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HMRC CGT Calculators for Shares and Property

HMRC has recently added two new CGT or Capital Gains tax calculators to their list of tools for shares and property disposals.

HMRC calculators and tools is a list of HMRC calculators and tools to help you work out what you could possibly owe in tax liabilities.

To view the full list of calculators and tools follow this link (https://www.gov.uk/guidance/hmrc-tools-and-calculators).

To view the CGT Shares Calculator – (https://www.gov.uk/tax-sell-shares/work-out-your-gain)

To view the CGT Property Calculator – (https://www.gov.uk/tax-sell-property/work-out-your-gain)

Automation Accounting via Artificial Intelligence (AI)

For many pop culture buffs out there AI is a familiar albeit worrying concept, as most references to AI in recent years results in the rise of our doom with large muscles and an Austrian accent.

Though in reality artificial intelligence or AI has an amazing potential to increase the overall quality of life for many of us. In its current state no AI can be considered truly intelligent, currently AI is nothing more than the odd piece of code that can understand a tremendous amount of data that previously required a human to interpret with any meaning, but now if any of you have used Siri, Cortana or the other alternatives you have interacted with one such AI.

AI is hopefully going to be a major step in terms of automation, allowing it to handle processes that take us boring humans hours, to be completed in minutes or seconds.

AI & Automations impact on Accounting

One such use of AI could be mileage tracking for business, now while this doesn’t sound flashy or exciting, I mean lets be honest, its no death robot, for many the idea of maintaining an active database of who went where and why, which is difficult enough for small businesses let alone large corporations. It can be a nightmare for all parties involved.

AI would allow employees to submit requests to a system controlled by said AI, which would then in turn evaluate the validity of the claim and respond appropriately, whether that is reimbursing the employee’s mileage or requesting further inspection from a human.

While this sounds simple enough, the impact this could have on a range of businesses is immense as it allows those that are inundated with these requests to focus more on the other aspects of their work life and only have to deal with the anomalous submissions, therefore improving the efficiency and most likely making life easier for both sides of the AI employee and Employer.

What this can mean?

As a Xero certified Bookkeepers and Accountancy, we resonate with the words of its founder Rod Drury, who said “Every small business, accountant and bookkeeper now has a supercomputer working for them,”, and we hope that supercomputer will only get better and more intelligent.

The Forgotten HMRC Incentive – R&D Capital Allowances

Research and development capital allowances or RDAs is an oft forgotten incentive by HMRC which allows 100% of your expenditure on R&D facilities, IT systems, plant and machinery against a corporation’s tax liability in the first year.

What this means is if your company has, in its first year:

  • Built or Refurbished any R&D Facilities.
  • Developed an Internal IT System.
  • Invested in any plant, machinery, fixtures, or fittings to support R&D.

You should apply for these R&D capital allowances which will write these expenditures off.

What qualifies for the R&D capital allowances?

Always applicable

  • Laboratory Equipment
  • Company Cars for R&D Staff
  • R&D Facilities (if standalone, else R&D must account for 75% of total cost of facility to cover the entirety)

Possibly applicable

  • Developing new IT Systems for Internal use
  • “Equipment to enable a technological advancement in a process, material, device, product, or service. The advancement must increase the overall knowledge or capability in a field of science or technology.”

A company can claim its R&D capital allowances up to a year after the filing deadline of its tax return – and R&D capital allowances can be claimed retrospectively, up to two years in arrears.

For more information about this, and to discover whether your business qualifies please visit HMRC.

Joint Named Investment Property; Before Sale

A case study was recently submitted to TaxInsider, which investigated how beneficial it may be to transfer an interest in investment property to a spouse or civil partner before the sale of the property.

The current system as it stands, affords some tax breaks to married couples and civil partners, and dependant on the circumstances, this may be leveraged to lessen the tax bill on the sale of the property. The case study delves in to the possible opportunities to save on tax.

In this case study, there are two people in question, Martin and his wife Catherine, and one property;

Martin: Additional rate taxpayer.

Catherine: No income.

Property:

  • Original purchase cost: £200,000
  • Current Sell price: £350,000
  • Outstanding Mortgage: £100,000
  • Cost of Sale: £5,000

There are 2 ways in which we can consider the sale of this property, we shall start with the first and most common scenario;

Scenario 1: Martin sole owner of property.

As established earlier Martin is an additional rate taxpayer, meaning in the current 2018/19 tax year, he is liable to pay 28% CGT, and the current exemption threshold is £11.700.

This means that when totaling the CGT from this sale, you would use the formula as follows;

 

 

 

 

 

 

In this scenario the total CGT required to be paid is $37,324.

Scenario 2: Split ownership with Catherine

Couples with marital rights can transfer assets between each other at such a value that it gives rise to neither profit nor loss, therefore it can easily be done in the case of this scenario.

Catherine not working and having no income has not used here annual exemption amount, and resides in the basic rate band for CGT, therefore when transferring 50% of the property into Catherines name, you can take advantage of double the exemption amount.

Therefore the CGT Calcuation will go as such:

 

 

 

 

 

As you can see the new payable amount is £30,598, which is a saving of £6,726.

This is just one of the ways that you can leverage the rights granted to you as a married couple or civil partners, in order to reduce the amount of tax chargable to you.

Open Banking

The Standard for open banking is changing, with it how banks share data and how it can be accessed.

What does this mean to you?

For small businesses and their accountants this could mean a great deal, some of the things to expect will be:

  • Improved security
    • You control when you want to share your data, no login data needs to be handed over.

 

  • Real Accountability
    • All third parties using Open Banking will be registered with the FCA.

 

  • Smart Integration
    • Easier access to better financial services, e.g. lending and financial management.

 

  • Control you own data
    • Your data will belong to you, and you can access a wider array of service.

“As a consequence of open banking, new and innovative financial services will be introduced, levelling the playing field for SMBs.”

Edward Berks – Director, Fintech & Xero Ecosystem.

VAT Post Brexit

The VAT act 1994 and The VAT regulations 1995 will need updating after the referendum. One key issue raised by the leave campaign during the referendum is the possibility of changing the VAT rate for domestic fuel and power from 5% to 0%. This hasn’t been decided upon yet and is unlikely to happen but the UK will now have the right to apply the reduced and zero rates.

Small Business Saturday 05/12/2015

This year for Small Business Saturday we will be offering all small businesses the opportunity to get our Cloud Bookkeeper service for a reduced rate for 6months. The offer will last 24hours so be quick to snap up the offer by emailing us at info@cloudbookkeeper.co.uk

 

 

Small Business Saturday 6th December

We are offering our services at a reduced rate of 50% for one day only to celebrate the Small business saturday event, if you would like our services then please send an enquiry to info@cloudbookkeeper.co.uk  and we will secure this reduced rate for you. Small-Business-Saturday-UK-2014-Logo-Blue

Business rates relief

There are a number of reliefs available to owners or tenants of smaller business premises. This article lists a number that can be claimed.
Small business rate relief:
You’ll get 100% relief (doubled from the usual rate of 50%) until 31 March 2015 for properties with a rateable value of £6,000 or less. This means you won’t pay business rates on properties with a rateable value of £6,000 or less.
The rate of relief will gradually decrease from 100% to 0% for properties with a rateable value between £6,001 and £12,000.
Retail relief:
Some local councils will give you up to £1,000 off your business rates if you occupy a retail property with a rateable value of £50,000 or less. To be eligible the property must mainly be used as a shop, restaurant, cafe or drinking establishment.
You’re usually not eligible if your business provides financial services, medical services or professional services like legal advice or accounting.
Empty properties re-occupation relief
You may get 50% off your business rates if you start occupying a retail premises that’s been empty for one year or more.
Rural rate relief:
You may qualify for the rural rate relief if your business is in a rural area with a population below 3,000. The relief is between 50% and 100% off your business rates.
You can get rural rate relief if your business is:
  • the only village shop or post office with a rateable value of up to £8,500
  • the only public house or petrol station with a rateable value of up to £12,500
Local councils can also:
  • top up the mandatory 50% relief to 100%
  • give relief to other rural retail businesses of up to 100% (for properties with a rateable value under £16,500)
The availability of the various reliefs will depend where you business is based. If you think you may qualify for any of the rates relief discuss your options with your local council.

Wear & Tear Allowance (WTA)

f a property is let furnished – with sufficient furniture, furnishings and equipment for normal residential use – landlords can only claim tax relief for the furniture and equipment by way of the WTA. Prior to April 2013, landlords had the option of claiming the cost of replacement furniture instead.
The WTA is calculated as 10% of the gross rents less any tenant’s costs (e.g. water rates and council tax) met by the landlord.
WTA does not cover repairs, which continue to be tax deductible. The question is then raised can replacement of an item be counted as a repair? In this respect, landlords that let furnished property need to distinguish between:
  1. Replacement of items that are integral to the building, and
  2. Replacement of items that are not integral to the building.
Needless to say there are grey areas!
Replacement of items that are integral to the building
Fixtures integral to the building are those that are not normally removed by either tenant or owner if the property is vacated or sold. Examples include:
  • Baths
  • Washbasins
  • Toilets
  • Immersion heaters
  • Fitted kitchens and fitted white goods.
This list is not intended to be complete but gives an idea of the assets that are integral to the building and fall outside the wear and tear allowance. As these items are integral to the building, the cost of replacing these items is normally an allowable expense as a repair to the building.
Replacement of items that are not integral to the building.
Expenditure of this type will be covered by the WTA. Examples given on HMRC’s website in this category include:
  • movable furniture or furnishings, such as beds or suites,
  • televisions,
  • fridges and freezers,
  • carpets and floor-coverings,
  • curtains,
  • linen,
  • crockery or cutlery,
  • beds and other furniture
Unfortunately, these examples are not definitive: is a carpet glued to the floor a permanent fixture, or not part of the integral features?