AC Mole Proactive (Budget2017)

A .C . M O L E & S O N S C H A R T E R E D A C C O U N TA N T S

pro

Acting for charities

Over many years, we have built a wealth of experience in the Charity Sector.

tive

AUTUMN 2017

Your Charity Structure – Is it fit for purpose?

In addition to accounts, audit and independent examination work, our charities team has been increasingly involved in helping trustees review their charity structures, internal accounting, budgeting and reporting systems.

Reviewing charity structures is not necessarily something at the top of every trustee’s agenda, but a more appropriate legal structure can offer a more secure foundation for the charity and additional protection for trustees.

There are several charitable structure options available. The newest, a Charitable Incorporated Organisation (CIO), offers trustees the same protection as company directors, but without the onerous additional reporting requirements of a company. New charities can be set up as a CIO and unincorporated charities can convert. For limited companies, however, this option is not yet available. Legislation is expected to be approved shortly with phased implementation anticipated from January 2018.

As a Trustee do you receive the information you need?

With increasing pressure on the not-for-profit sector it is vital that trustees and management receive up to date and relevant information.

The wide range of cloud accounting software packages now available including QuickBooks online and Xero have many features desirable to Charities and can significantly enhance management information. These features include more flexible reporting and allow for the automation of many administrative and processing tasks, freeing up time for more strategic work. Cloud software also allows remote access, giving trustees real time access to financial reports from any Wi-Fi enabled device and enabling up to the minute financial monitoring.

Our annual charity seminar on 4th December 2017 at the Castle Hotel Taunton includes sessions on “Proactive not Reactive – how to tackle the challenges facing the sector” and “Charity Commission Feedback” – areas of focus for the charity commission. If you would like more information or to attend please contact the office or email charities@ acmole.co.uk

A .C.MOLE & SONS

CHARTERED ACCOUNTANTS CHARTERED TAX ADVISERS

E. info@acmole.co.uk www.acmole.co.uk

A. C. Mole & Sons Stafford House, Blackbrook Park Ave, Taunton, Somerset TA1 2PX T. 01823 624450 F. 01823 444533

Best in Class

Dorset Mental Health Forum The Dorset Mental Health Forum is an independent local peer-led charity, which promotes wellbeing and recovery through lived experience, coproduction and recovery education. We were asked to act for the Forum around a year ago. Chief Executive Becky Aldridge writes: “The Forum is a unique organisation and our challenge now is to become sustainable for the future, whilst remaining rooted in our values and purpose. This has meant really focusing on how we do things, building the organisation's capacity through the use of technology, developing our workforce and fostering our professional relationships.

Towards the end of 2016/17, we made the daunting move away from our longstanding accountancy firm, to form a fresh relationship and new ways of working with AC Mole & Sons. We were also transferring from our old charity to our new CIO at the year end, which involved new payroll, auto enrolment schemes and new bank accounts and we decided to set up new accountancy software and improve our governance arrangements for the start of 2017/18 at the same time. We needed some help!

During the last few months, staff from AC Mole & Sons with different expertise have walked alongside us, providing bespoke, accessible and responsive support as and when it was required enabling us to achieve our optimistic objectives. We now have good financial foundations in place to build our future and we are looking forward to sharing the onward journey with AC Mole & Sons.”

Associate Rebecca Oatley – already a Chartered Accountant and Chartered Tax Adviser – recently qualified as a member of the Society of Trust and Estate Practitioners (STEP). STEP is a global professional body for practitioners who specialise in family inheritance and succession planning.

The Autumn Budget 2017

Rebecca was one of the top students on the STEP Advanced Certificate in Taxation of Trusts and Estates course for the second half of 2016, achieving the highest score and a distinction in a course undertaken by students world-wide.

Rebecca said: “The STEP exams are notoriously difficult and I am delighted to have achieved the top mark in the tax paper.

With tax, there is always something new to learn and to think about. The most enjoyable part though is applying the technical knowledge to real situations, because no two clients are ever alike.”

BUDGET 2017

A N D C H A R T E R E D TA X A D V I S E R S

Moving up After a year as Vice President of the Institute of Chartered Accountants in England and Wales (ICAEW), tax partner Paul Aplin took over as Deputy President in June. Over recent months he has attended and spoken at events in Paris, the Channel Islands and in the UK as well as attending meetings in London with ministers and officials.

Paul remains fully committed to the firm and to our clients. He said “Being away from the office more frequently doesn’t change the service I offer clients: I still see clients in Taunton and I am now seeing more of my clients in London than I was once able to. My email and phone are always on. The ICAEW role is fascinating and I am thoroughly enjoying it”.

Paul is, we think, the first ICAEW President to come from the South West District Society in the ICAEW’s 137 year history. He has also recently joined the governing Council of the Chartered Institute of Taxation.

Follow us on Twitter You can keep up to date with our thinking on tax, farming and general business issues on Twitter by following: @PaulAplinOnTax @RobAtACMole @CChandler

Philip Hammond delivered his second Budget on 22 November 2017. It was, he said, a Budget for “a future that will be full of change, full of new challenges and above all full of new opportunities” and one in which he set out his resolve “to look forwards not backwards”.

The economic backdrop gave him very limited room for largesse. The Office for Budget Responsibility (OBR) revised its growth predictions down from 2% to 1.5% for 2017, to 1.4% for 2018, 1.3% for 2019 and 2020 before returning to 1.5% in 2021.

CPI inflation is forecast to be 2.7% this year falling to 2.4% next year, 1.9% in 2019, 2.0% in 2020 and then stabilising at that level.

The deficit – the amount by which the Government’s annual expenditure exceeds its income – is now expected to be £49.9 billion for 2017/18 (£8.4 billion lower than the estimate in the Spring Budget), £39.5 billion in 2018/19, £34.7 billion in 2019/20 and

£32.8 billion in 2020/21. Overall, across the period 2017/18 to 2021/22, the deficit is now forecast to exceed the levels set out in the Spring Budget by £29.1 billion. No date has been set for achieving a surplus.

The national debt is now forecast to reach £1.791 trillion this year and to hit a staggering £1.909 trillion in 2022/23. Interest on this debt is currently running at over £40 billion a year, which is more than the combined annual defence and Home Office budgets.

The Budget Red Book once again highlights the UK’s poor productivity, which remains well below the average for the G7 and other OECD countries. This has been a persistent problem for the UK economy since the financial crisis in 2008. Although a number of measures were outlined by the Chancellor, the hill that has to be climbed is both steep and high.

AUTUMN 2017

BUDGET 2017

Tax changes for individuals

The Chancellor confirmed that the personal allowance will increase to £11,850 and the higher rate threshold will increase to £46,350 from 6 April 2018. The Individual Savings Account (ISA) investment limit will remain at £20,000 for the 2018/19 tax year, while the limit for Junior ISAs and Child Trust Funds will increase to £4,260.

Perhaps surprisingly, there were no further changes to tax relief on payments to pension funds. The Lifetime Allowance will increase from £1 million to £1,030,000 from 6 April 2018.

Stamp Duty Land Tax (SDLT) & Housing The surprise announcement was undoubtedly the permanent – insofar as anything is ever permanent in tax – abolition of SDLT on the first £300,000 of the property cost (on properties of up to £500,000) for first time buyers.

The Chancellor also set out a long term goal to build 300,000 new houses a year by the mid-2020s. He threatened to use compulsory purchase powers where land is held by developers but not being built on for financial reasons and has also launched a review into delays in permitted development projects.

Business taxation The 2017 business rates revaluation provoked significant discontent in the small business community and Mr Hammond introduced reliefs in the Budget which went some way to addressing this.

The Chancellor confirmed that £1,000 discount for pubs with a rateable value below £100,000 would continue next year. He also said that business rates will rise in line with CPI inflation (rather than RPI) from April 2018 and that with effect from the next revaluation (currently due in 2022) revaluations for non-domestic properties would be made three-yearly rather than five-yearly. Legislation will also be brought forward to address the so called “staircase tax”.

There had been much speculation in the press about the Government’s reaction to a recent report which drew attention to the level of the VAT threshold and contrasted it with much lower thresholds elsewhere in the EU. There had been suggestions that it could be lowered from the current £85,000 to as little as £25,000 forcing many more small businesses to charge their customers VAT. In the event Mr Hammond elected to freeze the VAT registration threshold at its current level until April 2020, but in the meantime to consult on the issue. Lowering the limit would certainly raise more tax and overcome the perceived barrier to growth that the threshold is said to represent (with some businesses deliberately remaining just below the threshold to avoid having to register and charge VAT) but it would also add a further burden to the smallest businesses.

Vehicle Excise Duty will increase for new diesel cars that do not meet the latest emissions standards but not for vans.

The indexation (inflation) allowance companies can use when calculating capital gains will be frozen from 1 January 2018.

Changes are proposed to the Enterprise Investment Scheme, significantly increasing the amount that can be invested from 6 April 2018 in “knowledge-intensive” companies to further encourage innovation.

Having placed the onus on public sector bodies to decide whether individuals working through limited companies should be treated as employees, the Government will now consult on extending that responsibility to the private sector.

It’s never too late….

Paul Bradshaw, a consultant with A C Mole & Sons, joined the firm following a long career in banking, specialising in the farming sector. Here he offers his thoughts on the recent interest rate rise.

Once, back in my banking days, I was debating with a client the merits of fixed or variable rate borrowings. At the time, Base Rate was at an historic low and I asked “at what point did you see Base Rate falling to under 1%?” The response was “I never did”. Interestingly, neither did I and for that matter I suspect few people had. Only months before the fall, economists were confidently predicting something different.

The recent rise in Base Rate has once again provoked discussion on the subject, with a mix of positive and negative reactions. Savers are perhaps pleased given the low returns seen in recent years, but borrowers will once again be examining their vulnerability to further rises.

Whilst the rate of interest is important, it is your ability to cope with repayments that is critical. It is why it is so important to work with your advisors to ensure that debt serviceability can be managed not only at current base rate, but also with a margin of safety for future potential rises. The amount of borrowing a business can cope with will depend not just on cost but also on structure and repayment terms.

This is where we can help, by using our experience and expertise to guide and support you in assessing your own position.

Whilst Death and Taxes might be the two certainties in life, when it comes to Interest Rates it is best to expect the unexpected!

Making tax digital A major announcement by the Government on 13 July – the result of much lobbying by professional and industry bodies – has significantly reduced the impact that MTD will have, but many businesses will still be affected by this radical new system from April 2019.

If you are VAT registered and have annual sales over the VAT threshold – currently £85,000 - MTD will still affect you from April 2019. All affected businesses will have to maintain their business records in digital form using accounting software and apps. The quarterly online VAT reporting obligation will remain. Other businesses and landlords will not now have to adopt MTD until 2020 at the earliest, unless they wish to.

The Government’s aim is to reduce errors in business records and make tax administration more efficient and effective. Our advice is that you should start planning for MTD sooner rather than later. While we believe that adoption should be voluntary, we also believe that digital technology and record keeping can offer benefits to businesses of all sizes.

We have decades of experience in this area and can offer help and support whatever your level of digital expertise.

If you are already using accounting software you should hopefully not find the transition to MTD particularly difficult.

If you currently use spreadsheets then these will need to integrate with MTD compliant software. Some software companies are working on links to automate this, but the process is still likely to need some initial set up. If you currently maintain manual records then you will need to change what you do.

Our Business Solutions team are happy to offer support, by recommending and providing software and Apps or training.

You can find more information on our dedicated business solutions website at www.acmolebusinesssolutions.co.uk

The rate of the R&D expenditure credit will be increased from 11% to 12%

Last word The Chancellor played it safe on 22 November and with the uncertainty over the effect Brexit is likely to have on the UK economy, perhaps that was not entirely surprising.

In the Press Over recent months we have again been quoted extensively in the media. Paul Aplin appeared on BBC Somerset twice on Budget Day with predictions and analysis and he was quoted in the Financial Times in October as well as in a number of West Country newspapers on the Paradise Papers revelations. You can read our views on topical tax and business issues on our website.

AUTUMN 2017

BUDGET 2017

Tax changes for individuals

The Chancellor confirmed that the personal allowance will increase to £11,850 and the higher rate threshold will increase to £46,350 from 6 April 2018. The Individual Savings Account (ISA) investment limit will remain at £20,000 for the 2018/19 tax year, while the limit for Junior ISAs and Child Trust Funds will increase to £4,260.

Perhaps surprisingly, there were no further changes to tax relief on payments to pension funds. The Lifetime Allowance will increase from £1 million to £1,030,000 from 6 April 2018.

Stamp Duty Land Tax (SDLT) & Housing The surprise announcement was undoubtedly the permanent – insofar as anything is ever permanent in tax – abolition of SDLT on the first £300,000 of the property cost (on properties of up to £500,000) for first time buyers.

The Chancellor also set out a long term goal to build 300,000 new houses a year by the mid-2020s. He threatened to use compulsory purchase powers where land is held by developers but not being built on for financial reasons and has also launched a review into delays in permitted development projects.

Business taxation The 2017 business rates revaluation provoked significant discontent in the small business community and Mr Hammond introduced reliefs in the Budget which went some way to addressing this.

The Chancellor confirmed that £1,000 discount for pubs with a rateable value below £100,000 would continue next year. He also said that business rates will rise in line with CPI inflation (rather than RPI) from April 2018 and that with effect from the next revaluation (currently due in 2022) revaluations for non-domestic properties would be made three-yearly rather than five-yearly. Legislation will also be brought forward to address the so called “staircase tax”.

There had been much speculation in the press about the Government’s reaction to a recent report which drew attention to the level of the VAT threshold and contrasted it with much lower thresholds elsewhere in the EU. There had been suggestions that it could be lowered from the current £85,000 to as little as £25,000 forcing many more small businesses to charge their customers VAT. In the event Mr Hammond elected to freeze the VAT registration threshold at its current level until April 2020, but in the meantime to consult on the issue. Lowering the limit would certainly raise more tax and overcome the perceived barrier to growth that the threshold is said to represent (with some businesses deliberately remaining just below the threshold to avoid having to register and charge VAT) but it would also add a further burden to the smallest businesses.

Vehicle Excise Duty will increase for new diesel cars that do not meet the latest emissions standards but not for vans.

The indexation (inflation) allowance companies can use when calculating capital gains will be frozen from 1 January 2018.

Changes are proposed to the Enterprise Investment Scheme, significantly increasing the amount that can be invested from 6 April 2018 in “knowledge-intensive” companies to further encourage innovation.

Having placed the onus on public sector bodies to decide whether individuals working through limited companies should be treated as employees, the Government will now consult on extending that responsibility to the private sector.

It’s never too late….

Paul Bradshaw, a consultant with A C Mole & Sons, joined the firm following a long career in banking, specialising in the farming sector. Here he offers his thoughts on the recent interest rate rise.

Once, back in my banking days, I was debating with a client the merits of fixed or variable rate borrowings. At the time, Base Rate was at an historic low and I asked “at what point did you see Base Rate falling to under 1%?” The response was “I never did”. Interestingly, neither did I and for that matter I suspect few people had. Only months before the fall, economists were confidently predicting something different.

The recent rise in Base Rate has once again provoked discussion on the subject, with a mix of positive and negative reactions. Savers are perhaps pleased given the low returns seen in recent years, but borrowers will once again be examining their vulnerability to further rises.

Whilst the rate of interest is important, it is your ability to cope with repayments that is critical. It is why it is so important to work with your advisors to ensure that debt serviceability can be managed not only at current base rate, but also with a margin of safety for future potential rises. The amount of borrowing a business can cope with will depend not just on cost but also on structure and repayment terms.

This is where we can help, by using our experience and expertise to guide and support you in assessing your own position.

Whilst Death and Taxes might be the two certainties in life, when it comes to Interest Rates it is best to expect the unexpected!

Making tax digital A major announcement by the Government on 13 July – the result of much lobbying by professional and industry bodies – has significantly reduced the impact that MTD will have, but many businesses will still be affected by this radical new system from April 2019.

If you are VAT registered and have annual sales over the VAT threshold – currently £85,000 - MTD will still affect you from April 2019. All affected businesses will have to maintain their business records in digital form using accounting software and apps. The quarterly online VAT reporting obligation will remain. Other businesses and landlords will not now have to adopt MTD until 2020 at the earliest, unless they wish to.

The Government’s aim is to reduce errors in business records and make tax administration more efficient and effective. Our advice is that you should start planning for MTD sooner rather than later. While we believe that adoption should be voluntary, we also believe that digital technology and record keeping can offer benefits to businesses of all sizes.

We have decades of experience in this area and can offer help and support whatever your level of digital expertise.

If you are already using accounting software you should hopefully not find the transition to MTD particularly difficult.

If you currently use spreadsheets then these will need to integrate with MTD compliant software. Some software companies are working on links to automate this, but the process is still likely to need some initial set up. If you currently maintain manual records then you will need to change what you do.

Our Business Solutions team are happy to offer support, by recommending and providing software and Apps or training.

You can find more information on our dedicated business solutions website at www.acmolebusinesssolutions.co.uk

The rate of the R&D expenditure credit will be increased from 11% to 12%

Last word The Chancellor played it safe on 22 November and with the uncertainty over the effect Brexit is likely to have on the UK economy, perhaps that was not entirely surprising.

In the Press Over recent months we have again been quoted extensively in the media. Paul Aplin appeared on BBC Somerset twice on Budget Day with predictions and analysis and he was quoted in the Financial Times in October as well as in a number of West Country newspapers on the Paradise Papers revelations. You can read our views on topical tax and business issues on our website.

A .C . M O L E & S O N S C H A R T E R E D A C C O U N TA N T S

pro

Acting for charities

Over many years, we have built a wealth of experience in the Charity Sector.

tive

AUTUMN 2017

Your Charity Structure – Is it fit for purpose?

In addition to accounts, audit and independent examination work, our charities team has been increasingly involved in helping trustees review their charity structures, internal accounting, budgeting and reporting systems.

Reviewing charity structures is not necessarily something at the top of every trustee’s agenda, but a more appropriate legal structure can offer a more secure foundation for the charity and additional protection for trustees.

There are several charitable structure options available. The newest, a Charitable Incorporated Organisation (CIO), offers trustees the same protection as company directors, but without the onerous additional reporting requirements of a company. New charities can be set up as a CIO and unincorporated charities can convert. For limited companies, however, this option is not yet available. Legislation is expected to be approved shortly with phased implementation anticipated from January 2018.

As a Trustee do you receive the information you need?

With increasing pressure on the not-for-profit sector it is vital that trustees and management receive up to date and relevant information.

The wide range of cloud accounting software packages now available including QuickBooks online and Xero have many features desirable to Charities and can significantly enhance management information. These features include more flexible reporting and allow for the automation of many administrative and processing tasks, freeing up time for more strategic work. Cloud software also allows remote access, giving trustees real time access to financial reports from any Wi-Fi enabled device and enabling up to the minute financial monitoring.

Our annual charity seminar on 4th December 2017 at the Castle Hotel Taunton includes sessions on “Proactive not Reactive – how to tackle the challenges facing the sector” and “Charity Commission Feedback” – areas of focus for the charity commission. If you would like more information or to attend please contact the office or email charities@ acmole.co.uk

A .C.MOLE & SONS

CHARTERED ACCOUNTANTS CHARTERED TAX ADVISERS

E. info@acmole.co.uk www.acmole.co.uk

A. C. Mole & Sons Stafford House, Blackbrook Park Ave, Taunton, Somerset TA1 2PX T. 01823 624450 F. 01823 444533

Best in Class

Dorset Mental Health Forum The Dorset Mental Health Forum is an independent local peer-led charity, which promotes wellbeing and recovery through lived experience, coproduction and recovery education. We were asked to act for the Forum around a year ago. Chief Executive Becky Aldridge writes: “The Forum is a unique organisation and our challenge now is to become sustainable for the future, whilst remaining rooted in our values and purpose. This has meant really focusing on how we do things, building the organisation's capacity through the use of technology, developing our workforce and fostering our professional relationships.

Towards the end of 2016/17, we made the daunting move away from our longstanding accountancy firm, to form a fresh relationship and new ways of working with AC Mole & Sons. We were also transferring from our old charity to our new CIO at the year end, which involved new payroll, auto enrolment schemes and new bank accounts and we decided to set up new accountancy software and improve our governance arrangements for the start of 2017/18 at the same time. We needed some help!

During the last few months, staff from AC Mole & Sons with different expertise have walked alongside us, providing bespoke, accessible and responsive support as and when it was required enabling us to achieve our optimistic objectives. We now have good financial foundations in place to build our future and we are looking forward to sharing the onward journey with AC Mole & Sons.”

Associate Rebecca Oatley – already a Chartered Accountant and Chartered Tax Adviser – recently qualified as a member of the Society of Trust and Estate Practitioners (STEP). STEP is a global professional body for practitioners who specialise in family inheritance and succession planning.

The Autumn Budget 2017

Rebecca was one of the top students on the STEP Advanced Certificate in Taxation of Trusts and Estates course for the second half of 2016, achieving the highest score and a distinction in a course undertaken by students world-wide.

Rebecca said: “The STEP exams are notoriously difficult and I am delighted to have achieved the top mark in the tax paper.

With tax, there is always something new to learn and to think about. The most enjoyable part though is applying the technical knowledge to real situations, because no two clients are ever alike.”

BUDGET 2017

A N D C H A R T E R E D TA X A D V I S E R S

Moving up After a year as Vice President of the Institute of Chartered Accountants in England and Wales (ICAEW), tax partner Paul Aplin took over as Deputy President in June. Over recent months he has attended and spoken at events in Paris, the Channel Islands and in the UK as well as attending meetings in London with ministers and officials.

Paul remains fully committed to the firm and to our clients. He said “Being away from the office more frequently doesn’t change the service I offer clients: I still see clients in Taunton and I am now seeing more of my clients in London than I was once able to. My email and phone are always on. The ICAEW role is fascinating and I am thoroughly enjoying it”.

Paul is, we think, the first ICAEW President to come from the South West District Society in the ICAEW’s 137 year history. He has also recently joined the governing Council of the Chartered Institute of Taxation.

Follow us on Twitter You can keep up to date with our thinking on tax, farming and general business issues on Twitter by following: @PaulAplinOnTax @RobAtACMole @CChandler

Philip Hammond delivered his second Budget on 22 November 2017. It was, he said, a Budget for “a future that will be full of change, full of new challenges and above all full of new opportunities” and one in which he set out his resolve “to look forwards not backwards”.

The economic backdrop gave him very limited room for largesse. The Office for Budget Responsibility (OBR) revised its growth predictions down from 2% to 1.5% for 2017, to 1.4% for 2018, 1.3% for 2019 and 2020 before returning to 1.5% in 2021.

CPI inflation is forecast to be 2.7% this year falling to 2.4% next year, 1.9% in 2019, 2.0% in 2020 and then stabilising at that level.

The deficit – the amount by which the Government’s annual expenditure exceeds its income – is now expected to be £49.9 billion for 2017/18 (£8.4 billion lower than the estimate in the Spring Budget), £39.5 billion in 2018/19, £34.7 billion in 2019/20 and

£32.8 billion in 2020/21. Overall, across the period 2017/18 to 2021/22, the deficit is now forecast to exceed the levels set out in the Spring Budget by £29.1 billion. No date has been set for achieving a surplus.

The national debt is now forecast to reach £1.791 trillion this year and to hit a staggering £1.909 trillion in 2022/23. Interest on this debt is currently running at over £40 billion a year, which is more than the combined annual defence and Home Office budgets.

The Budget Red Book once again highlights the UK’s poor productivity, which remains well below the average for the G7 and other OECD countries. This has been a persistent problem for the UK economy since the financial crisis in 2008. Although a number of measures were outlined by the Chancellor, the hill that has to be climbed is both steep and high.