Call for action over £20bn lost pension pots

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As much as £20bn of savings could be sitting in over a million so-called ‘lost pension pots’ where savers have lost touch with their providers according to analysis from the Association of British Insurers (ABI), which says this underlines the need for the government’s proposed pensions dashboard. Most people have moved jobs or houses at […]

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In a recent report Norway ranked as the most secure nation with a war chest built on its publicly held oil wealth.  This is in contrast to the UK which is one of the least financially secure, which allowed private sector companies to extract North Sea oil reserves and has spent the tax revenues.

EU adopts proposal to cut VAT on e-books

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The Professional Publishers Association (PPA) has welcomed an EU decision to reduce VAT on online publications, including electronic books, newspapers and periodicals. At present, electronically supplied services such as digital publications are taxed at the standard VAT rate, which in the UK is 20%. This contrasts with traditional media, which is zero-rated. The directive, which […]

HMRC update guidance on salary sacrifice for employers

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HMRC’s salary sacrifice guidance has been updated to provide information about the effect of employees changing from childcare vouchers to the new tax-free childcare scheme. Salary sacrifice for employers explains how to set up a salary sacrifice arrangement and calculate tax and National Insurance contributions. The guidance has been updated to add more information about […]

Brexit: Risks for UK and EU companies

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With less than six months until the exit, the main risks areas businesses may face are as follows: 1. Cyber-attacks: future cooperation between the UK and EU on this issue remains uncertain. No deal will have a knock-on effect on security. Businesses are concerned that the future involvement of the UK in organisations such as the […]

Frack Off

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If the IPCC is even close to being right about its timeline, speeding up the transition from fossil fuels to renewables is vital if we are to prevent passing the “tipping point” unleashing climate chaos. Can that be done? One of the winners of this year’s Nobel prize for economics – William Nordhaus – says […]

Bizarre excuses given for late Companies House filings

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An erupting volcano and a paper-eating goat are just two of the unusual explanations provided by directors for their inability to file their company accounts on time, according to this year’s analysis by Companies House of the most unusual excuses it received. Other reasons given for not meeting the deadline included the filer finding his […]

EU countries lost almost €150bn (£134bn) in VAT revenues in 2016

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European Commission analysis shows EU countries lost almost €150bn (£134bn) in VAT revenues in 2016, with the UK and Ireland among six member states reporting an increase in the ‘VAT gap’ between expected revenue and the amount actually collected. Pierre Moscovici, commissioner for economic and financial affairs, taxation and customs said: ‘Member states have been […]

Small charities failing to provide accurate financial data

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According to a Charity Commission survey, not enough small charities are providing correct information in their annual returns because too many are relying on someone with insufficient knowledge of their organisation’s accounts, leading to errors. In a review of a sample of charities, 38% of charities with incomes below £25,000 per annum were found to […]

Register for 2017-18 self assessment by 5 October

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The deadline for registering for self assessment is 5 October 2018 for the 2017-18 tax year.  If you have registered in the past then no action is needed, the deadline is for new self assessment cases. Anyone submitting a self assessment return for the first time – including higher income child benefit charge (HICBC) taxpayers […]

Childcare vouchers deadline 4 October 2018

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The Government will withdraw the tax and National Insurance relief associated with childcare vouchers for brand new applicants from 4 October 2018, with Tax-Free Childcare (TFC) providing help with childcare costs instead. For anyone who has not claimed childcare vouchers yet, it means they need to join in time for their employer to action their […]

Government announces Class 2 NIC will not be abolished during this Parliament

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The Government has announced that it will not proceed with the abolition of Class 2 National Insurance contributions (NICs) during this Parliament. The announcement was made on 6 September 2018. The abolition of Class 2 NIC was originally intended to simplify the tax system for the self-employed, however, implementation of the policy was delayed in […]

Brexit uncertainty hits future planning at businesses

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Lack of clarity around the Brexit process is hitting preparations for business after the UK leaves the EU, with only a third of finance professionals in large businesses reporting their organisation has started scenario planning and just 20% of those in small organisations, according to a poll. Around eight out of 10 of the respondents […]

Registering for Self Assessment – 5 October deadline

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The deadline for registering for Self Assessment is 5 October following the end of the tax year, You must tell HMRC that you need to prepare a tax return if you have any of the following: Self employed income (sole trader, freelancer, partner etc) Made a capital gain. Have employment income not taxed under PAYE. […]

HMRC targets inheritance tax returns

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Rising house prices and increases in other assets have seen HMRC launch more investigations to ensure individuals are paying the correct amount of inheritance tax (IHT), with the number of tax probes up by 5% this year. If an investigation finds that IHT has been underpaid, the estate may have to pay all of the […]

HMRC outlines ‘no deal’ preparations for EU-only UK traders

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HMRC has written to 145,000 VAT-registered businesses across the UK, including Northern Ireland, which only trade with the EU, explaining changes to customs, excise and VAT in the event of a ‘no deal’ Brexit, which would require them to complete customs declarations for the first time. While HMRC stresses that it is ‘unlikely’ the UK […]

UK employees less ethical than European counterparts

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UK employees seem to take a more lenient approach than the average European employee to questionable workplace practices, according to a survey by the Institute of Business Ethics which found that 38% believe petty fiddling is inevitable in a modern organisation compared to 30% of their European counterparts. The survey sought to establish whether employees […]

How to tax gains made on cryptocurrencies

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Many people will have heard of Bitcoin, Ethereum, Ripple, Bitcoin Cash, Litecoin, perhaps Stellar, Tether or Eos and there are thousands of new forms of cryptoasset which are less currency like and can have other attributes which can make them essentially a form of tokens tradable on different platforms worldwide. How do you tax Bitcoin? […]

Students – claiming a tax refund

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The Low Incomes Tax Reform Group (LITRG) is reminding students who have been working over the summer to make sure they have not overpaid tax and, if they have, to claim a refund from HMRC. Students are more likely to overpay tax as they usually only work – or earn more – at certain times […]

HMRC warns taxpayers to declare offshore income and assets

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HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties. New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. Some […]

Checking your pensions savings annual allowance

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HMRC have updated their guidance on the rules for carrying forward the unused pension savings annual allowance, together with a calculator on their website. For most taxpayers the maximum amount of pension savings that qualifies for tax relief each tax year is £40,000. It is possible to increase this amount by utilising unused relief brought […]

HMRC update guidance on paying the Apprenticeship Levy

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HMRC have updated guidance on how to allocate the apprenticeship levy allowance across multiple PAYE schemes and/or connected companies and charities. Pay Apprenticeship Levy explains when the apprenticeship levy needs to be paid and how to report payments. The guidance has been updated at the section about ‘how to allocate your allowance’. The apprenticeship levy […]

United Nations initiative issues sustainability guide

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The United Nations Global Compact and the Global Reporting Initiative (GRI) have released a practical guide for companies to use when measuring their environmental impact. Integrating the SDGs into Corporate Reporting: A Practical Guide, developed with support from PwC and Shift, makes plain the steps needed to set business objectives and both measure and report […]

Government outlines VAT implications if no Brexit deal

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The Government has set out the VAT implications for businesses in the event of a “no-deal” Brexit. For most UK businesses there will be no change to the VAT rules.There will, however, need to be some specific changes to VAT rules and procedures applying to transactions between the UK and EU member states. The key […]

HMRC late payment interest rates revised

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On 2 August 2018, the Bank of England Monetary Policy Committee voted unanimously to increase the Bank of England base rate to 0.75%. HMRC interest rates are linked to the Bank of England base rate and, as a consequence of the change, HMRC interest rates for late payment have also increased.  These changes came into […]

Plans for vaping ‘sin tax’ under challenge

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Suggestions that the government is planning a new ‘sin tax’ on vaping, in order to raise an additional £40m in tax revenue to help fund its commitment to a £20bn boost in NHS funding, have been strongly opposed by the UK Vaping Industry Association (UKVIA) on the grounds the move risks damaging public health. A […]

HMRC publish guidance on pension savings annual allowances

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If pension savings are more than the annual allowance, unused annual allowances from previous years can be brought forward. The annual allowance is the limit on the amount of pension savings that can be made to all pension schemes in a tax year before tax has to be paid on them. Pension savings over the […]

Restrictions on “rent-a-room” relief from April 2019

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Currently rent-a-room relief gives relief from income tax for up to £7,500 of gross rental income to individuals who let furnished accommodation in their only or main residence. HMRC propose to restrict the availability of “rent a room” relief to situations where the taxpayer is living in the let property for at least some of […]

Ask Alexa to contact HMRC for help

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HMRC has launched new and innovative technology to help more than 3 million customers renew their tax credits. HMRC has developed a customer-focused service through Amazon Alexa specifically for those seeking help with their tax credits renewals. Customers with Amazon Alexa-enabled devices can ask Alexa to ‘open HMRC’ and ask for help and information with […]

First software providers for Making Tax Digital VAT announced

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From April 2019, any VAT registered business with taxable turnover above the registration threshold will be required to submit digital VAT records and make digital returns as part of HMRC’s Making Tax Digital format. Voluntary VAT registered businesses with turnover below the VAT registration threshold will not be required to take this new approach until […]

Valuing an unlisted business

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If you are looking to sell your business, you will need to know what it is worth. There are various valuation methods however when valuing a business for sale to continue trading, typically a value model is something like this: Expected future annual profit before tax (HMRC require this to be provable by reference to […]

Extra NHS funding will see taxes increase

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The government’s announcement that the NHS is to receive increased funding of £20.5bn per year by the end of five years, has signaled future tax increases.  The funding will be front-loaded with increases of 3.6% in the first two years, which means £4.1bn extra next year. May said this long-term funding commitment means the NHS […]

Ebay and Amazon pledge to assist with VAT compliance

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The growth in online e-commerce is an important part of the UK economy but has also created opportunities for abuse of the VAT system. HMRC have asked for the assistance of online market place companies to help them identify online trader who may not be complying with the requirement to register for VAT. Ebay and […]

Making Tax Digital delayed further with the exception of VAT

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HMRC have confirmed that no further Make Tax Digital (MTD) for business changes will be brought in before 2020 at the earliest. The Treasury set out its revised priorities for current digital transformation projects, to make room for the additional demands on its resources of work to upgrade customs systems in preparation for Brexit. For […]

Simplification of Inheritance Tax

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The Office of Tax Simplification (OTS) have been tasked with carrying out a review of Inheritance Tax (IHT) with a view to simplifying how the tax operates. IHT is perceived to be complicated and currently yields a relatively small amount of tax compared to income tax and national insurance. There are a number of reliefs […]

Personal representatives must pay HMRC Inheritance Tax

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A recent case reminds us that personal representatives must pay HMRC Inheritance Tax.  In the case “G Harris as personal representative of HM (deceased)” the personal representative had distributed all funds to a beneficiary who promised to pay the inheritance tax.  The beneficiary (a brother of the deceased) moved abroad and cannot be located.  HMRC […]

Classifying food and drink expenditure

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The subject of classifying food and drink expenditure is a tricky area, not helped by HMRC’s vague guidance on the matter. There are VAT and corporation tax consequences depending on what classification you use so it is important to get it right. Generally, food and drink expenses incurred by a business can be categorised into […]

VAT threshold when more than one business

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If related businesses are trading in parallel there is the possibility that HMRC could argue the turnover of each business should contribute to the same VAT registration threshold (£85,000 until at least April 2020) rather than each business separately.  This is known as “business aggregation for VAT purposes”.  Put simply rules prevent businesses artificially staying […]

Simplifying PAYE Settlement Agreements

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The process for administering and agreeing PSA has changed to reduce the burden for employers. From 6 April 2018, a PSA will be agreed between the employer and HMRC and will remain in place for subsequent tax years unless changed or cancelled by the employer or HMRC. This means that employers will no longer have […]

Tax on foreign pensions

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With effect from 6 April 2017, individuals with foreign pension income will be taxed on 100% of the income in the tax year regardless of when they started to receive the pension payments. The 10% foreign pension allowance no longer exists. Further information can be found in HMRC’s Employment Income Manual As with all of […]

Young workers

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With the school summer holidays approaching, many businesses will look to employ young workers to help meet seasonal demands and to provide valuable work experience. Young workers have additional rights which must be followed strictly: Children below age 13 cannot work.  Children aged 13 to 15 can only work part time.  Children aged 16 or […]

Tax advantage of EMI share options lapses

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Update 29.5.2018: It has been reported that the European Commission has approved the state aid implicit in UK Enterprise Management Incentives. Post as at 9.5.2018: The EMI share option scheme introduced in 2000 was the most tax efficient scheme to attract and retain key staff, providing employees in receipt of qualifying options with significant tax […]

Working during hot weather

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With summer approaching, it is important to consider the affect of hot weather on the working conditions of your employees. Whilst there is no legal upper limit to temperature in the workplace, it must remain ‘reasonable’. What is considered reasonable must be judged against your particular work environment. The risks of high temperature must be […]

Working bank holidays

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Despite popular belief, UK employees are not legally entitled to bank holidays off work. The decision on the matter ultimately depends on the contract of employment. It is possible however, for a contractual term to be implied. For example, if an employee has regularly allowed the employees to have the bank holiday off, then it […]

Changes to termination payments

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The tax treatment of termination payments changed from 6 April 2018 and further changes will come into effect in 2019. Pay In Lieu of Notice Employers now need to pay Income Tax and Class 1 National Insurance Contributions (NICs) on an element of all termination payments from 6 April 2018, whether or not they are […]

GDPR

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The General Data Protection Regulation (GDPR) comes into force on the 25 May 2018. It’s a single set of rules that is designed to protect the privacy of individuals in their private, professional or public life. The regulation will change the way personal data can be collected, used and transferred. Businesses will need to know […]

Recognising genuine HMRC contact emails

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HMRC emails have long been used by scammers to try and entice you with “tax refunds” or other rebates into entering personal details, including bank account information, into fake websites. First and foremost, HMRC will never ask you for your bank details by email, and whilst they send the majority of communications by post, they […]

BBC presenter loses IR35 appeal

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HMRC has won the first in a series of appeals concerning the application of employment intermediaries legislation to BBC television presenters, after a first tier tribunal decided that IR35 applied to the arrangements under which the BBC contracted a presenter of the regional news programme, Look North. The appeal concerned the BBC engaging presenters through […]

VAT registration when changing entity type

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When a business changes entity, e.g. from a sole trader or partnership into a limited company, to what extent does the VAT status of the original entity affect the new one? The important point is whether the original entity was a taxable entity, this means that they were either already VAT registered or liable to […]

HMRC’s right to investigate

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HMRC have the right to investigate any taxpayer. An investigation can occur at any time and the cost of dealing with their enquiry can be expensive. HMRC use software to look for anomalies within taxpayer records and follow a complex and lengthy procedure requiring specific evidence and in depth answers. Evidence and answers that are […]

How your maternity pay is calculated

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If you are planning to go on maternity leave from your employment, it is important to be aware of the dates which affect how much statutory maternity pay you will receive. The basic rules of pay are 90% of you average weekly earnings for the first 6 weeks and then the statutory figure of £145.18 […]

Micro Accounts

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Accounting Standard – Accounting periods beginning on or after 1 January 2016 can no longer be prepared using the Financial Reporting Standard for Smaller Entities (FRSSE). Accounts for most companies with turnover up to £632,000 will be prepared under the Micro Entities Regime (FRS105). Micro accounts lack detail and so we also prepare detailed accounts […]

Worker status

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Employment law has developed to acknowledge that some individuals are not self-employed or employed, but are “workers” with some limited employment rights.  In tax law there are still only two statuses: employed or self-employed.  If an individual is a worker for employment law they are likely, but not necessarily, they will be self-employed for tax […]

Advantages of Furnished Holiday Lettings

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Many of the recent changes in the taxation of buy to let rental businesses do not apply to property businesses that qualify as furnished holiday lettings (FHL). In particular the restriction on deductibility of finance costs that started to apply from 2016/17 does not apply to furnished holiday lettings. It may be worth considering investing […]

Increase your Pension Savings on or before 5 April 2018 to reduce payments on account

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Investing more in your pension on or before 5 April 2018 that payment can be taken into consideration in computing your 2017/18 liability and hence you might be able to claim to reduce your payments on account, if you make them.  The maximum pension contribution is generally £40,000 each tax year, although this depends on […]

Invest in EIS or Seed EIS qualifying companies

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Before 6 April 2018, individuals may invest in companies that qualify under the Enterprise Investment Scheme (EIS) and treat that investment as having been made in 2016/17. The tax relief is 30% of the amount invested.  So a £20,000 investment can reduce the 2016/17 tax liability by £6,000. Investing in a Seed EIS qualifying company […]

Does your accounts system comply with MTD for VAT?

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Making Tax Digital (MTD) for VAT is scheduled to start in April 2019 which means that your VAT information needs to be submitted to HMRC digitally. On 18 December 2017, HMRC published draft legislation together with examples of how the business account records might link with the HMRC computer in order to comply with MTD […]

Tax relief for energy saving technology

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For a number of years there has been a generous 100% tax break for businesses that install energy saving technology in their premises. This is in addition to the £200,000 annual investment allowance for plant and machinery. The technology that qualifies for this 100% tax break includes energy efficient boilers and energy saving lighting systems. […]

Making regular gifts outside of surplus income

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Whilst on the subject of inheritance tax planning, why not consider setting up a standing order to family members? Such regular gifts can be outside of the scope of inheritance tax provided they are made out of surplus income and not out of capital. It would be necessary to demonstrate that you are left with […]

Passing on the family home

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New inheritance tax rules for passing on the family home started on 6 April 2017. This new relief should be taken into consideration when drafting your Will to make sure it is tax efficient. From 6 April 2017 an additional nil rate band of £100,000 is now available on death where your residence is left […]

Pension Planning

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For most taxpayers the maximum pension contribution is £40,000 each tax year, although this depends on their earnings. This limit covers both contributions by the individual and their employer. Note that the unused allowance for a particular tax year may be carried forward for three years and can be added to the relief for the […]

Fixed Rate Mileage for Property Businesses

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From 6 April 2018, unincorporated property businesses can now use a fixed rate mileage rate for business journeys by car, motor vehicle or goods vehicle as an alternative to claiming capital allowances and actual expenses. This information is courtesy of 2020 As with all of our tax tips and web pages this information is necessarily […]

Training Costs

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It is long established that training costs learning new skills is not tax deductible for self-employed.  This is because costs of learning new skills is deemed by HMRC to be capital not revenue expense. The government are now consulting on extending the scope of tax relief currently available for work-related training costs. As with all […]

What to consider when deciding which type of trading entity to use

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Should I be trading as a sole trader, partnership, limited liability partnership (LLP), company limited by shares, company limited by guarantee or a Community Interest Company (CIC)? There are a series of issues that need to be considered when deciding which type of trading entity to use: What is the expected profit of the business […]

Fixed rate mileage

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The following rates can used for fixed rate mileage: Car or van               First 10,000 business miles 45p Additional business miles 25p (remains 45p for national insurance purposes only) Motorcycles 24p Bicycles 20p Passenger payments 5p (all per mile) Note that these rates cover fuel, insurance, services, repairs, MOT, road tax, and car depreciation. […]

IR35 in the Private Sector

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The government are undertaking a consultation on shifting the burden in IR35 cases to private sector employers in the same way as has already been done for employers in the public sector. Please see our previous blog about shifting IR35 to public sector bodies here. As with all of our tax tips and web pages […]

New Restriction For Those in Pension Drawdown

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One of the measures affecting pensions announced in the Spring 2017 Budget, that was not included in the first Finance Act, concerns a new £4,000 pension input limit for those who are drawing income from their money purchase pension fund. The new flexible drawdown rules introduced from 6 April 2015 has allowed those with money […]

Changes To Pension Tax Relief In The Budget?

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Despite speculation about further restrictions to tax relief on pensions in the Chancellor’s Autumn Budget, there were in fact no changes in this area. It has been reported that this was a symptom of the narrow “majority” the government currently hold. Individuals can generally obtain tax relief at their marginal tax rate on up to […]

HMRC Tackles Employers Who Used EBTs Schemes

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With tax planning schemes as with many things in life, what looks too good to be true generally turns out to be so. This seems to be true for tax avoidance schemes using Employee Benefit Trusts (EBTs). During the summer HMRC won a landmark case at the Supreme Court against Glasgow Rangers Football Club concerning the […]

Furnished Holiday Letting Business Is Not A Business For IHT Relief

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A furnished holiday letting business is treated as a trade for most tax purposes. For example, capital allowances are available on furniture, and CGT entrepreneurs’ relief is available on disposal of the business. However, a recent tax case has determined that a holiday letting business in Cornwall did not qualify for inheritance tax business property […]

Many Will Not Get A Tax Return Next Year

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The government are gradually phasing out the self-assessment tax return and replacing it with an individual tax account pre-populated with data supplied by employers, pension companies and State Pension figures from DWP. With effect from April 2017, HMRC will have the power to assess income tax or CGT liabilities using information they already hold. This […]

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