Liric November newsletter

Did you catch our November newsletter – if not click here



Spring Budget 2017

The Chancellor’s 2017 Budget contained some important announcements and confirmed a number of changes planned for the new tax year.

There was both good and bad news for sole traders and small businesses in today’s Budget. Following this, we have put together a review which contains the latest tax and financial information, which we trust you will find useful. Please click here to download.

For more information on how the changes in the Budget may affect you, please contact us

In Brief:

Class 4 NICs will increase from 9% to 10% in April 2018, and then to 11% in April 2019 for those earning more than £8,060. Employees currently pay 12%. Class 2 contributions – as previously announced – will be abolished from April 2018. This will affect you if you are self-employed.

In addition, Hammond announced that the tax-free dividend allowance – introduced last year – will be reduced from £5,000 to £2,000 from April 2018. This will affect you if you trade as a Limited Company.

As plans for Making Tax Digital (MTD), continue apace, Hammond also announced that for businesses with turnover below the VAT registration threshold this will be delayed by one year to April 2019 to allow more time to prepare for the changes.

Businesses that have an annual turnover below the VAT registration threshold will have an extra year before they are required to keep records digitally and send HMRC quarterly updates.

Those businesses trading above the VAT threshold will still be required to keep digital records and send HMRC quarterly updates from April 2018.

The exemption threshold for MTD remains at £10,000.

At Liric, we are working on ensuring all our clients have the systems they will need to ensure they comply and there will be much more about this in future newsletters.


Paying your self assessment tax – deadline 31 January 2016

HMRC will not be issuing paper statements and payslips to self-assessment taxpayers to remind them of the 31 January 2016 filing and payment date unless the taxpayer has filed their 2014/15 tax return by 31 December 2015, and has not opted for digital only communications from HMRC.

HMRC will not be issuing paper SA reminders and payslips for taxpayers who file their 2014/15 tax returns in January 2016 or for those taxpayers who have opted for digital-only SA communications from HMRC. Payment options available without a payslip are by debit/credit card, CHAPS/BACS, direct debit or via online or telephone banking.

Payment by cheque through the post is available but only with a paying in slip. If you do not have a paying in slip you can print a payslip but this cannot be used to pay over the counter at a bank, building society or Post Office.

Further details on how to pay can be found on the HMRC website – GOV.UK at:

fee protection


Following the restriction of tax relief for mortgage interest and the 3% increase in Stamp Duty Land Tax all is not doom and gloom for buy to let landlords. Following on from the consultation this summer the draft Finance Bill 2016 includes the legislation to reintroduce tax relief for the replacement of furnishings in buy to let properties from 6 April 2016.


This will apply to both furnished and unfurnished lettings and will mean that the cost of replacing items such as cookers and washing machines will again qualify for relief following the withdrawal of a concession from 6 April 2013.

Note that the alternative, and simpler, 10% wear and tear allowance will be withdrawn from 6 April 2016 for those letting properties fully furnished.

Those letting properties under the more stringent furnished holiday letting rules will continue to be able to claim the Annual Investment Allowance which provides 100% tax relief for the initial furnishing as well as renewal of furniture in holiday properties.

Christmas Parties – top tips

It’s that time of year again, Christmas. Which means the Works Christmas Do.

So we thought it would be useful to give you as employers some top tips for the occasion.

Top tips for Christmas parties:

– Employment law still applies during any events outside of the workplace. This means that a business is still at risk if any incidents do occur

 Christmas parties should be enjoyable, but don’t make attendance compulsory. Family commitments or religious reasons may preclude attendance

 Consider timing. Putting it on a Wednesday night may mean that bizarrely attendance is down on Thursday

 Invite all employees though. Even those you’ve forgotten about on maternity leave etc​

– Circulate a memo reminding your employees of what constitutes acceptable non-discriminatory behaviour, and the disciplinary consequences they will face should they fail to comply

But what if you didn’t do this?

Ok so there are some risks and this is a serious issue, but is a huge policy going to help you? Maybe but also maybe not.

Sadly employees do stupid things, whether it’s at Christmas or not.

Whether they’ve read a policy or not, after 10 pints of lag​er and half a bottle of free wine they aren’t going to remember it and will likely do as they drunkenly want. It will need to be dealt with, but in reality you cannot legislate for every situation.

So beware – but enjoy

How will the 2015 Autumn Statement affect you and your business?

Download our guide to the 2015 Autumn Statement Autumn-budget-statement-2015.pdf.


Our summary offers an overview of the key business, tax and financial measures announced in the Autumn Statement which could affect you and your business. Major announcements include the reversal of cuts to tax credits, the introduction of a new 3% stamp duty surcharge for buy-to-let properties and second homes, and an extension of the doubling of small business rate relief for a further year.


For tailored advice on any of the topics covered within the Autumn Statement, and how they may have an impact on your business or personal finances, please give us a call on 01763 853633.


We offer far more than traditional tax and compliance services, and can advise on a range of strategies designed to minimise your tax bill, improve profits and maximise your personal wealth.



Free Information from Companies House

I just thought i would let you know of something you can get for FREE…. You can now get free access to 170 million records at Companies House.

In line with the government’s commitment to free data, Companies House announced on 22nd June 2015 that all public digital data held on the UK register of companies is now accessible free of charge, on its new public beta search service.

This provides access to over 170 million digital records on companies and directors including financial accounts, company filings and details on directors and secretaries throughout the life of the company.

As a result, it will be easier for businesses and members of the public to research and scrutinise the activities and ownership of companies and connected individuals.


In the Summer Budget Newsletter we outlined the new rules for the taxation of dividends that will apply from 6 April 2016. Further guidance has now been published by HMRC setting out how the new rules will operate and it seems the rules don’t work as many people expected.  As previously reported, there will be no 10% credit against the tax on dividends which means there will be a 7½ % increase in the rate of tax on dividends once the £5,000 dividend allowance has been used up. Currently dividends falling into the basic rate band are effectively tax free.

However the £5,000 allowance needs to be taken into consideration in determining the rate of tax on your dividends. For example if you have salary and other non- dividend income of £40,000 next year and £9,000 in dividends, the £4,000 of taxable dividends are taxed at 32.5%, not £3,000 at 7.5% then £1,000 at 32.5%. This is because the £5,000 is added to the £40,000 income pushing the taxable dividends into the higher rate band.

If you own your own company it may be beneficial to bring forward dividend payments from next year to save the additional 7½ %. However, it would be important to consider all of the tax implications of such actions so come and talk to us to discuss your options.

Auto enrolment exemptions

Have you received  letters from The Pension Regulator (TPR) telling you to “ACT NOW” to prepare for auto enrolment? An initial letter asks you to nominate a contact to receive communications about auto enrolment, a second one will be asking for details about your chosen scheme.  There will also be threats of fines or prosecution if you don’t take action.

The “staging date” for your business will be stated in the letter which is  the date by which you must have a pension scheme ready for your employees to join.  However, not every business will need a scheme.

A large number of small companies will be exempt from auto enrolment, if they don’t technically have any “workers” at their staging date. A company director is not a “worker” if he or she does not have a contract of employment with the company. A company with no staff other than directors has no obligations under auto enrolment if any of the following apply:

  • It has only one director; or
  • It has a number of directors, but none of those have an employment contract; or
  • It has a number of directors, only one of whom has an employment contract.

TPR doesn’t know which directors in which small companies have employment contracts.

If you are satisfied that your company meets the exemption provisions then The Pension Regulator does need to be advised.  This can be done direct on The Pension Regulator website

You’ll need your letter code , PAYE reference  and Companies House number  You can re-request the letter code if you have lost it by following the link and entering the PAYE  and Accounts office references.

Liric will be contacting all our clients whom we think are eligible for this exemption.

If your company does have staff other than its directors, we should talk about what preparations you need to make to get ready for auto enrolment.

How do new interest rules affect my buy to let property?

Changes announced in the Summer Budget may  significantly increase your tax liability if you have a property business – including a single buy to let – read on….


At present, full tax relief is available for interest on a loan used in a property business.  The funds may have been used to purchase the let property, to make major repairs, or just to fund the working capital of the property business.

From April 2017

From April 2017, tax relief on interest in property businesses ( including single buy to lets) will be restricted so that by 2020, interest will not be an allowable expense in computing the profit of the business, but instead will attract tax relief at 20%. The change does not affect furnished holiday lettings.  The change will be phased in as follows:


2017/18 2018/19 2019/20 2020/21
% of interest allowed as a deduction 75 50 25 0
% of interest given as a relief at 20% 25 50 75 100

A letting activity that has a low level of interest in relation to the borrowings will not be too badly affected, but where there is a higher level of borrowing, individuals will find that the business model has been severely undermined.

So how will this work?

Example 1

Jo is a 40% taxpayer. He has purchased a buy to let property as an investment. Here is the effect of the changes:

 now  2020/21
 Gross rents 7,200 7,200
 Repairs, agents fees and other tax deductible costs 1,000 1,000
 Mortgage interest 2,500
 Net rental profit 3,700 6,200
 Tax at 40% 1,480 2,480
 less interest relief at 20% 500
 Net tax liability on rental income 1,480 1,980
tax increase 500
effective tax rate on “real” rental profit 40.0% 53.5%


Example 2

In this case Jo has a bigger mortgage and hence more interest:

 now  2020/21
 Gross rents 7,200 7,200
 Repairs, agents fees and other tax deductible costs 1,000 1,000
 Mortgage interest 5,000
 Net rental profit 1,200 6,200
 Tax at 40% 480 2,480
 less interest relief at 20% 1,000
 Net tax liability on rental income 480 1,480
tax increase 1,000
effective tax rate on “real” rental profit 40.0% 123.5%


The tax due is more than the net funds available from the rental surplus by £280.

The new rules may also push a tax payer into the higher rate band, result in reduction of personal allowance or trigger the repayment of child benefit.

What are your options?

  1. Incorporation – has tax and other cost implications and borrowing often not easy
  2. Reduce borrowing so impact is less
  3. Sell property
  4. Accept the increase if expected capital gain on property makes it worthwhile


Please contact us to find out how this will impact on you.

01763 – 853633