Trivial perks

Trivial perks

by | 20 Nov, 2015 | Tax

Trivial perks

This is back on the legislative programme and hopefully will take effect from 6 April 2016. The new tax and NIC exemption of £50 will apply to as many perks as you want to give employees although there will be an annual cap of £300 for directors and their families. There are some restrictions; the perk must not be in cash or a voucher convertible into cash. It must not be a reward for an employee doing their job and it must not be part of a salary sacrifice arrangement.

This is obviously a great relief and hopefully will produce a level playing field. Currently different officers within HMRC operate an informal concession on trivial benefits where ‘trivial’ can take on a hold load of meanings!

The existing exemptions – mobile phone in the name of the company, parking close to a place of work or Christmas Party exemption continue and will take priority.

Child benefit

Child benefit

by | 9 Sep, 2015 | Other, Tax

Child benefit

As you may be aware if the taxable income of either of the partners to a civil relationship or marriage falls between £50,000 and £60,000 the child benefit is clawed back at such a rate that it is totally clawed back if the taxable income exceeds £60,000.

When this charge was first introduced the general advice was to still claim the benefit in case personal circumstances changed as there was only a short limited period in which the benefit could be retrospectively claimed. If however one has opted out of claiming it the time limit was extended to two years so if you wish to claim child benefit for the year ended 5 April 2014 you have until 5 April 2016 to do so.

The election has to be made by the person entitled to the child benefit which of course might not be the same person suffering the charge. If as a result there is then a liability in the year of reinstatement then the return must be amended and the tax is due for payment 30 days after the return is amended.

Interest is likely to be charged based on the original due date that tax was due for the year – in this example but 31 January 2015 but there would be good grounds for challenging.

Budget – Corporation tax rates

Budget – Corporation tax rates

by | 14 Jul, 2015 | News, Tax

Budget – Corporation tax rates

With effect from 1 April 2017 the corporation tax rate will be reduced to 19% and with effect from 1 April 2020 to 18%. This is fine provided that the additional costs that companies will be bearing such as pension costs under auto-enrolment and paying the living wage to employees can be either absorbed or passed on to customers but still leave the company profitable.

For accounting periods starting on or after 1 April 2017, the government will introduce new corporation tax payment dates for companies to pay in quarterly instalments in the third, sixth, ninth and twelfth months of their accounting period. This measure affects companies with annual taxable profits of £20 million or more. Where a company is a member of a group, the £20 million threshold will be divided by the number of companies in the group.

Whether the current quarterly payment of corporation tax by companies whose taxable profits exceed £1,500,000 will remain in place is not clear from the headline news.

Mainstream corporation tax rate reduced to 20%

Mainstream corporation tax rate reduced to 20%

by | 12 May, 2015 | Business, Tax

Mainstream corporation tax rate reduced to 20%

With effect from 1 April 2015 there is one main rate of 20% applying to the majority of UK companies irrespective of their level of profit. At the same time the rules for determining which companies have to pay corporation tax by quarterly instalments have changed.

Broadly now, if for example one company is the 51% subsidiary of another or they are both 51% subsidiaries of a third company they would be associated for corporation tax purposes assuming that none of them is dormant.

This means that the £1,500,000 taxable profit upper limit is split between the number of associated companies and if any of the companies has profits in excess of this sum, potentially they would fall with the quarterly instalment regime. A standalone company would also fall into this regime if its taxable profits exceed £1,500,000.

In the past the associated company test was much broader and more companies were caught so this is a welcome simplification.

Is it time to withdraw from tax avoidance schemes?

Is it time to withdraw from tax avoidance schemes?

by | 6 May, 2015 | Tax

Is it time to withdraw from tax avoidance schemes?

Tax avoidance schemes have been under increased scrutiny by HMRC. Indeed recent tribunal cases have highlighted the risks and consequences for participants. These schemes often aim to exploit perceived loopholes in tax legislation, promising significant savings. However, many are fundamentally flawed, leaving participants exposed to legal challenges and financial penalties. If you’re involved in or concerned about a tax avoidance scheme, understanding the potential implications is crucial.

 

HMRC’s Crackdown on Tax Avoidance Schemes

 

HMRC have recently won 3 tribunal cases against tax avoidance schemes. The objective of these schemes was to save substantial amounts of tax by claiming artificial losses by exploiting perceived loopholes in the employment income and CGT legislation. In particular, this was with respect to ownership of shares in a trading company. However, there are frequently fundamental flaws in the logic of these arrangements which gives HMRC ammunition to shoot down the schemes in the courts.

We have recently assisted clients who have participated in high profile schemes. It is noticeable that HMRC often offer participants of such schemes settlements on favourable terms should the individual agree to withdraw their claim for the derived tax advantages. Typically, participants will not be penalised for their involvement as long as they pay back any tax that was saved by the scheme, and any associated interest charges.

Penalties for those who unsuccessfully take disputes to the courts could be an equivalent amount to the tax that the scheme was designed to avoid. HMRC have made it very clear that fighting tax avoidance will be a priority for years to come. And, as such they will be utilising significant resources to challenge tax avoidance schemes.

Please let us know if you are concerned about your involvement with a tax avoidance scheme. We will be happy to help get you back on track. So, call us today on 01243 782 423. We will be glad to hear you out.

Tax Schemes

Tax Schemes

by | 13 Apr, 2015 | Tax

Tax Schemes

Avoiding the Pitfalls of Tax Schemes

Recently, we’ve been approached to assist individuals who regret becoming involved in certain tax schemes. These cases highlight the potential risks associated with such arrangements, particularly when they lack proper support or stability.

The Risks of Tax Schemes

Many tax schemes are promoted as legitimate ways to reduce tax liabilities. However, when challenged by HMRC, the reality can be quite different. In some cases, the promoters of these schemes have gone into liquidation, leaving their clients without the support they were promised. This creates financial and legal complications for those involved, often with limited options for resolution.

Seeking Independent Advice

If you are already part of a tax scheme and feel uncertain about its legitimacy, it’s essential to act quickly. Alternatively, if you’re considering joining a scheme, taking proactive steps now can save you from potential regret later. Seeking advice from an independent firm of accountants, such as ours, ensures you get an unbiased assessment of your situation.

We understand the complexities surrounding tax schemes and can help you evaluate the risks and compliance issues involved. Whether you need clarity on your current position or guidance on future decisions, we’re here to provide expert advice tailored to your needs.

Protect Yourself and Your Finances

Tax planning is an important aspect of managing your finances, but it should always align with HMRC regulations. Taking advice from trusted professionals ensures you remain compliant and avoid unnecessary risks.

If you’re concerned about your involvement in a tax scheme, or if you’re considering joining one, reach out to us today. Our team is here to guide you through the complexities and help protect your financial future.

Get in touch today for professional advice you can rely on. We’re always here to help and, as leaders in the field of tax, we can help you keep ahead without the need for potentially harmful schemes. Everything legitimate. Everything accurate! Now that really is peace of mind worth thinking about!