Pensions: how does tax relief work?

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An individual makes their pension contributions out of their taxed and NIC’d income. Most individual pension contributions are made “net of tax”.  The pension scheme will then gross up the payment by claiming 20% tax relief from the government.  So for £80 contributed by the individual, the scheme also gets £20 from government, giving a […]

Southern Western Railway has backtracked on its decision to not allow passengers to use reusable cups

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The company faced backlash after it emerged that passengers wanting to fill their own reusable cups with hot drinks bought on board were being denied. A spokesperson for the rail operator has confirmed the change in policy, which they say reflects their “ongoing commitment to manage our environmental impact”. Around 2.5 billion disposable cups are […]

How you treat your employees will determine the fate of your company

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Business magnate Richard Branson, founder of the Virgin Group, believes that employers should put their employees before their clients. “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients. Most businesses put customers first while employees are just secondary. Employees are the branches […]

Is there such a thing as too much teamwork?

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Open plan offices and the use of messaging apps have encouraged always-on, constant collaboration at work. But research from Harvard’s Ethan Bernstein suggests that we develop more, and better, solutions to problems when we take occasional breaks from the group so we can ponder on our own. Such intermittent collaboration strikes an ideal balance between […]

Cost of rubbish

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Retailers could be forced to pay up to £1bn for recycling under the government’s new waste initiative.  Supermarkets, retailers and major drinks brands currently pay just 10% of the cost of collecting and sorting the 11 million tonnes of packaging waste produced in the UK. The government strategy, expected to be published this month, will […]

Record keeping & tax: what, how and until when?

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Good record keeping is vital, not just to ensure timely and accurate filing of tax returns but also in the event of any challenge by HMRC. Penalties can also be levied if your records are incomplete or inaccurate. Generally, you need to keep sufficient records to support any income or expenses included in a tax […]

The new sugar tax

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The new sugar tax on soft drinks has raised £153.8m since it was introduced.  While initial forecasts estimated the sugar tax would raise around £520m a year, manufacturers have reduced the amount of sugar they use to avoid the levy – one of the government’s intended goals. The new tax is applied to soft drinks […]

Recreational benefits

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An employer can provide sporting or recreational benefits tax-free to: Its employees. Any member of their family and household. Main conditions: Benefit to be available to all staff. Benefit not generally available to the public. Benefit cannot include vehicles, holidays or take place in domestic premises. Unfortunately the exemption excludes membership to public gyms and sports […]

The Circular Economy Model: Reuse, Remanufacture or Recycle

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With August 1 marking Earth Overshoot Day, the point during the year that we will have consumed the ecological resources and services that Earth can regenerate in one year, it is clear that something has to change. The circular economy requires a significant shift in mindset, starting with the design process, which must ensure that […]

Class 2 NICs to continue for self-employed

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In 2016 the government consulted on a proposed abolition of Class 2 National Insurance contributions (NICs) for the self-employed. This flat rate contribution, currently £2.95 a week is payable by the self-employed in addition to Class 4 contributions based on the level of profits. The flat rate contributions were due to cease on 5 April […]

New tax on global digital businesses

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To try and ensure that digital businesses pay tax that reflects the value they derive from UK users, the government has announced that it will introduce a Digital Services Tax (DST) which will raise £1.5bn over four years from April 2020. The DST applies a 2% tax on the revenues of specific digital business models […]

Changes to Stamp Duty

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Chancellor Philip Hammond has announced plans to abolished Stamp Duty for all first-time buyers of shared ownership properties up to £500,000. This will also be implemented retrospectively for any shared-ownership buyers since the first-time buyer exemption was introduced in November 2017. As with all of our tax tips and web pages this information is necessarily […]

Student loan repayment threshold rises by 2.9%

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The government has increased the loan repayment thresholds (the amount graduates can earn before making repayments) for student loans by 2.9% and confirmed the introduction of a postgraduate loan system deductible from PAYE effective 6 April 2019. The Department for Education (DfE) has confirmed that from 6 April 2019 the thresholds will increase for tax […]

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 […]

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 […]

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 […]

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 […]

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 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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

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. […]

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 […]

Making Tax Digital for business delayed

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The Government has responded to pressure from accountants and other interested parties and announced the delay of Making Tax Digital for Business to 2020 at the earliest. Quarterly VAT reporting using the new system will be mandatory from 2019. In a further U-turn, three million small businesses and buy to let landlords below the VAT […]

Gone phishing

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HMRC are warning that a large scale scam email is at large: “Customers are strongly advised to lookout for a new phishing scam. If you get an email with the subject, “Your 2016 Tax Report”, with an attachment, do not open it. Please forward it to phishing@hmrc.gsi.gov.uk and then delete it. For more advice, please […]

HMRC lose case on daily penalties

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HMRC have lost a recent tax penalties case heard by the First Tier Tribunal (FTT) on 24 April 2017.  HMRC had applied daily penalties of £10 per day for late filing of a personal tax return.  HMRC could not provide evidence that the tax payer had been properly warned of such penalties. As with all […]

We can often reduce HMRC penalties

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Where additional tax is payable as the result of an HMRC enquiry and it is shown that the additional tax is due to poor accounting records, the maximum penalty that can be imposed is 30% of the additional tax for failure to take reasonable care. Where the error is deliberate, the penalty will be between […]

Artificial or Contrived? Not us!

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New rules are soon to come in to effect for all registered qualified accountants and tax advisers to reduce aggressive tax avoidance.  The rules are summarised as: “Members must not create, encourage or promote tax planning arrangements or structures that i) set out to achieve results that are contrary to the clear intention of Parliament […]

TaxAid – helping vulnerable people sort out tax problems

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TaxAid is a charity that helps people who perhaps can’t afford accountants, to sort out their tax affairs.  A recent article in Taxation magazine highlighted some stories of people TaxAid has helped, here is one of the stories: “Take Greg, who one morning found a bankruptcy notice on his doormat. His mental capacity had been […]

Checking income to the bank statements

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Here at Green Accountancy we always want to check income against actual bank statements.  This applies to companies, sole traders, landlords letting income, personal tax, VAT returns, pretty much all work we do.  A recent tax case highlighted the benefit of checking income to bank statements.  HMRC found there was income on bank statements not […]

Submitting documents to HMRC online is safer than post

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A recent tax case highlighted one of the benefits of online submissions.  The taxpayer submitted two forms to HMRC by post, but HMRC never received them.  HMRC imposed penalties of £1280 for late filing of the forms (which incidentally had no tax due on them).  The taxpayer appealed on the grounds that the forms had […]

Carbon Credits – remember those?

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Carbon Credits are part of the transferable permits system aimed at reducing greenhouse gas emissions.  These add to the cost of polluters, along with environmental taxes.  Unfortunately the prices are so low as to be ineffective.  The OECD (Organisation for Economic Co-operation and Development) report that the cost of polluting with 1 Tonne of CO2 […]

Final chance to declare hidden overseas income

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HMRC are publicising the worldwide disclosure facility asking UK taxpayers to take this final chance to declare previously hidden overseas income, assets and gains.  Making such a declaration could reduce the level of penalties charged on any associated tax bill.  Taxpayers have until 30 September 2018 to make use of the facility.  More details on […]

HMRC issue warnings about fake emails

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HMRC never email tax payers about refunds, penalties or to ask for bank details.  Always be on guard against email scams.  It is wise to hover on links to see the website the link points to before clicking. Please spend a few minutes having a look through the following web pages from HMRC. Published 30.8.16:  […]

HMRC Digital Personal Tax Account

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HMRC have implemented an online personal account that is available to everyone with a National Insurance Number even if you do not submit a personal tax return. This account enables you to check details on the following areas: Check your Income Tax estimate and tax code Fill in, send and view a personal tax return […]

HMRC Making Tax Digital (MTD) Summary and Timeline

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Making Tax Digital (MTD) is HMRC’s strategy to modernise tax administration for taxpayers.  Some highlights from their latest published MTD time-line include: 2016 test digital reporting of accounts by some small businesses testing using the RTI (payroll real time information) system to report back to tax payers how their personal allowances are used 2017 test […]

NEW SERIES – Many ways to grow your business – part 1

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This being the first in the series of “grow your business” ideas – we’ll start with the most obvious business development tip of all time: To increase your sales figure you can: Increase the number of customers Increase the number of times each one does business with you Increase the average value of each transaction […]

HMRC really useful factsheet about penalties

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HMRC have updated their really good factsheet on penalties.  This six page PDF gives a good overview and useful amount of detail relating to penalties for all taxes.  The factsheet is available here.   If you would like detailed specific advice on penalties please contact us.  

More taxpayers win appeals against HMRC penalties

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Two more tax tribunal cases against penalties have gone in favour of the taxpayer this week. In Eastman (TC5276) HMRC had refused to suspend a penalty in apparently one off event.  Suspending a penalty requires the taxpayer to put in place processes that would prevent the error reoccurring, which HMRC said was not possible for […]

Late HMRC appeals can be accepted

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Two recent cases, one for VAT and one for Capital Gains Tax have highlighted the point that tribunals can sometimes allow appeals by taxpayers to be heard after the deadline for appeals.  Of course this is the exception rather than the rule. However if you do have assessments for any kind of taxes from HMRC […]

HMRC – Making Tax Digital

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HMRC have published further information about their Making Tax Digital strategy.  The includes: Taxpayers should not have to give HMRC information that it already has, or should be able to get from elsewhere — for instance, from employers, banks, building societies and other government departments. Taxpayers will see the information that HMRC holds through their […]

Entrepreneurs’ relief (ER) for external investors

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Entrepreneurs’ relief (ER) will be extended to external investors in unlisted trading companies. This new investors’ relief will apply a 10% rate of CGT to gains accruing on the disposal of ordinary shares held by individuals. These shares must be subscribed for by the claimant and acquired for new consideration on or after 17 March […]

Gift Aid Small Donations Scheme extended

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The Gift Aid Small Donations Scheme (GASDS) allows charities to treat small donations such as those in collecting boxes as if Gift Aided. With effect from 6 April 2016 the maximum annual donation amount which can be claimed through GASDS will be increased from £5,000 to £8,000 allowing charities and Community Amateur Sports Clubs to […]

Barter Transactions

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It has long been held that tax is based on monetary values.  Where no money changes hand, for example in a barter transaction, tax is due on the market value of the goods or services each party supplies.  There can be VAT, PAYE, NI, and business tax on the transaction. For example, if a sports […]

Dividend tax from 6 April 2016

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A reminder that the way dividends are taxed is changing from 6 April 2016.  For more information see our Dividends Tax fact sheet.  For some it may be advantageous to increase dividends prior to the changes.  For example if dividend levels are projected to be similar in 2015/16 and 2016/17 it may be beneficial to […]

Keeping you safe

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HMRC have issued the following note about bogus emails Most of us think we would know how to recognise genuine contact from HMRC, and be able to tell if it’s a phishing or bogus email.  Whether it’s for tax credits or PAYE notices and reminders HMRC will never ask you, or your clients, to disclose personal or […]

HMRC direct recovery of debt (DRD)

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Following on from my post regarding directors potentially be liable for company debts, particularly to HMRC. HMRC now have a new power to collect debts due from individuals, businesses and companies directly from their bank accounts. To use these powers, all of these conditions must be met: Condition A – the total debt must be […]

Directors’ liabilities

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It has historically been quite unusual for directors to be found liable for any of their company’s debts. New rules will allow unpaid creditors more scope, lower costs, and more benefit in suing directors. For example, if a company becomes insolvent and ceases to trade, and owes HMRC money (PAYE, VAT, Corporation tax) it is […]

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