Tax Advice

Treasury to review tapered annual allowance as dispute rumbles on

The Treasury has announced it will review the tapered annual allowance for pensions, following calls to abolish it.

The amount of pension contributions that can be made tax-free in 2019/20 stands at £40,000 in most cases, but this is restricted for higher earners by the tapered annual allowance.

The taper applies to people with a taxable adjusted income of more than £150,000 and a threshold income over £110,000.

For every £2 of income an individual has over £150,000, their annual allowance is reduced by £1, down to £10,000. More…

Update to post of 2nd August – Reverse charge VAT for builders delayed for 12 months

A major change to the way VAT is collected in the building and construction industry has been delayed until 1 October 2020.  

The domestic reverse charge VAT for construction services was due to take effect from 1 October 2019.

It will put the onus on the customer receiving a service to pay the VAT element to HMRC, instead of paying the supplier.

The measure will apply to VAT-registered individuals or firms in the UK, who supply specific services under the construction industry scheme.

The domestic reverse charge aims to combat missing trader fraud in the construction sector.

Campaigners had expressed concerns that up to 150,000 businesses in the sector were not ready for the changes to be implemented next month. More…

Construction industry scheme – VAT and charges

Few sectors have such an impact in the UK as the construction industry. It not only provides the fabric of our nation – the places where we live and work – but also underpins our entire economy.

In 2017, construction contributed £113 billion to the UK economy, while construction output increased by 14% in 18 months to the end of September 2018.

Despite the looming prospect of leaving the EU without a deal on or before Halloween, demand for domestic construction projects remains high.

The Government aspires to build up to 300,000 new homes each year, and major infrastructure projects like the HS2 railway line, Crossrail in London, and Hinkley Point nuclear power station in Somerset continue to tick along.

The construction industry provides high-skilled jobs – many of which are also well paid – for more than 2.4 million people, according to the Office for National Statistics. More…

Most gifters are ‘unclear on inheritance tax rules’

Most people making gifts of money or assets are unaware of inheritance tax rules that might apply to them.

HMRC polled 2,090 people and found that only 25% of those who recently made a gift had a working knowledge of the rules.

Less than half (45%) were aware of the rules or exemptions surrounding inheritance tax when they made their largest gift.

Only 8% of gifters considered inheritance tax rules before making a gift, the research showed.

Inheritance tax will potentially apply on gifts where a donor dies within seven years of making the gift or on a chargeable lifetime transfer into a relevant trust or company.

Within these rules are exemptions, such as gifts to a spouse or civil partner, charity or a political party, while an annual exemption on gifts worth up to £3,000 applies. More…

HMRC error affects payments on account bills for some taxpayers

Some taxpayers may not receive a bill for payments on account this month, and face paying a higher bill in January 2020.

The Association of Taxation Technicians (ATT) is advising individuals affected by an error with HMRC’s systems to set aside money to pay the bill in full.

Most people who complete self-assessment pay their taxes in two instalments every six months, called payments on account.

These advance payments are based on the individual’s tax liability for the previous year, and are paid in January and July, followed by a final balancing payment the following January.

But a system error at HMRC in January 2019 meant some taxpayers’ self-assessment statements did not include their first payment on account. More…

The tapered annual pension allowance

How it affects high net-worth individuals.

The tapered annual pension allowance for high net-worth individuals was in the headlines again recently.

Concerns were raised that its impact on doctors within the NHS pension scheme is prompting high-earning NHS staff to leave their posts or reduce their hours.

In December 2018, it was reported that the number of members leaving the NHS pension scheme was five times higher than from other public pension funds.

Responding to these reports, Chancellor Philip Hammond dismissed requests to scrap the tapered annual allowance. More…

Tax implications of working from home

Working from home offers all kinds of benefits, from the opportunity to create the perfect environment in which you can be most productive, to the improvements to work-life balance that come with ditching the commute.

There are advantages for businesses, too, assuming they trust their employees to work without direct supervision. For example, if only a portion of your workforce is on site on any given day, you might be able to run a smaller office, saving on rent and operating costs.

According to research undertaken by the TUC, 1 in 20 people worked from home in 2005; by 2018, that figure had leapt to 1 in 16.

For many freelancers and contractors in particular, working from home is both normal and desirable.

For one thing, it’s a way of underlining their separation from those who hire them, and thus helping achieve compliance with IR35. More…

Making Tax Digital

More than a million VAT-registered businesses have now been mandated into the Government’s Making Tax Digital (MTD) programme, which came into force on 1 April 2019.

Under the scheme, businesses that are registered for VAT with a turnover of more than £85,000 are required to keep digital records and submit their VAT returns using MTD-compatible software.

According to HMRC, only around 100,000 VAT-registered businesses had signed up to the new regime by 1 April 2019.

Since then, businesses with VAT reporting obligations have been signing up at a rate of 4,000 a day. More…

Making Tax Digital – it’s here………

MTD zero-hour is here.

The moment has come: if your business has a taxable turnover above the VAT-registration threshold, which is currently £85,000, you’re now obliged to keep records in digital form and to file your VAT returns using HMRC-approved software.

You probably got a bit fed up of being reminded about the deadline for the first wave of the Government’s Making Tax Digital (MTD) scheme in the course of the past year or so, and who could blame you?

Adverts from Revenue were appearing all over our favourite websites and social media, alongside agenda-laden reminders from software providers, banks, and anyone else with a stake in this project. MTD even started to pop up in commercial breaks during prime time TV, and on colossal posters on the London Underground. There was simply no escaping it. More…

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