Archive for March, 2016

Gift aid donation rules clarified

Thursday, March 31st, 2016

Recent reports in the national media have suggested that HMRC has sought to restrict Gift Aid on donations which are accompanied by a message of support from a donor’s family. According to a recent announcement by HMRC this is absolutely not the case. HMRC’s position as set out in their recent website posting is reproduced below:

“HMRC’s position has always been that Gift Aid can be claimed when an individual donor, who pays tax in the UK, makes a donation, even if additional names are added in a supporting message. HMRC’s advice on this issue appears to have been misinterpreted so we are going to ensure our guidance is as clear as possible.

Where gifts are made by groups of people, such as work collections or large groups of friends, Gift Aid is not due and should not be claimed.

It is a government priority to maximise Gift Aid on eligible donations, and £1.2bn of tax repayments were made to charities in the tax year 2014 to 2015 through Gift Aid.

HMRC will continue working closely with charity collection agents to help them improve their processes so that Gift Aid is not removed from eligible donations.”

Tax free childcare update

Tuesday, March 29th, 2016

HMRC have updated their online “top ten things you should know about the new tax-free childcare scheme”. The notes are reproduced below and they provide parents with and easy read overview of the changes that will start early 2017:

1. You’ll be able to open an online account

You’ll be able to open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be done through the government website, GOV.UK.

Tax-Free Childcare will be launched from early 2017. The scheme will be rolled out gradually to families, with parents of the youngest children able to apply first. You’ll be able to apply for all your children at the same time, when your youngest child becomes eligible. All eligible parents will be able to join the scheme by the end of 2017.

2. For every 80p you or someone else pays in, the government will top up an extra 20p

This is equivalent of the tax most people pay – 20% – which gives the scheme its name, ‘tax-free’. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children).

3. The scheme will be available for children up to the age of 12

It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.

4. To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year

The scheme is designed to be flexible for parents if, for example, they want to get back to work after the birth of a child or work part-time.

5. Any eligible working family can use the Tax-Free Childcare scheme – it doesn’t rely on employers offering it

Tax-Free Childcare doesn’t rely on employers offering the scheme, unlike the current scheme Employer-Supported Childcare. Any working family can use Tax-Free Childcare, provided they meet the eligibility requirements.

6. The scheme will also be available for parents who are self-employed

Self-employed parents will be able to get support with childcare costs in Tax-Free Childcare, unlike the current scheme (Employer-Supported Childcare) which is not available to self-employed parents. To support newly self-employed parents, the government is introducing a ‘start-up’ period. During this, self-employed parents won’t have to earn the minimum income level.

The scheme will also be available to parents on paid sick leave and paid and unpaid statutory maternity, paternity and adoption leave.

7. If you currently receive Employer-Supported Childcare then you can continue to do so

You do not have to switch to Tax-Free Childcare if you do not wish to. Employer-Supported Childcare will continue to run. The current scheme will remain open to new entrants until April 2018, and parents already registered by this date will be able to continue using it for as long as their employer offers it.

However, Tax-Free Childcare will be open to more than twice as many parents as Employer-Supported Childcare.

Employers’ workplace nurseries won’t be affected by the introduction of Tax-Free Childcare.

8. Parents and others can pay money into their childcare account as and when they like

This gives you the flexibility to pay in more in some months, and less at other times. This means you can build up a balance in your account to use at times when you need more childcare than usual, for example, over the summer holidays.

It’s also not just the parents who can pay into the account – if grandparents, other family members or employers want to pay in, then they can.

9. The process will be as simple as possible for parents

The process will be light-touch and as easy as possible for you. For example, you’ll re-confirm your circumstances every three months via a simple online process; and there will be a simple log-in service where parents can view accounts for all of their children at once.

10. You’ll be able to withdraw money from the account if you want to

If your circumstances change or you no longer want to pay into the account, then you’ll be able to withdraw the money you have built up. If you do, the government will withdraw its corresponding contribution.

More information will become available ahead of the scheme being introduced so parents making childcare decisions are able to consider all their options.

Buy-to let sector suffers another blow in the March budget

Wednesday, March 23rd, 2016

 The Treasury seems to be committed to wringing the last available drop of tax revenue from the buy-to-let sector.

 In the Budget last week the rate of capital gains tax (CGT) was reduced from 6 April 2016.

  • From 28% to 20%  if the gains fell to be taxed as part of the higher rate tax band, and
  • From 18% to 10% if the gains fell to be taxed as part of the basic rate tax band.

But this excluded gains on disposals of residential property. Thankfully, the principle private residence relief for home owners is untouched – sale of your home is still tax free. However, other residential property sales will be taxed at the 18% and 28% CGT rates.

This de facto tax increase for landlords follow hard on the heels of previous changes to the taxation of the letting sector.

  1. From 6 April 2017, tax relief for mortgage interest to fund the purchase of residential property for letting will be reduced over a number of years until landlords are restricted to a basic rate tax credit. This could potentially more than halve the tax relief available for loan interest and promote many unwary landlords into the higher rate tax bands.
  2. From 6 April 2016, the 10% wear and tear allowance is being abolished and landlords after this date will only be able to claim for the actual cost of replacing qualifying furniture and fittings. For many landlords this will result in an increase in their tax payments from 2016-17.
  3. From 1 April 2016, landlords will pay an additional 3 percentage points on the stamp duty charged when they purchase a buy-to-let property.

By far the most insidious of these changes is the gradual reduction in the tax relief for loan or mortgage interest payments. Although the start of this process is still a year away, landlords would be well advised to seek professional advice to see exactly how they will be affected and what changes they will need to make in order to survive…

Budget for business

Monday, March 21st, 2016

Just in case you were wondering what was in the Budget last week for small businesses, we have reproduced below the comments made by George Osborne and posted to the GOV.UK website:

Backing business and creating opportunity

This Budget backs business and enterprise to drive up productivity growth and create job opportunities. This Budget continues to lower taxes, with new support for small business and entrepreneurs, while also modernising the tax system and taking steps to ensure that taxes are fair and are paid.

The government will:

  • cut the rate of corporation tax to 17% in 2020, benefiting over one million companies, large and small
  • cut business rates for all properties in England, with 600,000 small firms paying no rates so that the business rates burden will fall by £6.7 billion over the next five years
  • cut the higher rate of Capital Gains Tax from 28% to 20% and the basic rate from 18% to 10% from April 2016 (except for residential property and carried interest), and extend entrepreneurs’ relief to long term investors in unlisted companies
  • cut National Insurance contributions for 3.4 million self-employed people, by abolishing Class 2 National Insurance
  • modernise the corporation tax rules on losses, making the system more flexible for businesses while ensuring that companies making large profits pay tax on these, and further restricting banks’ use of their historic losses
  • reform Stamp Duty Land Tax on non-residential property transactions, cutting the tax for many small businesses purchasing property, with over 90% of non-residential transactions paying the same or less
  • abolish the bureaucratic and burdensome Carbon Reduction Commitment energy efficiency scheme and replace it, in a revenue neutral way, with an increase in the Climate Change Levy from 2019
  • support the oil and gas industry by permanently zero-rating Petroleum Revenue Tax, reducing the Supplementary Charge from 20% to 10% and introducing targeted measures to encourage investment in exploration, infrastructure and late-life assets
  • give large companies more time to prepare for a new corporation tax payments schedule, with a broadly neutral impact on the public finances

Spring Budget 2016

Thursday, March 17th, 2016

Please click here  to view our 2016 Spring Budget booklet.

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