To June’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
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!
New PSC register requirements take effect
From 6 April 2016, all unlisted UK companies, limited liability partnerships (LLPs), or societas europaea (SEs) are required to maintain a register of the people who have significant control over them. – read more >>
OTS examines potential for new trading vehicle
The Office of Tax Simplification (OTS) recently published a series of recommendations following its simplification review of small company taxation (see OTS recommends simplifications for small companies, April 2016 newsletter).
The review focused on incorporated businesses with fewer than 10 employees, known as ‘micro’ businesses, of which there are now some 4.1 million in the UK, with 1.3 million operating through a company structure.
Currently, the UK operates a corporate tax regime on a ‘one-size fits all’ basis, modelled on a traditional company, with third party shareholders and clear intentions for future growth. However, shifting attitudes over recent years have resulted in an increase in people choosing to contract their services to large companies, or by using platforms and other disruptive technologies, to obtain their work, rather than being an employee. This shift has, in turn, resulted in an increased need for the tax simplification for micro businesses. – read more >>
HMRC go live with Verify identity authentication
Gov.uk Verify, the online service taxpayers will need to use to prove their identity before accessing HMRC’s digital services and other government online services, is now live. The central government platform for online identity assurance has been under development for some time by the government digital service (GDS) and has been available in a beta version. It has now passed its service assessment. – read more >>
Free pension advisory services to be merged
Pension Wise, the free advice service set up to promote and advise on pensions reform and annuity freedoms, is to be merged with other publically funded advice services on pensions, to create a single website and advisory service. – read more >>
ATT urges HMRC to amend flat rate VAT scheme
Do you think you are paying too much VAT? Are you concerned that your business is being unfairly penalised by a VAT policy which treats all businesses the same regardless of size?
Well, that’s a criticism we, as accountants, often hear. Small businesses have been asking for a fundamental reform of the current system for some time, and it now appears their cause has been championed by the Association of Tax Technicians, with the ATT urging HM Revenues & Customs to review its VAT flat rate scheme to guarantee that small business consultants are no longer charged too much VAT. – read more >>
June Key Tax Dates
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/6/2016
June Questions and Answers
Q1. How do I work out my share of a capital gain?
I owned a quarter share in a property that was sold in 2015. It was not my main residence at any time during my period of ownership. I am trying to work out my share of the capital gain arising on the property. Do I simply divide the purchase price, sale price, and any improvement costs by four to work out how much tax I will have to pay?
A: HMRC guidance on the new higher rates of SDLT for purchase of additional residential properties explains that if a previous main residence is replaced within three years, then you will not be liable to the additional 3% SDLT charge, even though you own other residential properties.
Q2. Are my savings covered by the personal savings allowance?
I have several savings accounts. Most of the accounts have always had tax deducted from the interest paid before I receive it. However, I understand that one of my accounts is ‘tax-free’. Interest has always been paid gross and I have never included it on my tax return. I am a basic rate taxpayer. Is the ‘tax-free’ account interest included in the personal savings allowance limit?
A: If you make your business accounts up to 31 March, HMRC will treat this as being made up to 5 April. One advantage of a 31 March/ 5 April year-end is that no ‘overlap’ profits will be created. Broadly, overlap profits are bought about by being taxed twice in the first two years of trading. You would get relief for this overlap, but potentially this won’t be until a much later stage (for example if you change your accounting date, or if you cease to trade). Quite often, profits in a new business are smaller at the start and gradually increase. An advantage of a 30 April year-end is that tax is paid later. So, for a 30 April 2016 year-end, tax will become due for payment on 31 January 2018, and the tax on profits earned between 1 May 2016 and 30 April 2017 will be payable by 31 January 2019. If the business had a 31 March 2017 year-end, the tax on profits earned between 1 April 2016 and 31 March 2017 would not become payable until 31 January 2018. Of course, if you chose a later year-end, you should make sure that you keep enough money aside to pay your tax bill when is becomes due.
Q3. Will I be entitled to tax-free childcare?
I have heard that HMRC are launching a new tax-free childcare scheme. I am currently employed and earn £70,000 a year. My employer does not provide any support for childcare. Will I be eligible to join the new scheme?
A: You need to register with HMRC for both self-assessment as self-employed, and under the construction industry scheme (CIS). This does mean that there means that there are two separate registrations, but these can both can be done at the same time.
In most cases you can register as self-employed by calling the HMRC Newly Self-employed Helpline on 0300 200 3504. If you are already registered as self-employed, but need to register under the CIS scheme, you should contact the CIS Helpline on 0300 200 3210.
The contractor for whom you are working will ask you for your unique tax reference (UTR) and you need to provide this before you are first paid, in order to determine which tax deduction rate to use.
The UTR is issued when you are first set up under self-assessment to complete a tax return. If you have not previously been required to prepare a tax return, you will be given a UTR when you register as self-employed.
For further guidance on registration and other obligations for subcontractors, see the Gov.uk website at https://www.gov.uk/what-you-must-do-as-a-cis-subcontractor.