OrangeGenie Newsletter Autumn 2012

3rd Floor Buckingham House Buckingham Street Aylesbury Buckinghamshire HP20 2LA Tel: 0845 055 7055 www.orangegenie.com

QUART ERLY NEW SLETTER FOR CUSTOMERS OF ORANGEGENIE FREELANCER SERVICES

autumn Welcome to our Autumn Newsletter. As we look back on an enthralling Summer of events and perhaps take a breath to recover before the nights start drawing in, we hope that this quarter’s newsletter will address some of the most topical issues.

If we have not covered the one question you keep meaning to ask or we have prompted more please do not hesitate to contact your Client Accountant. We are here to help.

Have a lovely Autumn

Helen Christopher Operations Director, OrangeGenie Freelancer Services

How to deal with an IR35 Letter The first IR35 enquiry letters to contractors have been issued. Entitled “Check of employer records”, these letters request a breakdown of the income shown in the accounts of your limited company to the end of the last accounting period and copies of all the contracts that gave rise to that income. The letter goes on to ask if you have considered “the possibility of the company” being subject to the IR35 legislation and if you have concluded that IR35 does not apply then “please explain to me the basis upon whi ch you arrived at that conclusion” What should you do if you receive an IR35 letter?

You should contact your accountant. HMRC appear to be giving people about a month to get the information together so we can assist you in answering the questions. If you have had your contract reviewed by an IR35 specialist you should also contact them for further assistance in preparing your response. If you have any sort of HMRC IR35 investigation insurance you will need to contact your provider.

I have always considered IR35, but should I now be worried?

If you have reviewed all your contracts and more importantly your working practices, and can show that the engagements are outside IR35, then there should be little to concern you. Composing a response to HMRC should be straightforward and you will be able to provide written confirmation showing how you reached your opinion on your IR35 status.

I have never given IR35 much thought, can I do anything now to prepare?

Find out about IR35 and check out HMRC’s new guidance, Have your contracts and working practices reviewed by a specialist. Most will review old as well as current engagements. Due diligence – think about your contracts over the last year and currently.

Make a note of the differences between client employees and contractors. Consider seeking client confirmation of the day-to-day working practices. Are you confident that the client will support your view of your IR35 status?

Tel:01296 0845 468185 055 7055

www.orangegenie.com wwww.orangegenie.com

Preparing for the 45% tax rate.

If you currently belong to the Taxman’s 50% tax club, you will be looking forward to the proposed cut to 45% from April 2013. You can take some simple steps now to maximise the tax saving from this.

Defer Income Regardless of how much income you have, the thought of handing over 50% of this to the taxman is pretty unpalatable. The good news is that the rate is due to drop to 45% from 6 April 2013 and so you have a window of opportunity in which to shift income or advance expenses to take advantage of this reduction.

Salary and Dividends As a director/shareholder of a company you are in a position to determine your own salary levels and when and if dividends should be paid. Clearly commitments in life mean you need a certain level of funds on a regular basis but, if you are able to, why not defer the level of funds you take from the company so as to attract 45% rather than 50%?

Advance Pension Payments Advancing a tax deductible expense will have the same effect as deferring income. If you usually pay £10,000 per year into a pension, why not bring it forward from 2013 and pay it just before the end of the tax year. Instead of receiving 45% tax relief, ie £4,500, you’ll attract 50% i.e. £5,000.

Charitable Giving The Government announced in the last budget that there was to be a cap on the additional tax relief available for Gift Aid payments. The potential effect this measure on charities has led to a government re-think, but why not guarantee that tax relief is at 50% by making next year’s donations this year ahead of 5 April 2013?

Investment Income Do you have personal savings on deposit with a bank? Why not consider opening an account which pays interest annually instead of monthly or six monthly? Most financial institutions offer one- year bonds which pay interest at the end of the Investment period, thereby giving you the opportunity to shift the income.

Example: - Peter receives interest from his savings accounts on a six monthly basis. He has already received interest for the period to 30 June 2012 and will be due to receive a further payment in December 2012. This will be taxed at 50%.

If Peter moves his deposit to a one- year’s savings bond now, the interest on the Investment is likely to be paid on maturity in July 2013, thereby attracting 45% tax.



Cycle helmets which confirm to European Standard

  

Bells and bulb horns

 

Cycle clips and dress guards

Lights, including dynamo packs

Mirrors and Mudguards to ensure riders visibility is not impaired Panniers, luggage carriers and straps to allow luggage to be safely carried



Locks and chains to ensure cycle can be safely secured



Pumps, puncture repair kits, cycle tool kits



Reflective clothing along with front reflectors and spoke reflectors

Inspired by Bradley Wiggins?

Bradley Wiggins’s dream of winning the incredible double of a Tour de France and an Olympic Gold was realised this summer. Whilst most of us reserve our cycling for our free time, cycling can become an economical part of our working day. To promote healthier journeys to work and reduce environmental pollution, the government introduced an annual tax exemption, which allows employers to loan cycles and cyclists’ safety equipment to employees as a tax-free benefit.

Whilst the Cycle to work Scheme is not currently available to employees of OrangeGenie Umbrella, it is possible for contractors trading through their own Limited Companies to take advantage of the rules.

Assuming that all employees are offered the same opportunity, the Limited company can offer a “salary plus” arrangement whereby they purchase a bike that is then loaned to the employee for use on a qualifying journey i.e. the journey between home and workplace. There will be no tax charge in relation to this benefit.

The company can also provide the following safety equipment, with no benefit in kind occurring:-

The 20p per mile expense rate claimable for riding your own bike does not apply if you are using a company owned bike.

On the cessation of the company there are some simple rules in relation to transferring ownership of the bike.

If you would like to take advantage of the scheme contact your accountant for more details.

Meet the team Nathan Ball - Database and Systems Manager Nathan is an experienced Database and Systems Manager.

Nathan helps to ensure data integrity and integration between our systems to ensure we provide you with the best service possible.

Nathan is a PRINCE2 qualified Project Manger and Practitioner.

When not keeping the databases in check at OrangeGenie, Nathan is a keen angler, and can often be found riverside with a rod in hand.