Saying our final good-bye to ESC C16

If you have never heard of ESC C16, or if your accountant has never explained to you what ESC C16 is, here is a brief introduction, albeit a little late as it is being removed on 1 March 2012.

ESC C16, lets the owners of a business “wind” their company up without going down the formal liquidation route, it is only available if the company has cleared all its outstanding creditors. The advantage of “winding up” under ESC C16 is that the reserves of a company can be distributed as capital, rather than having to take the remaining surplus as a dividend.  This has always be a great tax planning tool for higher rate tax payers, as the capital payment should qualify for entrepreneurial relief and is therefore taxed at 10%, alongside your annual exemption of £10,600 (2011/12).

Unfortunately the government is scrapping ESC C16 on 1 March 2012, therefore if you want to take advantage of ESC C16, then you need a commercial decision as to why you need to close your company. This is obviously only relevant if you are a high rate tax payer, if you are in this situation we would strongly urge you to discuss this with an accountant (maybe Nimbus Accounting) as soon as possible and well before 1 March 2012 otherwise it could be too late.

From 1 March 2012, you can still wind your company up without a liquidator, but you can only take £25,000 as a capital item, any remaining surplus will have to be distributed as a dividend.

After 1 March 2012 you can still “wind up” your company and distributed the funds as a capital item and potentially pay 10% capital gains tax, but you would need to appoint a liquidator. A liquidator could become costly, but depending on the amount of reserves this option could be more beneficial than paying higher rates of tax on your dividends.

If you would like to discuss any points in this blog, please do not hesitate to contact Nimbus Accounting. 

Why we recommend Xero online accounting software to enhance the accountant/client relationship

If your accountant has not recommended online accounting software to you, then perhaps it is time to ask why not! If you are still using Sage and frustrated, then Xero is probably the solution you are looking for. If you hate “doing your accounts” and keep falling behind, then Xero provides an easier way.

 

Why not visit Xero online accounting software at www.xero.com. Xero is “in the cloud”, you can access your data anywhere and it is very user friendly. From the informative homepage to the automatic bank feeds, you will dramatically reduce the time it takes to update your financial records, compared to Sage or any spreadsheet. Furthermore, once the data is in Xero there are so many easy to access reports to view, you can start to really understand your company accounts and make informed decisions.

The main benefit to Xero is the bank reconciliation screen, here, rather than jumping between 5 screens (as in Sage), everything is on one page.  Xero also remembers how you previously analysed your expenses, so if the same expense appears twice, it will suggest how to post this transaction. You can also set up bank feeds whereby every night the previous days transactions are imported into Xero without you lifting a finger. This has the added benefit of keeping your accounts up to date and you don’t need to check your online banking to see if a client has paid, as this information is already in Xero.

Xero is not only great for tracking your accounts receivable (debtors) but can be used to forecast cashflows, so you know where you are. Invoices and statements can also be emailed directly from the software and repeat invoices can be set up so you never need worry about forgetting to invoice again.

Xero also has all the functions you would expect from an online accounting package, such as expenses claims, financial/management reports, multi-currency, fixed assets, VAT etc. There are also a host of Add-ons which integrate with Xero, such as inventory software and CRM. Xero really is a complete solution for your business.

At Nimbus Accounting, all of our accountants are Xero trained and can help implement Xero into your business, transfer data from your old accounting software and provide all the on-going training and support you need. We offer the software as part of our fixed rate packages. So if you are tired of paying to upgrade Sage, or find Sage support and your accountancy fees too expensive, then call us today for a free quote. You will be amazed how easy it is to transfer your business to Xero, the software that everyone is talking about!

Business in Brighton & Hove

What is happening in Brighton & Hove for local businesses? Is it a great city to start a new business? Are there enough customers to kick start a new venture in Brighton & Hove?

Brighton & Hove, on the south coast of England, has always attracted creative students to the local universities and has helped maintain Brighton’s bohemian feel. The city is booming with freelance businesses such as photographers, writers, editors, artists and designers. With the American Express European headquarters here, there are also plenty of employment opportunities. London is only a 50 minute train ride away which also makes Brighton & Hove a great base for city commuters.

If you are living in Brighton & Hove, what business should you think of starting? The city has a great number of tourist opportunities and with the huge amount of language schools, if you speak another language you are in luck. Also, with London in easy commuting distance, consultancy work in the city is a viable option. With a growing number of new businesses there are also opportunities for support networks to help out new budding entrepreneurs. Online businesses can be created anywhere, there are lots of IT/web based business starting in Brighton & Hove all the time.

Brighton & Hove has a very active a vibrant networking community, the city is big enough for us to all share in its prosperity, but small enough to know each other. I would highly recommend the Brighton Curry Club, this is a very informal meeting, but great for beginners to learn the ropes.

Brighton and Hove is a great place to start a new business and that’s why Nimbus Accounting is proud to support many new business startups in the city. We have our head office in Hove and are very active locally, always trying to pass on our expertise to local businesses.

If you are thinking of starting a new business in Brighton & Hove, then why not contact Nimbus Accounting for a free consultation to see how we can help your business grow and develop. 

Christmas Tax Saving Tips

Are you having a Christmas Party this year, don’t forget to claim the expense, what are the rules:

• You can spend £150 per employee for your annual Christmas party
• As long as you don’t exceed £150 you can claim the full amount as an expense
• You can also invite partners to your party, but still only £150 per employee
• You can also claim the VAT element too
• Don’t forget you must invite all employees
• If it’s only you in the company, you can have your own party

Also are you buying corporate presents this year? Here are some more rules from HMRC:

• It must not exceed £50, including gift wrapping
• It cannot be food, alcohol, tobacco or cash equivalents
• It must advertise the company
• Diaries, umbrellas, pens etc are all allowable corporate gifts.

Autumn Statement 29 November 2011

George Osborne disclosed his plans to re-invigorate the UK economy yesterday and at the same time, stay focussed on debt reduction. The pundits were forecasting a range of measures including: increasing the bank levy, perhaps scrapping or delaying the January 2012 increase in fuel duty and tinkering with the lower threshold for stamp duty to encourage first time buyers. Additionally the coalition also disclosed additional measures to stimulate the economy. Here’s a selection of the tax and other changes that were announced today.

For the business community:

Credit easing: National Loan Guarantee Scheme

The Government will make available up to £20bn of guarantees for bank funding over two years. This should encourage banks to lend at lower rates to businesses. In his speech, Mr Osborne speculated that this would reduce average rates by 1%.

Credit easing: Business Finance Partnership

An initial £1bn will be made available for investment in SME’s and mid-sized businesses in the UK.

Youth employment scheme

As previously announced the £940m proposal to subsidise work placements for the young unemployed was confirmed. Branded as the Youth Contract it will target 18 – 24 year olds. Extra support will be provided by Job Centre Plus and will include provision of work experience or a Sector Based Work Academy place.

 Those still in unemployment after nine months on Job Seekers Allowance will transfer to the Work Programme that was introduced to help in the government’s key aims of fighting poverty, supporting the most vulnerable and helping people break the cycle of benefit dependency.

Additional incentives for employers include:

•             The provision of funding for an estimated 160,000 wage incentives, each payment to employers amounting to £2,275.

•             Further funding for at least 40,000 incentive payments to encourage smaller firms to take on apprentices.

Additional Government funding will provide £50m a year to support disadvantaged 16-17 year olds.

Small Business Rate Relief

The present relief will be extended for a further 6 months from 1 October 2012. Additionally there will be an opportunity to defer 60% of any increase in business rate bills for 2012-13 as a result of RPI uprating. This will be repaid equally in the following two years.

Other boosts for the economy:

Infrastructure investment

The government is launching a £30bn plan to improve national infrastructure. The first tranche of £5bn will be provided by the government during the current parliament and a further £5bn in the next. The Treasury is to seek a further £20bn in total from the National Association of Pension Funds and the Pension Protection Fund. It is also promoting investment from insurance companies and China. The Government’s share, totalling £10bn will be funded from areas where there have been under-spends and from a crack-down on tax avoidance. Schemes targeted for support include: the Trans Pennine Express line between Leeds and Manchester, the Tyne & Wear Metro, and improvements to M25, M3 and M56.

Mortgage indemnity scheme

On the 21st November 2011 the Government announced a guarantee for up to 100,000 new mortgages, at up to 95% loan to value, for new build properties in England.

Rail charges capped

The planned January 2012 increase in regulated rail fares to be capped at 6.2% not 8.2%. This effectively limits the increases for London and regulated rail fares to RPI plus 1% and not the expected RPI plus 3%.

Water bills in the South West

Government is to fund South West Water in order that bills for household customers are cut by £50 per year.

Free childcare places

Places for deprived two-year-olds are to be doubled to 260,000. This will involve Government investing a further £380m a year by 2014-15 so that 15 hours of free education and care on a weekly basis can be offered to those that need it the most.

Fuel duty change

The expected 3.02p per litre rise in fuel duty due to take effect on 1 January 2012 has been deferred to 1 August 2012. The further increase of 1.92p per litre due to take effect from 1 August 2012 will be cancelled.

Tax changes:

Bank levy increased

The promised increase in the bank levy is confirmed. In order to meet the £2.5bn target each year from 1 January 2012 the rate of Bank Levy will increase to 0.088%

Employers’ pension contributions

Employers making asset-backed pension contributions to registered pension schemes will have tax relief restricted to accurately reflect the amount of payments made.

Seed Enterprise Investment Scheme (SEIS)

This new scheme is to be set up to encourage inward investment into qualifying, new start-up companies. SEIS will provide income tax relief at 50% for individuals who invest in shares in qualifying companies. There will be an annual investment limit of £100,000 and cumulative investment limit for companies of £150,000. There is also a capital gains tax exemption for investments realised in 2012-13 and invested through SEIS in the same year.

The existing Enterprise Investment Scheme

Changes include:

•             Relaxation of connected person rules and definition of shares qualifying for relief.

•             Tighten the focus of the schemes by introducing a new test to exclude companies set up for the purpose of accessing relief.

•             Exclude acquisition of shares in another company and exclude investment in Feed-in-Tariffs businesses.

•             Remove the £1 million investment limit per company for VCTs to reduce the administrative burdens of the scheme.

Capital gains tax

The annual exempt amount for CGT is to be frozen at present levels for 2012-13 at £10,600.

Capital Allowances: Enterprise Zones

Enterprise Zones in six assisted areas will qualify for enhanced capital allowances. In these areas, 100 per cent allowances will be available for plant and machinery investment incurred between April 2012 and March 2017. Zones are: the Black Country, Humber, Liverpool, North East, Sheffield and Tees Valley.

VAT low value consignment relief

As previously announced the VAT exemption for low value goods below £15 sent to the UK from the Channel Islands will be removed from 1 April 2012.

Gifts of pre-eminent objects

New legislation is to be introduced that will enable individuals and companies to receive a reduction in their income tax, capital gains tax and corporation tax liabilities in return for donations of pre-eminent works of art or historical objects.

Benefits and pensions:

Welfare benefits

Most working age and disability benefits will be increased in line with CPI from April 2012. The actual increase for 2012-13 will be 5.2%.

Tax Credits

The child element of Child Tax Credit will be increased in line with CPI and will rise by £135 per year in 2012-13. The £110 above inflation increase that was planned for 2012-13 will not go ahead.

The disability elements of tax credits will be increased by reference to CPI. The couple and lone parent elements of the Working Tax Credit will not be increased in 2012-13.

State Pension

The Government is standing by its triple guarantee. From April 2012 a full basic pension will rise by £5.30 to £107.45 per week. The full couple rate where entitlement is based on their spouse’s or civil partner’s pension will rise by £8.50 to £171.85 per week.

State Pension age change

The increase in the age at which the State Pension can be drawn is to be increased from age 66 years to 67 years in 2026.

Public sector pay

From the end of the current pay freeze, average public sector pay increases will be limited to 1% for a further two years.