To April’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
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We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.
Please contact us for advice in your own specific circumstances. We’re here to help!
OTS recommends simplifications for small companies
The Office of Tax Simplification (OTS) has unveiled a package of recommendations aimed at making the tax system simpler and easier to use for small companies. The report, entitled Small company taxation review contains a mix of long range structural change ideas and simpler short term administrative improvements. – read more >>
Close alignment of income tax and NICS
The Office of Tax Simplification (OTS) has published its recommendations on closer alignment of income tax and national insurance contributions. The report contains some bold recommendations for what would be a major reform of the UK’s tax rules. – read more >>
National minimum wage increases announced
Following recommendations made by the Low Pay commission, the government has announced increases in the national minimum wage (NMW), which will take effect from October 2016.
The new rates will be as follows:
– The rate for 21- to 24-year-olds will rise by 3.7% to £6.95 an hour.
– The rate for 18- to 20-year-olds will rise by 4.7% to £5.55 an hour.
– The rate for 16- to 17-year-olds will rise by 3.4% to £4.00 an hour.
– The apprentice rate will rise by 3% to £3.40 an hour.
For further information, see the GOV.UK website here.
Guidance on SDLT Budget reforms
Following announcements made in the 2016 Budget on 16 March, HMRC have published further guidance on the changes that are being made to stamp duty land tax (SDLT), and how they affect non-residential property transactions from 17 March 2016. – read more >>
Accountants urge HMRC to simplify the tax relief claims process to halt the growing influence of refund agencies
One of the greatest criticisms of the British taxation system is its unnecessary complexity. Nowhere is this better illustrated than with the tax relief claims process. Try claiming a refund, and you’ll soon discover how difficult the process can be. – read more >>
April Key Tax Dates
5 – End of 2015/16 tax year. Last day to use up your annual exemptions for capital gains tax, inheritance tax and ISA’s
14 – Return and payment of CT61 tax due for quarter to 31 March 2016
19 – Deadline for finial submission of the year – 19th April. Penalties for late submission.
19 – PAYE/NIC, student loan and CIS deductions due for month to 5/4/2016 or quarter 4 of 2015/16 for small employers. Interest will run on any unpaid PAYE/NIC for the tax year 2015/16
30 – Additional daily penalties of £10 per day up to a maximum of £900 for failing to file self-assessment tax return due on 31 January 2016
April Questions and Answers
Q. Can I transfer my personal allowance?
I work part time and don’t earn enough to pay tax, but my wife earns £25,000 a year from her full time job. I have been told that I can transfer some of my personal allowances to her so she can save some income tax. Is this true?
A. Claiming the marriage allowance can save married couples or civil partners up to £220 in 2016/17, but many couples have not claimed it yet.
The allowance was introduced from 6 April 2015, and enables married couples or civil partners to transfer £1,100 of personal allowance (2016/17 rate; £1060 for 2015/16) from one spouse or partner to the other, provided that the recipient does not pay tax at a rate higher than basic rate.
To process a claim, HMRC will need the national insurance numbers for each spouse/civil partner. In addition, if the claim is made online or by phone, HMRC will have to check the identity of the person making the claim and will ask for information from the claimant such as the last four digits from bank accounts that any state benefits (such as pension or child benefit) are paid into or from bank accounts that pay interest. Alternatively HMRC may ask for information from employment such as information contained on a P60 (the form given to all employees at the end of a tax year).
The claim should not be made if one spouse was born before 6 April 1935. Instead, the couple may be entitled to claim married couple’s allowance which is more favourable.
Q. Do I have to repay claimed VAT?
In July 2014 I purchased a commercial unit for £50,000, and as the building was registered for VAT, I notified HMRC, applied for a transfer as a going concern, and did not pay any VAT. At the time of purchase, the premises were let to a tenant but they moved out and the building was empty when the transaction was completed. In September 2014, I applied to de-register for VAT as I was receiving no income. I have since converted the unit into residential flats and I have applied to HMRC for a change of use. Do I need to pay back the VAT previously claimed?
A. This is a complex and questionable scenario. Since the business of renting out the property did not continue after you bought it, it will be difficult to argue that there was a transfer of a going concern (TOGC). However, you intended to continue to rent out the property and it was only because of circumstances beyond your control (i.e. the tenant moved out) that you didn’t continue to rent it out. There is also a further point worth noting – VAT Public Notice 742: opting to tax land and buildings (at section 3.2) states there is an exemption from VAT where a previously commercial building is adapted to use as a dwelling (see VAT Notice 708 for an explanation of ‘designed as a dwelling’). This exemption may be relevant to your scenario but I would recommend that you request a written ruling from HMRC.
Q. Do I have to pay CGT on the sale of a rented property?
I own a buy-to-let property, and over the last five years, its value has risen from £150,000 to £250,000. I understand that if I sell it now, I would have to pay capital gains tax (CGT) on a gain of £100,000. Can I sell this property and use all the money to buy another property rather than pay the tax now?
A. Unfortunately your plan to buy another house and thereby reduce the CGT payable on the first house is not allowed. ‘Rollover’ or ‘holdover’ relief from CGT is not available for investment properties, except for furnished holiday lettings, or compulsory purchase.