With the tax year coming to an end now is a great time to invest in an ISA. People always assume that everyone knows what an ISA is and the benefits of it, but do they and if so are they making the right decision?
There are two types of tax free ISA'S. Cash ISA's are basically ordinary savings accounts, but the interest you accumulate is free from tax. For the 2010/11 tax year you can save up to £5,100 with generous bonus interest rates which are tax free. Then there is a stocks and share ISA where the aim is to pick funds, and/or individual shares and bonds that are likely to deliver high returns for the lowest risk - but that also carry low charges. For the 2010/11 tax year, once you are aged 18 and over, you may invest up to £10,200 into your stocks and shares Isa
However whilst the interest rates seem attractive and the tax free aspect also is a big selling point must investors don’t realise that they could be missing out by not regularly switching their ISA.
The majority of ISA savers are missing out as a result of not switching their savings to accounts that offer higher rates, a consumer organisation has claimed.
According to Consumer Focus, as many as two-thirds of savers who have opened cash ISAs on a 'teaser' introductory rate subsequently lose out because they do not move to a provider offering better rates of interest once the teaser period has lapsed.
Consumer Focus said that many of the best buy cash ISAs offer introductory bonus interest rates that fall after a fixed time, usually 12 months, often leaving savers with uncompetitive accounts.
Cash ISAs can pay as much as 3 per cent interest, but the average interest rate is just 0.43 per cent.
The study carried out by Consumer Focus found that almost a quarter of cash ISA savers did not know whether their accounts had a bonus rate, while a third of account holders with an introductory rate weren't sure if their rates had expired or not.
More than a third of savers who hold a cash ISA have had it for more than five years, suggesting they are losing out on interest that could be gained by switching.
I generally do promote ISA's as a tax saving tool but make sure you manage them properly and speak to a financial advisor regularly to make best use of them. Don’t just leave them to rot and hope for the best !
For further information contact mitch@ljd.uk.com
Wednesday 30 March 2011
Monday 28 March 2011
50% Tax Rate To Go
The 50 per cent income tax rate looks set to be scrapped at a future date.
In BBC interviews, Vince Cable, the Business Secretary, conceded that the tax band was only a temporary measure and could well be dropped.
The Chancellor, George Osborne has already instigated a review of the 50% tax rate, which applies to those earning more than £150,000 a year, a move that indicates the Treasury may be ready to abandon the band as soon as 2013.
Vince Cable told the BBC: "I and George Osborne agree that we have to move away from extremely high marginal rates of tax on income, including that the 50p rate of tax.
"It moved up to 50p in an emergency because we had to have a sense of solidarity that everybody was bearing some of the pain, and the chancellor said in the budget that we're going to have to move away from that. I agree with him."
To offset the loss of the top rate of income tax, Dr Cable suggested the Government may turn its attention to a higher property levy.
He continued: "But it needs to be a change which is fair overall and does take account of the fact that the wealthy have got to pay their share. The emphasis may well have to shift from high marginal rates of tax on income which are undesirable, to taxation of wealth, including property, and the chancellor said as much as that in his Budget."
In a separate interview, the Deputy Prime Minister, Nick Clegg, said that any move would not necessarily mean a return to the Liberal Democrats' proposed mansion tax but could involve a review of council tax or stamp
Whilst this is good news for the higher earners on the one hand, on the other the government will almost definitely find a seperate way to tax them !
Tax planning will be key so please feel free to contact me mitch@ljd.uk.com
In BBC interviews, Vince Cable, the Business Secretary, conceded that the tax band was only a temporary measure and could well be dropped.
The Chancellor, George Osborne has already instigated a review of the 50% tax rate, which applies to those earning more than £150,000 a year, a move that indicates the Treasury may be ready to abandon the band as soon as 2013.
Vince Cable told the BBC: "I and George Osborne agree that we have to move away from extremely high marginal rates of tax on income, including that the 50p rate of tax.
"It moved up to 50p in an emergency because we had to have a sense of solidarity that everybody was bearing some of the pain, and the chancellor said in the budget that we're going to have to move away from that. I agree with him."
To offset the loss of the top rate of income tax, Dr Cable suggested the Government may turn its attention to a higher property levy.
He continued: "But it needs to be a change which is fair overall and does take account of the fact that the wealthy have got to pay their share. The emphasis may well have to shift from high marginal rates of tax on income which are undesirable, to taxation of wealth, including property, and the chancellor said as much as that in his Budget."
In a separate interview, the Deputy Prime Minister, Nick Clegg, said that any move would not necessarily mean a return to the Liberal Democrats' proposed mansion tax but could involve a review of council tax or stamp
Whilst this is good news for the higher earners on the one hand, on the other the government will almost definitely find a seperate way to tax them !
Tax planning will be key so please feel free to contact me mitch@ljd.uk.com
Wednesday 23 March 2011
The 2011 Budget
"This is not a tax raising budget, neither rising tax not offering give a ways" These were the words used by Chancellor George Osborne as he began his 2011 Budget address. I have to say I was impressed by the way the Chancellor came across as I feel he delivered a promising and fair Budget. In today's post I will highlight 5 key Tax areas that I feel were the most interesting from a tax point of view.
1. The merger of Tax and National Insurance
As I correctly predicted in yesterday's post, the Chancellor stated that "It is time that we take this historic step to simplify our tax system and make it fit for the modern age be merging Tax and National Insurance”. However you will not see this implemented for a number of years but the government will be setting up a consultation unit to implement this.
2. Further Reduction of Corporation Tax
The Higher Rate of Corporation Tax is to be reduced by 2% from April 2011 reducing the rate to 26%. The small and marginal rates are being reduced by 1%
3. Residency/Non Domicile
As predicted in yesterday's post, HMRC will be introducing a statutory residency test. They have not yet produced details on this yet but I will report back in June when details are published. Furthermore if you have been residence for 12 years in the UK but are not domiciled then you could be subject to an increased Remittance Base Charge of £50,000 increased from £30,000.
4. Personal Allowance Increased
Previously, the government announced income tax changes in April 2011, with the personal allowance - the point at which income tax starts to be paid - rising to £7,475. This will go up by another £630 in 2012.
5. EIS & VCT Investment Rules Relaxed
The Chancellor has increased the tax relief on enterprise investment schemes (EIS) from 20% to 30% and relaxed the investment rules for both EISs and venture capital trusts (VCTs).The total amount that can be invested by a VCT or EIS into an individual company will be increased to £10 million from £1 million
There were of course many items discussed in the Budget but I have decided just to make a mention a few that I found interesting. The main item that has got people speaking is the merger of Tax and National Insurance. I believe this is a good idea however it may be near impossible to implement. We shall see what happens.
For a full budget debrief please email me mitch@ljd.uk.com
1. The merger of Tax and National Insurance
As I correctly predicted in yesterday's post, the Chancellor stated that "It is time that we take this historic step to simplify our tax system and make it fit for the modern age be merging Tax and National Insurance”. However you will not see this implemented for a number of years but the government will be setting up a consultation unit to implement this.
2. Further Reduction of Corporation Tax
The Higher Rate of Corporation Tax is to be reduced by 2% from April 2011 reducing the rate to 26%. The small and marginal rates are being reduced by 1%
3. Residency/Non Domicile
As predicted in yesterday's post, HMRC will be introducing a statutory residency test. They have not yet produced details on this yet but I will report back in June when details are published. Furthermore if you have been residence for 12 years in the UK but are not domiciled then you could be subject to an increased Remittance Base Charge of £50,000 increased from £30,000.
4. Personal Allowance Increased
Previously, the government announced income tax changes in April 2011, with the personal allowance - the point at which income tax starts to be paid - rising to £7,475. This will go up by another £630 in 2012.
5. EIS & VCT Investment Rules Relaxed
The Chancellor has increased the tax relief on enterprise investment schemes (EIS) from 20% to 30% and relaxed the investment rules for both EISs and venture capital trusts (VCTs).The total amount that can be invested by a VCT or EIS into an individual company will be increased to £10 million from £1 million
There were of course many items discussed in the Budget but I have decided just to make a mention a few that I found interesting. The main item that has got people speaking is the merger of Tax and National Insurance. I believe this is a good idea however it may be near impossible to implement. We shall see what happens.
For a full budget debrief please email me mitch@ljd.uk.com
Tuesday 22 March 2011
Predictions for The Budget Tomorrow
Chancellor George Osborne delivers his Budget speech tomorrow with many tax commentators believing there is not much room for manoeuvre bearing in mind the current financial position of the UK. However I diasagree with the commentators and predict that there will be changes as indicated by the Office of Tax Simplification early this year.
I fully believe there is a strong chance that Tax and National Insurance could be merged. This would potentially mean tax savings as you would only have to pay Tax and no National Insurance. The government set up the Office for Tax Simplification (OTS) last year and it is expected that some concrete steps towards streamlining the tax system will be put in place and I believe this is one of them.
Furthermore I am predicting the following 5 items to appear in tomorrow’s budget:
1. IR35 - I believe partnerships will be targeted as HMRC look to clamp down on further 'disguised employments' to avoid rising National Insurance costs
2. Non Domicile/Non Residents - With no concrete rules in place to determine ones residency surely now they must introduce a statutory test!
3. NIC on benefits - an increase of NIC on benefits in kind
4. Stamp Duty - Possibly further anti avoidance legislation to be introduced
5. Inheritance Tax Squeeze - This has already been documented by the OTS as they reported "On the basis of the low number of estates caught by IHT and the useful but relatively low revenues [after reliefs] that it raises, we consider that a more appropriate approach may be to review the whole of IHT rather than to consider individual IHT reliefs"
Overall I believe this year’s budget could see the biggest tax changes we have seen for the past few years and I will be summarising all the key points in tomorrow’s blog.
Please feel free to contact me with any questions mitch@ljd.uk.com
I fully believe there is a strong chance that Tax and National Insurance could be merged. This would potentially mean tax savings as you would only have to pay Tax and no National Insurance. The government set up the Office for Tax Simplification (OTS) last year and it is expected that some concrete steps towards streamlining the tax system will be put in place and I believe this is one of them.
Furthermore I am predicting the following 5 items to appear in tomorrow’s budget:
1. IR35 - I believe partnerships will be targeted as HMRC look to clamp down on further 'disguised employments' to avoid rising National Insurance costs
2. Non Domicile/Non Residents - With no concrete rules in place to determine ones residency surely now they must introduce a statutory test!
3. NIC on benefits - an increase of NIC on benefits in kind
4. Stamp Duty - Possibly further anti avoidance legislation to be introduced
5. Inheritance Tax Squeeze - This has already been documented by the OTS as they reported "On the basis of the low number of estates caught by IHT and the useful but relatively low revenues [after reliefs] that it raises, we consider that a more appropriate approach may be to review the whole of IHT rather than to consider individual IHT reliefs"
Overall I believe this year’s budget could see the biggest tax changes we have seen for the past few years and I will be summarising all the key points in tomorrow’s blog.
Please feel free to contact me with any questions mitch@ljd.uk.com
Friday 18 March 2011
Why Pay 20% VAT? When You Should Pay 5%!
The 5% reduced rate of VAT was introduced almost 10 years ago on 1st April 2001. However not many people are aware of it. The 5% relief is given in two main area, the first being the renovation of an empty dwelling and the second being a conversion in respect of the number of dwellings.
If an existing residential property is renovated, after it has been empty for at least 2 years, the builder should charge 5% VAT for his services. This could apply to a builder renovating a domestic property or alternatively for a potential investor who is buying an empty property renovating it prior to renting it out.
The key thing to do if this applies to you is to obtain credible proof that the domestic property has been empty for 2 years. In practice many builders do not charge the correct rate of VAT in these circumstances.
Examples of changing the number of dwellings include:
- Conversion of a restaurant into a house
- Conversion of 1 house into 2 flats
- Conversion of a barn into a house
- Converting an office into a dwelling
If your builder has charged you incorrectly he should correct the position by issuing a credit note to reduce the amount of VAT. There are also certain forms you can obtain from HMRC for errors on VAT returns.
It is amazing how many property developers do not know about this as potentially it could save them thousands of pounds.
For more information please feel free to contact me mitch@ljd.uk.com
If an existing residential property is renovated, after it has been empty for at least 2 years, the builder should charge 5% VAT for his services. This could apply to a builder renovating a domestic property or alternatively for a potential investor who is buying an empty property renovating it prior to renting it out.
The key thing to do if this applies to you is to obtain credible proof that the domestic property has been empty for 2 years. In practice many builders do not charge the correct rate of VAT in these circumstances.
Examples of changing the number of dwellings include:
- Conversion of a restaurant into a house
- Conversion of 1 house into 2 flats
- Conversion of a barn into a house
- Converting an office into a dwelling
If your builder has charged you incorrectly he should correct the position by issuing a credit note to reduce the amount of VAT. There are also certain forms you can obtain from HMRC for errors on VAT returns.
It is amazing how many property developers do not know about this as potentially it could save them thousands of pounds.
For more information please feel free to contact me mitch@ljd.uk.com
Wednesday 16 March 2011
Resident or Non Resident? That is the Question
Most people are under the impression that if they spend less than 183 days in the UK then they can be classified as non resident for tax purposes. This view is totally incorrect and there has been quite a few important cases heard in court recently that outline the real facts.
The main aspect the Revenue focus on (as well as the 183 day rule) is the concept of a 'distinct break'. In order to be classified as non resident you must cut all ties with the UK to include, a property in the UK available for private use and even all social clubs.
The most recent case is Mr Grace vs HMRC. Mr Grace left the UK to go to South Africa. He lived an active social life in Australia with a permanent property as his main residence and only visited the UK on a small number of trips. However as he had a connection with a company in the UK and still retained UK accommodation the Revenue argued successfully he is still resident and would now have dual residency in the UK and Australia.
To me this is crazy when you think about it but what this case illustrates is just how difficult it can be for a UK resident to become non resident.
I would seriously advise to contact your professional tax advisor if you are thinking about leaving the UK even temporarily through work.
Please feel free to contact me mitch@ljd.uk.com
The main aspect the Revenue focus on (as well as the 183 day rule) is the concept of a 'distinct break'. In order to be classified as non resident you must cut all ties with the UK to include, a property in the UK available for private use and even all social clubs.
The most recent case is Mr Grace vs HMRC. Mr Grace left the UK to go to South Africa. He lived an active social life in Australia with a permanent property as his main residence and only visited the UK on a small number of trips. However as he had a connection with a company in the UK and still retained UK accommodation the Revenue argued successfully he is still resident and would now have dual residency in the UK and Australia.
To me this is crazy when you think about it but what this case illustrates is just how difficult it can be for a UK resident to become non resident.
I would seriously advise to contact your professional tax advisor if you are thinking about leaving the UK even temporarily through work.
Please feel free to contact me mitch@ljd.uk.com
Monday 14 March 2011
Have You Received an Email from HMRC?
HM Revenue and Customs (HMRC) has warned taxpayers to be on the alert for fraudulent emails.
Following the Tax Return deadline, criminals have been busy sending out phishing emails which claim to offer people tax refunds. They are, in fact, fraudulent.
The emails provide a click-through link to a replica of the HMRC website. The recipient is then asked to provide their credit card details. Fraudsters use the information to try to strip funds from the person's account. In the last three months, HMRC has shut down 99 websites that were responsible for sending out the fake tax rebate emails.
Chris Hopson, director of customer contact at HMRC, said that, as a matter of policy, HMRC will only ever contact customers who are due a tax refund in writing by post. He added: "If anyone receives an email offering a tax rebate claiming to be from HMRC, we recommend they send it to phishing@hmrc.gsi.gov.uk before deleting it permanently."
Should anyone receive a suspicious email claiming to be from the tax authorities, HMRC has advice on how to deal with it. Suspicious emails should be forwarded to HMRC at phishing@hmrc.gsi.gov.uk and then deleted from recipients' computers and mail accounts.
Nobody should click on the websites or on the links contained in suspicious emails, or open any attachments.
HMRC never use emails so if you recieve an email from HMRC delete it or contact your Tax Advisor.
Please feel free to contact me mitch@ljd.uk.com
Following the Tax Return deadline, criminals have been busy sending out phishing emails which claim to offer people tax refunds. They are, in fact, fraudulent.
The emails provide a click-through link to a replica of the HMRC website. The recipient is then asked to provide their credit card details. Fraudsters use the information to try to strip funds from the person's account. In the last three months, HMRC has shut down 99 websites that were responsible for sending out the fake tax rebate emails.
Chris Hopson, director of customer contact at HMRC, said that, as a matter of policy, HMRC will only ever contact customers who are due a tax refund in writing by post. He added: "If anyone receives an email offering a tax rebate claiming to be from HMRC, we recommend they send it to phishing@hmrc.gsi.gov.uk before deleting it permanently."
Should anyone receive a suspicious email claiming to be from the tax authorities, HMRC has advice on how to deal with it. Suspicious emails should be forwarded to HMRC at phishing@hmrc.gsi.gov.uk and then deleted from recipients' computers and mail accounts.
Nobody should click on the websites or on the links contained in suspicious emails, or open any attachments.
HMRC never use emails so if you recieve an email from HMRC delete it or contact your Tax Advisor.
Please feel free to contact me mitch@ljd.uk.com
Friday 11 March 2011
Sounding Like a Broken Record
The majority of clients always fall down when it comes to record keeping. I often ask myself, why is it so hard to keep appropriate records? The problem is when it comes to their yearly tax returns accountants and tax specialists often have to use estimates and this can be an issue with HMRC. Furthermore you have to keep your records for 6 years in a safe and organised manner in case of an investigation by the Revenue but in practice when a client gets investigated for previous years they may not be able to obtain the requested information and suffer penalties and additional tax.
HMRC have recently set up a number of guides to help self employed individuals and businesses ensure they are keeping appropriate records. The guides cover:
- Keeping Records for Businesses
- A general guide to keep records for tax returns
- Setting up basic record keeping
- What should be kept?
While this seems nice of HMRC to post these guides my view is that you should all take this as a big warning sign. HMRC investigate returns on a random basis but if they see something out of the ordinary or what perceives to be an estimate they can look back to previous returns. HMRC will be stepping up their reviews of self employed individuals and businesses over the forthcoming year.
Richard Mannion of Smith & Williamson stated " HMRC planned record checks marks a change and hardening of attitude, business owners should take these warnings seriously".
My advice would be to follow these 6 steps:
1. Keep records going back at least six years
2. Retain invoices, bank statements, purchase details, expenses and so on
3. Be careful when allocating personal and business use and have necessary paperwork to back this up
4. Be up to date
5. Avoid estimates
6. Provide everything to your tax advisor and get him to keep you up to date
Each year clients tell me they will be more organised next year and when next year comes around they are even less organised than the year before! So I say stop sounding like a broken record and let your accountant/tax advisor get your records organised and up to date.
Feel free to contact me mitch@ljd.uk.com
HMRC have recently set up a number of guides to help self employed individuals and businesses ensure they are keeping appropriate records. The guides cover:
- Keeping Records for Businesses
- A general guide to keep records for tax returns
- Setting up basic record keeping
- What should be kept?
While this seems nice of HMRC to post these guides my view is that you should all take this as a big warning sign. HMRC investigate returns on a random basis but if they see something out of the ordinary or what perceives to be an estimate they can look back to previous returns. HMRC will be stepping up their reviews of self employed individuals and businesses over the forthcoming year.
Richard Mannion of Smith & Williamson stated " HMRC planned record checks marks a change and hardening of attitude, business owners should take these warnings seriously".
My advice would be to follow these 6 steps:
1. Keep records going back at least six years
2. Retain invoices, bank statements, purchase details, expenses and so on
3. Be careful when allocating personal and business use and have necessary paperwork to back this up
4. Be up to date
5. Avoid estimates
6. Provide everything to your tax advisor and get him to keep you up to date
Each year clients tell me they will be more organised next year and when next year comes around they are even less organised than the year before! So I say stop sounding like a broken record and let your accountant/tax advisor get your records organised and up to date.
Feel free to contact me mitch@ljd.uk.com
Wednesday 9 March 2011
Til Death Do Us Part
Following on from yesterday's post 'don't take your spouse for granted', I thought I would comment on a different tax where, with detailed planning, you could benefit from your spouse's allowances. I am of a certain age where I don't always think about death but those of you more morbid than me should think about their Estate and Inheritance Tax Planning. I will be focussing today on the Nil rate band. The nil-rate band is the value of an estate that is not subject to Inheritance Tax currently set at £325,000.
The legislation allows that the proportion of any Inheritance Tax Nil Rate Band, that was unused on a person's death be transferred to their spouse, if the second death is on or after 9th October 2007. This applies even if the first death was before 9th October 2007. The amount of allowance to be transferred is determined by the rate of the nil rate band on the later death. If part of the allowance was used on the first death, the unused percentage is applied on the later.
What if the deceased had several spouses? In this situation the maximum allowance that can be transferred is restricted to one nil rate band. As a result, the married couples combined nil rate band now stands at £650,000 for 2010/11.
The basic idea of the legislation is that the estate of a surviving spouse will be able to claim the unused proportion of any previously deceased spouse's IHT nil rate band. With careful planning you may be able to save a large amount of tax.
In theory this sounds very simple but in realty the process of getting this through HMRC is quite tricky so make sure you speak to your accountant and perhaps even review your will to make sure it is tax efficient.
For further information please do not hesitate to contact me mitch@ljd.uk.com
The legislation allows that the proportion of any Inheritance Tax Nil Rate Band, that was unused on a person's death be transferred to their spouse, if the second death is on or after 9th October 2007. This applies even if the first death was before 9th October 2007. The amount of allowance to be transferred is determined by the rate of the nil rate band on the later death. If part of the allowance was used on the first death, the unused percentage is applied on the later.
What if the deceased had several spouses? In this situation the maximum allowance that can be transferred is restricted to one nil rate band. As a result, the married couples combined nil rate band now stands at £650,000 for 2010/11.
The basic idea of the legislation is that the estate of a surviving spouse will be able to claim the unused proportion of any previously deceased spouse's IHT nil rate band. With careful planning you may be able to save a large amount of tax.
In theory this sounds very simple but in realty the process of getting this through HMRC is quite tricky so make sure you speak to your accountant and perhaps even review your will to make sure it is tax efficient.
For further information please do not hesitate to contact me mitch@ljd.uk.com
Tuesday 8 March 2011
Taking your spouse for granted must stop !
Giving some income to a spouse has always been a way to lower taxes. However the process known to many as income splitting will soon come under great scrutiny in the forthcoming budget.
Since the introduction of the independent taxation of married couples back in 1990, married taxpayers have sought to minimise overall income tax liabilities by ensuring, where possible, that each spouse utilises their personal allowance and lower tax band. In particular the use of a family run company where in order to extract profits a dividend or salary gets paid to the wife.
The most famous case known as 'Artic Systems Limited' which HMRC lost involved a family run IT Company where the wife only spent a few hours a week doing administrative work. At the end of the year they both received a 50/50 split in the dividends. HMRC challenged this and lost in courts stated this was not caught by the settlement legislation. This is a very basic description of what was a large case and if you are interested in knowing more just drop me an email.
Speaking to the Telegraph, the tax director of HMRC (Treasury Office of Tax Simplification), John Whiting said that income splitting was one of the issues it was looking into, alongside National Insurance Contributions and IR35. "I hope we can come up with some quick tweaks that can make a difference, but I am no under illusions that some of the things we could come up with will require some serious study. I don't think we were ever confident that income splitting was in that 'never to come out again' box," said Whiting. "It is in the Dracula category. I don't think anyone ever put the stake through its heart"
You have been warned. If you have a family run business now is the time to look into your structures and ways of extracting profits. For those that are thinking of proposing to their other half, just to use your their tax exemptions I am afraid you will have to just marry for love !!!
Contact me for further information mitch@ljd.uk.com
Friday 4 March 2011
50 Tax Reliefs to be Abolished !!!
I was shocked to read on the Treasury website today that they are suggesting the abolishment of 50 of our precious tax reliefs.The Office of Tax Simplification is a department employed by the Treasury to help simplify tax policy but is this simplifying matters or just getting more tax out of us.
In its review of over 150 reliefs, the final report on which has been submitted to the Chancellor, the OTS suggested that 54 remained unchanged and that 47 be scrapped. A further 17 should be simplified, while the remainder require further examination.Of those that could be simplified, the OTS proposed that the rule which demands a 5 per cent shareholding in order for business owners to qualify for the 10 per cent entrepreneurs' relief rate of capital gains tax be dropped.
The report also suggested introducing a checklist for the four reliefs covering the enterprise investment scheme.
John Whiting, tax director for the OTS, said: "It's clear that many of the reliefs are valuable and clear in their purpose and operation, so we have not sought to change them, but others need simplifying or extending to be properly effective. Some have simply expired and have no further use; a number are poorly targeted leading to negligible value, or their benefit is outweighed by the administrative burden in using them.way."
I believe the forthcoming budget is going to shock people. Higher taxes less reliefs times ahead dont look too bright. I say act now, arrange meetings with your Tax Advisor/accountant and have a full review of your circumstances.
You can contact me at mitch@ljd.uk.com
In its review of over 150 reliefs, the final report on which has been submitted to the Chancellor, the OTS suggested that 54 remained unchanged and that 47 be scrapped. A further 17 should be simplified, while the remainder require further examination.Of those that could be simplified, the OTS proposed that the rule which demands a 5 per cent shareholding in order for business owners to qualify for the 10 per cent entrepreneurs' relief rate of capital gains tax be dropped.
The report also suggested introducing a checklist for the four reliefs covering the enterprise investment scheme.
John Whiting, tax director for the OTS, said: "It's clear that many of the reliefs are valuable and clear in their purpose and operation, so we have not sought to change them, but others need simplifying or extending to be properly effective. Some have simply expired and have no further use; a number are poorly targeted leading to negligible value, or their benefit is outweighed by the administrative burden in using them.way."
I believe the forthcoming budget is going to shock people. Higher taxes less reliefs times ahead dont look too bright. I say act now, arrange meetings with your Tax Advisor/accountant and have a full review of your circumstances.
You can contact me at mitch@ljd.uk.com
Thursday 3 March 2011
Plumbers Tax Plan Leaked
HMRC have just launced a new tax plan for Plumbers !
Under the tax plan plumbers, gas fitters, heating engineers and members of associated trades who have undisclosed taxable income can register their intention to make a voluntary tax disclosure by 31 May. If they make a full disclosure, most will face a penalty of 10% of the unpaid tax.
Once the disclosure window closes, those that have not come forward but are found to have unpaid tax liabilities will face penalties betwene 30% - 100% of the unpaid tax.
To me this scheme is not restricted just to plumbers as European Law would suggest it should be open to everyone and many people agree. The Chartered Institute of Taxation said: ‘HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers Plan.
HMRC said the new Plumbers Tax Safe Plan (PTSP) represents a ‘clampdown on tradespeople failing to declare their earnings and pay tax’. But the terms are ‘in line with those HMRC offers for any full and accurate unprompted voluntary disclosure of tax liabilities’.HMRC guidance published today says: ‘Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP.’
This backs up my argument, HMRC are giving everyone a chance to come forward and the message is loud and clear. Contact them before they contact you.
You can contact me for assistance mitch@ljd.uk.com
Under the tax plan plumbers, gas fitters, heating engineers and members of associated trades who have undisclosed taxable income can register their intention to make a voluntary tax disclosure by 31 May. If they make a full disclosure, most will face a penalty of 10% of the unpaid tax.
Once the disclosure window closes, those that have not come forward but are found to have unpaid tax liabilities will face penalties betwene 30% - 100% of the unpaid tax.
To me this scheme is not restricted just to plumbers as European Law would suggest it should be open to everyone and many people agree. The Chartered Institute of Taxation said: ‘HMRC are saying that if anyone else voluntarily comes forward to put their tax affairs in order they can expect broadly the same terms to those on offer through the Plumbers Plan.
HMRC said the new Plumbers Tax Safe Plan (PTSP) represents a ‘clampdown on tradespeople failing to declare their earnings and pay tax’. But the terms are ‘in line with those HMRC offers for any full and accurate unprompted voluntary disclosure of tax liabilities’.HMRC guidance published today says: ‘Customers who voluntarily come forward and put right their tax position can expect very similar terms to those on offer through PTSP.’
This backs up my argument, HMRC are giving everyone a chance to come forward and the message is loud and clear. Contact them before they contact you.
You can contact me for assistance mitch@ljd.uk.com
Tuesday 1 March 2011
Do I Need to Complete a Tax Return? .... YES !!
This question always comes up. Friends and clients a like as well as seasoned professionals somethimes are left confused as to whether they need to complete a Self Assessment Tax Return. A friend of mine recently stated "The Revenue have not requested a return from me so therefore I do not need to complete one". My friend is a Marketing Manager who earns £55k a year and has a small rental property in Bournemouth that yields a small profit of £1,000. I told him I would look into it and get back to him.
My first point of call is usually checking HMRC's website. So I did, and it states quite clearly a list of circumstances where one would need to complete a return , I listed the majority and ones I feel are most relevant below
There is no doubt that HMRC website is a bit confusing. HMRC have tried to cut down on their work by reducing the number of tax returns they receive but this will not stop them issuing you with a penalty if you have failed to notify them of chargeability. I believe this will catch a lot of people out especially those that have annual income of £60,000 - £80,000 and have a small rental property. My friend was far from happy but when you think about it why should he get away with not paying tax?
It is easy to look at HMRC website and see things that you want to see but dont be too short sighted. If you do own a rental property nows the time to speak to your Tax Advisor before HMRC get you !
mitch@ljd.uk.com
My first point of call is usually checking HMRC's website. So I did, and it states quite clearly a list of circumstances where one would need to complete a return , I listed the majority and ones I feel are most relevant below
- You're self-employed
- a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)
- a minister of religion (any faith)
- income from savings and investments of £10,000 or more
- income from untaxed savings and investments of £2,500 or more
- income from property (before deducting allowable expenses) of £10,000 or more
- income from property (after deducting allowable expenses) of £2,500 or more
- annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
- You must complete a tax return if you have any foreign income that's liable to UK tax.
- Your annual income is £100,000 or moreYou need to claim certain expenses or reliefs
- You have Capital Gains Tax to pay You've lived or worked abroad or aren't domiciled in the UK
- You're a trustee
There is no doubt that HMRC website is a bit confusing. HMRC have tried to cut down on their work by reducing the number of tax returns they receive but this will not stop them issuing you with a penalty if you have failed to notify them of chargeability. I believe this will catch a lot of people out especially those that have annual income of £60,000 - £80,000 and have a small rental property. My friend was far from happy but when you think about it why should he get away with not paying tax?
It is easy to look at HMRC website and see things that you want to see but dont be too short sighted. If you do own a rental property nows the time to speak to your Tax Advisor before HMRC get you !
mitch@ljd.uk.com
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