Pension contribution limits

Started the weekend by reading an article about allowable contributions to pensions. Pension contributions are now subject to new limits of £40,000 a year (down from £50,000) and a further limit that employee's (not employer's) contributions must be less than salary.

Below is a link to the article that I read, however it only works for me because of copyright restrictions on the article. If you really want to read the article you will have to subscribe to www.tipsandadvice–tax.co.uk.

My restricted link

HMRC General Anti-Abuse Rule (GAAR)

Read an article in the AAT magazine about the proposed GAAR.  Seems to boil down to: current position of what is avoidance and what is evasion depends on an interpretation of the rules.  If a GAAR were brought in, what is evasion and what is avoidance would boil down to interpretation of 'what is a reasonable course of action'.  As the article points out, this could end up being even more complex.

Tax can't be simple with a heavyweight finance bill - Accountancy Age mobile

Tax and Pension update

Attended a presentation hosted by Morgan McKinley and Spofforths.

Tax update in the light of last week's budget
Key points new to me:

1. Although the 'big company' tax rate will drop from 28% to 26% in Apr 11 and then gradually down to 23% by Apr 2014, the small company rate will reduce to 20% and stay there.
2. Written down allowances (WDAs) will be 20% for 11/12 (special rate pool 10%) but will fall to 18% from 2012/12 (special rate pool 8%).
3. Research and Development (R&D) threshold reduced to £10k (need to see more about definitions).

Pensions changes

presented by Philip Wise

1. Govt to introduce 'auto-enrolment' pensions.  This means that employers will be required to set up pension schemes and enrol all employees into them. The employer must make a contribution and the employee must make a contribution. There is a default scheme called NEST, or the employer may pick a private scheme.
2. The scheme is to start in July 2012 for voluntary adopters. As the current timing stands, large companies or those employing over 800 people are due to start October 2012 to October 2013. Companies employing fewer than 50 people will be staggered over the period July 2014 to February 2016. It was though considered likely that the dates may slip.
3. The contributions will be phased in also. Up until October 2016 employee contribution will be 1% and the employer contribution will be 1%. Between October 2016 and October 2017 the contributions will be 3% for employees and 2% for employers. After 2017 it will be 5% of employees and 3% for employers. The scheme will apply to all jobholder under the pension age, aged over 22, who earn more than £7,475 and this includes part-timers.
4. The employers is required to enrol all employees and re-enrol them every three years. Employees may opt out, in which case they would not have to pay their contribution and the employer would not have to pay his contribution.
5. The employer is specifically banned from discouraging membership of the scheme - for example offering extra salary for employees to opt out. The employer is also specifically banned from giving advice, for example, concerning whether to opt out.

1.5 hours CPD

P11d Dispensation

This link reminded me that a bit of planning now can save a whole lot of work later.  Having a dispensation now means less numbers need to go on the P11d forms at the end of this and subsequent tax years.  I've applied for mine.

Tax treatment of training for sole traders

A concise article on a question that also came up in a meeting that I had with a client in the past couple of months.

Working in Practice

Have spent the last couple of months working in practice with fellow CIMA member in  practice (MiP) Peter Lewis, at TaxAssist.

This has been excellent CPD as it has brushed up my knowledge on sole traders, income tax and capital allowances as well as creating company accounts from incomplete records.  Also included tax returns for individuals and companies.

It seems that working in practice can be a lot of fun.  Clients seem to really appreciate the assistance they are given.  Having many small clients rather than one big one spreads the risk but can mean that everyone is trying to get hold of you at the same time.  Potential downsides seem to be the high overheads of running an office and overload if work flow is not carefully managed.

For thought:

1. With a decent scanner and laptops, I could probably operate a similar business from home with reduced overheads, should I ever wish to.
2. Is Seaford big enough to support a client base?
3. Would it be possible to have a shared office space in say Eastbourne, where I would have a share of a full time receptionist and use of an office say 2 days a week?
4. Need to be very aware of costs of low charge clients.  Even if all the processing can be delegated, just meeting, greeting and final meetings take a lot of time.

CIMA Members in Pactice Conference

2 day event covering a range of subjects including technical updates.

Budget update

Took part in Grant Thornton webinar in keep up to date on latest budget analysis.