Archive for August, 2016

Good news for exporters

Thursday, August 4th, 2016

The UK’s 5 major high street banks have signed up to work with the new Department for International Trade to revolutionise the way businesses access international markets.

Barclays, HSBC, Lloyds, NatWest and Santander are getting behind the government’s drive to populate a new and unique Directory of Exporters. The Directory will link UK companies with contacts from around the world. Potential customers and buyers from global markets will be able to search for companies from across the whole of the UK which are ready to supply the products, services and skills they need.

The directory heralds an incredible opportunity for the UK economy and is part of wider government plans for a more digital service that will provide a world-leading platform for British businesses and the UK economy. The government and banks see this unique collaboration as the critical first stage in creating a ground-breaking service, aiming to make the UK the easiest place in the world from which to start exporting. Further details of the service will be revealed as the offer develops in advance of its launch in November 2016.

Business customers of the 5 banks will be encouraged to join the directory and take advantage of this exciting opportunity to promote themselves in lucrative global markets.

Announcing the partnership at an event in London on the 21 July, Secretary of State for International Trade, Dr Liam Fox, said:

“The new Department for International Trade is perfectly placed to bring together the whole of government, industry and our extensive overseas network to help UK businesses win lucrative deals. We want to help UK businesses scale up and take advantage of the global appetite for British goods and services, as well as to demonstrate that there has never been a better time for international companies to partner with UK suppliers.

The first of its kind, this directory will deliver a unique and new route to global markets, promoting British goods and services on an unprecedented scale. With this kind of creativity and collaborative working between government and industry, I’m confident that we can make the whole of the UK a beacon for open trade around the world.”

Tax free Childcare

Wednesday, August 3rd, 2016

This new scheme will be rolled out to parents next year. The scheme will be made available gradually to families, with parents of the youngest children able to apply first. You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017.

 

In the meantime, HMRC are gearing up to advise childcare providers to register to use the scheme.

 

The top ten things that parents should know about Tax-free Childcare have recently been updated and are reproduced below:

 

1.      You’ll be able to open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be done through the government website, GOV.UK.

 

2.      For every 80p you or someone else pays in, the government will top up an extra 20p. This is equivalent of the tax most people pay – 20% – which gives the scheme its name, ‘tax-free’. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).

 

3.      The scheme will be available for children up to the age of 12. It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.

 

4.      To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year.

 

5.      Any eligible working family can use the Tax-Free Childcare scheme – it doesn’t rely on employers.

 

6.      The scheme will also be available for parents who are self-employed. Self-employed parents will be able to get support with childcare costs in Tax-Free Childcare, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents. To support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the minimum income level.

 

7.      If you currently receive Employer-Supported Childcare then you can continue to do so; you do not have to switch to Tax-Free However, Tax-Free Childcare will be open to more than twice as many parents as Employer-Supported Childcare.

 

8.      Parents and others can pay money into their childcare account as and when they like. This gives you the flexibility to pay in more in some months, and less at other times. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays. It’s also not just the parents who can pay into the account – if grandparents, other family members or employers want to pay in, then they can.

 

9.      The process will be as simple as possible for parents. A bespoke online process will be provided.

 

10.  You’ll be able to withdraw money from the account if your circumstances change or you no longer want to pay into the account. If you do make withdrawals, the government will withdraw its corresponding contribution.

Tax Diary August/September 2016

Tuesday, August 2nd, 2016

1 August 2016 – Due date for Corporation Tax due for the year ended 31 October 2015.

19 August 2016 – PAYE and NIC deductions due for month ended 5 August 2016. (If you pay your tax electronically the due date is 22 August 2016.)

19 August 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2016.

19 August 2016 – CIS tax deducted for the month ended 5 August 2016 is payable by today.

1 September 2016 – Due date for Corporation Tax due for the year ended 30 November 2015.

19 September 2016 – PAYE and NIC deductions due for month ended 5 September 2016. (If you pay your tax electronically the due date is 22 September 2016.)

19 September 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2016.

19 September 2016 – CIS tax deducted for the month ended 5 September 2016 is payable by today.

Where there is a Will

Tuesday, August 2nd, 2016

If you leave your entire estate to charities, will you be turning in your grave if disinherited relatives mount a challenge to break your last will and testament, and succeed?

In a 2015 case heard by the Court of Appeal, a disinherited daughter challenged her deceased mother’s Will.

The background to the case is illuminating. The daughter had not been in touch with her mother since she left home at age 17, some 26 years prior to her mother’s death. The mother had made no provision for her daughter in her Will and left the majority of her estate to animal charities.

Aggrieved, the daughter brought a claim under the Inheritance (Provision for Family and Dependents) Act 1975. After many court appearances and appeals, the Court of Appeal has ruled that the daughter is entitled to share in approximately a third of her mother’s estate. It should also be pointed out that the daughter’s financial circumstances were somewhat straitened.

The charities that stand to lose out in this process are making a further appeal to the Supreme Court…

The Courts, therefore, have the power to over-rule the testamentary wishes of a deceased person if it feels that the needs of relatives prevail over and above the needs of non-related beneficiaries.

Buy-to-let landlords action required

Tuesday, August 2nd, 2016

Buy-to-let landlords need to start considering their options, in particular, those who have borrowed heavily in order to build their property portfolio.

As we have mentioned previously in this newsletter, from April 2017 deductions for finance charges will be progressively reduced and replaced by a 20% tax credit. This will promote a number of landlords into the higher rates of Income Tax and increase most buy-to-let landlords’ tax bills where annual finance charges are significant.

Consider Jane. She has purchased a number of buy-to-let properties and her total rental income is £120,000 a year. Her expenses, excluding mortgage and loan interest are £15,000 and her mortgage interest £85,000. Jane has no other income.

Her Income Tax bill for 2016-17, based on these figures, is estimated to be £1,800 leaving her with disposable income from her property business of £18,200.

With no changes in her rents and expenses her Income Tax bill will gradually increase until 2020-21 (when the changes to tax relief on finance charges are fully implemented). Her tax bill for 2020-21 will increase to £13,500, leaving Jane with a much reduced disposable income of £6,500.

Landlords affected need to start to consider their options now. There are a number of practical changes that could be made. For example, Jane could:

·         increase rents,

·         introduce savings to repay loans and therefore reduce interest charges,

·         dispose of properties that are not pregnant with capital gains.

If you have borrowed heavily in order to build your buy-to-let business, better to consider your options now than to be forced into less effective restructuring as the transitional period progresses.

A new broom

Tuesday, August 2nd, 2016

Philip Hammond has been appointed Chancellor of the Exchequer as George Osborne returns to the backbenches.

Mr Hammond has already confirmed that there will be no emergency budget, and he will be presenting the usual Autumn Statement later in the year and a new Finance Bill March 2017.

The immediate impact for UK tax payers is therefore business as usual. The Finance Bill 2016 will continue its progress towards Royal Assent and we will continue to offer advice to clients based on current legislation.

The press, of course, are speculating on the options that Mr Hammond has when he does turn his mind to the Finance Bill 2017. These include a deferral in the introduction of tax changes for non-doms, a possible reduction in Corporation Tax rates to encourage businesses to stay in the UK (rates as low as 12% have been mooted), and other measures to encourage savings and investment.