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January Question and Answer Section

Newsletter issue - January 2011.

Q. My employees earn an average of £490 per week, how much more NI will I have to pay for each employee from April 2011?

A. For an employee on average earnings of £490 per week you currently pay employer's NIC of £48.64 per week in 2010/11, but from 6 April 2011 this NIC bill increases to £48.85 per week. That adjustment appears small but it amounts to £10.92 per year per employee. The increase in NIC costs will be much larger for higher paid employees, but smaller for lower paid employees. For an employee on £210 per week, you pay employer's NICs of £12.80 per week in 2010/11, but this will drop to only £10.21 per week in 2011/12.

Q. I had taxable income of about £60,000 in 2009/10, made up entirely of dividends and bank interest. I also pay £2,400 per year into a personal pension. Will I get 40% tax relief on that pension contribution?

A. You will receive higher rate tax relief on your pension contribution if you make the claim on your tax return for 2009/10. A contribution of £2,400 is worth £3,000 to your pension fund as the pension scheme trustees reclaim £600 basic rate tax from HMRC. Your basic rate tax limit will be expanded to £40,400 by the gross value of your pension contribution. Which means £3,000 of dividends which would have been taxed at the higher rate applicable to dividends of 32.5%, will be taxed at 10%, saving you an additional 22.5% in tax, or £675.

Q. Our trade body charges a membership fee in advance for each calendar year, but from 1 December 2010 new members who join online can pay the annual fee for 2011 and become a member immediately, effectively receiving the balance of the 2010 membership period for free. The organisation is VAT registered and the membership fee is subject to standard rate VAT. Is it correct to charge new members 20% VAT when they join online in 2010?

A. The organisation should charge VAT at the standard rate in force at the date of the tax point for the membership subscription. This tax point is the earlier of the date the membership fees is received or the VAT invoice is issued. For new memberships paid for before 4 January 2011, the correct rate of VAT to charge is 17.5%, even where the membership covers the whole of the year 2011.

 

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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.