Archive for April, 2016

Companies to be liable for employees who facilitate tax cheating

Thursday, April 28th, 2016

The UK will bring forward plans to introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion, the Prime Minister has announced in a statement to the Commons, ahead of next month’s summit to tackle corruption in all its forms.

For the first time, companies will be held criminally liable if they fail to stop their employees from facilitating tax evasion. At the March 2015 Budget the Chancellor said the government would be delivering on its pledge to introduce the measure in this Parliament. The Prime Minister has confirmed that the offence will be introduced in legislation this year.

The move is part of the government’s efforts to clamp down on corruption in all walks of life. The government has already confirmed plans to create a cross-agency taskforce to investigate all evidence of illegality that has emerged from the so-called ‘Panama Papers’.

Prime Minister David Cameron said:

This government has done more than any other to take action against corruption in all its forms, but we will go further.

That is why we will legislate this year to hold companies who fail to stop their employees facilitating tax evasion criminally liable.

On 12 May, the Prime Minister will host the London Anti-Corruption Summit aimed at stepping up global action to expose, punish and drive out corruption in all walks of life.

The summit will seek to galvanise a global response to tackle corruption. As well as agreeing a package of actions to tackle corruption across the board, it will deal with issues including corporate secrecy, government transparency, the enforcement of international anti-corruption laws and the strengthening of international institutions.

It will be the first summit of its kind, bringing together world leaders, business and civil society to agree a package of practical steps to:

  • expose corruption so there is nowhere to hide
  • punish the perpetrators and support those affected by corruption
  • drive out the culture of corruption wherever it exists

Tax credit renewals online

Tuesday, April 26th, 2016

 HM Revenue and Customs (HMRC) is urging people to renew their tax credits claim online and early before the 31 July deadline.

When claimants renew their claim, they must tell HMRC about any changes to their circumstances that they haven’t already reported, including changes to working hours, childcare costs or income. Once people receive their renewal pack, these changes can be reported through the GOV.UK website.

The online service proved very popular in 2015, with more than 750,000 people renewing online and around 90% of people using it saying they were happy with the service. It only takes around six minutes to renew online, depending on circumstances.

There is also a special team to support the most vulnerable customers who cannot go online. People who we know need special support will be proactively contacted by our customer support teams.

Nick Lodge, HMRC’s Director General, Benefits and Credits, said:

“Our online service means that you can renew at any time of the day or night, and on any device, without having to call us. Online help can also answer most queries you may have and a web chat facility will be available to support people renewing online. We urge everyone who can to go online.

“Our customers should check their details and renew early to ensure they get the right money. The sooner people renew their claim, the sooner we can check payments are correct, meaning we avoid paying too little money, or too much, which claimants then have to pay back.”

Online help and information on renewing tax credits is available on GOV.UK and via HMRC’s customer service Twitter feed @HMRCcustomers. Support is also available through the tax credits helpline.

HMRC has begun sending tax credits renewal packs to approximately 5.9 million households around the country. The packs are sent out from April to June.

The deadline for people to renew their tax credits is 31 July 2016. Failure to renew before the deadline will mean payments are stopped and they may have to repay the money they have received since April.

Business investment and the annual investment allowance

Tuesday, April 26th, 2016

The AIA allows businesses to write off the full cost of qualifying expenditure and in recent years the amount allowed as a deduction for tax purposes has fluctuated wildly.

From January 2016, the annual limit for AIA expenditure has been set at a new permanent limit of £200,000. Accordingly, this is the amount that can be claimed for 2016-17.

AIA is generally available on a purchase of plant and machinery that can include:

  • Fixtures and integral features
  • The alteration of land for the purpose only of installing plant or machinery
  • Vans, lorries and motorcycles

Expenditure that would not qualify for AIA includes:

  • Motor cars
  • Expenditure which would not qualify for capital allowances such as on buildings or structures.
  • Plant and machinery which was originally used for another purpose, for example, items owned personally which are subsequently introduced into the taxpayer’s business.
  • Plant and machinery acquired in the final period of business before the cessation of trade.

Also, AIA is not available to:

  • Sole traders or partners using cash accounting as from 6 April 2013 as this has modified rules in respect of deductions for plant and machinery.
  • A partnership with a corporate partner which could be a company or an LLP.

This remains a generous tax allowance, as the full cost of qualifying purchases can be written off against trading profits before calculating any tax due.

Business owners should be advised that a claim for AIA in the final period of trading prior to cessation of trade would not be allowed.

Tax on savings

Tuesday, April 19th, 2016

From 6 April 2016, if you’re a basic rate taxpayer you’ll be able to earn up to £1,000 in savings income tax-free. Higher rate taxpayers will be able to earn up to £500. This is called the Personal Savings Allowance.

Banks and building societies will no longer deduct tax from the interest they pay you.

What counts as savings income?

Savings income includes account interest from:

  • bank and building society accounts
  • accounts with providers like credit unions or National Savings and Investments

It also includes:

  • interest distributions (but not dividend distributions) from authorised unit trusts, open-ended investment companies and investment trusts
  • income from government or company bonds
  • most types of purchased life annuity payments

Interest from Individual Savings Accounts (ISAs) doesn’t count towards your Personal Savings Allowance because it’s already tax-free.

If your taxable income is less than £17,000

If your total taxable income is less than £17,000 you won’t pay tax on any savings income.

How much your Personal Savings Allowance will be

The amount of your Personal Savings Allowance depends on your adjusted net income.

The table shows your allowance from 6 April 2016, depending on whether you’re a basic, higher or additional rate taxpayer.

 

Tax rate

Income band (adjusted net income)

Personal Savings Allowance

Basic 20%

Up to £43,000

Up to £1,000 in savings income is tax-free

Higher 40%

£43,001 – £150,000

Up to £500 in savings income is tax-free

Additional 45%

Over £150,000

No Personal Savings Allowance

 

The Panama Papers

Friday, April 15th, 2016

HMRC has responded to the significant leak of information on the activities of individuals and companies that have availed themselves of the offshore advantages of using Panama as a tax haven.

 We have reproduced below part of their response:

Jennie Granger, Director General of Enforcement and Compliance, HM Revenue and Customs, said:

“HMRC is committed to exposing and acting on financial wrongdoing and we relentlessly pursue tax evaders to ensure that they pay every penny of taxes and fines they owe.

HMRC can confirm that we have already received a great deal of information on offshore companies, including in Panama, from a wide range of sources, which is currently the subject of intensive investigation. We have asked the ICIJ to share the leaked data that they have obtained with us. We will closely examine this data and will act on it swiftly and appropriately.

We have brought in more than £2 billion from offshore tax evaders since 2010 and the Government has repeatedly strengthened our powers and resources with new criminal offences and higher penalties, so we can take even tougher action against the minority who try to cheat the honest majority by hiding their money in offshore tax havens.

Our message is clear: there are no safe havens for tax evaders and no-one should be in any doubt that the days of hiding money offshore are gone. The dishonest minority, who can most afford it, must pay their legal share of tax, like the honest majority already does.”

It’s business as usual here at Slaters & Co

Thursday, April 14th, 2016

We recently communicated the next stage in the development of the practice, but be assured it’s business as usual here at Slaters & Co.

Delivering the highest standards of service to our clients is, and will always, remain our number one priority.  However we recently communicated that due to the growth of the Practice we identified the need to change the management structure so that we can continue to develop and deliver the highest standards of service to all our clients.

So what’s changing?

Simon Barratt will be assuming responsibility for the day to day management of the Practice, which was previously the role of Steve Slater.  Simon will be working alongside another senior team member, Mark Plant to ensure the Practice continues to operate efficiently and effectively with the best interests of our clients, at heart.

Steve Slater’s role will become one of consultancy and support over an extended period, which is part of a structured withdrawal from the Practice.

Both Simon and Mark will continue to be supported by the wonderful team of staff that all our clients will already be familiar with.  Click here to meet our team

Business as usual..

Although these minor changes within the management structure are taking place we are keen to assure all of our clients that fundamentally these changes will have little, if any, impact on the service that is already provided by the team.

Introducing Simon

Simon BarrattSimon recently joined the Slaters team, having previously worked at another local firm for over 27 years, 24 years of which was as Practice Manager.

He has in excess of  30 years accountancy practice experience and is confident that together with the excellent team already in place, Slaters & Co can continue to meet and indeed exceed the expectations of our clients.

Simon commented:

“I wish to reassure all of our existing clients of my commitment to ensuring that they continue to receive the same high level of service they have come to expect to and from Slaters.  Backed by the Practices’ core values, we will always act for you in a professional and friendly manner. 

Steve Slater is of course a hard act to follow but he will be around for some considerable time in order to pass on his extensive and invaluable knowledge to ensure a smooth transition going forward.”

 

 

 

Farmers new tax break

Thursday, April 14th, 2016

From 6 April 2016, farmers trading as sole traders or in partnership will be able to claim for an extended form of the popular “averaging” provisions.

Under the new rules, initially announced in the 2015 Budget, farmers will be able to average their profits for Income Tax purposes from the present two years to an additional five years’ option. This is a welcome change. Farming profits can vary wildly from year to year, dependent not only on the fickle British weather, but also global commodity prices.

On this topic, the Environment Secretary Elizabeth Truss said:

“Food and farming is already a vital part of the UK economy, generating £100 billion and supporting one in eight jobs. Our ambition is to make the industry a world leader, turbo-charged by talent, skills and innovation so it can capitalise on the growing demand for, and excellent reputation of, British produce.

Managing risk at a time of severe price volatility is vital. By remaining in the EU we avoid years of complication and uncertainty and can help build greater resilience in the supply chain.

Having a tax system that accommodates the realities faced by farmers in a way that is simple to understand and use will also give farmers a vital tool to thrive in the face of volatility.

Chancellor George Osborne said:

“A resilient and thriving food and farming industry is fundamental to the success of the UK economy. This government recognises the challenges our farmers face from volatile markets and we are absolutely committed to supporting them.

Today’s reforms will provide farmers with additional security to plan and invest for the future, allowing them to spread profits over a longer period of time. Over 29,000 farmers can benefit from the changes, saving an average of £950 a year.

The fairer tax system for famers is among a number of reforms to taxes, National Insurance allowances and others measures coming into effect today to back hard work, support savers and economic security at every stage of life.”

As well as having the new option to average tax over five years, farmers will also retain the choice to average profits over two years.

The dual option, announced in December, follows industry feedback in consultation. It was felt that the two-year option was well understood and had provided significant relief to farmers dealing with financial pressures, and should be retained.

Lifetime ISA

Monday, April 11th, 2016

A new Lifetime ISA will be available from April 2017 for adults under the age of 40. Individuals will be able to contribute up to £4,000 per year and receive a 25% bonus from the government. Funds, including the government bonus, can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from age 60 completely tax-free.

Further details of the new account, which will be available from 2017, are as follows:

  • Any savings an individual puts into the account before their 50th birthday will receive an added 25% bonus from the government.
  • There is no maximum monthly contribution and up to £4,000 a year can be saved into a Lifetime ISA.
  • The savings and bonus can be used towards a deposit on a first home worth up to £450,000 across the country.
  • Accounts are limited to one per person rather than one per home, so two first time buyers can both receive a bonus when buying together.
  • Where an individual already has a Help to Buy ISA they will be able to transfer those savings into the Lifetime ISA in 2017, or continue saving into both. However only the bonus from one account can be used to buy a house.
  • Where the funds are withdrawn at any time before the account holder is aged 60 they will lose the government bonus (and any interest or growth on this) and will also have to pay a 5% charge. After the account holder’s 60th birthday they will be able to take all the savings tax-free.

The Chancellor said in his speech:

‘My pension reforms have always been about giving people more freedom and more choice.

So faced with the truth that young people aren’t saving enough, I am today providing a different answer to the same problem.’

Internet link: GOV.UK lifetime-isa-explained

Capital gains tax rates

Monday, April 11th, 2016

The current rates of capital gains tax (CGT) are 18% to the extent that total taxable income does not exceed the basic rate band and 28% thereafter.

The government is to reduce the higher rate of CGT from 28% to 20% and the basic rate from 18% to 10%. The trust CGT rate will also reduce from 28% to 20%.

The 28% and 18% rates will continue to apply for carried interest and for chargeable gains on residential property that do not qualify for private residence relief. In addition, the 28% rate still applies for ATED related chargeable gains accruing to any person (principally companies).

These changes will take effect for disposals made on or after 6 April 2016.

The rate for disposals qualifying for Entrepreneurs’ Relief (ER) remains at 10% with a lifetime limit of £10 million for each individual.

Personal service companies in the public sector

Monday, April 11th, 2016

From April 2017, individuals working through their own company in the public sector will no longer be responsible for deciding whether the intermediaries legislation applies and then paying the relevant tax and NIC. This responsibility will instead pass to the public sector employer, agency or third party that pays the worker’s intermediary. The employer, agency or third party will have to decide if the rules apply to a contract and if so, account for and pay the liabilities through the Real Time Information (RTI) system and deduct the relevant tax and NIC.

HMRC has announced they will will provide help for public sector employers and agencies with their new responsibilities. They plan to introduce clear, objective tests for employers to use to decide at the point of hire whether or not they need to consider the new rules and then identify those engagements that are caught by the rules.

For cases that are less clear cut, HMRC have announced that they will develop a simple digital tool. This will be designed to provide employers engaging an incorporated worker with a ‘real-time’ HMRC view on whether or not the intermediaries rules need to be applied.

Chris Bryce, Chief Executive of the Association of Independent Professionals and the Self Employed (IPSE), commented:

‘The Chancellor announced a number of measures today which are likely to impact independent professionals and the self-employed. His move to extend rules for off-payroll working in the public sector will create confusion and disruption. The engaging department or agency will be made responsible for any tax liability. This will result in genuine businesses having to jump through numerous hoops and will see the cost of engaging contractors increase. It will endanger the delivery of vital public services and important projects like HS2.’

Internet link: HMRC Off payroll working