Public Sector Engagements via Personal Service Company

The changes

From 6 April 2017, if you provide your services to a public authority contractor, new rules apply. The contractor, agency or other third party who pays you will deduct Tax and National Insurance contributions (NICs) from your fees.

The contractor calculates the Tax and NICs and pays these amounts over to HM Revenue and Customs (HMRC) on your behalf. Those payments are reflected on your tax records and contribute to your state benefit entitlement. The contractor will also pay employers NICs on the fees.

What do the changes mean?

If you continue your arrangement via a Limited Company then your current engagement with your contractor will be changing, which will mean you will have less income to extract from your company.

As an example (assuming your company is not VAT registered):

  • Your company invoices the contractor for £6,000 for services provided.
  • The contractor deducts £1,871 (£1,458 tax and £413 NICs) which it pays over to HMRC.
  • Your company receives £4,129 for your services instead of the £6,000 received at present.
  • If you pay the £4,129 out of the company to yourself, then no further tax and NIC is due.

If your company is VAT registered, you will still charge VAT on the £6,000 and receive this from your contractor so you can pay this to HMRC – i.e. nothing changes from a VAT point of view.

Your contractor may have already been in touch with you regarding the above and may not be willing to continue the engagement via your current structure.

So what are the options?

  1. Your contractor may be willing to continue to pay you through your Limited Company. If so, the example set out above illustrates the situation that will arise. You will therefore be worse off than you are at present.
  1. Your contractor may be willing to take you on as an employee directly. If so you would no longer be able to provide your services through your Limited Company.

We are aware that some contractor do not want to do this due to employment law and responsibilities as employer

  1. As an alternative you could provide your services via an Umbrella Company.

Due to the structure of an Umbrella Company, the payment made by the contractor to the Umbrella Company would be the same as the payment currently made to your Limited Company. However, the Umbrella Company will make certain deductions from the amount paid to you, which will result in you being worse off that at present.

Please do not hesitate to contact our tax team as soon as possible to discuss your next steps  and decide on the way forward for you.

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Spring Budget – March 2017

Yesterday saw the Chancellor Philip Hammond deliver his first – and last – Spring Budget before a move to just one annual Autumn Budget covering tax and spending.

In his opening statement, the Chancellor confirmed, “As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future” suggesting a positive slant on the delivery of his proposals.

Whilst there were no real surprises, there were several pieces of good news announced, as the Chancellor confirmed that the economy is growing faster than predicted in last year’s Autumn Statement:

  • Mr Hammond listened to the concerns of small businesses regarding the proposed increases in business rates by introducing various specific measures and giving local authorities £300m to deliver discretionary relief to target individual hard cases.
  • He also recognised the crisis in social care and local authorities will receive more funding to help in the short term. It was announced that a fundamental review would be carried out with the intention of finding a more lasting solution in the future. But this will not involve the introduction of a “Death Tax”.
  • He announced more funding for education and free schools, and increased spending on infrastructure, including £90m for roads in “The North” – hopefully this will mean improvements to roads in Yorkshire.
  • Businesses below the VAT threshold will not need to report quarterly to HMRC until April 2019 – a delay of one year.

However, the bad news includes the following tax changes which will affect many small businesses and individuals:

  • There will be increased National Insurance payable by the self-employed – to 10% in April 2018 and 11% in April 2019.
  • The tax-free level of dividends will reduce in April 2018 to £2,000 from £5,000.
  • The amount which can be paid into pension schemes by people who have already accessed their money purchase pension savings will reduce to £4,000 (from £10,000) from 6 April 2017.

Naylor Wintersgill Tax Partner, Chris Gumbley comments, “Overall, the proposals seem fair in today’s economic climate.  Hopefully this will mean that businesses and families can plan ahead with reasonable levels of certainty – even though the full effects of Brexit are still unknown. Watch this space!”

CENTENARY OF SUCCESS

Bradford’s largest independent firm of Chartered Accountants, Naylor Wintersgill are celebrating their centenary year as they mark 100 years since the founder of the firm, George Robert Verity began practising at Hooper Brothers & Watson in Bradford back in 1917.

Naylor Wintersgill Chairman, Alan Wintersgill comments, “We are absolutely delighted to have reached this incredible milestone. Naylor Wintersgill has built a strong reputation in the Bradford community for providing high quality business and accounting services and I am incredibly proud of our hardworking and dedicated team of skilled professionals.”

“While other firms have moved out over the years, we have continued to support and pro-actively contribute to the community here in Bradford and pride ourselves on our commitment to charitable causes.”

To launch the start of the yearlong celebrations for the firm, the staff at Naylor Wintersgill have chosen to support The Bradford Soup Run and are working with the charity to help focus their fundraising activities and events throughout their centenary year.  The Bradford Soup Run has been offering food, clothing, bedding and encouragement to the homeless in Bradford for over 30 years and caters for up to 100 people every Friday night with a meal of fruit juice, soup, bread, stew, tea/coffee, biscuits and fruit.

John Tempest, Director of The Bradford Soup Run, said,  “It’s heartening to know that one of Bradford’s oldest and most respected businesses has chosen to support us for their centenary year. We look forward to working with all at Naylor Wintersgill towards making the plight of Bradford’s homeless less difficult.”

Naylor Wintersgill Managing Partner, Victoria Wainwright adds, “We are pleased to support such a great local charity in what is a very significant year for Naylor Wintersgill.”

“We may be celebrating our centenary but our combination of strong core values and our willingness to embrace new technologies allows us to offer practical, real-world support and advice to meet our individual clients’ needs. We are proud to have strong longstanding relationships with many of our clients, supporting their growth and success often through generations of leadership.   I  believe that the success of Naylor Wintersgill really does lie with our people – as a firm we look to provide not only a platform for professional achievement but also aim to instil our strong core values into transferrable skills to benefit the wider Bradford business community.”

“We are now looking to further strengthen the firm’s marketplace position as a leading, innovative practice delivering outstanding service to our existing clients and new audiences.”

BREAKING NEWS: Delays possible for predicted quarterly reporting to HMRC

Naylor Wintersgill recently told of news that, as part of HMRC’s Making Tax Digital flagship project, by 2018 HMRC would require many businesses and landlords to update HMRC quarterly of income and expenditure and would need to use online accounting software to keep business records.

MPs in the Treasury Committee are today requesting for a one to two year delay to the introduction of these quarterly reporting requirements, which are currently planned to start from April 2018. In a 50 page report, the committee have called for delays to the introduction of the entire Making Tax Digital project ‘until at least 2019/20, possibly later’. The Committee have called for more practical and wide ranging pilot schemes and have also voiced their concerns over the lack of a ‘fully functioning market’ in appropriate software.

Naylor Wintersgill Tax Partner, Chris Gumbley comments, “I fully support the calls by the Treasury Committee to delay the implementation of Making Tax Digital – it is far too important to rush the introduction without ensuring that HMRC’s systems are completely robust, and the required software is fully available.”

Here at Naylor Wintersgill, we are continuing to consider the implications for our clients and Chris adds, “Hopefully this might be welcome news as taxpayers try to meet the 31st January Tax Return filing deadline but rest assured, we will provide on-going details as to how the changes may affect you as more news is revealed over the next few months.”

If you do have any queries or would like to discuss your personal circumstances with our tax team, please do not hesitate to contact us.

 

Start to centenary year – all boxed up!

The team Naylor Wintersgill, have launched their upcoming year of centenary celebrations by taking part in the Samaritan’s Purse ‘Operation Christmas Child’ shoe box appeal over the festive period. The firm took on the challenge to wrap and fill an impressive 100 shoe boxes, containing gifts for children worldwide at Christmas time to start the celebrations for the firm’s centenary year in 2017.

Naylor Wintersgill has been part of the Bradford business community for 100 years now and Managing Partner, Victoria Wainwright explains, “The long history of the firm allows us to understand the value of moving with the times. Our combination of strong core values and our willingness to embrace new technologies allows us to offer practical, real-world support and advice to meet our individual clients’ needs, whatever the industry. At Naylor Wintersgill, we pride ourselves in our people and I would like to thank everyone for their honourable fundraising efforts throughout 2016. We are really looking forward to plenty more fundraising opportunities and activities as part of our centenary celebrations this year!”

After deciding to set themselves the remarkable challenge, the firm contacted long standing client ASC Cartons Limited in Shipley, who were delighted to donate all 100 of the boxes to be filled to reach the fundraising total. Chairman, Alan Wintersgill added, “As a firm, we encourage and actively support our team in all areas of their development, so when the idea was put forward by a number of staff who wanted get involved, we were happy to assist.”

The fundraising activity marks the start of a yearlong plan of centenary celebrations for Naylor Wintersgill in 2017.

The season of giving?

With the season of goodwill now firmly upon us, you may be thinking about getting into the festive spirit by providing your staff with a Christmas gift to kick start their celebrations. But, are the use of small value benefits in kind really as simple as they sound?

Here, our Tax Partner Chris Gumbley makes the tax implications clearer for you and your business.

As an employer providing gifts to your employees, you have certain tax, National Insurance and reporting obligations to fulfil and there are different rules depending on the type of gift you give.

The ‘Trivial Benefits’ rules have been introduced for the 2016-17 tax year and onwards. The rules, in general terms, stipulate that no income tax charge arises on a benefit provided to an employee (or a member of their family or household) if four conditions are met:

  • The benefit is not cash or a cash voucher
  • The cost of providing the benefit does not exceed £50
  • The benefit is not provided as a result of a salary sacrifice arrangement
  • The benefit is not provided in recognition of services provided by the employee or in anticipation of such services.

However, our tax partner Chris Gumbley urges, “The rules are not quite as simple as they sound. You must be mindful that the rules are really in place to cover one-off gifts at say, Christmas or birthdays and not if the trivial benefit is in recognition of services provided by the employee.”

A trivial benefit at this time of year could be that of a turkey centre piece for the Christmas dinner table or a festive food hamper to enjoy but please bear in mind the fourth condition of the ‘trivial benefit’ rules which requires very careful consideration.  If gifts are provided to employees so regularly that they have an expectation to receive them, then HMRC may view them as taxable for services rendered.

As an employer, there may also be potential employment law implications that you may wish to consider.

Please do not hesitate to contact us if you require any assistance on your particular circumstances.

VAT Flat Rate Scheme – Changes ahead

In his Autumn Statement on 23rd November, the Chancellor announced some important changes to the VAT Flat Rate Scheme that will affect many small businesses and contractors currently making use of the system.

The VAT Flat Rate Scheme is a VAT reporting simplification measure for small traders with an annual turnover of less than £150,000. Although the VAT Flat Rate Scheme will continue to operate, new legislation proposed with effect from 1st April 2017 will see a new rate of 16.5% apply for those now known as ‘limited cost traders’ using the scheme.

A limited  cost trader is a business spending  less than 2% of their turnover or less than £1,000 per year on goods (excluding capital goods, food, vehicles and fuel).  At present, users of the scheme currently issue VAT invoices to business customers as normal, but only account for VAT at a flat rate percentage of turnover. The rate is dependent on the business sector but is usually significantly less than the standard rate of VAT.

The higher flat rate percentage proposed will have an impact on the savings the scheme can offer and for limited cost traders who are using the scheme at present, or wishing to use it, the benefit will almost be completely withdrawn.

 If you are currently using the VAT Flat Rate Scheme it is important that  you review your individual circumstances. Please do not hesitate to contact us if you would like advice on whether the Flat Rate Scheme is still right for you.”

 

Raising The Bar – Community Award Winners!

We are extremely proud to officially announce that Naylor Wintersgill has triumphed at the Raising the Bar awards 2016!

Chairman Alan Wintersgill and Managing Partner Victoria Wainwright were delighted to accept the award as winners of the ‘Community’ category on behalf of all the Naylor Wintersgill team on the 10th November 2016.

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The West & North Yorkshire Chamber of Commerce Raising the Bar awards provides a fantastic opportunity to celebrate all that is good about business in the region in four key areas: Community, Education, Economy and Environment.

The honorable community category  recognises businesses that have played an outstanding role in supporting the region through its commitment to great causes, projects, fundraising and activities to make the local community a  better place to live.

Victoria Wainwright said, “The award is well deserved recognition for the efforts of all the Naylor Wintersgill team during 2016 – we couldn’t have done it without them!”

In anticipation of the impressive night of celebrations held at The Met Hotel, Leeds, we were asked to film a short video that would be shown on the evening prior to announcing our category winner . We relished the opportunity to get as many members of our team involved in donning our fundraising t-shirts, wearing props from past events and generally really shouting about the fantastic fundraising challenges and activities we’ve been up to this year.

You can view our shortlist video on the Naylor Wintersgill YouTube channel.

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Shortlist video – great fun at Naylor Wintersgill!

Chairman Alan Wintersgill said, “As a firm, we  are very proud to support and pro-actively contribute to the local community. With strong links to Marie Curie and Bradford based charity, One In A Million for a number of years, we were delighted to make them our chosen charities of 2016.”

From bake-off’s and dress-down days to cycling and walking challenges, 2016 has so far seen some valiant fundraising efforts across the board in support of our 2016 chosen charities. We’ve had some great fun along the way!

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Winning Interview

If you missed what we have been up, take a look at a look at some of our previous blog posts:

A ‘reet good’ celebration at Naylor Wintersgill

Peak performance for Naylor Wintersgill

Alan’s charity cycle success!

Naylor Wintersgill ladies Moon Walk madness

We would like to thank all our team for their fundraising efforts this year and we’re already looking forward to 2017!

Focus on funding

We are always looking at  opportunities for our clients in order to facilitate their growth, and we have had a great success assisting some of our clients through the application process for a number of funding opportunities on offer.

Whether you are just starting up or are an established business, there are a number of financing options available to benefit you  and if you have a gap in funding where conventional sources of finance are insufficient or unavailable there are still plenty of options available.

Depending on the nature of your business, there are a number of financing and alternative funding options that you may not have considered. Here, Naylor Wintersgill talks you through some of the possibilities currently available.

Leeds City Region Enterprise Partnership (LEP)

 Leeds City Region Enterprise Partnership (LEP) is currently supporting ambitious businesses spanning the entire Leeds City region (including West Yorkshire, plus York, Harrogate, Craven, Selby and Barnsley) with business finance and support.

LEP can provide grants of between £10,000 and £250,000 to small and medium sized businesses that are based in the Leeds City Region, or planning to invest there.  The grants are for those who will use the funds for capital investment in fit-out and refurbishment of buildings, plants, machinery and equipment – creating permanent jobs in the Leeds City Region.

Naylor Wintersgill has already had great success assisting our clients through the application process for a number of LEP Grants, so please do not hesitate to get in touch if you wish to find out more about LEP and other Government Grants that may be available for your business.

 The Business Enterprise Fund (BEF)

Founded in Bradford, The Business Enterprise Fund (BEF) is a not for profit social enterprise offering finance for small businesses in Yorkshire and the North East.  Over the last 11 years, the BEF have lent to a wide range of businesses from start-ups right through to established multi-site companies who have usually been unable to get finance from the banks.

The BEF offers a range of unsecured and secured loans for up to 100% of the funding needed with flexible terms:

Start up Unsecured Loans £500-£25, 000

  • Terms up to 5 years
  • For businesses up to 24 months trading

Unsecured Business Loans – Up to £50,000

  • Terms up to 7 years
  • Ideal for new or growing businesses to support working capital needs such as:
  • Growing debtors
  • Increasing work in progress
  • Supporting additional employee costs
  • IT infrastructure costs

Secured Business Loans – Up to £150,000

  • Terms up to 7 years
  • Perfect for a business looking to purchase major assets such as:
  • Premises
  • Plant and machinery
  • Stock
  • Acquisitions

Finance Yorkshire

Finance Yorkshire also provides a range of typically unsecured loans ranging from £15k to £50k for early stage businesses, £15k to £75k for established businesses and from £15k to £250k for established and profitable businesses with terms up to maximum of 5 years.

Finance Yorkshire business loans are available for a wide range of purposes including working capital, expansion projects, commercial premises and asset acquisitions with a sliding scale of interest rebates depending on stage of business. Their aim is to finance ambitious entrepreneurs and businesses who can demonstrate their ability to grow their businesses.

Whether you are a startup business or need resources to take your company further, we can help. Please contact us if you would like any further information based on your specific situation.

 

 

Are you cyber secure?

With many alarming horror stories in the press recently, cyber fraud has become the hot topic of 2016.  The methods that fraudsters are using to obtain the information they want are constantly changing and it is  important  to stay vigilant and be aware.

With this, now more than ever we are being advised to be suspicious of all unsolicited contact, even if it appears to be from a trusted source. There are an increasing number of different fraud types being used, with reports over the last few months of phishing phone calls, with fraudsters claiming to be from HMRC, making unsettling and intimidating phone calls in their latest attempts to obtain personal data. HMRC have published some helpful guidelines here, which provides guidance on recognising scams, if you are not sure.

Here at Naylor Wintersgill, we take security very seriously, and so, as part of our continued commitment to provide support to your business, we have teamed up with the West Yorkshire team at Barclays to deliver a Cyber Fraud and Tax In Action Seminar for our clients on 20 October 2016.

We are encouraging as many clients as possible to join to us for the event – we are all at risk of cyber fraud but we can take steps to ensure we are able to identify and manage these risks.

In the seminar, expert speaker Andrew Dixon from Barclays will present on the current cyber fraud trends, the best approach to managing fraud risk and help raise awareness of the different fraud types, which may result in financial losses for you and your business.  Andrew will also provide key information to help you to identify and manage fraud risks that could harm your business.

During part two of the seminar, Naylor Wintersgill tax specialist, Chris Gumbley will be presenting 5 of the most pertinent business and personal tax topics, based largely on making the most of the extremely valuable tax reliefs readily available.  There will also be an opportunity to put any questions you may have to Chris and talk through the possibilities for your business.

If you are interested in attending this seminar or you would like any further information, please contact us to register your interest or call 01274 733184.