At Shipleys we strive to offer a tailored experience right from the very first phone call
Majority of those who wish to start contract work want to do so for the perceived tax benefits. Whilst tax savings can be significant given the right advice, those looking to move to self employment need to be wary of the many pitfalls – IR35and status issues, income shifting etc to name but a few.
At Shipleys we will help you make the transition from employment to self-employment as painless as possible. We will deal with all the tax and accounts issues that need resolving and we promise to do it swiftly. We will explain honestly and carefully the pros and cons of self employment/sole tradership v. trading through a company and help you decide the best way for you.
If you are a locum, or thinking about becoming one in the near future, talk to us for clear concise advice – we deal with hundreds of locums/ IT contractors each year.
- Free contractor/locum start-up advice
- Paying too much tax? If you haven’t done any planning then you probably are paying over the odds to the Chancellor. Call us for a free tax health-check.
- Sole trader v. company structure – the pros and cons
- IR35 – this affects all locums/contractors trading via a company. Is your business contract IR35 proof? How can you minimise the risk? HMRC is continually attacking Personal Service Companies, how can you stay one step ahead?
- Expenses – are you claiming everything you possibly can?
- Buying a car – which is the best way, personally or through a company?
- Fixed fee accounts, tax returns, VAT (if applicable) and Payroll
- Preferential payment terms can be agreed for start-ups
Latest news & blogs…
The Finance Bill 2016 finally received Royal Assent on 15 September, enacting proposals announced in the 2016 Budget, Autumn Statement 2015 and Summer Budget 2015. Amongst other things, Finance Act 2016 includes provisions relating to income tax rates and allowances; restrictions on tax reliefs for travel and subsistence expenses (in effect since April 2016), the reduction of the lifetime allowance on pension contributions from £1.25m to £1m (again, effective from 6 April 2016); and the reduction in the main rate of corporation tax to 17% for financial year 2020.
The Act is based on George Osbourne’s final Budget. The annual Finance Bill usually receives Royal Assent in early to mid-July. This year’s extensive delay has been largely blamed on the Brexit referendum followed by the summer parliamentary recess.
The Finance Act 2016 can be found online here or alternatively you contact us for more information.
HMRC has published further details of its proposals to amend the inheritance tax rules for non-domiciled individuals.
The changes were initially announced at the 2015 Summer Budget which were aimed at preventing non-doms from escaping a UK inheritance tax (IHT) charge on UK residential property through use of an offshore structure, and thereby bringing to an end the permanent non-dom status for tax purposes.
The consultation document suggests that individuals who are non-domiciled in the UK currently enjoy a significant advantage over other individuals for IHT purposes. UK-domiciled individuals are liable to IHT on their worldwide property, whereas non-doms are only liable on property that is situated in the UK.
Any residential property in the UK owned by a non-dom directly is within the charge of the IHT. However, a common loophole is for such individuals to hold UK residential properties through an overseas company or similar vehicle. In such a case, the property of the individual consists of overseas shares which will be situated outside the UK and are thus excluded from IHT.
In an effort to curb such structures HMRC plans to bring residential properties in the UK within the charge to IHT where they are held within an overseas structure. This charge will apply both to individuals who are domiciled outside the UK and to trusts with settlors or beneficiaries who are non-domiciled. The changes will come into effect from 6 April 2017.
Shares in offshore close companies and similar entities will no longer be deemed excluded property if, and to the extent that, the value of any interest in the entity is derived, directly or indirectly, from residential property in the UK. Where a non-dom is a member of an overseas partnership that holds a residential property in the UK, such properties will no longer be treated as excluded property for IHT purposes.
The consultation will close on October 20. The effect of these proposals will mean structures set up to mitigate IHT will now need to be reviewed in light of the above and specialist tax advice sought.
Upcoming changes to tax relief for landlords may result in them paying higher rates of tax as HMRC publishes guidance on how the interest relief restrictions would work.
We saw the changes announced in the summer budget of 2015 and HMRC have now published further guidance. The rules looks to restrict the interest relief a residential landlord can claim to calculate their income tax liability. The restriction is being phased in over four years with interest being restricted by 25% in each year until it takes full effect in April 2020.
How could landlords be affected?
Currently, landlords of residential properties can deduct all interest from rental income to calculate taxable rental profit. When the new measures take full effect, the interest will be completely disallowed and instead a tax credit equal to 20% of the interest will be given against the person’s income tax liability.
This could result in the individual having higher taxable income which could push them into a “higher” or “additional rate” of income tax. Furthermore, if individuals’ income exceeds £100,000 it could start to reduce their personal allowance, affect their entitlement to child benefit and restrict the amount on which they can claim tax relief for pensions.
What can you do?
These measures are controversial to say the least and a judicial review by a coalition of private landlords is currently in progress.
In meantime, Shipleys Tax strongly recommends seeking professional advice to help mitigate the effects of the changes above and take action to manage your property portfolio tax efficiently a there currently a few solutions available.