June’s Tax Tips & News
Welcome to 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.
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Marginal Tax Rates
What rate of tax would you pay on an additional £1 of earnings? If your annual income is between £41,865 and £150,000 you may think the tax rate would be 40%, but the peculiarities of the UK tax system mean you could pay much more.
To start with earned income above the 40% threshold carries a national insurance charge (NICs) of 2% so for every £1 you earn above £41,865 (for 2014/15) you will pay 42% in tax and NICs. – read more >>
Real Time Information (RTI) Interest
In the past some employers would play the PAYE system, holding on to the PAYE deductions until the last payment date of the year, and then paying the balance due before interest was charged. That is no longer possible under real time information (RTI), as interest is now charged on late paid PAYE and CIS deductions on a monthly basis throughout the tax year. – read more >>
VAT and Discounts
Do you offer prompt payment discounts to your customers – known as PPDs?
Under UK law VAT is payable on the net amount after deducting the discount, whether or not the customer takes advantage of the discount. – read more >>
Auto-enrolment is the term for the law that requires all employers to register their employees into a qualifying workplace pension scheme. This requirement is being rolled-out to the largest employers first and will eventually apply to the smallest employers from June 2015 onwards. – read more >>
June Questions and Answers
Q. My father resigned as a director of our family business in March, and started to draw his pension, but he retained 15% of the shares in the company. It seems likely that company will be sold later this year. Will my father get entrepreneurs’ relief on any the gain he makes on his shares?
A. Unfortunately not. To qualify for entrepreneurs’ relief the shareholder must be an employee or officer (director or company secretary) for the full 12 months that ends with the sale of the shares, or the date the company ceases to trade. If you reappoint your father as a director (he doesn’t have to get paid for that role) and then wait for 12 months before the sale, he should qualify for entrepreneurs’ relief.
Q. I have just received my renewal pack for claiming working tax credits, but the income figure for 2013/14 doesn’t agree with my P60 form and payslips from my employer – by a wide margin. What’s gone wrong and what should I do?
A. The difference between the figures could be due to any of the following;
- Where you have more than one source of income (perhaps a redundancy payment from a previous employment) your tax credits renewal notice will show the total from all the sources that you received inc ome from in 2013/14.
- Your pay shown on the P60 may have been corrected a late stage after the Tax Credits Office extracted the figures used for the renewal notice.
- Your income counted for tax credits includes the value of certain benefits in kind such as the provision of a company car, which isn’t included in the amounts reported on the form P60 or on payslips. The value of those benefits will be reported on a form P11D which you should receive by 6 July.
If you believe the tax credits income figure for 2013/14 is wrong ring the number given in the renewal pack and report the correct figure.
Q. I run a small independent chemist which has three employees. I was told that my business would not qualify for the employment allowance as a good deal of our work involves dispensing NHS prescriptions. Is that true?
A. The initial guidance from HMRC appeared to indicate that pharmacies would not qualify for the employment allowance, which is worth up to £2000 per year. However, revised guidance from HMRC confirms that independent pharmacies that conducting a business, including over the counter sales as well as dispensing NHS prescriptions, are entitled to claim the employment allowance.
June Key Tax Dates
19/22 – PAYE/NIC and CIS deductions due for month to 5/6/2014