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More on Making Tax Digital...

At Wood and Disney we consider ourselves to be a pretty progressive and modern firm. At least compared to most accountants anyway. From a digital standpoint, we know our website stands out from the crowd and we regularly update it with news and blog items that we think are important to our clients. We’re on top of social media too, consistently sharing across Twitter and Facebook, and on last count our app had over 2000 downloads. All in all, we think we are pretty savvy when it comes to digital matters. That’s pretty lucky when you consider the changes being made to tax.

2015 saw the release of HMRC’s ‘Making Tax Digital’ policy. It highlights the fact that technology has become such a major part of all our lives, from online weekly shops to booking tickets for shows. Businesses across all sectors are embracing digital marketing in various ways as well, and investing in cloud accounting software that simplifies services. David Gauke MP, the Financial Secretary to the Treasury, is behind the move, and claims to be bringing ‘The digital revolution to Whitehall’. As businesses begin to integrate more and more digital processes into their business, it is his view that tax should follow suit.

Top 8 Reasons to embrace Cloud Accounting...

1. Available 24/7. Easy access anytime, anywhere with just an internet browser. No need to worry about which operating system you use to access your software. Accessible from your PC, laptop, Mac, tablet, iPad or any mobile phone.  In the office, on the move, at home or even on holiday, your financial information is always available to you.

2. Easy to understand and intuitive to use. Written with the Cloud in mind rather than based upon a traditional PC software means the language used is modern and easy to understand compared to the traditional software which used confusing accountancy jargon.

3. Easy to test and experience for free. Most Cloud systems allow you to play with the software for up to 14 days (and sometimes longer) completely free of charge and with no commitment.

4. Once you do decide which cloud based software is best for your business you just pay a small monthly fee. There is no need to buy expensive software and pay upfront. The small monthly fee also includes all upgrades, updates and back up. No annual contract so you can cancel at any time.

5. Cloud based software links to Apps which can improve the accuracy of your data inputting such as:

a. Create and send your sales invoices while on the move from your mobile phone  and the system tells you when they are opened by your customer.

Change in Dividend Tax to hit Charity Gift Aid...

With the abolition of the dividend tax credit many small business owners will have a problem with their charitable Gift Aid claim.  Gift aid is dependent upon the taxpayer being “a tax payer”.  If you set up your personal tax affairs to remain below £42,000 with a small salary and a dividend then in essence from 6th April 2016 you will no longer have the dividend tax credit and the only liability you will face will be the 7.5% dividend surcharge which doesn’t count towards the gift aid requirement of being a basic rate tax payer.  So if you sign a gift aid certificate for your charitable giving to enable your charity to get the 20% tax from HMRC, HMRC in their turn will demand that tax from you.  So if you gift £5000 under gift aid you will get the tax demand for £1250.  Gift aid could therefore become taboo for many small company owners but it may not stop there.  Many retired people are the most generous to charities and if all they have is a state pension and a small amount of investment income they too could no longer be paying any basic rate tax.

Register of People with Significant Control (PSC)...

From 6th April UK Companies and Limited Liability Partnerships (LLPs) will be required to identify and record the people who own OR control their companies or LLPs.  They will need to keepa PSC Register as well as their existing register of directors and register of members.  They must then file this PSC information with Companies House and will be publicly available.

Designed to increase transparency over who owns or controls UK businesses, it will support law enforcement agencies in anti-money laundering operations.
So if you are a director of a limited company or a designated member of an LLP you will be required to:

1. Identify the People with Significant Control (PSCs).

2. Confirm their contact details.

When do you want to pay your dividend tax?...

As we now all know the dividend tax surcharge of 7.5% will come into effect from 6th April 2016.  But when did you think you would be paying this extra tax? 

Under self-assessment rules you would naturally expect to declare your dividends on your Income Tax Return for year ended 5th April 2017 which you would submit some months later and not pay the tax until the last possible moment i.e. 31 January 2018.

Really?  I can hear the sounds of hysterical laughter from the Treasury….

Did you seriously think HMRC will want to wait until 31 January 2018 before they get their hands on your money?  I think not…

HMRC is already amending notices of coding of small company owners/directors to collect this tax from their payroll from April 2016.  But this can be problematic on a number of fronts.