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Chartered Accountants Redditch

Mills Pyatt have a reputation for affordable and pragmatic accountancy advice that will help organise company or personal finances. We provide relevant business advice that adds real value to our clients’ businesses.

Our friendly, professional team provides a range of services including audit, taxation, payroll, bookkeeping and advice on general accounting matters. We act for clients across the Midlands; including overseas subsidiaries, owner managed businesses, the self-employed and business start ups.

For a FREE and informal chat about how we can help you, please call 01527 521717 or click on the contact us page to email us.

We look forward to hearing from you.

  • The New Dividend Tax applies from 6th April 2016

    From April 2016 the Notional 10% Dividend Tax Credit currently attaching to dividends will be abolished. In its place is a new tax-free Dividend Allowance. The Dividend Allowance means that you won’t have to pay tax on the first £5,000 of your dividend income, no matter what non-dividend income you have. This allowance is available to anyone who has dividend income.

    However the Rates of Dividend Tax are going up.

    From 6th April 2016 you will pay tax on any dividends you receive over £5,000 at the following rates:

    • 7.5% on dividend income within the basic rate band of £32,000
      (This tax year, 2015/16 - 0 %)
    • 32.5% on dividend income between £32,000 and £150,000
      (This tax year, 2015/16 – 25%)

    (Additional rates apply if your dividend income exceeds £150,000).

    According to HMRC this simpler system will mean that only those with significant dividend income will pay more tax. However many of our owner managed company clients do have significant dividend income!

    Here is a typical example of the effect of these changes:

    “In 2016/17 I plan to take a salary of £8,000 and dividends of £31,000”

    Of the £8,000 salary:

    • £8,000 is covered by the Personal Allowance (total £11,000 in 2016/17)

    Of the £31,000 dividend income:

    • the new Dividend Allowance covers the first £5,000
    • £3,000 is also covered by the remaining balance of Personal Allowance
    • the remaining £23,000 of dividends will be taxed at the Basic Rate (7.5%)

    Under the new rules tax is payable on these dividends of £1,725.  (In the current tax year no tax is payable).

    What are the consequences for me?

    Many director/shareholders who have meticulously kept their incomes below the 40% tax threshold over many years will now find themselves paying personal tax for the very first time.

    The first tax bills will drop on the mat in January 2018 with a requirement to pay the whole 2016/17 dividend tax liability plus half again to pay on account for 2017/18 and six monthly thereafter. This will need careful cash management.

    The good news is that it still remains favourable to extract company profits via dividends as opposed to salary. (This is because dividends still do not attract National Insurance Contributions).

    Another side effect, following the abolishment of the notional dividend tax credit , is that there will be room to declare more dividends than previously before you reach the 40% rate threshold. 

    What can I do?

    If there are sufficient reserves in your company and you usually pay higher rate tax, it might be worth considering maximising dividends in the current tax year 2015/16, to take your income to as near to £100,000 as is practical. (Incomes above £100,000 suffer the effects of the rapid withdrawl of the annual tax free personal allowance).

    Such Dividends declared will then be taxed at the current rate of 25% rather than higher 32.5% rate.

    However you will need to speak to us before using this strategy as there are other factors that can come into play. These include the amount of reserves available in the company, Child Allowance Thresholds, Student Loan Repayments, etc;

    If you would like to discuss your company dividend strategy with us please contact us as soon as practical and we can discuss the options.

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  • VAT notes – new edition published

    HMRC has published the latest quarterly edition of VAT notes which includes a summary of recent changes to the VAT rules.

    The main topic covered in the latest edition is the introduction of the Alcohol Wholesaler Registration Scheme (AWRS). This scheme is designed to tackle alcohol duty fraud by introducing a register of businesses that wholesale alcoholic drinks.

    The AWRS will require alcohol wholesalers to demonstrate they are 'fit and proper' and have their supply chains tested to make sure they are legitimate before being approved to operate in the sector and entered onto a register. There are currently 20,000 alcohol wholesalers in the UK.

    Businesses that need to apply to register must do so by 31 March 2016 or be at risk of trading illegally. From April 2017, it will become an offence for a retailer to buy alcohol from an unregistered wholesaler.

    The latest edition of VAT notes also included a list of the following new and revised VAT notices:

    • VAT Notice 749: local authorities and similar bodies
    • VAT Notice 1001: VAT refund scheme for certain charities
    • VAT Notice 700/1: should I be registered for VAT?
    • VAT Notice 700/11: cancelling your registration
    • VAT Notice 700/44: barristers and advocates
    • VAT Notice 700/60: payments on account
    • VAT Notice 700/56: insolvency

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  • Creative industry tax reliefs

    Creative industry tax reliefs (CITR) are a collection of six Corporation Tax reliefs that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

    To qualify for the CITR, films, television programmes, animations or video games must pass a 'cultural test' or qualify through an internationally agreed co-production treaty - certifying that the production is a 'British film', 'British programme' or 'British video game'. Formal certification is required. Certification and qualification is administered by the British Film Institute (BFI) on behalf of the Department for Culture Media and Sport. The BFI will issue an interim certificate for uncompleted work or a final certificate where production has finished.

    The guidance published by HMRC on the creative industry tax reliefs have been updated to include details of the new cultural test for children's television tax relief (CTR). CTR is an extension of high-end television and animation relief but is specifically for the producers of Childrens' television programmes.

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