The Business Exchange Swindon & Wiltshire Edition 28: Dec/Jan 2016/17 | Page 12

FINANCE Hear it from the experts… Best share split for spouses/civil partnerships From Peter Bromiley, AMS Accounting Ask AMS Advice for small businesses AMS Accountancy Ltd. 01793 818400 There are a few points to consider when deciding how to split the shares between them. GENUINE OWNERSHIP Who genuinely owns the business, founded and acquired it? Who works in it and earns the money? If the person who formed and runs the company isn’t the majority shareholder, this could be storing up trouble – particularly in the event of a fall-out between the partners, the main worker could find themselves not in control of their own company. TAX PLANNING Splitting shares between Partners can be advantageous – particularly when their respective taxable income is unequal. It is common for a shareholder to transfer shares to their partner if it minimises their overall tax bill. Transferring shares to a partner is straightforward and there are no Capital Gains Tax implications. RELATIONSHIP TO WORK DONE BY EACH PARTNER In 2007, there was a court case concerning a law called s.660a, in which the House of Lords ruled that a shareholder can give shares to their spouse without there being any tax issue - so long as the share transfer was an outright gift. No legislation has since altered this position. However, some people still incorrectly believe it is unsafe to gift more than 20% of the share capital to a non-working Partner This is not the case. ALPHABET SHARES This term describes the situation where there are different share classes with different rights – e.g. perhaps A shares with voting rights and B shares etc. with no voting rights but a right to dividends. The idea is that dividends are paid out in a tax efficient way to the B/C/D shareholders without the main director/shareholder having to give up control, so there is no real 'outright gift'. It is this sort of set-up where companies are at risk of an HMRC enquiry and I advise being very cautious around setting up Alphabet share structures. I have just started renting out a property. What do I need to do regarding tax? If you have net rental income on which you'll have tax to pay, (rent minus expenses) then you must register for a Self- Assessment tax return and keep a record of your rental income and ‘allowable’ expenses (you can find out what they are here www.gov.uk/rentingout-a-property/paying-tax). If the rent is lower than the personal allowance of £11,000 -2016/17, (assuming no other income), you will not pay income tax. But if the gross rental income exceeds £10,000, or the net rental income exceeds £2,500, then HMRC will still require a tax return. If you make a loss on the rental, it is still a good idea to complete a Tax Return so that you can record the loss, carry it forward, and maybe reduce your tax in a later year. Peter Bromiley ACA www.ask-ams.co.uk See our YouTube channel with 60+ useful videos. @AMSAccountancy Ten Top Bookkeeping Tips www.ams-accountancy.co.uk From Sandra Silk Bookkeeping Following as many of these tips as you can will help keep your bookkeeping simple and ensure you retain control of your finances. own car and is a tax free payment to you. 1. Banking Have a separate bank account for business transactions – do not mix personal and business spending as it is time consuming to identify and separate. 6. Drawings Take a regular amount from your business for personal spending rather than paying for personal items through your business. This will keep you aware of how much you are drawing and protect your cash flow. 2. Invoicing your customers Have a system for recording the work that you do so you don’t forget to invoice for it. Raise invoices promptly as soon as the work is complete and while you remember what you did. Ensure they are accurate, addressed correctly and sent to the person who should receive them. If you have been provided with a Purchase Order N umber use it. 7. VAT Be aware of the threshold for VAT registration (£83,000 for 2016-17). If your income from trading reaches the threshold within any 12 month period you only have 30 days from the date it reaches the threshold to register for VAT. Register any later and you will receive a fine. Alternatively choose to register before you reach the threshold if it is of benefit to your business. 3. Credit control Add payment terms to your invoice and make time to follow up unpaid invoices. Keep paid and unpaid invoices separate. Set up a payment system where you can take immediate payment by card or regular payment by direct debit (try GoCardless). 8. Record keeping Find a method of keeping your accounts which suits you - manually in an accounts book, on a spreadsheet or by using one of the latest cloud software (try Xero or Quickbooks Online) which are user friendly and can be accessed from your phone, ipad or computer. 4. Expenses Keep receipts to support all your business spending and know what expenses you can put through your business. Visit HMRC website to find out more about business expenses. 9. Filing Don’t forget to file all your invoices, receipts, bank statements, mileage records. Boring but you will be glad you did when you are looking for the receipt to return an item or when HMRC ask. HMRC accept electronic or paper format for documents. 5. Travel If it is not appropriate to have a company vehicle keep a mileage record when travelling on business (keep a notebook in your car or try Tripcatcher at £1.49 per month). Mileage can be claimed at 45p per mile up to 10,000 miles if you are using your 12 THE BUSINESS EXCHANGE 2016 10. Get help If keeping your accounts records is outside of your comfort zone or you are just too busy, ask for help. Keeping your accounts records up to date is vital for your business development. Don’t bury your head in the sand! Pension Auto Enrolment is here to stay! Would you like a simple cost effective solution? Would you like peace of mind and no fines? Contact [email protected] and you won’t have to think about it again. We will set up the scheme and complete your first month. We can do ongoing compliance too …… But don’t leave it too late – your Staging Date is the final deadline! Fo r help with auto enrolment, payroll or bookkeeping Give us a call now on 01722 341820 SPECIAL OFFER Quote TBE235 and receive our special rate of £349 for up to 10 employees (if you have more than 2 months left until your Staging Date)