The Business Exchange Swindon & Wiltshire Edition 35: Feb/March 2018 | Page 9

FINANCE TAX FREE INCOME IN 2018 Ask AMS Advice for small businesses AMS Accountancy Ltd. 01793 818400 Because they cost more for HMRC to administer than they pay in tax, certain types of income are not taxable up to a certain level. Here is the AMS in a nutshell guide. Personal Allowance Firstly, we all have an annual Personal Allowance - meaning the first £11,500 of taxable income (in 2017/18) is not taxable. Rent-a-Room Relief If you have a lodger, or lodgers, in your house, the first £7,500 of rent they pay you is tax free. (This limit is halved if you share the income with a spouse/partner.) Annual Dividend Allowance The first £5,000 of dividends received in the 2017/18 tax year is tax-free. For 2018/19, the dividend allowance drops to £2,000 per person. Dividends above the dividend allowance are taxable if not covered by the Personal Allowance. Personal Savings Allowance Basic Rate Taxpayers (taxable income up to £45,000 in 2017/18) can receive up to £1,000 of interest tax-free. Higher Rate Taxpayers (taxable income £45,000 to £150,000) up to £500 of interest tax- free. If you’re just in the Higher Rate tax threshold, you’re only entitled to the £500 Personal Savings Allowance. It could be worth making a few Gift Aid donations to drop back below the Higher Rate tax threshold and qualify for the £1,000 Allowance. (or miscellaneous income for providing assets or services) less than £1,000, it is not taxable. Also, if the trading income is over £1,000, a taxpayer can elect to have a deduction of £1,000 set against the total income instead of claiming actual trading expenses. A useful tax break for very small businesses. Records should always be kept in case it needs to be proven. Property Allowance From 2017/18, taxpayers have a Property Allowance of £1,000. This means if they receive property rental income of below £1,000 then it is not taxable. Also, if the property rental income is over £1,000, a taxpayer can elect to have a deduction of £1,000 set against the total rental income instead of claiming actual property rental expenses. Again, even if the rental income is less than £1,000, a taxpayer must keep records in case they need to prove the level of their income. Peter Bromiley ACA Partner at AMS Accountancy How is my wife’s state pension bigger than mine? I’ve been self- employed for 45 years, paid NI (Class 2 & 4). My wife worked part time / low paid jobs. Good question. It’s because we used to have two types of State Pension: the Basic State Pension and the Secondary State Pension (formerly SERPS). You probably didn’t receive a Secondary State Pension because, until April 2016 self-employed NI contributions didn’t count towards it. However, your wife’s Employee’s NI contributions, did count towards her Secondary State Pension – so she gets a bigger pension. Class 2 and Class 4 contributions have been, in effect, just another tax (so are Employer’s NI contributions). Si nce April 2016, we have had one flat-rate State Pension irrespective of how much NI we pay and the self-employed are now treated the same as the employed. A bit late for you, I’m afraid. Peter Bromiley ACA 60+ videos on YouTube. ‘Ask AMS Accountancy’ @AMSAccountancy www.ams-accountancy.co.uk Trading Allowance From 2017/18, taxpayers have been given a Trading Allowance of £1,000. This means if they receive sales income from trading SWBF open for lending South West Business Finance (SWBF) is open for business and is currently helping a number of businesses in Swindon and Wiltshire acquire the funds they need to go for growth in 2018. SWBF is now being recognised on a national scale in achieving success for clients. They go out to multiple lenders when finding a product, offering a much more flexible approach to a mainstream bank. They have recently secured finance for a Swindon-based business who required some assistance to manage their cash flow through a difficult period. The bank was only able to help with increased security to extend their overdraft and took six weeks to give this advice. It would have taken at least another 6-8 weeks to get the facility in place, which in a fast-moving business was not helpful. This was despite having banked with them for over 20 years. Dan Smith, director of SWBF said: “On working closely with the client and on assessment of their financial performance we were able to find an unsecured facility (personal guarantees were required) for £300k, helping the company through this stressful time. The funds were delivered inside 10 days of receiving the full information. Since completed this facility we have now assisted them in funding commercial property, as well as the MD’s personal property portfolio.” LOVE OFFICE SPACE Flexible space with great terms MEETING ROOMS VIRTUAL OFFICE TELECOMS BUSINESS SUPPORT As a business owner, it’s your passion and commitment that drives your business. Basepoint Business Centres share this enthusiasm and are committed to helping businesses by offering first-class workspaces alongside services that support you in making your business a success. Offices | Flexi-Space | Virtual Office | Meeting Rooms Unique workspaces for your business For more info: www.swbf.co.uk 01225 800849 Contact us today 01793 602555 [email protected] @basepoint_swnd basepoint.co.uk THE BUSINESS EXCHANGE 2018 9