Moore Accountancy April 2018 Newsletter
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Tax Efficient Company Profit Extraction

The new tax year means that many directors of family companies will be considering the most tax efficient method of paying themselves. 

We have consistently suggested that director/shareholders should extract profit by paying themselves a low salary with the remainder of their income being extracted in the form of dividends, as generally they do not attract National Insurance Contributions (NICs). Note they are not deductible in arriving at the company’s taxable profits though.

A salary just below £8,424 pa (but above £6,032) would mean no NIC would be due but would be sufficient to count as a qualifying year for State Pension purposes.

There is also a £3k employment allowance that can be offset against employers NICs, but only for businesses other than those with a sole director as employee. If this has not been utilised against NICs on staff wages then consider increasing the directors’ salaries up to £11,850, as the additional salary would save corporation tax at 19% on the £3,426 extra salary which equals £651, whereas the employees NIC would be £411.

Re dividends - the tax rate changes from 7.5% to 32.5% at £46,350 so ideally the dividends should not exceed £34,500 if a salary of £11,850 is paid. The first £2,000 would be taxed at 0% with £32,500 being taxed at 7.5%. Don’t forget that this tax will then be due on 31 January 2020, possibly with a payment on account on top too.  

Contact us to discuss other ways in which you can extract profits from your family company tax efficiently, and if we run payroll for you, then please respond to the email that Aiden sent recently regarding salary levels.


GDPR - guidance for small business

The General Data Protection Regulation (GDPR) is a regulation on data protection and privacy for all individuals within the EU, and its primary aim is to give control back to individuals over their personal data and to simplify the regulatory environment across the EU.
It becomes legally enforecable from 25/05/18.

Moore Accountancy will be sending out separate emails to our clients and contacts and will need to issue new letters of engagements for our clients over a period of time.

For your own business, the ICO has a useful checklist to start looking at your data - and how and where you hold it.

06/04/18   Start of Tax Year 2018/19

19/04/18   PAYE & NIC deductions for quarter and month ended 05/04/18

30/04/18   Corporation tax payment for year to 31/07/17


ICO reveals new fees for data protection registration

From 25/05/18 (to coincide with the introduction of GDPR) there is a new fee structure for data controllers.
Currently most organisations that process personal information are required to notify the ICO of this and pay a fee of £35 (most SMEs) or £500 each year.
From May, or a business' renewal date there is a new structure depending on staff number, turnover and whether the business is a charity, or public authority.

There are certain exemptions that apply. Where organisations only process personal data for certain limited reasons – for example, staff administration or accounts and records (amongst others) or without using an automated system (e.g. a computer) – they will not be required to pay a fee.

Tier 1: organisation has a maximum turnover of £632,000 in a financial year or no more than 10 members of staff. Fee: £40;

Tier 2: organisation has a maximum turnover of £36 million in a financial year or no more than 250 members of staff. Fee: £60;

Tier 3: if an organisation does not fulfil the criteria for tier 1 or 2, it will be required to pay the tier 3 fee of £2900.

New rules for online marketplaces

HMRC have published guidance relating to unpaid VAT by sellers using online marketplaces. 
From 15/03/18 new laws allow HMRC to hold the operator of an online marketplace, jointly and severally liable for unpaid VAT where the seller has not registered for UK VAT and the marketplace knew or should have known about this.
This will affect marketplaces such as amazon, ebay and etsy and any suppliers who trade through these marketplaces.
It will be interesting to see what these sites do to communicate and manage this new legislation with suppliers.

Changes to rental income interest

We recently wrote a blog post about how the interest on rental income changes affect our customers.

Have a read here for the article if you have investment property.
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Moore Accountancy · 1 Northway · Altrincham · Cheshire, WA14 1NN · United Kingdom

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