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The government has sold more shares in taxpayer-backed Lloyds Banking Group, lowering its stake in the bank to below 20%.

£500 million has been returned to the taxpayer, meaning around £10 billion has now been recouped. At the height of the financial crisis, Lloyds received £20 billion and taxpayers took a 40% stake in the group.

Since December, UK Financial Investments has been gradually reducing the government’s stake in the business. The most recent sale cut the government’s stake in the bank to 19.93%, reducing its shareholding by 5% since the start of the year.

On the London Stock Exchange today, shares in the bank were flat one hour into trading at 86.57p.

In opposition, the fortunes of the bank of Royal Bank of Scotland (RBS) was also rescued by taxpayer during the financial crisis, however appears to not be ready for private ownership.

RBS reported a loss of £446 million for the three months to 31 March after setting aside £856 million for charges. They also saved £453 million for restructuring costs following the sale of its US bank, Citizens. RBS is still 80% taxpayer-owned.

This compared with a profit of £1.2 billion last year when they had fewer one-off costs. In comparison, Lloyds said that in February it would continue paying dividends to shareholders for the first time since 2008, when the financial crisis hit. It reported full-year statutory profits of £1.8 billion.

Lloyds said they would pay a dividend of 0.75 pence per share, which would amount to £535 million to be split between the bank’s three million shareholders. The government at £130 million owns the largest amount or Lloyds shares.

 

 

 

 

Every month the Directors at McPhersons share some useful financial tips especially for Business in Hastings readers. This month, Ainsley Gill looks at a summary of the 2015 Budget

Overview

Fifty days before the General Election, Chancellor George Osborne delivered his sixth and final Budget of this Parliament on 18th March.

Introducing the package of tax and spending plans to the Commons, Mr Osborne said: “Today I report on a Britain that is growing, creating jobs, paying its way. We took difficult decisions in the teeth of opposition and it worked. Britain is walking tall again.”

He said that difficult decisions had been taken and insisted the country had to stay the course, with forecasts that Britain will be running a Budget Surplus in 2018/19.

Although to eliminate the remainder of the deficit, he conceded that significant cuts would still be needed, including a £13billion reduction in the budget of government departments and £12billion from welfare spending.

Key proposals

Mr Osborne said that this Budget came against the backdrop of rising employment, improving growth forecasts and falling debt.

Headline announcements included an increase in the personal tax-free allowance, the introduction of a Help to Buy ISA and pensioners being given the freedom to sell their annuities for a cash lump sum.

Following recent controversy over tax avoidance and evasion, there was a commitment to close loopholes, while the rate of the bank levy was also increased (which will benefit the Treasury by £900million a year).

Fuel duty

A fuel duty increase scheduled for September has been cancelled, meaning the longest duty freeze in 20 years. The Chancellor said that the measure saved families £10 each time they had to fill up their car.

Personal tax

27 million people will benefit from an increase in the personal tax-free allowance. This will increase to £10,800 next year and then rise again to £11,000 in 2017. This will lift four million of the lowest paid workers out of income tax altogether.

The Chancellor also confirmed an increase in the threshold at which people pay the higher tax rate. This will increase from £42,385 to £43,300 by 2017-18, above the rate of inflation.

Mr Osborne said he would cut 1p from duty on a pint of beer and two per cent from cider and scotch whisky.

Business, enterprise and employment

Mr Osborne confirmed that in a fortnight’s time, the Government would slash corporation tax to 20 per cent – one of the lowest rates of any major economy in the world.

There was also good news for High Street businesses, with an admission from the Chancellor that the existing system needed far-reaching reform. Although precise details of what changes lie in store are not expected until the Autumn Statement.

Aside from a commitment to abolish the Class 2 National Insurance contributions for the self-employed during the course of the next Parliament, there was a further promise to abolish the annual tax return altogether. 12 million people and small businesses will benefit from the “simplified system”.

The Chancellor also gave assurances there would be support for all regions of the UK. He spoke of the need to build a “Northern powerhouse”, the creation of ten new Enterprise Zones nationwide and help for industries including the motor trade, film and local newspapers.

And changes were announced for Enterprise Investment Schemes and Venture Capital Trusts, ensuring they comply with the latest state aid rules.

Pensions and savings

The Chancellor announced four key reforms which he said would mean massive benefits for those with savings and investments. As was widely predicted, five million pensioners will be given access to their annuities, while plans to introduce a radically more flexible ISA were also announced.

Third is the creation of the Help to Buy ISA, this will mean that for every £200 a first-time buyer saves towards their deposit, the Government will top it up with £50 more.

Mr Osborne confirmed a new Personal Savings Allowance, that will take 95 per cent of taxpayers out of savings tax altogether. The measures, which take effect in April next year, create a tax-free allowance of £1,000 or £500 for higher rate payers. He hailed the move as the end of an entire system of tax collection.

There was also news that the lifetime pensions allowance would decrease from £1.25million to £1million.

Health

The Budget promised funding for a major expansion of mental health services for children (thanks to a £1.25billion investment) and more help for those suffering from maternal mental illness. These areas have previously been seen as under-resourced and Mr Osborne admitted that those suffering with mental illness had been “forgotten for too long.”

Charities

In a move that will be welcomed by many, a scheme that allows charities to automatically claim gift-aid on their donations is set to be extended –  from the first £5,000 they raise, to the first £8,000. Mr Osborne said that this would benefit over 6,500 smaller charities.

Elsewhere £75million in LIBOR fines was put aside for various good causes, including regimental charities, air ambulance services and the Church Roof Fund.

Tax evasion, avoidance and aggressive tax planning

A raft of measures was announced to tackle tax evasion and avoidance and Mr Osborne vowed that individuals and businesses who flouted the laws would be made to pay their “fair share.”

A new Diverted Profits Tax would tackle multinationals who attempted to artificially shift their profits offshore.  There will also be efforts made to close loopholes in Entrepreneurs Relief, changes to corporation tax rules to prevent contrived loss arrangements and confirmation that more Accelerated Payment Notices (APNs) would be issued in the year ahead.

Summary

With so many announcements leaked in the days prior, there weren’t many surprises in this Budget. But Chancellor George Osborne will be banking on his message of financial responsibility and increasing economic optimism striking a chord with the public. Summing up, he said: “Today I present the Budget of an economy stronger in every way from the one we inherited. The Budget of an economy taking another big step from austerity to prosperity.”

Need more help?

This feature aims to give some informal hints and tips.  McPhersons Chartered Accountants and McPhersons Financial Solutions are offering business free advice so get in touch now to arrange your meeting.  Simply email info@mcphersons.co.uk or call our Head Office on 01424 730000 for a free consultation at McPhersons Hastings, Bexhill or London offices. www.mcphersons.co.uk

 

 

 

Every month, Peter Watters, ACA, shares some useful financial tips especially for Business in Hastings readers. This month, he looks at Self Assessment.

All Self Assessment taxpayers have to meet several important deadlines throughout the tax year or they could incur penalty charges. Here is our useful guide to this year’s Self Assessment deadlines.

Filing Your Tax Return

McPhersons, Chartered AccountantsEast Sussex

Peter Watter from Mcphersons sheds some light on tax returns

 There are generally three deadlines for filing your Self Assessment Tax return. Which of the three you should use depends on the filing type of tax collection you choose.

You must ensure HM Revenue & Customs (HMRC) receives your completed return by midnight on 31 October 2014, if you choose a paper return. However, if you decide to file your tax return online, you gain more time than paper filing, it must reach HMRC by midnight on 31 January 2015. Remember that you will need a Government Gateway username and password in order to file online, and this could take around a week to arrive in the mail. So be sure to leave yourself enough time before the deadline.

If you owe less than £2,000, and you want HMRC to collect your tax through your Tax Code, you will need to submit your tax return online by 30 December 2014. If however, HMRC is unable to alter your tax code, you may still be required to file again by 31 January 2015.

Making a Payment

As with filing there are several payment deadlines throughout the year. The most common is 31 January 2015, on which you may need to make several different payments. The first being the balancing payment, this is the tax you owe for the previous tax year. If you made payments on account in the previous year, it is likely you have paid some of this tax. You may also have to make the first payment on account.  This will normally be 50 per cent of your previous tax bill; excluding student loan repayments and Capital Gains Tax.

The second payment deadline is 31 July 2015. On this date you will be required to make your second payment on account, which is normally the second 50 per cent of your previous tax bill.

Financial Penalties

Legally you have to meet the Self Assessment deadlines. If you fail, you will receive the following financial penalties:

  • 1 day late – A £100 penalty charge.
  • 3 months late – A £10 charge for each following day, up to a 90 days (maximum of £900).
  • 6 months late – A charge of £300 or  5 per cent of the tax due, whichever
  • is the higher.
  • 12 months late – A charge of £300 or 5 per cent of the  tax due, whichever is the higher. In serious cases, you may have to pay up to 100 per cent  of the tax due instead.

However, you may not have to pay a penalty if you have a supportive reason for missing the deadline. These could be:

  •  You have a life-threatening illness that has prevented you from completing your Self Assessment Tax return.
  •  You have experienced technical problems with the online service.
  •  Your documents have been lost in a fire, flood or theft.
  •  Your partner has died shortly before the deadline.

Should HMRC accept your reasoning for late filing, they may reduce or decide not to pursue the fine.

Need more help?

This feature on Business in Hastings aims to give some informal hints and tips.  Mcphersons are offering businesses free advice so get in touch now to arrange your meeting. Simply email Peter Watters p.watters@mcphersons.co.uk  or call our Head Office on 01424 730000 for a free consultation at mcphersons’ London, Bexhill or Hastings offices. www.mcphersons.co.uk

Posted by: In: events, Tax and Expenses 15 Sep 2014 Comments: 0 Tags: , ,

If you’re just starting out in business and find tax issues confusing and daunting then this free monthly seminar will be worth going to.

Russell Accounting are now offering a monthly free Tax Surgery for small businesses and individuals.

This will take place on the first Monday of each month, from 5 pm onwards, in our office at the Creative Media Centre. Bookings can be made by telephone to 01424 205360 – or by e-mail to hello@russellaccounting.co.uk.

 

Working from home occasionally or frequently? Not sure about what to put through as expenses then the April’s feature from Mcphersons will be ideal for you.

If you are self-employed and use part of your home as an office, some of your expenses are tax-deductible. However, you need to be aware that:

You should keep evidence of the costs (bills etc.)

Every claim is different and involves an element of common sense and understanding of how the tax relief works

flashdeveloper

Work from home? Find out what you can actually claim for.

There may be  tax penalties for incorrect claims

For the purpose of this article, we have used the number of rooms and hours. However, this is not the only way to calculate expenses

How to calculate the claim

  • How many hours is your home used for your business daily?

To answer this question, you need to consider where else you work, whether you employ anyone else who works at your home and the type of work you do. Total up the number of hours your home is used each day.

  • Rooms used for work

To calculate this, you need the total number of rooms in your house, how many are used exclusively for work, and whether they a used partly for private use. Also, do you store anything at home for work?

  • Work out your annual costs. E.g.
Costs £
Mortgage Interest or rent 4,800
Council Tax 1,320
Water Rates (if metered) 720
Building Insurance (not contents) 500
Broadband 240
Electricity 600
Gas 600
Repairs/Maintenance 2000
Cleaning 250
Total  11,030 

The Calculation

Full Time Workers

If you work more than 7 hours per day, you need to take the total costs (£11,030) and divide by the number of rooms in the house. Let’s say there are seven rooms.

£11,030 / 7 = £1,575

Multiply by the number of rooms you use for your business. In this example, we are assuming there is one room used 90% and one room used 50% for business.

£1,575 x  1.4 = £2,205

Part Time Workers

If your daily use is less than 7 hours, you may need to restrict your claim if you are using the rooms privately as well. You can calculate this more accurately over 24 hours as follows:

Assuming the same rooms as above:

£2,205 multiplied by your total hours each day (assume you work 3 hours per day at home)

£2,205 x 3 = £6,615

Divide by 24 hours

£6,615/ 24 = £276

Fixed Rate Claims

From April 2013, you can claim a fixed rate rather than go into all the details above. This is based on the number of hours you work from home as follows:

25-50 hours/month = £10 per month

51 to 100 hours per month – £18 per month

101 hours+ per month = £26 per month

Minor use of home

HMRC will not challenge claims where there is a minor use of home. Therefore, if you use your home at all as an office, whether employed or self employed, you can claim £4 per week as an alternative to working out the above calculations.

Need more help?

Call Ainsley Gill on 01424 730000 or email info@mcphersons.co.uk