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

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Latest News From CKLG Accountants

Job Vacancy - Accounts Executive

August 26, 2014

Accounts Executive – AAT – Full/Part Time

Posted: 28th July 2014

CKLG works with a broad client base across East Anglia that provides team members with interesting and varied portfolios.

We are looking for an AAT qualified individual or an AAT trainee with a level 3 Diploma in Accounting, to join our Business Services Team. The position is full-time but flexible working and/or part-time hours would be available for the right applicant.

The candidate will be expected to understand the general concepts of double- entry, prepayments and accruals, and be able to prepare information up to a Trial Balance stage. This is a mixed role, therefore the ability to prepare statutory accounts and corporation tax computations for manager review would also be viewed advantageously.

The successful applicant will also be expected to assist with the payroll function offered to clients; knowledge of preparing previous payrolls would be preferable but not essential as training would be provided.

The successful applicant will need to be confident in front of clients as well as be able to manage their own workload. The individual should have excellent communication skills and be able to demonstrate a high level of written and oral interaction with the clients and other team members within Business Services.

Salary: £market rate   
Closing Date: rolling

If you are interested in applying for this position please apply to Faye Toomey with your cv.


Tax deductions for unfurnished let property

August 26, 2014

For periods before 6 April 2013 HMRC allowed a deduction for the cost of renewing carpets, curtains and white goods in all let residential properties on a concessionary basis. That concession was withdrawn with effect from 6 April 2013. The new rules now state that a wear and tear allowance (10% of the net rents) that covers furnishings and similar items, can only be claimed for fully furnished properties.

Properties don’t count as fully furnished if they contain only white goods (cooker and fridge), carpets and curtains. HMRC will not accept claims for the cost of free- standing white goods in unfurnished residential properties. It will allow deductions when replacing fixtures such as baths, toilets, integrated fitted ovens and hobs, as those costs can be classified as repairs. Talk to us about want can be classified as a “repair” for unfurnished let properties.

HMRC opinion on white goods in let properties


Net closes on EBTs

August 25, 2014

A surprisingly large number of small companies used employee benefit trusts (EBT) to save tax and NICs, before the abuse of EBTs was outlawed by the disguised remuneration rules on 6 April 2011. HMRC opened a settlement opportunity in April 2011, offering employers the chance to settle disputed tax and NI liabilities involving EBTs on favourable terms.

However, those favourable terms will be withdrawn from 31 March 2015. All agreements under the EBT settlement opportunity must be finalised by 31 July 2015 with the tax due also paid by that date. If you still have not resolved matters surrounding an EBT you used before April 2011, talk to us about achieving a reasonable settlement.

Time limit on using EBT settlement opportunity


VAT on multi-products

August 23, 2014

If you sell a package of goods or services which is made up of items which carry different rates of VAT, you need to be sure of the split of value between those items in order to charge the right amount of VAT to your customers.

The VATman may insist that you charge VAT at the highest rate if he thinks the lower-rated product is only incidental to the total package the customer is buying. For example a printed leaflet (0% VAT) sold with a DVD (20% VAT).

The essential test is what the customer thinks he is buying – one product with an incidental part, or two or more distinct products or services. If your products have several elements with different VAT treatments, talk to us about how your customers view the mix, and how you should split the VAT charges.

Case: Antiques Within Ltd v HMRC TC2507


PAYE overpayments

August 22, 2014

Have you received a letter recently from HMRC issuing saying there is a PAYE overpayment on your account? The facts in the letter may well be incorrect, but you need to check your own payment records and refer to the business tax dashboard for your business on the HMRC PAYE online service, which records all tax payments and amounts owing by your business to HMRC. Unfortunately HMRC has not given us access to your business tax dashboard, so we can’t check the figures on your behalf. HMRC has apologised about the inaccurate overpayment letters, which carry the reference: RTI 201.

HMRC Letters re PAYE overpayments


PAYE underpayments

August 20, 2014

If you receive a demand from HMRC asking for immediate payment of underpaid PAYE, check your own records before paying up. Often the PAYE “underpayment” is caused by HMRC allocating your PAYE payment to the wrong tax period or even to the wrong tax. This could be caused by the HMRC computer not being able to read the payslip submitted with your PAYE cheque, particularly when your payroll software has printed the payslip. If you are paying your PAYE by cheque please use the official HMRC printed payslips in the P30BC Payment booklet, and not your own version.

Employer bulletin no.49 – see page 4


Deferring gains

August 1, 2014

If you make a tidy sum when you sell your business you may want to reinvest it in another business to make a bigger fortune. It would be nice if you could invest all of the proceeds and not worry about paying tax on the gain. This is deferral of gains is possible, but only if you and the new business both meet a long list of conditions.

Essentially your new business venture must issue new shares to you under the Enterprise Investment Scheme (EIS) or the Seed Enterprise Investment Scheme (SEIS). Companies and charities which exist for a social purpose can also issue shares or bonds which achieve the same deferral of your gain, under the Social Investment Tax Relief scheme (SITR). We can help you understand all three of these venture capital schemes.

Background to venture capital schemes


Deferring gains

August 1, 2014

If you make a tidy sum when you sell your business you may want to reinvest it in another business to make a bigger fortune. It would be nice if you could invest all of the proceeds and not worry about paying tax on the gain. This is deferral of gains is possible, but only if you and the new business both meet a long list of conditions.

Essentially your new business venture must issue new shares to you under the Enterprise Investment Scheme (EIS) or the Seed Enterprise Investment Scheme (SEIS). Companies and charities which exist for a social purpose can also issue shares or bonds which achieve the same deferral of your gain, under the Social Investment Tax Relief scheme (SITR). We can help you understand all three of these venture capital schemes.

Background to venture capital schemes


Featured Job - Accounts Executive

July 31, 2014

We are actively looking for an AAT qualified individual who has at least 3 years post- qualification experience or someone who is time-qualified by experience, to join our Business Services Team. Ideally the candidate would be available to start 1 October 2014, or sooner.

The position is full-time but flexible working and/or part-time hours would be available for the right applicant. The role will primarily entail book-keeping for a number of clients and therefore previous experience of this is essential. The candidate will be expected to understand the general concepts of double-entry, prepayments and accruals, and be able to prepare information up to a Trial Balance stage. The successful applicant will also be expected to assist with the payroll function offered to clients; knowledge of preparing previous payrolls would be preferable but not essential.

As this is a mixed role, the ability to prepare statutory accounts and corporation tax computations for manager review would also be viewed advantageously.  The successful applicant will need to be confident in front of clients as well as be able to manage their own workload. The individual should have excellent communication skills and be able to demonstrate a high level of written and oral interaction with the clients and other team members within Business Services.

Full/ part time
Salary: £market rate   
Closing Date: rolling

If you are interested in applying for this position, please apply to Faye Toomey with your cv.  


Annual Investment Allowance

July 30, 2014

The annual investment allowance (AIA) allows a business to spend up to £500,000 (at current rates) on plant and machinery in a year, and get a full deduction for the cost against profits of the same year. This includes expenditure on commercial vehicles, but not on cars.

However, there is a catch; expenditure in the year the business permanently closes does not qualify for the AIA. This includes the situation where the business is transferred from a sole trader to a company. If you are thinking of incorporating your business, ask us to check out the tax implications before you take an irreversible step.

Rules for AIA


Emails alerts from HMRC

July 28, 2014

If you currently complete your personal self-assessment tax return online, and who do not also access online services for other taxes, you may be invited to test this new email alerts service when they log on to the HMRC website. This allows you to opt-out of receiving paper tax statements and reminders to file a return, and instead receive electronic messages.  We will continue to receive information on your behalf from HMRC if we are registered as your tax agent.

Digital self-assessment update


Flat rate VAT scheme

July 25, 2014

If you sell services to other businesses overseas, those sales are ignored for the VAT flat rate scheme joining threshold (£150,000 net of VAT). Those overseas services are also ignored when calculating the VAT payable under the flat rate scheme every quarter.

However, you need to keep an eye on the maximum annual turnover test for leaving the flat rate scheme. This is set at £230,000 including VAT, but in this case all income of the business must be counted, including those overseas sales which are outside the scope or VAT or are exempt from VAT. We may be able to help you save money using the flat rate scheme.

Flat rate scheme guidance: VAT notice 733


Property nudge

July 24, 2014

HMRC is writing to around 30,000 individual landlords where it holds evidence which suggests the landlord has not declared rental income. This letter may not formally open a tax enquiry, but it will count as a ‘prompt’ for disclosure purposes when calculating penalties due, when a subsequent tax investigation is concluded. 

A penalty imposed after a ‘prompt’ can be up to 70% of the tax due. If you declare rental income under the Let Property Campaign you will pay penalties of 0%, 10% or 20% of the tax due, depending on your circumstances. We can help you make a declaration under the Let Property Campaign and save up to 50% of the tax demanded as penalties.

Guidance to making a disclosure for let property


Tax avoidance scheme users to make upfront payments

July 23, 2014

From 17th July 2014, HMRC will have the power to demand accelerated payments of tax which has been avoided using tax avoidance schemes. The Taxman doesn't have to prove the tax is actually due. He can use this power in two situations:

  • where the taxpayer has used a tax avoidance scheme for which a DOTAS number has been issued; or
  • where a tax scheme which is similar to one the taxpayer has used has been ruled to be ineffective by a court or tribunal, and HMRC have issued a “follower notice”

These forms of tax demand cannot be appealed. So if you have received a tax demand that relates to a tax scheme you without delay.

If you have any questions, please contact us for more information.

Click here for CIOT & ATT advice on accelerated payments


Creating and preserving wealth seminar

July 22, 2014

Our afternoon seminar, Creating and Preserving Wealth in association with Money Matters Wealth Management, took place on Thursday 3 July.  Held annually at the historic Jockey Club in Newmarket, this is a key event in our private clients summer diaries.  The seminar was officially opened by Katie Holmes, Director for CKLG Accountants.

Nicola Valentine for CKLG Accountants was the first to speak and delivered an insightful review of the 2014 Budget and its implications on our own financial situations; including an update on personal tax and property tax, and focused on changes to Principal Private Residence Relief (PPR) and Capital Gains Tax for non-residents. Her presentation also covered tax investment relief's (including the Seed Enterprise Investment Scheme (SEIS) and the new Social Investment Tax Relief (SITR)) and concluded with a section on tax avoidance and the issue of morality in tax planning.  Nicola also gave details on the new powers that HMRC are being given to tackle avoidance.

Nicola's presentation was followed by Adrian Atkinson, Managing Director at Money Matters Wealth Management, who covered the new rules and implications of pensions flexibilities.

The final presentation for the day was delivered by Richard Buxton, Head of UK Equalities at Old Mutal Global Investors, who provided a summary of the global market environment, including an insight into the UK's economic recovery and gave his predictions for forthcoming trends in the UK Investment market.  

The seminar was followed by a wonderful spread for afternoon tea and the sun shone as guest spilled out onto the veranda to enjoy the beautifully manicured lawns and gardens that surrounds this fantastic venue.


RTI penalty notices

July 8, 2014

As an employer you may have received an RTI penalty warning letter accusing you of not submitting all the RTI returns required for 2013/14. However, that letter may be incorrect.  HMRC has admitted that its computer has issued inappropriate penalty warning letters to employers who have submitted employer payment summaries (EPS) during 2013/14. If you have submitted all the required RTI returns for the tax year you can ignore the warning letter, as a penalty will not be charged.

Incorrect penalty warning letters sent


VAT on digital services

July 7, 2014

Many music and software creators want to sell their tunes, games or apps directly to their customers. If they sell through a multi-national online store, that store takes a commission and sorts out the VAT. However, from 1 January 2015 where the creator sells his digital product directly to non-business customers who are located in other EU countries, he must register for VAT in the customer’s country, and charge to VAT due in that country.

The easiest way to do this will be through the VAT-MOSS system on the HMRC website. However, a UK-based trader must first register for VAT in the UK. If you are UK-based but not VAT registered, and you want to sell digital services internationally from 2015 you must choose one of these options:

  1. register for VAT in the UK;
  2. stop selling to non-business customers outside the UK; or
  3. sell only through online stores or other businesses.

We can help you make this choice and do the necessary registrations.

Electronic services rule changes from 1 Jan 2015

 


Claiming the employment allowance

July 4, 2014

Companies which are subject to IR35 (provision of services through intermediaries) can claim the employment allowance, worth up to £2,000 per year from 6 April 2014. However, that allowance can only be set against employer’s class 1 NICs due on the normal salary of the company’s employees and directors. It can’t be set against NICs due on the deemed salary calculated under the IR35 provisions.

Eligibility for employment allowance - detailed guidance


Interest on late paid PAYE

July 2, 2014

Interest is now charged on late paid PAYE on a monthly basis. Each tax month ends on the 5th of the calendar month and the PAYE due must reach HMRC by the following 22nd if paid electronically, or by 19th if paid by cheque. If you need to adjust the amount of PAYE due for say the tax month ending 5 June, you must tell HMRC by the 19th June. Do this by submitting a supplementary FPS, or an EPS that includes a claim for set-off of CIS tax, or statutory pay.

If you pay less PAYE than HMRC is expecting for the tax month you will be charged interest. You can monitor your PAYE debt and any interest charged on the business tax dashboard on the HMRC website.

Interest on late paid PAYE


Moving into care

June 30, 2014

The capital gain relating to last 18 months for which you own your home is exempt from capital gains tax (CGT) when you sell it, even if you have moved out long before the sale. However, if you or your spouse have moved into a care-home or are disabled, the gain for the last 36 months is exempt from CGT. This applies as long as you own just one home at the point the property is sold. If you have two or more properties which could be used as your main home, you need to carefully plan the order in which those properties are sold, to maximise the CGT reliefs available. We can help you with that.The capital gain relating to last 18 months for which you own your home is exempt from capital gains tax (CGT) when you sell it, even if you have moved out long before the sale. However, if you or your spouse have moved into a care-home or are disabled, the gain for the last 36 months is exempt from CGT. This applies as long as you own just one home at the point the property is sold. If you have two or more properties which could be used as your main home, you need to carefully plan the order in which those properties are sold, to maximise the CGT reliefs available. We can help you with that.

ATT comment on 36 month rule


EIS relief

June 27, 2014

Enterprise Investment Scheme (EIS) tax relief is very valuable to investors, but it’s easily lost. The actions of the company that issued the EIS shares can lead to a retrospective withdrawal of EIS income tax relief for all the shareholders. For example if the company is taken-over by another company within three years of issuing the EIS shares the income tax relief will be lost. There is one exception to this rule – where the acquiring company is brand new, and has no issued shares other than subscriber shares. We can help you use EIS to attract investors, and keep them happy.

Averil Finn & others v HMRC TC03555


PAYE reconciliations

June 23, 2014

If your income is mostly taxed under PAYE you may soon receive a computation of your income and tax for 2013/14 on a form P800. These forms are only sent to those people who have paid too little, or too much tax under PAYE, so if you don’t receive a P800 form the taxman believes you have paid the right amount of tax. 

If you do receive a P800 you need to check it carefully. Errors can arise in the tax calculation if say your taxable benefits or pension contributions have changed one year to the next, or your other income such as rents or interest has been under or over-estimated. We can help you check your P800 form to ensure that any mistakes are not carried forward into future years.

LITRG guide for dealing with P800s for 2013/14


Scary letter

June 18, 2014

Have you recently received a scary letter from HMRC asking you to check your 2011/12 tax return? It may have suggested that you paid less tax than you should for your level of income. There are many valid reasons for paying a smaller amount of tax in certain tax years such as; set-off of losses, paying gift aid donations, or pension contributions. HMRC did not read the disclosures on your tax return before sending the scary letter, so the accusations it makes may be completely unfounded. Please ask us to check you past tax returns if you are worried about what you have reported on them.

HMRC asks taxpayers to check 2011/12 tax returns


Charity Cake Sale for Cancer Research

May 27, 2014

We are holding a charity cake sale in the office today to raise awareness and boost funds for our Race for Life team event for Cancer Research on 20 July 2014. The office smells amazing and we've been indulging in delicious home baked sweet and savoury goodies all morning.

Our target is £500.  If you would like to sponsor us, you can do so via our giving page.  Any contributions would be greatly appreciated. Many thanks. 

 


US tax issues

May 23, 2014

If you hold a US passport, or “green card” that permits you to work in the USA, you are required to file a US tax return each year, even if you don’t live in, or have never lived in the USA. The deadline for filing the 2013 USA tax returns for those who live outside the USA is 16 June 2014, although a four month extension can be requested.

The Foreign Account Tax Compliance Act (FATCA) will shortly require all financial institutions to report to the US tax authorities (or to the local tax authority for forwarding to the US), details of accounts held by individuals who are required to complete USA tax returns. Failure to comply with the FATCA rules could result in a 30% withholding tax.

Critical USA income tax deadlines


Employment allowance

May 22, 2014

The employment allowance is worth up to £2,000 per year to reduce employer’s class NICs a business has to pay. However, any business whose work is 50% or more of a public nature cannot claim the employment allowance. This includes all parish councils and town councils.

There was some concern that retail pharmacies who provide dispensing services would not qualify for the employment allowance as they are treated as providing a public service. HMRC’s new guidance clarifies that independent pharmacies who conduct a business, including over the counter sales as well as dispensing NHS prescriptions, are entitled to claim the employment allowance.

Find out more on the new guidance on eligibility for the employment allowance


CIS repayments

May 16, 2014

As a sub-contractor company registered under the construction industry scheme (CIS) you may receive payments from your customers after CIS tax has been deducted. This CIS tax can be set against the PAYE you owe to HMRC. But where the CIS tax is greater than the PAYE due for the tax year you need to claim back the excess from HMRC. This claim must be done in writing. We can help you with this.

Make sure you keep the deduction statements you receive from your customers, and if you don’t receive a statement, ask for one. The taxman may want to see all the deduction statements for the year to support your CIS repayment claim.

Helpcard for CIS repayment claims


Flipping properties

May 15, 2014

If you have more than one property which you occupy as a home, perhaps a flat in town and a holiday home, you can elect for one of those properties to be your tax-exempt main home. Once this election is made it can be changed at any time, and this allows you to manage the tax you pay when disposing of your homes.

However, from April 2015 the ability to elect for one property or another to be tax-exempt may well be removed. Instead your tax-exempt property will be determined by factors such as where you spend most of the tax year. It’s not clear how the elections which are currently in place will be treated. If you are planning dispose of one of your properties after April 2015 we can help you plan how to make the best use of the other continuing tax exemptions.

Consultation on CGT for non-residents


Benchmarking

May 14, 2014

This is the process of comparing attributes of one business to the average for the trade sector. HMRC is writing to a sample of businesses quoting benchmarked profit ratios for the particular trade sector, and asking the trader to review his figures before he completes his 2013/14 tax return.

If you receive such a letter, don’t assume HMRC has evidence that you are cheating in anyway. There many valid reasons why your results could vary from the industry average. We can help review your figures, so you don’t raise the suspicions of the taxman again.

Abbey Tax blog re benchmarking


Credit card data

May 12, 2014

HMRC can now request details of all UK transactions processed by debit and credit card companies for specified periods. This sales data can be broken down by trader, and compared to the VAT and tax returns that trader has submitted. This will help the taxman home in on businesses who have massaged their sales income to report a lower turnover for tax purposes. If HMRC challenges your reported sales figures, we can help you sort out the muddle. The credit card data can contain errors, so don’t assume the taxman’s figures are always correct.

Credit card data used by HMRC


Second income

May 7, 2014

If you are employed, but have second source of income perhaps through selling home-made craft items, or from acting as a consultant, you need to declare and pay tax on any profits from that second income. You can use the Second Incomes Campaign to notify HMRC by calling 0300 123 0945. You will then have four months in which to make a full disclosure and pay all the tax, interest and penalties due. We can help you calculate the profits or losses to be reported, and work out if any tax is due.

Second incomes disclosure facility


Employee share schemes

May 2, 2014

Companies who run employee share schemes need to self-certify those schemes by registering each scheme with HMRC through a new system called ERS Online. If the share scheme is not registered by 6 July 2015 the tax advantages of the scheme will be lost, even if the scheme already has HMRC approval.

Share options granted under Enterprise Management Incentive (EMI) schemes must be notified to HMRC within 92 days of the grant date. For grants made after 5 April 2014 the notification must be done online through ERS Online. However, to do that the EMI scheme must first be registered with ERS.

Registering share schemes


SDLT top rate

April 29, 2014

Stamp Duty Land Tax (SDLT) applies at the highest rate of 15% where a residential property is purchased for more than £500,000 AND the buyer is a non-natural person such as a company. However, there are exceptions to this 15% rate including where the residential property is acquired exclusively for:  

  • letting by a property rental business;
  • development by a property development business; or
  • resale by a property trading or property development business.

Where one of the exceptions applies, the normal rates of SDLT: 4%, 5% or 7% (according to the value of the property) should be paid. However, HMRC can reapply the 15% rate of SDLT (plus interest and penalties) should the property cease to qualify for the exception within three years of the purchase date.

Finance Bill 2013 explanatory notes see page 412


Coming to or leaving the UK

April 23, 2014

If you live in another country as well as in the UK, you will need to us the statutory residence test to establish whether you are resident for tax purposes in the UK or not for the tax year. You may want to split the year into portions in which you are “tax resident” and “not tax-resident”, for the year in which you come to live permanently in the UK, or leave the UK.

HMRC has updated its tax residency indicator online tool to take into account the split year treatment, but currently that online tool only deals with situations where the individual has permanently left the UK. We can help you work out your tax residency status in the UK.

Tax residence indictor tool


Forms P60

April 18, 2014

Many of the PAYE forms you used to file have been replaced by RTI processes, but not the form P60 which must be given to everyone you employed at 5 April 2014. If you use the free HMRC payroll software: PAYE Basic Tools you may have been searching for the button that allows you to print the forms P60 for 2013/14.

You will be disappointed, as to print the 2013/14 P60s you first need to update the software to  014/15(!). CKLG Accountants can help you will all your PAYE obligations.

Basic PAYE tools new version


Employee share schemes

April 17, 2014

Companies who run employee share schemes need to self-certify those schemes by registering each scheme with HMRC through a new system called ERS Online.

If the share scheme is not registered by 6 July 2015 the tax advantages of the scheme will be lost, even if the scheme already has HMRC approval. Share options granted under Enterprise Management Incentive (EMI) schemes must be notified to HMRC within 92 days of the grant date. For grants made after 5 April 2014 the notification must be done online through ERS Online. However, to do that the EMI scheme must first be registered with ERS.

Registering share schemes


Employment allowance

April 17, 2014

You may have seen the adverts that encourage you to claim the employment allowance which is worth up to £2,000 per year. Before you make your claim on the first Employer Payment Summary (EPS) for 2014/15, check that your business is eligible, as some aren’t. For example the following employers should not claim the allowance:

  • sick or disabled individuals who employ carers in their own home;
  • individuals who employ nannies, gardeners or other domestic workers;
  • GP or NHS dentist practices;
  • businesses who perform public services such as refuse collection.

CKLG Accountants can help you check whether you qualify for the employment allowance, and to complete the claim in your payroll software.

Brief guidance on employment allowance


Stamp Duty Land Tax Top Rate

April 17, 2014

Stamp Duty Land Tax (SDLT) applies at the highest rate of 15% where a residential property is purchased for more than £500,000 AND the buyer is a non- natural person such as a company. However, there are exceptions to this 15% rate including where the residential property is acquired exclusively for:

  • Letting by a property rental business;
  • Development by a property development business; or
  • Resale by a property trading or property development business.  

Where one of the exceptions applies, the normal rates of SDLT: 4%, 5% or 7%  (according to the value of the property) should be paid. However, HMRC can reapply the 15% rate of SDLT (plus interest and penalties) should the property cease to qualify for the exception within three years of the purchase date.

Finance Bill 2013 explanatory notes see page 412


Coming to or leaving the UK

April 17, 2014

If you live in another country as well as in the UK, you will need to us the statutory residence test to establish whether you are resident for tax purposes in the UK or not for the tax year. You may want to split the year into portions in which you are “tax resident” and “not tax-resident”, for the year in which you come to live permanently in the UK, or leave the UK.

HMRC has updated its tax residency indicator online tool to take into account the split year treatment, but currently that online tool only deals with situations where the individual has permanently left the UK. We can help you work out your tax residency status in the UK.

 Click here to access HMRC's Tax Residence Indicator Tool


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.


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