December 2007 Newsletter

FOREWORD

Welcome to our December E-News. We hope you find our last E-News of 2007 useful. As ever there is plenty of information that you should be aware of. Feel free to contact us regarding any of the issues raised, we are more than happy to discuss them with you.

We wish you all a Merry Christmas. Prime Chartered Accountants have decided to make a charitable donation to Breakthrough Breast Cancer, www.breakthrough.org.uk rather than send Christmas Cards; we trust you agree that this is a worthy cause.

Regards

Laurence Moore (Chairman, Prime Chartered Accountants)

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CGT update

Please see the article on our website for the latest position. Contact Sarah Nickols in our Coventry office on 024 7655 4310 or Jan Hornby in our Solihull office on 0121 711 2468 for more specific advice about your circumstances and options.

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Changes ahead for capital allowances

As you are no doubt aware the system of tax reliefs on expenditure on equipment in your business is a complex one. Broadly, when you buy a piece of equipment to use in your business, you normally cannot set the full cost against that year’s profits, unless the value of the item is quite small, or a special tax relief applies. The cost of more expensive items is written off against profits over a number of years, using the capital allowances system. 

For expenditure incurred on or after 1 April 2008 for companies or 6 April 2008 for unincorporated businesses, it is proposed that up to £50,000 spent on equipment in one year by any business will be set-off in full against the profits for that year. This allowance should cover most items of equipment purchased by smaller businesses, although cars will not be included in this total. Where the expenditure on equipment exceeds £50,000 in one year, the excess will be written off at a rate of 20% per year rather than the current 25%. 

Up until April 2008 the old system of capital allowances largely remains in place, and small businesses can claim a 50% first year allowance (40% for medium sized businesses) for the cost of new equipment purchased before 1 April 2008 by companies or before 6 April 2008 by unincorporated businesses. 

Currently where equipment fixed in a building is used for your business, after the initial claim of first year allowances at either 50% or 40% depending on the size of your business, you may be able to claim 25% of the remaining costs in subsequent years against profits. This will be reduced to 10% per year on new expenditure from 1 or 6 April 2008 where the expenditure is not covered by the £50,000 annual allowance. 

The tax savings which can be made by reducing your business’ profits are potentially high. Timing is important, so please contact Sarah/Jan if you are planning additional expenditure on equipment or premises. This is a summary of the proposals and the transitional rules can be complex.

Internet Links: HMRC Budget notice and HMRC Capital Allowances reform

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PAYE penalties

HMRC had previously issued a significant number of incorrect late filing penalty notices to employers in respect of their 2006/07 PAYE end of year forms P35 and P14. These forms are used to report details of employees pay, tax, national insurance contributions, etc.

HMRC have now advised that they have sent letters to all those employers who they believe submitted their 2006/07 Employer Annual Return on time, but who received an incorrect penalty notice, explaining that the incorrect penalty has been cancelled.

Please do get in touch with Monima Das who heads up our Prime Paysolve team on 024 7655 4324 if you have not received a letter and believe that the penalty notice you received is incorrect.

Internet Links: HMRC penalties update

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Northern Rock ISA savers

Following the problems at Northern Rock earlier this year, the government has announced that it will allow the people affected to re-invest their money into any cash ISA, including Northern Rock’s, and so restore their tax advantages. This announcement applies to funds withdrawn from Northern Rock ISAs between the 13 and 19 September 2007 inclusive.

By 5 April 2008 savers who wish to restore their cash ISA must either:

• return their funds to a Northern Rock ISA or
• obtain from Northern Rock a certificate for the amount of cash ISA savings withdrawn between 13 and 19 September 2007 and present this to a new cash ISA provider when depositing the money.

If you have any questions or queries about your savings, or any issue surrounding your Personal Financial Planning, do not hesitate to call Wendy Tipler on 024 76 554 323 to arrange a free consultation.

Internet Links: Treasury press release

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Are you missing out on £30,000?

HMRC has recently heralded the work of their specialist Research & Development Tax Credit units. In their first year they have handled 5,000 claims and paid out £150,000,000. This averages out at £30,000 per claim.

It is amazing that only 5,000 claims have been made.

If you think that your company might qualify for this relief please contact us.

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Spanish holiday homes

It appears that the Spanish authorities are tightening their position with regard to non-residents. A new act basically requires you to appoint a Spanish resident to represent you with the Spanish Tax Authorities if you have a fixed establishment in Spain and pay tax there. If you do not appoint somebody then it will now be considered a serious infringement of the rules and suffer a fine of between 2,000 and 6,000 Euros. From this it appears that if you have a holiday home in Spain and let it out when you are not using it then you will need to comply with this new law. 

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What really winds up customers!

The most irritating trait a company can display is failing to have its contact details on its website, according to new research.

The study by 1&1 Internet found that 77% of people listed this as their biggest customer service bugbear, followed by being held in a telephone queue (also 77%), speaking to staff with heavy accents (56%), poor on-hold music (42%) and inflexible office hours (40%).

If you would like more details re this please contact ………………… (Joke!)

Once again have a wonderful Christmas and a happy new year. We hope you enjoyed a successful 2007 and we are committed to helping all our clients achieve their objectives for 2008.

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Disclaimer
This newsletter is published for the information of clients and other recipients of our email newsletters. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this newsletter can be accepted by the firm.