Archive for the ‘Practice Information’ Category

HMRC filing and payment scams.

Thursday, January 31st, 2013

HMRC DO NOT EMAIL PEOPLE ABOUT LATE FILING OR PAYMENT ISSUES.

There are a number of phishing scams going around, particularly today, We have had two ourselves today, on the filing deadline saying HMRC are having problems with payment systems etc. they are SCAMS. You will loose your money… report any suspicious emails by forwarding them to phishing@hmrc.gov.uk and do not click on any links 

2012 Chancellors Autumn Statement – Principal Changes

Monday, December 10th, 2012

Confirming what we all knew to be the case, George Osborne advised in his Autumn Statement that the UK economy is forecast to shrink in 2012. The actual percentage rate is small, just 0.1%. In the subsequent 5 years to 2016-17 we are advised that the UK should achieve modest growth as the present factors holding back the economy fall away. Next year, growth is forecast to be 1.2% rising to 2.8% in the year 2017.The changes announced in the Autumn Statement are fiscally neutral – any savings are matched by new expenditures.
There are a number of initiatives to be implemented from April 2013 that are aimed to reduce loss of tax revenue due to tax evasion. These are explained in more detail in the notes that follow together with details of other expected tax changes

2012 Chancellors Autumn Statement – Principal Changes – Personal tax and benefits

Monday, December 10th, 2012
  • The basic Personal Allowance, due to anyone born after 6 April 1948, will increase in April 2013 to £9,440 (2012-13 £8,105). The increase in the Personal Allowance is £235 more than expected and will save basic rate tax payers up to £267 in a full tax year.
  • For those born between 6 April 1938 and 5 April 1948 the Personal Allowance is unchanged at £10,500 from April 2013. The equivalent allowance for those born before 5 April 1938 is unchanged at £10,660 from April 2013. The income limit, above which the increased allowance for the elderly are reduced, is increased to £26,100 (2012-13 £25,400) from April 2013.
  • The basic rate of Income Tax remains at 20% and will apply to the first £32,010 of taxable income (2012-13 £34,370). If your taxable income exceeds £32,010 you will pay tax at the higher rate of 40% until your income exceeds £150,000 when the additional rate of 45% kicks in.
  • The threshold for the 40% rate of Income Tax is to rise by 1% in 2014 and 2015 from £41,450 to £41,865 and then £42,285.
  • Capital Gains Tax annual exempt amount will be increased by 1% in 2014-15 and a further 1% in 2015-16 reaching £11,100.
  • Child Benefit rates are frozen for 2013-14 and will increase by 1% in 2014-15 and 2015-16.
  • Tax credits disability elements are increased in line with Consumer Price Index (CPI). Other elements are either frozen or will increase by 1% in 2013-14. All rates are increased by 1% in 2014-15 and 2015-16.
  • Guardian’s Allowance is increased in 2013-14 in line with the CPI.
  • State pensions will increase by 2.5% to £110.15 per week from April 2013.
  • For 2013-14, there are no changes to the percentage rate of contribution for Class 1 and Class 4 National Insurance Contributions (NICs) but there are changes to all of the thresholds and limits.

Pensions Savings – tax relief
The expected decrease in tax relief on pension contributions was confirmed. However, the change will not be applied until 6 April 2014. For the tax year 2014-15 onwards:

  • The annual allowance for pensions tax relieved savings will be reduced from £50,000 to £40,000.
  • The standard lifetime allowance for pensions tax relieved savings will be reduced from £1.5 million to £1.25 million.
  • A transitional ‘fixed protection’ regime will be introduced for those who believe they may be affected by the reduction in the lifetime allowance.

The lifetime allowance is the maximum amount of pension contributions you can make that benefit from tax relief. If the lifetime allowance is exceeded, a lifetime allowance charge is levied on the excess. This is presently 55% if excess is paid as a lump sum and 25% is paid as a taxable pension.
Legislation will be introduced in Finance Bill 2013 to make these changes and will be published in draft on 11 December 2012.
This is one of the few measures introduced to increase the tax take from higher income earners.

2012 Chancellors Autumn Statement – Principal Changes – Business tax

Monday, December 10th, 2012

Corporation Tax
In addition to the Budget 2012 announcement, the main Corporation Tax (CT) rate for Financial Year 2014 will be reduced by a further 1% to 21%. As already announced, the main CT rate for Financial Year 2013 is 23% and the Small Profit rate is 20%.

Annual Investment Allowance
In the hope that businesses will increase investment, the Annual Investment Allowance will be increased from £25,000 to £250,000 per annum for a 2 year period commencing 1 January 2013. This is a tenfold increase. The Annual Investment Allowance provides a 100% write off for purchases of qualifying equipment. This could include plant, computer equipment, furniture, vans and other fixtures and fittings. For profitable, self-employed business people, who need to invest in this type of asset, tax savings could be considerable as the relief will impact their higher and additional rate liabilities.

Simplified tax scheme for small unincorporated businesses
A simpler Income Tax scheme for small unincorporated businesses will be introduced for the tax year 2013-14 to allow:

  • Eligible self-employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. In essence, they will not have to distinguish between revenue and capital expenditure.
  • All unincorporated businesses will be able to choose to deduct certain expenses on a flat rate basis.

Small Business Rate Relief
The present Small Business Rate Relief Scheme is to be extended for a further year to April 2014.

2012 Chancellors Autumn Statement – Principal Changes – Other Taxes – Fuel Duty, Air Passenger Duty (APD), Inheritance Tax (IHT)

Monday, December 10th, 2012
  • In a move that will delight motorists the 3.02 pence per litre Fuel Duty increase that was due to take effect on 1 January 2013 will be cancelled and the increase that was planned for 1 April 2013 will be deferred until 1 September 2013.
  • From the 1 April 2013 APD rates will increase based on the Retail Price Index increase for September 2012.
  • The IHT nil-rate band was frozen at Budget 2010 at its current level of £325,000 until April 2015. For 2015-16 the band will be increased by 1% rounded up to £329,000.

2012 Chancellors Autumn Statement – Principal Changes – Anti-Avoidance and tax evasion

Monday, December 10th, 2012

The Government accepted the recommendations of the Aaronson report that a General Anti-Abuse Rule targeted at artificial and abusive tax avoidance schemes would improve the UK’s ability to tackle tax avoidance. The Government has committed to bringing forward legislation in Finance Bill 2013 to enact this measure.
Earlier this week, the Chancellor of the Exchequer and the Chief Secretary to the Treasury announced that the Government is investing a further £77 million in HMRC to increase revenues raised from tackling tax avoidance and evasion.
This investment will be used to:

  • Accelerate resolution of avoidance schemes.
  • Expand HMRC’s Affluent Unit to deal more effectively with taxpayers with a net worth of more than £1 million.
  • Increase specialist resources to tackle offshore evasion and avoidance of inheritance tax.
  • Improve HMRC’s risking technology, including increased use of third party data.

Additionally, five further measures have been announced in a Written Ministerial Statement. They are effective from 5 December 2012 and cover:

  1. Foreign bank levies – there are no longer allowable deductions for Income Tax or Corporation Tax purposes.
  2. Tax mismatch scheme – which reduces Corporation Tax liability by artificial tax treatment of loans or derivatives.
  3. Property return swaps – which convert capital losses into income losses.
  4. Manufactured payments – schemes involving stock lending arrangements.
  5. Payments of patent royalties – relief for non-trade payments to be abolished.

Warm down for the Pasty Tax ..

Monday, May 28th, 2012

Phew.. we understand that the 20% VAT charge will not be added to hot takeway food,such as pasties, that are served hot from the oven. as long as they are not kept hot or reheated. a 5% VAT rate is however likely !!

Smarter than the Average Phone ?

Thursday, May 3rd, 2012

HMRC have at last woken up to technological advances in recent years, and in particular, to the so-called smart phones.
Until recently HMRC decreed that smart phones were not mobile phones and therefore subject to tax as a benefit in kind.
Users of iPhones, Blackberries and other “Android” devices, who have suffered a benefit in kind charge in recent years, can now reclaim any tax paid. Claims can be backdated to the tax year 2008/09.
In order to be considered a tax free benefit, the smart phone contract must be between the employer and the phone operator. As with mobile phones there is no restriction or tax charge if private calls are made.

This change of tack by HMRC does not yet apply to tablet devices such as the iPad.

Major Corporation Tax changes 1st April – We are NOT JOKING

Friday, March 11th, 2011

Firms are being reminded that significant changes to the corporation tax system come into effect next month.

From April 2011, all Corporation Tax payments will have to be made electronically, and all company tax returns must be filed online for accounting periods ending after 31 March 2010.

The returns will also have to be filed using a specified data format, known as Inline XBRL or iXBRL.As well as limited companies, the changes will affect other organisations that pay corporation tax, including clubs, societies, associations, co-operatives, charities and other unincorporated bodies.

Magnificent motorcycles – New Capital Allowance Rules

Tuesday, September 1st, 2009

Motorcycles are to be excluded from the definition of cars from April 2009. This means that they will qualify as main pool plant and machinery and willbe eligible for consideration for the following allowances: 

• the 100% AIA • the temporary FYA of 40% 

• a 20% allowance where neither of the above apply. Where there is part non business use of the asset by a self employedperson, it will have to be placed in a single asset pool and a restriction onany allowances will be made for private use