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March Question and Answer Corner
Newsletter issue - March 09.
Q. We have just taken on a new employee who has presented his form P45. But it's an A4 sized back and white form, not the usual smaller shaded form. Is it a bad copy? If it is, what should we do?
A. Don't panic. The format of the form P45 was changed last October, but there was not much publicity about it. The new form P45 is A4 sized, double its previous size, and it must be printed in black ink on to plain white paper, not onto pre-printed HMRC stationery. The new form is valid and includes all the information that was on the old form. There are also some new compulsory boxes: date of birth and gender for the employee, and the address and postcode for the former employer must be shown in full. The new format P45 will be compulsory for all employers from 6 April 2009.
Q. I have built up quite a good business as a music teacher with profits of about £80,000 a year. Should I incorporate my business?
A. The full answer to your question will involve a lot of detailed calculations concerning how much you want to draw from the business each year, what assets you use in the business - such as a car and musical instruments, and what other people may be involved - such as your spouse. However, your main consideration should be VAT. As a sole trader the private tuition you provide is exempt from VAT. However, because the service is one of private tuition, if you provide the same service as an employee of your own company, that tuition must be subject to standard rate VAT. If your customers are individuals they will see your prices increase by 15% once you start trading through your company.
Q. I retired from the civil service in 1992 and have just been informed that my civil service pension has been overpaid for every year since then. As this money has to be repaid to the Government will I get refund of the tax I paid on that income?
A. The overpayment of pension will be recouped by the Government by reducing the amount of pension you were due to receive from 6 April 2009. This reduction will be small and should be covered by the normal inflationary increase you would have at that time, so you will receive approximately the same pension in 2009/10 as you did in 2008/09. You will not have to repay a lump sum. Your tax position for earlier years will not be affected, and you will be taxed on the pension you actually receive in 2009/10.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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