May 17th, 2013
HMRC have made it clear that they do not send taxpayers emails regarding their tax affairs. So the next time you receive an email purporting to be from HMRC you can safely bet that it is a scam and that it can be safely ignored. Whatever you do, do not follow any links in these emails as they will likely lead to all sorts of computer viruses infecting your computer. And do not provide any personal information, particularly bank details.
If you are in doubt as to authenticity of communications received call HMRC to clarify.
May 15th, 2013
You may have noted that from the date the Finance Bill 2013 receives a Royal Assent, HMRC will be using new powers to stop abusive tax schemes from reducing a tax payer’s liability. The legislation is set out in the GAAR, the General Anti-Abuse Rule.
It is worth noting that HMRC can use the GAAR to counter certain arguments previously used by the judiciary. There are a number of well-known rulings where the tax payers’ right to use a tax scheme were endorsed. The following quote is from the judgment of Lord Clyde in the Ayrshire Pullman case:
“No man in this country is under the smallest obligation, moral or other, so as to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores. The Inland Revenue is not slow – and quite rightly – to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”
Following the implementation of GAAR, Parliament is now in a position to side-step these judgments. HMRC have commented on this change of tack:
‘Accordingly, it is essential to appreciate that, so far as the operation of the GAAR is concerned, Parliament has decisively rejected this approach and has imposed an overriding statutory limit on the extent to which taxpayers can go on trying to reduce their tax bill. That limit is reached when the arrangements put in place by the taxpayer to achieve that purpose go beyond anything which could reasonably be regarded as a reasonable course of action.’
For taxpayers and their advisors this creates a new dilemma; who defines a reasonable course of action?
We will be keeping a close eye in the months to come on ways in which the GAAR is used to close down tax savings opportunities. Watch this space…
May 9th, 2013
We are already two months into the 2013-14 tax year and those readers who need to file a tax return for the year ending 5 April 2013 have until 31 January 2014 to do so if filing online.
In this article we will explain why it is advisable to gather your various P60s and other tax information together and bring them in so we can compute your liability for 2012-13. There are a number of compelling reasons for working through this process as quickly as you can.
- As part of the tax return preparation process we will work out your total tax liability for 2012-13 and any balance of tax unpaid for this year. Unpaid tax will need to be paid on or before 31 January 2014 so working out the underpayment early means you have more time to save for any tax due.
- Conversely, if you have overpaid tax for 2012-13 we can file your return and obtain a refund for you.
- The actual tax liability for 2012-13 also forms the basis for payments on account in January and July 2014. Again, the earlier these amounts are known, the longer you will have to save for payments due.
- If your Self Assessment tax liability for 2012-13 is lower than for 2011-12 we may be able to reduce the payment on account due in July to avoid you paying tax and obtaining a refund later. However, to do this we will need to prepare your 2013 return by about the middle of July.
- Although most of the tax planning opportunities to reduce tax due for 2012-13 have passed, there is one significant planning option that can be actioned up to the date you file the 2013 return. We have provided more information on this in the following article.
Hopefully, you can now see how you might benefit from getting your tax return records to us sooner rather than later. It pays to be informed.
May 9th, 2013
1 May 2013 - Due date for Corporation Tax due for the year ended 31 July 2012.
19 May 2013 - PAYE and NIC deductions due for month ended 5 May 2013. (If you pay your tax electronically the due date is 22 May 2013.)
19 May 2013 - Filing deadline for the CIS300 monthly return for the month ended 5 May 2013.
19 May 2013 - CIS tax deducted for the month ended 5 May 2013 is payable by today.
19 May 2013 - The payroll forms P35 and P14s must be filed by this date – employers late in filing these forms may receive a penalty.
31 May 2013 - Ensure all employees have been given their P60s for the 2012-13 tax year.
1 June 2013 - Due date for Corporation Tax due for the year ended 31 August 2012.
19 June 2013 - PAYE and NIC deductions due for month ended 5 June 2013. (If you pay your tax electronically the due date is 22 June 2013.)
19 June 2013 - Filing deadline for the CIS300 monthly return for the month ended 5 June 2013.
19 June 2013 - CIS tax deducted for the month ended 5 June 2013 is payable by today.
April 17th, 2013
From our client feedback forms for March:
100% said we are friendly and courteous
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April 16th, 2013
The following quote is from information recently published to HMRC’s website:
‘HM Revenue & Customs (HMRC) recognise that some small employers who pay employees weekly, or more frequently, but only process their payroll monthly may need longer to adapt to reporting PAYE information in real time. HMRC have therefore agreed a relaxation of reporting arrangements for small businesses.
Until 5 October 2013, employers with fewer than 50 employees, who find it difficult to report every payment to employees at the time of payment, may send information to HMRC by the date of their regular payroll run but no later than the end of the tax month (5th).
This is a temporary relaxation to give some extra time to small businesses that pay weekly (or more frequently) but who only run their payroll (or use an agent to run their payroll) at the end of the month. This extra time will enable these businesses to adapt their processes or change their arrangements with their payroll service supplier so that they can comply with the new legislation.
From April 2013, employers who choose to take advantage of this relaxation will still need to report their PAYE in real time by the last payday in the month or the end of the tax month (5th) at the latest.
This is not a withdrawal of the requirement to report PAYE in real time. All employers are still required to operate PAYE in real time and we expect most employers to be reporting PAYE in real time from their first payday on or after 6th April.
From 6th October all employers will be required to report PAYE in real time each time they pay their employees. However HMRC will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension’s Universal Credit.
HMRC recommends that employers and agents move to real time reporting as soon as possible in order to give them time to refine business processes before automated penalties are implemented. Employers using commercial payroll software will find that their payroll software is designed to submit their PAYE information as part of their integrated payroll processes. So these employers should continue to or start to report “on or before” each payment is made to employees as this will be the easiest and quickest way of operating their payroll.
Software developers have been informed that they do not need to change their products to accommodate this relaxation.’
Therefore, this should be considered a temporary relaxation of the obligations imposed on employers by the switch to RTI reporting. Readers who are still unsure how these changes affect their business should contact us immediately.
April 15th, 2013
In the distant past Government supported home buying by offering tax incentives. It has been some years now since UK taxpayers could obtain tax relief for mortgage interest payments. The MIRAS arrangement, where tax relief at the basic rate was deducted from mortgage interest payments by the lender, was the last and fading effort at stimulating home buying in this way.
Instead George Osborne and his team have elected to try out two alternative systems: an equity loan scheme and a mortgage guarantee.
Help to buy: equity loan
This scheme will run for three years from 1 April 2013 and is proposed to provide £3.5bn of additional investment.
- The scheme will apply to new builds only.
- All home buyers can apply – this scheme is not restricted to first-time buyers.
- Buyers will need a minimum deposit of 5%.
- Government will lend up to 20% of the value of the property as an equity loan – this can be repaid at any time or when the property is sold. The loan is interest free for the first five years. In year six borrowers will have to pay a 1.75% annual fee which will increase annually by 1% of the annual amount above inflation.
- The equity loan arrangement will only apply to home purchases of £600,000 or less.
Lenders using this scheme will share ownership of their property with Government, if the value of your property increases so will the equity loan.
Help to buy: mortgage guarantee
This scheme will run for three years from 1 January 2014. Buyers will need to secure a mortgage from a lender who should be encouraged to offer better access to low deposit mortgages by the Government guarantee.
- Guarantee will apply to new builds and existing homes.
- A minimum 5% deposit will apply.
- Available to existing homeowners and first-time buyers.
- A maximum home purchase of £600,000 applies.
Both schemes are intended to stimulate the housing market and in particular new building.
April 9th, 2013
The Government is to introduce an allowance of £2,000 per year for all businesses and charities to be offset against their employer Class 1 secondary NICs’ bill from April 2014. The allowance will be claimed as part of the normal payroll process. The Government will engage with stakeholders on the implementation of the measure after Budget 2013 and is seeking to introduce legislation later in the year.
Although this change is a year from now, the allowance should be factored into your payroll budgeting for next year. It is likely that payroll software will be updated to allow for the £2,000 reduction in employers’ Class 1 secondary NICs. For smaller businesses contemplating their first or further appointments into the employment arena this will be a welcome support.
Employers’ Class 1 secondary contributions are 13.8% of any wage or salary that exceeds the secondary threshold, currently £148 per week (£641 a month, £7,696 per annum). New employers could pay a salary or wage of up to £22,189 per annum to one employee and be liable for no employer’s National Insurance – ordinarily, employer’s NIC on this level of salary would amount to £2,000.
This scheme is not intended to replace salary sacrifice arrangements that will continue to offer employees and employers NIC savings. Whether it will help to stimulate new job creation or reduce unemployment is an open question.
April 9th, 2013
A new Childcare Scheme will be introduced to support working families with their childcare costs and will replace the current salary sacrifice scheme. Unlike its predecessor, the new scheme will be available to the self-employed and those on a minimum wage. Also parents will be able to choose their own voucher provider, as the new system will not be administered by employers.
Claimants will fund 80% of their childcare costs up to £6,000 per child. The remaining 20% (up to £1,200) will be subsidised by Government. From the first year of operation all children under 5 will be eligible and the scheme will build over time to include children under 12.
The scheme will provide support for families where:
· both parents are in work and not receiving support through the Childcare Element of Working Tax Credits/Universal Credit, and
· where neither parent has an income over £150,000.
The scheme has been widely criticised in the press as it seems to discriminate against parents who elect to stay at home to take care of their children.
Support will be provided through a childcare account redeemable at any registered childcare provider. The new scheme will be phased in from autumn 2015 as the current system of Employer Supported Childcare is phased out. The Government will shortly consult on the detail of delivery.
March 8th, 2013
The main tax announcements for the 2013-14 tax year, as announced 5 December 2012, have now been published as draft clauses for the forthcoming Finance Bill 2013.
The new acronym stands for General Anti-Abuse Rule. It will give HMRC powers to stop companies and tax payers taking advantage of complex tax arrangements in order to save tax. The new powers will affect all tax arrangements entered into from the date the Finance Bill 2013 receives Royal Assent.
Statutory residence test
A new statutory residence test will come into force from 6 April 2013. For the first time this will place the determination of an individual’s tax residence on a statutory basis. The legislation will also provide for a tax year to be split into a UK part and an overseas part in certain circumstances and new rules for the taxation of particular income and gains arising during a period of temporary non-residence.
Higher rate threshold
As announced in the Autumn Statement 2012, the higher rate threshold for Income Tax will be increased by 1%: for 2014-15 to £41,865 and for 2015-16 to £42,285. This threshold is the amount at which an individual pays tax at the higher rate, presently 40%.
Capital Gains Tax annual exemption
As for the higher rate threshold the Capital Gains Tax annual exemption is also being raised by 1%: for 2014-15 to £11,000 and for 2015-16 to £11,100. This threshold determines the maximum gains that an individual can accrue in each tax year without paying Capital Gains Tax.
Secondary legislation will be introduced to confirm the cancellation of the fuel duty rate increase due to have been made January 2013.
Employer supported childcare
Secondary legislation is also being introduced to increase the tax exempt amount for employer supported childcare. This includes childcare vouchers or directly contracted childcare. The tax exempt amount will be increased from £22 to £25 per week for additional rate tax payers who joined such a scheme on or after 5 April 2011. This will ensure that the value of tax relief available for employer supported childcare continues to be aligned to the value received by basic rate tax payers.