Archive for April, 2016

Companies to be liable for employees who facilitate tax cheating

Thursday, April 28th, 2016

The UK will bring forward plans to introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion, the Prime Minister has announced in a statement to the Commons, ahead of next month’s summit to tackle corruption in all its forms.

For the first time, companies will be held criminally liable if they fail to stop their employees from facilitating tax evasion. At the March 2015 Budget the Chancellor said the government would be delivering on its pledge to introduce the measure in this Parliament. The Prime Minister has confirmed that the offence will be introduced in legislation this year.

The move is part of the government’s efforts to clamp down on corruption in all walks of life. The government has already confirmed plans to create a cross-agency taskforce to investigate all evidence of illegality that has emerged from the so-called ‘Panama Papers’.

Prime Minister David Cameron said:

This government has done more than any other to take action against corruption in all its forms, but we will go further.

That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.

On 12 May, the Prime Minister will host the London Anti-Corruption Summit aimed at stepping up global action to expose, punish and drive out corruption in all walks of life.

The summit will seek to galvanise a global response to tackle corruption. As well as agreeing a package of actions to tackle corruption across the board, it will deal with issues including corporate secrecy, government transparency, the enforcement of international anti-corruption laws and the strengthening of international institutions.

It will be the first summit of its kind, bringing together world leaders, business and civil society to agree a package of practical steps to:

  • expose corruption so there is nowhere to hide
  • punish the perpetrators and support those affected by corruption
  • drive out the culture of corruption wherever it exists

Source: New feed

Tax credit renewals online

Tuesday, April 26th, 2016

 HM Revenue and Customs (HMRC) is urging people to renew their tax credits claim online and early before the 31 July deadline.

When claimants renew their claim, they must tell HMRC about any changes to their circumstances that they haven’t already reported, including changes to working hours, childcare costs or income. Once people receive their renewal pack, these changes can be reported through the GOV.UK website.

The online service proved very popular in 2015, with more than 750,000 people renewing online and around 90% of people using it saying they were happy with the service. It only takes around six minutes to renew online, depending on circumstances.

There is also a special team to support the most vulnerable customers who cannot go online. People who we know need special support will be proactively contacted by our customer support teams.

Nick Lodge, HMRC’s Director General, Benefits and Credits, said:

“Our online service means that you can renew at any time of the day or night, and on any device, without having to call us. Online help can also answer most queries you may have and a web chat facility will be available to support people renewing online. We urge everyone who can to go online.

“Our customers should check their details and renew early to ensure they get the right money. The sooner people renew their claim, the sooner we can check payments are correct, meaning we avoid paying too little money, or too much, which claimants then have to pay back.”

Online help and information on renewing tax credits is available on GOV.UK and via HMRC’s customer service Twitter feed @HMRCcustomers. Support is also available through the tax credits helpline.

HMRC has begun sending tax credits renewal packs to approximately 5.9 million households around the country. The packs are sent out from April to June.

The deadline for people to renew their tax credits is 31 July 2016. Failure to renew before the deadline will mean payments are stopped and they may have to repay the money they have received since April.

Source: New feed

Business investment and the annual investment allowance

Tuesday, April 26th, 2016

The AIA allows businesses to write off the full cost of qualifying expenditure and in recent years the amount allowed as a deduction for tax purposes has fluctuated wildly.

From January 2016, the annual limit for AIA expenditure has been set at a new permanent limit of £200,000. Accordingly, this is the amount that can be claimed for 2016-17.

AIA is generally available on a purchase of plant and machinery that can include:

  • Fixtures and integral features
  • The alteration of land for the purpose only of installing plant or machinery
  • Vans, lorries and motorcycles

Expenditure that would not qualify for AIA includes:

  • Motor cars
  • Expenditure which would not qualify for capital allowances such as on buildings or structures.
  • Plant and machinery which was originally used for another purpose, for example, items owned personally which are subsequently introduced into the taxpayer’s business.
  • Plant and machinery acquired in the final period of business before the cessation of trade.

Also, AIA is not available to:

  • Sole traders or partners using cash accounting as from 6 April 2013 as this has modified rules in respect of deductions for plant and machinery.
  • A partnership with a corporate partner which could be a company or an LLP.

This remains a generous tax allowance, as the full cost of qualifying purchases can be written off against trading profits before calculating any tax due.

Business owners should be advised that a claim for AIA in the final period of trading prior to cessation of trade would not be allowed.

Source: New feed

Tax on savings

Tuesday, April 19th, 2016

From 6 April 2016, if you’re a basic rate taxpayer you’ll be able to earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £500. This is called the Personal Savings Allowance.

Banks and building societies will no longer deduct tax from the interest they pay you.

What counts as savings income?

Savings income includes account interest from:

  • bank and building society accounts
  • accounts with providers like credit unions or National Savings and Investments

It also includes:

  • interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts
  • income from government or company bonds
  • most types of purchased life annuity payments

Interest from Individual Savings Accounts (ISAs) doesn’t count towards your Personal Savings Allowance because it’s already tax-free.

If your taxable income is less than £17,000

If your total taxable income is less than £17,000 you won’t pay tax on any savings income.

How much your Personal Savings Allowance will be

The amount of your Personal Savings Allowance depends on your adjusted net income.

The table shows your allowance from 6 April 2016, depending on whether you’re a basic, higher or additional rate taxpayer.

 

Tax rate

Income band (adjusted net income)

Personal Savings Allowance

Basic 20%

Up to £43,000

Up to £1,000 in savings income is tax-free

Higher 40%

£43,001 – £150,000

Up to £500 in savings income is tax-free

Additional 45%

Over £150,000

No Personal Savings Allowance

 

Source: New feed

The Panama Papers

Monday, April 18th, 2016

HMRC has responded to the significant leak of information on the activities of individuals and companies that have availed themselves of the offshore advantages of using Panama as a tax haven.

 We have reproduced below part of their response:

Jennie Granger, Director General of Enforcement and Compliance, HM Revenue and Customs, said:

“HMRC is committed to exposing and acting on financial wrongdoing and we relentlessly pursue tax evaders to ensure that they pay every penny of taxes and fines they owe.

HMRC can confirm that we have already received a great deal of information on offshore companies, including in Panama, from a wide range of sources, which is currently the subject of intensive investigation. We have asked the ICIJ to share the leaked data that they have obtained with us. We will closely examine this data and will act on it swiftly and appropriately.

We have brought in more than £2 billion from offshore tax evaders since 2010 and the Government has repeatedly strengthened our powers and resources with new criminal offences and higher penalties, so we can take even tougher action against the minority who try to cheat the honest majority by hiding their money in offshore tax havens.

Our message is clear: there are no safe havens for tax evaders and no-one should be in any doubt that the days of hiding money offshore are gone. The dishonest minority, who can most afford it, must pay their legal share of tax, like the honest majority already does.”

Source: New feed

Farmers new tax break

Thursday, April 14th, 2016

From 6 April 2016, farmers trading as sole traders or in partnership will be able to claim for an extended form of the popular “averaging” provisions.

Under the new rules, initially announced in the 2015 Budget, farmers will be able to average their profits for Income Tax purposes from the present two years to an additional five years’ option. This is a welcome change. Farming profits can vary wildly from year to year, dependent not only on the fickle British weather, but also global commodity prices.

On this topic, the Environment Secretary Elizabeth Truss said:

“Food and farming is already a vital part of the UK economy, generating £100 billion and supporting one in eight jobs. Our ambition is to make the industry a world leader, turbo-charged by talent, skills and innovation so it can capitalise on the growing demand for, and excellent reputation of, British produce.

Managing risk at a time of severe price volatility is vital. By remaining in the EU we avoid years of complication and uncertainty and can help build greater resilience in the supply chain.

Having a tax system that accommodates the realities faced by farmers in a way that is simple to understand and use will also give farmers a vital tool to thrive in the face of volatility.

Chancellor George Osborne said:

“A resilient and thriving food and farming industry is fundamental to the success of the UK economy. This government recognises the challenges our farmers face from volatile markets and we are absolutely committed to supporting them.

Today’s reforms will provide farmers with additional security to plan and invest for the future, allowing them to spread profits over a longer period of time. Over 29,000 farmers can benefit from the changes, saving an average of £950 a year.

The fairer tax system for famers is among a number of reforms to taxes, National Insurance allowances and others measures coming into effect today to back hard work, support savers and economic security at every stage of life.”

As well as having the new option to average tax over five years, farmers will also retain the choice to average profits over two years.

The dual option, announced in December, follows industry feedback in consultation. It was felt that the two-year option was well understood and had provided significant relief to farmers dealing with financial pressures, and should be retained.

Source: New feed

Lifetime Individual Savings Account

Thursday, April 7th, 2016

In a further bid to encourage savings for a first property purchase, or retirement, a new ISA is being launched from April 2017 – the Lifetime ISA.

It will be available from April 2017 for adults under the age of 40. They will be able to contribute up to £4,000 per year, and receive a 25% bonus from the government.

Funds from the Lifetime ISA, including the government bonus, can be used to buy a first home at any time from 12 months after the account opening, and be withdrawn from age 60. There will be penalties for early withdrawals.

The government also announced that the overall annual ISA subscription limit will be increased to £20,000 from 6 April 2017.

Source: New feed

Tax Diary April/May 2016

Thursday, April 7th, 2016

1 April 2016 – Due date for Corporation Tax due for the year ended 30 June 2015.

 19 April 2016 – PAYE and NIC deductions due for month ended 5 April 2016. (If you pay your tax electronically the due date is 22 April 2016.)

 19 April 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2016.

 19 April 2016 – CIS tax deducted for the month ended 5 April 2016 is payable by today.

 19 May 2016 – PAYE and NIC deductions due for month ended 5 May 2016. (If you pay your tax electronically the due date is 22 May 2016.)

 19 May 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2016.

 19 May 2016 – CIS tax deducted for the month ended 5 May 2016 is payable by today.

 31 May 2016 – Ensure all employees have been given their P60s for the 2015-16 tax year.

 

Source: New feed

Capital Gains Tax changes

Thursday, April 7th, 2016

CGT rates have been significantly reduced from April 2016.

The rates at which capital gains are taxed depend on where they would fall to be taxed for Income Tax purposes if they were added to income. This would determine whether the gains would fall to be taxed at basic or higher rates, or part and part.

  • If at basic rates, gains will now be taxed at 10% instead of £18%
  • If at higher rates, gains will now be taxed at 20% instead of 28%.

These reductions will not apply to residential property sales of second homes or buy-to-let properties – the 2015-16 rates of 18% and 28% will continue to apply.

There is also a surprising change to Entrepreneurs’ Relief (ER). It is being extended to afford relief to investors in non-quoted companies. The revisions will introduce the following change to legislation:

“The extension to ER, introducing investors’ relief, will apply to gains accruing on the disposal of certain qualifying shares by individuals (other than employees and officers of the company). In order to qualify for relief, a share must:

  • be newly issued, having been acquired by the person making the disposal on subscription for new consideration
  • be in an unlisted trading company, or unlisted holding company of trading group
  • have been issued by the company on or after 17 March 2016 and have been held for a period of three years from 6 April 2016
  • have been held continually for a period of three years before disposal

The rate of CGT charged on the qualifying gain will be 10%, with the total amount of gains eligible for investors’ relief subject to a lifetime cap of £10 million per individual. Rules will ensure that this limit applies to beneficiaries of trusts.

Because the relief is designed to attract new capital into companies, avoidance rules set out in the legislation will ensure that shares must be subscribed for by individuals for genuine commercial purposes and not for tax avoidance purposes.

This is a welcome change, and one that should stimulate interest from investors in smaller concerns that would otherwise struggle to attract inward investment.

Source: New feed

Capital gains tax changes April 2016

Thursday, April 7th, 2016

 One of the surprising announcements in the recent budget was the easing of capital gains tax (CGT) rates.

 From April 2016, the new rates published by HMRC are:

 Changes to rates.

 Legislation will be introduced in Finance Bill 2016 to reduce the rate of CGT charged on most gains accruing to basic rate taxpayers from 18% to 10%.

 For higher rate taxpayers, or those whose gains exceed the unused part of their basic rate tax band, the rate of CGT charged on most gains will be reduced from 28% to 20%.

 The 28% and 18% rates will continue to apply for gains accruing on the disposal of interests in residential properties that do not qualify for Private Residence Relief, and the receipt of carried interest.

 The rate of CGT charged on Annual Tax on Enveloped Dwellings related chargeable gains will continue to be 28%. These changes will have effect from 6 April 2016.

The annual exemption for CGT continues to be £11,100. This is the amount of gains an individual can make and still pay no CGT. Married couples both qualify for the annual exemption.

The lower 10% rate will apply to gains, that when added to your taxable income, still fall within the basic rate band. Once the basic rate band is exceeded any gains that fall into the higher rate band will be taxed at the higher 20% rate.

The 18% and 28% higher rates will continue to be applied to gains on the disposal of residential property that do not qualify as a principal private residence.

Source: New feed

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