Posts Tagged ‘Accounts’

Change in accounts filing for small companies

Wednesday, May 10th, 2017

Small companies are required to file a copy of their end of year accounts with Companies House. In the past, it has been possible to file abbreviated accounts – basically, a few notes and a Balance Sheet with very little data regarding profitability – for smaller companies this has restricted the amount of financial information available in the public domain, and thus, their exposure to competitors.

 

For accounting periods beginning on or after 1 January 2016, the format of accounts that will need to be filed has changed. An announcement posted to the gov.uk website is reproduced below:

If you’re a small company, you have 4 options for filing your accounts:

Micro-entity accounts

You must meet at least 2 of the following:

  • turnover is no more than £632,000
  • balance sheet total is no more than £316,000
  • average number of employees is no more than 10

Abridged accounts

You must meet at least 2 of the following:

  • turnover is no more than £10.2 million
  • balance sheet total is no more than £5.1 million
  • average number of employees is no more than 50

Full accounts with us and HMRC

These joint accounts are suitable for small companies who are audit exempt and need to file full accounts to us and HMRC. You can also file your tax return with HMRC at the same time.

Dormant company accounts

These accounts are suitable for companies limited by shares or by guarantee that have never traded and can be filed using our WebFiling Service.

We will be considering these options in the coming months and making recommendations to clients based on their available options.

New accounts filing regulations for smaller companies

Tuesday, April 25th, 2017

Companies house recently published the following news story.

Changes to UK company law removed the option for small companies to file abbreviated accounts for accounting periods starting on or after 1 January 2016.

Small companies

If you are a small company, you have 4 options for filing your accounts:

1. Micro-entity accounts

  • You must meet at least 2 of the following:
  • turnover is no more than £632,000
  • balance sheet total is no more than £316,000
  • average number of employees is no more than 10

2. Abridged accounts

  • You must meet at least 2 of the following:
  • turnover is no more than £10.2 million
  • balance sheet total is no more than £5.1 million
  • average number of employees is no more than 50

3. Full accounts with us and HMRC

These joint accounts are suitable for small companies who are audit exempt and need to file full accounts to us and HMRC. You can also file your tax return with HMRC at the same time.

4. Dormant company accounts

These accounts are suitable for companies limited by shares or by guarantee that have never traded and can be filed using our WebFiling Service.

How to file your accounts

Micro-entity accounts:

To file micro-entity accounts you need to sign-in to our WebFiling service and choose the micro-entity accounts type.

Abridged accounts:

We’re working on a replacement service that will enable you to file abridged accounts on Companies House Service. We expect to launch it this year.

 

Currently, there are 2 options for you to consider:

  • Use the Companies House-HMRC joint filing service. You’ll need a Government Gateway account and you can file your tax return to HMRC at the same time.
  • Use third party software. This service benefits those who file regularly.

 

Clients will be relieved to know that we will choose the appropriate filing method and format for them.

Overdrawn loan accounts

Thursday, April 7th, 2016

Up to 5 April 2016, directors who overdrew their loan accounts in a company ran the risk of an additional 25% Corporation Tax charge if the debt remained outstanding nine months after their company’s trading period end.

The tax can be claimed back, but not until there is a repayment of the debt. From a cash flow point of view this can be a hefty penalty, and makes this type of temporary cash extraction by shareholder directors, unattractive.

The Treasury has decided to tighten the screw.

Legislation has been introduced in the Finance Bill 2016 to specifically link the rate of tax chargeable on loans or advances to, or arrangements conferring benefits on, participators made by close companies to the higher dividend rate. The rate will be increased from 25% to 32.5%. The new rate will apply to loans made or benefits conferred on or after 6 April 2016.

This is a 30% increase in the tax charge. A company that allows a director or shareholder to maintain an overdrawn loan, taken out after 6 April 2016, for say £50,000, still unpaid after the nine month deadline, will incur a corporation charge of £16,250 instead of £12,500.

Companies affected would do well to revisit the cash flow implications.

Buy-to let sector suffers another blow

Wednesday, March 23rd, 2016

The Treasury seems to be committed to wringing the last available drop of tax revenue from the buy-to-let sector.

In the Budget last week the rate of capital gains tax (CGT) was reduced from 6 April 2016.

  • From 28% to 20%  if the gains fell to be taxed as part of the higher rate tax band, and
  • From 18% to 10% if the gains fell to be taxed as part of the basic rate tax band.

But this excluded gains on disposals of residential property. Thankfully, the principle private residence relief for home owners is untouched – sale of your home is still tax free. However, other residential property sales will be taxed at the 18% and 28% CGT rates.

This de facto tax increase for landlords follow hard on the heels of previous changes to the taxation of the letting sector.

  1. From 6 April 2017, tax relief for mortgage interest to fund the purchase of residential property for letting will be reduced over a number of years until landlords are restricted to a basic rate tax credit. This could potentially more than halve the tax relief available for loan interest and promote many unwary landlords into the higher rate tax bands.
  2. From 6 April 2016, the 10% wear and tear allowance is being abolished and landlords after this date will only be able to claim for the actual cost of replacing qualifying furniture and fittings. For many landlords this will result in an increase in their tax payments from 2016-17.
  3. From 1 April 2016, landlords will pay an additional 3 percentage points on the stamp duty charged when they purchase a buy-to-let property.

By far the most insidious of these changes is the gradual reduction in the tax relief for loan or mortgage interest payments. Although the start of this process is still a year away, landlords would be well advised to seek professional advice to see exactly how they will be affected and what changes they will need to make in order to survive…

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