A day in the life of Robyn Milstead - Chartered Tax Adviser at Ward Williams

I am often asked what made me want to become a Tax Adviser and the simple answer is that I never specifically wanted a career in tax. Fresh out of college with good A-levels I set my sights on becoming an accountant however the only vacancy I could find was as a trainee tax technician. I got that job, and I am so glad I did. 

My own experience, and the experiences of others I have spoken to bares out the truth that most tax advisers initially intended to become auditors, bookkeepers or accountants but fall into a tax role by chance. But why?

In my opinion this is not because tax is a horrible or undesirable job (far from it!) but purely because it is not an ‘obvious’ choice. 

That’s why this month I am pleased to have been involved in a couple of local events aimed at helping young people find a career that suits them. 

Uxbridge College

At Uxbridge college I met with a small class of students to talk to them about the day to day ins and outs of my job, the ATT and Chartered Institute of Taxation’s (CTA) exams and CV writing. The students were happy to participate in a short tax facts quiz and I am due to return in February. 

Brunel University

Brunel run an ‘Accountancy Uncovered’ event each year aimed at helping their undergraduates, graduates and post graduates learn more about accountancy careers and the different options that are available to them. Representing tax I gave a 15 minute presentation to around 40 attendees after which representatives from CIMA, ICAEW and CIPFA had time to speak. Our own corporate tax trainee, Matt Mansell, was also called upon to address the students and comment on his own entry into the profession.  After the session it was encouraging to speak to many of the students who are now thinking of a career in tax and to see their enthusiasm for studying!

I am thoroughly proud to be able to demystify the profession for those who would like a career in Accountancy but I am even more proud to open up the door to a career in specialised tax.  If you or anyone you know would like to know more about becoming a Tax Adviser then please get in touch. 

robyn.milstead@wardwilliams.co.uk

Tax Highlights from the 2013 Autumn Statement

Personal Tax Highlights

• Confirmation that the income tax personal allowance will increase to £10,000 from April 2014.
• From 2015-16 married couples and civil partners will be able to transfer £1,000 of their income tax personal allowance to their spouse where neither is a higher rate taxpayer. 
• Employer NI contributions will be abolished for under 21 year olds with earnings below the upper earnings limit with effect from April 2015.
• From April 2015 non-residents disposing of UK residential property will be subject to capital gains tax.
• A reduction in the capital gains tax private residence relief final period exemption from 36 months to 18 months to reduce the incentive for those with multiple homes to exploit the rules.
• A scheme to allow current pensioners, and those who reach State Pension age before the introduction of the new single tier pension, an option to top up their Additional State Pension through a new class of voluntary National Insurance contributions .
• Future changes to State Pension Age, with a guiding principle that people should expect to spend, on average, up to a third of their adult life in receipt of the State Pension.  This is likely to mean that the increase in State Pension age to 68 could come forward to the mid 2030s, and the State Pension age could increase further to 69 by the late 2040s.

Business Tax Highlights

• With immediate effect, new measures have been introduced to counter manipulation of profit and loss allocations within ‘mixed membership’ partnerships.
• From April 2014, measures will be introduced to counter arrangements where partnership  losses are reallocated in order to achieve an overall tax advantage.
• The associated companies rules will be replaced with simpler rules based on 51% group membership in April 2015 when the main rate and small profits rate of corporation tax are unified at 20%.
• The rules restricting the availability of corporation tax losses when a company changes ownership will be relaxed.
• From 6 April 2014 the government will introduce legislation to ensure individuals make payments for private use of a company car or van in the relevant tax year.  Measures will also be introduced to ensure that where an employer leases a car to an employee, the benefit is taxed as a car benefit rather than as employment earnings.

Measures to Tackle Tax Avoidance and Evasion

• Several measures were introduced to clamp down further on tax evasion, avoidance and aggressive tax planning, including:
• From April 2014, a strengthening of existing legislation which prevents employment intermediaries from disguising employment as self-employment to avoid tax.
• Legislation will be introduced to require taxpayers using avoidance schemes that have already been defeated in the courts to pay the tax they are trying to avoid upfront. 
• A new information disclosure and penalty regime for high risk promoters of avoidance schemes will be introduced.  Clients of these will also be required to identify themselves to HMRC.

…and of course we can’t leave out

• The planned fuel duty increase for Sept 2014 will be cancelled.
• Paper tax discs will be abolished.

Creative Industry Tax Relief

In addition to the existing Film Tax Relief, introduced in April 2007, as of 1 April 2013 some new Creative Industry Tax Reliefs have been introduced by the UK Government.  The new reliefs are aimed at supporting the high-end television, animation and video games industries.  

Companies carrying on qualifying work will be able to claim an additional tax deduction of up to 100% of qualifying expenditure.

Who gets the relief?

The government has chosen to target three specific sectors: “high-end” television production, animation, and video games.  There are various conditions that need to be met in order to qualify for each of the reliefs, but to qualify for any of the creative industry tax reliefs all films, television programmes, animations or video games must pass a ‘cultural test’ which essentially requires that the production is certified as  ‘British’.   (For further details please see the HMRC website: http://www.hmrc.gov.uk/ct/forms-rates/claims/creative-industries.htm#2.)

“High-end” Television Tax Relief

Qualifying programmes include dramas, documentaries and comedies. Provided they meet the British test an additional deduction can be claimed for pre-production, principal photography and post-production expenditure. However, if the television production is an advert, news or current affairs programme, quiz or games show, a broadcast of live events, or a training programme, HMRC will not grant the relief. In order to qualify programmes must also be more than 30 minutes in length with average production costs of £1million or more per hour.

Animation Tax Relief

Similar to the television production relief, any animation programme must be British, and must fit into one of the genres mentioned above. The difference is that to qualify as an animation, 51% of the company’s qualifying expenditure must have been on animation.

Video Games Development Relief

This relief has been subject to much debate recently and is yet to receive EU state approval.   If approval is given the relief will be available as of 1 April 2013.

Tax Credits

In the event that the creative industry tax deduction creates losses for the company these losses can be surrendered in exchange for a payable tax credit calculated at 25% of the surrendered loss.  This may be useful for companies who perhaps have invested a lot of cash into a production, but are yet to receive any returns.

For more information on any of the Creative Industry Tax Reliefs please contact Sarah Brock or Matt Mansell on 01932 830 664 or matt.mansell@wardwilliams.co.uk.

Auto-enrolment and reducing your tax bill

Firstly, what is auto-enrolment and who’s got to pay?

Auto-enrolment, or Workplace Pension Reform, is a new legislation that was introduced by the Government in October 2012, where all employees must be automatically enrolled into a pension scheme, provided they meet certain criteria (below):

What’s the problem?

There are various contribution basis and salary definitions employers can use in order to meet the legislation requirements. These are set to increase in the future, with the first increase due in October 2017, then increasing again in October 2018.

By October 2018, employers will be required to pay at least 3% of the employee’s salary with total contributions of at least 8% of salary. What you may not realise, is that it could be far more tax efficient (and NI-efficient) for the employer to pay the total pension contributions – and here’s why...

Salary Sacrifice

The idea is simple; rather than deducting the employee’s contributions from their net salaries, employees can agree to reduce their gross salaries in exchange for you paying their part of the auto-enrolment contributions. This is called “salary sacrifice”.

But where’s the saving?

Well, by the employee giving up some of their gross salary, both the employee and employer will reduce the amount of NIC’s they pay on that ‘exchanged’ part of the salary. The money the employer saves from reducing salaries can then be paid into the pension fund or used elsewhere within the business. Ultimately, the pension contributions made are the same, but both the employer and employee save on NI contributions.

Employees will also receive higher rate tax relief at source on any contributions they make.  

So, what’s the saving?

With minimum contributions being made, the saving isn’t going to be too substantial. However, when you take that saving, multiplied by 15 employees over a few years, the NIC savings will soon accumulate and reduce your tax bill.

Like with any change in legislation, there are cost implications and salary sacrifice can reduce this cost for many employers. However it is useful to bear in mind that it may not be suitable for everyone.

(It is important to seek advice should you wish to set up your scheme using salary sacrifice.)

Top tips for managing your business banking

Business is hard, and money is precious, so we should do everything we can to minimise the expenses and maximise our returns. One of the areas people totally overlook when thinking about their business finance is the income and expenses from the bank.

Top tips to make sure you maximise your money:

1. Talk to the bank and find out how much you pay for your accounts and what you get for it. Many people set up an account and then don’t review it for years. It may be that you are using an account you don’t need and you could reduce the monthly account fee or move to something more relevant for your business.

2. Look at the other services you get with your account, a lot of accounts now come with roadside cover or travel insurance and other perks.  People forget this and purchase separate travel insurance, roadside cover and so on. If you are happy with the level of cover the bank gives you then cancel your other policies. You don’t need two of these things, so save the money.

3. If you are one of the lucky people with savings, research the market to see who has the best savings interest rates, if you have left your money in an account for a few years it is likely the rate you are getting is not the best one available.  So move your money to get as much return as you can.

4. To maximise the interest you earn, try to make sure any spare or unused funds (if you have any) are transferred into the account with the highest interest rate. Just make sure you check you still have access to the money when you need it and it’s not ‘locked in’.

5. The flip side of researching a savings interest rate is to look into the interest rates you pay on loans and overdrafts. These days many of us operate with some form of debt and like with savings we tend to just go with whatever the bank tells us. It’s much easier to change accounts now so find out how much interest you pay and see if you can get a better rate.

6. Check what the bank is doing and don’t be afraid to question them. Banks make mistakes and can over charge or enter erroneous transactions which they may not realise. So check your statements, query anything you are not expecting, and argue your case if you get fines or charges you don’t think you should have to pay for.

Just a quick check online can provide you with the information you need to action most of these points… and you are online now…. so why not do it now?

For further information please contact Erin: erin.walls@wardwilliams.co.uk

www.wardwilliams.co.uk