| 1 April | Corporation tax for year to 30/6/14 |
| 6 April | 2015/16 Tax year begins |
| 19 April | Final RTI FPS due by this date. Indicate that this is Final Submission for the Tax Year but note that the end of employer questionnaire is not included this year |
| 19 April | PAYE & NIC deductions, and CIS return and tax, for month to 5/4/15 (due 22 April if you pay electronically) |
| 1 May | Corporation tax for year to 31/7/14 |
| 19 May | PAYE & NIC deductions, and CIS return and tax, for month to 5/5/15 (due 22 May if you pay electronically) |
Archive for April, 2015
Tax Diary – April / May
Tuesday, April 7th, 2015April – Monthly Round Up
Tuesday, April 7th, 2015Budget 2015
George Osborne presented the final Budget of this Parliament on Wednesday 18 March 2015.
In his speech the Chancellor reported ‘on a Britain that is growing, creating jobs and paying its way’.
Towards the end of 2014 the government issued many proposed clauses of Finance Bill 2015 together with updates on consultations. Due to the dissolution of Parliament on 30 March some measures have been legislated for in the week commencing 23 March, whilst others will be enacted by a Finance Bill in the next Parliament (depending on the result of the General Election).
The Budget proposed further measures, some of which may only come to fruition if the Conservative Party is in power in the next Parliament.
The articles which follow summarise some of the key changes.
Internet link: GOV.UK Budget
Personal tax rates and allowances
For those born after 5 April 1938 the personal allowance will be increased to £10,600. For those born before 6 April 1938 the personal allowance remains at £10,660.
The reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 will continue. The reduction is £1 for every £2 of income above £100,000. So for 2015/16 there is no personal allowance where adjusted net income exceeds £121,200.
Tax bands and rates for 2015/16
The basic rate of tax is currently 20%. The band of income taxable at this rate is being decreased from £31,865 to £31,785 so that the threshold at which the 40% band applies will rise from £41,865 to £42,385 for those who are entitled to the full basic personal allowance.
The additional rate of tax of 45% is payable on taxable income above £150,000.
Dividend income is taxed at 10% where it falls within the basic rate band and 32.5% where liable at the higher rate of tax. Where income exceeds £150,000, dividends are taxed at 37.5%.
Starting rate of tax for savings income
From 6 April 2015, the maximum amount of an eligible individual’s savings income that can qualify for the starting rate of tax for savings will be increased from £2,880 to £5,000, and this starting rate will be reduced from 10% to 0%. These rates are not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.
This will increase the number of savers who are not required to pay tax on savings income, such as bank or building society interest. Eligible savers can register to receive their interest gross using a form R85.
Internet link: GOV.UK Budget
Proposed personal allowances to come
The Chancellor announced that the personal allowance will be increased to £10,800 in 2016/17 and to £11,000 in 2017/18. The Transferable Tax Allowance will also rise in line with the personal allowance, being 10% of the personal allowance for the year.
The higher rate threshold will rise in line with the personal allowance, taking it to £42,700 in 2016/17 and £43,300 in 2017/18 for those entitled to the full personal allowance.
Personal Savings Allowance
The Chancellor announced that legislation will be introduced in a future Finance Bill to apply a Personal Savings Allowance to income such as bank and building society interest from 6 April 2016.
The Personal Savings Allowance will apply for up to £1,000 of a basic rate taxpayer’s savings income, and up to £500 of a higher rate taxpayer’s savings income each year. The Personal Savings Allowance will not be available for additional rate taxpayers.
These changes will have effect from 6 April 2016 and the Personal Savings Allowance will be in addition to the tax advantages currently available to savers from Individual Savings Accounts.
The Personal Savings Allowance will provide basic and higher rate taxpayers with a tax saving of up to £200 each year.
Internet link: GOV.UK News
Help to Buy ISA
The government has announced the introduction of a new type of ISA, the Help to Buy ISA, which will provide a tax free savings account for first time buyers wishing to save for a home.
The scheme will provide a government bonus to each person who has saved into a Help to Buy ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings.
Help to Buy ISAs will be subject to eligibility rules and limits:
- An individual will only be eligible for one account throughout the lifetime of the scheme and it is only available to first time buyers.
- Interest received on the account will be tax free.
- Savings will be limited to a monthly maximum of £200 with an opportunity to deposit an additional £1,000 when the account is first opened.
- The government will provide a 25% bonus on the total amount saved including interest, capped at a maximum of £3,000 which is tax free.
- The bonus will be paid when the first home is purchased.
- The bonus can only be put towards a first home located in the UK with a purchase value of £450,000 or less in London and £250,000 or less in the rest of the UK.
- The government bonus can be claimed at any time, subject to a minimum bonus amount of £400.
- The accounts are limited to one per person rather than one per home so those buying together can both receive a bonus.
- As is currently the case it will only be possible for an individual to subscribe to one cash ISA per year. It will not be possible for an account holder to subscribe to a Help to Buy ISA with one provider and another cash ISA with a different provider.
- Once an account is opened there is no limit on how long an individual can save into it and no time limit on when they can use their bonus.
The government intends the Help to Buy ISA scheme to be available from autumn 2015 and investors will be able to open a Help to Buy ISA for a period of four years.
Internet link: GOV.UK factsheet
Pension freedoms for those with annuities
The Chancellor has announced a new flexibility for people who have already purchased an annuity. From April 2016, the government will remove the restrictions on buying and selling existing annuities to allow pensioners to sell the income they receive from their annuity for a capital sum.
Individuals will then have the freedom to take that capital as a lump sum, or place it into drawdown to use the proceeds more gradually.
Income tax at the individual’s marginal rate will be payable in the year of access to the proceeds.
The proposal will not give the annuity holder the right to sell their annuity back to their original provider. The government has begun a consultation on the measures that are needed to establish a market to buy and sell annuities and who should be permitted to purchase the annuity income.
The government recognises that for most people retaining their annuity will be the right choice. However, individuals may want to sell an annuity, for instance to pay off debts or to purchase a more flexible pension income product.
We will keep you informed of developments.
Internet link: GOV.UK News
National Minimum Wage rises
The National Minimum Wage (NMW) is a minimum amount per hour that most workers in the UK are entitled to be paid. NMW rates increases come into effect on 1 October 2015:
From 1 October 2015:
- the adult rate will increase by 20 pence to £6.70 per hour
- the rate for 18 to 20 year olds will increase by 17 pence to £5.30 per hour
- the rate for 16 to 17 year olds will increase by 8 pence to £3.87 per hour
- the apprentice rate will increase by 57 pence to £3.30 per hour
Penalties
Penalties may be levied on employers where HMRC believe underpayments have occurred and HMRC ‘name and shame’ non-compliant employers.
If you have any queries on the NMW please get in touch.
Internet links: GOV.UK News
Tax Diary April/May 2015
Tuesday, April 7th, 20151 April 2015 – Due date for Corporation Tax due for the year ended 30 June 2014.
19 April 2015 – PAYE and NIC deductions due for month ended 5 April 2015. (If you pay your tax electronically the due date is 22 April 2015.)
19 April 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 April 2015.
19 April 2015 – CIS tax deducted for the month ended 5 April 2015 is payable by today.
1 May 2015 – Due date for Corporation Tax due for the year ended 31 July 2014.
19 May 2015 – PAYE and NIC deductions due for month ended 5 May 2015. (If you pay your tax electronically the due date is 22 May 2015.)
19 May 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2015.
19 May 2015 – CIS tax deducted for the month ended 5 May 2015 is payable by today.
31 May 2015 – Ensure all employees have been given their P60s for the 2014-15 tax year.
Significant increase in NMW from October 2015
Tuesday, April 7th, 2015The National Minimum Wage rates from 1 October 2015, as recommended by the Low Pay Commission. (LPC) will be:
- a 20p (3%) increase in the adult rate (from £6.50 to £6.70 per hour)
- a 17p (3%) increase in the rate for 18 to 20 year olds (from £5.13 to £5.30 per hour)
- an 8p (2%) increase in the rate for 16 to 17 year olds (from £3.79 to £3.87 per hour)
The National Minimum Wage rate for apprentices will increase by 57p (20%) from £2.73 to £3.30 per hour. The LPC recommended an increase of 2.6% to £2.80 in the apprentice rate.
The Government is also putting employers in control of the funding for apprenticeships by introducing a new digital apprenticeship voucher. Vouchers can be used to reduce or eliminate training costs with appropriate providers.
Apprenticeship vouchers will further simplify things for employers and give them the purchasing power to fund apprenticeship training.
The employer would register their details on a system being developed by the Skills Funding Agency including their type of business, the details of the apprentice and the apprenticeship standard being signed up to. The discounted rate, which could be up to 100% for 16 to 18 year olds, at which employers can purchase training, would be calculated and the employer would be able to pass on the voucher code to the provider that is delivering the training. The provider would then reclaim the value of the voucher from the Skills Funding Agency.
Pension’s flexibility a word of caution
Tuesday, April 7th, 2015The new flexibility, that certain pension pot holders can avail themselves from 6 April 2015, offers more opportunity regarding the funds they have saved. Once you reach minimum pension age, normally 55, you will be able to:
- leave your pension fund invested, no change;
- enter drawdown, thereby taking some of your money whilst leaving the rest where it is;
- withdraw cash in one or a number of lump sums;
- purchase an annuity;
- go with a combination of all of the above;
- or take your entire pension pot in one go.
Additionally, from April 2016, people who already have an annuity will be able to effectively sell it on, so that they too can benefit from the pension freedoms announced at last year’s Budget.
Currently, people who have bought an annuity are unable to sell it without having to pay at least 55% tax on the proceeds of the sale. From April 2016, the tax rules will change so that people who already have income from an annuity can sell that when they choose and will pay their usual rate of tax they pay on income, instead of 55%.
With so many options to choose from, and a variety of tax traps to avoid, there has never been a more compelling time to seek professional advice BEFORE you make any decisions.
Savings boost
Tuesday, April 7th, 2015There were a number of changes to promote savings in the Budget. The main changes are set out below:
- Help to Buy ISA
From autumn 2015, a new ISA is being launched that will enable first time buyers to save for their deposit. An initial deposit of £1,000 is allowed with additional monthly savings of up to £200.
The Government will top up these savings by 25% up to a maximum of £3,000 (when deposits by the saver reach £12,000).
The bonus can only be put towards a first time buy of up to £450,000 in London or £250,000 elsewhere.
- ISA flexibility
From autumn 2015, ISA savers will be able to withdraw and replace money from their ISAs without using up their ISA subscription limit.
- Personal savings allowance
From April 2016, basic rate taxpayers will not have to pay tax on the first £1,000 of interest received on savings, and higher rate (40%) taxpayers will not have to pay tax on the first £500 of interest received. The allowance will not be available to additional rate (45%) income taxpayers.
- Premium Bonds investment limit
This limit is increased from £30,000 to £50,000 on 1 June 2015.
Goodbye tax returns, hello digital accounts
Tuesday, April 7th, 2015In an effort to streamline and simplify the administration of the Self Assessment tax system HMRC is planning to open digital accounts for fifty million taxpayers by 2020. When completed, these taxpayers will no longer be required to submit Self Assessment tax returns to HMRC.
Instead, HMRC will gather information from employers, pension providers, banks and building societies, and automatically post data regarding salaries, benefits, pensions and investment income to the digital accounts.
It is still not clear how information regarding property income, capital gains, business profits and other chargeable income or gains will be gathered by HMRC, although it has been mooted that it will be possible to link business accounting software with the digital accounts by 2020.
This is a radical shift from the present “gathering and filing” processes that presently places the responsibility for the make-up and lodgement of Self Assessment data on the taxpayer. In some respects it harks back to the days prior to Self Assessment when HMRC used to issue assessments to taxpayers, who were then obliged to check the numbers.
Information published so far by HMRC indicates that:
- Taxpayers, and their agents, will be able to access their digital accounts to make real time changes to data and pay their tax.
- Fifteen million taxpayers will be set up with digital accounts as early as 2016 with the remainder given access to their digital accounts by 2020.
More details are needed in order to assess the impact of these changes and HMRC have advised they will publish this later this year.
It will be interesting to see how the change will impact associated issues such as late filing penalties. Hopefully, HMRC will abandon these charges for taxpayers where little or no tax is due.
The Government will also need to consider digital exclusion: how are they going to accommodate taxpayers who cannot easily access the internet for various reasons?
Some of the Budget changes March 2015
Thursday, April 2nd, 2015Following last week’s Budget, the government has published the Finance Bill 2015. The bill implements tax changes announced at Budget 2014, Autumn Statement 2014 and Budget 2015.
It includes action by the government to support hardworking families keep more of their hard-earned money by:
- increasing the personal allowance by an extra £400 to £11,000 from April 2017 so that a typical rate taxpayer will be £905 better off compared to 2010, and an individual on the National Minimum Wage working up to 30 hours a week will not pay any income tax
- exempting children from Air Passenger Duty so that, taken together with measures introduced in Finance Act 2014, a family of four flying to Australia will save £194
The bill also contains key policies to make the UK more competitive for business, such as:
- supporting investment in the crucial UK oil and gas industry through cutting the Supplementary Charge by 12%, cutting the Petroleum Revenue Tax from 50% to 35% and introducing two new allowances
- increasing the tax credits available for large and small businesses investing in research and development
- a new tax relief to promote the production of children’s TV in the UK, and further support for high-end TV and film tax.
Finally, the bill legislates to create a fairer tax system, by clamping down on tax avoidance and ensuring that banks contribute their fair share. This includes:
- introducing a new Diverted Profits Tax of 25%, aimed at multi-national companies that artificially shift their profits offshore to avoid paying UK tax
- putting a stop to unfair tax avoidance – raising nearly £2.5 billion by 2019/20 to support the economic recovery
- increasing the bank levy and introducing new rules for banks – raising nearly £8 billion over the next 5 years
David Gauke, Financial Secretary to the Treasury, said:
The government is committed to supporting hardworking families and backing business. That is why we are making it easier for them to keep more of their hard earned money and access the help they need to grow.
The legislation published today builds on our efforts to create a stable tax system that supports our long-term economic plan.”
The measures contained in the bill were announced by the Chancellor at Budget 2014, Autumn Statement 2014 or Budget 2015.
