Could you claim expenses and an early tax refund?
HMRC is reminding employees that they may be able to claim a tax rebate if they have incurred certain expenses related to their employment. HMRC’s press release on the matter specifically identifies workers including nurses, hairdressers, construction workers and those in retail and food that have to dip into their own pockets to pay for work-related expenses like car mileage, replacing or repairing small tools, or maintaining branded uniforms. A claim can be made online now with the tax relief ... read more
X-factor VAT bonus
The Chancellor, Philip Hammond has announced that the government will waive the VAT equivalent on the sales of this year’s X-Factor Christmas Charity single. All proceeds from the sale of the single are going to two children’s charities; Together for Short Lives and Shooting Star Chase Children’s Hospice.
Both charities provide support for children with life-limiting illnesses and their families. The donation will be the equivalent of the sum of the VAT receipts collected on sales of the ... read more
Employing someone to work in your home
When you employ someone to work in your home, it is your responsibility to ensure you meet the employee's rights and deduct the correct amount of tax from their salary. This can include employees such as a nanny, housekeeper, gardener or carer. The rules are different if the person is self-employed or paid through an agency.
If you employ anyone they must:
have an employment contract
be given payslips
work no more than the maximum hours allowed per week
be paid at least the National ... read more
UK VAT claims by non-EU businesses
The VAT paid in other EU countries is often recoverable by VAT-registered businesses in the UK, who bought goods or services for business use. The amount of VAT that is refundable depends on the other countries' rules for claiming input tax. It is important to note that VAT incurred in foreign countries can never by reclaimed on a domestic UK VAT return.
There are special rules for businesses established outside the EU submitting a claim for VAT incurred in the UK. The deadline for the ... read more
HMRC writes to taxpayers in Wales
HRMC has written to two million taxpayers in Wales concerning the introduction of the Welsh rates of Income Tax (WRIT) from 6 April 2019. The WRIT will be payable on the non-savings and non-dividend income of those defined as Welsh taxpayers and WRIT taxpayers will receive a new tax code, starting with C for Cymru. A proportion of the revenue from the Welsh rates of Income Tax will go to the Welsh Government.
To effect this change the UK government will reduce each of the 3 rates of Income Tax ... read more
Taxation of termination payments
In the 2016 Budget, the government announced that termination payments over £30,000 would be subject to employer National Insurance Contributions (NICs) from April 2018. In the 2017 Budget, the government further announced that this change would be delayed for a year with the changes set to come into force from April 2019. A further delay in the implementation of the new rules has now been confirmed, and the introduction of employer NICs on termination payments above £30,000 will now commence ... read more
Who can or cannot claim the Employment Allowance
The Employment Allowance of £3,000 per year is available to most businesses and charities to be offset against their employers Class 1 NIC bill. The allowance can be claimed as part of the normal payroll process.
An employer can claim less than the maximum if this will cover their total Class 1 NIC bill. Eligible employers that have not yet done so can still claim for the current tax year (as well as make a backdated claim for one further tax year).
The eligibility to claim the Employment ... read more
When you can utilise overlap relief
The assessment of self-employed or partnerships profits is usually relatively straight-forward if the accounting date, to which accounts are prepared annually, falls between 31 March and 5 April. However, overlap profits can arise where a business year end date is not coterminous with the end of the tax year.
Overlap profits can happen in the first 3 years of the business or in any year in which there is a change of basis period because of a change of accounting date.
For example, if your ... read more
Statutory employee benefit pay to rise from April 2019
In a written ministerial statement, the government has announced the proposed new rates for Statutory Maternity Pay (SMP), Statutory Adoption Pay (SAP), Statutory Paternity Pay (SPP), Statutory Shared Parental Pay (ShPP) and Statutory Sick Pay (SSP) for tax year 2019/20.
The proposed revised rates are as follows:
The standard weekly rates of SMP, SAP, SPP and ShPP will increase from £145.18 to £148.68 – it is assumed this will be for payment weeks commencing on or after Sunday, 7 April ... read more
Tax Diary December 2018/January 2019
1 December 2018 - Due date for Corporation Tax due for the year ended 29 February 2018.
19 December 2018 - PAYE and NIC deductions due for month ended 5 December 2018. (If you pay your tax electronically the due date is 22 December 2018)
19 December 2018 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2018.
19 December 2018 - CIS tax deducted for the month ended 5 December 2018 is payable by today.
30 December 2018 - Deadline for filing 2017-18 self-assessment ... read more
When to report and pay Capital Gains Tax
The annual Capital Gains Tax (CGT) exemption for individuals is £11,700 for 2018-19. A husband and wife each benefit from a separate exemption. Same-sex couples who acquire a legal status as civil partners are treated in the same way as married couples for CGT purposes.
CGT is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate ... read more
Inheritance Tax if you live abroad
The Inheritance Tax rules can be difficult to fathom when an expat or another person with connections to the UK living outside the country dies. The liability to Inheritance Tax in the UK depends primarily on the domicile of the deceased. If the deceased is deemed to be domiciled in the UK for tax purposes, they will generally be subject to Inheritance Tax in the UK regardless of where they died. It is important to note that this is different to being classed as a non-resident for tax purposes. ... read more
Claim tax relief for job related expenses
Employees who use their own money to buy things they need for their job can sometimes claim tax relief for the associated costs. It is usually only possible to claim tax relief for the cost of items used solely for their work.
There is no tax relief available if your employer pays you back in full for an item you have bought for work. In addition, you cannot claim tax relief if your employer has provided you with a suitable item, but you want a different or upgraded model. For example, you are ... read more
Coding out debts deadline
The coding threshold entitles taxpayers to have tax underpayments collected via their tax code, provided they are in employment or in receipt of a UK-based pension. The coding process applies to certain debts such as Self-Assessment liabilities, tax credit overpayments and outstanding Class 2 NIC contributions. Instead of paying off debts in a lump sum, money is collected in equal monthly instalments over the tax year.
The amount of debt that can be coded out ranges from £3,000 to £17,000 based ... read more
Pension automatic enrolment changes
Automatic enrolment for workplace pensions encourages many employees to start making provision for their retirement with employers, and as a bonus, government also contributes to their pension pot.
The law states that employers must automatically enrol workers into a workplace pension, if they are aged between 22 and State Pension Age, earn more than the minimum earning threshold (currently £10,000), work in the UK and are not already a member of a qualifying work pension scheme.
Employees ... read more
New advisory fuel rates published
Advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. The rates can be used by employers who reimburse employees for business travel in their company cars or where employees are required to repay the cost of fuel used for private travel. HMRC accepts there is no taxable profit and no Class 1A National Insurance on reimbursed travel expenses where employers pay a rate per mile for business travel no higher than the published advisory fuel ... read more
VAT - FRS limited cost trader
The VAT Flat Rate Scheme (FRS) has been designed to simplify a way a business accounts for VAT, and in so doing reduce the administration costs of complying with the VAT legislation. The scheme is open to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000.
In April 2017, HMRC introduced a 'limited cost trader' test that can increase the VAT flat rate percentage used by VAT registered businesses that use the Flat Rate scheme. It appeared that ... read more
CGT and investment clubs
Investment clubs are loosely defined as a group of people who get together to buy and sell shares on the stock market with a view to making a profit. An investment club does not have any special legal status and usually operates as a kind of informal partnership. These clubs can offer an interesting perspective to investors helping to hone their skills, share risk and benefit from new fonts of knowledge.
HMRC publishes special guidance as to how gains and losses should be handled as part of an ... read more