future.

In an interview with the BBC at the end of September, “If the economy continues on the path that it’s been on, and all indications are that it will, in the relatively near term we can expect that interest rates will increase.”

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

The Bank of England is tasked with using interest rates to keep inflation at 2%. It is currently at 2.9%. However, according to the EY Item Club, inflation will fall back to 2% by the end of next year as the effects of the weaker pound begin to wane.

It is said that public spending would slow from a 9-year high in 2016 (2.8%) to 1.5% this year, as a result of inflation, limited rise in wages and a slow housing market.

According to the latest retail industry figures, footfall fell by 1.2% in September. The chief executive of the British Retail Consortium, Helen Dickson, most shopping destinations faced a decline for the third consecutive month.

The British Chambers of Commerce said on Friday that it was “extraordinary” to hear that the Bank of England was considering raising the interest rate whilst economic growth remained muted.

Earlier this month, Standard and Poor’s said that it was “a bit sceptical” as to the need for an interest rate rise in the UK.

Others, however, have argued that the economy is indeed now strong enough to move away from emergency rates.

Phebys – Accountants in Cambridgeshire

Here at Phebys, Chartered Accountants in Cambridgeshire, we’re interest rate experts. If you have any questions about the potential interest rate rises, contact us on 01480 896267, or email admin@phebys.com, and we’ll be happy to speak with you.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

Xerocon 2017 – Phebys – Accountants in Huntingdon

Xerocon 2017 – Phebys – Accountants in Huntingdon

This week, some of our team here at Phebys, Accountants in Huntingdon, will be attending Xerocon 2017 at the Excel in London. Xerocon is an exclusive event for Xero partners. Here at Phebys, we are very proud to be a Xero Silver partner and are greatly looking forward to the event, along with all the opportunities for learning and networking that it will present.

Accountants in Huntingdon

Phebys – Accountants in Huntingdon

Xerocon 2017 will be taking place at the Excel in London and will span over a total of three days, including Xero Uni Day, a whole range of lectures and seminars and, of course, the Xero Awards and Xero Party.

Here at Phebys, we believe in the future of the cloud. As a firm, we recognise both the importance and the value of cloud accounting for small to medium businesses (read our post about it here), and so an event like Xerocon provides a great opportunity to learn more about accountancy in the cloud and to engage with other like-minded people who share our interest and our passion for cloud accounting. The event also offers exclusive content to Xero partners, which provides a great opportunity for us to further develop our insight into the industry and its workings.

Every year at Xerocon, Xero demonstrates and provides invaluable insight into the future of the accounting industry, both in and outside of the cloud. By attending the event, Phebys can benefit highly from this insight and then pass this information on to you, the client, in order to deliver a better service and help your business grow as much as possible.

Speakers at this year’s event will include Rod Drury, CEO and co-founder of Xero; Gary Turner, the managing director of Xero UK; Alexis Prenn, the CEO of Receipt Bank; and James Cliffe, the head of business banking and small business at HSBC.

Being a Xero partner is so important to us at Phebys, because accounting in the cloud is the future of our industry. It’s a simple, secure and convenient way to manage your accounts from absolutely anywhere. Cloud accounting utilises modern technology such as tablets, smartphones, and so on, to provide a smooth and accessible service to anyone who needs it.

The team at Phebys is strongly looking forward to attending Xerocon 2017 at the Excel and we are very excited to extend our knowledge of accounting in the cloud; to exchange ideas with like-minded people within the industry; to further develop the help that we are able to offer to our clients; and to hear and learn from the wide range of expert speakers and panelists who will be presenting and speaking at the event.

Phebys – Accountants in Huntingdon

At Phebys, Accountants in Huntingdon, we’re tremendously proud of our status as as a Xero partner, and if you require any advice on how cloud accounting could help with the efficiency of your business, please do not hesitate to contact us on 01480 896267 or, alternatively, email admin@phebys.com, and we will be happy to talk with you or arrange a meeting.

New HMRC Support for Companies – Accountants in Cambridgeshire

New HMRC Support for Companies – Accountants in Cambridgeshire

HMRC has announced that it is extending the support it offers to medium-sized enterprises. “Medium-sized” refers, in this instance, to businesses with an annual turnover of £10 million or more, or with at least 20 employees. It is worth noting that a business need only meet with one of these two criteria in order to qualify, and so can become eligible based on employee numbers alone. This is also based purely on headcount and therefore includes part-time workers. Here at Phebys, Accountants in Cambridgeshire, we’ve explained just what the new support is and who it is offered to.

“Growth Support Service”

The support offered by HMRC to medium-sized businesses is expected to be much like a scaled-down version of the support it currently offers to large enterprises. HMRC has previously been accused of showing favouritism towards large businesses. Whilst all businesses who meet one of the two criteria will qualify for some level of support, particular attention will be paid to companies exhibiting “certain types of growth”. These firms will receive special support and, namely, their own dedicated tax specialist, who will aim to aid their understanding of tax issues, governance risks and access to incentives and reliefs.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

What constitutes “certain types of growth”?

  • A significant increase in turnover – a company whose turnover has increased by 20% or more in the last 12 months, where this increase is at least £1 million
  • Growth-related mergers and acquisitions – any company that has recently undergone a merger or acquisition resulting in the growth of business
  • Group re-organisation – a company, or group of companies, that has undergone a re-ordering or the change in composition for the purpose of business growth (excluding insolvency)
  • Stock market listing
  • A significant introduction of capital – a company whose recent introduction of capital has increased their balance sheet total by more than 20%, where that capital is at least £1 million
  • Notifying HMRC and submitting a Senior Accounting Office (SAO) certificate for the first time
  • Making quarterly installment payments for the first time
  • Entering the VAT Payments on Account (POA) regime
  • Exporting goods or services for the first time, or any other way in which the firm has established a presence in a new territory

HMRC has stated, however, that it would also consider companies that are displaying meaningful growth in ways outside of these pre-defined parameters to receive the relevant special support.

It is believed that this new support has come as a direct result of government policy, wherein a desire to make growth a simpler goal for British companies has been openly expressed.

Phebys – Accountants in Cambridgeshire

Here at Phebys, professional and proactive accountants in Cambridgeshire, we are more than happy to assist you in finding out whether or not you qualify for the new support. Furthermore, if it transpires that you do not qualify, we will be more than happy to instead offer our own support on tax guidance matters, as we have extensive experience on helping businesses achieve the growth that they desire. To get in touch, please do not hesitate to call us on 01480 896267, or email admin@phebys.com, and we will be more than happy to meet with you to discuss how we can help your business grow.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

Choosing Your Accountant – Accountants in Huntingdon

Choosing Your Accountant – Accountants in Huntingdon

There’s a lot to consider when looking for an accountant and many businesses therefore treat it just as seriously as hiring another member of staff. Here, we have compiled a list of top tips to break down the process of choosing an accountant and make it that little bit less daunting.

Are they qualified?

The qualifications held by your accountant will show, not only their level of knowledge, but also the extent to which they are regulated by a professional body, in terms of professional indemnity insurance and so on. An accountant’s qualifications can say a lot about the sort of practice you can expect from them.

What’s their experience?

This doesn’t just refer to how long they’ve been practising accountancy, but also to their level of experience in dealing with firms just like yours. For example, if you are a small business, you will want to be looking to hire an accountant with experience in dealing with small businesses. Other things to consider would include their experience with firms in your sector and firms with a similar life-stage. For example, if you are a start-up company in the early stages of maturity, you may want to look for an accountant with prior experience in dealing with start-ups. Little things like this will help you to ascertain whether a certain accountant truly is a good match for you.

Accountants in Huntingdon

Phebys – Accountants in Huntingdon

Do they provide the services that you require?

Should you require specific services such as audit, investment, insolvency and so on, you will need to check that a potential accountant is qualified and authorised to undertake this work.

Do they have a good reputation?

It’s always helpful to ask for any customer feedback or referrals systems that they may have in place, as it can give you a good insight into how satisfied their existing clients are with the service that this accountant is providing.

Will they add financial value to your business?

Many people believe that an accountant’s only real job is to crunch the numbers and look after annual accounts and tax compliance. A good accountant, however, would be proactive in finding ways to make your money go further. They can help to raise capital by finding grants, funds and tax relief schemes that you may be entitled to. Consider asking a potential accountant, “What could I be entitled to that I don’t know about?” This “above and beyond” attitude from an accountant is what will truly add value to your business.

Now what?

Once you’ve chosen an accountant, it’s not advised that you just sit back and let them get on with it. It’s important to monitor their performance going forwards to check that you are still satisfied with the services that they are offering. It will be helpful to schedule regular meetings with your accountant, to see what they have achieved and to ask for their professional view on your business and its finances.

Phebys – Accountants in Huntingdon

Here at Phebys, we are a highly professional and proactive team of Chartered Certified Accountants in Huntingdon that prides itself on providing the utmost service quality to its clients. To find out how we can add value to your business, do not hesitate to call us on 01480 896267, or email us at admin@phebys.co.uk, and we will be more than happy to speak with you.

Accountants in Huntingdon

Phebys – Accountants in Huntingdon

Cloud Accounting Software – Accountants in Huntingdon

Cloud Accounting Software – Accountants in Huntingdon

What is cloud accounting software?

Cloud accounting is like any normal accounting software, except that it’s hosted on remote servers and is thus accessible from absolutely anywhere, and on any device, provided that the user has the necessary access permission to view it. The necessary data is sent to the cloud, processed and then returned to the user. Users can then access this data and the necessary software applications remotely, through any device connected to the internet and a cloud application service provider, such as Xero.

 What are the benefits of cloud accounting software?

  •  One of the biggest advantages of cloud accounting is that the software and the data can be accessed from anywhere, on any device. This means that employees in remote or branch offices can access the same information and makes it easy to collaborate, no matter how spread out your team may be.
  •  The software provides you with a clear overview of your financial position and documents in real time.
  •  Cloud accounting software is scalable, cost effective and easy to use. A whole range of add-ons can be integrated as and when they are needed, tailoring the software to the needs of each individual business.
  •  Online accounting software negates the need to install and maintain software on individual desktop computers or other devices. This reduces upfront costs for the business, as it means that system updates, maintenance, administration costs and server failures are all taken care of by the cloud service provider.
  •  As all of the necessary software is contained online, there is nothing to install and all of your data is backed up automatically. Furthermore, system updates are free and instantly available, again with no installation necessary.
  •  Cloud accounting software is more secure than traditional software, which normally has to be transferred between users via a USB drive, which is easily misplaced or stolen. Furthermore, when inviting users to access your data through the cloud, it is possible to control the level of access that they receive, rather than the all-or-nothing approach of traditional software.
  • If one device breaks, or is lost or stolen, it only takes another device with internet connection to get back up and running, so productivity is not impaired in the meantime.

Going Forward

The shift to the cloud is an undeniable trend in the accounting industry, as with many industries, and can only be expected to continue into the future. Because of this, it is definitely worth considering your options now to see what providers are available and would best suit the needs of your business.

Phebys – Accountants in Huntingdon

Here at Phebys, we are a professional and proactive group of Chartered Certified Accountants in Huntingdon. We know everything there is to know about accounting software in the cloud and we are proud to be Xero Silver Partners. If you would like to find out how making the switch to cloud accounting software would benefit your business, do not hesitate to contact us. You can either call us on 01480 896267 or, alternatively, email us at admin@phebys.co.uk, and we will be more than happy to discuss your options with you.

Accountants in Huntingdon

Phebys – Accountants in Huntingdon

Top 10 Apps for Running a Business – Accountants in Cambridgeshire

Top 10 Apps for Running a Business – Accountants in Cambridgeshire

If you run your own business, you’re probably always busy, and any way in which you can save time, in ways big or small, is always welcome. Mobile apps are a great way to do this, because you can use them no matter where you are and everything you need is kept together, right in the palm of your hand. “Handy”, right?

Here at Phebys, accountants in Cambridgeshire, we’ve compiled a list of ten apps that will keep you organised, boost productivity and make day-to-day life that little bit easier for the average busy businessperson.

1) FullContact

FullContact takes managing your contacts a lot further than the default contacts app on your phone. For starters, it enables you to store additional information about your contacts, such as company website addresses and social media profiles, which allows you to create a full profile for each contact. Additionally, whilst still creating one main contacts list, the app allows you to separate your contacts into categories based on groups, businesses, projects and so on.

2) Appear

In today’s environment, many businesses have employees in remote locations that still need to be in regular contact with each other. Appear allows group video conferencing for up to 12 people at a time, allowing collaboration for even the most dispersed of teams.

3) WhatsApp

Speaking of business communication in today’s world, with hacking on the rise, it’s growing ever more important that we communicate with our coworkers, clients, etc. in a secure manner. Apps like WhatsApp offer end-to-end encryption, allowing users to send messages, make calls and transfer files safely.

4) Shift

Shift allows you to manage multiple email accounts and inboxes without the need to constantly be signing in and out of your various accounts. The app can also send you notifications about what is happening in each inbox, so none get forgotten.

5) Evernote

Evernote is a fairly well known app, but it’s great for note-taking. It allows users to write notes, or clip them from the web, compile to-do lists and, importantly, sync all of these notes between their devices, meaning that they’re accessible from anywhere.

6) KanbanFlow

KanbanFlow allows you to manage your employees’ workloads from anywhere. You can set tasks, schedule deadlines and upload documents from anywhere and the app’s clean layout provides a great visual representation of employee workflow.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

7) TripIt

TripIt is an app designed for managing travel, which makes it perfect for business trips. Users simply forward their travel emails to TripIt and the app creates an itinerary for the trip. The basic app is free, but at an additional cost, users can subscribe to TripIt for Teams, which allows the itineraries to be viewed by multiple users. This is perfect if your whole team is going on a business trip and you want to keep them organised.

8) Adobe Scan

Adobe Scan is a portable scanner, perfect for organizing documents on the move. The app allows you to use the camera on your phone to scan any document (receipts, forms, business cards, etc.) and convert it to a PDF, wherever you are. Your mobile phone is a lot less bulky than a traditional scanner and the quality is just as good.

9) Xero

Accountancy services are becoming more and more cloud-based, and Xero is testament to this. The Xero app allows you to reconcile bank statements, send invoices, create expense claims and so on, all from your mobile.

10) Phebys

The Phebys app is great for keeping track of your finances, whilst also providing a whole host of other nifty tools. There’s an income and a receipt manager, as well as all the tax information you could need, from tax tables to a calendar containing all the key tax dates. There are extra tools, such as a calculator, currency converter and mileage tracker, which would prove especially useful for business owners, and there’s even financial news, as well as a stock market and precious metals overview. It’s everything a business owner could need, right at their fingertips.

Accountants in Cambridgeshire

Phebys App – Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

If you’re interesting in trying out our fantastic app, you can download it here. It’s not just our app that’s great for business owners, though. Our accounting services are too. If you would like to find out what we can do for your business, feel free to call us on 01480 896267, or email admin@phebys.com and we’ll be happy to speak with you.

Changes to Corporation Tax Loss Relief – Accountants in Cambridgeshire

Changes to Corporation Tax Loss Relief – Accountants in Cambridgeshire

HMRC has been consulting on proposed changes to corporation tax loss relief, which would relax the rules for losses that are carried forward. Here at Phebys, Chartered Certified Accountants in Cambridgeshire, we have produced an explanation of what these changes mean and just who they’ll be affecting.

Existing losses, when carried forward, can usually only be set against profits of the same type (i.e. trading losses used against profits from this same trade), but this rule is set to be retrospectively relaxed as of 1st April 2017. A draft of this legislation was first published on 13th July 2017, with some initial guidance then released on 31st July. HMRC has invited comments on the legislation with a deadline of 25th September.

Who will benefit from the changes?

Charitable companies are excluded from the new rules, but all other companies should be able to benefit, including non-resident companies, providing that they are charged corporation tax.

There will, however, be specific rules put in place for losses made by companies with business in insurance or investment, companies in creative industries (e.g. film/TV, video games or theatre/opera), and firms with activities relating to oil or gas.

Which losses will be affected?

All corporate tax losses arising from 1st April 2017 onwards, which will be carried forward to later years, will be eligible. If the relevant accounting period straddles this date, it will be treated as two separate accounting periods for loss relief purposes (i.e. one period ending on 31st March and one commencing on 1st April). Relief for any pre-April losses being carried forward will continue to be given in the same way as present.

How do the new rules work?

Carried forward losses can be group relieved, or set against the company’s own total profits as they arise in later years. There is a £5 million cap on carried forward losses.

The following losses will be affected:

1) Trading losses

Current carried forward trading losses are automatically set against the first available profits from the same trade. Under the new rules, the company will have the ability to choose for their post-April profits to not be reduced in this manner (i.e. the set-off of any carried forward loss can be wholly or partly claimed).

The post-April portion of a carried forward loss can be relieved against the firm’s future total profits and the company is able to specify how much of the loss will be relieved in this manner.

If a loss is only partly relieved, this balance can be further carried forward and relieved in the same way in consequent years.

The relief is not available in the following circumstances:

  • Trade activities have become small/negligible
  • Trade is not conducted on a commercial basis
  • Trade is conducted wholly overseas

Anti-avoidance measures affecting disincorporation will also be put into place.

Where there is a transfer of trade without any change in ownership taking place (a “succession”), the successor will be eligible to claim the new loss relief for their predecessor’s carried forward losses. The predecessor will not be eligible to claim terminal loss relief.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

2) Non-trading loan relationship debits

As it stands, these are offset against any future non-trading profits, including capital gains, and the firm chooses how much is offset in this way. The new rules will allow post-April carried forward losses to be wholly or partly set against total profits.

3) Management expenses of an investment business

These expenses are currently treated as a management expense of a later period and are automatically relieved against total profits, or group relieved. The new rules will apply to both pre- and post-April losses and the method of loss relief remains unchanged, except that the firm will now have to make a claim in order to relieve carried forward losses in this way and can now choose how much to use.

4) UK property losses

These expenses are currently treated as property losses of a later period and are automatically relieved against total profits, or group relieved. Just like management expenses, the new rules will apply to both pre- and post-April losses and the method of loss relief remains unchanged, except that the firm will now have to make a claim in order to relieve carried forward losses in this way and can now choose how much to use.

5) Non-trading losses on intangible fixed assets

These expenses are currently treated as non-trading debits of a later period and are automatically relieved against total profits, or group relieved. The new rules state that losses such as these will now be treated as carried forward losses. Loss relief will still effectively be given in the same way, unless the £5 million cap applies.

The annual cap

Companies, or groups of companies, will receive a total allowance, per year, of £5 million’s worth of carried forward losses, which can be relieved against total profits. Groups of companies will be able to spread this allowance between companies, in accordance with how they see fit. If post-April carried forward losses exceed £5 million, only 50% of any excess loss (over £5m) will be eligible to be relieved in this manner.

Phebys – Accountants in Cambridgeshire

These changes, whilst welcome, will require the segregation of pre- and post-April losses and knowledge of both the existing and new systems. If you require any advice on these changes, do not hesitate to contact Phebys on 01480 896267 or email us at admin@phebys.com.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

NIC Reform for Self-Employed – Accountants in Cambridgeshire

NIC Reform for Self-Employed – Accountants in Cambridgeshire

Big changes are on the way for the self-employed and their National Insurance contributions. As of 6th April 2018, class 2 NI contributions are to be abolished and class 4 contributions will be reformed. The existing contributions provide the means by which the self-employed earn an entitlement to the state pension and to certain contributory benefits.

The self-employed currently pay two classes of National Insurance contribution, class 2 and class 4. By law, a worker is obliged to notify HMRC when self-employment begins, and again when it ceases. Registering for National Insurance contributions can be done at the same time as registering for tax. The necessary form, the CWF1, can be completed entirely online, or filled in electronically, printed and submitted via post. The applicant must have an NI number before completing the CWF1 form.

Class 2 Contributions

These contributions are payable for each week of self-employment, from age 16 to the state retirement age. The weekly rate for class 2 contributions is set at £2.85 per week for the 2017/18 period.

Liability to pay class 2 contributions only arises when a worker’s profits from self-employment fall above the small profits threshold (£6,025 for 2017/18). In the instance that profits fall below this threshold, the worker is still eligible to pay, but no longer liable. The worker will still have the option to pay these class 2 contributions voluntarily.

Although calculated using a weekly rate, class 2 contributions are now paid in an annual lump sum and must be paid by 31st January following the end of the tax year to which they apply. For example, class 2 contributions from the 2017/18 tax year must be paid by 31st January 2019.

When calculating a worker’s annual liability for class 2 contributions, weeks of self-employment include those where the worker was on holiday, or where they had no work, but were available to work, as self-employment does not cease during these periods.

Liability for class 2 contributions comes to an end in the week in which the worker reaches state retirement age, although it could remain beneficial, depending on the worker’s contribution record, to continue paying the contributions voluntarily until the end of this tax year, such that it still counts as a qualifying year.

Class 2 contributions earn the worker entitlement to a state pension, maternity allowance, bereavement allowance, and contributory employment and support allowance. This contributory role of class 2 will move to class 4 as of 6th April 2018, where class 2 will officially and technically be abolished.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

Class 4 Contributions

Class 4 contributions currently function similarly to the income tax, in that they do not confer any entitlement to a pension or other benefits. Class 4 contributions are payable at a rate of 9% of earnings between the lower and upper profit margins. For 2017/18, the lower limit was set at £8,164 and the upper limit at £45,000. There is an additional rate of 2% on earnings above the upper profit limit.

Much like class 2, class 4 contributions are payable via an annual self-assessment and are due on 31st January after the end of the tax year to which they apply.

The Future

Following the abolition of class 2 as of 6th April 2018, class 4 contributions will become the means by which the self-employed accrue entitlement to a state pension and the other relevant benefits. The reformed class 4 contributions system, as outlined by the government, so far seems to resemble the class 1 system, as applied on a basis of annual earnings.

Phebys – Accountants in Cambridgeshire

If you are self-employed and are looking to find out what these NIC reforms will mean for you, do not hesitate to call Phebys Accountants on 01480 896267, or email admin@phebys.com, and we will be more than happy to advise you.

Accountants in Cambridgeshire

Phebys – Accountants in Cambridgeshire

Are You Eligible To Claim R&D Tax Credits?

Are You Eligible To Claim R&D Tax Credits?

What are R&D tax credits?

R&D tax credits appear to be one of the most untapped tax-saving tricks around. R&D stands for “research and development”, and generally encompasses any investment into the development of new products, processes, services or technologies; or the enhancement of existing ones. In 2000, the government introduced a tax relief scheme that would encourage businesses to invest more into innovation, with a mind to making UK businesses more competitive in the long term. The R&D tax credits can reduce taxable profit, sometimes even as far as to a tax loss, thus lessening a company’s corporation tax liability. It is also worth noting that the R&D tax credits can be redeemed irrespective of whether or not your business is profitable.

And yet, it has been shown that figures as high as 95% of businesses eligible for R&D tax credits are yet to claim. This is due, in part, to preconceptions about research and development. Many people believe that R&D only encompasses the work done by scientists in white coats in laboratories, but that is, in reality, not the case.

R&D Tax Credits

Phebys – R&D Tax Credits

Is my business eligible to claim R&D tax credits?

Many companies that believe themselves to be ineligible for R&D tax credits would actually be able to claim. Despite preconceptions about just who is eligible to receive R&D tax relief, any company that spends money on developing new products, processes, services or technologies; or indeed on enhancing pre-existing ones, is able to claim the relevant tax credits.

What R&D costs can I claim on?

R&D expenditure includes staff costs, such as wages, employer NIC and pensions contributions; expenditure on subcontractors and freelancers; the cost of consumables such as heat, light and power which are used for, or transformed by, the research and development process; and the money spent on some software and technology.

What do I do next? 

If eligible, it is usually possible to claim R&D tax relief for your two most recent completed accounting periods. Put simply, this means that, if you’re currently in your 2017 accounting period, your R&D expenditure and tax credits for 2015 and 2016 can be considered. The tax credits are calculated based on how much you spent on R&D within that accounting period and any qualifying expenditure is then identified and enhanced by the relevant rate, providing your ‘enhanced expenditure’. This is then deducted from your taxable profits, leading to a corporation tax reduction if you were profitable in that accounting period, a cash credit if you made a loss, or even a combination of the two.

Phebys – Accountants in Cambridgeshire

If you are looking to find out if your business is eligible to claim R&D tax credits, or want help in claiming them if it is, it will always help, in the first instance, to consult an accountant. Here at Phebys Chartered Certified Accountants, we are able to provide professional help and advice on this matter. Simply call us on 01480 896267, or email admin@phebys.co.uk, and we will be happy to discuss your options with you.

 

R&D Tax Credits

Phebys – R&D Tax Credits

Top 10 Tax-Saving Tips for Individuals – Accountants in Huntingdon

Top 10 Tax-Saving Tips for Individuals – Accountants in Huntingdon

Here at Phebys, professional accountants in Huntingdon, we believe that everyone should be certain that they’re paying a fair amount of tax (and not tipping the taxman!). Here are our top ten legal ways to save on tax.

1) Marriage Allowances

As of 6th April 2017, married couples and civil partners can transfer £1,150 of personal allowance from the lower-earning partner to the higher earner, saving them up to £230 in tax. This is only available if the higher earner is a 20% taxpayer.

2) Take in a Lodger

Rent a room relief is an optional scheme that lets you receive up to £7,500 (in both 2016/17 and 2017/18) in rent each year from a lodger, tax-free. This only applies if you rent out furnished accommodation in your own home. If two people who share a property take advantage of the scheme, they can only claim £3,750 each.

3) Invest in Pensions 

When you make a payment into your pension, you receive tax relief. If you have a personal pension, your contributions are paid into a fund after your income has already been taxed. For example, for every £80 you pay into an individual pension the taxman will add basic rate tax relief of £20. If you are a higher rate taxpayer, you can claim additional relief through your Self-Assessment Tax Return. If you are a member of your employer’s pension scheme, your contributions will be paid directly from your salary before it’s taxed, giving immediate tax relief. The tax you’d normally pay is invested into your pension instead. If you have given up existing salary or proposed salary increases to make additional contributions through salary sacrifice, you will not get tax relief, but you will save on income tax and national insurance contributions as you are reducing your salary in exchange for pension contributions.

4) Personal Savings Allowance

In 2017/18 (as with 2016/17), the first £1,000 of interest you receive from savings is tax-free if you are a basic-rate taxpayer. If you are a higher-rate taxpayer, the threshold is £500. Only when your savings income exceeds the allowance is any tax is due on it. This will no longer be deducted at source. If tax is due, you can pay it through your Self-Assessment Tax Return or have it deducted from your wages through an adjustment in your tax code.

5) Tax Breaks for Lower Incomes 

For those on lower incomes (below £16,500), you may also receive up to £5,000 of interest tax-free. The more you earn from other income (e.g. your wages or pension), the less your starting rate for savings will be. Your starting rate for savings is a maximum of £5,000, which is reduced by £1 for every £1 of income you receive over the personal allowance threshold (currently £11,500). For example, let’s say you have an annual salary of £15,000 and get £200 interest on your savings. Your Personal Allowance is £11,500 and is used up by the first £11,500 of your wages. The remaining £3,500 of your wages (£15,000 minus £11,500) reduces your starting rate for savings by £3,500. Your remaining starting rate for savings is £1,500 (£5,000 less £3,500).

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6) ISA Allowance

Also as of 6th April 2017, the annual limit will rise to £20,000 (from £15,240 in 2016/17). This can all be put in a Cash ISA, all in a Stocks and Shares ISA, or split between both.

7) Set Up Children’s Savings Plans 

For those aged 18-29, consider paying into a Lifetime ISA (LISA). This is a tax-free wrapper that allows you to save up to £4,000 every year. The state will then add a further 25%. So, if you save £1,000, you’ll have £1,250 and if you save the full £4,000, you’ll have £5,000. And that’s before interest or growth. The bonus is paid every year until you hit age 50, so the maximum bonus you can receive, assuming you make the maximum investment each year of £4,000, amounts to £32,000. It’s designed for two specific purposes: the first is for first-time buyers to put towards a deposit for a residential property and the second is for later life.

8) Take Advantage of Dividend Allowances

All taxpayers have a £5,000 dividend allowance. This means any dividend payments you receive, either from a company shareholding or investments outside of an ISA or pension, will not incur a tax liability up to this level. Anything over £5,000 will be taxed at a rate dependent upon your marginal rate of income tax.

9) Make Charitable Donations 

Take time to understand your tax position so as to make the most out of tax breaks on charitable donations. Some key income thresholds to be aware of are:

  • £10,600 – the tax-free personal allowance that most people have;
  • £42,385 – the point at which 40% tax starts for most people;
  • £50,000 to £60,000 – the bracket in which child benefit is lost
  • £100,000 to £121,200 – where a quirk in the tax system means income tax shoots up to 60 per cent;
  • £150,000 and over – where the tax rate is 45 per cent.

For example, if you donate £100 to charity then they claim Gift Aid to make your donation £125. If you are a higher rate taxpayer you can personally claim back £25 (£125 x 20%) through your Self-Assessment or through your wages via an alteration to your tax code.

10) Avoid Inheritance Tax 

Lifetime gifts are not usually counted as part of your estate for inheritance tax purposes if you live for a further seven years after making them. Known as Potentially Exempt Transfers (PETs), they can reduce your residual estate significantly. Also remember that you can make exempted gifts up to the value of £3,000 each year, without them being added to the value of your estate. You can carry any unused annual exemption forward to the next tax year. Each tax year, you can also give away:

  • Wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child);
  • Normal gifts out of your income, e.g. Christmas or birthday presents – you must be able to maintain your standard of living after making the gift;
  • Payments towards another person’s living costs, such as an elderly relative or a child under 18;
  • Gifts to charities and political parties.

 

Phebys – Accountants in Huntingdon

Accountants in Huntingdon

Phebys – Accountants in Huntingdon

For further professional advice on how you can save tax, call Phebys on 01480 896267, or email admin@phebys.co.uk.

BT Profits Take Hit After Accounting Scandal – Phebys – Accountants in Huntingdon

BT Profits Take Hit After Accounting Scandal – Phebys – Accountants in Huntingdon

BT has seen profits fall by 42% after it took a £225m charge related to its Italian accounting scandal. BT reported that first quarter pre-tax profits fell to £418m, which was way below the estimated £751m, according to Reuters.

At the start of the year, the telecoms giant reported a £530m black hole in the accounts of its Italian business. Today, it said that it has settled a warranty claim with Deutsche Telekom and Orange, who also now both hold stakes in BT as a consequence of the deal that saw them sell the EE mobile network to the UK company.

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Phebys – Accountants in Huntingdon

The revealing of the scandal, which also promoted the group to cut its earnings forecast, wiped around £8bn off BT’s share price earlier this year.

The UK’s accountancy watchdog, The Financial Reporting Council (FRC) is currently looking into the auditing of BT’s financial statements for the years 2015-17.

On another note, BT also announced that Marc Allera had been appointed as chief executive of its combined BT consumer business, while Cathryn Ross – currently chief executive of Ofwat – will become its new director of regulatory affairs.

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