an accountant's perspective

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Resources for start-up businesses

If you are just starting your own business or expanding/ taking on employees there is a lot you need to know and keep up to date with.

Visit our handy downloads page to stay up to date with all the latest tax information and guidance on how to approach VAT, payroll, National Insurance contributions, self-assessment and bookkeeping. Use the links below to find out more of what you need to know:


New starter checklist for Payroll


The basics of bookkeeping


Self-Assessment explained


The basics of VAT – 2014


National Insurance Contributions – rates and allowances


2014/15 Tax data

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Pensions – What did Osborne say again?




Was it just me or did anyone else lose Osborne when he was carrying on about pensions and annuities. In fact, here were his exact words, they make a little more sense when you catch every word:

‘The tax rules around these pensions are a manifestation of a patronising view that pensioners can’t be trusted with their own pension pots.

I reject that.

People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances.

And that’s precisely what we will now do. Trust the people.

Some changes will take effect from next week.

We will:

-cut the income requirement for flexible drawdown from £20,000 to £12,000

-raise the capped drawdown limit from 120% to 150%

-increase the size of the lump sum small pot five-fold to £10,000

-and almost double the total pension savings you can take as a lump sum to £30,000

All of these changes will come into effect on 27 March.

These measures alone would amount to a radical change.

But they are only a step in the fundamental reform of the taxation of defined contribution pensions I want to see.

I am announcing today that we will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots.

Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want.

No caps. No drawdown limits.

Let me be clear. No one will have to buy an annuity.’

(For full budget speech see: –


So this is reform – real reform. Annuities existed to help retirees navigate how they would invest/live off their retirement income. They were compulsory so that pensioners were able to live off a weekly wage and enable their saved money to support them until their death. The annuity is dependent on a cash-lump sum premium in exchange for this regular income/money management service. To many they are a final insult from the state to be forced to buy an annuity with the majority of their pension. They were designed to make sure that retirees were not tempted to spend their pensions frivolously and live on a paltry weekly income for the remaining years of their life. They prevent relatives negotiating money from vulnerable pensioners. Let’s be honest though – they also give insurance companies massive profits – profits made from worker’s pensions.

So when Osborne states that pensioners will be able to release all of their money without having to buy an annuity or be restricted by drawdown limits, he has introduced a giant change – a freedom. How this freedom is used is very much up to the individual and I agree that if we work all our lives to accrue savings we should be able to spend them on our future in any way we see fit. Of course, this money will be taxed.

More good news on the tax front. The rate of tax on pension income will fall from 55% to marginal income tax rates if the whole pension pot is withdrawn. Here is where the big benefit to Osborne lies. The government anticipates that the number of people withdrawing pension income will rise steeply now that the 55% tax disincentive has gone. The government stands to make around £320m in 2015/16 from those withdrawals. A nice flow of revenue back to the state rather than to the insurance companies from cash lump sums for annuities.

It has been called the most significant change to pensions for 50 years and only time will tell whether this is a good move or a misguided one. You can be sure of one thing – there will be lots of new and promising investment opportunities set up to wow pensioners’ who have big chunks of money to invest.

We advise caution and urge people to get legit advice and spend time looking for the right investment for them. It may be property, shares, premium bonds, high interest bank accounts, annuities, land…whatever it is make sure you do not get ripped off. It is not pensioners’ who can’t be trusted with their own pension pots it is the capitalist society that surrounds them and wishes to profit from people’s savings. Get good advice and protect your hard earned cash!

For further advice on pensions see a good pensions adviser – one who is accredited and qualified.

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Local Connections

A more relaxed piece following on from the Budget article last week. We are all acutely aware of how important tax, VAT, national Insurance and PAYE are to our businesses. From the outset the two focus points for any business are:

1) Can I afford to run my own business: Accounting fees, tax and national insurance contributions, VAT quarters, premises costs, equipment costs, bank fees, employee wages…?

2) How do I get more clients/customers?

ABC has always nurtured local connections and much of the success of the business has come from this relentless activity and interaction. We get transfixed with bills and numbers when ultimately the real source of income is never going to be found at a desk!

I don’t have time to network!

I am too busy working for socialising and drinking coffee!

It’s pointless – everyone is out there to sell- not buy!

Belinda Darley, ABC’s director, couldn’t have proven these statements more wrong. She has an experienced team behind her and a very healthy client base but this has not reduced the amount of time she spends promoting her business. There are three solid reasons to attend networking events and meet with local business men/women:

1) If people like you they will think of your company when someone is in need of what you sell – you will get recommended because people connected to you/liked your story/found you genuine

2) You will get your business name out there – generate interest/make people aware of your existence

3) You will meet the faces behind local business and the ones you connect with can introduce you to friends/colleagues/other businesses – so your network quickly grows

Establishing local connections is far more valuable than sending out a run of flyers because you are face to face with your audience. You are your business and you get the opportunity to tell people why you do what you do. Tell them why this matters to you and maybe it will begin to matter to them as well. What business man/woman wouldn’t want to tap into a supportive network full of like-minded individuals?

Belinda has recently partnered with Lizzie Jordan of Yello Story to launch ThinkBIG. These will be a series of events designed to help those considering becoming self-employed, those who are self-employed and people who are already running a business.  The events are designed to empower entrepreneurs with the confidence and knowledge needed to make smart and decisive decisions from day one.

The workshops will include practical advice and insights from a marketing expert, a discussion about pooled experiences and knowledge, lots of advice from experienced and successful business owners, and lots of networking with likeminded individuals.

Belinda is hoping to impart some of her wisdom in a no jargon, easy to follow, inspirational format.  There really is no reason you cannot be out their putting your business on the map – it won’t sell itself and the greatest spokesperson for it is the person who founded it!

Go to for more information and details on when and where the events will take place. 

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Tax data 2014-15

For all your up to date tax data information for the tax year ahead (6th April – 5th April) – Download this pdf.

You can either store it on your PC or print it out and fold it into a 3 page leaflet for your convenience. Just click on the link below:

tax data FINAL

Next week I will be doing a separate blog on pensions to clear up any confusion over what has changed and what we can expect in the coming months/ years.

Happy reading!

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What do we think about the 2014 budget then?

Firstly, we had good news in the fact that the economy is recovering at a faster rate than was previously expected. Yes, it is still in recovery but there is room for optimism here it seems. The UK is growing at a faster rate than other economies including Germany, Japan and the US. Hooray! Of course if the economies surrounding the UK, particularly the Eurozone, are recovering at a slower pace then high commodity prices will make the UK’s outlook sensibly cautious at best.

Then came the expected announcement that the £1 coin will be replaced in three years’ time with a more technologically advanced version to reduce its vulnerability to forgery. It will be cutting edge science blended with historical inspiration to keep it current and yet nostalgic. I wonder if vending and car park machines will need to be altered or has someone thought about that? I have a suggestion – reduce parking costs to 50p a pop! My budget speech would be far more news worthy!


Now we are into the serious stuff, although it has to be said there wasn’t a lot of it! HMRC are to be given even greater powers to collect debt from the bank accounts of those who can afford tax but refuse to pay it. Transferring profits between companies within groups to avoid tax will be banned.

The misuse of enterprise investment schemes and venture capital trusts will also be prevented from happening. There is an awful lot of monitoring going to have to take place to enforce all of the above. Has the number of civil servants doubled in size or are folk just going to become more honest with the dawn of the new tax year?


Corporation tax will fall to 21% in a few weeks and will drop to 20% next year. The business rate discounts and enhanced capital allowances for enterprise zones will be extended for another three years. High street stores will receive £1,000 off their rates and there will be an Employment Allowance for every business in the country which will provide £2,000 cash back on jobs.


The Annual Investment Allowance will be doubled in April – making it £500,000 and this will run until the end of 2015. That will enable 99.8% of businesses to qualify for a 100% investment allowance.


The expected rise to £10,500 of personal tax allowance has been honoured. This will come in effect next year and from April 6 2014 it will climb to £10,000. The higher rate threshold is also rising from £41,450 to £41,865 in April and will reach £42,285 next year.


It seems like the right decisions have been made for keeping manufacturing jobs in the UK which is what counts right now. The £7 billion package introduced to cut energy bills for British manufacturers will reduce production costs and even the playing field. It includes a cap on the Carbon Price Support rate at £18 per tonne for Co2 from 2016-17 until 2020. The current compensation scheme for energy intensive industries will also be extended for another four years to 2019-20.  Manufacturing lives to fight another day in the UK!


No rise on fuel duty. Thank goodness! It is costly enough as it stands thank you very much. Bingo duty will also be halved to 10%. However, duty on fixed-odds betting terminals rises by 25%. Tabacco duty has also risen by 2% – no surprises there. Beer duty will fall by 1p so the pint is safe (don’t think that is the only measure needed to save local pubs though) and duty is frozen on Scottish Whiskey and cider. We now know what to drink if inclined to toast the budget speech!


I was a little lost when watching Osborne glide through what sounded like massive reform to the pension system. This is how it pans out. The guaranteed income requirement for flexible pension drawdown will be cut from £20,000 to £12,000, while the capped drawdown limit will be raised to 150% from 120% of the GAD rate. The size of qualifying small pension pot will be increased to £10,000 and the total pension savings that can be converted into a cash lump sum will be almost doubled to £30,000.

The reform comes in the way that pensions are withdrawn. Osborne has handed the powers back to pensioner’s to control their own finances. He plans to remove all tax restrictions on how pension pots are accessed and stresses that they will be offered free, impartial advice on how to best convert defined contributions into a retirement income. The message is that it is their money so they should be able to use it and manage it as they see fit.


Premium bonds cap on contributions will raise from £30,000 to £40,000 this June and this will increase to £50,000 next year. Great I had no idea where I was going to put that £10,000 I had stuffed under the mattress!  


There will be up to 10 million new, taxable Pensioner Bonds that offer expected rates of 2.8% for a one year bond and 4% for a three year bond. Up to £10,000 can be invested in each bond.

The annual ISAs allowance will be increased to £15,000 with Junior ISA limits being increased to £4,000. This is great news for savers – if only we all had something to save!


So, that was the budget – at least the main areas. Nothing overly offensive or surprising but I am sure Labour and the Conservatives will thrash out all the arguments they can about each insignificant point. At the end of the day, we are happy enough with the budget speech, just a little bit less childish disruption in the House of Commons and more straight talking decision making would be appreciated. They all manipulate the English language quite well to try and disguise something bad as something good so we remain informed but ultimately weary of what lies ahead! 

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Pre-budget predictions: Any good news?

With the budget around the corner it is time to take stock of what has been and what will arrive in its place. There are three topical areas where we can state with reasonable certainty what is set to change because of published draft clauses for the 2014 Financial Bill. These are personal tax, capital gains tax and business tax.

For personal tax the expectations are:

  • Individuals born after 5 April 1948 will be entitled to a personal tax allowance of £10,000.
  • Employees will be able to increase the maximum value of shares acquired under Share Incentive Plans (SIP) and Save As You Earn (SAYE) schemes. The increased limits will be: SIPs – £3,600 on the free shares that can be awarded to employees and £1,800 on the partnership shares employees can purchase; SAYE – the monthly amount that employees can save will be increased to £500.
  • The annual exemption limit for employer-related loans, to be treated as earnings, will be increased from £5,000 to £10,000.

For capital gains tax the expectations are:

  • The annual exempt amount to be increased to £11,000.
  • The rule that exempts the final 36 months of ownership of a private residence from CGT is to be reduced to 18 months. The 36 months will still apply if the owner is disabled or moved into a care home.

For business tax the expectations are:

  • HMRC is introducing new legislation affecting Limited Liability Partnerships. Members of LLPs who satisfy the new criteria as “salaried members” will effectively lose their self-employed status and be taxed under the PAYE legislation.
  • There will also be restrictions on the way in which mixed partnerships, those with individual and typically corporate members, allocate profits and losses.

We know more about what is expected in the 2014 budget. For more information go to:

One of the most significant changes comes to National Insurance contributions. The changes promised in last year’s budget come into effect this April:

  • Almost every employer who is a business or charity that pays Class 1 NICs on their employee’s or directors earnings is eligible. The Allowance could reduce your contribution by up to £2,000. To check eligibility go to for more info. This rolls out on the 6th April 2014 – we waited a year for it so don’t delay and make sure you benefit from day one!

This budget proposes another concession for employee’s under the age of 21:

  • From 6 April 2015 employers will no longer be required to pay Class 1 secondary NICs on earnings paid up to the Upper Earnings Limit (UEL) to any employee under the age of 21.

It is another year of waiting but yet another nice reduction in National Insurance contributions.

What we do not know is what surprises there will be in the 2014 Budget. There will be live updates on our social media and significant points posted here throughout the speech on the 19th March. Once again we await a lengthy speech, some disappointment, some broken promises, some kept, and hope for the outcome to be good for business above all else!

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HMRC is adamant that RTI is working – is it?

I have to admit that it was far less of a disaster than we thought it might be. Yes, there were many long phone calls, changing of the goal posts and annoying glitches to be handled but they were handled without any catastrophic meltdowns. Just. HMRC’s phones must have needed replacing by the end of last year the amount they were being used. And you would have thought the holding music could have been a little more engaging given the audience numbers it was getting.

That aside though we do seem to have a more effective, more informative and modern PAYE system in place with RTI. HMRC on the other hand still succeed in baffling us with errors. As an article by accounting web reports – 400,000 organisations earlier this month received late filling alerts in error: Full article. HMRC promptly gave out the advice to ignore those messages.

Their reason, straight from the director general for personal tax, was that though they had decided not to send out the messages – they had not got to the system quickly enough to stop them. I can just imagine a HMRC employee dashing across the room and diving for the ESC button on a computer only to realise the 400,000 emails had sadly made their way to their destinations. Really! They couldn’t stop the system in time? None of their around 80,000 strong team could stop the system to save their company another wave of embarrassment. Oh dear!

On a more positive note because of the teething problems HMRC have decided to push the penalties back. The automatic penalties for late filing will be pushed back until October 2014 and the automatic payments for late payment until April 2015. So we can breathe a sigh of relief on that front. Ruth Owen came up with some impressive statistics to show that RTI is working – for example – 99% of employer records are being reported in real time and 70% feel that RTI is actually easier than the old system.

She also tackled the key issues of duplicate records, disputed charges, business tax dashboard mismatches and generic network system messages head on. They are aware of them and they are working on them, particularly on the software that needs to detect duplicate reports and deliver messages to the right people. But, with the amount of errors employers have had to contend with Owen wasn’t really left with any place to hide – she had to respond with a proactive defence and she did.

The year end is looming and ultimately we want to believe that the system will be up to scratch but deep down we suspect otherwise. There will be more teething problems and more mistakes made but HMRC took a bold step to update a system that needed to reflect contemporary employment patterns. I think it has done that and we are hopefully nearing the end of the bedding in period. Owen addressed concerns and finished with an odd thing – an apology. She said:

‘If you try and sort out your payroll at the end of the pay period and if it’s not working for you or when you log in to your dashboard and you’re not recognising the figures HMRC is paying back to you, it must feel very frustrating and I am sorry to anyone experiencing difficulties’. (accounting web: Full Article)

Yes we will remain cautious and a little anxious but if they are prepared to apologise for mistakes made then maybe, just maybe there is still a human element to HMRC. So for that alone I stand by RTI and hope we are over the worse of it. 


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