Keep up to date with all the latest tax and financial news from CKLG

CKLG

Latest News From CKLG Accountants

Charity donations by a company

April 16, 2014

If your company is making a profit it can make charitable donations and get relief against corporation tax. However, the recipient charity cannot claim gift aid relief on the company’s donation.

The deduction of donations from the company’s profit cannot change a taxable profit into a loss, or increase a taxable loss. In those cases there is no tax relief for the donations. You need to claim the tax relief by including the total charitable donations made in the accounting period on your company’s corporation tax return for that period, but we can help you with that.

Guidance on companies making charitable donations


Property traps

April 14, 2014

From 20 March 2014 the rate of stamp duty land tax (SDLT) paid on certain property purchases leapt up to 15%. This rate applies where purchaser of a residential property is a non-natural person (a company, a partnership including a company, or a collective investment scheme), and the property is worth over £500,000. That may well catch properties bought to let.

If you operate your let property businesses through a company you need to be aware of this change, and of the future annual tax charges (ATED) would could apply from April 2015 or April 2016. We can explain how to claim relief from the ATED.

SDLT and  ATED changes announced in Budget


Landlords’ information

April 8, 2014

HMRC is writing letting agents in the UK to collect information about landlords who haven’t declared all their rental income. The letter asks for details of the properties the agent has managed in 2012/13, including the rent collected for each property, its full address and details of the landlord. The letting agent has 60 days to provide the information, or face a penalty of £300, plus further penalties of £60 per day for any additional delay.

If you have received such a request from HMRC we can help you compile the information in the form demanded – which must be on a pre-defined spreadsheet.

How letting afents must comply with the Information Notice


PAYE year end

April 7, 2014

This year you should not submit forms P35 or P14, as the information on those forms will be included on the final submission for the year submitted under RTI.

You final submission may be the full payment submission (FPS) submitted when you run your last payroll, or if you forget to tick the box to say it’s the final return, you can use  the employer payment summary (EPS) which should reach HMRC by 19 April 2014. If the final submission is not received by HMRC by 19 May 2014 at the very latest, a late filing penalty will apply at £100 per 50 employees. That penalty will be imposed again at that rate for every month the final submission is late.

RTI year-end guide


ATED return

March 28, 2014

The annual tax on enveloped dwellings (ATED) applies to residential property in the UK which is owned by a non-natural person, such as a company, and that property was worth £2 million or more on 1 April 2012, or on acquisition if later.

For 2014/15 the ATED return and payment must reach HMRC by 30 April 2014.

There are many reliefs that can remove the requirement to pay the ATED charge, such as where the property is commercially let, or where it is open to the public for at least 28 days a year. However, to claim the relief from ATED for the relevant tax year an ATED return must be submitted for that year.

Latest ATED forms

 


Tax Rate Summary: 2014/ 2015

March 27, 2014

With the 2014/ 2015 tax year only a week away, we have put together a useful summary outlining the latest key tax rates and allowances likely to affect you and your business.

Please download our 2014/ 2015 Tax Rate summary.

If you have any questions about these tax rates, please contact us


RTI specified charges

March 26, 2014

If your company hasn’t paid any employees yet this tax year, it may not have submitted any returns under real time information (RTI). In this case HMRC can raise a “specified charge”, which is an estimate amount of PAYE due, based on what the company paid in the previous tax year. HMRC will try to collect this charge as if it was real tax. The only practical way to remove the specified charge from your PAYE record is to submit a nil employer payment summary (EPS) return. If your payroll software doesn’t permit the submission of a nil EPS return, you need to use the free software provided by HMRC: Basic PAYE tools to submit a nil EPS. We can help you with this.

How to use Basic PAYE Tools to send an EPS


CITB levy

March 24, 2014

If you are a contractor in the construction industry, you will be used to deducting the construction industry training board (CITB) levy from payments you make to employees and subcontractors. The Taxman’s long standing practice has been to allow contractors to deduct the CITB levy before they calculated the CIS tax to be held back from payments to subcontractors.

However, this all changes from 6 April 2014. From that date contractors will have to calculate the CIS tax based on the gross amount paid to subcontractors, before the CIBT levy is deducted. This also applies to VAT; any VAT due must be paid on the gross amount paid to the subcontractor before deduction of the CITB levy.

Training levey CIS deductions


Key Points of the Budget 2014

March 20, 2014

A Budget for ‘Makers, Doers and Savers’!

Those were Chancellor George Osborne’s words as he sat down from delivering his 5th Budget in the House of Commons. Certainly there are some very welcome measures for savers and pensioners who have been hammered by the years of low interest rates held in place to boost the struggling economy.

For the makers and doers of the British economy, the Chancellor provided additional tax relief for investment, financial support for exporters and further actions to boost the housing supply.

We have prepared our own Budget Report so you can easily see the changes which affect you.  Please download the Budget Report here.


Budget 2014: Pensions

March 20, 2014

Significant changes to pensions were announced by the Chancellor in yesterday's Budget Report.

Retirees with defined contribution pensions will be guaranteed free, face-to-face impartial guidance about their pension.  The guaranteed income requirement for flexible drawdown eligibility will be cut from £20,000 to £12,000.

Tax on pension amounts taken as a lump sum, over and above the 25% tax-free entitlement, will be charged at normal marginal income tax rates rather than at 55% from April 2015. 

Compulsory annuities will be scrapped and there will be more flexibility when drawing an income from a pension.


Budget 2014: ISAs

March 20, 2014

In yesterday's Budget Report. Chancellor George Osborne announced important changes to ISAs. From 1 July 2014, Stocks and shares and cash ISAs will be merged to create one New ISA with a tax-free limit of £15,000. The Junior ISA allowance will increase to £4,000 a year.

 


Budget 2014: INCOME TAX

March 20, 2014

The tax-free annual personal allowance will increase to £10,500 from April 2015. The higher rate threshold will rise to £41,865 from April 2014.  It will rise by a further 1% to £42,285 in 2015.  

The transferable tax allowance for married couples and civil partners will rise to £1,050.


Compensation awards

March 19, 2014

If you receive a compensation payment which is not related to an asset you own, and is not designed to replace your lost income, that payment is not subject to capital gains tax.

From 27 January 2014, this rule is changed where the compensation or damages award exceeds £500,000. In such cases the recipient must apply to HMRC to claim a tax exemption on the excess above £500,000. If the Taxman suspects the compensation is actually a disguised bonus payment, he will not grant the tax exemption. Awards for personal injury to individuals are not affected by this change, those awards will always be free of capital gains tax.

Changes to tax on compensation


Let property campaign

March 5, 2014

The Taxman has launched a “confess your tax sins” campaign aimed at individual landlords who have failed to declare rental income from residential properties. If you want to use this let property campaign to come clean about undeclared rental income, you need to complete a notification form on the HMRC website, or phone the property campaign helpline on 03000 514 479. We can help you with this.

You will then have three months to make a full disclosure of the unpaid tax, and pay the tax due plus interest and penalties. However, if you ignore this opportunity, and the Taxman later discovers your undeclared rental income, you are likely to suffer a full tax investigation.

Let property campaign


Annual investment allowance (AIA)

March 3, 2014

In simple terms the AIA is the amount your business can spend on plant and machinery and get 100% tax deduction in the year of purchase. The AIA is currently capped at £250,000 for each of the calendar years: 2013 and 2014.

However, tax is never that simple. The AIA cap is due to reduce to £25,000 on 1 January 2015, so for accounting periods that straddle 31 December 2014, the full AIA cap of £250,000 doesn’t apply. If you are planning to buy an expensive bit of kit please talk to us about the timing. It may be better to bring the purchase forward to the accounting period that ends in 2014.

Brief AIA guidance


Employment allowance

February 27, 2014

From 6 April 2014 if you are a private sector employer or charity you should be able to claim an annual employment allowance worth £2,000 to set against your class 1 NIC liabilities. However, where you employ a nanny, cook or care-worker to work in your own home you can’t set the employment allowance against the NI on those staff salaries.

To claim the allowance all you need to do is a tick box on the first Employer payment summary (EPS) submitted for 2014/15, your payroll software will show you how, or we can do that for you. Only one claim is needed for all future tax years.

Once claimed you simply deduct the allowance from your class 1 NI costs as they arise through the year, and pay any balance due to HMRC. However, if you can’t set-off the full £2000 of allowance in 2014/15 the unused allowance is lost, it isn’t carried forward to the next tax year. Remember in order to take advantage of the employment allowance against employers’ class 1 NICs the employee will also be paying employee’s NI. So taking more salary from your own company, instead of dividends, just to soak-up the allowance may actually cost you more.

Employment allowance


Electric cars

February 24, 2014

You may be tempted to buy an electric car through your company for your personal use, as the taxable car benefit for electric cars is currently zero. However, from in 2015/16 the car benefit for a zero emissions car (ie electric) will be 5% of list price, rising to 7% in 2016/17 and 8% in 2017/18. This benefit is expected to carry on rising in 2018/19 and 2019/20. There is no car fuel benefit charge for electric cars even if the employer pays for all the electricity to power the car.

Tax Faculty TaxGuide 2/12 – see point 4 re electric cars


Andy's Kars switch to Xero for their business accounting

February 20, 2014

Manage your business anytime, anywhere and on any device.

IQ Magazine speaks to Andy Kent from Andy's Kar's in Bar Hill, Cambridge to find out why they recently upgraded their business accounting software to Xero.

Read the full interview here

Xero Online Accounting


Swiss tax letters

February 17, 2014

If you recently held a bank account or investment account in Switzerland you will shortly receive a letter from HMRC asking you to make one of the following declarations:

  1. where you have no outstanding UK liabilities in relation to the Swiss investments, including VAT, IHT, income tax or CGT;
  2. where you have UK tax liabilities to disclose, but you are using the Liechtenstein disclosure facility to disclose all outstanding tax; or
  3. where you have UK tax liabilities to disclose but you are not using the Liechtenstein disclosure facility.

You need to reply to the letter and make the appropriate declaration, even if you have declared your Swiss income correctly on your UK tax returns, and paid all the UK taxes due. We can help you decide which declaration to sign.

Sample Swiss tax letter


Individual Protection 2014

February 13, 2014

The value of pension savings can go down as well as up, so there is an individually tailored form of pension fund protection called “Individual Protection 2014” (IP). This can protect the tax favoured status of your pension fund up to £1.5 million, but you are permitted to make pension contributions once the IP election is in place. You can elect for IP from 6 April 2014 to 5 April 2017, if your pension savings at 6 April 2014 are over £1.25 million. You can also elect for both FP2014 and IP, but we recommend you take specialist advice before making either election.

Brief guide to Individual Protection 2014


Fixed Protection 2014

February 12, 2014

Although the government wants us all to save an adequate amount to provide a decent pension in retirement, you need to guard against amassing a pension pot which is too big. The current limit on tax favoured pension savings at retirement is £1.5 million, but this will reduce to £1.25 million on 6 April 2014.

If your pension pot is worth more than £1.25 million you should consider electing to protect the tax favoured status of up to £1.5 million of your fund by using “fixed protection 2014 (FP2014)”. The FP2014 election must be made by 5 April 2014, but once it’s in place, you can’t make further contributions to a pension scheme. You should take specialist advice before making the FP2014 election as there are restrictions and alternatives.

Brief guide to Fixed Protection 2014


Compensation Awards

February 10, 2014

If you receive a compensation payment which is not related to an asset you own, and is not designed to replace your lost income,that payment is not subject to capital gains tax.

From 27 January 2014, this rule is changed where the compensation or damages award exceeds £500,000. In such cases the recipient must apply to HMRC to claim a tax exemption on the excess above £500,000.

If the Taxman suspects the compensation is actually a disguised bonus payment, he will not grant the tax exemption. Awards for personal injury to individuals are not affected by this change, those awards will always be free of capital gains tax.

 Click here for more information 

 

 


Annuities switch for pensioners proposed

February 7, 2014

Pensioners should be allowed to switch to better annuities and escape poor-value schemes, Pensions Minister Steve Webb has suggested.  In an interview with the Sunday Telegraph, Mr Webb said that pensioners should be able to change annuities in the same way homeowners can change their mortgage deals.  

The proposal would prevent retirees becoming trapped in poor-value schemes, as they can do under the current system - described by Mr Webb as a “lottery.”

Other reforms Mr Webb is considering include:

  • Help for pensioners with health conditions or people who have worked in risky industries to get better deals
  • More mixed pension arrangements which combine annuities and investments 
  • A 'collective pensions' system where savers contribute to the same 'mega fund'.  

Year End Tax Guide 2013/14

February 6, 2014

UPCOMING CHANGES - ALREADY ANNOUNCED

  • The main rate of corporation tax reduces on 1 April 2014 to 21 per cent and on 1 April 2015 to 20 per cent.
  • On 6 April 2014 the annual pension allowance reduces from £50,000 to £40,000 and the lifetime allowance reduces from £1.5 million to £1.25 million.
  • From 6 April 2014 the personal allowance will be £10,000. The lower rate threshold will be £31,865, the higher rate threshold will increase to £41,865.
  • From April 2014, businesses may claim £2,000 a year against employer’s national insurance.
  • In 2015, it is intended to introduce a transferable allowance between married couples where one of them has little or no income. A new scheme of childcare tax relief is also planned

Click here to download a short guide to rates, relief's and allowances available for use by 5 April 2014. 


The Patent Box

February 6, 2014

This is a new way to claim a reduced rate (down to 10%) of corporation tax on income related to patented products for which your company holds the patent or exclusive licence to develop. Any size of company can qualify for this new tax relief. You could boost your company’s patent related income by:

  • applying to patent internally generated intellectual property, or inventions.
  • changing any non-exclusive arrangements or licences to use patents into exclusive agreements; and
  • formalising any informal arrangements to use patents into a licence.

You may need to modify your company’s accounting system to capture the data needed in order to make a claim under the patent box, but we can help you with that.

HMRC Guide to The Patent Box


Email scams

January 23, 2014

HMRC’s Employer Bulletin is produced three times a year, but only in electronic form. Employers are reminded that a new issue has been published by an email alert. Unfortunately the scammers have copied this email alert, sending out a fake notice announcing the issue of HMRC’s Employer Bulletin no. 45 (which was published in September 2013). The fake email looks genuine but it contains a zip file which should not be opened as it contains a virus. There is also a similar fake email circulating informing the recipient that they are registered to receive HMRC email notices. Ask us if you are suspicious of any emails from HMRC or Companies House.

Scam email imitating HMRC

CKLG Accountants in Cambridge are here to help.


Business tax dashboard

January 20, 2014

 

The business tax dashboard is an online service from HMRC which allows you to view the tax you have paid and owe, including PAYE. However, there are two known faults with the PAYE data displayed for employers:

 

  • Month 5 data (to 5 September 2013) is not appearing for some employers who submitted an EPS between 8 and 13 September 2013.
  • Month 7 data (to 5 November 2013) in some cases does not include the FPS information submitted for that month.

 

HMRC’s debt management department should not pursue any apparent PAYE debts that arise because of these faults.

Faults with business tax dashboard

CKLG Accountants in Cambridge are here to help.


Mixed partnerships

January 17, 2014

These are partnerships or LLPs which include members who are not individuals such as; companies, other partnerships/LLPs, or individuals acting as trustees. New tax rules due to come into effect from April 2014 will counteract the diversion of partnership profits to a non-individual member who pays tax at a low rate than the individual members.

A secondary effect of this new law is that where profits are held back within the partnership for any reason, and they are initially allocated to the non-individual member. Those deferred profits must be reallocated for tax purposes so the individual partners pay more tax. If you operate through a mixed partnership, talk to us about how the new law will impact on the individual members of your partnership.

HMRC technical guidance on partnership changes

CKLG Accountants in Cambridge are here to help.


Main residence

January 9, 2014

When you sell your main home, any gain you make is generally tax free, if you lived there for the entire period that you owned it. If you can’t sell your old home before you move into your new one, you may hold two properties for a time. To prevent you being taxed on gains arising in this overlap period, the gain attributed to the last 36 months of ownership of your old home is free of capital gains tax (CGT). This 36 month tax free period is to be cut to 18 months where contracts for sale of the property are exchanged on or after 6 April 2014.

If you are thinking of selling a property which was your main home for a period, you may need to advance that deal in order to maximise the tax free gain on the disposal.

CGT exemption for main residence - draft legislation

CKLG Accountants in Cambridge are here to help.


News Archive

Archive 2013

Archive 2012

Handelsbanken Charity Bowling Event

Archive 2014

Events for your diary


Xero Silver PartnerB1G1 Logo
investors in peopleICAEWChartered Tax AdvisorsThe 2020 Group

 Facebook   Twitter LinkedIn