‘Uncategorized’

Claiming the tax-free marriage allowance

Monday, September 30th, 2019

marriage allowance

Here’s how to claim the tax-free marriage allowance

We’re seeing confusion and mistakes made over claiming the marriage allowance, resulting in couples missing out on potentially claiming over £1,000 and then paying professional fees to correct the issue.

Since 6 April 2015, unused personal allowance can be transferred between spouses and civil partners where neither is a higher rate taxpayer. This amount is known as the marriage allowance.

The Rules:

  • The transferor must have income below the PA (currently £12,500) or should not pay income tax
  • The recipient of the unused PA should not be a higher rate taxpayer (i.e. they should pay tax at 20%)
  • The personal giving up their PA must make the ‘claim’, either online or by phone
  • Both parties must meet the criteria in order to transfer the PA

 

How much is the marriage allowance worth?

In the current tax year, up to £1,250 can be transferred across and added to the basic rate taxpayer’s PA, resulting in an extra tax saving of up to £250 (£1,250 @ 20%).

Can I claim marriage allowance for previous periods?

Good news – yes! You can claim for any tax year since 6 April 2015 providing you both satisfy the criteria. Your refund could be worth more than £1,000.

How does this differ from the Married Couples Allowance?

If one of you was born before 6th April 1935, you may qualify for the MCA which provides even more in tax savings.

Tax is always changing and we’re here to help you get it right, whilst ensuring you’re optimising your tax position. If you’d like advice on your current position or are thinking about making some changes, we’re well placed to help you. Please get in touch to speak with our tax team and find out how we can help improve your personal tax.

HMRC details for claiming

Taking the stress out of IHT and probate

Wednesday, August 21st, 2019
IHT

IHT and probate

Taking the stress out of IHT and probate

We’re currently seeing a considerable delay in issuing grants of probate which is causing stress for the executors and beneficiaries of estates. There’s also added stress around the ability to fund inheritance tax payments and the best way this can be achieved. Recent reports suggest that 36% of us will inherit a property during our lifetime but many beneficiaries aren’t clear about what steps they need to take when a loved one dies.

It’s often an emotionally charged time and we completely understand that the last thing people want is to have to get their heads around the ins and outs of inheritance tax and probate. We’ll try and simplify some points here to give you a heads up for when you find yourself in the position of dealing with a loved one’s estate.

When does inheritance tax (IHT) apply?

After someone dies, if the value of their estate exceeds £325,000, IHT at 40% may apply. Estates left to spouses don’t attract IHT on first death and there are other reliefs available which can reduce inheritance tax such as the residency nil rate band where you pass your main property to direct descendents.

Who sorts out the estate finances?

The executors are responsible for sorting out the finances of the estate and ultimately handing over any remaining assets to the beneficiaries. This process is called probate and begins after death. Often, it helps to appoint a probate-qualified professional to ease this process but it can be done without the guidance of a professional.

What can be done to reduce exposure to IHT?

There are a number of options and reliefs available to minimise IHT.  More estates are hitting the IHT threshold as house prices continue to rise but with a willingness to take action early, taxes can be reduced.

The advantages of appointing a probate-qualified accountant

We’re regularly involved with our clients’ financial affairs and understand not only the assets in the estate but also the history of the deceased estate. The probate process involves HMRC returns, valuations and often complex calculations which we’re well placed to help with.

To reduce your exposure to inheritance tax or understand what steps you can take to become even more tax efficient, please contact [email protected] or call 01527 558539. More info on our probate services can be found here.

hmrc

Frequently asked questions

Friday, August 9th, 2019

Frequently asked questions

Frequently asked questions

We’re asked all sorts of questions by our clients and here are some of them, ranging from VAT to working from home.

Can I scan my receipts into my accounting software ?

There are many receipt scanning apps available that integrate with the main accounts software; one of the most commonly used apps is ReceiptBank. All you have to do is take a picture of the receipt/invoice and the software will pick up the key information and then categorise this in to your accounts software, whilst saving a copy of the picture as a PDF within the software. This then means you are free to throw away all of those pieces of paper to reduce clutter and reduces the need to send a box full of paperwork to your accountant!

As part of our finance function offering, we offer this service and can advise you further.

Do I charge on VAT on EU sales?

When selling goods to VAT-registered EU customers, 0% VAT is charged – make sure  you capture the customer VAT number on your invoice.  Also remember to complete your EC sales list and keep proof of export.  If your customer is not VAT registered you will need to charge VAT and keep an eye on the VAT registration limits on each country. For services, the place of supply rules apply and VAT is not normally chargeable. We can advise on all VAT matters and how they apply to your business.

Can I claim tax relief for working from home?

If you work more than 25 hours each month from home, you can use flat rates to offset your income. These are simplified expenses and it’s worth calculating what they’re worth to you vs your actual expenses incurred to determine which method gives you more tax relief.

What’s the max earning before paying higher rate tax?

Taxpayers are entitled to an annual tax-free personal allowance of £12,500, then taxed on their income up to £50k at the basic rate of 20%, then higher rate of 40% on income up to £150k. Above this level of earnings, the additional rate of 45% applies. There are ways to reduce your taxable income, such as qualifying pension contributions and gift aiding. There are also other forms of earnings with their own tax-free allowances which are worth exploring.

Please contact us to find out how we can help your business thrive.

Summer – a great time to get your personal tax return done early

Friday, July 19th, 2019

Ok, so hopefully you filed your 2017/18 personal tax return before the 31 Jan deadline..but….just in case you didn’t and want to be better this year, here’s some food for thought. Twelve reasons why you should do your tax return earlier.

If you’re one of the many who didn’t file your tax return on time, here’s why you should get it done earlier for 2018/19:

  1. There’s less likelihood of errors when you’re not preparing it in a hurry – get it right and stay off HMRC’s radar
  2. It’s much less stressful for you (and your accountant if you use one) if you file before the busy season
  3. Get it out of the way before Christmas so it’s not looming over you whilst you enjoy the festivities
  4. Preparing it earlier means paperwork will be easier to locate and details are fresh in your mind – this should save you significant time and ensure better accuracy
  5. Avoid a late filing penalty
  6. File early and you’ll have more time to save up if any tax is due
  7. You’ll receive any tax refund earlier
  8. More availability of resources in the quieter months, such as access to accountants and HMRC who are notoriously stretched in December and January
  9. You can have qualifying underpayments coded out if your tax return is filed by 30 Dec
  10. There’s more time to correct any errors in your current tax code
  11. You’ll have more time to file an amended return
  12. With more time to consider all available tax deductions and reliefs, you stand a better chance of reducing your taxable profits and saving more tax

 

If you have any queries about your tax position or are interested in optimising your tax affairs, please contact Helen Sewell or call Helen on 01527 558539. Have a look at how we can help with your tax requirements.

personal tax return

personal tax return

Advisory fuel rates from 1 June 2019

Monday, June 3rd, 2019

Advisory fuel rates from 1 June 2019

The advisory fuel rates for claiming back mileage in a company car from 1 June 2019 are as follows:

Engine size                       Petrol – amount per mile            LPG – amount per mile

1400cc or less                     12 pence                                                   8 pence

1401 to 2000cc                   15 pence                                                   9 pence

Over 2000cc                        22 pence                                                  14 pence

 

Engine size                         Diesel – amount per mile

1600cc or less                        10 pence

1601 to 2000cc                      12 pence

Over 2000cc                          14 pence

For the purposes of claiming back mileage, hybrid cars can be treated as either petrol or diesel. The above rates apply from 1 June 2019 but you can use the previous rates up to 30 June 2019 if desired. It is not compulsory to use the above rates but if they are applied, there is no charge to Income Tax or NIC on amounts paid to employees.

Advisory Electricity Rate

For fully electric cars, employees can claim back 4 pence per mile when using the car for business purposes. Electricity is not classed as a fuel for car fuel benefit purposes. This new rate can be claimed from 1 September 2018.

Considerations

Given the government’s changing stance on company car taxation and the move towards ‘greener’ cars, it is often worth revisiting which car you drive or which cars you offer in the company car fleet. There are tax considerations for both the employer and employee who will be keen to optimise the tax position whist driving cars that fit the purposes of the business/individual.

If you are thinking about your options, we can explain them to you and help you understand which course of action might ‘tick the boxes’. It is important that all aspects are considered, not just tax, so that an informed decision is made.

If this is an area you’d like help with, please contact Helen Sewell on 01527 558539 or [email protected]  Helen is experienced in all matters of employer and employee taxation, such as benefits in kind, payroll and also personal taxation.

Advisory fuel rates

HMRC

VAT reverse charge for construction services

Wednesday, May 22nd, 2019

VAT reverse charge for construction services

From 1 October 2019, a domestic reverse charge will apply to construction services in the UK, in response to organised criminal attacks on the VAT system in the construction sector.

The domestic reverse charge will apply to supplies taxable at the standard or reduced rates where payments are required to be reported via the Construction Industry Scheme (CIS).

Therefore, supplies between sub-contractors and contractors as defined by CIS will be subject to the reverse charge unless they are supplied to a contractor who is an end user. End users will usually be recipients who use the building or construction services for themselves, rather than sell the services on as part of their business of providing building or construction services.

What supplies are included?

The new domestic reverse charge will apply to B2B supplies of those services between VAT registered businesses where the recipient then makes an onward supply of the same construction services.

Construction services included in the reverse charge include:

  • Construction, alteration, repair, extension, demolition or dismantling of buildings or structures
  • Installation in any building or structure of systems of heating, lighting, air conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection
  • Painting or decorating the internal or external surfaces of any building or structure

What next?

The first period affected by the VAT reverse charge is starting soon and businesses should ensure they are prepared for the changes. Whilst HMRC has indicated it will be lenient for the first few months with respect to genuine errors, we are urging businesses to get to grip with the new rules and practise good VAT housekeeping from the start.

If you would like help understanding how the changes affect your business and what your obligations are, please email Julia Gallagher or call 01527 558539.

Further information on our tax services can be found here. HMRC guidance on the VAT reverse charge.

VAT reverse charge

VAT reverse charge

Making Tax Digital – can we help?

Monday, May 20th, 2019

Making Tax Digital for VAT…..how is it going for you so far?

From April 2019, the government’s Making Tax Digital (MTD) campaign has applied to the online filing of digital VAT returns. Businesses will have received instructions from HMRC advising of the steps to take.

All VAT registered businesses with a turnover greater than the VAT threshold, currently £85,000 p.a. (including unincorporated businesses, companies, LLPs and charities) will be required to file their quarterly VAT returns online. They will also be expected to keep and maintain digital VAT records.

Are there any exemptions from digital VAT filing?

Yes. If turnover is below the VAT threshold, there is an automatic exemption from digital VAT filing.

Software

HMRC is currently working with software providers over a suitable product but unlike the HMRC’s personal tax return software, it is not expected to be free.

The software will need to:

  • Keep and preserve records in a digital form
  • Produce a VAT return from these records
  • Provide VAT data to HMRC on a voluntary basis
  • Communicate with HMRC’s software in order to receive information and messages/alerts, such as reminders of filing dates etc

What information needs to be kept digitally?

It’s important to note that there will be no need to make and store invoices and receipts digitally. These can be kept in their original paper form. However, transactions will need to be stored digitally and all records should be kept for 6 years. Businesses are required to store other types of information digitally, including supplies/purchase data and amounts used in the VAT account.

We appreciate that this represents yet more change and are here to help you understand your obligations under MTD for VAT.

If we already file your VAT returns or you would like us to do so, these changes will have minimal effect on you and your business.

If you file your own VAT return, we can support you and ensure you are complying with the new rules.

Please contact [email protected] or call 01527 558539 to discuss your VAT requirements. We’ve also produced a short video with the key points of Making Tax Digital for VAT.

Or, visit our website to find out about our other services and how we can help your business. More information can also be found on the HMRC website.

Making Tax Digital

The P11D deadline is looming

Monday, May 13th, 2019

Now that the 2018-19 tax year has come to an end, expenses and benefits forms P11D need to be completed for each employee and director who has received expenses and benefits during the 2018-19 tax year, and the overall amount of Class 1A National Insurance contributions (NICs) has to be declared and paid by the employer.

All of these forms must be submitted to HMRC by 6 July 2019 and penalties are levied for late and incorrect returns.

If we currently prepare P11Ds for you or we include the benefits in kind in your payroll, we will have already contacted you.

If we don’t usually prepare P11Ds for you but you think you may need to file a Return for 2018-19 i.e. you or your staff have recently started to receive expenses and / or benefits, we would be happy to discuss your requirements with you. Please contact Helen Sewell to discuss your requirements or call 01527 558539. Other business services we can help you with can be found here.

P11D forms are due by 6 July 2019

P11D forms are due by 6 July 2019

HMRC P11d info here.

Daily late filing penalties from 1 May 2019

Monday, April 29th, 2019

Taxpayers who missed the 31 January 2019 deadline for 2017/18 SA tax returns should have already been issued with an automatic £100 penalty by HMRC, although the penalty notices have been issued late this year.

From 1 May, daily penalties of £10 will apply up to a maximum of 90 days (£900). From 1 August the late filing penalty is levied at 5% of tax due of £300 if higher. If any tax is outstanding at this date, the late payment penalty is charged at 5% of unpaid tax.

Interest also applies on unpaid tax and unpaid penalties, so we are urging taxpayers to submit and pay any outstanding returns and liabilities.

If you would like help in completing your tax return or any issue relating to your personal tax affairs, please contact [email protected] or call 01527 558539. Please see our website for further information on our personal tax services or take a look at the HMRC site for more details on your personal tax obligations.

Daily late filing penalties

Daily late filing penalties

Welsh rates of income tax from April 2019

Monday, April 15th, 2019

Effective April 2019, Welsh resident taxpayers are subject to the new Welsh rates of income tax which are set by the Welsh government. Welsh taxpayers will continue to pay income tax in the same as they have done previously but will now pay a UK rate and a Welsh rate.

Welsh income tax will apply, even if the Welsh resident employee works in England.

What are the new rates?

For the tax year 2019/20, the UK government has reduced the UK rates for Welsh taxpayers as follows :

  • basic rate – from 20% to 10%
  • higher rate – from 40% to 30%
  • additional rate – from 45% to 35%

In addition, the Welsh rates are 10% for each bracket above, meaning that overall, there is no change to income tax rates for Welsh taxpayers in the 2019/20 tax year.

Of course, this could change from April 2020, depending on the Welsh government and we will advise accordingly.

What else do I need to be aware of?

It is the responsibility of the individual taxpayer to ensure HMRC holds correct contact details and is informed of any change in address. Employees or pension recipients deemed to be Welsh resident will be given tax codes starting with a C. The employer or pension provider is not responsible for deciding an individual’s Welsh taxpayer status.

Self-employed individuals will be required to disclose their country of residence on their Self Assessment tax return.

If you are an employer, please encourage your employees to check if HMRC holds their correct contact details using their personal tax account Any changes of address can be managed through this facility.

If you would like to discuss the new Welsh rates of income tax, please contact us on [email protected] or call 01527 558539.

To read more about our services, visit our website or call 01527 to arrange to come in and meet with one of our experienced team. Or take a look at the Welsh government’s website for further details.

Welsh rates of income tax