14 Days left to submit your 2016/17 self assessment return

The following Tax Events are due on 31st January 2018:

Personal Tax Events

Deadline for submitting your 2016/17 self assessment return (£100 automatic penalty if your return is late) and the balance of your 2016/17 liability together with the first payment on account for 2017/18 are also due.

This deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge liabilities. 

There is a penalty of £100 if your return is not submitted on time, even if there is no tax due or your return shows that you are due a tax refund.

The balance of any outstanding income tax, Classes 2 and 4 NI, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2017 is due for payment by 31st January 2018.  Where the payment is made late interest will be charged.

The first payment on account for 2017/18 in respect of income tax and any Class 4 NI or High Income Child Benefit Charge is also due for payment by 31st January 2018.

If we have already dealt with your self assessment return on your behalf you need take no action.

If you haven’t completed your self assessment return yet please contact us, we can help. 0116 2423400 or send us an email info@torrwaterfield.co.uk

Tax Events are due on 19th January 2018

The following Tax Events are due on 19th January 2018:

Business Tax Events

PAYE quarterly payments are due for small employers for the pay periods 6th October 2017 to 5th January 2018

This deadline is relevant to small employers and contractors only. As a small employer with income tax, national insurance and student loan deductions of less than £1,500 a month you are required to make payment to HMRC of the income tax, national insurance and student loan deductions on a quarterly basis.

Where the payment is made electronically the deadline for receipt of cleared payment is 22nd January 2018. In year interest will be charged if payment is made late. Penalties also apply.

PAYE, Student loan and CIS deductions are due for the month to 5th January 2018.

This deadline is relevant to employers who have made PAYE deductions from their employees’ salaries and to contractors who have paid subcontractors under the CIS.

Employers are required to make payment to HMRC of the income tax, national insurance and student loan deductions. Contractors are required to make payment to HMRC of the tax deductions made from subcontractors under the CIS.  

Where the payment is made electronically the deadline for receipt of cleared payment is 22nd January 2018. In year interest will be charged if payment is made late. Penalties also apply.

VAT: Overseas sales

VAT: Overseas sales

Below are some very basic rules of how to deal with VAT on overseas sales. If you ever come across these, please contact us as there are a lot more details which should be reviewed before anything is submitted to HMRC.

The following are basic questions that need to be answered before being able to decide whether VAT should be charged or not:

Are you supplying goods or services?

Are you supplying to a business or a consumer?

Where are they located?

Are they VAT registered?

Goods

EU:

VAT Registered Business-

If the VAT number has been provided by the Business and there is a VAT number on the invoice as well as documentary proof of export, VAT can be charged at 0%.

Non-VAT Registered Business or Consumer-

If the customer is not VAT registered you will have to charge VAT at 20%. However this is only true until the distance selling threshold is exceeded, which depends on the country concerned.

 Outside the EU:

If the Customer resides outside the EU, VAT can be charged at 0%.

 Services

EU:

All VAT and Non-VAT Registered Businesses-

VAT can be charged at 0%, if the service is for business purposes.

Consumer-

VAT must be charged at 20%.

However, if it is an ‘e-service’ you would have to charge VAT at that country’s own rate.

Outside the EU:

All VAT and Non-VAT Registered Businesses-

VAT can be charged at 0%.

Consumer-

VAT can be charged at 0% for the following services:

Electronically supplied services

Advertising

Legal

Accountancy

Consultancy

Supply of staff

Hire of goods

Telecoms and broadcasting

 

VAT must be charged at 20% on all other services.

If you have any queries, or require any further information on this, please do not hesitate to contact us 0116 2423400

Jess Cooper, Accounts & Tax 

The Apprenticeship Levy

The Apprenticeship Levy is charged on employers’ “paybills” at a rate of 0.5%. The levy is payable through Pay as You Earn (PAYE) and is payable alongside income tax and National Insurance. To keep the process as simple as possible “paybill” will be based on total employee earnings subject to Class 1 secondary NICs.

Each employer receives one annual allowance of £15,000 to offset against their levy payment. There is a connected persons rule, similar to the Employment Allowance connected persons rule, so employers who operate multiple payrolls are only be able to claim one allowance.

1.) If you’re an employer with a pay bill over £3 million each year, you must pay the apprenticeship levy from 6 April 2017. You can find out how to do this here.

You will report and pay your levy to HMRC through the PAYE process.

The levy will not affect the way you fund training for apprentices who started an apprenticeship programme before 1 May 2017. You’ll need to carry on funding training for these apprentices under the terms and conditions that were in place at the time the apprenticeship started.

Detail on how to setup and use your online account can be found here.

2.) If you do not have to pay the levy then you can still receive support to pay your apprentices.

From May 2017, you will pay 10% towards to the cost of apprenticeship training and government will pay the rest (90%), up to the funding band maximum.

If you do not pay the levy, you won’t be able to use the apprenticeship service to pay for apprenticeship training and assessment until at least 2018.

Instead, you’ll need to agree a payment schedule with the provider and pay them directly for the training. The provider must prove that you have paid your contributions as a condition of government paying its contribution.

There are 2 different types of apprenticeships to choose from:

  • apprenticeship standards– each standard covers a specific occupation and sets out the core skills, knowledge and behaviours an apprentice will need; they are developed by employer groups known as ‘trailblazers’
  • apprenticeship frameworks– a series of work-related vocational and professional qualifications, with workplace- and classroom-based training

To choose training:

If you would like to discuss any of this further then please contact us on 0116 2423400

Becky Edwards, Payroll Manager 

HMRC’s Worldwide Disclosure Facility (WDF)

This is a facility that the Inland Revenue introduced in 2016 which allows the voluntary disclosure of any UK tax liabilities that relate to offshore income or assets, which have not previously been disclosed to the UK tax authorities, to be declared.

This includes:

  • Income arising from a source outside the UK
  • Assets situated or held outside the UK
  • Activities carried on wholly or mainly outside the UK
  • Where the funds connected to unpaid tax are transferred outside the UK

Which years?

  • The facility applies to all tax years up to and including 2015 to 2016.
  • If HMRC has sent you a tax return for that year, or any tax year from 2013 to 2014 which is still outstanding, you must complete the return and you must not include these tax years on this disclosure form.

 

By contacting the Inland Revenue, rather than the Inland Revenue contacting you, the penalty regime will be less harsh.

 

If you think that the above applies to you then please get in touch with us as soon as possible so that the Inland Revenue can be notified. 0116 2423400

Julia Harrison, Tax Manager 

Inheritance Tax

Inheritance Tax

For most people, Inheritance Tax is a tax they only encounter when dealing with the estate of someone who has passed away.

There’s normally no Inheritance Tax to pay if either:

  • The value of your estate is below the £325,000 threshold
  • You leave everything to your spouse or civil partner, a charity or a community amateur sports club.

If you give away your home to your children or grandchildren, your threshold will increase to £425,000.

If you are married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you pass away.  This means their threshold can be as much as £850,000.

Inheritance Tax rates

The standard Inheritance Tax rate is 40%.  It’s only charged on the part of your estate that’s above the threshold.

Inheritance Tax can be paid at a reduced rate of 36% on some assets if you leave 10% or more of the ‘net value’ to charity in your will.

Example 

If your estate is worth £600,000 and your tax-free threshold is £325,000 – The Inheritance Tax charged will be 40% of £275,000 (£600,000 minus £325,000). 


Who pays the tax to HMRC? 

The Funds from your estate are usually used to pay the Inheritance Tax to HM Revenue and Customs.  This is done by the person dealing with the estate (the ‘Executor’, if there is a will). 

If you have any further questions or would like to discuss the above in more detail then please get in touch 0116 2423400

Paula McIntosh, Administrator 

Have you become a landlord?

You can become a landlord for many different reasons; you might not even think of yourself as one. This could be because you’ve:

  • inherited a property
  • rented out a flat to cover your mortgage payments
  • moved in with someone and need to rent out your house.

If you follow this link http://bit.ly/2w4rf17 it takes to the gov.uk web page for Guidance on HMRC’s Let Property Campaign.

On the page there are examples of the most common tax errors people make when renting out their property and are all part of the Let Property Campaign which aims to help landlords bring their tax affairs back in to order. These include:

  1. Moving in with a partner and renting your property.
  2. Inheriting a property.
  3. Property bought as an investment.
  4. Relocation
  5. Divorce
  6. Moving in to a Care Home.
  7. Jointly owned investment property.
  8. Property bought for a family member at university.
  9. Armed Forces.
  10. Tied accommodation.

If any of the above apply to you, or if you are unsure whether your circumstances are covered, you can contact HM Revenue and Customs direct or you may wish to discuss matters with us first. Please call us on 0116 2423400

Linda Plumb, Credit Control

Hot Topic Making Tax Digital for Business

The government have issued information on how Making Tax Digital for Business (MTDfB) is expected to work for VAT once the rules are introduced in April 2019.

Under the proposed rules, which have been issued subject to consultation, VAT registered businesses with turnover over the VAT registration threshold will be required to submit their VAT return digitally using software. Businesses with a turnover above the VAT threshold (currently £85,000) will have to:

  • keep their records digitally (for VAT purposes only) and
  • provide their VAT return information to HMRC through Making Tax Digital (MTD) functional compatible software.

It has also been confirmed that MTD will be available on a voluntary basis to other businesses, for both VAT and income tax.

Exemptions will be available where HMRC are satisfied the business is run by a practising member of a religious society or order whose beliefs are incompatible with the use of electronic communications, some insolvent businesses; or where HMRC are satisfied that it is not reasonably practicable to make a return using an electronic return system for reasons of disability, age, remoteness of location or any other reason.

The proposed rules include provisions that where a business is in scope for MTD the business must use functional compatible software to meet the new requirements. This software will either be a software program or set of compatible software programs which can connect to HMRC systems via an Application Programming Interface (API). The functions of the compatible software include:

  • keeping records in a specified digital form
  • preserving digital records in a specified digital form
  • creating a VAT return from the digital records and providing HMRC with this information digitally
  • providing HMRC with VAT data on a voluntary basis and
  • receiving information from HMRC via the API platform that the business has complied.

Businesses will need to preserve digital records in the software for up to six years. The digital records include:

  • ‘designatory data’ including the business name, principal place of business and VAT registration number together with information about which VAT accounting schemes they use
  • the VAT account that each VAT registered business must keep, by law, and
  • information about supplies made and received.

Further information on the required information can be found in Annex 1.

The government will make the final detailed requirements available to the software providers by April 2018 to allow time for the software to be developed and tested prior to the rules coming into effect from April 2019.

VAT returns

Businesses within the scope of MTD for VAT will be required to submit their VAT returns using their functional compatible software.

The information contained with the VAT return will be generated by pulling information from the digital records. This information will contain as a minimum the 9 boxes required for the completion of the VAT return but can also contain a specific data set of supplementary information, all of which will be pulled from the digital records.

Businesses submitting monthly or non-standard period returns will be able to continue to do so. The VAT annual accounting scheme will also be retained with the current conditions. Businesses making these types of returns will also be required to keep digital records and submit their VAT returns through software.

Under the new rules some businesses may choose to voluntarily provide further information:

Periodic updates
Businesses will be able to submit VAT information more frequently than their VAT return obligations require on a voluntary basis as a ‘voluntary update’.
Supplementary data
HMRC believes that businesses and HMRC could benefit from the submission of supplementary data detailing how the figures in the return are arrived at. HMRC believe this additional data will help them target non compliance. The software will allow for the voluntary submission of supplementary VAT data as part of a VAT return or a voluntary update. This will allow HMRC to test with businesses the extent to which they and HMRC can benefit from such supplementary data.

Timescale

VAT is the first tax to be reportable under MTD and businesses within the scope of MTD will need to keep their records digitally, using approved MTD functional compatible software, from 1 April 2019. The software will create the return from the digital records and this will need to be submitted under MTD for return periods starting on or after 1 April 2019.

We will keep you informed of developments in this area and ensure we are ready to deal with the new requirements. Please contact us for more information 0116 2423400

The following Tax Events are due on 31st October 2017

Personal Tax Events

Deadline for submission of 2016/17 self assessment returns if you require HMRC to compute your tax liability and/or if tax underpaid is to be collected by adjustment to your 2018/19 PAYE code.

This deadline is only relevant for those individuals who complete a ‘paper’ self assessment tax return and who are employees. Where you have an underpayment you may request that HMRC collect the tax outstanding by making an adjustment to your tax code for the year 2018/19.

Please note that where your return is submitted online then the filing deadline for ‘coding out’ is 30 December 2017.

If we are already dealing with this matter on your behalf you need take no action.

Deadline for submitting ‘paper’ 2016/17 self assessment returns.

This deadline is relevant to individuals who need to complete a self assessment tax return for 2016/17 and wish to file the return in a ‘paper’ form. Self assessment returns submitted after this date must be submitted electronically.

Please note that this deadline is not relevant if we are going to submit an online return for you or you are going to deal with the completion of an online return yourself. The deadline for submission of online returns is 31 January 2018.

If we are already dealing with this matter on your behalf you need take no action.

If you would like to discuss this further please get in touch 0116 2423400

New Vehicle Tax Rates April 2017

We all know that there are a few things we need to consider before buying a new car.

These are some common questions which are asked by clients (hopefully before they go ahead and make that major purchase):

“Should I purchase a car through my business or should I use my own car for business use?”

“Should I lease or purchase a car?”

…and perhaps the most common question of all:

“How much tax will I have to pay?”

You may be interested in purchasing an electric car because you are concerned about the environment.  The government have certainly put in place tax incentives to encourage us to think ‘green’ and, with BMW recently deciding to build their future electric cars in the UK, it would seem that the motor industry is following suit.

Despite the many obvious things we all have to consider when purchasing a new car perhaps there is one thing that you may not be aware of and that is the new vehicle tax rates that were introduced from 1 April 2017.

The way vehicle tax is calculated has changed for cars and some motor homes that were first registered with DVLA from 1 April 2017.  The change doesn’t affect any vehicle registered before 1 April 2017.

The rates explained

Vehicle tax for the first year is based on CO2 emissions.  From 1 April 2017 this rate has increased and is now between £0 for electric cars and £2,000 for the highest polluting cars.  Vehicle tax rates can be checked by visiting https://www.gov.uk/vehicle-tax-rate-tables.

After the first year, the amount of tax that needs to be paid depends on the type of vehicle. The rates are:

  • £140 a year for petrol or diesel vehicles
  • £130 a year for alternative fuel vehicles (hybrids, bioethanol and LPG)
  • £0 a year for vehicles with zero CO2 emissions (electric vehicles)

New vehicles with a list price of more than £40,000

If a vehicle has a list price (the published price before any discounts) of more than £40,000, the rate of tax is based on CO2 emissions for the first year.

After the first year, the rate depends on the type of vehicle (petrol, diesel, alternative fuel or zero emissions) as above plus an additional £310 a year for each of the next 5 years.

After those 5 years, the vehicle will then be taxed at one of the standard rates (£140, £130, or £0) depending on vehicle type.

So for vehicles with a list price of more than £40,000, from the second time they are taxed and for the next 5 years, the amount of tax to pay will be as follows:

  • £450 a year for petrol or diesel vehicles
  • £440 a year for alternative fuel vehicles (hybrids, bioethanol and LPG)
  • £310 a year for vehicles with zero CO2 emissions (electric vehicles)

If you are considering the purchase of a new car and would like more information about the new vehicle tax rates then please click on the following Youtube video link: https://www.youtube.com/watch?v=hbV7Yfud1dE

There are certain accounting and tax issues associated with business vehicles so please get in touch if you have any questions about a vehicle you wish to use in your business.  Remember it is always a good idea to ask for advice before making a major purchase as it is important to know all the facts before making a decision.

If you would like to discuss any of this further then please contact us 0116 2423400

Beth Judd, Accounts & Tax