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.
We’re here to help!
Pensions Death Tax
Currently if you die before you have started to draw your pension, the value of your pension fund will not usually be subject to inheritance tax (IHT) at 40%, as it is excluded from your estate. However, there can be a 55% tax charge where your pension fund is passed to someone else under your will, especially if you die aged over 75. – read more >>
Taskforce at Large
HMRC has set up specialist tax investigation teams to concentrate on recovering unpaid tax from particular business sectors or as a result of tax fraud. – read more >>
National Insurance Contributions
It seems that HMRC is trying to gather every penny in tax and national insurance contributions (NIC), from every possible source. Recently it has been demanding payment of class 2 NICs from landlords and investors in investment partnerships. If you get a bill for back-dated class 2 NICs should you pay it? – read more >>
Mini One Stop Shop (MOSS)
This sounds like a friendly retail outlet where you might buy a pint of milk on a Sunday evening. In fact it is short-hand for the online portal which UK businesses should use from 2015 to account for VAT they owe in respect of digital services provided to customers in other EU countries. – read more >>
UK Government Announces Plans To Offer Alternative Finance To SMEs
Is your business struggling to access finance? Have your expansion plans been stymied by your bank’s unwillingness to lend? If you’re one of the many SMEs who have had their plans stifled by a stubborn and risk-averse banking system, then there could be some good news on the horizon. The UK Government has confirmed that it intends to take the initiative. It is now planning to improve access to alternative finance for those small and medium-sized enterprises – read more >>
Most Small Business Would Like Auto-Enrolment Delayed Until Pension Reform Is Complete Claims ACA
Auto-enrolment is a subject that causes panic amongst many small businesses. It represents a fundamental change to the way employers and employees fund their retirement years. The proposed system is vastly different than any that the private sector has dealt with before, so any accountant can understand and sympathise with these concerns. – read more >>
November Questions and Answers
Q. Last year I bought a run-down pub and converted it into a restaurant. I registered for VAT after the work was done, but before the restaurant opened. Can I reclaim any of the VAT paid on the costs of converting and fitting out the restaurant?
A. It is easy to see with hindsight, but you should have registered for VAT at the point you started the conversion work. You can claim back VAT charged on services incurred in the six month period that ends with the date you registered for VAT, which might not cover all of the conversion costs.
There is more flexibility for the assets you purchased to use in your restaurant business, such as tables and kitchen equipment. We need to look at each asset purchase individually, but if you still held the assets at the date your VAT registration took effect, the VAT on those purchases should be reclaimable.
Q. HMRC has sent me a tax calculation for 2013/14 which says I owe over £5,000. I don’t understand how this much can be due as all my tax is dealt with under PAYE and I don’t have any other significant income. What should I do?
A. You will have received a form P800 showing the tax deducted from your pay under PAYE, and the amount of tax due based on your total income for the year. HMRC has admitted that a large number of the P800 forms sent out in recent weeks are incorrect. In many cases part of the taxpayer’s income has been double counted, but the tax deducted has not, leading to an apparent underpayment of tax.
Your first step should be to compare the P800 calculation with the P60 form given to you by your employer in May 2014. Where the total income shown on the P60 is less than your employment income shown on the form P800, there may be a problem. Also check if any of the figures on the P800 are estimated, such as rents or interest received. If the HMRC figures appear to be wrong, we can help you get the tax calculation corrected.
Q. My personal service company stopped trading on 31 August 2014, after a good run of 10 years. There is about £22,000 available to distribute to me as the only director/ shareholder. Can I claim entrepreneurs’ relief on that pay-out and do I need to show it on the tax return?
A. Distributions from an informal winding-up of a company of no more than £25,000 are treated as capital gains, so you should be within that total with a final distribution of £22,000. If the total distribution from the company made in anticipation of the winding-up exceeds £25,000, then the whole distribution is taxed as income, unless the company is formally liquidated by a liquidator.
As the company has been trading for more than a year and you have held at least 5% of the shares for that time, as well as working for the company, entrepreneurs’ relief should apply. This reduces the tax rate payable on the gain to 10% after deducting your annual exemption of £11,000 (for 2014/15), it doesn’t eliminate the gain. You need to claim entrepreneurs’ relief on your tax return and include a computation of the gain. We can help you with that.
November Key Tax Dates
2 – Last day for car change notifications in the quarter to 5 October – Use P46 Car
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/11/2014