Keep up to date with all the latest tax and financial news from CKLG
Latest News From CKLG Accountants
January 17, 2018
Where an individual does not have sufficient income to utilise their Personal Allowance (PA) in full, the Marriage Allowance enables them to transfer 10% of their PA to their spouse or civil partner. It is only available if both individuals were born after 5 April 1935 and neither spouse is a higher rate taxpayer.
The Personal Allowance for the current 2017/18 tax year is £11,500. Therefore, the Marriage Allowance is worth £230 for this year (£1,150 x 20%). However, it has to be specially claimed and many people have been put off by the online application process. In fact, you can claim the allowance by calling HMRC on 0300 200 3300, or can make the claim in writing.
Once the claim has been accepted, it remains in place for future tax years while the marriage continues, unless the claim is revoked. The claim for Marriage Allowance can also be backdated to cover all years from 2015/16 if the couple were married in those earlier years.
January 15, 2018
Make sure you are fully aware of any changes to UK tax rates, reliefs and allowances affecting you and your business for 2018/ 2019.
January 9, 2018
For the current 2017/18 tax year, the first £5,000 of dividends you receive are taxed at 0%, as that amount is covered by your Dividend Allowance. This allowance will be reduced from £5,000 to £2,000 with effect from 6 April 2018. This may affect the amount of tax you pay on the dividends you receive in the 2018/19 tax year.
Where your company’s shares are held by a number of your family members, to take advantage of the Dividend Allowance, you may need to review this share structure and amend it if necessary before 6 April 2018. Changing share ownership can give rise to tax charges, so please ask us for advice before cancelling or issuing new shares.
January 4, 2018
We all work to deadlines; an important one is looming which will cost you an automatic £100 penalty if your 2017 Tax Return is not filed electronically by Wednesday 31 January 2018. If you bury your head in the sand and also forget to pay your tax bill, tax geared penalties and further automatic penalties will be charged from 28 February 2018.
Don’t put it off!
For 2016/17, be aware that;
- Most savings income will have been paid gross; do you have an unexpected tax liability?
- If you are renting out furnished rooms in your home, the allowance has increased to £7,500
- Buy-to-let landlords;
- 2016/17 is the last year 100% of your finance costs can be claimed; and
- Don’t claim 10% Wear and Tear; claim the cost of replacement furnishings and equipment instead
- Married couples could transfer 10% of the personal allowance between them for 2016/17 and 2015/16 to achieve a tax saving of £432
- Valuable capital losses need to be claimed to use them in the future; keep a note indefinitely
- Maximise tax relief for charitable gifts by
- Claiming those made in the current tax year against 2016/17
- Ensure the spouse who pays the highest rate of tax pays!
When your Return has been submitted, check your tax calculation carefully. Sometimes HMRCs systems incorrectly allocate allowances resulting in you paying more tax than you should.
If you are employed or receive a pension, always check PAYE Coding Notices. Our digital world allows HMRC to make adjustments to collect tax they think you might owe sooner.
The above list is intended to highlight some general points but if you would like advice on how these may apply to you, please get in touch with us on 01223 810100.
December 12, 2017
Calling all landlords!
BTL loan interest restriction is in, is it worth setting up a company?
Unless you own commercial or furnished holiday property, you will see an annual increase in your tax bill from January 2019 onwards as a result of the gradual restriction in tax relief on loan interest payable over next three years. Large property businesses with extensive borrowings will see catastrophic results; an increase in the tax rate from 45% to in excess of 170% on net rental income could result in an unviable loss-making business. If you own one or two let properties, your tax bill could easily double.
Have you done the maths?
One solution could be to transfer your properties to a new company. However, this can crystallise Capital Gains Tax (CGT) and Stamp Duty (SDLT) liabilities. Depending on your own individual circumstances, it may be possible to reduce (or even eliminate) these tax liabilities but careful planning is needed beforehand. Whilst achieving full tax relief on loan interest and paying Corporation Tax on net rents at 19% is attractive, please remember that if you want access to the profit in the company, additional tax will also be payable personally. Also, running a company is administratively burdensome and you will also need to consider the logistics of moving the borrowings.
Setting up a company could provide a long term solution (and greater tax savings) for landlords re-investing rental income to build up their property portfolio. For those of us with a handful of properties, gifting a share of your BTLs to your spouse, a family member or to a family trust may provide a better solution.
If you are concerned about the changes to mortgage interest relief, call us on 01223 810100 to discuss your options.
November 29, 2017
From 21 November, the interest rate charged by HMRC on tax paid late rose from 2.75% to 3%. There is an exception for corporation tax paid by quarterly instalments, for which the interest rate increased on 13 November 2017 from 1.25% to 1.50%.
The interest rate paid by HMRC to taxpayers on overpaid or early paid tax has not changed. This remains at 0.5% in every case, including for overpaid quarterly instalments of corporation tax. The official rate of interest for beneficial loans is unchanged and remains at 2.5% for the current 2017/18 tax year.
November 28, 2017
For historical reasons, if you are self-employed, you have to pay two types of National Insurance Contributions (NIC) on your profits: Class 2 and Class 4. Class 2 is currently charged at £148 per year. The Class 4 liability is calculated as 9% of your profits over a lower limit up to £45,000, plus 2% of profits above that level. At present, Class 2 provides you with entitlement to the State Pension and certain other State benefits, but Class 4 provides no such entitlements.
The Government had planned to implement reforms to the NIC system from 6 April 2018, with Class 2 NIC to be abolished from that date. However, the Government has now decided to postpone these changes by a year until 6 April 2019. As a result, if you are self-employed and liable to NIC, you will carry on paying both Class 2 and Class 4 NIC for the 2018/19 tax year.
November 23, 2017
Yesterday’s Autumn Budget was a good Budget for Cambridge with the Chancellor Phillip Hammond, confirming that the government is committed to supporting the plans for the development of the Cambridge to Oxford corridor.
The Chancellor also announced support for our local first time-buyers who will benefit from the immediate abolishment of Stamp Duty on the first £300,000 of any property purchase of less than £500,000. For more the expensive areas of the country such as Cambridge, the next £200,000 will be chargeable at 5%. The Government predicts that 80% of first time buyers will benefit from the £5,000 saving but will this measure just fuel the property market in our area?
From next April, the Chancellor has given an extra £70 to basic rate taxpayers and £340 to higher rate taxpayers by increasing the personal allowance and the 40% tax band.
Our local businesses will welcome the decision the Chancellor has made to fix the VAT threshold at £85,000 for the next couple of years although from January, companies will pay more Corporation Tax on gains realised on the sale of property or any capital asset. EIS and VCT investments limits are increasing to £2m for knowledge intensive companies from 6 April 2018.
To help you see how Philip Hammond’s announcements yesterday may affect either you, your family, or your business, we have prepared a summary highlighting the key points.
November 3, 2017
What are the best ways to assess your firm’s performance?
Changing market conditions make it more important than ever to measure your business’ performance on a regular basis. The impact caused by recent events, such as the vote to leave the EU in June 2016, the snap general election, and rising interest rates have added to the uncertainty felt by business owners around the UK.
Knowing your business’ strengths and weaknesses will help you manage your business efficiently. There are various tools and techniques out there to help you assess the performance of your market, but knowing where to start can be the trickiest obstacle of all.
We've created a helpful guide to help you focus on getting the best out of your business.
November 1, 2017
The patent box regime applies a reduced rate of corporation tax to profits attributable to qualifying patents and similar intellectual property (IP). Unincorporated businesses can’t qualify for the patent box. The patent box tax rate has gradually been reduced to 10% since the introduction of the regime in 2013.
To benefit from this reduced rate, your company must:
- hold a qualifying patent or other qualifying IP
- receive income relating to that patent or IP
- elect into the regime.
There is a certain amount of accounting work to do to identify the profits from your patented products or processes, and we can help you with that, please contact our Business Services team to discuss your company's situation.
For more information, please download our useful guide to the patent box regime.
October 28, 2017
For the last six years companies have had to submit corporation tax returns in an electronic form, with the figures in the accompanying accounts and tax computations “tagged” so they can be easily analysed by HMRC’s computer. Submitting a PDF version of the accounts is not acceptable unless you are a charity, voluntarily body, or a company in liquidation.
From 1 November 2017 HMRC is stepping-up the checking it performs on the company accounts it receives. If not enough of the figures have been tagged to make them computer-readable the tax return and accounts will be rejected.
We can help you submit your company’s accounts to HMRC in an acceptable format which will not be rejected.
October 17, 2017
From 1 April 2019, it is expected that most VAT registered businesses will have to comply with the making tax digital (MTD) regime.
HMRC will require your company to:
- keep digital records of all transaction details within accounting software that is capable of linking directly to HMRC’s systems; and
- report the totals normally reported on a VAT return using accounting software directly to HMRC within 5 weeks of the end of the VAT quarter.
The first step towards complying with making tax digital will be to get all your accounting records in a digital format. We can help you with that using our trusted software providers. Many of our clients use Xero for their business accounting.
Please speak to our Cambridge Business Services team for more accounting advice for your business.
October 10, 2017
When you sell a property that has been your main or only home, you may expect any gain to be free of tax. This will be the case for the period that it was actually occupied as your main home, and for the last 18 months of ownership, but you may need evidence to support these facts to provide to HMRC at a later date.
If you are buying a second property to occupy as the family home, it is wise to retain evidence of occupation; such as change of address notifications, copies of utility bills and other correspondence. If you own more than one home at one time, you should consider making an election for the desired property to be treated as your main residence for tax purposes.
This needs to be done within two years from the date when there is a different combination of residences.
Our Cambridge tax advisers can advise you on the timing of this election.
October 3, 2017
Over the last five years there has been a seismic shift in attitudes towards retirement saving. Auto-enrolment means workplace pensions are now regarded by many employees as a normal part of working life. Although detractors argue that minimum contributions lull people into thinking they are saving enough for a dream retirement, auto-enrolment has got considerably more people saving something, however small, for their retirement.
As an employer you have probably been through the process of starting auto-enrolment and should be managing your ongoing responsibilities. These include making contributions, deducting employee contributions through payroll and making sure you're paying at least the minimum contributions.
But auto-enrolment doesn't stop with the routine tasks. Every three years employers have to re-enrol eligible workers who are not part of a scheme. These are usually workers who opted out when you first began auto-enrolment. Although this may sound like another administrative burden to get your head around, this process is very similar to getting started with auto-enrolment. And, like beginning starting auto-enrolment, it pays to plan ahead.
September 20, 2017
Some homeowners do not consider themselves to be a landlord if they did not set out to make a profit from letting their property. However, you must declare your rental income and associated expenses, in all of these situations:
- posted abroad and let UK home to a friend.
- live above the pub which you manage, and let your former home.
- bought student house for your offspring, and other tenants in that house pay you directly for their rooms.
- moved into a care home and let former house to pay for care home fees.
- Inherited a house, and let it out before selling.
We can help you declare any rental income received in past years and get your tax records straightened out, contact our property tax team on 01223 810 100.
September 15, 2017
If you incur VAT on business expenses in other EU countries, you must not attempt to reclaim that VAT on your UK VAT return. However, you can reclaim the overseas VAT through HMRC’s VAT online services, if your business meets all these conditions:
- VAT registered in the UK;
- not registered for VAT (or liable to be registered) in the EU country where the expenses were incurred;
- does not have a place of business, fixed establishment or other residence in that EU country;
- does not make supplies of goods or services in that EU country, except for transport services, or services where the recipient pays the VAT.
Its best to submit a claim for the whole calendar year, as the minimum amount refundable is €50. All claims for 2016 must be received by midnight on 30 September 2017.
We can help you compile and submit your claim.
September 13, 2017
In past years you may have taken sufficient dividends from your company to take your total income to just under the basic rate tax band threshold, as before 6 April 2016 there was no further tax to pay on dividends within the basic rate tax band.
If you continued with this pattern of dividends in 2016/17 there will be additional tax due, as only the first £5,000 of dividend income is taxed at 0%. HMRC will try to collect the extra dividend tax through your PAYE coding, but where your salary is very small, or non-existent, this won’t be possible.
You will have to pay the dividend tax for 2016/17 by 31 January 2018. You will also have to make an on-account payment for 2017/18 on the same date, so your tax bill may be 50% larger than you expect.
We can help you budget for these large tax bills, please contact our business services team on 01223 810 100
September 6, 2017
Most employers have now reached their staging date for auto-enrolment and should be complying with their workplace pension duties.
- setting up a workplace pension scheme;
- identifying staff who qualify for auto-enrolment;
- enrolling those staff in the workplace pension scheme;
- deducting employee contributions from their pay;
- paying those deductions and your employer contributions into the pension scheme.
In order to be in a position to meet your obligations under auto-enrolment, your staff records must be accurate and up to date. Your payroll software must also be equipped to adequately manage the employer’s duties under auto-enrolment on an ongoing basis.
In addition, you need to ensure your payroll system works with your chosen pension system and allows for an easy transfer of data.
Our Cambridge accountants can help you with any payroll matters, including auto-enrolment, so please contact us on 01223 810 100 to discuss your situation.
August 4, 2017
HMRC recently announced the Government’s revised plans for Making Tax Digital (MTD), which will ultimately lead to a fully digital tax system. These announcements have been welcomed as, although HMRC remain committed to implementing MTD, they have delayed the start date and reduced the scope of the regime.
The previous proposals
The Government previously intended to phase in MTD, starting in April 2018. Under those proposals, sole traders and landlords with turnover above the VAT threshold would have been required to keep digital records and report data to HMRC quarterly from April 2018 onwards. Those with turnover below the VAT threshold but above £10,000 would have had to comply from April 2019 onwards.
The latest announcements
The Government have announced that the previous timetable will not be implemented. Instead, it will now be as follows:
- Businesses with turnover above the VAT threshold (currently £85,000) will be required to keep digital records from April 2019, but only for VAT purposes.
- For other taxes, digital record keeping and quarterly reporting will not be required until at least 2020.
- Businesses with turnover below the VAT threshold may keep digital records and file digitally on a voluntary basis. There are no plans for this to be mandatory until at least 2020.
- The above dates apply to unincorporated businesses. Companies will not be brought into the MTD regime until at least April 2020.
Further details on the precise workings of MTD are expected in due course and we will continue to monitor any developments.
In the meantime, although the start date for MTD has been pushed back, digital record keeping could save you both time and money. There are also numerous advantages to seeing your business accounts in real time.
Speak to one of the team at CKLG Accountants to discuss how digital records could benefit your business and how we can help you make the transition.
July 26, 2017
Salary or Dividend?
As the owner and director of your own company, you can choose how and when to extract funds from your company. As almost all the funds you take out will create a tax charge in your hands, you may want to leave a proportion of the money in the company until you really need it.
The tax charge you pay will depend on how your payment is categorised, such as salary, dividend, interest, rent or a loan. This article looks at the tax differences between extracting funds as a salary or a dividend.
For your company to pay you interest or rent, you must provide it with a sum of money or a property to use. Taking a loan from your company can be tax-efficient, but only when the loan is outstanding for a relatively short period of time.
Discuss the tax-efficient ways to run your business with us.
July 20, 2017
Gemma and Harriet from our Cambridge Tax team have recently joined the Cambridge Young Professionals (CYP) committee. The aim of the CYP group is to create an environment where talented young people in Cambridge have a platform to meet new friends and informally network. Events are run throughout the year and are designed to encourage collaboration and idea sharing amongst the some of Cambridge's brightest individuals.
July 19, 2017
The list of individuals who must file a UK tax return has been updated for 2016/17 to include those who have either:
• dividends from shares of £10,000 or more;
• interest from savings or investments of £10,000 or more.
We would advise you consider submitting a tax return if you have income in those categories which exceeds £5,000 not £10,000. This is because where personal allowance (£11,000 for 2016/17) is just covered by employment income, you will have tax to pay
on dividend income exceeding £5,000, or interest over £6,000.
Contact our Cambridge Tax Advisers on 01223 810 100 if you are unsure about whether you need to submit a tax return.
July 12, 2017
When a person who is not a UK resident for tax purposes disposes of a residential property in the UK on or after 6 April 2015, that disposal must be reported to HMRC within 30 days from the completion date of the deal. This is the day the property passes into ownership of the purchaser.
The report must be made on the NRCGT form, and if tax is payable that is also due by within 30 days. However, if the seller is already registered with HMRC they can opt to pay the tax due alongside their annual tax return (for ATED, self-assessment or corporation tax). If the NRCGT form is submitted late, penalties apply: £100 for one day late, £300 if 6 months late, and a further £300 if 12 months late. HMRC has recently said it won’t impose daily £10 penalties for NRCGT returns which are filed between 3 and 6 months late.
July 6, 2017
Where your company lets property, or if you are thinking about transferring your let properties into a company to avoid the interest restrictions that now apply, consider the annual administration costs. There will be a corporation tax (CT) return to file every year, and annual accounts to prepare.
HMRC’s free CT filing service can’t be used where the company receives gross rental income of £5,200 or more per year. If your gross rents are more than £100 per week you will have to buy commercial software to submit the Corporate Tax return online. A paper Corporation Tax return will only be accepted by HMRC in very limited circumstances.
Alternatively, we can file your Corporate Tax return for you.
July 4, 2017
CKLG Accountants celebrate their ten year anniversary with a day at the Newmarket July Race Course.
The atmosphere was buzzing with many of the favourites promising to impress the crowds. The team at CKLG were rewarded with a delightful afternoon of private hospitality, cake and a number of winning flutters.
CKLG Accountants was formed from a merger between two well established Cambridge based accountancy practices and Jones Golding and CKL in July 2007, however the history of the firm dates back as far as 1997. CKLG Accountants provide highly specialist tax and advisory skills and employ qualified and experienced Chartered Accountants and Chartered Tax Advisers. Corporate, personal and trust tax services make up 50% of the services provided and the tax team includes four Chartered Tax Advisers. This level of expertise enables CKLG Accountants to provide corporate and personal tax advice at the highest level.
CKLG specialise in start-ups and growing businesses, particularly within the Cambridge Technology sector and are focused on revolutionising the way in which small businesses manage and control their finances. Over the last few years' CKLG Accountants have adopted a modern approach to providing ‘traditional’ accounting services to our clients and are fully committed to becoming a lead player in the integration of innovative online technology for small business accounting.
June 28, 2017
HMRC will impose a penalty surcharge if you pay your VAT bill late. The rate of surcharge increases with every late payment, but each surcharge issued relates to a specific quarter’s debt, not the whole amount of VAT outstanding. The surcharge starts at nil for one late payment, and increases to 2%, 5%, 10% and finally 15% for the fifth and sixth late payments within the surcharge period.
There is a £400 minimum surcharge floor for the second and third late payments, so you may not receive a bill until the penalty has reached 5% or 10%. Small businesses with annual turnover of no more than £150,000 are permitted two late payments before surcharges apply. When you are trying to clear VAT debts note that the HMRC computer automatically allocates payments against the oldest debt first, unless you instruct it otherwise.
Please speak to one of our Cambridge Accountants on 01223 810 100 for advice on paying VAT.
June 22, 2017
Although you are fit and active in retirement you realise that you may need care in the future, but you don’t know when, or for how long. You may want to reduce a future inheritance tax (IHT) bill, but also need to retain access to sufficient investments which could be used to pay for care.
The solution could be to make investments which qualify for inheritance tax business relief. Shares quoted on the AIM stock exchange and shares issued under the EIS or SEIS will qualify for this relief, and will not be subject to IHT on your death if you have held them for two years.
We can discuss the general principles for investing to use the IHT business relief.
June 8, 2017
The first £325,000 left on a death is free of Inheritance Tax, but that can now be supplemented by the residential nil rate band (RNRB) of £100,000, where the deceased's home is left to a direct descendant. This includes a grandchild, great grandchild, step-child, foster-child and the spouses of those individuals
If the Estate value exceeds £2million, the RNRB is tapered away by £1 for every £2 over this limit. That gross value is calculated before any reductions in value under Business Relief or Agricultural Relief. The RNRB can apply if the deceased sold their home on or after 8 July 2015 to downsize or to move into a care home.
The rules are complicated, so please ask us for guidance on Inheritance Tax planning.
Call our Cambridge Tax Advisers on 01223 810 100.
June 1, 2017
Making Tax Digital (MTD) is the Government's initiative to move towards a fully digital tax system in the coming years.
Once fully implemented, MTD will affect individuals, businesses, Trusts and companies. Those affected by MTD will be required to record their business transactions digitally and report their profits quarterly to HMRC, in addition to filing an annual Tax Return.
No action needed just yet...
Ahead of the implementation of MTD, HMRC have now started testing their MTD reporting system on a small sample.
Based on current proposals, MTD is due to be introduced in two stages for individuals and Trusts with income from self-employment and/or property:
- From April 2018, MTD will apply to those with turnover exceeding the VAT threshold (£85,000).
- Those with annual turnover over £10,000 will be brought into the regime a year later, from April 2019.
We will be ready for MTD?
Change is clearly coming and we will be ready for it. Although the fine details are yet to be released, the team at CKLG will be continually monitoring MTD developments.
We will provide regular updates on HMRC's digital agenda and how we can help you comply with the requirements of MTD, if you are affected.
If you have any queries at this stage, please do get in touch with your usual contact.
May 30, 2017
If you provide shares or share options to your employees, you must register that share or option scheme with HMRC by 6 July following the tax year in which the scheme commenced. You also have to report annually if there have been any actions (events) in relation to that scheme, such as the issue of new share or options.
All registrations and annual returns for share schemes must be submitted to HMRC using the ERS online service. This can be quite complicated as it requires the use of spreadsheet templates.
Our Cambridge Business Accountants can help you with these submissions, but please don’t delay as the deadline is 6 July 2017. Contact us on 01223 810 100
May 22, 2017
The first £325,000 left on a death is free of inheritance tax, but that can now be supplemented by the residential nil rate band (RNRB) of £100,000, where the deceased’s home is left to a direct descendant. This includes a grandchild, great grandchild, step-child, foster-child and the spouses of those individuals.
The RNRB is tapered away by £1 for every £2 of the estate value which exceeds £2million. That gross value is calculated before any reductions in value for under business property relief or agricultural property relief. The RNRB can apply if the deceased sold their home on or after 8 July 2015 to downsize or to move into a carehome. The rules are complicated, so please ask us for guidance on inheritance tax planning.
May 11, 2017
HMRC use computer system called “Connect” to help it effectively target its tax investigations. Connect interrogates information from multiple sources to detect links, and then identifies anomalies between the figures the taxpayer declared on his tax returns and the income or assets shown by other sources of information.
Last year HMRC used the Connect analysis and wrote to 10,000 individuals about interest which appeared to be missing from their tax returns for 2014/15. The Connect analysis may not always produce the correct answer, but if you receive a letter from HMRC querying your tax return, don’t ignore it. A simple letter can turn into a full-blown tax investigation if it is not handled with care.
Our Cambridge Tax Advisers can help you respond to any questions from HMRC, please contact us as soon as possible.
May 9, 2017
Some people don’t realise that additional income they receive from rents, hobbies or a part time business, is taxable. There is an allowance of £7,500 which covers rent from letting rooms in your own home, but any additional income should be disclosed to the tax office.
If you need to make a disclosure of additional income, the first step is to notify HMRC using an online form or by telephoning: 0300 123 0945. We can do this for you. The next step is to complete a detailed disclosure form, which isn’t simple as HMRC want you to calculate the tax due. The final step is to pay the tax due, plus interest and any penalties.
Our Cambridge Tax Advisers can help you with all the steps of the disclosure process, but often the most difficult step is admitting you need to do something.
May 5, 2017
The longest Finance Bill in UK history was cut by 600 pages to allow it to be passed before Parliament was dissolved in advance of the General Election. A large number of tax reliefs did not make into the Finance Act 2017, so their implementation will depend on whether the new Government wants to reintroduce the measure.
The tax changes which are on hold until that new Government takes power include:
- Digital reporting and record keeping (MTD) for Income Tax and VAT
- Dividend tax rate for 2018/19
- £1,000 tax free allowances for property and sundry income
- £500 tax free pensions advice
- Changes to taxation of terminations payments from April 2018
- Reduction in money purchase annual allowance from £10,000 to £4,000
- Power to tax capital gains made from UK land as Income Tax not CGT
- Deemed domicile after 15 years to apply to all taxes
- Changes to substantial shareholding exemption
- Changes to EIS, SEIS, SITR and VCT schemes
- Restrictions on corporation tax losses
- Tax relief for cost of museum exhibitions
- VAT in relation to goods stored in UK warehouses
May 3, 2017
Sharing income or gains around the family can reduce the marginal tax rates for the highest earners and make use of the allowances available to those on lower incomes. Taken together, this should result in a tax saving for the whole family. To be effective, the lower earner must own the investment, bank account or shares which produce the income or gain.
A family business can be used to share income by employing family members or by allowing each person to hold a share in the company or partnership. Transferring shares or property can create tax charges, so take advice before giving away assets. Married couples or civil partners can generally transfer assets between them without tax charges.
Where a spouse has a high income and holds valuable assets, tax can be saved by transferring assets into joint names.
Speak to our Cambridge Personal Tax Advisers today
April 25, 2017
The new tax-free childcare scheme launches on 28 April 2017. It is an online savings scheme where parents pay in funds to be used to pay for childcare provided by a registered childcare provider. For every £8 deposited by the parents, the Government will add another £2, up to a maximum of £2,000 per child per year (£4,000 where the child is disabled).
Parents of children aged under 2 will be invited to join first, and the scheme will be expanded during 2017 to those with children aged under 12 (or under 17 where the child has disabilities). Both parents must be in work and earn at least £120 per week, although each parent must have income of £100,000 or less. And you can join the tax-free childcare scheme if you are self-employed.
April 18, 2017
Employers are required to send a full payment submission (FPS) to HMRC on or before the day the employees are paid, or an Employer Payment Summary (EPS) if no employees are paid. If you are late in submitting the FPS or EPS you may receive a penalty notice. Sometimes such penalties are raised in error.
If you receive a PAYE penalty which you believe is incorrect, you can appeal online or by using a paper form. The online method is quicker and easier, but you must select a reason for your appeal using the drop-down menu, and provide further facts to support the reason in the information box.
Completing this information box is now mandatory, our Cambridge Accountants can help you with any appeals.
April 10, 2017
If you bought a new home after 31 March 2016, you may have been charged the Stamp Duty Land Tax (SLDT) supplement at 3% of the full value. This supplement came into effect on 1 April 2016 to discourage people from buying second homes to let out, or use for holidays. However, if you temporarily owned two homes, the charge was levied on your purchase of the second property.
Where your new property was a replacement for your main home, and you have since sold the first home, you can reclaim the 3% SDLT supplement you paid.
This claim can be done online or using the paper form SDLT16, and we can help with that.
April 3, 2017
If you normally file your tax return quickly to report and pay the small amount of tax due on your state pension, please hold on to that form until the end of May 2017. HMRC are changing their approach this year, and may not need a tax return from you after all.
If you do not need to submit a tax return for 2016/17, the tax office should write to you by 31 May to tell you. If you don’t receive such a letter, but you think your tax affairs are so simple it’s not worth the hassle, you can ask to be removed from the list of those who need to do a return.
Do remember however that you must declare any new sources of income you have, or if you make taxable capital gains.
Contact our Cambridge Personal Tax Advisers for guidance.
March 30, 2017
SDLT when transferring property from an individual to a company
When a company acquires land or buildings it will pay Stamp Duty Land Tax: SDLT (LBTT in Scotland). The rates due on residential property are: 3%, 5%, 8%, 13%, or 15%, on bands of consideration which vary for SDLT and LBTT.
This tax is payable even if the properties are transferred from an individual to a company he or she owns. Where a partnership of related individuals transfers properties to a company the partners control, the SDLT can be reduced to nil. However, the circumstances in which this exemption applies are very limited.
Talk to our Cambridge Property Tax Advisers about the tax charges which may arise before you transfer properties to a company.
March 30, 2017
If you are planning to invest in residential property to let out the most tax efficient way to do this is probably through a limited company. The company will have to purchase the property using a mortgage and/ or funds you lend to it. On the other hand, the company will be able to set all of its finance costs against the rents it receives.
The company will pay tax on the profits it makes from letting at 19%, rather than at 20% to 45% if the profits arose in your hands. However, the income will be trapped in the company until it is paid out to you as dividends, interest or wages, when further tax charges are due. The company will also have to file its own tax return online and submit accounts to Companies House.
If you are looking to purchase a property to let or you already have a portolio of let properties, please contact us for advice on managing your properties within a company.
March 28, 2017
Swapping salary for benefits which are taxed at a lower rate is known as salary sacrifice. The law is to change to ensure the same tax is paid whether a benefit or salary is received, but at first will only apply to new salary sacrifice arrangements made from 6 April 2017 onwards. Existing arrangements will be caught if they are modified or renewed after that date, such as when a different company car is provided.
All salary sacrifice arrangements involving cars, vans, fuel, accommodation and school fees will come under the new rules from 6 April 2021. Other benefits, such as free car parking, will fall under the new rules from 6 April 2018. Some benefits won’t be affected at all, and these include pension contributions, subsidised meals and medical treatments.
If you offer a salary sacrifice arrangement to your employees, we should discuss how these new rules will affect your business.
March 23, 2017
Tax reporting is changing to a fully digitised process. Businesses and landlords will have to submit updates of income and expenses to HMRC at least quarterly. However, those with business or rental income of no more than £10,000 per year will be exempt from such quarterly reporting.
Other businesses will be required to send HMRC regular updates from the first accounting period that starts on or after:
- 6 April 2018 - for unincorporated businesses with turnover exceeding the VAT threshold (£85,000 from 1 April 2017), excluding large partnerships.
- 6 April 2019 – for unincorporated businesses with turnover exceeding £10,000 but less than the VAT threshold.
- 1 April 2019 – for all VAT registered businesses, for VAT-related reports
- 1 April 2020 – for all companies to report income and expenses subject to corporation tax, and partnerships with turnover of £10 million or more.
There are still many questions to answer about the practicalities, and it is possible that this timetable will change.
March 22, 2017
Make sure you are fully aware of any changes to UK tax rates, reliefs and allowances affecting you and your business for 2017/ 2018.
Download our Tax Card for 2017/ 18
March 22, 2017
The Government supported savings accounts called “tax-free childcare” are due to launch in April 2017. Employees who use these accounts won’t be permitted to also receive employer provided childcare vouchers, which are tax free within limits.
The tax-favoured child care vouchers are to be phased out, so no new employees will be able to join such schemes from April 2018. In the meantime, there will be two alternative routes to subsidised childcare with different conditions, which will affect families in different ways.
We can advise you whether to continue to provide childcare vouchers though your company, please contact our Cambridge Business Tax Advisers to discuss your personal tax situation.
March 17, 2017
If you receive dividends of £5,000 per year you will be affected by the cut in the dividend allowance from £5,000 to £2,000 on 6 April 2018. This is likely to have the greatest impact on owners of small companies, who extract most of the funds they need from the company as dividends.
This tax change will cost you £225 per year (as basic rate taxpayer), £975 per year (as a higher rate taxpayer) or £1,143 per year (as an additional rate taxpayer).
If your family also receive dividends from your company, please contact our Cambridge Business Accountants to review your dividend strategy for 2018.
March 16, 2017
Self-employed individuals, who don’t trade through a company, currently pay class 2 and class 4 national insurance contributions (NIC). The Chancellor had planned to increase the main rate of class 4 from 6 April 2018, as class 2 will be merged into class 4 from that date.
This caused such a fuss as it appeared to break a Conservative Party manifesto pledge not to raise the rates of income tax, national insurance or VAT in this Parliament, i.e. before May 2020. A u-turn followed, and class 4 NIC will not increase in 2018 or 2019 However, class 2 NIC will be abolished from 6 April 2018, which will save self-employed individuals £148.20 per year, at the 2017/18 rates.
March 9, 2017
The Chancellor Philip Hammond delivered his first and last Spring Budget yesterday, and the first of the 2 Budgets scheduled for 2017. From 2018 it is planned that there will only be one fiscal event each year being the annual Autumn Budget.
The Chancellor stated that it was a Budget in which he was putting economic stability first. A ‘strong and stable platform’ for the forthcoming negotiations as the UK starts the formal process of exit from the European Union. He remains committed to eliminating the deficit but although the OBR still forecasts borrowing to be on an overall downward trajectory, there will still be a deficit throughout the next 5 years.
The anticipated tax rise was directed at the self-employed, with a controversial increase in Class 4 NIC from April 2018 of 1% and further 1% from April 2019. There was no major reform to the tax system but several changes that are set out in the small print of the reports that may affect you.
To help you see how Philip Hammond’s announcements yesterday may affect either you, your family, or your business, we have prepared a summary highlighting the key points.
March 8, 2017
The IR35 rules will be familiar if you offer your personal services through your own personal company. You decide if you are caught by IR35, and if so, your company pays the appropriate tax and national insurance.
From 6 April 2017, if your contract is with a public sector body, that body decides if you are within IR35. Where it decides you are within IR35, the fee payer (normally the employment agency) must deduct the tax and NI due from the invoiced amount, excluding VAT.
Essentially your personal company is ignored, and you are taxed as if you were an employee of the fee-payer, without any employment rights.
These new rules are very complicated, so we should discuss how you maybe affected, please contact our Cambridge Business Accountants to discuss your personal situation.
March 6, 2017
The flat rate scheme (FRS) is supposed to simplify VAT reporting for small businesses in the UK, but that simplification is removed from 1 April 2017. If you use the flat rate scheme, you will have to check whether the relevant goods you buy each quarter amount to more than 2% of your gross sales for that quarter, and at least £250.
Relevant goods excludes items acquired:
- for resale, leasing, letting or hiring out if your main business activity doesn’t ordinarily consist of selling, leasing, letting or hiring out such goods.
- that you intend to re-sell or hire out, unless selling or hiring is your main business activity.
- for disposal as promotional items, gifts or donations.
If the 2% test is passed you can carry on using the flat rate percentage applicable to your trade sector. If your business fails the 2% test, you will have to pay 16.5% of your gross sales to HMRC as VAT. This will mean the Flat Rate Scheme is no longer economical to use.
Please speak to one of our Cambridge accountants to determine your VAT position.
February 24, 2017
All properties used for business purposes are subject to business rates in the UK. This includes let holiday accommodation and guest houses. Although the tax is paid to the local authority, the multiplier (pence per £ of property value), is determined by central Government.
All premises subject to business rates were revalued in April 2015, and these values show some significant differences to the last revaluation which was undertaken in 2008
The April 2015 value will be used for setting the business rates payable from 1 April 2017. If you believe your business premises has been incorrectly valued you can appeal. Smaller properties are eligible for business rates relie
Please contact our Business Services Advisers Cambridge to discuss the impact of business rates increases on your small business.
February 22, 2017
All employers in the UK are required to provide access to a workplace pension scheme, and their employees must be enrolled in that scheme (auto-enrolment), unless they specifically opt out. This applies even to the smallest companies, although where the company only employs its directors, it can apply for exemption from the Pensions Regulator.
Employees must be ready to be enrolled in the workplace pension scheme by the “staging date”, which is set according to your PAYE scheme reference. Many small employers have a staging date of 1 March 2017 or 1 April 2017. If you miss your staging date you may receive a fixed £400 fine. However, you can apply for a six-week grace period to get your work place pension arrangements back on track.
Speak to one of our Small Business Accountants Cambridge on 01223 810 100 for more information about setting up a workplace pension for your employees.
February 16, 2017
With the end of the 2016/17 tax year fast approaching CKLG Accountants Cambridge are pleased to be able to share with you our Year End Tax Guide. The Guide highlights the potential tax planning measures that you may wish to consider or take for yourself or your business before 5 April 2017.
- Personal Allowances and Relief's
- Pension Contributions
- Inheritance Tax
- Capital Gains
- Corportation Tax
- Entrepreneurs’ relief
As always, our personal tax and business services team are on hand and would be delighted to assist you with any of your tax planning requirements.
Please contact us on 01223 810 100 to discuss your tax planning requirements with one of our Cambridge Tax Advisers