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 […]

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 […]

ISAs

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ISAs The 2018/19 overall limit for ISAs is £20,000. This can be invested in cash or stocks and shares. Any income or gains arising on the investments will be tax free. As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like […]

Transfer income-producing assets to your spouse or civil partner

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Transfer income-producing assets to your spouse or civil partner Transferring assets such as property or quoted investments to a spouse or civil partner is accepted by HMRC provided there is an outright gift with no conditions attached to it. Save income tax on share dividends:  Following the change in how dividends are taxed, it can […]

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 […]

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 […]

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? […]

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 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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

Budget News – Savings Tax

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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.  […]

Budget News – Personal Allowance

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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 […]

Budget News – Capital Gains Tax

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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 […]

Budget News – Stamp Duty Land Tax

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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 […]

Renting Out Your House Whilst on Holiday

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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 […]

Are state benefits taxable?

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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 […]

What income is exempt from tax?

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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 […]

More penalties cancelled

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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 […]

Simple Assessment

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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 […]

What is a tax code?

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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 […]

Budget Update: Start of Digital Reporting Delayed for Smaller Businesses

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The Government is committed to the “Making Tax Digital” (MTD) project which is scheduled to start in April 2018 with the first quarterly updates being submitted by the self-employed and property landlords in July 2018. However, the Chancellor has now announced that there will be a one year deferral in the start date to 2019 […]

Budget Update: Tax Free Dividend Allowance to be Reduced to £2,000

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The Chancellor has announced measures to limit the rise in tax-driven incorporation. The £5,000 tax free dividend allowance will be reduced to just £2,000 from 6 April 2018. Mr Currently, once the dividend allowance has been used the remaining dividends are taxed at 7.5%, 32.5% and then 38.1% depending upon whether the dividends fall into […]

Tax Free Childcare Accounts To Start 6 April 2017

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New tax-free childcare accounts were announced in 2014 to replace the employer-provided childcare voucher scheme. Introduction has been delayed by legal disputes with organisations involved in administering the existing scheme, but the new accounts will at last be introduced on a trial basis in early 2017. The new scheme will then be rolled out across […]

Don’t Forget “Rent A Room” Relief

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From 6 April 2016 Rent A Relief has increased from £4,250 to £7,500. This is an annual allowance which can be deducted from rent received from lodgers where you rent out part of your main residence. Where income from lodgers exceeds £7,500 a year only the excess is taxable or this can to calculated on […]

Splitting the income of married couples

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Where a married couple hold savings accounts and other investments in joint names, the income from those investments is split 50:50 for tax purposes, unless there is an election to allocate the income in accordance with their beneficial interests. This is particularly important where the couples’ marginal tax rates are different now that there are […]

Is it time to tame your tax return? (ignore if already completed your 2016 tax return)

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A story about clients that who wait until the last minute to provide tax records: “Most tax practices have clients who delay supplying tax compliance information until a few days before the deadline. There are several reasons for this, including reluctance to engage with taxpayer responsibilities, lack of organisational skills, unavailability of ready funds, fear […]

Fuel Duties – could you support an increase?

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Despite fuel duty increases, the real cost of motoring fell by 14% from 1980 to 2010.  During the same period rail and bus travel increased in price by 60%! Private car use is a major source of carbon pollution, causing climate change and health problems. An increase in fuel duty by 20p per litre would […]

National Insurance record and top ups to increase State Pension

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The level of State Pension can depend on how many years you have made contributions.  This can be checked here: https://www.gov.uk/check-national-insurance-record   If you have gaps in your national insurance record you can make additional voluntary contributions.  Details are here: https://www.gov.uk/voluntary-national-insurance-contributions   You can make additional contributions to increase your state pension further.  Details are […]

Lifetime ISA

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You may have seen the new Lifetime ISAs when they were announced in the March 2016 budget.  We commented on this back on 17 March 2016. For every £40 you put in, the government will put in another £10.  The account then attracts tax free interest on top of the £50.  There is also no […]

Personal Savings Allowance – tax free interest

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Since 6 April 2016 every individual has a new “personal savings allowance”.  This allows interest to be received tax free up to set amounts.  The allowance is £1,000 for basic rate tax payers and £500 for higher and zero for additional rate tax payers.  Also since 6 April 2016 interest has been paid by banks […]

New tax free childcare scheme from April 2017

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HMRC are opening a new childcare scheme from April 2017. For many people it will be better to stay on the existing childcare scheme.  However self employed (sole traders and partners) are ineligible for the exiting scheme but will be able to join the new childcare scheme. Families with the youngest children will be able […]

Making tax digital update – August 2016

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HMRC have issued some further details on their making tax digital strategy.  Partnerships, sole traders, self-employed and landlords with turnover over £10,000 will have to report quarterly.  The time-scale is yet to be announced but some staging will take place starting with those with the higher turnover.  Software will be needed but likely that some […]

Class 2 National Insurance (self employed)

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Class 2 National Insurance (“the stamp” in old money) stopped being collected by direct debit from 6 April 2016.  It is now collected as part of the self assessment bill for sole traders and partners. The March 2016 budget announced that Class 2 National Insurance will be scrapped from 6 April 2018.  In the Government’s […]

Further Changes to ISAs

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The current £15,240 ISA limit is frozen for 2016/17. The Junior ISA limit remains at £4,080 for 2016/17. The Chancellor announced that the ISA allowance will increase to £20,000 from 6 April 2017 and that from the same date there will be a new “Lifetime ISA” account where investors aged between 18 and 40 who […]

Pensions (no major changes after all)

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Despite widespread predictions in the media and tax press, there has not been further restrictions in tax relief on pensions or the tax free lump sum. From 6 April 2016 the pension fund lifetime allowance will be reduced from £1.25million to £1million. Transitional protection for pension rights already over £1million will be introduced alongside this […]

LISA (new, if you’re lucky enough…)

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LISAs or Lifetime Individual Savings Accounts will be available from 6 April 2017.  These will allow up to £4,000 to be saved, on top of which government will give you back the basic rate tax you had paid earning the £4,000.  Thus £4,000 becomes £5,000 in the LISA.  Unfortunately they won’t give you back the […]

Investments

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At Green Accountancy we are not independent financial advisers and cannot give advice on whether to invest or not, or what to invest in. We can advise on the tax consequences of investments. Investments into ISAs do not attract tax relief.  However the income generated within the ISA will be tax free.  The maximum investment […]

Income exempt from tax

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A basic tax tip in everyone’s book is to take advantage of the sources of income exempt from tax.  Unfortunately, though perhaps predictably, such income is fairly limited.  The following are generally exempt from income tax: Income from ISAs Most dividends from Venture Capital Trusts Income from National Savings Certificates (NS&I) (not National Saving Accounts) […]

Gift aid on charitable giving

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HMRC have recently highlighted that charities can only claim gift aid on cash donations. If your charity receives goods there is no gift aid available at that point. However, HMRC make clear that when the goods are sold, the donor can be offered the cash generated, and if the donor chooses to allow the charity […]

Undisclosed Offshore Income

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If you have undisclosed offshore holdings or investments, for example: offshore bank accounts overseas assets like property, eg a holiday let shares or other interests in an offshore company or trust inherited money from overseas You have until 31st December 2015 to disclose these. After that date a penalty could be charged up to 200% […]

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