HMRC has been given 28 days to delete an estimated five million taxpayer biometric ‘voice prints’

HMRC has been given 28 days to delete an estimated five million taxpayer biometric ‘voice prints’ obtained from callers to its helplines, after an investigation by the Information Commissioner’s Office (ICO) found they were being held illegally in contravention of data protection rules

Callers were asked to create a voice ID by repeating the phrase ‘my voice is my password’, but the ICO found that HMRC failed to give taxpayers sufficient information about how their biometric data would be processed and failed to give them the chance to give or withhold consent. This is a breach of the General Data Protection Regulation (GDPR).

High Income Child Benefit Tax Charge

If you are affected due to high income you can choose not to get Child Benefit payments, but you should still fill in the Child Benefit claim form. This will help you get National Insurance credits which count towards your State Pension.

Could you be missing out on a state pension boost worth £1,000s?

Thousands of grandparents who have given up work to help look after their grandchildren could be missing out on a state pension boost worth £1,000s over the course of their retirement, new research has revealed. But you can act now to protect your pension.

The Government scheme – technically known as 'specified adult childcare credits' – was introduced six years ago, and is designed to protect the pensions of grandparents who retire early to help care for grandchildren so their parents can go back to work.

A parent (usually the mother, though it can be the father) who gets child benefit for a child under 12 automatically gets NI credits towards their state pension. But a mum who goes back to work and pays NI doesn't need the credit because she gets a qualifying year anyway.

Under the scheme, a mum can sign a form and pass the NI credit to the grandparent who is actually looking after the child. This means the grandparent benefits from the NI credit and it goes towards their state pension instead.

The number of hours a grandparent helps out with childcare is irrelevant to the claim. So even if it's just one day a week, eligible grandparents should be able to claim.

New guidance on the VAT domestic reverse charge for building and construction services

HMRC have published new guidance on the VAT domestic reverse charge for building and construction services that starts on 1 October 2019.

The domestic reverse charge (referred to as the reverse charge) is a major change to the way VAT is collected in the building and construction industry. It comes into effect on 1 October 2019 and means the customer receiving the service will have to pay the VAT due to HMRC instead of paying the supplier. It will only apply to individuals or businesses registered for VAT in the UK (although it will not apply to consumers).

Published 7 June 2019 Croner-i

Non Residential CGT on Sale of UK Property

IMPORTANT INFORMATION FOR NON RESIDENT UK PROPERTY OWNERS


From 6 April 2019
, non-UK residents disposing of UK land (or assets that derive at least 75% of its value from UK land) must file a Capital Gains Tax return within 30 days following the completion of the disposal, and a payment on account must be made at the same time.

This change means that YOU will have to be prepared to advise us to promptly calculate and report the capital gain/loss, and then you must make the necessary tax payment. 

From 6 April 2020, anyone (including UK residents) disposing of UK residential property will have to report and pay the associated tax within 30 days following the completion of the disposal but for now it is only non-residents to whom this applies.

The next natural step would be that all UK land disposals will be brought within this same regime in the future, and so extended beyond UK residential property.

While the new taxing regime is designed around the government’s desire to collect more tax from non-UK residents investing in UK land, the general theme around reporting and tax collection is a move towards expediting tax receipts from property transactions.

Therefore, with this in mind should you consider selling your UK buy to let property please keep us in the picture and be prepared to have all paperwork to hand that we would require:

  • Proof of purchase price

  • All legal fees paid on purchase and sale

  • Expenses for any capital improvements to the property in period of ownership

  • Details of sale price

This may not be foremost on your mind when dealing with the sale but from the date of conveyance the clock is ticking!

If you are currently in the process of selling, we would suggest you try and complete prior to the new legislation coming into force on the 6 April 2019 allowing you a further 9 months before filing and payment.

Any questions please contact us.

Tax Allowance & Wage Updates for 2019

Marriage Allowance

If your income is less than your annual tax allowance of £12,500, you may now be able to transfer up to £1,250 of your unused allowance to your spouse so they pay less tax.

Personal Allowance

The personal allowance increases to £12,500 for 2019/20, up from £11,850 in 2018/19. The personal allowance starts to be tapered off once an individual’s adjusted net income reaches £100,000. By the time this income reaches £125,000 in 2019/20, the personal allowance will be nil. 

Dividend Rates 

There are no changes to the dividend rates of tax which apply to all UK taxpayers. The first £2,000 of dividends is tax free. If you are a basic rate taxpayer, you’ll continue to pay 7.5% tax on dividends over this amount (up to £37,500 on top of the personal allowance).

If you pay higher rate income tax, you’ll pay 32.5% on dividend income between the higher rate threshold and the additional rate threshold of £150,000. 38.1% will be paid on dividend income above the additional rate threshold of £150,000. 

The National Living Wage is Increasing

In April, the National Living Wage will increase by 4.9% from £7.83 to £8.21.

MTD 'Soft Landing' won't require digital linking until 2020

Next month, the Making Tax Digital for VAT will be in full swing, but the ‘soft landing period’ of 1 year means that VAT registered organisations have been given extra time to get their software programs connected with ‘digital links’.

For now, the use of ‘cut and paste’ between digital records, accounting programs and HMRC is being permitted, until at least April 2020 when ‘digital linking’ between programs will be enforced.

A ‘digital link’ is defined by law as ‘an electronic or digital transfer, or exchange of data, between software programs, products or applications’, and ‘copy and paste’ isn’t included in this definition.

To learn more about digital linking, and what will be allowed for this soft landing period, Accountancy Daily has a great in-depth article on their website that goes into more detail.

Could you be claiming for job expenses?

Check this list to make sure you’re not missing out on claiming for common job expenses…

(The following is an extract taken from the HMRC website):

Flat rate expenses, or work-related expenses, are a kind of tax relief you get if you spend money on equipment for your job. They’re called flat rate expenses because you can either claim a standard flat rate or the actual cost. If you want to claim the actual amount you’ll need to keep receipts.

You can claim tax relief on expenses for:

  • small tools

  • protective clothing needed for your work

  • uniforms

You cannot claim tax relief for everyday clothing (even if you wear it for work).

Small tools

You can claim tax relief for the cost of replacing or repairing small tools, for example, hairdressers might need to buy their own scissors.

Protective clothing

You can claim tax relief for the cost of replacing, repairing and cleaning of specialist or protective clothing, for example, hard-hats, protective boots and overalls.

Uniforms

A uniform is a set of specialised clothing that’s recognisable as a uniform that identifies someone as having a particular occupation, for example, nurse or police uniforms.

It does not include employees who wear clothing of a similar design or colour, for example, a bank who wants to promote its corporate image by requiring all counter staff to wear a shirt or blouse in the corporate colours. Only nurses and midwives can claim for replacing shoes, socks and underwear.

For more information see: - https://www.gov.uk/guidance/job-expenses-for-uniforms-work-clothing-and-tools

IR35 Ruling

The Chancellor has confirmed in the 2018 Budget that the off-payroll rules will be extended to the private sector but will be delayed until 6 April 2020 and will only apply to large and medium-sized organisations. The definition of medium and large businesses for these purposes has not yet been published. The rules mean that when medium or large businesses hire consultants through personal service companies (or chains or intermediaries), a deemed employment relationship may be created for tax purposes. Businesses will need to decide whether the off-payroll working rules apply.

Where the rules do apply, the business, agency or third party paying an individual’s personal service company or intermediary will be responsible for accounting for PAYE and employees’ National Insurance contributions (NICs) and for paying employer’s NICs.

The existing IR35 rules in the private sector, where the individual’s personal service company or intermediary is required to consider the off-payroll working rules, and to apply those rules when they do, will continue to apply for small businesses.

Student Loan Repayments Thresholds Increasing

The Department for Education (DfE) has confirmed that from 6 April 2019 the thresholds for paying back the student loan will increase for tax year 2019/20 to:

• Plan 1 - £18,935, up from £18,300 for tax year 2018/19; and

• Plan 2 - £25,725, up from £25,000.

Student loan deductions will remain the same at 9% for Plan 1 and Plan 2 loans.

Capital Gains - Payments on account

From 6 April 2020 the CGT payment window is to be set at 30 days from completion date for disposals of residential property, made by any person.

At the same time a CGT return must be submitted within the same 30-day period. This return will be additional to the self-assessment return CGT schedules and HMRC will be able to enquire into to it separately.

Self assessment penalty notices delayed

If you thought the timing of the introduction of Making Tax Digital for VAT was a poor one given Brexit, then what about this “ HMRC says that because of Brexit, it will be delaying the issue of self assessment penalty notices, until such time as its call centres have time to cope with the calls from taxpayers”

HMRC has stated that the latest date the notices will go out is the end of April instead of February, which may just mean more taxpayers will be liable to the daily penalty for non-submission for being over three months late!

Making Tax Digital Legislation

HMRC's vision to digitalise the UK tax system is well underway in the form of Making Tax Digital.

This legislation requires the filing of tax returns four times a year, rather than once annually, as with the current requirement. According to the government, filing returns more regularly will make it easier for businesses and individuals to get their “tax right and stay on top of their affairs”, as there will be less work required than compiling the information in one large chunk, which is presently the case.

According to HMRC, the Making Tax Digital legislation will fulfil its ambition to become “one of the most digitally advanced tax administrations in the world”.

Businesses and landlords will be required to use commercial software to maintain their records and to update HMRC quarterly. This includes unincorporated businesses, companies, LLPs, and charities.

The new system – which comes into effect in April 2019 – will initially apply to businesses with a turnover above the VAT threshold (currently £85,000).

Businesses registered for VAT but with turnover below the VAT threshold can opt in and file their VAT information via MTD if they wish.

There is some concern among those in the finance and accountancy sectors that this “modernising” of the tax system will have firms very quickly yearning for a return to the good old days with filing tax returns by 31 January each year.

At this time we understand there will be no free software for MTD for VAT. HMRC is working closely with software providers to ensure a range of suitable products will be available.

The use of spreadsheets will be permitted although they will need to be combined with third-party commercial software, using APIs, to ensure a seamless flow of data from the business to HMRC (and vice versa). 

MTD for Limited Companies will not be mandatory until April 2020 at the earliest. If you are not currently collating your records digitally now is the time to consider how you are going to conform with the new regulations!

The Requirement to Correct: What you need to know

Below is an extract from the HMRC website:

 What is the Requirement to Correct? 

HMRC has introduced new legislation called the Requirement to Correct. This requires UK taxpayers to make sure that all their foreign income and assets, where there might be tax to pay, have been declared to HMRC before the 30th September 2018. From the 1st October 2018, new, substantially higher penalties will apply for those who have failed to pay all the tax due on foreign income and assets. To avoid these new penalties, action must be taken now. 

Does it affect me? 

Many people may not realise that some straightforward actions, such as renting out a property abroad or transferring income or assets from one country to another, could mean having to pay tax in the UK. This includes having income from or an asset in the Channel Islands, Isle of Man, the Republic of Ireland, the EU or anywhere else in the world. These must all be declared to HMRC. 

Although the Requirement to Correct applies to people who pay tax in the UK, it could still affect you if you live abroad and pay tax outside of the UK, for example people who rent out their UK home whilst living in another country. 

What action should I take? 

If you are concerned that you haven’t told HMRC about foreign income or assets, or that you have transferred UK income abroad without paying the UK tax on it, you should make a disclosure to HMRC before the 30th September 2018. 

If you are confident that your tax affairs are in order, then you do not need to worry. If you are unsure, we recommend you seek advice from a professional tax advisor or agent. 

How do I make a correction to my tax affairs? 

The main route to let HMRC know about previously undeclared income or assets is the Worldwide Disclosure Facility through the Digital Disclosure Service. This is the final opportunity to make a disclosure before the penalties rise. 

Why act now? 

A disclosure or discovery after the Requirement to Correct deadline will be subject to much tougher Failure to Correct penalties. These penalties are much higher than the present penalties and start from a minimum penalty of 100% of the tax owed. There is also an Asset Based Penalty of up to 10% of the underlying asset for serious cases; and an additional penalty for situations in which HMRC can show the taxpayer moved their assets to avoid reporting. 

We would also like to make you aware that HMRC is beginning to receive an unprecedented amount of information about foreign income and assets under the Common Reporting Standard (CRS) exchange of information. By September 2018, more than 100 jurisdictions will be exchanging data with the UK under the CRS. The CRS data will provide HMRC with information on UK taxpayers’ bank accounts, investments and trusts held around the world. HMRC will use this information to open tax enquiries, issue tougher penalties, and take forward criminal prosecutions against those who avoid paying the tax they owe. 

The Requirement to Correct period, from now until 30th September 2018, is the last opportunity to put things right before HMRC receives the CRS data and the new penalties apply. 

Where can I find further information or make a disclosure? 

To make a disclosure, or for further information on the Worldwide Disclosure Facility, visit www.gov.uk/guidance/worldwide-disclosure-facility-make-a-disclosure. 

Technical guidance on the Requirement to Correct for agents and advisors can be found at https://www.gov.uk/guidance/requirement-to-correct-tax-due-on-offshore-assets. 

Two Million Couples Still Missing Out on Marriage Allowance

The allowance was first introduced in April 2015, which means that a backdated claim made in 2017/18 could be worth up to £662

The marriage allowance is specifically designed for couples where one partner pays standard rate income tax and the other is a non-taxpayer, it allows couples to transfer a proportion of their individual Personal Allowance between them in a tax-efficient manner. 

Where a couple satisfies the following criteria, it should be possible to claim the allowance:

  • The couple must be either married or in a civil partnership - living together is not sufficient for the allowance to be claimed.
  • One partner needs to be a non-taxpayer - which generally means they are earning less than the personal allowance (£11,500 for 2017/18, rising to £11,850 from 6 April 2018).
  • The other partner needs to be a basic 20% rate taxpayer, which generally means they are earning less than £45,000 in 2017/18 (rising to £46,350 for 2018/19) (note that rates are different for Scottish taxpayers). Higher rate and additional rate taxpayers are not entitled to the allowance.
  • Both partners must have been born on or after 6 April 1935.

For 2017/18, the maximum amount that can be transferred from one partner to the other is £1,150, which means that the spouse or civil partner receiving the transferred allowance will be entitled to a reduced income tax liability of up to £230 for 2017/18 (£1,150 @ 20%).

Backdated claims

You can backdate your claim to include any tax year since 5 April 2015 that you were eligible for Marriage Allowance. A claim for all three years from 2015/16 to 2017/18 inclusive will therefore be worth up to £662.

If your partner has died since 5 April 2015 you can still claim providing all the eligibility criteria outlined above is satisfied.

In most cases, the allowance will be given by adjusting the recipient partner's personal tax code and the allowance will be received via the PAYE system. The partner who transferred their personal allowance will also receive a new, reduced, tax code, which will be operated against their employment income where applicable. If the recipient partner is self-employed, the allowance can be claimed via the self-assessment tax return and the allowance will be given as a reduction against their self-assessment tax liability.

If you or your partner were born before 6 April 1935, you might benefit more as a couple by applying for Married Couples Allowance instead.

You can’t get Marriage Allowance and Married Couple’s Allowance at the same time.

Non-Resident Capital Gains Returns

A non-resident that disposes of a UK residential property is normally required to deliver to HMRC an NRCGT return in relation to the disposal within 30 days of the disposal being completed. This includes where there is no tax to pay or the disposal is for a loss. Penalties can apply where a return is delivered late

Reminder of increased minimum contribution rates from April 2018 for Auto enrolment

Currently with auto enrolment, there is a minimum total amount that has to be contributed to a pension scheme by both the employee and the employer. The total minimum contribution is currently set at 2% of the employee’s earnings, with the employer paying a minimum of 1%.

Contributions are being increased gradually over time. From 6th April 2018, the total minimum contribution will rise to 5% with a 2% minimum employer contribution and the employee contributing the remaining 3%.  Minimum contributions will undergo further increases on 6th April 2019, with the total minimum contribution rate increasing to 8% (3% employer, 5% employee). If as an employer you choose to pay more than the employer minimum but less than the total minimum amount, then the employee must make up the difference.

National Minimum Wage and National Living Wage rates

Below is an extract from the HMRC website:

The government is increasing the National Minimum and National Living Wage rates on 1 April 2018.This includes the largest increases in a decade for the rates that apply to 18-20 and 21-24 year olds. 

These rates are for the National Living Wage and the National Minimum Wage. 

National Minimum Wage

Tax relief on Christmas Entertaining

With the Christmas season fast approaching, we would like to remind all employers about the possibilities for entertaining the company employees (which includes directors), while getting full tax relief. 

This means that you can deduct the cost from your taxable profits, NOT that the tax man reimburses you in full!

Basically, providing you do not spend more than £150 (including VAT) per person attending (which can include partners), you get tax relief on the full amount. 

Very important is that the event must be available to all employees at that particular company location.

1. If you are a sole director with no employees and based in London you could have an annual Christmas party for you and your partner(spouse) in London – a meal in the West End, theatre show tickets and drinks – so long as the total cost, including vat, was not more than £ 300.00 this would be tax deductible.

2. If you are a two director company based in London you could have an annual Christmas event in Cornwall for you and 1 child each – rail travel tickets, 2 nights 

B & B in St Ives, entrance to the Eden project (or other attraction) lunch and dinner plus drinks plus even the hire of a car – so long as the total cost, including vat, was not more than £ 600.00 this would be tax deductible.

3. If you are self employed employing three staff you could have an annual Christmas event anywhere in the country, or overseas, with a partner/(spouse) – hiring a four bedroom self catering property, travel costs to and from the accommodation plus food and drinks for the period of letting – so long as the total costs, including Vat, was not more that £ 1,200.00 this would be tax deductible.

4. If you are a sole trader employing no staff you can have a mince pie with your tea !

The four basic rules in a nut shell

  • It must be, or planning to be, an annual event.
  • You must not have incurred other annual staff entertainment costs during the year
  • You do not spend, including Vat, no more than £ 150.00 per person ATTENDING

Check with us for specific advice first before committing yourself to an event.