Section 336 expense claims

by Leah McGarvey | 26 May, 2016 | Tax

Section 336 expense claims

One of the section numbers in the Taxes Acts that gets quoted more often than most!

These are the responsibility of the employee, but those that are attached to the original paper P11D and submitted on behalf of an employee by an employer should be sent to HMRC (NIC & EO), Room BP2101, Tynemouth House, Benton Park View, Longbenton, Newcastle Upon Tyne NE98 1ZZ. This should ensure that the form P11d and the section 336 claim are processed at the same time.

CAIf submitted separately on form P87, form P810 or in letter format and not attached to an original P11D they should be headed section 336 claim and a copy of the P11d where relevant attached as well. They should be sent to PAYE and Self-Assessment, HMRC, BX9 1AS.

Transferable personal allowance (marriage allowance)

by Leah McGarvey | 23 May, 2016 | Tax

Transferable personal allowance (marriage allowance)

HMRC are running a radio campaign to encourage individuals to take this up!

With effect from 6 April 2015 if one of a married couple or civil partnership is a non-taxpayer and the other is only a basic rate taxpayer it is possible for the non-taxpayer to elect to transfer up to 10% of the unused personal allowance to the other spouse. So in the year ending 5 April 2016 this is worth up to £10,600 x 10% = £1,060 x 20% = £212.00. Application can be made on-line if not within self-assessment. Or alternatively the claim can be made on the 2015/16 self-assessment tax return.

For the year ending 5 April 2017 the amount that can be transferred is £11,000 x 10% = £1,100 so worth up to £1,100 x 20% = £222.00.

More information can be found here. If you cannot supply the information that HMRC need to process the claim on-line then HMRC can be telephoned and a claim form requested.

https://www.gov.uk/marriage-allowance

Personal tax accounts (PTA)

by Leah McGarvey | 19 May, 2016 | Tax

Personal tax accounts (PTA)

HMRC introduced personal tax accounts (PTAs) to give individuals online access to their tax information. These accounts allow taxpayers to view key details about their tax affairs in one place.

With a PTA, you can:

Check your PAYE coding notices and tax code.
View your tax calculation and payments.
Manage your National Insurance contributions.
Update your personal details with HMRC.

This online system aims to simplify tax management and improve transparency for individuals.

Agent Access to PTA

Unfortunately, access to PTAs, which will include details of things such as PAYE coding notices, will not be available to agents at present.

This means accountants and tax advisors cannot log in to manage a client’s personal tax account directly. Clients must access their own account and share any relevant details with their advisor manually.

For businesses and self-employed individuals, HMRC’s Business Tax Account remains the preferred option for agent access.

Managing Your PTA

To get the most from your personal tax account, you should:

Register for HMRC online services if you haven’t already.
Regularly check your PAYE coding to ensure accuracy.
Update HMRC if your circumstances change, such as a new job or additional income.

While agents cannot access these accounts, they can still offer guidance on interpreting the information found within them.

How We Can Help

Although we cannot access personal tax accounts directly, we can help you understand and manage your tax obligations effectively.

For expert tax advice, contact us today. Our team is ready to assist you.

R&D tax relief for directors – pension contributions considered

by Leah McGarvey | 17 May, 2016 | Business, Tax

R&D tax relief for directors – pension contributions considered

Companies investing in innovation can claim R&D tax relief to reduce their tax liability. This relief applies to eligible staff costs, which include salaries, employer National Insurance, and pension contributions. If a company qualifies for R&D tax relief for directors, it may be more tax-efficient to pay pension contributions rather than dividends for those involved in R&D activities.

Why Pension Contributions Are More Tax-Efficient Than Dividends

If a director is actively engaged in R&D, paying pension contributions instead of dividends can improve the company’s R&D tax credit claim.

If a company qualifies for R&D relief, remember that it might be more tax-efficient to pay a director engaged in such activities contributions towards his pension scheme rather than pay dividends.
The dividends will never count as eligible staff costs and so do not improve the R&D credit.
Pension contributions, however, are included in eligible R&D costs, enhancing the claim and reducing taxable profits.

This approach can increase tax efficiency, benefiting both the company and the director’s long-term financial security.

Optimising R&D Tax Relief

To maximise R&D tax relief for directors, consider the following:

Pay a salary or pension contributions instead of dividends for directors working on R&D projects.
Ensure payroll records clearly identify R&D-related staff costs.
Keep detailed documentation of R&D activities for HMRC compliance.

Careful structuring of payments ensures that the company makes the most of available relief while supporting the director’s financial planning.

How We Can Help

Understanding R&D tax relief for directors can be complex, but we can help ensure you claim the maximum benefit while remaining tax-efficient. As leaders in the field of tax, we’re always poised to clarify the complexities. Plus, we offer a free introductory meeting. We know how important it is to meet your professionals before you commit – so do suss us out!

For expert guidance on R&D tax relief contact us today.

Income tax and national insurance on overvalued shares

by Leah McGarvey | 11 May, 2016 | National Insurance, Tax

Income tax and national insurance on overvalued shares

When a company buys back shares, particularly minority holdings, the valuation process is crucial. These shares are often subject to a discount due to their lack of control or influence, meaning they may be worth less than a proportional share of the company.

However, if a company overpays for the shares, exceeding their true market value, this excess amount could create unintended tax consequences. The overpayment may be treated not as a capital transaction but as taxable income, leading to additional liabilities for both the company and the seller.

PAYE and National Insurance Consequences

Overpayments in share buybacks can have serious tax consequences:

PAYE (Pay As You Earn): If the excess payment is deemed to be a benefit or disguised remuneration, HMRC may classify it as taxable income, meaning the company must deduct PAYE.
National Insurance Contributions (NIC): Depending on the structure of the transaction, both employer and employee NICs may become due, increasing the overall tax burden.
Potential HMRC Scrutiny: If HMRC determines that a company has intentionally inflated the buyback price to provide a disguised bonus or benefit, it may impose penalties.

Given these risks, it’s critical to ensure that all share buybacks are carried out at a fair and justifiable market value.

Avoiding Tax Pitfalls in Share Buybacks

To minimise risks, businesses should take the following steps:

Obtain a professional share valuation – A robust and independent valuation can prevent HMRC challenges.
Consider alternative exit strategies – If a buyback is not tax-efficient, other options may be available.
Consult tax and legal experts – Proper structuring and documentation can protect both the company and the shareholders from unexpected liabilities.

How We Can Help

At Lewis Brownlee, we specialise in helping businesses navigate income tax on overvalued shares. Our experts provide guidance on:

Fair share valuations to prevent overpayment.
Tax-efficient structuring of share buybacks.
Ensuring PAYE and NIC compliance to avoid HMRC penalties.

If you’re considering a share buyback, we can help you structure it correctly to avoid unnecessary tax liabilities. Contact us today via our contact page for expert advice.

By ensuring compliance with HMRC regulations, you can protect your business and shareholders from unexpected tax consequences.

Inheritance tax (IHT) numbers

by Leah McGarvey | 12 Apr, 2016 | Tax

Inheritance tax (IHT) numbers

If you need to pay Inheritance Tax (IHT) on a deceased’s estate or a large gift into a trust, you may need an Inheritance Tax number before making the payment. HMRC uses this number to track tax liabilities, ensuring payments are correctly allocated.

Applying for your number is a crucial step in managing IHT compliance, whether for an estate or a taxable gift.

How to Apply for an Inheritance Tax Number

Applying Online

If you need to pay IHT on an estate, you can apply for an Inheritance Tax number online via HMRC. This streamlines the process, making it faster and easier to receive the reference needed for payments.

Using Form IHT422 for Gifts into Trust

For other taxable IHT events—such as gifts into trust exceeding the IHT allowance—you must complete Form IHT422 instead of applying online. This form ensures that any lifetime transfers subject to IHT are properly recorded and assessed by HMRC.

When Is an Inheritance Tax Number Required?

An IHT number is necessary when:

Paying Inheritance Tax on an estate where the deceased’s assets exceed the nil-rate band.
Making gifts into trust that surpass available IHT allowances, triggering an immediate tax charge.

Without an IHT number, HMRC may not process tax payments correctly, leading to delays or penalties.

How We Can Help

Navigating Inheritance Tax can be complex. At Lewis Brownlee, we provide expert advice on:

Inheritance Tax planning to reduce liabilities.
Applying for an Inheritance Tax number efficiently.
Completing Form IHT422 for taxable gifts into trust.

If you need help with IHT compliance, contact us today via our contact page for professional guidance. We are always happy to see how we can help. Plus, we offer a free introductory meeting so that you can find out what we do and how we do it before you commit!

Managing Inheritance Tax correctly ensures compliance and helps avoid unnecessary delays in estate administration. So, make sure you’re on top of it today!