Tax on residential property

Tax on residential property

Has devolution affected what tax you pay?

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First-time buyers in England, Northern Ireland – and for a short time in Wales – were the biggest winners in the most recent shake-up to affect property taxes in Autumn Budget 2017.

Philip Hammond’s headline measure was to abolish stamp duty for first-time buyers on homes worth up to £300,000, and the chancellor didn’t stop there.

He also introduced a reduced rate of 5% on the portion worth from £300,000 to £500,000, providing a welcome boost for many aspiring homeowners in London where the average residential property sold for £556,146 in 2017.

But while the chancellor received plaudits for a move that helped 121,500 people take their first steps on the property ladder up until 30 June 2018, existing homeowners still have to pay property taxes – most notably in the form of stamp duty and capital gains tax (CGT) – while devolution means that where you live in the UK also affects the property tax you pay. Read More

Insider – Policy News Digest – September 2018

Keeping you up to date with the top financial policy news stories, rumours and talking points you need to know this month.

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HMRC confirms ‘soft landing’ for Making Tax Digital

HMRC has confirmed that digital reporting requirements will be relaxed during the first year of Making Tax Digital (MTD) for VAT-registered businesses.

From April 2019, businesses with annual taxable turnover of more than £85,000 will be required to maintain digital records for VAT and submit quarterly returns alongside the annual tax return.

Under the requirements of MTD, any transfer of data between software programs must be carried out using digital software.

However, for VAT periods starting in the 2019/20 tax year, businesses will not need to have digital links for all software, and will be able to manually transfer or cut and paste their records instead.

This does not include the submission of the VAT return itself, which must be shared with the Revenue using an application programming interface (API).

In December 2017, HMRC said it anticipated there would be a “soft landing period without application of record-keeping penalties” in 2019/20 to give businesses time to adjust to the new system.

Its VAT notice, published in July 2018, legally confirmed the relaxed reporting requirements but made no mention of how the soft landing on penalties will apply.

“It would have been completely inadequate for the law to require you to do one thing, but then for HMRC to say informally that they would not enforce it.

“Most businesses want to comply with what the law requires them to do, and this approach from HMRC helps ensure that is the case.”

John Cullinane, tax policy director at the Chartered Institute of Taxation

We can help you get on top of digital reporting with our Cloud Accounting Solution.

Get in touch or download our factsheet if you would like to get ahead of the changes!

Stamp duty tax break saves first-time buyers £284m

Philip Hammond’s decision to abolish stamp duty land tax (SDLT) for most first-time buyers on all properties worth up to £300,000 saved homeowners £284 million in the first half of 2018.

The chancellor scrapped SDLT in Autumn Budget 2017 for most people taking their first steps on the property ladder in England, Northern Ireland and for a limited time in Wales.

Speaking at the time, Hammond expected the move to cut SDLT for 95% of first-time buyers and abolish it for 80% of them.

SDLT was axed on the first £300,000 of all purchase prices up to a value of £500,000, with a 5% rate chargeable on the portion between £300,000 and £500,000.

Those who bought their first home in Wales could have benefited from the move between 22 November 2017 and 1 April 2018, at which point the devolved land transaction tax replaced SDLT.

More than 121,500 first-time buyers have been able to get on the property ladder in the six months between 1 January 2018 and 30 June 2018.

“Our cut to stamp duty for first-time buyers is helping to make the dream of home ownership a reality for a new generation.

“In addition, we’re building more homes in the right areas and have introduced generous schemes such as the Lifetime ISA and Help to Buy.”

Mel Stride, financial secretary to the Treasury

We are committed making sure our clients don’t pay a penny more in tax than they have to. Talk to us about personal tax planning or download our factsheet below.

Inheritance tax receipts reach record high of £5.2bn

The Treasury fetched a record high of £5.2 billion in inheritance tax receipts last year, according to statistics published by HMRC.

Inheritance tax receipts increased 8% year-on-year in 2017/18 to continue a long-term trend, which began when the nil-rate band was frozen at £325,000 with effect from 6 April 2009.

Since then, inheritance tax receipts have grown by an average of 10% a year, with the latest increase £388 million higher than in 2016/17.

“The amount of money raised from inheritance tax has doubled in less than a decade, and a steadily rising proportion of estates are now caught within the inheritance tax net.

“Even the introduction of an additional nil-rate band for families passing on a home to their children was not able to stem the growth in inheritance tax revenues, yet it remains riddled with anomalies.

“Inheritance tax is a complex tax, and the sooner it is overhauled the better.”

Steve Webb, director of policy at Royal London

Rising residential property prices are a contributing factor to the ongoing rise in inheritance tax receipts, with house prices soaring above the rate of inflation over the same period.

However, the most recent statistics do not take into account the full impact of the residence nil-rate band (RNRB), which was introduced on 6 April 2017 in addition to the £325,000 nil-rate band.

Eligible estates qualify for an extra £125,000 through the RNRB in 2018/19 if the deceased owned a home, or a share of one, that was included in their estate and left to their direct descendants.

It enables someone to pass on a family home worth £450,000 without incurring inheritance tax liabilities in 2018/19 – and will increase a further £25,000 in each of the next two years.

“We’ve seen in recent years a more aggressive approach from the taxman that has driven a surge in inheritance tax receipts.

“Simplification of this can’t come soon enough for many families, but taking financial advice should be a priority for anyone with a potential inheritance tax problem.”

Sean McCann, chartered financial planner at NFU Mutual

If you are concerned about the implications of passing on your wealth, get in touch to plan your estate. Out friendly team personal tax team are waiting to take your call.

SMEs cite VAT as ‘biggest administrative headache’

VAT creates the biggest administration burden for around two-thirds of businesses in the UK, research from the British Chambers of Commerce (BCC) has claimed.

The report, which polled more than 1,100 businesses of all sizes, found that 64% were bamboozled by an array of rates and rules to comply with VAT legislation.

This percentage is likely to increase in the near future as VAT-registered businesses with taxable turnover of more than £85,000 prepare for Making Tax Digital to take effect from April 2019.

“It’s time to tackle the huge costs and complexities of the UK tax system, which sap away time and resources that could be better spent raising business productivity and growth.

“We want to see more investment in frontline HMRC support that’s geared towards making compliance easier for SMEs.

“There should also be greater independent scrutiny of new tax proposals with the aim of minimising the administrative burden on business.

“HMRC must be given both resources and a clear remit to focus more on supporting, rather than pursuing and punishing, small and medium-sized firms as they work to get tax right.

“Making tax administration simpler would provide businesses with more time and headroom to focus on investment and growth.”

Adam Marshall, director-general of the BCC

More than half (54%) said payroll tasks were the next biggest compliance burden, with many firms confused by the national insurance contribution thresholds and rates they are required to pay.

Corporation tax (41%) proved to be the third biggest administration headache for businesses in the UK, while three in four (75%) respondents feel HMRC red tape has increased in the last five years.

Speak to us about your business challenges. We pride ourselves on getting to know you and helping to resolve what keeps you awake at night.

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Tax Tips and News – September 2018

Welcome to September’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

This month’s stories (Sept ’18)

  • Employee benefit changes – HMRC consultation
  • Digital Tax is welcomed – even ‘expected’
  • VAT due on vouchers and gift cards
  • New online PAYE platform for the self-employed?
  • September questions and answers
  • September key tax dates

Please contact us for advice in your own specific circumstances. We’re here to help!

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Here’s why HMRC care deeply about kids blankets…

The VAT treatment of children’s clothing has always been a source of confusion. According to HMRC sales of clothing designed for young children are zero rated. No VAT is payable by the supplier or manufacturer of the item.

When is a blanket an item of clothing?

APenalties recent case between HMRC and a supplier of fleeced blankets with sleeves hinged on whether such items are indeed clothing. We can imagine that a hefty tax bill was riding on the outcome of the decision.

The taxman argued that the product was not clothing as it lacked fastenings and was not intended for use when moving. HMRC also said the size range of ages 3-10 years and 10-13 years are more consistent with blankets.

But the seller of the product insists that the product is indeed clothing.

So what was the decision?

The decision by Judge Jonathan Cannan at the First-tier Tribunal agreed that the item is in fact clothing.

Clothing generally refers to items made of fabric or some other material which are worn to cover the body parts of the body in order protect the wearer from the elements, to preserve modesty and/or for the purposes of fashion.

All clothing may be said to be worn.

An item of clothing is worn where it is appropriately shaped to accommodate the contours and movement of the body, having regard to the functions it is intended to fulfil.

Given this definition the defining factor of the fleece was the fact it has sleeves. A blanket cannot reasonably be said to be worn in contrast to this product.

Therefore no VAT was payable to HMRC!

If you need help with your VAT Returns get in contact with us – our expert team is waiting to answer your questions.

How to make marriage work for you

Explore how the marriage allowance tax break can benefit you.

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Millions of married couples and civil partners in the UK are eligible for the marriage allowance, but take-up has remained subdued since the tax break came into force on 6 April 2015.

Almost half of the UK’s eligible couples failed to claim their slice of £1.3 billion in marriage allowance cash in 2016/17, with many couples either unaware of the tax break or forgetting to claim it.

It’s designed for couples where one partner pays the basic rate of income tax and the other is a non-taxpayer.

More than four million married couples and 15,000 civil partners are eligible to claim a tax break worth up to £238 in 2018/19, but how do you go about it?

Marriage allowance entitlement

Whichever person doesn’t pay tax can choose to reduce their personal allowance by £1,190 in 2018/19 and transfer it to their husband, wife or civil partner.

It’s possible for the taxpaying spouse or civil partner to increase their tax-free personal allowance to £13,040 in 2018/19.

You may benefit from the marriage allowance if:

  • your spouse or civil partner has elected to reduce their personal allowance for the tax year and transfer it to you
  • you are a basic rate taxpayer in 2018/19
  • you meet the residence requirements and have the right to claim a personal allowance
  • neither you nor your partner submits a claim to the married couple’s allowance (MCA) in 2018/19.

You can only benefit from one tax reduction in any tax year.

Elderly exclusion

You may have noticed the exclusion of the MCA for elderly taxpayers in the list above, although this is only available to people born before 5 April 1935.

In cases where both the marriage allowance and the MCA are available, it is usually preferable to claim the MCA.

The MCA provides a potential tax deduction of between £336 and £869.50 a year, while the maximum benefit from the transfer of the marriage allowance in 2018/19 is restricted to £238.

Personal allowance

As long as you’re married or in a civil partnership with the same person for the whole or part of the tax year at the time the claim is made, you can choose to reduce your personal allowance.

You must also only be liable to pay income tax at the basic rate, dividend nil or ordinary rate or the basic or starting rate for savings after your personal allowance has been reduced by the transfer.

You must elect to use the marriage allowance within four years after the end of a tax year, and it will remain in force until you give notice to withdraw it.

However, an election made after the end of a tax year applies only to the year of election.

This is the easiest way for us to operate the allowance for you, as it can be made when your tax return is prepared and once we know your income and your partner’s for 2018/19.

Separation and divorce

If you and your spouse or civil partner separate between the end of a tax year and the date your tax return is due, there’s a slight chance you’ll lose your eligibility for the marriage allowance.

Cancelling the marriage allowance normally takes effect from the next tax year unless the marriage or civil partnership has come to an end through:

  • divorce (decree absolute)
  • order of judicial separation
  • decree of nullity
  • in the case of a civil partnership, a dissolution order, order of nullity or order of separation.

In these circumstances, the withdrawal of the marriage allowance can be backdated to the start of the tax year.

Death of a partner

If a spouse or civil partner dies, it’s possible to make a backdated claim for the marriage allowance providing the deceased spouse or civil partner was eligible for it when they were alive.

A claim can be made for any tax year in which you were both alive, including the tax year of death, although no claim can be made thereafter.

How does it work?

Working part-time

Tom’s on an annual salary of £16,000 and is married to Isobel, who works part-time and earns £5,000 a year.

Isobel elects to reduce her personal allowance, which is transferred when Tom claims the marriage allowance. The benefit is 10% of the personal allowance rounded up to the next £10.

So the transferable amount is £1,190 in 2018/19, giving a tax saving of £238. This transfer does not impact on Tom’s national insurance contributions.

Dividends income

Dicky is a director who pays himself an annual salary of £8,000 and receives a dividend payment of £30,000. His spouse, Katie, earns £10,000 a year.

Katie elects to reduce her personal allowance, enabling Dicky to submit a claim and increase his personal allowance by £1,190.

As Dicky’s dividend income is taxed at 7.5%, the tax saved is £1,190 x 7.5% = £89.25.

Complications

Non-residential spouse

If your spouse or civil partner is a non-UK resident, but hails from the European Economic Area (EEA), an extra restriction requires the transferee’s annual income to be less than the personal allowance.

Scottish rate of income tax

Scotland introduced additional rates of income tax for 2018/19 that do not apply anywhere else in the UK, including the intermediate rate of 21% tax on income between £24,001 and £43,430.

Married couples in Scotland can continue to receive the allowance, despite the introduction of these new income tax bands.

The only noticeable difference is that the transfer of the allowance isn’t possible for income tax bands that exceed £43,430 in Scotland – despite the basic-rate threshold in the rest of the UK stretching further to £46,350.

Income from dividends and savings are not liable for the Scottish rate of income tax, so Westminster’s basic-rate threshold and 20% rate applies.

Brexit

Less than a year before the UK is due to leave the EU an additional concern surrounds whether or not the UK retains membership of the EEA.

Should the UK withdraw from the EEA, the marriage allowance may be made redundant if your spouse or civil partner comes from an EEA nation.

The EEA countries comprise all 28 member states of the EU plus Liechtenstein, Norway and Iceland.

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How can you reduce your capital gains tax bill in 2018/19?

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Whether you’re a buy-to-let landlord, a shareholder, an art dealer or you fall somewhere in between, the chances are you will be familiar with paying capital gains tax (CGT).

CGT is payable when you ‘dispose’ of a certain item and make money from the sale, with the amount you’re liable for depending on your income and the asset in question.

These could be personal items worth more than £6,000, a second home or even shares you own in a limited company.

CGT is due when you sell or give these assets away, classed as ‘disposing’ of an asset in the eyes of HMRC.

For example, you buy a house for £170,000 with the intention of letting it out to tenants and manage to sell it for £210,000 three years later.

This will leave you with £40,000 of profit before deducting the annual exemption, which is potentially liable for CGT.

However, it’s possible to reduce your tax bill through careful CGT planning and there are several reliefs out there to help you and your business form a tax-efficient strategy in 2018/19.
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Insider – Policy News Digest – August 2018

Keeping you up to date with the top financial policy news stories, rumours and talking points you need to know this month.

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Contractors criticise ‘flawed’ IR35 test

A contractor group has slammed HMRC for omitting mutuality of obligation in an online tool designed to assess an individual’s employment status.

Mutuality of obligation requires employers to provide ongoing work for an employee, who then has an obligation to perform that work.

In a self-employed relationship, there is no continuing obligation on either side to offer work or perform the tasks.

This is one of several factors which determine whether an individual is employed or self-employed when it comes to applying IR35 legislation.

The Revenue argues that anyone using its Check Employment Status for Tax (CEST) tool should have already established that mutuality of obligation exists in their arrangement.

But the Freelancer and Contractor Services Association (FCSA) claims HMRC’s stance ignores mutuality of obligation, despite IR35 case law often hinging on whether or not it is present.

HMRC does not expect the tool to be used where this obligation does not exist.

“Mutuality of obligation is an essential element of IR35 status, as borne out in recent cases, and until HMRC’s position is revised their CEST tool is fundamentally flawed by ignoring case law.

“Any rollout of IR35 reform to the private sector is unthinkable until this is resolved.”

Julia Kermode, Chief Executive FCSA

In an additional comment, the Institute of Chartered Accountants in England and Wales said the CEST service does “not command public confidence and needs further work”.

Get in touch to discuss IR35.

Landlords welcome tax incentives for long-term tenancies

The government is considering introducing tax incentives for landlords who offer longer tenancies, as part of a new consultation.

The Ministry of Housing, Communities and Local Government has launched a consultation on implementing a three-year tenancy model.

This is intended to support the increasing number of private tenants seeking long-term security, as more families and older people plan to stay in privately rented property.

The report put forward a number of options, including introducing a financial incentive for landlords in the form of tax relief or cash payments.

The Residential Landlords Association (RLA) says this would encourage 63% of landlords to offer a longer tenancy.

“With landlords having faced a barrage of tax increases we believe that smart taxation, such as that being proposed, would provide the longer-term homes to rent many families and older people want.”

David Smith, Policy Director RLA

According to the government report, 41% of privately renting households in England do not expect to move into home ownership, and 38% have dependent children.

Other proposals for implementing the longer tenancy model included enforcing it through legislation or introducing it as a default option.

However, the RLA warned against making three-year tenancies a statutory requirement, arguing that many tenants require the flexibility of shorter-term arrangements.

Contact us to discuss your property.

Tax for Property Investors

Calls for further delay to digital tax rollout

The government’s flagship Making Tax Digital (MTD) scheme should be delayed until 2020/21 for all taxpayers, according to the British Chambers of Commerce (BCC).

VAT-registered businesses with annual turnover of more than £85,000 are due to be the first to go through the transition to digital accounts for reporting VAT only from April 2019.

But the BCC is calling on the government to push that date back after discovering that only one in ten UK businesses are fully aware of MTD.

The BCC polled 1,073 small firms and found 24% of business owners had never heard of MTD, while 66% had only heard of it by name and know little else.

As a result of the widespread lack of awareness of digital accounts, the BCC called on the government to delay its rollout of MTD to increase its profile and ensure suitable software is in place first.

Mike Spicer, director of economics and research at the BCC, said:

“The government’s aim to modernise the UK’s tax system is admirable, but in view of low business awareness, it would make sense for HMRC to delay the implementation of MTD to get this right.

“Far too many firms still aren’t clear on what MTD is, or what it means for their operations.

“With just months to go [before MTD is rolled out for VAT-registered businesses], these knowledge gaps could make the timeline for change unworkable for many firms.

“Ministers must face up to the reality of the pressures facing HMRC and delay the introduction of MTD for all businesses for the next financial year.

“When MTD is implemented, the acid test will be whether it creates a simpler and more efficient tax system, or yet more onerous administrative burdens that stifle the growth of UK firms.”

Talk to us about digital tax.

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‘Tax over-40s to pay for elderly care costs’, say MPs

Over-40s in England should pay a new tax to help cover the costs of providing care for the elderly, MPs have said. 

Two influential House of Commons’ committees called for the introduction of a social care premium, which would also see retirees made to pay if they have lucrative pensions or investments.

The money generated through the proposed premium would be used to ensure everyone gets the support they need in their old age.

Only the poorest people currently receive assistance towards the costs of social care, which is usually provided in individuals’ homes or care homes.

“We can no longer delay finding a fair and sustainable settlement for social care.

“Too many people are being left without the care and support they need and it is time for decisions to be made about how the costs are shared.

“Doing nothing cannot be an option.”

Sarah Wollaston, chair of the health and social care committee

The new tax would reform the current system, described by the report as “under a very great, unsustainable strain” and “not fit to respond to the demographic trends of the future”.

It also highlights the need to plug an estimated £2.5 billion funding gap in 2019/20, at which point wider reforms of the social care system are expected to be rolled out.

“We heard during the inquiry that people would be willing to pay more if there was an absolute guarantee that the extra money would go on social care.

“The social care system is in a critical condition and there is an urgent need for more funding both now and in the future to ensure people are properly looked after.

“Reforms at a local level will not be enough if we are to provide high-quality care for all those that need it.”

Clive Betts, chair of the housing, communities and local government committee

We’re happy to discuss funding care.

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Tax Tips and News – August 2018

Welcome to August’s Tax Tips & News, designed to bring you tax tips and news to keep you one step ahead of the taxman.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

This Month’s Topics

  • Further MTD guidance published
  • Saving tax with simplified expenses
  • HMRC update trust registration guidance
  • Finance Bill 2018-19
  • August questions and answers
  • August key tax dates

Please contact us for advice in your own specific circumstances. We’re here to help! Read More

Insider – Financial News Digest – July 2018

Keeping you up to date with the top financial stories, rumours and talking points you need to know right now.

Calls increase for reform of ‘flawed’ apprenticeship levy

Pressure is mounting on the government to reform the apprenticeships system, following recent apprenticeship levy statistics.

The Institute of Directors (IoD) has joined the British Chambers of Commerce (BCC) in urging the government to address ongoing problems with the levy.

Apprenticeship starts were down 25% for the seven months to February 2018 compared with the previous year, according to statistics from the Department for Education.

The apprenticeship levy, which has been in place since 6 April 2017, means businesses with an annual wage bill of more than £3 million must pay the levy towards apprenticeship funding.

The levy is charged at 0.5% of the annual wage bill, and each employer is eligible to receive an allowance of £15,000 to offset against their levy payment.

Seamus Nevin, head of policy research at the IoD, said that “while the motivation behind the policy is laudable, the execution is flawed”.

He suggested the system could be reformed by giving businesses more time and flexibility when using levy funding.

Nevin said:

“If we want to boost skills, productivity and wages in our economy then the [apprenticeship] system must be reformed.

“Businesses should be afforded the flexibility to invest in more tailored courses, firms need longer to spend the money so they can use it on the apprenticeships of greatest value and larger companies could also be allowed to transmit more of the funds down to where it’s most needed.”

Jane Gratton, head of skills at the BCC, also saw inflexibility as one of the main problems with the levy, which has felt “more like a tax” for larger firms.

Meanwhile, she said the changes to apprenticeships have only “added to the barriers, complexity and cost of recruiting and training staff” for SMEs.

Gratton added:

“There is a consensus among the UK business community that the levy needs reform, yet our calls continue to go unanswered.

“Each month the number of apprenticeships is falling, so now has to be the time for government to work with business and training providers to sort things out.”

We’re happy to discuss the apprenticeship levy.

‘Raise the VAT threshold to stimulate SME growth’

The Association of Independent Professionals and the Self-Employed (IPSE) has called for the VAT threshold to be increased, in response to a government consultation.

The current £85,000 threshold at which businesses must register for VAT has been frozen until 2020, while the government deliberates on its approach to the tax.

Chancellor Philip Hammond considered lowering the VAT-registration threshold before Autumn Budget 2017 to bring the threshold closer to global standards and the EU average of £20,000.

Estimates suggested that reducing the threshold from £85,000 to £43,000 would net the Treasury an extra £1.5 billion a year, while decreasing the threshold to £25,000 could fetch up to £2 billion.

More than half a million businesses currently below the registration threshold would need to register for VAT if it was lowered, according to the Office for Tax Simplification.

IPSE warned against decreasing the threshold, arguing this would “actively discourage” growth as well as forcing business owners to either raise prices or absorb the costs.

Instead, the organisation suggests raising the threshold annually in line with the retail prices index measure of inflation, which it says would incentivise growth and innovation in small businesses.

The comments came in response to the government’s call for evidence on the VAT threshold, which ran from 13 March to 5 June 2018.

Other suggested policy solutions include a “smoothing mechanism”, which would introduce the tax more gradually.

Andy Chamberlain, deputy director of policy at IPSE, said:

“Presently, the self-employed contribute £271 billion to the UK economy every year.

“Increasing the VAT threshold would create a nurturing environment for our smallest businesses to thrive, expand and further increase the overwhelming value they provide.”

Contact us to discuss managing VAT.

SMEs miss out on business savings interest

Small business owners could alleviate pressure on their cashflow by paying more attention to business savings interest, according to a report.

Aldermore polled 950 SME owners and sole traders and found that 62% are earning no interest on their business savings at all.

Over half (53%) are earning less than £300 a year in interest on their business savings, while 65% had the same business bank account as their personal account provider.

While consistently low interest rates offer little incentive to save, 33% of respondents said they were spending their cash too quickly each month.

Around a fifth (19%) claim their bank does not offer high enough rates for noticeable interest to be earned.

Ewan Edwards, head of savings at Aldermore, is urging sole traders and business owners to conduct due diligence to find the best banking products on the market.

Edwards said:

“It is vital business owners make their surplus cash work harder to provide additional financial support and to strengthen financial resilience.

“Many businesses could be missing out on additional income that would be a boost when dealing with the multiple financial pressures of running a business.

“We encourage all business owners to shop around to find the best account on offer, as this can make a positive difference in the long term.”

Talk to us about your business.

Working pensioners pay £8.6bn in income tax

Working pensioners are on course to pay £8.6 billion in income tax in 2018/19, according to Aegon.

The number of pensioner households containing at least one person working beyond their state pension age increased from 12% in 1997/98 to an estimated 17% in 2018/19.

Aegon estimates there are around 12.8 million people living in 8.7 million pensioner households in the UK, with around 1.4 million homes containing a working pensioner.

Steven Cameron, pensions director at Aegon, said:

“Gone are the days when reaching state pension age meant a total end to work.

“Many people are choosing to keep working and earning, even once they’ve started taking their pension.”

Weekly wages in pensioner households increased 30% over the same 20-year period – up from an average of £410 in 1997/98 to £534 in 2018/19.

Working pensioners who are single have seen their weekly wages rise 71%, from £199 to £340 per week over the same period.

Pensioners who continue to work past their state pension age and pay tax on that income are providing a boost to the economy, but Aegon warned against complacency.

Cameron added:

“These people are contributing significant amounts to the nation’s finances through the tax they generate, while also helping the broader economy through their work.

“We’re living in what has been described as a golden era for pensioners, with many benefiting from generous final salary pensions and increases to the state pension.

“When you combine this with earnings from post-retirement work, it’s not surprising that many pensioners are living on very decent incomes.

“However, these are unlikely to continue so it’s important that society changes with more people able to choose to work past traditional retirement ages.”

Get in touch for tax planning advice.

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Davis Grant achieves Gold Champion Partner Status with Xero

Davis Grant is now a Xero gold partner. Xero forms a key part of our Cloud Accounting Software solution by providing you with market leading online bookkeeping including a direct link to import your bank statements, live dashboards, reports and alerts.

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This new status as a partner reflects an ethos throughout Davis Grant to provide proactive and timely advice capitalising on the technology best suited for your needs.

Modernisation is especially critical to your business given HMRC’s Making Tax Digital initiative. Digital tax requiring online records is currently in a pilot scheme and will be introduced to VAT registered businesses next year.

Speak to us today to explore the Clear Benefits of Cloud Accounting and how Xero can help you achieve your goals.

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