Monthly Archives: January 2017

Salary Sacrifice Changes From April 2017

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New rules are coming in on 6 April 2017 for certain benefits in kind where they are provided by salary sacrifice.

If you provide benefits to your employees in exchange for salary sacrifice or have a flexible benefits package where your employee can choose a benefit or cash, or where you provide benefits but offer your employee a cash alternative then you need to know about these changes.

Benefits impacted are those which are currently taxable, like cars and white goods, and those currently tax exempt, like mobile phones and workplace parking.

You don’t need to do anything if your employees are only sacrificing salary for:

  • Pensions or pensions advice,
  • childcare vouchers,
  • workplace nurseries,
  • directly employer contracted childcare,
  • cycle to work or
  • ultra-low emission company cars (emissions of or under 75 g CO2 / km).

The new rules start on 6 April 2017. Salary sacrifice contracts entered on or before 5 April 2017 will be protected up until the contract hits a trigger point. From 6 April 2017, the normal trigger point is when the salary sacrifice contract renews, auto-renews, starts, ends or is modified or changed. At this point you must use the new rules. This should align with your normal contractual arrangements.

If an employee starts a contract on or after 6 April 2017, then you will need to immediately use the new rules for that employee. This will apply to any new recruits who adopt the arrangements.

For a better understanding of what is changing and what you need to do next, please click the button below to view our help sheet.

HELPSHEET

PM+M Helps East Lancs Box Co. Limited Secure Six Figure Lancashire Growth Fund Grant

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L-R: Andrew Cowking (PM+M), David Ingham, Peter Ingham, Amy Ingham & Neil Harrison

Andrew Cowking and the PM+M team have helped East Lancashire Box Co. secure a £120,000 grant from the Lancashire Growth Fund which will see the creation of 12 new jobs.

East Lancashire Box Co. was established in 1981 and is headquartered in Rishton near Blackburn. It manufactures bespoke cardboard box packaging and products. It offers a complete service, from initial concepts to the final product and handles all elements of design, print and production. The company’s product range is visible on the shelves of all the major supermarkets both within the UK and overseas.

The grant will be used to purchase new equipment including a state-of-the-art printer and a die cutter. The aim is to create a colour printing facility under one roof in 16,000 sq ft of new production space at the Junction 7 Business Park in Clayton-Le-Moors with the capacity to meet current and expected demand. The 12 new jobs will include apprenticeship and production positions.

Andrew Cowking – partner at PM+M – handled the forecasts for the grant application whilst Neil Harrison of The Harrison Partnership coordinated all elements of the grant application process, which was completed in just over 3 weeks from starting the application to the making of the offer.

Peter Ingham – director of East Lancashire Box Co. – said: This is a significant investment for the company and is an exciting milestone in our history. The grant will help to support our growth plans and will ensure that we are able to develop our offering and provide a bespoke service to all our customers – from small businesses to multinationals.

Andrew Cowking added: “East Lancashire Box Co. is a forward thinking family-owned business and one of the region’s most entrepreneurial companies. We were delighted to help them secure the grant and we look forward to seeing how it aids their expansion over the coming years.”


Buy-to-let – the new rules are coming

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If you cast your mind back to the 2015 summer budget, you may remember the significant changes that will impact all landlords. The implementation date of these changes is drawing ever closer and it will eat into landlords’ profits and, in some cases, may wipe them out completely.

With the slashed tax relief and added stamp duty, you may feel that someone has got it in for buy-to-let landlords. The question is what can you do about it?

What does the loss of tax relief mean?

This is one of the biggest changes to buy-to-let and now means that people buying to let residential property will no longer be able to claim tax relief on their mortgage interest payments at their marginal rate of tax. Before the changes this meant that basic rate taxpayers would get 20% tax relief, but those at a higher rate would receive 40% or 45% in tax relief.

What’s changing?

The changes mean that the tax relief will be a flat rate of 20%. Basic rate taxpayers, in most cases, will not see any changes, but those on higher incomes will find themselves losing much more in mortgage interest payments.   Also, more landlords may find themselves unexpectedly moving up into the higher rate tax bracket because of the way the new rules work.

To provide some perspective, here’s an example:

A landlord with a £150,000 buy-to-let mortgage on a property worth £200,000, with a monthly rent of £800, would currently have a net profit after tax of around £2,160 a year. With the lower tax relief, the net after-tax profit would be reduced £960.

Overall, the higher the interest you pay, the more you will feel the changes.

However, the full impact of the new rules is not felt immediately, as these changes will be gradually phased in from 6 April 2017, with transitional rules in place until April 2020. During the transition, the amount of interest directly deductible from rents will reduce and the proportion deducted as a fixed 20% credit will increase. This means in the transitional period landlords will be able to claim:

Tax year Interest deductible from profits Interest at fixed basic rate credit
2017/18 75% 25%
2018/19 50% 50%
2019/20 25% 75%

Income tax on property gains!

New rules announced last year, designed to target non-resident companies and individuals from escaping UK tax on profits made from the sale of UK properties, could inadvertently impact UK landlords. The new rules seek to charge the profits on selling UK property to UK income tax rather than CGT when the ownership of the property is more in the nature of a trade than a fixed investment.

When the changes were announced, there was widespread concern that UK landlords could be affected.

HMRC have now addressed this by releasing a 64-page guidance document to help clarify how they will seek to operate the rules.  In the guidance, they state that the new rules will not apply to businesses which buy properties in order to generate rental income, even if these businesses also enjoy an uplift in market value of the property. So the average UK buy-to-let landlord should not be subject to income tax on the gains he makes when he sells properties which were acquired for letting.

Whilst this is good news, it is only HMRC guidance and not law. For those particularly concerned about this new legislation, the position can be clarified with HMRC under their non-statutory clearance application process.