Tuesday 24 April 2018

New Tech

I don't very often need to be reminded how tech is changing the world but sometimes I get a reminder when I wasn't even looking for one.

Here's the reminder I was thoughtfully provided with by the Universe the other day...

A mate of mine had been sent by his wife to buy new shoes for his two year old daughter.

Now I will admit it's been a while since I had to buy shoes for my daughter - she's 21 - but I can just about remember doing it.  Here's the process:

Get a good description of what you are to buy, take some money with you and buy the shoes.  And woebetide if they were wrong.  Daughter would be upset and wife would be cross... and you would be back at the shop tout suite to return the offending items.

So, I met my mate ahead of having a swift half on a Saturday lunchtime and this is what happened.  In the bar he took the shoes out that he'd bought.  He took a photo of them which he sent to his wife using WhatsApp to gain pre-approval before he went home.

thirty seconds later he got a response and thirty seconds after that we were back in the shoe shop asking for a refund.

It was almost deja vu on Monday when I checked what our Support Centre was suggesting in terms of what they are calling our 'Software Estate' and I have to say even I am impressed with what we can now do.

When a new customer comes on board we have to provide something called a Letter of Engagement - this has all been streamlined.  Going forwards we will only have to set up a new client in one place and that will populate everything else.  Currently we have to type the same details into at least three, sometimes six different places.

Our bookkeeping system can suck through bank transactions automatically, reconciles bank accounts and provides us with client portals.in preparation for GDPR... (more about GDPR in future posts).

For customers who can't access Internet Banking we can now take paper bank statements and scan them directly into spreadsheets or - even better - directly into Quickbooks.

Another app allows us to take photographs of expense claims and our accounts production software will be fully Making Tax Digital ready.

We can provide management accounts and dashboards to our clients providing them with up to the minute information about how their business is performing.

I love all this stuff and can't wait for the chance to implement it all even though I was a bit nervous about online only accountants that are springing up.

But then I was reassured when I read the following piece in a magazine:

'You are at the centre of a raging tornado of innovation.  We must embrace technology but not become it.  Clients will engage, relate and buy services based on the experiences they are provided.  Customer Experience is rated as the single most exciting opportunity in client growth and retention.

Remember, people buy from people first.'

And suddenly I wasn't nervous anymore - and neither should you be even if your industry is going through as much change as ours...

Thursday 12 April 2018

Tax - It's Complicated...

...or at least people like me would have you think so.

It has to be said, though, that this year there is some justification to the claim that 'tax is complicated' especially if you live in Scotland.

The new tax year started on 6th April - we are in the 2018/19 tax year - and in Scotland that date is particularly significant.

It represents the day that the Scottish tax regime diverged significantly from the rest of the UK.  Instead of the four tax bands we had up to 5th April there are now six for those of us who live in Scotland.

(And if you're unsure whether you are subject to the Scottish rate of Income Tax have a look at your tax code - you'll find it on your payslip.  If it has an 'S' in front of it then you are part of the Scottish regime).

So, the new standard tax bands in Scotland are (and this assumed you have standard tax code of S1185):

Income:

From nil to £11,849 - 0%
From £11,850 to £13,849 - Starter Rate - 19%
From £13,850 to £23,999 - Basic Rate - 20%
From £24,000 to £43,429 - Intermediate Rate - 21%
From £43,430 to £149,999 - Higher Rate - 41%
Above £150,000 - Top Rate - 46%

The effect of all this depends on your income levels.  If you are a 'lower' earner you would pay a bit less.  A 'higher' earner would pay a bit more.

For example, if you have a £15,000 salary in the 2018/19 tax year this is how your tax would work out in Scotland (not taking into consideration National Insurance):

£15,000 salary less the personal allowance of £11,850 = £3,150 taxable income
£2,000 of this would be at the Starter Rate of 19% = £380
£1,150 (the rest of the taxable amount) would be at Basic Rate of 20% = £230

Total tax = £610.

If you earned the same amount of money in England you would pay £630 - £20 more than Scotland.

However, if you earned £45,000 in 2018/19 it flips.  Here's the calculation:

£33,150 would be taxable after taking off the personal allowance.

£2,000 of this would be at the Starter Rate of 19% = £380
£10,150 would be at Basic Rate of 20% = £2,030
£19,430 would be at the Intermediate Rate of 21% = £4,080.30
£1,570 would be at the Higher Rate of 41% = £643.70

Total tax = £7,134

If you lived in England and earned the same salary the total tax bill would be £6,630.

You pay £504 more if you live in Scotland.

So - more complicated because of the increased number of tax bands.  And remember the more sources of income you have the more complicated it gets.

If you have some salary, but have a business that you earn from, too, you have some bank savings and some dividends and you rent out a property (and heaven forbid if you sell it during the year and have Capital Gains Tax to calculate!) it does get a little messy.

But not to worry - there's a really good calculator on the BBC website - you can get it here:

http://www.bbc.co.uk/news/business-17442946

To help work out where you are and whether you will be better or worse off.

If you'd like to talk about any of this then feel free to get in touch - we'd be delighted to talk it through with you.