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Changes to company carry-forward of losses confirmed

Initially announced at the time of the 2016 Budget and following a period of consultation, Finance Bill 2017 contains provisions to reform the tax treatment of certain types of carried-forward loss for corporation tax purposes with effect from 1 April 2017.

Losses arising from 1 April 2017, when carried forward, will have increased flexibility and can be set against the total taxable profits of a company and its group members (referred to as the ‘loss relaxation’).

For all carried-forward losses, whenever they arose, companies will be able only to use the losses…

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Salary v dividend

The questions surrounding the issue of how best to extract profits from a company in a tax-efficient manner remain as popular as ever. Despite the introduction of the dividend allowance, and the personal savings allowance, extraction by as remuneration and by way of dividend remain the two most widely used methods. The tax effects of these methods may be broadly contrasted as follows:

– Provided the amount is justifiable, remuneration is generally allowed as a deduction in arriving at the taxable profits of the company. The recipient is taxed…

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Tax-free access to pension advice

The Treasury has confirmed details of the new Pension Advice Allowance, which will take effect from April 2017, and which will enable people to withdraw £500, on up to three occasions, from their pension pots tax-free to put towards the cost of pensions and retirement advice.

Following an eight-week consultation period, the Economic Secretary to the Treasury, Simon Kirby, confirmed that the £500 allowance:

– can be used a total of three times, only once in a tax year, allowing people to access retirement advice at different stages of their lives, for…

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Changes to IR35 rules confirmed

HMRC have recently announced changes to the way the intermediaries legislation (known as the ‘IR35 rules’) will be applied to off-payroll working in the public sector. In particular, contractors who provide their services to a public authority through an intermediary will need to be aware for the changes, which take effect from 6 April 2017.

Broadly, from 6 April 2017, responsibility for deciding whether the legislation should be applied will move from the worker’s intermediary to the public authority the worker is supplying their services to.

Where the rules apply, the fee-payer…

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We fuel expansion with more recruitment

Morgan Hemp is continuing with its steady expansion, having boosted the team with another new recruit.

We are pleased to have  taken on a new Trainee Accountant, Zoe Foister, who is studying towards her ACCA professional accountancy qualifications.

Zoe, aged 22 brings with her a 1st Class Honours degree in Mathematics from Swansea University, and she has joined the Morgan Hemp team as an integral part of the continued growth of the Swansea-based company – highlighted by the firm’s expansion into neighbouring…

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Don’t Get Caught Short When It Comes to Retirement

More and more people – particularly in Wales – are self-employed, but according to recent figures* only eight percent of self-employed workers aged 25 to 34 are saving into a private pension.

This is compared with 59 percent of employees in the same age group who are contributing to their pension pot.

This is a worrying state of affairs, since UK-wide figures show self-employment has grown by 46 percent since 2000 and if this upward trend continues the self-employed could outnumber public sector workers by 2020.

While many enjoy the…

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February key tax dates

2 – Last day for car change notifications in the quarter to 5 January – Use P46 Car

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/2/201

28 – First 5% penalty surcharge on any 2015/16 outstanding tax due on 31 January 2017 still unpaid

– Talk to us about year end and pre-budget planning

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February Questions and Answers

Q. Due to unforeseen circumstances I have recently had to sell my house and down-size to a smaller property. I sold the house for £20,000 less than I paid for it. Can I offset this loss against income from my business and reduce my income tax liability for this year?

A. Unfortunately the tax law does not permit you to do this. I am assuming that you are not trading in properties and the house was either your main residence or an investment asset. Losses on the sale of…

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Coming soon: tax-free childcare

Plans for the introduction of a new scheme called ‘tax-free childcare’ were initially announced way back in the 2013 Budget. The original proposals have since been amended and the scheme is now set to be implemented during 2017. Broadly, the new scheme, which aims to help working parents with the cost of childcare, will replace the current system of employer-supported childcare (ESC) which is offered by less than 5% of employers and used by around 450,000 families.

Parents will be able to open an online voucher account with a…

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Employers beware of plans to change Scottish income tax threshold

Shortly before Christmas, the Scottish draft budget contained an announcement that Scottish taxpayers will start paying the 40p higher rate of income tax at a lower point than taxpayers elsewhere in the UK. This announcement means that businesses across the UK, not just in Scotland, will need to review their payroll systems to ensure that the proposed change can be accommodated.

Scotland’s Finance Secretary Derek Mackay confirmed that the Scottish Government intends to restrict increases in the rate at which people start paying the higher rate of income tax…

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