Increased ISA allowances

Posted on May 18, 2012 by Jack Ross

New allowances for Individual Savings Accounts (ISAs) – which offer tax-free returns on investments – have now come into force.

For the 2012/13 tax year, the total amount that can be invested into an ISA has increased to £11,280 (previously £10,680), of which a maximum £5,640 can be invested in cash. The remaining £5,640 can be invested into a stocks and shares ISA with either the same or a different provider.

Junior ISAs are also now available, and have been in force since 1 November 2011, as alternative to child trust funds (CTFs) which have since been disbanded (although CTF vouchers may still be cashed in). Like their adult counterparts, Junior ISAs are tax-free, although the annual allowance limit is £3,600 which can be invested in either cash or stocks and shares.

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The tax year and choosing your accounting date

Posted on May 15, 2012 by Jack Ross

Whatever business model you are in, you must prepare annual accounts which report on business performance and activities during the financial year. What many may be unaware of, is that businesses are allowed a free choice of when to end an accounting year.

So, for 2012/13 tax, accounting dates can vary between 6 April 2012 and 5 April 2013. The date that you choose may be dictated by commercial reasons, but also by external factors such as interest rate movements, inflation, changes in rates of tax and changes to the tax system.

As a general rule, using a date towards the end of the tax year leads to the simplest application of a current year basis of assessment, although this leaves very little time before tax is payable.

Alternatively, businesses expecting an upward trend in profits may benefit from cashflow advantages if their accounting date is set on or shortly after the beginning of the tax year, although this also has its disadvantages including increased liability should the business cease.

Do you need to review your accounting date?

We can advise on the best year end date for your new business, and help change existing dates to make your business more efficient. 

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Mobile record-keeping

Posted on May 12, 2012 by Jack Ross

New mobile apps designed to help small businesses keep tab on their record keeping accounts, have been launched by various software companies and are now available on smartphones such as Android, iPhones and Windows phones.

The free apps are aimed at small businesses, sub-contractors and the self-employed who have an annual turnover below the VAT registration threshold of £77,000 – allowing users access to simple record keeping accounts, to track income, expense and profit, and provide estimations on what their basic tax liability may be.

Whilst the apps meet HMRC specification requirements, HMRC has emphasised that their use has been designed to complement existing tools and programmes. It also encourages users to ask suppliers about any security concerns prior to use.

We can help you keep up to date with your business records. Please get in touch to find out more.

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Auto-enrolment and employee earning thresholds

Posted on May 9, 2012 by Jack Ross

Starting from October this year, and depending on the size of your business, employers will have to automatically enrol all eligible workers into a qualifying pension scheme. The Government has now confirmed that automatic enrolment rates for the next tax year will be aligned alongside tax and national insurance thresholds, in the hope that it will make it easier for firms to work out which staff are eligible.
The following rates will now apply:

  • £8,105 will be the trigger in which an employee must be automatically enrolled – this is in line with the personal allowance.
  • An employee earning between £5,564 up to the £8,105 trigger can choose whether or not to opt in.
  • Qualifying earnings – in which an employer must contribute towards an employee’s pension – will sit between the lower limit of £5,564 and the higher threshold of £42,475. Employees within this threshold who choose to remain opted in must get an employer contribution.
  • Those earning less than £5,564 are entitled to join a pension scheme, although employers will not be required to contribute on their behalf.

Businesses will need to offer their employees auto-enrolment at different commencement dates from October 2012 and 1 January 2016. We can help your business implement an auto-enrolment programme.

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You don’t have a Will? –Don’t die intestate

Posted on May 9, 2012 by Jack Ross

Intestacy is the consequence of dying without a Will.

Various surveys indicate that about two-thirds of adults fail to make a Will. Even those who do may still be caught by the rules of intestacy. A Will may prove to be invalid because of a procedural defect or even just because no-one can find it. A subsequent marriage often revokes a Will while a divorce can alter the terms of a Will.

The main advantages of having a Will are:

  • Your property transfers according to your wishes
  • You may make arrangements to avoid or reduce inheritance tax
  • You can choose who you want to administer your estate
  • You can create a trust, e.g. to provide for dependants when simply leaving them money or property is not deemed appropriate
  • You can create a trust or make other arrangements to reduce your estate and protect yourself for health care charges in older age
  • An administrator has to be appointed instead of an executor. This can be a slower process, and the appointment may be challenged
  • You may specify you wish to look after any [under-age] children
  • You can decide what type of funeral you wish (such as cremation or burial).

All these planning advantages are lost without a Will.

Without a Will you are allowing the state to decide what happens to your estate and in this case your property may not devolve as you would wish. In particular, a surviving spouse or civil partner will not automatically receive everything.

A partner with whom you live but where there is no marriage or civil partnership is not treated as a spouse and may receive nothing.

Contact us so we can advise how to make arrangements to ensure that your wishes are carried out, and that the inheritance tax liability is minimised.

Intestacy – so who gets what?

The rules on who receives what depend on the part of the UK where the deceased lived.

For England and Wales, the law is governed by the Administration of Estates Act 1925. For Northern Ireland, the provisions are broadly the same, but the governing law is the Administration of Estates Act (Northern Ireland) 1955.

A completely different law applies in Scotland.

England, Wales and Northern Ireland

The laws on who receives what changed on 1 February 2009, having remained unchanged since 1993.

If the deceased left a spouse (husband, wife or civil partner) AND children:

The spouse receives:

  • All personal chattels (moveable assets)
  • A legacy of £250,000
  • A life interest in half of what is left.

The children receive the rest. Parents, brothers or sisters receive nothing.

A life interest means that the person may use the items during their lifetime. The assets then pass to the children.

If the deceased left a spouse, no children, but other relatives:

The spouse receives:

  • All personal chattels
  • A legacy of £450,000
  • Half the remainder absolutely.

If the deceased left parents, they inherit the rest. If there are no parents, brothers and sisters inherit. They inherit equally. If any of them has already died, their share may pass to any surviving children or other descendants.

If the deceased left no spouse, but left children: The children inherit everything.

If the deceased left no spouse or children: The estate goes to the highest placed living person or group of living relatives on this list:

  • Parents
  • Brothers and sisters
  • Brothers and sisters of the half blood (one parent in common)
  • Grandparents
  • Uncles and aunts
  • Uncles and aunts of the half blood.

If someone dies and leaves no-one on this list. The estate is “bona vacantia”. This means that the whole estate goes to the state.

A beneficiary has already died

In each case (except parents and grandparents), if a person in the group has already died, their share passes to their descendants. So if uncles and aunts inherit, and an uncle has died, their share will pass to his children, the deceased’s cousins.

Here is an example of a family tree at Alan’s death, showing his descendants’ ages:

Alan = Belinda (died)

                                                |                                               .

|                                              |                                              |

Colin = Donna                                  Eric                       Freda (dead) = George
            |                                                                                           |                     .

|                        |                                                            |                                          |

Harry (19)         Ian  (16)                                        John (dead)                         Keith (16)

             |           .

|                        |

Linda (1)      Michael (born after Alan died)

As Alan’s spouse has died, the three children inherit equally. So Colin and Eric each receive one third.

Freda has died so her third is shared between John and Keith, who each get one sixth. As John is also dead, his sixth is shared between Linda and Michael who each get one twelfth.

So the distribution is:

  • Colin: one third
  • Eric: one third
  • Keith: one sixth
  • Linda: one twelfth
  • Michael: one twelfth

As Keith, Linda and Michael are all under age, their shares will be held in a statutory trust.

Children

For all inheritance purposes, a child includes an adopted child and an illegitimate child. It also includes a child that has been conceived but not born at the time of the death.

A child does not include someone who was given up for adoption by the deceased.

Scotland

In Scotland, the main law is the Succession (Scotland) Act 1964. This has been amended several times, particularly by the Law Reform (Parent and Child) (Scotland) Act 1986.

If there is no Will, the estate devolves in this order:

  • Prior rights
  • Legal rights
  • Other rights

A surviving spouse has prior rights to:

  • The dwelling house in which the spouse was resident, to a maximum value of £473,000
  • Furnishings and furniture in that house up to £29,000, plus
  • £50,000 if there are children, or £89,000 if there are not.

Once the prior rights have been satisfied, the legal rights must be settled.

In addition to the prior rights, the spouse is entitled to:

  • One third of the moveable estate if there are children, or
  • One half of the moveable estate if there are no children or remoter descendants.

If there are children in addition to a spouse, they have legal rights to one third of the moveable asset(s). If there is no spouse, they receive half. All children inherit equally. Since 1986, children inherit from a parent even if the parent was unmarried.

After the prior rights and legal rights, the balance of the estate passes under the other rights provisions. Under this the balance of the state passes wholly to the highest surviving person or persons in the list below:

  1. Children
  2. Parents and brothers and sisters (half to parent or parents, half to siblings)
  3. Brothers and sisters
  4. Parents
  5. Husband, wife or surviving partner
  6. Uncles and aunts
  7. Grandparents
  8. Brothers and sisters of grandparents
  9. Remoter ancestors
  10. Brothers and sisters of any surviving ancestor of oldest generation
  11. The Crown.

Where more than one person in a group inherits, the estate is divided equally between them. There is no precedence on grounds of age or sex (except in relation to titles and coats of arms).

If a relative who would have inherited has died, their share passes to their children. However no person can inherit more than one share under their provision.

Brothers and sisters of the whole-blood inherit before those of the half-blood.

Adopted children and adoptive parents have the same rights as natural children and natural parents.

If a person has made a Will, the prior rights do not apply, but the legal rights apply regardless of what the Will says. However, someone cannot inherit under both a Will and the legal rights of intestacy. The beneficiary must choose which to inherit.

Deed of variation

If the laws of intestacy do not give the desired result, it is possible for all the beneficiaries to make a deed of variation within two years. This requires unanimous agreement. For inheritance tax, the estate is taxed as if distributed in accordance with the deed. We can advise you on this.

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Saving with a Tax Advantage

Posted on May 9, 2012 by Jack Ross

The past few years have seen households focus on reducing household debt and increase their savings. Tax advantaged saving still provides a valuable boost to the saving regime and so in this update we look at some of the opportunities for you to consider together with your professional advisers.

Saving for retirement
The Government encourages pension savings by providing income tax relief on pension contributions via a reduction in your tax bill and/or an increase in your pension fund. Pension fund profits are free of income tax and capital gains tax (CGT). Your pension fund may even be able to acquire commercial property with the rent received being tax-free in the fund.

With the top rate of tax in the UK at 50 per cent (ignoring any effective rates), there is a substantial tax advantage because it is possible to invest up to £50,000 – although a contribution of up to £200,000 is available where previous years’ allowances are unused – subject to the overriding limit of 100% of your annual ‘net relevant earnings’. The relief is achieved firstly by the pension provider claiming 20 per cent back from the Government and the remainder is received through a reduction in your income tax liability.

Upon retirement 25 per cent or possibly more of your total pension pot can be withdrawn as a tax-free lump sum. Annuities can be purchased with the remaining fund to provide a guaranteed income stream, normally at retirement when your other income is lower, and thus you may be subject to a lower rate of tax. Further options are also available, which your professional adviser will be able to discuss with you.

Individual Savings Accounts (ISAs)
ISAs have widespread appeal. Investments can be made on an annual basis with all income and gains arising exempt from taxation.

The current ISA annual subscription limit for stocks and shares is £11,280, of which up to £5,640 can be invested in a cash deposit.

Junior ISAs
A Junior ISA is a long-term saving plan for children under the age of 18. The annual investment limit is £3,600 which, if invested outside of a Junior ISA, could be subject to tax. Maybe a possibility for saving for future children/grandchildren costs?

Enterprise Investment Scheme (EIS)
EIS is an investment vehicle offering numerous tax reliefs to the investor in order to attract investment into unquoted companies.

There are numerous restrictions and conditions to each of the available reliefs, but the main constant is that the shares in an EIS-registered company must be held for three years from the latter of the date the shares were issued or the date the qualifying trade started. Investment can be directly into the company or through an EIS Fund.

Income tax relief
Individuals investing into an EIS-registered company will be entitled to income tax relief of 30 per cent of their investment. There is also a ‘carry back’ facility, which allows all or part of the cost of shares acquired in one tax year to be treated as though those shares had been acquired in the preceding tax year (at the rate for that year). For example:

EIS investment of £20,000

2011/12: Gross salary

£30,000

   
  IT liability

£4,705)

    
  EIS relief

(£1,495)

   £4,984 EIS carried back
  Income tax due

£3,210

    
   

   
2012/13: Gross salary

£30,000

   
  Income tax liability

£4,505)

    
  EIS relief

(£4,505)

   £15,016 EIS utilised
  Income tax due

£ nil)

    

The tax treatment can be complicated – please ask us for more information.

CGT
There is also a CGT exemption, so that any gain made on your EIS investment is completely free from CGT.

The payment of tax on a gain can be deferred where the gain is invested in shares of an EIS qualifying company. The gain can arise from the disposal of any kind of asset, but the investment must be made within the period one year before or three years after the gain arose.

There are no minimum or maximum amounts for deferral.

Seed Enterprise Investment Schemes (SEIS)
SEIS were launched from 6 April 2012 and act alongside the existing EIS framework. The scheme will allow up to £100,000 to be invested in the first year, with an additional £50,000 available for subsequent years subject to a total limit of £150,000.

In return, tax relief at 50 per cent will be provided to the investor regardless of any marginal tax rates and any chargeable gains occurring in the 2012/13 tax year may be rolled over into SEIS and attract full CGT exemption. To reflect the smaller nature of the scheme, qualifying companies must be a start-up UK company with fewer than 25 employees and gross assets under £300,000.

Venture Capital Trusts (VCTs)
Similar to the EIS, VCTs are part of a scheme that provides tax relief to individuals on investments made in small businesses not listed on a recognised stock exchange.

Income tax relief is available where you subscribe up to a maximum of £200,000 of shares in any given tax year and these are held for a period of at least five years. In this case, income tax relief of 30 per cent will be applied to the investment and any dividends received throughout will not be taxable at all. The sale of shares in a VCT after this period will be exempt from CGT.

CGT exemption
Perhaps the most frequently overlooked and unused tax-free allowance available to individuals is the annual CGT exemption, currently £10,600. This tax-free amount is in addition to your income tax personal allowance.  Consequently, turning income-generating assets into capital assets is an essential tax planning consideration.

Making use of this allowance will require the investment in capital assets which can include land and property, shares, unit trusts and other miscellaneous assets. One such opportunity to use this tax-free exemption may be to invest in a collective fund managed by a professional manager. Both open ended investment companies and unit trusts exist for this specific purpose.

Subject to gains successfully being realised on the investments, careful planning of disposals over a number of tax years to utilise the annual exemption will significantly reduce and often eliminate any CGT liability arising. 

Investment bonds
An investment bond is a vehicle offered by life assurance companies and, although strictly an investment, it is deemed to be a life policy and thus outside the scope of the traditional CGT framework.

UK investment bonds are often used for tax deferral, as income or gains received from the bond will only be subject to taxation once a chargeable event is triggered. Nevertheless, investment bonds are also used as a tax mitigation tool for those who may be a higher rate tax payer on the investment date but only a basic rate tax payer when the bond is surrendered.  As the investment is deemed to have been subject to basic rate tax already it may mean that there will be no further tax to pay.

Each policy year carries an entitlement to withdraw up to 5 per cent of the initial investment without becoming subject to income tax immediately, thus allowing for tax due to be deferred until the bond is surrendered or matures. Withdrawals do not have to be made every year to maintain this entitlement as you are allowed to withdraw the total amount unclaimed for previous year’s tax free in addition to your current year’s 5 per cent allowance. When considering retirement to a country which provides specific tax exemptions for overseas income and gains, this could potentially mean that relief at 100 per cent is achieved.

Your next step
We are only able to provide a brief overview of the tax-advantaged savings opportunities. This factsheet is for information only, please seek professional advice before taking any action.

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The Seed Enterprise Investment Scheme (SEIS)

Posted on May 4, 2012 by Jack Ross

For many of the businesses we speak to, the news last week that the UK has dipped back into recession will not have come as a surprise. The economic landscape remains bleak, and almost all businesses are finding this year to be toughest since the Credit Crunch began.

As the economy stalls the Coalition Government has come under attack, and a lot of the fire has been focused on policies that emerged in the Budget in March. The headline writers have made hay with stories about tax cuts for millionaires which they’ve contrasted with the introduction of ‘pasty’ and ‘granny’ taxes for the rest of us.

But actually, if you can get past the media hysteria, there are some very useful tax reliefs for businesses which will help small firms. These reliefs have not been picked up by the mainstream media.

The one that we are most excited about is the Seed Enterprise Investment Scheme (SEIS). This new scheme has the potential to provide up to 78% tax relief, and help new startup businesses.

Normally when we write about tax relief, or a scheme, we ask to speak to people to take advantage of the scheme. But with SEIS it’s different. We already have a number of investors who wish to take advantage of this very generous tax relief. So this month, we are looking for businesses which are two years old or younger, or entrepreneurs with business ideas, who need funding to help get their business off the ground and help it grow.

There are strict rules on the amount and type of investment, but we can advise on that. The bottom line is new businesses can benefit from investment of up to £150,000 (with a maximum of £100,000 from any one investor).

If you think your business, or your idea, can benefit from such an investment, get in touch.

If you are an investor, and would like up to 78% tax relief on your investment,  call us on 0161 832 4451, and we can tell you more about the scheme.

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Seed Enterprise Investment Scheme (SEIS)

Posted on April 30, 2012 by Jack Ross

The Seed Enterprise Investment Scheme (SEIS) is designed to help small, early stage companies to raise equity finance by offering a range of tax reliefs to individual investors who purchase new shares in those companies.  It complements the existing Enterprise Investment Scheme (EIS) which will continue to offer tax reliefs to investors in higher risk small companies.  SEIS is intended to recognise the particular difficulties which very early stage companies face in attracting investment, by offering tax relief at a higher rate than that offered by the existing EIS.

SEIS applies for shares issued on or after 6th April 2012.  The rules have been designed to mirror those of EIS as it is anticipated that companies may want to go on to use EIS after an initial investment under SEIS.

Please note that the legislation governing SEIS will not become law until the Finance Bill receives Royal Assent, expected to be in July 2012.  It is the government’s intention that the legislation, and the tax reliefs available will apply in respect of shares issued on or after 6th April 2012.  HMRC cannot provide an assurance before the date of Royal Assent that any shares issued will qualify for relief.

Investment requirements

Shares must be paid up in full, and in cash, when they are issued.

Please note that one of the most common reasons for investments failing to qualify for relief under EIS (which may also apply to SEIS) is that shares are issued to investors without the company having received payment for them.  This sometimes happens when a new company is registered at Companies House and shares are issued to members as part of the registration process, but the company takes some time to set up a bank account and the shares are not paid for until that has happened.

HMRC advises companies and investors to ensure that any shares on which it is intended SEIS relief will be claimed are not issued during the company registration process but are issued only at a later date when the company is able to receive payment for them.

Shares must be full risk ordinary shares, and may not be redeemable or carry preferential rights to the company’s assets in the event of a winding up.  Shares may carry limited preferential rights to dividends, but may not include rights where either:

  • The rights attaching to the share include scope for the amount of the dividend to be varied based on a decision taken by the company, the shareholder or any other person.  (NB this exclusion covers only those shares which carry preferential rights and does not therefore prevent the voting of dividends in respect of non-preferential shares, nor does it prevent shareholders from choosing to waive a dividend payment should they wish to do so).
  • The right to receive dividends is cumulative – that is, where a dividend which has become payable is not in fact paid, the company is obliged to pay it a later time, normally once funds become available.

There must be no arrangements to protect the investor from the normal risks associated with investing in shares, and no arrangements at the time of investment for the shares to be sold at the end of the relevant period.  The shares may not be acquired using a loan made available on terms which would not have applied other than in connection with the acquisition of the shares in question.  The shares must not be issued under any reciprocal arrangements, where company owners agree to invest in each other’s companies in order to obtain tax relief.

Investor requirements

Income Tax relief is available to individuals who subscribe for qualifying shares in a company which meets the SEIS requirements, and who haveUKtax liability against which to set the relief.  Investors need not beUKresident.

Relief is available at 50% of the cost of the shares, on a maximum annual investment of £100,000.  The relief is given by way of a reduction of tax liability, providing there is sufficient tax liability against which to set it.  Please note that the relief cannot be set off against the notional tax credit on dividend income, as that tax credit is not recoverable.

As an investor you may be eligible for tax relief providing:

  • You have subscribed for shares which have been issued to you and which at the time of issue were fully paid for.  You may subscribe via a nominee.
  • You do not have a substantial interest in the company, at any time from date of incorporation of the company to the third anniversary of the date of issue of the shares.  Substantial interest is defined as owning more than 30% of the company’s issued share capital, or of its voting rights, or of the rights to its assets in a winding up.  Shareholdings of associates are taken into account in arriving at the 30% figure.  Associates include business partners, trustees of any settlement of which the investor is a settlor or beneficiary, and relatives.  Relatives for this purpose are spouses and civil partners, parents and grandparents, children and grandchildren.  Brothers and sisters are not counted as associates for SEIS purposes.
  • You are not employed by the company at any time during the period from date of issue of the shares, to the third anniversary of that date.  For this purpose, you are not treated as employed by the company if you are a director of the company.

When relief will be withdrawn or reduced

Tax relief in this section means both Income Tax relief and capital gains reinvestment relief.

HMRC will withdraw tax relief if, at any time during the three years from date of issue of the shares if:

  • You become employed by the company without being a director of the company.
  • Your holding in the company becomes a substantial interest (see Investor requirements above).
  • The company loses its qualifying status.

Tax relief will be either withdrawn or reduced if at any time during the three years from date of issue of the shares if:

  • You dispose of any of the shares (other than to a spouse or civil partner – in those circumstances the shares are treated as though the spouse or civil partner had subscribed for them).
  • You or an associate receive value from the company, or from a person connected with that company.  The rules to do with receiving value from the company are similar to those for EIS.  It can include the company repaying any of its shares or securities which you hold; repaying a debt owed to you, if that repayment is in connection with the issue of shares; you receiving a loan or benefit from the company; or the company selling an asset to you at less than market value (or you selling an asset to the company at more than market value).  How much tax relief is withdrawn will depend on the amount of the value received.  In significant amounts of value received can be ignored, and there is also scope for relief to be retained if the value received is made good by the investor as soon as is practicable.

Please note you are required by law to tell your tax office within 60 days of any of the above events occurring.

There is a ‘carry back’ facility which allows all or part of the cost of shares acquired in one tax year to be treated as though the shares had been acquired in the preceding tax year.  The SEIS rate for that earlier year is then applied to the shares, and relief given for the earlier year.  This is subject to the overriding limit for relief each year.

Please note that there is no SEIS rate for a year earlier than 2012/13 so there is no scope for carrying relief back before that year.

Tax reliefs available – capital gains reinvestment relief

This relief is for the tax year 2012/13 only.  If you dispose of an asset which would give rise to a chargeable gain in 2012/13, and reinvest all or part of the amount of the gain in shares which also qualify for SEIS income tax relief, the amount reinvested will be exempt from capital gains tax.  The £100,000 investment limit which applies for income tax relief also applies for reinvestment relief.  The ‘carry back’ facility applies for capital gains reinvestment relief as it does for income tax relief.

The asset does not have to be disposed of first; the investment in SEIS shares can take place before disposal of the assets, providing that both disposal and investment take place in 2012/13.

Tax reliefs available – capital gains disposal relief

If you have received income tax relief (which has not subsequently been withdrawn) on the cost of the shares, and the shares are disposed of after they have been held for at least three years, any gain is free from Capital Gains Tax.

NB  If no claim to Income Tax relief is made, then any subsequent disposal of the shares will not qualify for exemption from Capital Gains Tax.

A company cannot issue shares under the SEIS scheme if it has already had investment from a VCT, or issued shares in respect of which it has provided an EIS compliance statement (EIS1).

This guidance provides an overview of SEIS.  It does not cover all the rules in full detail.  For more detailed advice about investing in a SEIS, please call us on 0161 832 4451.

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Budget 2012: your money highlights

Posted on April 18, 2012 by Jack Ross

Budget 2012 included a series of announcements that could affect your finances. Highlights included:

  • The personal allowance will increase to £9,205 in April 2013, putting the Government on track for its £10,000 target.
  • The 50% additional tax rate will reduce to 45% from 2013, after the new rate caused ‘massive distortions’ and raised just one third of what it was forecast to.
  • Age related personal allowance to be frozen – perhaps the most controversial announcement made. From 2013/14 the availability of the age related personal allowance will be restricted. The allowance of £10,500 for 2012/13, available for those aged 65 to 74 will be restricted to individuals born after 5 April 1938 but before 6 April 1948. The age related personal allowance of £10,660 for 2012/13, available to people aged 75 and over will be restricted to those born before 6 April 1938. The allowance of £10,660 will not be increased in 2013/14.
  • Child benefits – a new income tax charge is being introduced from 7 January 2013 on taxpayers who are both in receipt of child benefit and whose annual income exceeds £50,000. This charge also applies if it is the partner of the taxpayer earning £50,000 in a tax year who is in receipt of the child benefit. In a case where both partners earn over £50,000 in a tax year, the income tax charge will only apply to the partner with the higher income. For taxpayers with income in a tax year of above £60,000, the tax charge will equate to the amount of the child benefit. For those taxpayers with an income of between £50,000 and £60,000, the income tax charge will be 1% of the amount of child benefit for every £100 of income above £50,000.

These are just some of the announcements made. Please contact us if you would like more information or think that we can help you to prepare for these changes. 

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Will you be an HMRC taskforce target?

Posted on April 16, 2012 by Jack Ross

HMRC is launching thirty new taskforces in 2012/13 to crackdown on those businesses it believes are likely to attempt to evade tax.

Likely targets include the textiles industry, the motor trade, and indoor and outdoor markets, according to HMRC.

The taskforces are regional, and HMRC expects to collect more than £50 million as a result of 12 taskforces that were launched in 2011/12. These included London restaurants, fast food franchises, Scottish scrap metal traders, and North West landlords.

The taskforces form part of HMRC’s ramping up on anti-avoidance. Other initiatives launching or already launched include targeting those working in home improvement trades, direct selling, online trading and electricians.

If you are concerned about your tax affairs please do not hesitate to contact us. 

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