What you can do with your pension pot
Pension Wise is a free government service that was launched in 2015 to help provide individuals with general pension advice. However, the service does not answer specific questions relating to your pension. The main advice the service provides is generic and covers what you can do with your pension pot, the different pension types, how they work and what’s tax-free and what’s not.
The website lists the following six options:
Leave your whole pot untouched - You don’t have ... read more
When you can claim back VAT on purchase of a car
There are complex VAT rules that determine the amount of VAT that can be recovered when purchasing a new car. The usual rule is that when you purchase a car for your business then no VAT can be reclaimed.
The main exception to this rule is when the new car is used solely for business use. This rule has been the subject of much case law over the years, but it has generally been established that to qualify for VAT recovery the car must not be available for any private use and you must be able to ... read more
Child Benefit charge if income exceeds £50,000
The High Income Child Benefit charge (HICBC) applies to a parent whose income exceeds £50,000 in a tax year and who is in receipt of Child Benefit. If both parents have an income that exceeds £50,000, the charge will apply to the highest income earner. The charge claws back the financial benefit of receiving Child Benefit either by reducing or removing the benefit entirely.
If you or your partner have exceeded the £50,000 threshold during the last tax year (2018-19) then you ... read more
VAT and insurance claims
Insurance transactions are generally VAT exempt. However, there are many issues that can arise concerning the VAT liability of certain insurance transactions. One of these issues concerns the VAT treatment of insurance claims.
Insurers are unable to recover VAT incurred in obtaining replacement goods or having repairs carried out for a policy holder. This supply is treated as being made to the policy holder regardless of who makes the payment to the supplier.
However, a VAT registered ... read more
When are Class 1A NICs due
Class 1A NICs are paid by employers in respect of most benefits in kind provided to employees, for example, the use of a company car. There are no Class 1A employee contributions payable.
Class 1A NICs are due in respect of most benefits provided to:
directors and certain other persons in controlling positions,
members of the family or households of the above.
Where a benefit is provided as part of a salary sacrifice or other optional remuneration arrangement (OpRA), special ... read more
How do you calculate adjusted net income?
To calculate adjusted net income, you will need to look at a taxpayer’s total taxable income, before personal allowances, and then deduct any trading losses, gift aid donations, gross pension contributions and pension contributions where the pension provider has already provided tax relief at the basic rate.
Calculating the adjusted net income amount is necessary if any of the following apply:
A taxpayer is liable to an income-related reduction to the personal allowance - when their ... read more
Pregnant women and new parents to get enhanced redundancy protections
The government has published its response to its January 2019 consultation on “pregnancy and maternity discrimination: extending redundancy protection for women and new parents” and has confirmed that it will now take action to address such discrimination.
As the law currently stands, employees who are placed at risk of redundancy when they are absent on maternity, adoption or shared parental leave have an absolute right to be offered a suitable alternative vacancy, where one is ... read more
Lowest paid to be eligible for sick pay
A new consultation launched jointly by the Department for Work and Pensions and the Department of Health and Social Care, is seeking views on different ways in which both the Government and employers can take action to reduce ill health-related job loss.
The consultation is examining a number of specific proposals including:
Reforming Statutory Sick Pay (SSP) so that it is better enforced, more flexible and covers the lowest paid employees. This would extend SSP protection to around 2 ... read more
Visiting EU after 31 October 2019
Although we have a new Prime Minister, it would seem that so far nothing has changed to bring us any closer to a Brexit resolution. In fact, it appears that a no-deal Brexit is becoming more likely as we approach the 31 October deadline.
HMRC has published guidance on visiting the EU after 31 October 2019. They have said that there will be significant changes to the rules for EU travel if there is a no-deal Brexit. This would affect you if you visit the EU, Iceland, Liechtenstein, Norway or ... read more
Last chance to join the Help to Buy ISA scheme
The Help to Buy ISA scheme will close to new savers after 30 November 2019. This leaves less than 4 months to open an account before the product is due to be withdrawn by the Government. Once opened, account holders can continue to save in their ISA account until 30 November 2029 when accounts will close to additional contributions. Bonuses can be claimed until 1 December 2030.
The scheme allows savers to claim a Government bonus of 25% on monthly savings of up to £200 on savings towards ... read more
Clients exporting to EU if a no-deal Brexit
If the UK leaves the EU without a deal, any UK business that exports goods to the EU will be responsible for making customs declarations (as is the case for businesses currently exporting goods outside the EU).
If you have clients that trade with the EU, you should check that they have a UK Economic Operator Registration and Identification (EORI) number. If they have not applied, it is important that they apply for an EORI number as soon as possible. If the UK leaves the EU without a deal, they ... read more
Working after State Pension age
There are many taxpayers that have reached the State Pension age and continue to work. It should be noted that the requirement to pay any employee or self-employed National Insurance Contributions (NICs) ceases once a taxpayer reaches the State Pension age, subject to the following clarification. Taxpayers remain liable to pay any NICs that were due to be paid on earnings before they reached the State Pension age. The self-employed will need to pay Class 4 NICs for the remainder of the tax year ... read more
Inheritance Tax and domicile
Domicile is a general legal concept which in basic terms is taken to mean the country where you permanently belong. However, determining domicile status can be complex. HMRC guidance states that domicile cannot be defined precisely, but the concept rests on various basic principles.
Although domicile can change, there is generally a presumption in favour of the continuation of an existing domicile. To change a domicile, many factors are considered, for example, the location of family, property ... read more
NIC Act 2019 receives Royal Assent
The National Insurance Contributions (Termination Awards and Sporting Testimonials) Bill has received Royal Assent, to become the National Insurance Contributions (Termination Awards and Sporting Testimonials) Act 2019.
The Act aligns the employer NICs treatment of termination awards in excess of £30,000, received in connection with the termination of an individual’s employment, with the Income Tax treatment for such payments, by introducing a new 13.8% Class 1A employer NIC charge ... read more
Duty free limits if you are travelling abroad
Here is a reminder for our readers of their duty and tax free allowances if travelling abroad this summer.
Travelling to an EU country
Where tobacco or alcohol is brought in from another EU country, no duties or tax will be payable as long as you can demonstrate that the goods are for your own use, and that you paid the relevant taxes and duties on the purchase.
However, HMRC provide the following guidelines as to an acceptable maximum for personal use. If you exceed these limits, you are ... read more
Payments on account system glitch
The due date for making your second payment on account for 2018-19, was the 31 July 2019. The amount that was due for payment is usually the same as that for your first payment on account made on or before 31 January 2019. If you are late making a payment on account, you will likely be required to pay interest and penalties.
Issues with HMRC’s handling of payments on account have been reported by a number of taxpayers. This is an ongoing problem that also affected the first payment on ... read more
VAT for business if there’s a no-deal exit from the EU
With the new Prime Minister, Boris Johnson, appearing to take an increasingly hard line the chances of Britain leaving the EU without any working agreement, known as a 'no deal' Brexit, are looking increasing likely and certainly cannot be ignored.
If the UK leaves the EU on 31 October 2019, without a deal, there would be immediate changes to the procedures that apply to businesses trading with the EU. It would be timely to repeat a summary of the VAT guidance published by HMRC ... read more
Keeping records if self-employed
If you are self-employed as a sole trader or as a partner in a business partnership, then you must keep suitable business records as well as separate personal records of your income.
For tax purposes, the business records must be held for at least 5 years from the 31 January submission deadline for the relevant tax year. For example, for the 2017-18 tax year where online filing was due by 31 January 2019, you must keep your records until at least the end of January 2024. In certain situations, ... read more