The Blog

Welcoming our 200th member of staff to the team

As chartered accountants, you’ll usually find us focusing on our clients’ figures, but we’ve been focusing on a rather special figure of our own recently.

We’ve been looking after clients for over 35 years and have just welcomed our 200th member of staff to the team.

With eight offices across Worcestershire, we’ve grown into one of the largest independent practices in the Midlands.

Here’s what our Senior Partner, Peter Ormerod, has to say about our latest staff milestone and success story so far:

“We’re really proud to have hit this milestone. It’s an incredibly special achievement for us.

“Over the years, we’ve grown and developed our services as the needs of our clients and the business world in general have changed. I’m extremely proud that we’ve maintained our friendly, accessible and highly professional approach to business.

“We’re always keen to strengthen our team and many of our senior accountants and advisors started life on our award-winning apprenticeship scheme.

“Our home-grown talent is a source of great pride, but we’ve also welcomed new partners to the board, who are experienced specialists in their own fields, and further strengthen the level of strategic business advice we offer.

“In an ever-changing business climate, we’ve expanded the services we offer to include HR, IT and property tax advice, in addition to our core services of accounts, audit, bookkeeping, tax and VAT advice.”

“We’re committed to maintaining our culture of family firm personality with a big firm capability.“

For more information about our wide range of services visit here. In the meantime, if you’d like to discuss your requirements with us, contact us on 01905 777600 or  hello@ormerodrutter.co.uk.

 

Staff take on sun-soaked Birmingham 10K in aid of double charity target

While many of us were sitting back and soaking up the rays at the weekend, 15 members of our team were pounding the streets of Birmingham in aid of charity.

Jack James, Emily Hassell, Jo Purser, Rajbir Singh, Alex Cook, Ally Smith, Ross Holland, Jamie Harland, Alice Bennett, Dina O’Brien, Mark Winter, Rachel Smith, Jamal Yafai, Asiah Faraz and Jenny Cockeram all took part in the Birmingham 10K on Sunday (May 6).

Seven members of staff from our tax team ran on behalf of DEBRA and the remainder of the runners completed the course in aid of mental health charity, Mind. Collectively, they’ve set themselves the challenge of raising £4,000 and it’s a target they’re well on track to meet, with the last balance total standing at £3,974.62.

There were all sorts of reasons why the Team OR runners were spurred on to take on the Birmingham 10K, ranging from the fact some of them wanted to use it as springboard to get back into exercise and running again, supporting their colleagues and having fun in aid of charity, to raising money for DEBRA in support of Jenny’s four-year-old son, Jamie.

“Jamie suffers from a severe form of Recessive Dystrophic Epidermolysis Bullosa, which is one of the worst forms of EB. As well as deformity, he has a high chance of developing squamous cell carcinoma (aggressive skin cancer) before he reaches adulthood,” explains Jenny.

“He also suffers from corneal abrasions, making his eyes so hypersensitive to light, that all curtains and blinds have to be closed for a day or so and he plays in the dark, as if blind, with his eyes tightly shut.

“DEBRA helps support people, just like Jamie, who have skin conditions, such as EB, which there’s currently no cure for. The money we’ve raised and are continuing to raise at present, will enable the charity to continue carrying out the invaluable research that’s needed to help find a cure for EB.”

Despite the scorching heat, which reached temperatures of 23 to 25°C, all of the 15 runners managed to complete the race, with times ranging between 00:51:44 and 01:15:46. Here’s how some of them found it:

“It was very hot, so I’m extremely proud of the guys and girls for running in that heat,” – Jack James, who organised the Team OR runners and ran in support of Mind due to some people who are close to him being affected by mental health issues.

It was fun but very hot and I’m glad I did it,” – Ross Holland.

“It was far too hot, but the great atmosphere got us through,” – Dina O’Brien.

Being the kind-hearted bunch that we are, it’s not just the runners within our company who’ve helped raise almost £4,000 for DEBRA and Mind. We held a dress-down day on May 4 and James Read, who was unable to make the Birmingham 10K, had his hair shaved off, raising £235 for his hair-raising efforts in the process.

If you’d like to help our Birmingham 10K champions meet, or even exceed, their £4,000 target, head over to https://www.justgiving.com/teams/ORGreatBirmingham10k where you can make a donation online.

Everything you need to know about cryptocurrencies and UK tax

Cryptocurrency usage has soared in recent years, but despite the surge in global demand, the virtual currency is still very much shrouded in mystery.

In this blog, we explain some of the key details relating to cryptocurrency, including what it is, the common myths associated with it and the UK tax implications.

Cryptocurrencies – a brief explanation

Cryptocurrency is digital virtual currency that’s created using encryption technology or cryptography.

The first cryptocurrency was Bitcoin, a name that the vast majority of us have heard of by now. There are currently around 1,000 other variations in circulation. Other examples include Ethereum, LiteCoin and Ripple.

Cryptocurrencies are used on a global scale and, at present, international consensus on their legal status is yet to be agreed. It’s a grey area that’s attracting increasing amounts of attention, as demand for virtual currency grows and the possibility of virtual money going mainstream is getting closer by the day. At some point, the law will need to evolve to keep pace with cryptocurrencies as they continue to come into their own.

At present, there are two main ways you can go about obtaining a cryptocurrency. You can:

  1. Engage in an activity known as ‘mining’ – which is a system that allows computer users to calculate algorithms that are required to verify transactions in blockchains. As a result, they’re rewarded in a cryptocurrency or;
  2. Purchase them via a Bitcoin exchange – this involves you exchanging world currency (i.e. tenderable currency such as pound sterling or dollars) in return for a chosen cryptocurrency. 

Common myths

There are numerous misconceptions surrounding the use of cryptocurrencies, particularly relating to tax. Many people believe they aren’t taxable for all sorts of reasons, including the fact they’re:

  • Unregulated right now
  • Exchanged online
  • Viewed by some people as being a form of gambling, so don’t count as income. (Internal guidance from HMRC currently indicates that gambling or betting wins aren’t taxable and gambling losses cannot be offset against other taxable profits).

The truth of the matter is, they are taxable. And it’s highly likely that HMRC will catch up with cryptocurrency users who’ve made large gains because they’re most likely to transfer these gains back into traditional currency at some point. (Details relating to HMRC’s tax treatment of income generated by Bitcoins and other cryptocurrencies can be found within this guidance brief).

The tax reality

For all of the myths surrounding cryptocurrencies and regardless of how they’re obtained, they do fall under the tax radar. This means they’re subject to Income Tax, Corporation Tax and Capital Gains Tax, depending on how they’re being used. Let’s take a look at these tax treatments in further detail:

Tax treatment 1: Income Tax

HMRC use a series of tests, known as The Badges of the Trade, to determine whether or not trading activity has taken place. If it has, then Income Tax will apply.

Any profits will be subject to Income Tax at the individual’s marginal rates (20%, 40% and 45%). Class 2 and Class 4 National Insurance will also apply.

Tax treatment 2: Corporation Tax

Any trading profits that are made and are generated through a company are subject to Corporation Tax. Any trading losses can be dealt with by:

  • Offsetting them against the company’s total profits of the same accounting period
  • Relieving them against the company’s total profits for the previous accounting period
  • Carrying forward and offsetting them against the company’s profits from the same trade in a subsequent accounting period

Tax treatment 3: Capital Gains Tax

In situations where transactions are regarded as investments, rather than trading activity, HMRC require that Capital Gains Tax should be paid-  as do those that profit from disposal of stocks, shares and other investment instruments- via their annual self-assessment. The current Capital Gains Tax free allowance is £11,300 (2017/18) per annum so any gains up to this amount are effectively tax free.

The future

Cryptocurrencies is a rapidly-evolving world and against the backdrop of all of the changes, it’s widely reported that plans are afoot for the UK and EU governments to regulate Bitcoin and other cryptocurrencies.

It’s hoped that this will help bring the virtual currency in line with anti-money laundering and counter-terrorism financial laws. It’s also thought that traders will be forced to reveal their identities and cryptocurrency firms will be overseen by national authorities at some point.

All of these changes mean that it can be difficult for businesses to know where they stand with their cryptocurrency activity and tax liabilities. As with all tax responsibilities, it’s highly advisable that you don’t overlook them and that you do try and keep pace with any changes that are taking place. And if you have any queries, then make sure you speak to a specialist, it’ll save you a lot of time and hassle in the long-run.

For more information about cryptocurrencies, including the tax implications for your business, or to discuss any of the points above further with us, call us on 01905 777600 or email us at hello@ormerodrutter.co.uk.

It’s official! Our customer service is award-winning!

Providing our clients with the best possible customer service is something we always pride ourselves on here at Ormerod Rutter.

In fact, such is our commitment to customer service that it recently received international recognition, in the form of an award from non-other than The Confederation of Chinese Business UK (CCBUK).

We were awarded the Customer Service award at the CCBUK’s prestigious 20th Anniversary and International Business Awards ceremony, which took place on November 24.

Held in Mayfair, London, the awards are designed to celebrate and reward outstanding achievements in a wide range of areas, including best infrastructure, best real estate, best technology and best investment.

We’re absolutely delighted to have been presented with the award, which demonstrates our commitment to providing our clients with services that extend far beyond professional accountancy, auditing and taxation.

We pride ourselves on our innovative and progressive approach to serving our clients’ needs and, as well as providing general accounting support, help our clients overcome the obstacles associated with international trade.

We’re extremely proud of this award and what it represents.

Established in 1997, the CCBUK is a non-profit organisation and the oldest Chinese association in the UK. Its founders include the top-ranked UK-based Chinese businessmen and the organisation as a whole facilitates investments and business between China and the UK.

For more information or to talk to us about our services, contact us today on 01905 777600 or hello@ormerodrutter.co.uk.

Getting Into Gear In Aid Of Charity

Staff at our Droitwich office recently gave up their lunch breaks and replaced them with pedal power– all in aid of charity.

A total of 16 employees set themselves the challenge of collectively cycling 136 miles at Droitwich Leisure Centre from July 24 to July 28.

The cycling challenge was in support of Francis Samasuwo, who works in our audit department and took part in this year’s Prudential Ride London on July 30 to raise funds for Breast Cancer Care.

The 24-year-old has set his sights on raising £5,000 for the charity after his mum, Jill, was diagnosed with breast cancer. And the RideLondon bike ride is just one of several fund-raising activities Francis will be taking part in over the coming months to help boost its coffers.

“I took part in the Prudential Ride London last year, but was unfortunately unable to complete it due to accidents that took place en route,” explains Francis.

“But I didn’t let that put me off, which is why I decided to take part in it again this year, as it’s for a cause that means such a great deal to me. It’s fantastic that I have such supportive colleagues behind me too.”

Francis started the race 136 miles away at Olympic Park in Stratford – the distance our Droitwich office staff clocked up during their lunch breaks. In addition to cycling during their lunch breaks, they also held a fund-raising dress down day and cake sale.

Francis has so far raised more than £700 in sponsorship. To sponsor Francis, visit https://www.justgiving.com/fundraising/Francis-Samasuwo14

Breast Cancer Care is the only UK-wide charity providing care, information and support to people who are affected by breast cancer. For more information about the charity and its work, visit www.breastcancercare.org.uk.

Press coverage

This story has also been covered by BBC Hereford and Worcester radio station (2:04:24 to 2:08:08), the Worcester News, Droitwich Advertiser, Bromsgrove Advertiser, Malvern GazetteRedditch & Alcester Advertiser and Droitwich Standard (turn to page 3).

 

Key considerations when starting a new business

Business start-ups are on the rise. According to the national enterprise campaign, StartUp Britain, an unprecedented number of new businesses were launched last year, at a record pace of 80 an hour.

Figures published by StartUp Britain revealed 342,927 new businesses registered with Companies House between January and June, compared with 608,110 for the whole of 2015.

Interestingly, Bromsgrove was responsible for the majority of start-ups outside of London, where 29 people for every 1,000 residents branched out on their own between January and June.

Whether you’re starting a new business because you’ve been made redundant or the idea of being your own boss has always appealed to you, it’s important you don’t rush into anything. Make sure you do your research and take the time to consider key factors, such as these:

1. Business structure

Yes, it’s an obvious starting point, but it’s a really crucial starting point that will determine the type of business you run. Generally speaking, there are three common types of business structures:

  • Sole trader – sole traders are the sole owner of their business. They’re entitled to keep all profits after tax has been paid, but are liable for all losses.
  • Partnership – partnerships are similar in nature to sole traders, but because they involve more than just one person, it’s advisable for written agreements to be put in place and for all partners to be made fully aware of the terms of the partnership.
  • Partnerships can also exist as Limited Liability Partnerships (LLP) in which some or all partners have limited liabilities. For instance, one partner is not responsible for another partner’s misconduct or negligence.
  • Company – the owner(s) have limited liability. They keep their business affairs totally separate from their personal affairs and have to comply with legal regulations.

2. Business plan

Business plans vary from organisation-to-organisation. Ideally, they should thoroughly describe your business and cover key areas, such as your objectives, strategies, sales, marketing and financial forecasts.

The most effective plans help business owners to not just clarify their business idea and spot potential problems on the horizon but help them understand and plan precisely how they intend to generate money and make their business sustainable.

You can speak to us for help and advice on putting a business plan together.

3. Record-keeping

Regardless of whether you’re a sole trader, partnership or company, it’s essential that you keep an up-to-date record of your business activity.

It’s entirely up to you how you choose to keep your records. You may decide to keep hard copies of all of your business affairs or you may prefer to do everything electronically, including logging your expenses. The main thing is, that come year-end, you have a clear audit trail of all of your business activities for the previous 12 months.

If your records are organised and kept all up-to-date, then it will be much easier to put your year-end accounts together for HMRC. In addition to compiling their books, companies and LLPs need to make their accounts publicly available on Companies House within certain time frames. They may also be audited by HMRC at any time too.

4. Taxation

Another key area that needs to be considered when starting a new business, is taxation, which can be broken down into the following three elements:

Tax on profits

The type of tax that’s applied and the amount that’s taxed will be dictated by the type of business being operated. Taxable profits are usually based on the profits shown in your business accounts after they’ve been adjusted to comply with the tax rules.

National Insurance (NI)

Contributions can be paid at different rates for sole traders and partnerships compared to company directors on a salary. The entitlements can also differ. For instance, within a company, it may be possible to avoid NI by paying dividends rather than salary. Your accountant will be able to advise you on the options to take, based on your company set-up.

Value Added Tax (VAT)

Not all businesses are VAT registered. In fact, knowing whether or not to register for VAT is a question that’s often posed by many business owners, particularly when they’re first starting out.

If your turnover (total sales) in the previous 12 months exceeds the compulsory registration threshold (currently £85,000), then yes – you must register. Failure to do so can result in you being fined by HMRC.

If you haven’t exceeded the threshold for compulsory registration, you can still register voluntarily if it makes sense for you to do so. Again, your accountant should be able to advise you on the best course of action based upon your individual circumstances.

Starting a new business is undoubtedly an exciting venture. However, it is important that business owners’ visions don’t get clouded by excitement and that they do focus on factors, such as those listed above, that will help ensure they have the right foundations in place.

Are you planning to start a new business and feel you could benefit from some expert guidance and advice? Contact our team of specialists on 01905 777600 or hello@ormerodrutter.co.uk.

Are you aware of the IR35 changes?

On 6 April the rules for IR35 changed and with the threat of a hefty fine should you get it wrong, it is almost certainly a good thing to make yourself aware of these changes.

What is IR35?

Before the IR35 legislation came into effect in 2000 there were an increasing number of people working through their own limited company. As a director of their company, they would enjoy perks that people in full-time employment would not be eligible for. The main reason for doing this was that no National Insurance Contributions (NICs) are payable on company dividends. Whereas, full-time staff has to pay PAYE and NICs.

The government believed that they were losing a lot of revenue through this system so introduced IR35. It was introduced to tackle cases of disguised employment. If anyone was caught foul of this they would be liable to pay the PAYE and NICs on their income.

What are the changes?

Up until now, it has been the responsibility of the worker to ensure that they were compliant. The change will only apply to work that is carried out within the public sector. The new rule will see the responsibility shift to the public sector client to determine whether their workers fall under IR35 or not. Failure to comply will result in hefty fines.

Will this affect me?

HMRC has created an IR35 Employment status tool that was launched last month (March 2017) to help workers, clients and agents identify if someone will be caught out by IR35. With mixed reports of accuracy on results, HMRC has said it will stand by the results of the tool assuming that all inputted data is correct.

What can I do?

If you think that this change may or may not affect you please get in touch with your accountant as soon as possible. Here at Ormerod Rutter, we have experts with years of experience in the industry. We also offer tax investigation insurance which covers any costs incurred should you have a tax investigation.

Have a question about IR35? Leave a question or comment below and we can offer you expert advice.

At Ormerod Rutter we understand that finances and tax can sometimes be confusing. We have 15 expert partners to hand that can offer expert advice on all financial matters, no matter how big or small. We pride ourselves on having big firm capabilities and family firm personality. Have a question or want to discuss your personal or business finances? Give us a call on 01905 777600.

* Please note that all information contained in this article is for informative purposes only and that we cannot be responsible for any errors or omissions.*

 

Spring Budget 2017: how will the announcements affect you?

Following the UK’s historic vote to leave the EU, and with Prime Minister Theresa May poised to trigger Article 50, Chancellor Philip Hammond presented the Spring Budget against a backdrop of economic uncertainty. Figures from the Office for Budget Responsibility revealed that UK economic growth is now expected to reach 2% this year, before falling to 1.6% in 2018.

The Chancellor announced a range of significant measures for businesses and individuals, including a support package for firms in England affected by the business rates revaluation and the announcement that unincorporated businesses and landlords with turnover below the VAT registration threshold will have until 2019 to prepare for quarterly reporting.

Also unveiled in the 2017 Spring Budget was an increase in the main rate of Class 4 national insurance contributions (NICs) to 10% in April 2018 and a reduction in the tax-free dividend allowance, which will fall from £5,000 to £2,000 in April 2018.

Our Budget Report provides an overview of the key announcements arising from the Chancellor’s speech. However, it also looks beyond the more sensational measures and offers detail on the less-publicised changes that are most likely to have an impact upon your business and your personal finances.

Additionally, throughout the Report you will find handy tips and ideas for practical tax and financial planning, as well as an informative 2017/18 Tax Calendar.

Don’t forget, we can help to ensure that your accounts are accurate and fully compliant, as well as suggest strategies to minimise your tax liability and maximise your profitability.

Click the link to download the Spring Budget 2017 Summary.

Have a question on the Spring Budget 2017? Leave a question or comment below and we can offer you expert advice.

At Ormerod Rutter we understand that finances and tax can sometimes be confusing. We have 15 expert partners to hand that can offer expert advice on all financial matters, no matter how big or small. We pride ourselves on having big firm capabilities and family firm personality. Have a question or want to discuss your personal or business finances? Give us a call on 01905 777600.

* Please note that all information contained in this article is for informative purposes only and that we cannot be responsible for any errors or omissions.*

*Since the Budget the government has now made a U-turn and will not be increasing the National Insurance Contributions from the self-employed. This was overturned as it went against one of the main Conservative manifestoes promises of not raising taxes. 

Payments On Account: Everything you need to know

What are Payments on Account?

Payments on Account are a method of paying towards future self-assessment tax bills. They are payable twice a year and each payment is normally 50% of the previous year’s tax liability.

Payments on Account are payable by midnight on 31 January and 31 July.

How does it work?

The first instalment is due on the 31 January. This amount will be 50% of your previous tax year’s tax liability. This is the same day that a balancing payment must be settled for the previous tax year.

The remaining 50% will be due by 31 July.  This enables your tax liability to be spread out throughout the year.

How about an example?

You owe £4,000 on earnings between 6 April 2015 and 5 April 2016 (excluding Class 2 National Insurance).

This amount will need to be settled by 31 January 2017. On top of this, a payment of £2,000 will need to be paid at the same time and again on 31 July 2017.

This means that when you file your self-assessment tax return for 2017 you will have already paid £4,000 towards it.

If you have overpaid, you will be due a refund. If you have underpaid, this difference will need to be settled by 31 January 2018.

Are Payments on Account voluntary?

If the tax bill from the previous year was over £1,000 then Payments on Account are required. However, if more than 80% of that year’s tax liabilities have been paid at source (e.g. through PAYE) Payments on Account are not required.

Can Payments on Account be reduced?

It is not unusual for earning’s to fluctuate year to year. If this is the case and earnings are forecast to be lower for the next financial year; an application can be made to reduce the Payments on Account via HMRC.

It is worth noting that if earnings remain the same and do not decrease after you have reduced the Payments on Account, that the difference will need to be settled by the preceding January plus any interest accrued.

Have a question on Payment on Account? Leave a question or comment below and we can offer you expert advice.

At Ormerod Rutter we understand that finances and tax can sometimes be confusing. We have 15 expert partners to hand that can offer expert advice on all financial matters, no matter how big or small. We pride ourselves on having big firm capabilities and family firm personality. Have a question or want to discuss your personal or business finances? Give us a call on 01905 777600.

* Please note that all information contained in this article is for informative purposes only and that we cannot be responsible for any errors or omissions.*

Making Tax Digital Update

The UK government’s response to the Making Tax Digital consultations has finally been published and has broadly been welcomed by business leaders and the tax profession.

With the exception of a very few, it is expected that all businesses will be required to hold their accounting records digitally and submit quarterly updates to HMRC. In addition to this, an end-of-year reconciliation will be required to ensure all financial activities have been recorded.

Criticisms of the report have focused on the short timeline for further consultations for the legislation and also the cost of transition during the first year.

The government will continue to consider issues contained in the report, such as the exemption threshold, so the features in the report are not a finalised list of changes.

Here is a list of some of the proposed decisions for Making Tax Digital:

  • Businesses will be able to continue to use spreadsheets for record-keeping, but they must ensure that their spreadsheet meets the necessary requirements of Making Tax Digital for Business – this is likely to involve combining the spreadsheet with software
  • Businesses eligible to use ‘three line accounts’ will be able to submit a quarterly update with only three lines of data (income, expenses and profit)
  • Free software will be available to businesses with the most straightforward affairs
  • The requirement to keep digital records does not mean that businesses have to make and store invoices and receipts digitally
  • Activity at the end of the year must be concluded and sent either by 10 months after the last day of the period of account or 31 January, whichever is sooner
  • Charities (but not their trading subsidiaries) will not need to keep digital records
  • For partnerships with a turnover above £10 million, Making Tax Digital for Business is deferred until 2020

You can view the full report here

Due to the overwhelming response to the initial consultations, the government is taking more time to consider issues raised alongside fiscal impacts.

Have a question on Making Tax Digital? Leave a question or comment below and we can offer you expert advice.

At Ormerod Rutter we understand that finances and taxes can sometimes be confusing. We have 15 expert partners to hand that can offer expert advice on all financial. We pride ourselves on having big firm capabilities and a family firm personality. Have a question or want to discuss your personal or business finances? Give us a call on 01905 777600.

* Please note that all information contained in this article is for informative purposes only and that we cannot be responsible for any errors or omissions from use of this information.*

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