Monthly Archives: October 2015

Auto-Enrolment 21 Point Employer Checklist

Direct Debit

 

 

 

 

 

 

 

Here is another useful Auto-Enrolment 21 point employer checklist and you can download it at the bottom of the page:

Download (PDF, Unknown)

See also:

Workplace Pension Auto-Enrolment page

It is important to seek advice from your accountant, payroll bureau and IFA before taking action on the contents of this checklist.

 

 

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What is a Direct Debit Service User Number?

Direct Debit

Ever thought what Service User Number (SUN)? If you would like to improve your cash flow with a direct debit scheme for small businesses then check out the answer to what is a direct debit Service User number?

Look how your cash flow could benefit from a direct debit scheme aimed at small businesses whether you have a handful of customers or thousands – the scheme I use for my small accountancy practice.

I would appreciate it if you would please mention The Dales Accountancy Service if you contact my scheme provider so that they can monitor where referrals have come from.

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Dividends Tax Shocker

Tax on Dividends Concept

How do the changes to the taxation of dividends from April, 2016 affect owner-managed and family companies?

At present, owners of owner-managed and family limited companies would would pay themselves a minimum salary to cover the personal allowance and avoid payment of tax and National Insurance on it but enough to qualify for state pension purposes.

The balance of their remuneration would be in the form of dividends (provided there is enough retained profit in the company).

The Present Situation

At the moment, dividends have a 10% tax credit so that for every £100 dividend actually paid by the company (the net dividend) is divided by 9 and then multiplied by 10 to get to the gross dividend of £111.11.

How much additional tax would you be liable to pay at present?

  • Provided you are a basic rate tax payer (20% band), you have no further tax to pay;
  • If you are a higher rate tax payer (40% band), you will have a further 25% of the £100 net dividend to pay in tax;
  • If you are an additional rate tax payer (45% band), you will have a further 30.6% of the £100 net dividend to pay in tax

The reason that basic 20% rate tax payers have no further tax to pay is that the company has already been taxed 20% on the profit before it is paid out as dividend.

What is the Benefit of Business Owners Paying Themselves with Dividends?

Although the company does not get tax relief on dividends paid (unlike wages and salaries), dividends are attractive as you do not have to pay National Insurance contributions on them and no additional tax is payable until your income goes into the higher 40% after income reaches the limit of the basic rate band of £31,785 plus your personal allowance (2015/16).

What will Change from April 2016?

The 10% dividend tax credit will be abolished on 6 April, 2016. In its place, all taxpayers will receive a tax free dividend allowance of £5,000 which is offset against the first £5,000 of taxable income. This means that someone who only has dividend income will be able to receive £16,000 in dividends with no further tax to pay (£11,000 personal allowance in 2016/17 plus the £5,000 dividend allowance).

Where dividends are received above the dividend allowance, from 6 April, 2016 the balance will be taxed at 7.5% for basic rate tax payers, 32.5% for higher rate tax payers and at 38.1% for additional rate tax payers.

In effect, from 6 April, 2016, all tax payers receiving dividends above the £5,000 dividend allowance, will be paying 7.5% more tax than prior to 6 April, 2016.

This additional tax is tackling owners of owner-managed companies who pay themselves a small salary and take the balance in dividend to avoid National Insurance.

However, like a blunderbuss, it hits the pensioners who do not pay National Insurance anyway and the higher earning employees who pay the maximum National Insurance (at normal rate) that have dividend income from investments.

Dividends in ISA’s and pension funds will not pay the tax.

HMRC Examples

The way the allowance will work in different situations is demonstrated in the examples below.

Where appropriate to the calculations, the examples use the limits that will apply from April 2016:

  • Personal Allowance: £11,000
  • Basic Rate Limit: £32,000
  • Higher Rate Threshold: £43,000

Example 1

“I receive less than £5,000 per year in dividends”

From April 2016 you won’t have to pay tax on your dividend income as it is within your new Dividend Allowance.

Example 2

“I receive dividends of £600 from shares invested in an ISA

As is the case now, no tax is due on dividend income within an ISA, whatever rate of tax you pay.

Example 3

“I have a non-dividend income of £6,500, and a dividend income of £12,000 from shares outside of an ISA

With a Personal Allowance of £11,000, £4,500 of the dividends are under the threshold for tax. A further £5,000 comes within the Dividend Allowance, leaving tax to pay at Basic Rate (7.5%) on £2,500.

Example 4

“I have a non-dividend income of £20,000, and receive dividends of £6,000 outside of an ISA

You won’t need to pay tax on the first £5,000 of dividends due to the Dividend Allowance, but will pay tax on £1,000 of dividends at 7.5%.

Example 5

“I have a non-dividend income of £18,000, and receive dividends of £22,000 outside of an ISA

Of the £18,000 non-dividend income:

  • £11,000 is covered by the Personal Allowance
  • the remaining £7,000 to be taxed at Basic Rate

Of the £22,000 dividend income:

  • the Dividend Allowance covers the first £5,000
  • the remaining £17,000 of dividends to be taxed at the Basic Rate (7.5%)

Example 6

“I have a non-dividend income of £40,000, and receive dividends of £9,000 outside of an ISA

Of the £40,000 non-dividend income, £11,000 is covered by the Personal Allowance, leaving £29,000 to be taxed at basic rate.

This leaves £3,000 of income that can be earned within the basic rate limit before the higher rate threshold is crossed. The Dividend Allowance covers this £3,000 first, leaving £2,000 of Allowance to use in the higher rate band. All of this £5,000 dividend income is therefore covered by the Allowance and is not subject to tax.

The remaining £4,000 of dividends are all taxed at higher rate (32.5%).

 

 

 

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Keep Onside with Auto-Enrolment

Retirement NestEgg

Keep on-side with the Pensions Regulator and ensure you cover all the due diligence required for auto-enrolment.

As Auto-Enrolment for small businesses draws ever closer to being a reality I, in conjunction with my accountancy Institute, have linked up with the multi award winning Henry Tapper and his team at The Pension Playpen to help clients through the Auto-Enrolment Due Diligence maze.

Henry and his team will cover all the due diligence necessary to work out which staff are Eligible or Non-eligible, they will provide a report of all the workplace pension providers that will offer you a scheme and finally they will provide all the necessary Certificates and Reports that will prove to the Regulator and the STAFF that the scheme complies and that you have made the choice in a correct manner.

One important point to remember is that it is not just the Pensions Regulator that employers are answerable to it is also their staff who have a right to expect that their contributions are being safeguarded and that the choice of the pension provider has been made in a correct way and not just based on cost or ease of use.

The Dales Accountancy Service – Payroll Bureau

If you use my payroll bureau service, my systems are ready for auto-enrolment. I will also happily assess your workforce for free if you are a client (doing your own payroll or using my payroll bureau) as required in stage two of the auto-enrolment compliance below.

Planning for Auto-Enrolment

One – Register with the Pensions Regulator

It is important that you nominate someone from your organisation to be the main point of contact on all auto-enrolment matters. The primary contact must be the most senior person within your organisation.  A secondary contact will be the person responsible for implementing auto-enrolment.

Two – Assess your workforce

If you have staff on PAYE it is very likely that you will have to enrol at least some of them. Use The Pension Playpen’s free Workforce Assessment to see how your workforce is divided between Eligible jobholders, Non-eligible jobholders and Entitled workers and the cost of contributions into the scheme for each category. All these calculations are done for you and all you need to do is input some basic data into their system. Should you then decide to proceed with Pension Playpen’s ‘Choose a Pension’ service this data will be pre-loaded. Note that all of your information which Pension Playpen hold will remain secure and fully confidential.

If you wish to assess your workforce yourself for free register with The Pension Playpen

Three – Choose a pension

Pension Playpen have researched the market for workplace pensions and considered the differing requirements of each pension provider. Their system analyses your data and will quickly match you with those workplace pension providers willing to offer you a scheme. There is a charge for this service but you only need pay after we have confirmed how many providers are willing to offer you a quote.

Please note that if you are a Dales Accountancy Service client the charge is substantially discounted due to the volume that my Institute and it’s members put through, so please talk to me to get your discount code.

This can be done through The Pension Playpen

Four – Integrate your payroll

Setting up auto-enrolment into a new pension scheme might lead to other complications like integration with your payroll systems or with the providers own systems used to manage contributions. These issues are best addressed early on. Pension Playpen will help you with the questions you need to ask of your payroll system provider and chosen pension provider.

The Dales Accountancy Service payroll bureau system integrates with most pension providers.

Five – Auto-enrolment compliance

You can use Pension Playpen’s service to choose a pension with no obligation to purchase a scheme from your chosen provider. After you have chosen a scheme they will give you a package of reports and an Actuarial Certificate to confirm that your chosen scheme will comply with the rules and regulations for auto-enrolment and minimum terms required by the Regulator.

This can be done through The Pension Playpen

Six – Implementation and beyond

Auto-enrolment does not finish once you have made your first contribution. You will need to continue to pay regular contributions into the pension scheme, monitor the age and earnings of all staff and any new staff joining, process any opt-in, joining or opt-out requests, keep and maintain accurate records and re-enrol every three years.  Once your systems have been set up this will need to operate just like real-time PAYE and as part of your usual business process.

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Addingham Beer Festival 2015

AddinghamBeerFestival_Logo_2015

Are you ready to sample some real ale this weekend and help local good causes at the same time?

The Addingham Beer Festival now in its 5th year of celebrating real ale starts tomorrow 2 October at The Memorial Hall, Addingham, Ilkley, West Yorkshire.

Sponsors Session Friday 4pm – 6pm (Open to Sponsors and guests)

Public Session Friday: 6pm – Late

Public Sessions Saturday: 1pm – 5pm and 7pm – Late

NEW FOR 2015 : Special Saturday Afternoon Beer tasting and Panel Discussion

Follow Addingham Beer Festival on Twitter @addinghambeer or check out the web site Addingham Beer Festival

Only £6 for regular sessions, including Festival Glass and tasting notes. Tickets for The Addingham Beer Festival are now on general sale in Addingham at The Village Newsagents, The Swan, The Craven Heifer (sister pub of The Fleece that is closed due to a serious fire) and online.

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Pub of the Year – Your Vote Counts!

Group of Three Friends in a Bar Having Drinks

The Harrogate Advertiser needs help to pick the Pub of the Year 2015 in the area. Voting forms are on page 99 of this weeks Harrogate Advertiser (1 October, 2015). The completed voting form should be posted to Pub of the Year, PO Box 316, Rossendale, BB4 0DU. The closing date for voting is 10am Friday, October 16.

 

 

The full list of nominees and voting codes are:

01 The Coach and Horses, West Park, Harrogate.

02 The Muckles, West Park, Harrogate.

03 The Alexandra, Prospect Place, Harrogate.

04 The Harrogate Tap, Station Parade, Harrogate.

05 Hales Bar, Crescent Road, Harrogate.

06 The Old Bell Tavern, Royal Parade, Harrogate.

07 The Knox Arms, Knox Lane, Harrogate.

08 The Swan on the Stray, Devonshire Place, Harrogate.

09 The Empress, Church Square, Harrogate.

10 The Shepherd’s Dog, Otley Road, Harrogate.

11 The Fat Badger, Cold Bath Road, Harrogate.

12 The Woodlands, Wetherby Road, Harrogate.

13 The Castle Inn, High Street, Spofforth.

14 The Travellers Rest, Crimple Lane, Harrogate.

15 Radcliffe Arms, Pannal Road, Harrogate.

16 The Black Swan at Burn Bridge, Burn Bridge Road, Harrogate.

17 The Pine Marten, Otley Road, Beckwithknowle, Harrogate.

18 The Old Spring Well, Otley Road, Harrogate.

19 The Nelson Inn, Skipton Road, Hampsthwaite.

20 The Greyhound Inn, Ripon Road, Killinghall.

21 Queens Head Inn, Kettlesing, Harrogate.

22 The Wellington Inn, Main Street, Harrogate.

23 The Joiners Arms, High Street, Hampsthwaite.

24 The Malt Shovel, Main Street, Brearton, Harrogate.

25 The New Inn, Burnt Yates.

26 The Chequers Inn, Bishop Thornton.

27 The Lamb and Flag Inn, Boroughbridge Road, Bishop Monkton.

28 Masons Arms, St John’s Road, Bishop Monkton.

29 The Hare and Hounds, Burton Leonard.

30 Ye Olde Oak Inn, Pateley Bridge Road, Low Laithe, Harrogate.

31 The Flying Dutchman, Summerbridge.

32 Half Moon Inn, Fell Beck, Harrogate.

33 The Royal Oak, Bridgehouse Gate, Pateley Bridge.

34 The Bridge Inn, Low Wath Road, Pateley Bridge.

35 The Lamb and Flag, High Skellgate, Ripon.

36 The One Eyed Rat, Allhallowgate, Ripon.

37 The Water Rat, Bondgate Green, Ripon.

38 Hornblower Tavern, Market Place, Ripon.

39 Grantley Arms, High Grantley, Ripon.

40 The Tiger Inn, Goldsborough, Knaresborough.

41 So! Bar and Eats, Silver Street, Knaresborough.

42 The Old Royal Oak, Market Place, Knaresborough.

43 The Kestrel, Wetherby Road, Knaresborough.

44 The Guy Fawkes Arms, Main Street, Scotton, Knaresborough.

45 The Worlds End, Bond End, Knaresborough.

46 The Bay Horse, Main Street, Kirk Deighton, Wetherby.

47 Bar Thr3, Market Place, Wetherby.

48 The Red Lion, High Street, Wetherby.

49 The Crown Inn, High Street, Wetherby.

50 The Swan and Talbot, North Street, Wetherby.

51 Muse Ale and Wine Bar, Bank Street, Wetherby.

52 The Royal Oak, North Street, Wetherby.

53 The Admiral Hawke, High Street, Boston Spa.

54 The Albion, Chapel Lane, Clifford.

55 Fox and Hounds, Hall Park Road, Walton, Wetherby.

56 The Chequers Inn, Church Street, Bilton-in-Ainsty.

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