Welcome to BPU's June 2017 Newsletter
As the General Election draws ever closer, leading business groups have outlined their wishes and priorities for UK businesses. Some have warned that the election must not be 'about Brexit alone', highlighting the importance of other key domestic issues.
Cyber attacks have also been another major concern facing businesses over the last couple of months following the NHS' crisis. Businesses are urged to suitably protect against cyber-attacks and breaches going forward as research published by the British Chamber of Commerce has suggested that one in five businesses has been hit by a cyber-attack over the course of the last year.
Graduates Required
BPU are looking for ambitious new graduates for our Chartered Accountancy Training Programme. We would be very grateful if our clients could spread the word or recommend any suitable candidates that may be interested in joining our training programme.
PR Appointment
BPU are delighted to appoint our longstanding client Mela as PR consultants for BPU Chartered Accountants. We very much look forward to working with Ashok & Manon Ahir going forward.
Wild Creations
BPU were delighted to see the fabulous display work created by clients, 'Wild Creations' for the Champions League final held in Cardiff at the weekend. Well done to Matt Wild and his team for their spectacular work!
Go Air
Congratulations also to our client, 'Go Air' for opening their third site in the UK at the Samlet Park Trading Estate, Llansamlet, Swansea. We wish you all the very best of luck for the foreseeable future!
Exam Success & New Starters
Congratulations to James Verdon who has recently passed his Indirect Tax exam with flying colours. James has had a very busy but successful six months having passed his final Accounts prep, his Management Accounts and Advanced Book Keeping exams. James is awaiting his results for one final exam and if successful will complete his Level 3 AAT and become a fully Qualified Book Keeper. Well done James for all your hard work!
BPU offers a very warm welcome to Daniella Connors who joins us in our Payroll department. Daniella has joined us having worked in the Subway Head Office in Bristol and previously worked for another independent firm of chartered accountants. Welcome Daniella!
BPU's Big List appearance
BPU are pleased to support The Big Issue for yet another year and were delighted to appear as a feature in their May 2017 edition.
Businesses Urged to Protect themselves against Cyber-Attacks
A recent survey has suggested that one in five businesses has been hit by a cyber-attack in the last year.
The study released by the British Chamber of Commerce, revealed that 20% of firms have fallen victim to a cyber-attack within the last 12 months. Of those targeted, 42% were businesses employing more than 100 staff. The survey also revealed that the majority of businesses (63%) rely on IT providers to resolve problems after an attack.
As a result, the BCC is urging businesses to take action to help protect themselves. With new data protection regulations coming into effect in May 2018, which will increase firms' obligations in respect of personal data (and which will carry tough penalties for non-compliance), the sooner businesses act, the lower the potential risk of falling victim to a cyber-attack.
In order to protect against such attacks, the government introduced the 'Cyber Essentials' security certification scheme. This recommends taking a risk management approach, which involves understanding the risks posed by cyber-attacks, carrying out thorough cyber security planning, implementing security controls to protect information and reviewing the effectiveness of your cyber security controls.
Businesses should also ensure that the following protections and behaviours are implemented into their cyber security strategy:
- Download software updates - ensure that software and app updates are downloaded as soon as they appear on your devices and computers.
- Use strong passwords - strong passwords are hard for cyber criminals to guess. Combine three random words to create a password that is both memorable and hard to figure out.
- Always delete suspicious emails - if you are in doubt, simply delete unusual or suspicious emails, particularly requests for information or messages asking you to click on a link.
- Utilise anti-virus software - ensure that up-to-date anti-virus software is installed on your devices, particularly android smartphones and computers.
- Train your employees - always provide full information for your employees regarding cyber security threats and how to deal with them.
The UK's new National Cyber Security Centre (NCSC) was recently officially opened by the Queen, as part of a £1.9 billion government cyber security initiative designed to help businesses and individuals to safeguard themselves.
More information on the NCSC can be found here.
Property
Recent Changes affecting Landlords of Residential Properties
Whilst the rules have been known and in many cases discussed to date, now is the time that action will need to be taken as the new rules have taken affect.
BPU can assist landlords of residential properties in the Cardiff area to understand the changes to the taxation of property. There have been a number of changes to property taxation announced recently and a summary of these measures are given below.
Restriction of Finance Costs Relief for individual Landlords
Finance costs include mortgage interest, interest on loans to buy furnishings, and fees incurred when taking out or repaying mortgages or loans. The change will restrict relief for finance costs on residential properties to the basic rate of income tax, and will be introduced gradually from April 2017 over four years.
Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs. They will be able to obtain relief as follows:
For 2017-18 the deduction from property income will be restricted to 75% of finance costs with the remaining 25% being available as a basic rate tax reduction. Over the subsequent three years the direct deduction of finance costs will reduce by 25% each year until 6 April 2020 when all finance costs incurred by a landlord will be given as a basic rate tax deduction.
The overall effect is shown in the table below (assuming basic rate remains at 20%):
Year |
% of costs allowed as deduction |
% remaining of costs subject to basic rate tax relief |
Effective tax relief at 20% on B |
A |
B |
C |
2017-18 |
75 |
25 |
5 |
2018-19 |
50 |
50 |
10 |
2019-20 |
25 |
75 |
15 |
2020-21 and beyond |
0 |
100 |
20 |
There are certain circumstances which allow any excess finance costs to be carried forward to following years.
Please note that these changes do not affect furnished holiday lettings or lettings of non-residential property.
Reform of the wear and tear allowance
The wear and tear allowance for fully furnished properties has been replaced with a relief that enables all landlords of residential dwelling houses to deduct the costs they actually incur on replacing furnishings, appliances and kitchenware in the property, but excluding fixtures.
The relief given will be for the cost of a like-for-like, or nearest modern equivalent, replacement asset, plus any costs incurred in disposing of, or less any proceeds received for, the asset being replaced.
Fixtures integral to the building that are not normally removed by the owner if the property is sold would not be included because the replacement cost of these would be a deductible expense as a repair to the property itself. Fixtures include such items as:
- Baths
- Washbasins
- Toilets
- Boilers
- Fitted kitchen units
Landlords will no longer need to decide whether their property is sufficiently furnished to claim the new replacement furniture relief, as they had to when claiming the wear and tear allowance. This is because the new relief will apply to all landlords of residential dwelling houses, no matter what the level of furnishing.
The measure has effect for expenditure incurred on or after 1 April 2016 for corporation tax payers and 6 April 2016 for income tax payers.
This deduction will not be available for furnished holiday lettings because capital allowances will continue to be available for them.
Rent a Room relief increase
This measure affects those who receive rental income from letting out a room or rooms in their only or main residential property. "Rent a Room receipts" is described in the legislation and includes receipts for any meals and cleaning services paid for in relation to the use of the room. It may also be relevant where an individual rents out rooms in a guest house, bed and breakfast or similar, providing that this is their main residence.
The level of tax-free income was increased to £7,500 per year from 6 April 2016. The previous limit had been unchanged at £4,250 since April 1997. When two or more people are entitled to the rent a room income, the relief is halved for each person.
If you are a landlord of a residential property and require additional information regarding the changes to property taxation, please contact Martin Knight at martink@bpuaccountants.co.uk or telephone 02920 734100.
Making Tax Digital
BPU are helping their clients, who currently use manual or spreadsheet accounting records, get ready for 'Making Tax Digital' by setting up & training them on Sage One or Xero cloud based software.
We are focusing on Sage One Start and Sage One Accounting cloud based accounting software, setting out the benefits of each:
Sage One Start- the cash book version of the software allows you the ability to create sales invoices but does not have a purchase ledger function. You can purchase this software from BPU at £3 + VAT per month (RRP £6 + VAT per month).
Sage One Accounting - If you want to use a purchase ledger, require multicurrency or departmental analysis, you will need to use Sage One Accounting. You can purchase this software through BPU at £15 + VAT per month (RRP £20 + VAT per month.)
The benefits of using this cloud based software are as follows:
- Free automatic bank feeds - your bank transactions will automatically import into your accounts, reducing time spent manually entering or importing statements;
- Quickly create sales invoices - email it to your client and track overdue sales invoices;
- Always know how your business is performing;
- BPU can access your data the same time as you from our office and help resolve any issues/ queries;
- Easy production and submission of VAT return;
- Very user friendly screens and user guides; and
- Easy submission of the quarterly information required by HMRC to comply with the 'Making Tax Digital' government initiative when it comes into force.
Our Sage One advisors would love to speak to clients that are interested in using this cloud based software. To find out more call Simone Stephenson or Dawn Bevan on 02920 734100 or email simones@bpuaccountants.co.uk or dawnb@bpuaccountants.co.uk
ESSENTIAL DATES FOR JUNE 2017
19 June
PAYE, Student loan and CIS deductions are due for the month to 5 June 2017.
30 June
End of CT61 quarterly period.
On Our Website
6th June
Survey reveals slowdown in retail sales
Retail sales fell by 4.4% last month, according to the latest figures from the British Retail Consortium (BRC)
5th June
Number of 45p taxpayers reaches new high
The number of people paying the additional rate of income tax has risen to its highest ever level, according to new data released by HMRC.
2nd June
Insurance costs set to rise as a result of increase in Insurance Premium Tax
Millions of individuals in the UK have been warned that their insurance premiums are set to rise as a result of an increase in Insurance Premium Tax (IPT).
1st June
Half of businesses believe artificial intelligence will 'transform their industry.'
A survey carried out by the Confederation of British Industry (CBI) in association with IBM has revealed that 49% of businesses believe artificial intelligence is set to 'fundamentally change' the industries and markets they operate in.
Quote of the month
'It's encouraging to see that confidence is starting to rise after a sustained period of decline.'
Stephen Ibbotson, Director of Business at the Institute of Chartered Accountants in England and Wales (ICAEW), commenting on results from its latest Business Confidence Monitor.