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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
Owners of second homes and buy-to-let (BTL) landlords face a much shorter period in which to pay any capital gains tax (CGT) due on property sales from April 2020. Where Capital Gains CGT is due, a disposal is normally reported to HMRC in a self-assessment tax return. Under self-assessment, any CGT must be paid by […]
The World Cup, which starts today, is a great opportunity for businesses around the world to capitalise from employees’ national pride. However, the tournament features many games during work hours, causing workers to have to potentially miss games, which can cause staff to feel unmotivated. It is therefore important to set clear rules for you […]
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 […]
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 […]
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 […]
In Palmer [2018] TC 06411, the First Tier Tribunal has decided that although there was no reasonable excuse for the late filing of a return, the penalties charged should be reduced by 70% because the taxpayer was a first time filer. This case is another reminder of how penalties can be mitigated even if there […]
We have recently advised on a case where a furnished holiday let cottage is being sold, from a small portfolio of such properties. A key question on such an arrangement is whether Entrepreneurs Relief (ER) applies on the sale of a single property from such a business. For ER to apply there must be an […]
In April 2016, new rules were brought in requiring companies to disclose Persons with Significant Control (PSC). PSCs are those who own at least 25% of a company’s shares, hold at least 25% of the company’s voting rights or have control over appointments to the board of directors. The PSC register is designed to reduce […]
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 […]
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 […]
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 […]
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 […]
During February 2018, nine out of thirteen cases for personal tax late filing penalties taken to the First Tier Tribunal were found in favour of the tax payer. The majority of these verdicts were given on the basis that the penalties were generated automatically and not by a “flesh and blood” person and therefore did […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 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 […]
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 […]
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 […]
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 […]
The most successful entrepreneurs focus on their mental and physical fitness. The two are inextricably linked. Most IronMan triathletes are senior business people and successful entrepreneurs. A good workout helps to clear your mind and prepares you to face the daily challenges of your business.
Making sure your people feel valued is vitally important. People who feel valued tend to be more committed to their employers and also tend to go the extra mile, when necessary. One of the most important duties of any manager is to ensure that their team members feel that their work is appreciated. To ensure […]
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 […]
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 […]
Set time aside to read about your industry, related industries, current affairs, pop culture and what is trending around the world. Bookmark or tag articles that you come across throughout the day and come back to read them during your dedicated “reading time”.
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 […]
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 […]
Much of the focus in the Autumn Budget on Stamp Duty Land Tax (SDLT) concerned the abolition of the duty for first time buyers of property up to £300,000. There was also welcome news for those involved in other property transfers where the 3% supplementary SDLT charge potentially applies when an interest in a second […]
Indexation allowance was introduced in the 1970s to provide relief from paying tax on inflationary gains based on increases in RPI. The relief was abolished in 1998 for individuals and trusts, and replaced with taper relief. However, it was retained for companies. The Autumn Budget announced that indexation for corporation tax would cease for disposals […]
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. […]
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 […]
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 […]
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 […]
Now is a good time to start planning your tax affairs before the end of the tax year on 5th April. An obvious tax planning point would be to maximise your ISA allowances for the 2017/18 tax year (currently £20,000 each). You might also want to consider increasing your pension savings before 5 April 2018 […]
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 […]
Reforms to NICs will now take effect from April 2019 including abolition of Class 2. This had been previously announced to be from April 2018. This information is courtesy of 2020 As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If you would like […]
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 […]
Disincorporation relief will not be extend beyond the current 31 March 2018 expiry date. HMRC
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 […]
Business losses for a sole trader or partnership may be utilised in various ways. Firstly losses can be set against other income arising in the year of loss or the previous year. A loss in incurred in the year in which the trade commences or any of the next three years may set against total […]
In a recent tax case HMRC proved that a trader claiming to operate through a limited company was actually trading as a sole trader. In order to “trade through a limited company” more is needed than simply creating a company at Companies House. It is also necessary to actually operate through the company: All […]
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. […]
The rules for salary sacrifice arrangements changed with effect from 6 April 2017 and HMRC have updated their guidance for employers. Apart from 5 exceptions the amount assessed as employment income for new salary sacrifice arrangements is now the greater of the salary foregone and the taxable benefit as set out in the tax legislation. […]
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 […]
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 […]
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 […]
As we have previously mentioned here, auto-enrolment of staff in workplace pension schemes now applies to even the smallest of employers, although there are exclusions. The current minimum contributions are 2%, with at least 1% from the employer. These are scheduled to increase to 5%, at least 2% from the employer, from 6 April 2018. […]
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 […]
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 […]
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 […]
From April 2018 there will be no benefit-in-kind liability if you are charge your electric cars at your employer’s premises. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If you would like detailed specific advice please contact us.
Remember, it is important to be different to your competitors. Use the information you’re gathering from your customers to establish: (a) what they value (b) what they don’t value Here’s how you do it. List all the key attributes of your products and services, such as: 1. Speed of delivery 2. Pricing policies 3. Range […]
Armed forces personnel can now receive some accommodation expenses free of income tax and National Insurance. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If you would like detailed specific advice please contact us.
The starting rate for savings income will remain at £5,000 for 2018-19 and the standard ISA annual subscription limit will stay at £20,000. Limits for junior ISAs and child trust funds will rise to £4,620. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. […]
In keeping with the government’s stated aim of increasing the personal allowance to £12,500 by 2020, this will rise to £11,850 for 2018-19, while the higher rate threshold for income tax increases to £46,350. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If […]
It had been announced that by 2019 capital gains tax on residential property would have to be paid within 30 days of disposal. This has now been delayed until 2020. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature. If you would like detailed […]
First-time buyers paying £300,000 or less for a residential property will no longer pay stamp duty land tax (SDLT). For purchases up to £500,000, SDLT at 5% will be payable on the excess above £300,000. The comparable rates for non-first-time buyers are 0% up to £125,000; 2% from £125,001 to £250,000, 5% from £250,001 to […]
The £85,000 VAT threshold will remain at the same level for two years pending further consultation. The Office of Tax Simplification has pointed out that this high limit (one of the highest in Europe) distorts competition and is a disincentive to business.
The general rule is that if the entertainment is provided only for directors (or partners) of a business the VAT incurred is not input tax. This is because the goods or services are not deemed used for a business purpose. The VAT therefore cannot be reclaimed on the VAT return. However, where directors and partners […]
On the first Monday in November each year, the voluntary living wage is increased. From 6 November 2017, the voluntary UK living wage has increased from £8.45 to £8.75 per hour. The London living wage has increased from £9.75 to £10.20 per hour. The annual November increases to the voluntary living wage do not affect […]
An employer can provide a gift to it’s employees over the festive period without it being a benefit in kind provided that it meets the following criteria: the cost of providing the benefit does not exceed £50 (or the average cost per employee if a benefit is provided to a group of employees and it […]
Rent a room relief is a tax relief available to those who rent out a room within their only or main residence. The current relief allows the first £7,500 of income generated in this way to be tax free. The legislation states that allowable rental receipts must be for the use of furnished accommodation, in […]
The Government’s Autumn Budget Day will be on 22 November 2017. There are reports that this may include: A reduction in the annual pension allowance from £40,000 to £30,000 as well as the tapered annual allowance for higher earners being reduced from £150,000 to £120,000. Pension tax relief could be cut for older workers to […]
Green Accountancy has three new vacancies. These are for a new trainee accountant; a part qualified accountant; and a payroll and bookkeeping administrator. Full role descriptions and details on how to apply can be found here.
Note that the following benefits are taxable State Pension Jobseeker’s Allowance Carer’s Allowance Employment and Support Allowance (contribution based) Incapacity Benefit (from the 29th week you get it) Bereavement Allowance Pensions paid by the Industrial Death Benefit scheme Widowed Parent’s Allowance Widow’s pension The following benefits are tax free: Housing Benefit Employment and Support […]
The following income is exempt from UK tax: Income from National Savings (NS & I) Certificates (but interest on a National Savings Account is taxable) Winnings on Premium Bonds. ITTOIA 2005, s.692 Any income from betting, gaming or lotteries Scholarship awards Income from ISAs (individual savings accounts). ITTOIA 2005, s.776; SI 1998/1870 Dividends paid on […]
Good governance is not about making the right decisions but about ensuring there is a good decision-making process used in the business. In a large enterprise, the management board will have a team who are charged with ensuring the firm adheres to the principles of good corporate governance as is expected of a large organisation. […]
If your business has suffered VAT on expenses incurred in another EU country, for example overseas hotel and restaurant bills, then it is possible to reclaim the foreign VAT. The foreign VAT must not however be reclaimed on the UK VAT return but by using HMRC ‘s VAT online services system. You must claim by […]
HMRC have recently won a tax tribunal case where they were seeking to challenge the deduction for a wife’s wages in arriving at the profits of her husband’s business. The judge agreed with HMRC that the amount allowed as a deduction should be limited based on the hours spent and appropriate rate for the work […]
When an entity has both business and non-business activities input tax claims may need to be apportioned to allow for this split. A case has highlighted that other objectives or long timescales do not necessarily have any impact of how such claims should be apportioned. In this case a charity acquired land which was used […]
We have reported many cases where taxpayers have had penalties overturned by the tribunals. The latest one involved an arithmetical error of £4 resulting HMRC trying to apply a penalty of £600. In another recent case “marriage difficulties and ill health” were found to be reasonable excuses for a late return and penalties were cancelled […]
Some taxpayers that have previously needed to complete a self assessment tax return will now longer have to. HMRC will be able to calculate the tax of some employees and pensioners by use of data they already hold from third parties. HMRC have named this system “simple assessment”. Full details published by HMRC. If you […]
For anyone in employment, you might have noticed a tax code on your payslip, most commonly 1150L. But what does this actually mean? Your tax code determines the allocation of your personal allowance against your income from that job. If you only have one job you will likely have 1150L tax code which means the […]
Making Tax Digital will be mandatory for VAT purposes from April 2019. From then, businesses with a turnover above the VAT threshold (currently £85,000) will have to: Keep their records digitally – for VAT purposes only Provide their VAT return information to HMRC through MTD-compatible software. Other businesses will be able to adopt […]
Your business may benefit from convening a focus group. This will require you to gather a group of customers together in order to discuss your business. Here’s how it works: 1. Schedule a meeting at a desirable location, such as a restaurant or a hotel, with either lunch or dinner provided 2. Contact a group […]
HMRC has updated its guidance the intermediaries legislation (IR35) to clarify that the IR35 rules may apply if an agency, umbrella company or similar third-party supplies a worker by engaging their company rather than the individual directly. The new guidance can be found here. As with all of our tax tips and web pages this […]
A recent tax case has highlighted the need to ensure company affairs and personal affairs are clearly separated. In the case a locum was working for the NHS. He thought he was operating through a limited company, and prepared company accounts and tax returns accordingly. He ensured the corporation tax was paid and paid his […]
Broadly, there is favourable inheritance tax treatment to business property. A question that has been tested in various recent cases is whether a let property is business property for this purpose. A hotel is likely to be a business property, whereas a buy to let house would be an investment and not a business property. […]
If you are resident in the UK (live here) and are domiciled in the UK (e.g. born here) then you will be taxable in the UK on worldwide income. As a basic idea, if you are not resident in the UK then you will only be subject to UK tax on income arising in the […]
The queues when trying to contact HMRC by phone are often very long so this can be a frustrating and time consuming process. Most departments now offer a WebChat service where you can communicate with an advisor online. This method also has the advantage of being able to save your conversation so that you have […]
The 80/20 rule (also known as the Pareto Principle) says that 20% of your activities generate 80% of your results. From this, we derive principles such as 20% of your customers generate 80% of your revenue. Do an analysis – group your customers together by “family” and related entities and see how closely this applies […]
In the 2015/16 tax year the UK government raised £533 billion in taxation. This is made up of: Income tax 32% National Insurance 21% VAT 22% Corporation Tax 8% Duties on certain goods and imports 10% Capital taxes and other taxes 7%
Even if you are non-UK resident any income from UK property will still need to be reported in the UK. The standard position is that the letting agency or tenant has the responsibility of withholding basic rate tax (20%) before paying the rent to you. At the end of the tax year you will be […]
Auto enrolment does not apply if a company is not considered an employer by The Pension Regulator. Reasons for not being an employer include: Director only company, none of the directors have an employment contract No longer employ any staff Ceased trading, Although you will not have any auto enrolment duties you must inform The […]
A director paid staff and suppliers but not HMRC. HMRC accused the taxpayer of negligence and issued a personal liability notice for the company’s unpaid National Insurance. The taxpayer appealed but the appeal was dismissed. The first tier tribunal found that the director was liable to his now defunct company’s liabilities to HMRC.
A recent case reminds us of the importance of getting VAT right. The taxpayer concluded that his eBay sales of adult motorbike protective clothing were mostly exempt from VAT as protective equipment. Supplies that are exempt from VAT doesn’t count towards the VAT threshold so the tax payer didn’t register for VAT. HMRC checked the […]
In a recent tax case the taxpayer failed to file a tax return on time. The tax payer tried to file on time but failed to obtain an electronic user ID and password from HMRC in time. Instead they filed a paper tax return which was more than six months late by then. HMRC charged […]