Useful Information

Useful Information


24/01/2019

National Minimum Wage and Living Wage rates


In April 2019 the minimum wage rates are increasing

 

     •  25 and over - £8.21

     •  21 to 24 - £7.70

     •  18 to 20 - £6.15

     •  Under 18 - £4.35

     •  Apprentice* - £3.90

 

*If under 19 or in first year of apprenticeship (otherwise refer to age bands). The apprenticeship rate does not apply to Higher Level Apprenticeships.

 

Further information on National Living and National Minimum Wage rates can be viewed at this link:

https://www.gov.uk/government/news/lpc-welcomes-acceptance-of-its-2019-minimum-wage-rate-recommendations

28/09/2018

One week to register for 2017-18 self-assessment, warns HMRC


Anyone whose tax circumstances have changed in the past year and now earns more than £2,500 from rented property, owns shares or is hit by the higher income child benefit charge needs to register for self-assessment to avoid automatic penalties.

 

The deadline for registering for self-assessment is 5 October 2018 for the 2017-18 tax year.

 

Anyone submitting a self-assessment return for the first time – including higher income child benefit charge (HICBC) taxpayers - need to register by 5 October 2018 so that they can complete their return by 31 January 2019 and avoid an automatic £100 penalty for failure to file.

Individuals need to complete a tax return if they:

 

     •  earn more than £2,500 from renting out property;

     •  Receives child benefit and has an annual income of more than £50,000

     •  earned more than £2,500 in other untaxed income, for example from tips or commission

     •  are self-employed sole traders

     •  are limited company directors

     •  are shareholders

     •  employees claiming expenses in excess of £2,500 per tax year

     •  have an annual income over £100,000.

 

The deadline for filing self-assessment returns for 2017-2018 is 31 January 2019.

 

The penalties for late tax returns include an initial £100 fixed penalty, which applies even if there is no tax to pay, or if the tax due is paid on time; after 3 months, additional daily penalties of £10 per day, up to a maximum of £900; after 6 months, a further penalty of 5% of the tax due or £300, whichever is greater; and after 12 months, another 5% or £300 charge, whichever is greater.

 

There are also additional penalties for paying late of 5% of the tax unpaid at 30 days, 6 and 12 months.

 

Full details at www.gov.uk/selfassessment or from the HMRC self-assessment helpline on 0300 200 3310.

25/09/2018

Deadline for Requirement to Correct (RTC) tax rules is 30th September 2018


RTC rules and how they will affect taxpayers with assets overseas, such as bank or investment accounts, or holiday homes that have been rented, as well as those overseas with a liability to UK tax, need to take note of 30 September deadline.


HMRC has been targeting taxpayers with assets overseas as a priority for many years. In 2013 a policy document titled ‘No safe havens’ was first published. This document set out a vision for the future where taxpayers with offshore tax issues come forward voluntarily to pay their tax and those who do not would be ‘detected and face vigorously enforced sanctions’.


UK residents with offshore assets, such as bank or investment accounts or holiday homes that have been rented, as well as those overseas with a liability to UK tax, should be alert to what is coming as both innocent and deliberate errors could now attract a penalty up to 200% of the tax due.


Previously HMRC encouraged taxpayers to make voluntary disclosures by offering favourable terms under several disclosure facilities. However, a 2014 agreement by almost all governments worldwide to exchange financial information, known as the Common Reporting Standard (CRS), has allowed HMRC to harden its approach. 


The CRS is now in full flow, with HMRC receiving unprecedented amounts of information on the offshore financial assets of those resident in the UK. This has allowed HMRC to move away from a policy of encouraging voluntary disclosures with lower penalties to heavily punishing those who have not taken the opportunity to come forward.


HMRC is advertising the disclosure facility that is currently open, the Worldwide Disclosure Facility (WDF), as the last chance for those with UK tax issues with an offshore connection, to come forward voluntarily before the CRS data is used by HMRC to find and sanction those who have not disclosed.


HMRC is writing to taxpayers with offshore assets, advising them of the WDF and the importance of coming forward now.  HMRC is also asking taxpayers to sign certification that their offshore tax affairs are fully up to date.  They are encouraging all taxpayers to carry out a thorough review of their affairs with professional advice before signing the declaration.


Currently the penalties under WDF are based on the behaviour which led to the non-disclosure and is applied to the amount of tax due. Typically, they are:


     •  0-30% for careless errors;

     •  20-70% for deliberate errors; and

     •  up to 100% for deliberate errors with concealment.


These penalties can also be increased up to a maximum of double the standard penalty range.


Penalties are reduced for co-operation with HMRC and for voluntary disclosures.


RTC by 30 September


The RTC legislation creates an obligation for taxpayers (individuals, trusts and certain companies) to notify HMRC of the intention to disclose any non-reported offshore taxable amounts. After notification the taxpayer has 90 days to provide HMRC with the full details of the disclosure.


HMRC now holds vast amounts of CRS information, once 30 September has passed, it will be using the information it holds together with its enhanced data analytics capabilities and increased statutory time limits to identify those who have not come forward.


Failure to notify by 30 September 2018 and disclose will result in an automatic failure to correct (FTC) penalty of 200% of the underpaid tax. This penalty can be reduced to a minimum of 100% with full co-operation. However, the usual behavioural reductions will not apply and, therefore, innocent errors and deliberate evasion could both be subject to the same level of FTC penalty.


HMRC has urged taxpayers to seek professional advice and ignorance of the law or failing to understand the position will not be considered a reasonable excuse.


Additionally for those deliberately seeking to avoid detection the FTC penalty can be increased by 50% where assets are moved to avoid tax.  In the most serious cases an asset-based penalty of up to 10% of the offshore asset value could also apply.


Criminal offence


Continuing the increasingly aggressive stance the Government introduced the long anticipated strict liability criminal offence for undeclared offshore liabilities for tax years commencing on or after 6 April 2017.


Those who have an undisclosed offshore income/gain giving rise to a liability over £25,000 could now face an immediate fine and/or prison sentence of up to 51 weeks (6 months for offences in Scotland and Northern Ireland).  As a strict liability offence this applies automaticaly and it isn’t necessary for intent to be proved so innocent errors will be treated the same way as deliberate tax evasion.


This strict criminal liability only applies to income/gain from countries that have not signed up to the exchange of information under CRS.  Many jurisdictions have signed up but others, including USA have not.


What could be caught


Individuals with offshore connections need to review their tax position. UK residents with offshore income and gains must ensure that these are fully disclosed even if foreign taxes have been withheld at source.  All non-UK resident individuals with UK assets need to ensure that all their UK reporting is up to date in respect of their UK income. Liabilities arising from UK assets where funds have been paid offshore are considered offshore transfers and also fall within the RTC regime.


Any UK resident taxpayer who is the beneficiary or settlor of an offshore structure must ensure that structure has been recently reviewed from a UK tax perspective. The rules surrounding such structures are complex and there have been many changes in recent years. Previous advice may need updating to ensure that all UK taxpayers are fully compliant.


Trustees both resident and non resident need to ensure that their filing obligations for UK  income have been fulfilled as well as any inheritance tax charges in relation to UK assets for Discretionary trusts.


For 2017/18 tax returns extra care will need to be taken as severe penalties could now apply for even innocent errors and a criminal offence could be committed with the possibility of a prison sentence.


While deliberate evaders could always expect to face significant penalties, it is more important than ever to ensure that innocent errors are not subject to heavy-handed action by HMRC.

06/09/2018

Self-employed workers on course for pension crisis


Self-employed workers are on course for a pension saving crisis as they can’t afford to save for their retirement, nearly half have no pension at all and a third are relying solely on the state pension.


Prudential’s nationwide study of around 1,200 people found that 43% of those working for themselves admit they do not have a pension, compared to just 4% of those in employment, while over a third of the self-employed say they can’t afford to save for retirement.


Around one in three say they will be relying entirely on the state pension to fund retirement, whilst 28% will be reliant on their business to provide the income they need.


Prudential’s study shows self-employed workers are savers – but found they are more focused on day-to-day emergencies than the long-term retirement fund. 64% save to build up a safety net in case of an emergency in comparison with 57% of those in employment.


Only 1 in 10 self-employed people see a financial adviser regularly, despite having potentially more complex requirements than those in employment. 1 in 5 are not confident with money and financial matters, while a quarter worry that they do not know enough about money.


Research shows the existence of an education gap when it comes to the importance of pensions for the self-employed as 20% admit they do not take pension saving seriously as they don’t think it applies to them.


Saving for a pension is important whatever your employment status as no one wants to work forever. Having money to fund your retirement is essential as the state pension is highly unlikely to be enough to fund a comfortable retirement.


Speaking to a financial adviser will help you with all aspects of your financial planning.


The association of independent professionals and the self-employed (IPSE) said the Prudential’s findings mirrored its own recent research.


Simon McVicker, IPSE’s director of policy, said :-


Auto enrolment is not the answer, however. While the policy has been a success in boosting the number of employees paying into a pension, IPSE’s research found that it simply isn’t a viable solution for the self-employed. There is no employer to enrol them and it also reduces their ability to be flexible and in control of their money – two of the central attractions of self-employment. Instead, we support rolling out a sidecar pension scheme, allowing the self-employed to save for later life and also into a separate “rainy day” fund for emergencies.’

IPSE’s report, ‘How to solve the self-employed pensions crisis’

28/08/2018

HMRC warning on PAYE tax avoidance via umbrella companies


HMRC is warning people about the potential risks of using some remuneration arrangements offered via agencies and umbrella companies which are marketed as saving tax and increasing take home pay, but are in effect tax avoidance schemes and open to challenge


Some arrangements leave individuals at risk as they are ultimately responsible for their tax affairs and for paying the correct amount of tax and national insurance contributions (NIC).


HMRC is warning people to be careful of arrangements where the companies that use them claim they will help them keep more of their income and reduce their paperwork.


HMRC advises people to make additional checks if the company promises they can keep 80%, 90% or 95% of their wages and be tax compliant, and only a fraction of their salary is paid through payroll and subject to PAYE.


Payments made using a loan, credit or investment payment which the company claims are not subject to income tax or NIC are tax avoidance.  People should also be careful if the payment from the umbrella company is routed through various companies before it comes to them.


HMRC guidance states such arrangements are extremely high risk and likely to be challenged, with the possibility of an individual being asked to pay additional tax, NIC and interest. There may also be penalty charges.


Anyone who is involved in this type of arrangement, or has used one in the past, is advised to withdraw from it and settle their tax affairs with HMRC.


https://www.gov.uk/guidance/umbrella-companies-offering-to-increase-your-take-home-pay-spotlight-45

13/01/2018

Tax Rebates


If you have to wear a uniform for work and are responsible for cleaning/repair yourself and don’t receive an allowance from your employer to do this you could reclaim the tax back for the previous 4 years as well as the current year.


To be eligible to claim ALL the following must apply:

• You wear a recognisable uniform - branded, nurse or police uniform. In some trades unbranded clothes that are only worn for work are accepted (see HMRC fixed rate chart)

• Your required to wear it whilst working.

• You have to purchase, clean, repair or replace it yourself. You can't claim if your employer washes your uniform, has facilities for you to do so and you chose not use them or pays you for doing the cleaning.

• You paid income tax in the year you are claiming for.


HMRC have a fixed rate allowance for different industries:-

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim32712

You can claim for more but you will have to provide proof of this expenditure.


If you are claiming for the first time you need to complete form P87 and can either submit online or print out and post. You will need to complete separate forms for each year you are claiming for.


Link to P87 form:- https://www.gov.uk/government/publications/income-tax-tax-relief-for-expenses-of-employment-p87


Once your claim has been accepted you will receive your tax refund and your tax code will be adjusted in future years to take account of this cost. If for any reason your tax code isn't update you can make the claim by phone without completing another P87 form as long as your expenses don’t exceed £1000.


You may be able to claim other tax-deductible expenses, eg professional fees, specialist tools or travel for your job. Visit HMRC's website for more details.

10/01/2018

Ban on card surcharges


The Government ban on surcharges for paying by debit or credit card come into force on Saturday 13th January 2018. From this point forwards you will no longer be able to charge a customer an additional charge for paying on card.


Alongside the ban on surcharges HMRC will no longer be accepting credit card payments for any Tax Liabilities from this date.

03/11/2017

Dividend allowance


A lot was removed from the first Finance Bill prior to the elections but it was predicted that after the elections most of it would be put into a second Finance bill.  One of these was the reduction of the Dividend allowance.


The tax free Dividend allowance of £5,000 per person will be reduced from April 2018 to £2,000.


For Company Directors that are only claiming the Directors Remuneration from the Company under the Tax and National Insurance bands (2017/18 £8,164) you will still have part of your personal tax allowance to top up with some Dividends before the tax implications hit.


For example for the current tax year 2017/18 if you are receiving a salary of £8,164 from the company for the year then you could also take £8,336 of Dividends Tax free.


Any dividend distribution above this will attract a 7.5% tax charge up to the higher rate band of £45,000. Anything over this is charged at 32.5%.

07/09/2017

HMRC urge students who have worked over the summer to review their PAYE liability.


If you have worked over the summer, are returning to full time education and are not planning on working during this time then you could be due a refund.


During your summer work you may have had tax deducted based on continuously working for the full year.  If you have earnt £11,500 or less and have paid any tax then you can claim it back by completing a P50 https://www.gov.uk/claim-tax-refund/youve-stopped-work


You can apply online through your Government Gateway Account or download the form for posting.

07/09/2017

Guide to current Income tax rates and allowances


2016/17


Personal Allowance - £11,000


You start to lose your Personal Allowance once your income reaches the £100,000 limit. It goes down by £1 for every £2 of income above the £100,000 limit. It can go down to zero.


Basic rate band (20%) - £32,000

Higher Rate band (40%) - £32,001 – £150,000

Additional Rate (45%) - £150,001


2017/18


Personal Allowance - £11,500


You start to lose your Personal Allowance once your income reaches the £100,000 limit. It goes down by £1 for every £2 of income above the £100,000 limit. It can go down to zero.


Basic rate band (20%) - £33,500

Higher Rate band (40%) - £33,501 – £150,000

Additional Rate (45%) - £150,001




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