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Harrison Salmon Handpicked as Leading Accountancy Firm

Harrison Salmon Associates have been selected as one of the UK’s leading accountancy firms by Handpicked Accountants – a new initiative designed to help business owners find a reliable accountant in their local area.

The Handpicked Accountants website was launched earlier this year by Begbies Traynor Group plc and features accountants from across the UK who have proven over time to be ethical, trustworthy and experts in their field.

The website also provides news, articles and advice of an accountancy and business nature on issues such as tax, cash flow and director responsibilities.

David Tattersall, Head of Client Relations at Handpicked Accountants, commented:

“Harrison Salmon Associates is an excellent accountancy firm with a strong reputation across Lancashire and the North West. They are highly regarded as being a credit to their profession through their key focuses on client growth, community and investment in their people.

“We’re delighted to feature Harrison Salmon Associates on Handpicked Accountants which recognises the leading accountancy practices across the UK.”

You can view our profile page on Handpicked Accountants HERE.

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Jointly Held Let Properties

From 6 April 2017, if you let residential property as an individual, you won’t be able to deduct all of the finance costs from your rental income. This blocking of deductions for loan interest and other finance charges is to be phased in over four years. Where your let property is mortgaged, you will be taxed on the rental income before deduction of interest charges. Your marginal tax rate may increase to 40% or 45%, and you could make a real loss after paying tax. Where your family receives child benefit, that could be clawed back in full as a result of your higher taxable income. A partial solution to this problem is to give a share in the let property to your spouse or civil partner. Such a gift won’t attract Capital Gains Tax if you and your spouse are living together during the year of the gift. The aim is to spread the income from the let property over two basic rate tax bands, and two personal allowances, to reduce the total tax payable. For maximum flexibility, the property should be held as ‘tenants in common’, so you can determine the exact share in the property that you each own; say, 10% and 90%. Your solicitor should draw up a trust deed which states who holds which share (or ‘beneficial interest’) in the property. If you want to be taxed on the property income in line with your beneficial interest, you and your spouse need to submit an election on Form 17 to HMRC, and include a copy of the trust deed. Without the Form 17 election you will both be taxed on 50% of the income from your jointly held property, whatever your underlying beneficial interest. You can’t submit a Form 17 election if the property is held as ‘joint tenants’ rather than as ‘tenants in common’. Legal advice should always be taken when changing the ownership of a property and, where the property is mortgaged, the permission of the lender will be required

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VAT Flat rate changes

The VAT flat rate scheme (FRS) allows small businesses to simplify their VAT records and, in many cases, keep a slice of the VAT they collect on behalf of the Government. Unfortunately, there has been abuse of the FRS, so HMRC is changing the rules. From 1 April 2017, it will be more difficult to make money out of the FRS. A VAT registered business which spends less than 2% of its gross turnover, or less than £1,000 per year on goods, will have to use an FRS percentage of 16.5%. The ‘goods’ counted for this test don’t include food and drink for the employees, motor expenses, or capital items. The high percentage of 16.5% means the business will have to pay over almost all of the VAT it collects, with no deductions permitted for VAT incurred on purchases. Businesses which operate in the knowledge and service sectors are unlikely to benefit financially from using the FRS after 1 April 2017, although the simplification for VAT records remains. If your business supplies services (anything from hairdressing to consultancy services) and you use the FRS, we should talk about whether you should remain within the FRS and, in some cases, whether you should even remain VAT-registered. •

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