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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

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 […]

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? […]

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 […]

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 […]

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 […]

BBC presenter loses IR35 appeal

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

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 […]

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 […]

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

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

Fixed rate mileage

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

No national insurance rise for the self-employed after all

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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.  […]

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 […]

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 […]

Low and ultra low emmision cars

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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.  […]

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