Posts Tagged ‘Finance’

Finance Bill reduced

Thursday, May 4th, 2017

In order to ensure that the Finance Bill 2017, introduced March 2017, is passed before the impending general election, huge chunks of the original, published bill have been removed. In the national press this has been referred to as a “wash-up”.

Significant legislation has been side-lined in the process. For example, the following charging provisions have been removed:

  1. Rules to introduce the further digitisation of tax payer records by requiring that certain sectors of the self-employed will need to upload quarterly data to HMRC from April 2018, all unincorporated businesses by April 2019. The so-called, Making Tax Digital processes.
  2. The reduction of the tax-free dividend allowance from £5,000 to £2,000 from April 2018.
  3. Many of the anti-avoidance, counter legislation changes.
  4. The reduction in the pensions money purchase allowance.

The national press is keen to speculate that some or all of these removed clauses will not be reintroduced after the election. Much will depend on who wins the election, but if Mrs May re-enters Downing Street, a second Finance Bill for 2017, to represent the missing clauses, seems likely.

Like so much in politics these days, we will have to wait until the ink has dried on the voting slips, and the count completed, before the re-introduced legislation or new tax changes are considered.

Business owners are to some extent in limbo as the Making Tax changes, although heavily promoted by HMRC, are now without charging provisions in the Taxes Acts. Many businesses, and their advisors, are presently trialling the electronic upload of data to HMRC, so it is difficult to see that this entire raft of legislation will be permanently withdrawn. We will have to wait and see.

What are your responsibilities to pay the National Minimum Wage

Thursday, April 20th, 2017

The current state defined wage rates are divided between the National Living Wage (NLW) – this is currently set at £7.50 per hour and only applies to workers aged 25 years and over – and the NMW for workers under 25 years.

The NMW hourly rates are currently:

  • Age group 21 to 24 – £7.05
  • Age group 18 to 24 – £5.60
  • Age group under 18 – £4.05
  • Apprentices £3.50

Apprentices are entitled to the apprenticeship rate if they are either:

  • Aged under 19
  • Aged 19 or over and in the first year of their apprenticeship.

Workers are not entitled to the NMW until they reach the school leaving age. This depends on where you live:

England

You can leave school on the last Friday in June if you’ll be 16 by the end of the summer holidays.

You must then do one of the following until you’re 18:

  • stay in full-time education, for example at a college
  • start an apprenticeship or traineeship
  • spend 20 hours or more a week working or volunteering, while in part-time education or training

Scotland

If you turn 16 between 1 March and 30 September, you can leave school after 31 May of that year.

If you turn 16 between 1 October and the end of February, you can leave at the start of the Christmas holidays in that school year.

Wales

You can leave school on the last Friday in June, as long as you’ll be 16 by the end of that school year’s summer holidays.

Northern Ireland

If you turn 16 during the school year (between 1 September and 1 July) you can leave school after 30 June.

If you turn 16 between 2 July and 31 August, you can’t leave school until 30 June the following year.

One week to go

Thursday, March 30th, 2017

Next week sees the end of the 2016-17 tax year. On the 6 April 2017, any action you take to minimise your tax liabilities for 2016-17 will be largely ineffective. So what, if anything, can you still action this week?

Capital gains tax (CGT)

The amount of tax free gains you can make during 2016-17 is £11,100. This exempt allowance is available to all UK resident tax payers, accordingly, married couples and civil partners both qualify.

If you have no gains chargeable to CGT thus far during 2016-17, there is still an opportunity to crystallise gains during this coming week, up to the annual exemption limit, and no tax will be payable. For example, if you have a shareholding that you have been considering for disposal, and you could sell a sufficient quantity of shares before 6 April 2017, the disposal would utilise your allowance without creating a tax liability.

The important matter to note is that this annual exemption is lost if you don’t use it; it cannot be carried forward and used in later years.

Inheritance tax (IHT)

There are a number of annual reliefs that you can use without creating a chargeable event for IHT purposes. For example, the exempted annual gifts you can make are:

You can give away £3,000 worth of gifts each tax year (6 April to 5 April) without them being added to the value of your estate. This is known as your ‘annual exemption’.

You can carry any unused annual exemption forward to the next year – but only for one year.

Each tax year, you can also give away:

  • wedding or civil ceremony gifts of up to £1,000 per person (£2,500 for a grandchild or great-grandchild, £5,000 for a child)
  • normal gifts out of your income, for example Christmas or birthday presents – you must be able to maintain your standard of living after making the gift
  • payments to help with another person’s living costs, such as an elderly relative or a child under 18
  • gifts to charities and political parties

You can use more than one of these exemptions on the same person – for example, you could give your grandchild gifts for her birthday and wedding in the same tax year.

Small gifts up to £250

You can give as many gifts of up to £250 per person as you want during the tax year as long as you haven’t used another exemption on the same person.

Company car users

If your employer pays for your private fuel this will create a fairly significant income tax charge for 2016-17. You may save money if you calculate the cost of the fuel provided and reimburse your employer. For 2016-17, you need to do this before 6 April 2017. (For 2017-18, the rules are being relaxed slightly and you will have until 6 July 2018 to make an equivalent reimbursement for 2017-18).

To make the calculation you will need your private mileage for 2016-17 and multiply this by the advisory fuel rate for your vehicle. These range from 7p to 22p per mile. See the published list at https://www.gov.uk/government/publications/advisory-fuel-rates/advisory-fuel-rates-from-1-march-2016

These are just a few of the actions you could take to minimise your tax payments during what’s left of 2016-17. If you are unsure what your options may be, please call, we would be delighted to help.

Marriage Allowance

Wednesday, March 8th, 2017

Although the financial impact of this allowance is relatively low, it is surprising that there has not been more uptake of the Marriage Allowance since its inception 6 April 2015. In fact, taxpayers that qualify can still backdate a claim for 2015-16 as well as make a claim for the current tax year, 2016-17.

Marriage Allowance lets you transfer £1,100 of your Personal Allowance to your husband, wife or civil partner – if they earn more than you. This reduces their tax by up to £220 in the tax year. To benefit as a couple, the lower earner must have an income of £11,000 or less.

If you were eligible for Marriage Allowance in the 2015-2016 tax year, you can backdate your claim to 6 April 2015 and reduce the tax paid by up to £432.

Who can apply

You can get Marriage Allowance if all the following apply:

  • you are married or in a civil partnership
  • you don’t earn anything or your income is under £11,000
  • your partner’s income is between £11,001 and £43,000

You can still apply for Marriage Allowance if you or your partner:

  • are currently receiving a pension
  • live abroad – as long as you get a Personal Allowance.

 

To apply, you will need you and your partner’s National Insurance numbers. You will also need a way to prove your identity. This can be one of the following:

  • the last 4 digits of the account that your child benefit, tax credits or pension is paid into
  • the last 4 digits of an account that pays you interest
  • details from your P60
  • details from any of your 3 most recent payslips
  • your passport number and expiry date

You’ll get an email confirming your application. The online application link is https://www.tax.service.gov.uk/marriage-allowance-application/eligibility-check?_ga=1.166134333.262204862.1487688115

The budget crystal ball

Wednesday, March 8th, 2017

Today Philip Hammond will present his first budget to parliament; forecasting any changes he may be considering to the UK tax system is perhaps unwise.

If he remains committed to austerity, anticipating any potential fall-out from the Brexit process and maintaining (or more likely slowing down) the repayment of national debt, it is difficult to see where savings can come from to fund tax give-aways.

Most of the annual tax allowances for 2017-18 have already been published so what we may see are commitments to ease taxation in future years. There have been rumours that the UK may be promoted as a low-tax area to draw non-EU business to the UK after Brexit. Perhaps we will see a promise to reduce corporation tax below 17%, the rate it is predicted to be from April 2020, or bring forward the reduction to 17%.

Other predictions include:

  • Increasing stamp duty thresholds for first-time buyers.
  • Setting a fixed rate for pensions tax relief – 33 per cent has been mooted.
  • Taking the sting out of the recently announced business rate increases.
  • Efforts to simplify tax compliance for businesses.

Additionally, we may see a start towards the alignment of rules for NIC and income tax, removing or closing the disparity between the overall tax and NIC payable by the self-employed and employed persons.

In some respects, tax payers, their advisors and HMRC have their hands full implementing tax changes already announced. Most impactful is Making Tax Digital and the necessity for the self-employed to make quarterly data uploads from April 2018.

Many of us are hoping that Mr Hammond will opt for a gently-gently approach. By this time next week, we will know if he agrees.

Tax free Childcare

Wednesday, August 3rd, 2016

This new scheme will be rolled out to parents next year. The scheme will be made available gradually to families, with parents of the youngest children able to apply first. You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017.

 

In the meantime, HMRC are gearing up to advise childcare providers to register to use the scheme.

 

The top ten things that parents should know about Tax-free Childcare have recently been updated and are reproduced below:

 

1.      You’ll be able to open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be done through the government website, GOV.UK.

 

2.      For every 80p you or someone else pays in, the government will top up an extra 20p. This is equivalent of the tax most people pay – 20% – which gives the scheme its name, ‘tax-free’. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).

 

3.      The scheme will be available for children up to the age of 12. It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.

 

4.      To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year.

 

5.      Any eligible working family can use the Tax-Free Childcare scheme – it doesn’t rely on employers.

 

6.      The scheme will also be available for parents who are self-employed. Self-employed parents will be able to get support with childcare costs in Tax-Free Childcare, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents. To support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the minimum income level.

 

7.      If you currently receive Employer-Supported Childcare then you can continue to do so; you do not have to switch to Tax-Free However, Tax-Free Childcare will be open to more than twice as many parents as Employer-Supported Childcare.

 

8.      Parents and others can pay money into their childcare account as and when they like. This gives you the flexibility to pay in more in some months, and less at other times. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays. It’s also not just the parents who can pay into the account – if grandparents, other family members or employers want to pay in, then they can.

 

9.      The process will be as simple as possible for parents. A bespoke online process will be provided.

 

10.  You’ll be able to withdraw money from the account if your circumstances change or you no longer want to pay into the account. If you do make withdrawals, the government will withdraw its corresponding contribution.

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