In this blog we’re going to take you on our festive wander through the historic town of Ringwood, to showcase some of the other local businesses, what products and services they offer, and how they’re getting in the festive mood!

Ringwood’s best Christmas display

This year Ringwood town’s local businesses have been busy, decorating their windows in preparation for the annual best Christmas display. Competition is fierce, and with a total of 30 community organisations, businesses and shops entering, it’s the biggest one yet. To ensure you don’t miss any of the fabulous displays, the Ringwood Winter Wanderland facebook page has provided a handy downloadable map , or if you don’t have a printer you can pick one up from Ringwood Gateway.

Take a ‘wanderful’ walk with us through Ringwood

We began our walk at Kimbers Carpets and really enjoyed their traditional Victorian Christmas town window display, complete with a bakery, pub and local shop. If you’re doing the walk with children, get them to see if they can spot their name on the ‘good list’ that Father Christmas is holding. For bonus points you may see something in Kimber’s display that shouldn’t be there, do let us know if you spot it!

Next up is Nudo, the bespoke florist and event planner which sits opposite Kimbers. As event styling and making beautiful creations is their forte, it’s no surprise that their window display is quite spectacular. With a beautiful pink piano, shimmering trees and retro ride-ons, there’s something for everyone.

If Christmas baking is your thing a stop-off at Love Cake is an absolute must. As well as selling all the baking equipment you’ll ever need, they specialise in bespoke celebration and wedding cakes, cupcakes, brownies, meringues and iced cookies made to order. This year’s window display is quite spectacular, with a 5 tier cake covered in Christmas themed decorations.

Who doesn’t love getting their home ready for the festive season? And if you’re on the lookout for some beautiful decorations and homeware, then look no further than The Lighthouse Cookshop. From unique kitchenware, baking and cooking essentials, to stunning gifts to give to your nearest and dearest this festive period, they have something for everyone. With a beautiful window display showcasing some of their stock, it’s well worth a stop-off on your festive walk around Ringwood to pick up some goodies.

By now you’ll probably be in need of a refreshment, and what’s better than a refuel at Jacqueline’s Tea Rooms & Gifts? Whilst enjoying your well earnt rest be sure to check out their window display, where the naughty elves have descended to cause havoc.

If you or your little ones enjoy steam trains, than Martin & Co’s window is a must-see. With a ferris wheel, light up trees, a working train, and even a ski lift, you’ll feel like you’ve stepped straight into a winter wonderland. Martin & Co are an award winning letting and estate agent, and are always active in supporting the local community. Their window display is certainly worth a look on your way around town.

If you’re on the lookout for something sparkly this Christmas, then be sure to stop off at Allum & Sidaway, the family run jewellers. As previous winners of the best dressed festive window they know how to catch your eye, and this year is no different. With a beautiful festive garland complete with baubles outlining the shops windows, it’ll get you into the festive spirit in no time.

Whilst you’re in town it’s certainly worth a wander through the Furlong Centre. The mini lit up Christmas trees above each shop are so festive, and there’s plenty of fantastic shops, all getting into the magic of the season.

How to vote for your favourite window display

You’re able to vote for your top favourite three online no later than 11am on December 20^th.

Ringwood during the festive period

Ringwood has really outdone themselves this year, and it’s hard not to leave the town centre without being in the festive mood. From the amazing window displays (of which they are many more, but sadly we couldn’t get round them all!), to the seasonal product offerings that’ll probably end up coming home with you, there’s something for everyone.

Here at Vantage we make it our business to know and support our fellow local businesses, be that with their payroll, tax returns or even financial advice. Our Ringwood office is situated at the end of Duck Island Lane, so why not pop in for a mince pie and a chat? We look forward to helping support your business this festive period and beyond, with our friendly, local Ringwood accounting services.

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But when it comes to partying during the festive period, are you allowed to claim your party expenses? The answer is ‘yes’, but there are some rules you must abide by. In this blog we outline the dos and don’ts to having a good time this festive season, courtesy of HMRC.

Allowable business expenses

HMRC usually like to take money from small businesses, so it may come as a surprise to learn that when it comes to entertainment costs, they are rather quite generous. Before you start planning a festive party that even Father Christmas would be RSVPing to, there are a number of rules you must stick to.

The rules

As a director of your own Limited Company, you’re able to host events throughout the year, which are exempt from Tax and National Insurance, so long as you abide by the following:

• The total cost of all events collectively throughout the year do not exceed the limit of £150 per person
• The event is annually reoccurring
• All employees are able to attend
• The £150 limit must include VAT, and any other additional costs such as travel and accommodation
• If you’re not able to physically attend an event, or because of current circumstances would prefer to host a virtual event, you can send each employee a hamper, or box of wine for example, up to the value of £150
• If you or any of your employees are part of a salary sacrifice scheme, you have to report the amount to those employees

What if it’s just you in your company?

As long as the event you’ve planned follows the above rules, then you’re still allowed to enjoy yourself, free from Tax and National Insurance.

What if you have employees?

There are no limits to the number of employees you can invite.

Remember! The cost of an event is an exemption, not an allowance

The £150 is an exemption, not an allowance, so don’t be tempted to go over the limit. If you do, even by a penny, the whole expense will be subjected to Tax and National Insurance, so don’t be tempted to party like a rockstar!

It’s simple to calculate the cost of your event:

If it’s just for you – total up all of the associated costs

If it’s for you and your employees – add together all costs, and divide it by the total number of employees to get the cost per head

Vantage’s final thoughts

Remember that whilst it would be lovely to have the £150 limit per event, it’s per year, so you could have multiple events, but only the £150 once.

How can your Vantage accountant help?

No one likes to be out of pocket, especially at this time of year, so before parting with your cash be sure to run your party plans past your Vantage accountant.

As a Vantage client your expert advice and support is only a touch of a button or phone call away, we might even be able to suggest some good local venues for your party to take place! Get in touch with the team today.

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Q1: What’s your best advice for a client running their own business?
For the vast majority of clients, setting up their own business is a big jump. They may be an expert in their field, but suddenly they’re in charge of sales, marketing, finance, tax planning, admin, and actually doing the job that will make them the money. Many underestimate how long these can take, so I think it’s really important to seek the advice of an accountant from the outset and have them on board to provide advice on the setup, what to claim, how to keep records, how to save, etc. It’s always nice to see clients do well, and I love building long term relationships with them, that’s why I always try to understand as much as possible about a client’s circumstances. As your business changes in size, keep your accountant in the loop, that way they can tell you if anything needs to change (e.g. software, VAT registration, etc).

Q2: What are your general predictions for the next 6 months and how Vantage can help?
For many the last 18 months have been very hard. The government provided significant support for many (although I do appreciate there are some that didn’t fit into any of the criteria set out by the government) and my prediction is that the government will be looking to clawback some of this outlay. Recently they have announced a 1.25% increase in National Insurance and dividend tax, I suspect other taxes will follow, such as S455 tax. I think it will be a careful balancing act in trying to increase tax revenue without too much negative PR! On a slightly more positive note, I have read many reports detailing how new business setups are growing in numbers, and as the world returns to normality, there will undoubtedly be many opportunities!

Q3: How much experience does Vantage have?

Vantage originally setup in 1995 under the name Stilwell Gray, and for nearly 5 years now I have run Vantage assisting clients of all sizes; whether it be a tax return, self-employed individual, a small start-up business or fully established company running for years. Each of our staff are carefully recruited and all of them bring their own knowledge and experience into the company. We are not dealing with the likes of Tesco or BP, instead we want to be assisting family run businesses or a business setup by a small group of individuals. Helping clients be tax efficient both in the short and long term is one of our biggest areas of expertise, and we completely understand that some clients want to maximise their income, others want to concentrate on growing the business, and others are gearing up towards closing the business or selling.

Q4: What are you most proud of when it comes to Vantage?
Seeing clients refer their friends or family to me and thank me for advice given really makes me feel proud. Knowing you have actually made a difference to someone’s life is a lovely feeling, whether it be that new car, new house, clearing debts, or being able to enjoy a new freedom they never had from employment.

Q5: Tell us something about you personally that most clients won’t know
I recently got engaged whilst away on holiday. I wish I could say I wasn’t nervous but I was! Packing the ring in a pair of socks and worrying that it would fall out of my pocket on the day were worries, but that just made the cold beer looking out at the sea even more enjoyable later that day!

Q6: What do you enjoy doing outside of work?

I am very lucky to have a close family and enjoy spending time with them, whether it be all getting together for a bite to eat, or taking my near three year old niece out for the day. Feeding baby goats seems to be her favourite! I am also a keen sports fan, and try to play as much golf as I can fit in – although you wouldn’t think it if you saw my swing or my scores!

Q7: What made you decide to become an accountant?

I wish I could say it was something that I dreamt of being as a child but I think everyone would know I wasn’t telling the truth there. The first time I really thought of it was when I was 15 or 16 and I did two weeks work experience through the school at a local firm of accountants. It was the first time I had been in an office, and somehow being given boxes of receipts to type up seemed to make me keener. I then went on at university to study accountancy and taxation.

I didn’t go straight into accountancy at that point though – I actually went into a large US investment bank. Whilst I enjoyed it and worked with a very friendly team, it was at the same time as a few of the US banks were collapsing so I could see some staff were worried about their futures, and I really wanted to be involved in what I could only describe as “everyday businesses”. I landed myself a role at a large local firm and have never looked back since!

Q8: What’s your favourite thing about your job?

My favourite thing would be knowing you have actually made a difference to someone’s life in a positive way. I have met many clients over the years and gained friendships as a result, and as clichéd as it sounds, I couldn’t do it all without my team behind me. You spend a lot of time with your colleagues, so I’m very proud to say how enjoyable it is working with them, despite some terrible jokes I’ve been told by one of them in particular.

Got a burning question about Assure Accountants, or something personally for Paul? Get in touch! We’d love to hear from you.

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In this blog we explore your options, to help you have a celebration this summer.

Allowable business expenses

Staff entertainment is classed as an allowable expense, but there are some rules you must follow.

As a director of your Limited Company you’re able to host an event up to a certain value which will be exempt from Tax and National Insurance, so long as:

• The total cost of the event is less than £150 per head, per year
• The event is annually reoccurring
• The event is open to all of your employees
• The £150 limit per head includes VAT, and any other additional costs (such as accommodation or transportation to the event)
• If any employees (including yourself) are part of a salary sacrifice scheme then you do not need to report the amount to those employees
• Virtual events are also allowed. For example, if every employee was sent a hamper or something to enjoy during the virtual event, then this cost would be allowable, so long as each hamper didn’t exceed the £150 per person limit

What if you’re the only employee?

You can still enjoy an event! So long as it still satisfies the above criteria then you’re able to throw yourself a summer event, and it will remain to be exempt from Tax and National Insurance.

Remember that the cost is an exemption, not an allowance

If you exceed the £150 limit by even a penny, the entire expense will be subject to Tax and National Insurance. A staff event is classed as an exemption by HMRC, not an allowance, so it’s not advised to be tempted to go over the limit.

It’s easy to calculate the cost of an event:

If it’s just for you – total up all of the associated costs

If it’s for you and your employees – take the total cost and divide it by the number of employees, to get the cost per head

Final thoughts

Remember that the £150 limit is per person for the whole year, and not per event. So after everyone has been stuck indoors for the majority of the year so far, you’ve probably got the full total of your allowance to enjoy.

How can Assure Accountants help?

Before making any reservations or plans be sure to run them past your accountant to double check everything is allowable. You certainly don’t want to be out of pocket (or worse, under HMRC’s microscope!), so it’s always worth getting the green light from an expert.

Vantage clients get to speak to their accountant by calling their direct number or emailing them for advice and support. If you’re in need of a specialist, friendly local accountant who’s on hand whenever you need them, look no further. Our services provide everything you’ll need to run your business confidently and successfully, from a tax and accounting point of view. Get in touch with our team to find out more today.

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There are some major changes proposed both good and bad:

1.  Dividend tax

The removal of dividend tax credits and introduction of new dividend taxes. Currently dividends are free of additional tax up to the higher rate tax threshold of £42,385. However it is proposed that a new tax free dividend allowance of £5,000 is introduced with rates of tax above this as below:

• 5% tax on dividends between £5,000 and £43,000 per year
• 5% tax on dividends between £43,000 and £150,000 per year
• 1% tax on dividends above £150,000 per year

These changes would come into effect from April 2016. Based on a salary of £15,000 this means dividends of £24,000 per year would now attract tax of £1,425. However, with the large difference in tax on dividends in higher rate it is recommended that, providing there is sufficient profits, dividends of £28,000 per year are paid (from April 2016) in most circumstances. The government has also signalled its intention to increase the higher rate tax threshold to £50,000, so if it does get up to this level the effect of the additional tax would be mitigated to a large extent.

An example for a contractor withdrawing a salary of £15,000 and dividends of £24,000 per year.

Total personal tax and NI payable in 2015/16 – £1,750 Total personal tax and NI payable in 2016/17 – £3,900

2.  Removal of Employment Allowance for single employee companies

The Employment Allowance was introduced a couple of years ago to encourage businesses to employ more staff. This was in the form of a discount of £2,000 per year on Employers National Insurance (NI).  Now most contractors and small businesses will be paying a low salary and larger dividends which are not subject to NI, so this won’t be such a big hit. We will also be looking out for further announcements on this to see if it is still removed if a spouse or director is employed in the business. Again this would come into effect from April 2016. For those still able to claim the Employment Allowance it will be increased to £3,000 per year so good news for those businesses employing more than one person.

3.  Introduction of proposals on travel and subsistence consultation (Umbrella Companies and contractors caught by IR35)

Last year the Office of Tax Simplification (yes, there is a department for this and no, we don’t see any evidence of simplification yet!) consulted on a proposal to restrict the travel and subsistence expenses claimed by those contractors working through umbrella companies and also those working through their own limited companies. See here:

https://www.gov.uk/government/consultations/employment-intermediaries-and-tax-relief-for-travel-and-subsistence

The good news for most contractors is this will only affect those who are subject to the control, supervision and direction of their client (broadly those caught by IR35) and those working through umbrella companies. We think we will see a lot more contractors moving from umbrella companies to limited companies over the next year as they look to increase their tax efficiency through claiming travel and subsistence expenses.

4.    Review of IR35

The Government have asked HMRC to start a dialogue with businesses on how to improve the effectiveness and fairness of existing IR35 legislation. Although this might sound worrying to contractors, we actual welcome a review of this very grey area. IR35 legislation was introduced in 2000 and we are still no closer to getting a clear definition of a disguised employee or genuine limited company contractor. We find it hard to get too excited about it, as it is just the intention to review and we have heard the same from George Osborne for the last 3 or 4 budgets!

5.  Inheritance Tax

The addition of a new nil rate band of £175,000 on top of the existing £325,000 allowance will mean married couples and civil directors will be able to pass on assets worth up to £1m, including the family home, without paying any Inheritance Tax at all. This will be introduced gradually from 2017 with the whole £175,000 being in place by 2020.

6.  Personal Allowance

The Personal Allowance (the amount everyone can earn before paying tax) will be increased to

£11,000 from April 2016 with a commitment to increase to 12,500 by the end of this government.

7.  Corporation Tax

Corporation tax will be decreased from 20% to 19% in 2017 and 18% by 2020. This is good news for contractors and will go some way to mitigate the new dividend tax.  For contractors with a £100,000 profit it will mean Corporation Tax savings of £2,000 per year.

8.  Trivial benefits

A new trivial benefits allowance will come into place from April 2016. This will mean that benefits of less than £50 per year per employee will not need to be reported or taxed.

9.  Buy to let property investors

Two bits of bad news here for some property investors. Firstly the amount of mortgage interest that can be claimed against your rental profits will be restricted to those under the higher rate tax threshold. This will be tapered away from 2017. Secondly the wear and tear allowance of 10% that could be claimed against your profits will be removed from April 2016 and replaced by the original system of just claiming for the actual costs incurred. So it’s important to keep all your receipts for property expenses from April next year.

10.  Rent a room scheme

Income received from renting a room in your main residence was subject to a free of tax annual allowance of £4,250 for many years, this has now been increased to £7,000. So good news for those renting a room either privately or through sites like Airbnb.

11.  Childcare

From September 2017 free childcare entitlement to be doubled from 15 to 30 hours per week for working parents of 3 and 4 year olds.

12.  Tax compliance

HMRC have been cracking down on the use of tax avoidance schemes and well within their sites are some of the schemes that contractors have been using like Employee Benefit Trusts (EBT) and various off shore arrangements used to avoid tax.  The Government has committed to a further £800m investment in HMRC compliance units to tackle this. We have always steered contractors away from these schemes and are glad we did now that we have seen a lot of contractors with backdated tax bills, penalties and interest causing bankruptcy (plus the providers of the scheme running off into the sunset with the fees they have charged leaving the contractors….or more likely their new accountants to try and sort out). With the extra impetus directed on this shady area of tax by HMRC it is hard to see how these schemes can fly under the radar any longer.

13.  Savers

Some good news here for savers in a few forms:

1. The new ISA limit of £15,240 remains for the tax year ending 5 April We would not be surprised to see this increased next year also.
2. Personal Savings From April 2016 no tax will be paid on the first £1,000 (or £500 if a higher rate taxpayer) of interest received.
3. A new Help to Buy ISA will be introduced in December Those saving for their first home will be able to save £200 per month in a help to buy ISA.  The Government will then top this up by 25%.  This will be capped at a maximum of £3,000 topped up for £12,000 of savings.

14.  Pensions

The Government will consult on a new ISA style pension tax system.  At the moment pensions receive tax relief on the way in, growth within the pension is tax free, however, the pension is taxed on the way out.  An ISA style system would mean that pensions are paid after tax, growth in the pension is tax free and no tax would be paid on the way out. We will keep an eye on this over the coming months however we can’t see this coming in anytime soon.

Pension tax relief will also be limited for those employees earning over £150,000 from £40,000 to

£10,000 per year. This will not affect the Employer pension contributions made by the majority of contractors working through a Limited Company.

Our recommendations

The good news is we believe with the right tax planning we can mitigate a lot of the “bad news” changes and take advantage of the “good news” changes.

We will need to wait until the Finance Act is drafted to get more detail on some areas but things we can look at are:

• Bringing in new employees to retain the Employment Allowance (which actually increases to £3,000 per year from April 2016).

• Decreasing salary levels so that more income is taxed at 5% (as dividends) rather than 32% (as salary).

• Actually increasing the amount in dividends that can be taken due to the removal of the dividend tax credit, introduction of new £5,000 tax free allowance and increase in basic rate tax

A typical structure may then be:

£11,000 salary and £32,000 dividends per year – total personal tax payable c£2,000 Compared to a current structure of:

£15,000 and £24,000 dividends per year – total personal tax payable c£1,710

In this example you have taken out another £4,000 per year from the business for only another £300 in personal tax.

• Tax planning strategies in terms of how much is drawn as dividends and how much is left in the Money left in the business may then be drawn out as a lump sum on closure of the Company at a rate of 10% by using Entrepreneurs Relief.
• Review of all of the expenses that you can claim through your business and advice on employer pension contributions that can be made from your ltd
• Review of VAT The Flat Rate VAT scheme still remains a great benefit for contractors and far outweighs the additional tax in basic rate on dividends.
• Bringing in a spouse as a shareholder/employee to make use of their tax free or lower tax allowances for both salary and dividends.
• Bringing in a spouse as a minority shareholder where before it was not as tax efficient to do so (maybe they were earning higher rate income elsewhere). We can now make use of a spouse’s £5,000 tax free dividend
• Ensuring full use of the tax free basic rate band is used in 2014/2015.

Summary

For the last few years there has been some really good news for contractors in the budget. Reductions in Corporation Tax, Employment Allowance, increases in Personal Allowances etc were  all benefitting the small personal service company, so it is not entirely unexpected to see an increase in taxes now. With a Tory mandate for 5 years this was always going to be the “bad news” budget.

There are still some positive things for contractors like the reduction in Corporation Tax, increase in Personal Allowance and basic rate band, large increase in Inheritance Tax thresholds and this is offset by the increase in tax on dividends. As you can see from the example above we are already thinking of ways we can take advantage of this for you and will continue to do so.

There is a lot for us to look at over the next few months and we will keep you updated with the changes as we know about them.

As always any questions please ask.

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