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March Question and Answer Corner

Newsletter issue - March 09.

Q. We have just taken on a new employee who has presented his form P45. But it's an A4 sized back and white form, not the usual smaller shaded form. Is it a bad copy? If it is, what should we do?

A. Don't panic. The format of the form P45 was changed last October, but there was not much publicity about it. The new form P45 is A4 sized, double its previous size, and it must be printed in black ink on to plain white paper, not onto pre-printed HMRC stationery. The new form is valid and includes all the information that was on the old form. There are also some new compulsory boxes: date of birth and gender for the employee, and the address and postcode for the former employer must be shown in full. The new format P45 will be compulsory for all employers from 6 April 2009.

Q. I have built up quite a good business as a music teacher with profits of about £80,000 a year. Should I incorporate my business?

A. The full answer to your question will involve a lot of detailed calculations concerning how much you want to draw from the business each year, what assets you use in the business - such as a car and musical instruments, and what other people may be involved - such as your spouse. However, your main consideration should be VAT. As a sole trader the private tuition you provide is exempt from VAT. However, because the service is one of private tuition, if you provide the same service as an employee of your own company, that tuition must be subject to standard rate VAT. If your customers are individuals they will see your prices increase by 15% once you start trading through your company.

Q. I retired from the civil service in 1992 and have just been informed that my civil service pension has been overpaid for every year since then. As this money has to be repaid to the Government will I get refund of the tax I paid on that income?

A. The overpayment of pension will be recouped by the Government by reducing the amount of pension you were due to receive from 6 April 2009. This reduction will be small and should be covered by the normal inflationary increase you would have at that time, so you will receive approximately the same pension in 2009/10 as you did in 2008/09. You will not have to repay a lump sum. Your tax position for earlier years will not be affected, and you will be taxed on the pension you actually receive in 2009/10.

 

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Dakins Property Services

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Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

Fredrick Thomas Electrical and Maintenance

We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.