With changes announced in the Budget coming into effect over the next couple of months, now is a good time to plan to make sure you don’t miss any tax breaks or allowances. We’ll give you a rundown of the changes and what you can do to take advantage.
In the news, businesses have said that they have started planning for national living wage. But it’s not all good news - some employers are saying Bah Humbug to Christmas parties.
Top news stories
39% of businesses communicated with staff about national living wage
According to the research by the Department for Business Innovation and Skills (BIS), 63% of respondents know which employees in their organisation should receive the new national living wage.
A quarter of employers will not hold a Christmas party for staff
But the research found that 66% of employees say their work Christmas party is a valuable opportunity to build relationships with their colleagues. If you are having a party, we have some advice.
Small retailers who don’t accept card payments are missing out on Christmas sales
New research from EE found that 80% of UK shoppers expect to be able to pay for goods using their credit or debit cards but 25% have been forced to abandon purchases due to a lack of card facilities.
Anger over threat of VAT hike on renewable energy
The government has proposed a massive hike in VAT on solar panels and wind turbines from next summer.
North-south divide set to continue over next three years
London and the South East will drive UK growth over the next three years as the Government’s ambition of building a “Northern Powerhouse” won’t bear fruit this decade.
Key dates for your diary
15 December: Hanukkah ends
19 December: Last posting date for Royal Mail 2nd class
21 December: Last posting date for Royal Mail 1st class
Getting ready for the end of the year
With all the Christmas party planning and other seasonal activities, it’s easy to forget about tax and business planning. But you should be aware that some changes and deadlines are approaching, so now is the time to get things sorted.
Here are the key things to look at:
Annual investment allowance
Don’t forget to finalise any big purchases before 31 December 2015, as the Annual Investment Allowance (AIA) will be reduced after that date. The AIA provides a 100% deduction for the cost of plant and machinery, up to the maximum allowance.
In the summer Budget, the Chancellor announced that this allowance would fall from £500,000 a year to £200,000. While this drop may not affect many small businesses, if you have significant purchases in progress it could be useful to put as much as possible through this quarter.
However, don’t rush. It’s important that you choose the right equipment and plan your cash flow to avoid any issues in the future. That is equally as important as taking advantage of the allowance.
Dividends
Changes announced in the Budget mean that dividends for 2016 onwards will face a higher rate of tax, so now is a good time to start planning how much you want to take this year. The changes mean that shareholders and directors will pay between 7.5% and 38.1% on their dividends after the first £5,000.
Speak to your accountant about the best amount to take as a dividend this financial year and whether there are any steps you can take to minimise the impact of the changes.
Employment Allowance
As always, you should ensure you’re claiming your employment allowance for your business. This gives you a £2,000 reduction in your Class 1 National Insurance Contributions (NICs).
The good news is that the allowance will be increasing to £3,000 a year from April 2016. The bad news is that if you’re a director and the sole employee, you will no longer be able to claim. The Chancellor said this was to “focus the employment allowance on employment”. If that applies, do make sure you claim the allowance this year, as it’s unlikely that you’ll be able to roll it over.