Are you “a maker, a doer or a saver”? If you are any of these then the chancellor said this budgets for you. Now that the dust has settled, I thought I would explore what could be relevant for the Salon Owner in simple plain English.

Personal Tax

Personal Allowance

For most the personal allowance increased from £9,440 to £10,000 for 2014/15 and to £10,500 2015/16.

Implications – This is good news for Directors and Self Employed Salon Owners as it means the amount you can take out of the business tax free is increasing so you pay less tax. Make sure you are setup correctly as a business to take advantage of this you may be paying more tax than you need to.

New Tax-Free Childcare scheme

If you have children, from 2015 you might be eligible for tax relief on your childcare costs even if you are self-employed so basically for every 80p you put towards childcare the government will give you 20p to top it up up to £10,000 per child.

Implications – This should be a good scheme to use if you have children and pay childcare costs.

Savings

Do you have savings? If so there are few things you should check to see if you are maximising your return.

For those with a larger income and savings - ISA’s are changing to NiSA’s

And they are “nisa” too. From 1 July 2014 you will be able to save up to £15,000 a year in cash tax free instead of the existing £5,940.

For those with a small income and savings – check your R85

If currently only take a small wage and have small amount of savings, you might be paying tax on your savings that you shouldn’t. Use the HMRC calculator http://www.hmrc.gov.uk/calcs/r85/ to see if you should register to receive your interest on your savings without being taxed using a form R85. The amount you can have will increase in 2015 also so check again next year.

Implications – If you have savings both of these changes are beneficial to you as they should save you tax.

Pensions

Personal Pension

Various changes are being made to pensions that are designed to offer more flexibility in the way you will be able to take your pension and you won’t be forced to purchase and annuity anymore with most changes taking effect by April 2015.

Implications – Do you have a pension and/or have you thought about your exit strategy from the business? It could be worth discussing with us as we can probably help. Click here to book a free consultation

Workplace Pensions

Not mentioned in the budget but you may have seen the ads with the slogan “We’re all in”. Large companies have already had to enrol into Workplace Pensions and they become compulsory for smaller employers also shortly. This means that all small Employers will have to offer a pension to their employees starting from those with 50 to 249 staff who must implement the scheme between 1 April 2014 and 1 April 2015; those with 30 to 49 staff between 1 August 2015 and 1 October 2015; while those with fewer than 30 qualifying workers must implement the scheme between 1 January 2016 and 1 April 2017.

Implications – This is compulsory and you can be fined up to £10,000 a day for not complying. We will be providing more information and advice about this important subject over the coming months and we can even help you get set up.

You can find out when you have to enrol by entering your PAYE reference at the following link http://www.thepensionsregulator.gov.uk/automatic-enrolment.aspx or we provide a specific Workplace Pension Service for Salons

Employment

National Insurance

The Government has introduced an allowance of up to £2,000 per year for many employers to be offset against their employer Class 1 National Insurance Contributions (NIC) liability from 6 April 2014 and from April 2015 the Government will abolish employer NIC for those under the age of 21.

Implications – These allowances will be claimed as part of the normal payroll process and should mean a reduction Employers NIC for most Salon Owners. Check with your accountant.

Real Time Information (RTI) late filing penalties

RTI requires employers operating PAYE to report information on employees' pay and deductions in 'real time' to HMRC. Under RTI employers are obliged to tell HMRC about payments they make to their employees, on or before the date payments are made. Employers continue to pay over to HMRC the sums deducted from their employees under the PAYE system monthly, quarterly or annually.

HMRC are introducing automatic in-year penalties for RTI to encourage compliance with the information and payment obligations.

In essence late filing penalties will apply to each PAYE scheme, with the size of the penalty based on the number of employees in the scheme. It is proposed that monthly penalties of between £100 and £400 will apply to micro, small, medium and large employers.

This regime will start in October 2014.

Another change is more imminent. For tax years 2014/15 onwards, HMRC will charge daily interest on all unpaid amounts from the due and payable date to the date of payment, and will raise the charge when payment in full has been made.

Implications – Check with your accountant to ensure you are supplying Real Time Information correctly and avoid paying any extra fines as you already pay enough in tax.

If in doubt, check it out

There are of course exceptions and exemptions to most of the above depending on your personal situation; therefore you should get specific advice from your accountant. If you do not have access to this advice it may be worth you taking advantage of our free consultation, click below for more information...

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