Vexed over VAT? Puzzled about personal tax rates? Intrigued by annual investment allowance? Gary Perrens of Tax Assist Sudbury, has the answers...
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?
Since April 2014, the VAT registration threshold was £81,000.
As announced in the recent Budget, the VAT registration threshold from April 2015 will be £82,000.
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 me.
Please could you tell me what the personal allowance and basic rate band will be in 2015/16?
The personal allowance is the amount of tax-free income that an individual is entitled to. It can vary according to your age, gender and your circumstances.
As already announced the basic personal allowance for 2015/16 will be £10,600. The Budget on 18th March announced that there will be a further above inflation increase to £10,800 for 2016/17 and £11,000 in 2017/18.
Those aged 75 and over will continue to receive a personal allowance of £10,660 for 2015/16 but by 2016/17 they will receive the basic personal allowance.
The 20% basic rate band is £31,785 for 2015/16 and will be £31,900 for 2016/17. This means that you pay 40% tax if your taxable income exceeds £42,385 for 2015/16 and £42,700 for 2016/17. It is proposed that the higher rate tax threshold will increase to £43,300 for 2017/18.
The 45% top rate continues to apply to taxable income over £150,000 for 2015/16.
I own a manufacturing business and therefore, our company spends a lot on equipment and vehicles each year. Following the Budget, could you tell me what the Annual Investment Allowance is for the forthcoming year please?
The Annual Investment Allowance (AIA) provides a 100% tax write off for the cost of most plant and machinery acquired by businesses, a notable exception being motor cars.
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). From 1st January 2016, it is due to plummet to just £25,000.
In this year’s Budget, we had high hopes that the Chancellor might pledge to extend how long the AIA stands at £500,000. Unfortunately, he made no such announcement and only said that the AIA should be reviewed as part of the Autumn Statement. Given that we could see a change of government in the meantime, it would be prudent to assume that the AIA will fall to £25,000 come next year.
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. Please get in touch with your local TaxAssist Accountant if you would like to discuss this further.
Can you tell me what the tax changes were with regards to savings income in the recent Budget announcement please? I’m a pensioner and I rely on my bank interest receipts to boost my income.
From April 2015, if your total income (things like wages, pension, benefits and savings income) is less than your personal allowance plus £5,000, you will be eligible to register for tax-free savings with your bank or building society.
Non-savings income is always taxed before savings income. So the tax-free £5,000 savings band only applies if you earn less than £15,600 a year, or if some of your savings income falls into the £5,000 band.
If you believe all of your savings income will fall within the £5,000 limit, you can ask your bank or building society to pay your savings interest tax-free by filling in a R85 form, which is available on gov.uk.
If only part of your savings income falls into the £5,000 band, you may be able to get some of the tax back. Complete form R40 available on gov.uk and return it to HMRC if you think this applies to you.
In addition from April 2016, a tax-free allowance will be introduced for the interest that people earn on savings. If you are a basic rate taxpayer and have a total income up to £42,700 a year, you will be eligible for £1,000 tax-free savings allowance.
If you are a higher rate taxpayer and earn between £42,701 and £150,000, you’ll be eligible for a £500 tax-free savings allowance. Those with income in excess of £150,000 a year will be taxed in full on their interest income.
As a result, from April 2016 banks and building societies will pay interest gross and HM Revenue & Customs will look to adjust PAYE coding notices accordingly.
I run my own limited company- were any changes announced with regards to the corporation tax rate in the Budget?
The government have been gradually bringing down the so-called main rate of corporation tax that applies large companies with profits in excess of £300,000, in an effort to entice companies to come and trade in the UK.
Unfortunately, the government have not made any corresponding changes to the small profits rate. And so from April 2015, we find ourselves with a uniform corporation tax rate of 20% across all companies; irrespective of the level of their profits.
If I can help with these or any other accountancy questions, please get in touch. We pride ourselves at helping your business grow, so please call me on 01787 699 141
