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 […]
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 […]
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 cost of business travel is an allowable expense for tax. Home to work travel may qualify as a business journey (and so the cost will qualify for tax relief) where: Home is the main or only workplace or the operating base of the business. The trade or profession is a travelling occupation, or the […]
If you are self-employed and work from home you can claim: All the costs that are incurred for business purposes. A proportion of all the other costs of running your home, such as light and heat, insurance, council tax, repairs, cleaning and mortgage interest. When you are claiming expenses then ensure that you pay them (e.g. they are not […]
In order to maximise entitlement to full State Benefits, a full contribution record Is required. It is possible to check your National Insurance record online to see: what you’ve paid, up to the start of the current tax year (6 April 2018) any National Insurance credits you’ve received if gaps in contributions or credits mean […]
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 […]
The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends. For many taxpayers that meant more tax to pay on those dividends on 31 January 2018. The same will also apply on 31 January 2019. […]
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 […]
Personal allowance This is the amount of income you can receive that you don’t have to pay tax on. In 2017/18 this is £11,500. The allowance is lost at a rate of £1 for every £2 of income where your adjusted net income is over £100,000, until the allowance is totally extinguished. This creates an […]
Charitable donations Gift aid donations to charity also give tax relief at your highest marginal tax rate. Any donations made before 31 January of the following tax year, or the date of the submission of your tax return if earlier, can be carried back to the previous tax year. Cash donations made before both 31 […]
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 […]
Use your annual pension allowance Pension contributions are still a tax-efficient way of saving for retirement, with tax relief given at your highest marginal rate of income tax. Tax relief is restricted to the lower of the annual allowance, which is £40,000 for most people, or your net relevant earnings. It may also be possible […]
Use the Budget calculator developed by Deloitte, to find out how your pocket may be affected by the Chancellor’s latest measures. Bear in mind, some changes will not be seen until future financial years, and are not included in this calculator.
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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? […]
Under Making Tax Digital (MTD) for VAT, most VAT registered businesses will have to report VAT in new way. If your turnover is above the registration threshold in the year to 31 March 2019 then from 1 April 2019 you must: Keep your bookkeeping records for VAT digitally Stop using HMRC’s portal to submit your […]
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 […]
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 […]
Certain traders can be made liable for the unpaid VAT of another VAT-registered business when you buy or sell specified goods. HMRC have recently updated VAT notice 726 which advises traders to carry out due diligence into their supply chain. The specified goods are any equipment made or adapted for use as a telephone and […]
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 […]
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 […]
The Office of Tax Simplification (OTS) is calling for further work on the potential for a new form of trading vehicle, the sole enterprise with protected asset (SEPA), which would be simpler to administer. Research has found that one of the main reasons for forming a limited company is to obtain limited liability protection, but […]
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 […]
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 […]
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 […]
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 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 […]
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 […]
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 […]
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 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 […]
Philip Hammond has announced that the planned national insurance rise for the self employed has been scrapped at least for the current parliament. He has said he will announce how extra funds will be raised in the autumn statement. Meanwhile Theresa May has said the government await the Taylor report on the future of employment. […]
The VAT registration limit increases by £2,000 to £85,000 from 1 April 2017. At the same time the de-registration limit increases to £83,000.
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 […]
In his first Budget on 8th March the new Chancellor Phillip Hammond announced that he would level the playing field between employees and the self-employed by increasing Class 4 National Insurance Contributions (NICs) from 9% to 10% from 6 April 2018 and then to 11% from 6 April 2019. His justification is that the self-employed […]
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 […]
In addition to the current £5,000 tax free dividend allowance and the personal savings allowance of up to £1,000 there will be two further tax free allowances starting from 6 April 2017. These will be a new £1,000 tax free allowance for self-employed income and a £1,000 rental income allowance. These new allowances mean that […]
The government have re announced the £1,000 tax allowance that starts from 6 April 2017. This was first announced in spring 2016 (see our blog 17 March 2016). The Autumn statement tweaks the allowance to include income generated from sharing goods and services along with trading income. The effect of the new allowance is that […]
The £85,000 limit was in effect for almost five years until 3 July 2015. The limit was then reduced to the current limit of £75,000. Under the proposals depositors will be protected up to £85,000 as of 30 January 2017. We recommend as a risk reduction exercise businesses including companies should open a second bank […]
A recent case reminds us of the need to have a complete national insurance record in order to claim full state pension. For self employed this has meant a record of class 2 national insurance. The case concerned Richard Thomas, drummer with the Birmingham group Breakthru in the 1960s, then in the band Jonesy and […]
Tax relief for businesses on cars is restricted. Cars purchased are generally excluded from the 100% annual investment allowance enjoyed on most equipment purchases. Cars leased often have an element of the lease cost disallowed for tax purposes restricting the tax relief. Rules for special relief for less polluting cars have been revised and extended. […]
Where credit card sales have been omitted from business takings, HMRC are encouraging taxpayers to come forward and make a disclosure of the income that has been omitted to avoid incurring interest and penalties on top of the unpaid tax. As you may be aware HMRC now receive information from third parties such as banks […]
Many small businesses and organisations are using Receipt Bank to simplify their bookkeeping process. The cost starts from £10 per month. For this you get an app for your smart phone that can be used to record expenditure. Any receipt, however paid for, can be photographed from within the app, some basic details added, and […]
HMRC now collect Class 2 NI contributions (£2.80 per week) from sole traders when their self-assessment tax return is submitted. In some cases it can be better to pay Class 2 NI even if earnings are below the threshold. There is no requirements to make Class 2 NI contributions if you are below the small […]