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April – Monthly Round Up

Tuesday, April 7th, 2015

Budget 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

This entry was posted on Tuesday, April 7th, 2015 at 9:00 am by Slaters and is filed under Accounts - General, Accounts preparation, Bookkeeping, Budget, Business planning, Company Tax, HMRC, Management accounts, Pension, Personal Pension, Personal Planning, RTI, Tax, Tax planning, Tax relief, VAT. You can follow any responses to this entry through the RSS 2.0 feed.

Some of the Budget changes March 2015

Thursday, April 2nd, 2015

Following 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.

This entry was posted on Thursday, April 2nd, 2015 at 12:00 am by Slaters and is filed under Budget, Company Tax, HMRC, Management accounts, Pension, Personal Planning, Property, Tax, Tax planning, Tax relief, VAT. You can follow any responses to this entry through the RSS 2.0 feed.

Banks to stop taking tax on interest paid

Tuesday, March 31st, 2015

From 6 April 2015 you won’t have to pay tax on interest received if your total income is less than £15,600.

As part of a wider relaxation for savers, the recent Budget pledged to introduce a Personal Savings Allowance (PSA) from 6 April 2016. The main features of the new PSA are:

  1. If your taxable income is less than £42,700 the first £1,000 of your savings income will not be taxed.
  2. If your taxable income is between £42,701 and £150,000 a year the first £500 of your savings income will not be taxed.
  3. If your taxable income is over £150,000 a year you will not be eligible to claim the PAS and all your savings income (interest received) will be taxed.

At present, the banks (including building societies) deduct tax at 20% before they credit you with interest paid on your savings. In order to accommodate the new PAS, from 6 April 2016 these deductions will cease and interest will be paid gross, without deduction of tax.

Savers in receipt of significant interest receipts, and those paying income tax at the 40% or 45% rates, should take care to reserve part of their interest received to cover any income tax due; otherwise, what you receive from the banks after 6 April 2016 may create unexpected and unwelcome income bills…

This entry was posted on Tuesday, March 31st, 2015 at 12:00 am by Slaters and is filed under Accounts - General, Budget, Company Tax, Personal Tax, Tax, Tax planning, Tax relief. You can follow any responses to this entry through the RSS 2.0 feed.

Budget Statement 18 March 2015

Thursday, March 19th, 2015

 Personal Tax and miscellaneous matters

 Personal Tax allowance

The personal allowance for those born after 5 April 1948 will be increased to:

  • For 2015-16 – £10,600
  • For 2016-17 – £10,800
  • For 2017-18 – £11,000

From 2016-17, there will be one Income Tax personal allowance regardless of an individual’s date of birth.

 Income Tax rate bands

There was significant press commentary prior to the Budget predicting an increase in the threshold at which tax payers are liable to the 40% Income Tax rate. The declared higher rate thresholds are:

  • For 2015-16 – £42,285
  • For 2016-17 – £42,700
  • For 2017-18 – £43,300

If your income before allowances exceeds these amounts you will be paying 40% Income Tax on the excess (this assumes that you are only entitled to the basic personal allowance).

The threshold at which the 45% rate starts is unchanged at £150,000.

There were no changes to the basic Income Tax rate (20%), the higher rate (40%) and the additional rate (45%).

 Personal savings allowance (PSA)

From 6 April 2016, a PSA will apply to provide exemption of up to £1,000 of a basic rate taxpayer’s savings income, and up to £500 of a higher rate taxpayer’s savings income. The PSA will not be available to additional rate (45%) Income Tax payers.

These benefits will be in addition to the tax advantages offered from ISAs.

 Annuity flexibility

From April 2016 people who are drawing an annuity will be able to sell that income to a third party for a capital sum. The change will allow annuity holders to sell their annuities without punitive tax penalties of up to 70%.

To prepare for this flexibility the Government has published a consultation to develop a secondary market in annuities.

 Pension’s lifetime allowance

From 6 April 2016 the pension’s lifetime allowance will be reduced to £1m (currently £1.25m).

 Trivial benefits in kind

From 6 April 2015 employee benefits costing £50 or less will be exempt for tax purposes.  An annual cap of £300 (of combined trivial benefits) will apply to office holders of close (smaller) companies and family members of those office holders.

From the same date the £8,500 threshold for benefits in kind is abolished.

 Working tax credits (WTCs)

In order to tighten the eligibility conditions for those claiming WTCs based on their status as a self-employed person, it will be necessary for claimants to demonstrate that their business is viable, or is working towards viability. The test will mirror the principles already set out in tax case law.

 Excise duties

Alcohol duty is being reduced from 23 March 2015. This reduction will amount to:

  • 1p off a typical pint of beer
  • 18p off a typical bottle of spirits
  • 1p off a typical litre of cider

The duty rates on wine not exceeding 22% abv, and sparkling cider of a strength not exceeding 5.5% abv, have been frozen.

 Tobacco duty rates

Duties are increased by 2% above the rate of inflation. The price of a pack of 20 cigarettes will increase by 16p.

 Vehicle excise duty 2015-16

Rates for cars, vans and motorcycles will increase in line with the Retail Prices Index.

Rates for heavy goods vehicles will be frozen.

 Transferrable allowances

From April 2015 a spouse or civil partner, who is not a taxpayer, or who does not pay tax above the basic rate, will be entitled to transfer up to £1,060 of their personal allowance to their spouse or civil partner. This will not advantage higher rate tax payers as the recipient of the transfer cannot be subject to tax at higher than the basic rate. This could result in a saving of up to £212 for the recipient (20% of £1,060 in 2015-16). The limit will increase to £1,080 in 2016-17 and £1,100 in 2017-18.

Business Tax

 Corporation Tax rate

The main rate of Corporation Tax from 1 April 2015 is 20%. The main rate and small company rate will be the same from this date dispensing with the need for marginal rate calculations.

 National Insurance for under 21s partially abolished

From 6 April 2015 employers with employees under 21 years old will no longer have to pay Class 1 Secondary National Insurance Contributions (NICs) on earnings up to the Upper Secondary Threshold (UST) for those employees.

The zero rate won’t apply to Class 1A or Class 1B NICs. Class 1 Secondary NICs will apply if the employee is earning above the UST.

 Capital Gains Tax – Entrepreneurs’ Relief (ER)

Where this relief is linked to the disposal of privately held assets used in a business, to qualify for ER the disposal of these assets must be linked to a significant material disposal of the business. This is defined as at least a 5% shareholding in a company or of a 5% share in the assets of the partnership carrying on the business.

Legislation is also being introduced to prevent claims for ER in respect of gains on shares in certain companies that invest in joint venture companies, or which are members of partnerships. This new provision will deny relief where the investing company has no trade of its own.

Both these changes apply from 18 March 2015.

 Entrepreneurs’ Relief on disposal of goodwill

ER is denied in respect of gains on business goodwill where the goodwill has been disposed of to a limited company which is related to the claimant. This change was introduced 3 December 2014 following the Autumn Statement.

Following consultation, the legislation has been amended to allow ER to be claimed if the partners in a firm do not hold or acquire any stake in the successor company.

 Capital Gains Tax – wasting assets exemption

From April 2015, the exemption for wasting assets will only be available where the qualifying assets have been used in the seller’s own business.

 Van benefits for zero emission vans

From 2020-21 there will be a single benefit charge applying to all vans. This compares with the current £nil rate. The transitional steps will be:

  • 2015-16 – 20%
  • 2016-17 – 40%
  • 2017-18 – 60%
  • 2018-19 – 80%
  • 2019-20 – 90%
  • 2020-21 a single rate will apply with no reduction for zero emission vans.

 Farmer’s averaging of profits

It is proposed that farmers will be able to average results for Income Tax purposes for up to 5 years, presently only 2 years, from April 2016.

  Flood defence relief

Contributions made by companies and unincorporated businesses after 1 January 2015, to flood relief partnership funding schemes, will be deductible for both Corporation Tax and Income Tax purposes. The relief will apply to monetary contributions and for the cost of contributed services.

 Landlord’s energy saving allowance (LESA)

LESA will not be extended beyond 31 March 2015, for corporate landlords, and 5 April 2015 for unincorporated landlords of let residential property.

 Bank loss relief restriction

The proportion of a bank’s annual profits that can be offset by carried forward losses is to be restricted to 50%. Following consultations an allowance of £25m will be included for groups headed by a Building Society.

 Banks’ compensation payments

Although no date was set for its implementation, the Government will consult on making customer compensation payments non-deductible for Corporation Tax purposes.

 Bank levy rate increase

The bank levy is to be increased to 0.21% from 1 April 2015.

 Film, orchestra and television tax relief changes

 

  1. High-end television tax relief: the minimum UK spend requirement reduced from 25% to 10%. Changes to the cultural test will also be made to bring them into line with similar changes to the film cultural test.
  2. Children’s television tax relief: from 1 April 2015 producers of children’s television programmes, including game shows and competitions, will be able to benefit from tax relief.
  3. Film tax relief: payable tax credits to increase to 25% for all films from 1 April 2015.
  4. A new tax relief will be introduced for orchestras from 1 April 2016.

 

VAT registration and deregistration limits

From 1 April 2015:

  • Registration threshold increased from £81,000 to £82,000
  • Deregistration threshold increased from £79,000 to £80,000

 VAT refunds for charities

From 1 April 2015 charities that provide palliative care will be able to obtain a refund of the VAT they incur in providing these services and also in relation to their non-business activities.

A similar scheme will be introduced for “blood-bike” charities to enable them to recover the VAT incurred on the purchase of goods and services.

 Gift Aid Small Donations Scheme

From 6 April 2016 the maximum amount that can be claimed through the scheme will be increased to £8,000. This will allow Charities and Community Amateur Sports Clubs to claim a Gift Aid top up payment of up to £2,000 a year.

Savers and investors

 

ISAs – increased flexibility

Regulations will be introduced in autumn 2015 to enable savers to withdraw and replace money in their cash ISA accounts without it counting towards their annual ISA subscription limit for that year.

 Help to Buy ISA

In order to encourage and support first time house buyers to raise a deposit, the Government is to introduce a Help to Buy ISA from autumn 2015. The essential elements of the scheme are:

  • Maximum monthly savings to an account will be set at £200.
  • Maximum initial deposit will be £1,000.
  • A Government bonus amounting to 25% of the amount saved will be added to the account when saver buys their first home. The maximum bonus will be £3,000 based on achieved savings of £12,000.
  • The bonus is only available for the purchase of homes in the UK by first time buyers.
  • Accounts can be opened for 4 years, but once opened you can save for as long as you like.
  • The bonus is available on homes up to £450,000 in London or £250,000 elsewhere.
  • Only available to persons who are 16 years or over.
  • The accounts are open to individuals so a couple could have two accounts.

This entry was posted on Thursday, March 19th, 2015 at 12:00 am by Slaters and is filed under Budget, Business, Business planning, Company Tax, Government, HMRC, PAYE, Pension, Personal Pension, Personal Planning, Personal Tax, Tax, Tax planning, Tax relief, VAT. You can follow any responses to this entry through the RSS 2.0 feed.

Business rates review

Wednesday, March 18th, 2015

The Chief Secretary to the Treasury, Danny Alexander, launched the most wide-ranging review of national business rates in a generation this month – paving the way for changes to how businesses across England pay the tax.

The review, set to report back by Budget 2016, will examine the structure of the current system which is paid annually on 1.8 million properties in England. The review will look at how businesses use property, what the UK can learn from other countries about local business taxes, and how we could modernise the system so it better reflects changes in the value of property.

The Chief Secretary launched the review during a speech to local businesses in Cambridge. He said:

“Our system of business rates was created nearly 30 years ago. Since that time, the worlds of commerce and industry have changed beyond recognition. I’ve been impressed by the representations made by the business community and I know that business rates are a considerable cost.

The government has taken measures to help businesses by capping rates and introducing reliefs for smaller businesses. But now the time has come for a radical review of this important tax. We want to ensure the business rates system is fair, efficient and effective.

Today’s announcement follows the Government’s commitment in December 2014 to conduct a review of business rates and implement a £1 billion package to reduce the cost of business rates in 2015-16, with particular support for the smallest businesses and the high street.”

From the 1 April 2015 the government is:

  • increasing help for the High Street: increasing the business rates discount for smaller retail premises with a rateable value of £50,000 of below to £1,500 to 31 March 2016 benefiting around 300,000 shops, pubs, cafes and restaurants
  • doubling small business rate relief for a further year to 31 March 2016 to provide support for 575,000 of the smallest businesses, and ensuring 385,000 small businesses pay no rates at all
  • capping the rise in the business rates multiplier at 2% to benefit all businesses
  • extending transitional rate relief to support 16,000 small business facing significant bill increases due to the ending of transitional rate relief

Key facts about business rates:

  • 1990 – National business rates system introduced
  • business rates are paid by occupiers of non-domestic properties (e.g. shops, offices, warehouses, factories, guest houses)
  • the main aim of business rates is to help raise revenue to pay for local services
  • business rates are devolved within the UK
  • business rates are paid on 1.8 million non-domestic properties in England each year
  • £20.5 billion was brought in from business rates in England in 2013-14
  • April 2013 – government introduced the ‘business rates retention scheme’ to allow local government in England to keep 50% of all business rates receipts and therefore 50% of any growth
  • some properties are eligible for relief on their business rates (e.g. small business rate relief which has been doubled until March 2016)
  • local councils send out business rate bills in February or March each year. The bill is for the following tax year. Some councils offer payment in 12 instalments

This entry was posted on Wednesday, March 18th, 2015 at 12:00 am by Slaters and is filed under Business planning, Employers, Tax, Tax planning, Tax relief. You can follow any responses to this entry through the RSS 2.0 feed.

The Marriage Allowance

Tuesday, March 17th, 2015

From 6 April 2015 married couples (and civil partners) will be able to register for the MA.

If your income is less than £10,600 in the 2015 to 2016 tax year, you may be able to reduce your husband, wife or civil partner’s tax by up to £212.

The new Marriage Allowance will let you transfer some of your Personal Allowance to your partner. This is the amount of income people can get before paying tax.

Who will be eligible?

You’ll be able to claim Marriage Allowance if all the following apply:

  • you’re married or in a civil partnership
  • you have an annual income of less than £10,600 – including pensions, savings and investments
  • your spouse or civil partner has an annual income of between £10,601 and £42,385
  • you were both born on or after 6 April 1935

If you or your partner were born before 6 April 1935, you may be able to claim Married Couple’s Allowance instead.

If both partners are paying tax at the 20% rate their personal allowance will be fully utilised against their own income and there will be no advantage making an MA claim.

The allowance will only benefit partnerships where one spouse has income below the tax personal allowance, presently £10,600 for 2015-16, and the other partner/spouse does not pay income tax at the 40% rate.

This entry was posted on Tuesday, March 17th, 2015 at 12:00 am by Slaters and is filed under Personal Tax, Tax, Tax relief. You can follow any responses to this entry through the RSS 2.0 feed.

Our summary of the latest tax updates

Tuesday, March 10th, 2015

As there are so many small things to update you on in March, we’ve pulled them all together into one post:

Avoid losing your personal allowance

For every £2 that your adjusted net income exceeds £100,000, the £10,000 personal allowance is reduced by £1. Pension contributions and Gift Aid can help to reduce adjusted net income and save tax at an effective rate of 60%.

Get ready for the new flexible pension rules

For those aged 55 and over and with a SIPP or other money purchase schemes, the new flexible pension rules commence on 6 April 2015. The new rules allow such pensioners to withdraw as much or as little income as they like from their fund but the income drawn will be taxed at their marginal tax rate.

Those affected should discuss the options with an Independent Financial Adviser who will need to work closely with us as the tax payable on the pension will depend upon their level of other income.

Make charitable payments under gift aid to save more tax

Higher rate taxpayers should make any charitable payments under Gift Aid so that you obtain additional tax relief. The charity will also be able to reclaim the basic rate tax from HMRC.

 

Year end capital gains tax planning

Have you used your 2014/15 annual exemption of £11,000? Consider selling shares where the gain is less than £11,000 before 6 April 2015. Also, if you have any worthless shares consider a negligible value claim to establish a capital loss. You may even be able to set off the capital loss against your income under certain circumstances.

Take advantage of your 2014/2015 ISA allowances

Your maximum annual investment in ISAs for 2013/14 is £15,000. Your investment needs to be made before 6 April 2015. In addition, have you thought about investing for your children or grandchildren by setting up junior ISAs or pensions? In the 2014/15 tax year, you can invest £4,000 into a Junior ISA for any child under 18 who does not have a Child Trust Fund.

 

Other tax efficient investments

If you are looking for investment opportunities, have you considered the Enterprise Investment Scheme (EIS), which offers income tax relief of 30 per cent as well as capital gains tax relief when you buy shares in certain qualifying companies? An even more generous tax break is available for investment in a qualifying Seed EIS company where income tax relief at 50 per cent is available. It is possible to shelter 50% of your capital gains in 2014/15 and there is a capital gains tax exemption when the shares are sold. Note however that qualifying Seed EIS companies tend to be risky investments so professional advice should be taken.
A 30% income tax break is also available by investing in a Venture Capital Trust.

Inheritance tax planning before 6 April 2015

Have you made use of your annual inheritance tax exemptions? The general annual exemption is £3,000 per donor (plus last year’s £3,000 exemption if you did not use it). Also consider making regular gifts out of your income to minimise the growth of your estate that will be liable to IHT.

The £2,000 employment allowance continues for 2015/16

The £2,000 “employment allowance” introduced in 2014/15 continues to be available for 2015/16.

Click here to read full story

Maximise tax relief for capital expenditure

Those running a business should take advantage of the temporary increase in the Annual Investment Allowance (AIA) to £500,000. 5th April 2015 is not relevant for this tax break as the limit continues until 31 December 2015 when it is scheduled to reduce to just £25,000. AIA provides a 100% tax write off for plant and equipment used in your business. This tax relief extends to fixtures and fittings within business premises such as electrical, water and heating systems.

This entry was posted on Tuesday, March 10th, 2015 at 11:43 am by Slaters and is filed under Capital Gains Tax, Company Tax, Employers, HMRC, PAYE, Pension, Personal Tax, RTI, Tax, Tax planning, Tax relief, VAT. You can follow any responses to this entry through the RSS 2.0 feed.

The £2000 employment allowance continues for 2015/16

Tuesday, March 10th, 2015

The £2,000 “employment allowance” introduced in 2014/15 continues to be available for 2015/16. Note that this allowance provides relief from paying employers NIC on the first £2,000 of contributions. The £2,000 allowance is set against employers NIC on a cumulative basis during the tax year.
The allowance is available to most employers, although those under common control are restricted to just the one £2,000 allowance.  Husband and wife companies with no other employees charged to national insurance may find it tax efficient to change the mix of salaries and dividends to take advantage of the £2,000 allowance. From 6 April 2015 it may be advantageous to increase directors’ salaries to the new £10,600 personal allowance instead of the NIC threshold of £8,060 (£155 a week).

 

The extra £2,540 will save £508 (20%) corporation tax (£1,016 for two directors) whereas the additional employees NIC would be just £305 each.

 

Husband and wife company – from 2015/16:

 

Salary                               £10,295 net = gross £10,600

Dividend up to BR band  £28,606 net = gross £31,785

Top of BR band                    £42,385

Net cash extracted (each) £38,901

Total extracted                £77,802 for couple

 

There would however be 20% corporation tax payable.

Profits before tax £71,515 @ 20% = £14,303 corporation tax, thus profits before salaries and tax would be £92,715.

 

This results in an overall tax and NIC rate of just 16.1%.

A salary in excess of £10,600 would attract income tax (at 20%) and employee’s NIC at 12%.

This entry was posted on Tuesday, March 10th, 2015 at 11:42 am by Slaters and is filed under HMRC, PAYE, Personal Tax, Tax, Tax planning, Tax relief. You can follow any responses to this entry through the RSS 2.0 feed.

Registration opens for new married couples tax break

Tuesday, March 10th, 2015

HMRC have announced that registration for the new ‘Marriage Allowance’ for married couples and those in civil partnerships is now open.

From 6 April 2015 certain married couples and civil partners may be eligible for a new Transferable Tax Allowance referred to by the Government as the ‘Marriage Allowance’. The allowance will enable eligible spouses and civil partners to transfer a fixed amount of their personal allowance to their spouse. The option to transfer is not available to unmarried couples.

The option to transfer will be available to couples where neither pays tax at the higher or additional rate. If eligible, one partner will be able to transfer 10% of their personal allowance to the other partner which means £1,060 for the 2015/16 tax year which could save them tax of up to £212 a year.

Couples can register their interest to receive the Allowance.

The government estimates that more than four million married couples and 15,000 civil partnerships will be eligible for the tax break.

Chancellor of the Exchequer George Osborne said:

‘We made a promise to introduce a recognition of marriage into our tax system – and now we’re delivering on that promise.

This includes updating the tax system so that it recognises marriage and civil partnerships.

Our new Marriage Allowance means saving £212 on your tax bill couldn’t be simpler or more straightforward.’

From April, HMRC will contact those who have already registered for the ‘Marriage Allowance’ to apply. People can register at any point in the tax year and still receive the full benefit of the allowance. It is also possible to claim the allowance after the end of the tax year where claimants are unsure if they will qualify.

Applying online is simple. One person in a couple will apply online to transfer the allowance to their spouse or civil partner, and HMRC will tell the recipient about the change to their Pay As You Earn (PAYE) tax code.

This entry was posted on Tuesday, March 10th, 2015 at 11:14 am by Slaters and is filed under Personal Tax, Tax, Tax planning, Tax relief. You can follow any responses to this entry through the RSS 2.0 feed.

Tax Diary March/April 2015

Monday, March 2nd, 2015

 1 March 2015 – Due date for Corporation Tax due for the year ended 31 May 2014.

 2 March 2015 – Self Assessment tax for 2013/14 paid after this date will incur a 5% surcharge.

 19 March 2015 – PAYE and NIC deductions due for month ended 5 March 2015. (If you pay your tax electronically the due date is 22 March 2015.)

 19 March 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2015.

 19 March 2015 – CIS tax deducted for the month ended 5 March 2015 is payable by today.

 1 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.

This entry was posted on Monday, March 2nd, 2015 at 12:00 am by Slaters and is filed under Capital Gains Tax, Company Tax, HMRC, Personal Tax, Tax, Tax planning, Tax relief, VAT. You can follow any responses to this entry through the RSS 2.0 feed.

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