higher rate taxpayers and gift aid
By Katie Tax 0 Comments

Charity & Gift Aid For Higher Rate Taxpayers

This year, the Gift Aid scheme will celebrate its 35th birthday. The scheme has been an incredible success, now raising upwards of £1.6bn each year. By now, you will surely be familiar with the concept – for every £1 you donate to charity, the charity can claim an extra 25% (or 25p) from HMRC.

This comes at no additional cost to you, as long as you’ve paid enough income and capital gains tax to cover the amount reclaimed.

However, what many people don’t realise is that higher-rate taxpayers can get an additional benefit from their charitable donations.

How does Gift Aid work for higher-rate taxpayers?

Where possible, all taxpayers should “Gift Aid” their donations to charity to provide additional benefit to the charity. However, higher-rate taxpayers can obtain additional tax relief on the gross value of their donation (i.e. after applying Gift Aid).

Let’s say your annual income exceeds the basic rate threshold of £50,271, and, therefore, you are a higher-rate taxpayer. If you make a £20 cash donation to charity and confirm that the donation is eligible for Gift Aid, the charity can claim a further £5 from HMRC, making a gross gift of £25.

Now, as you fall into the higher-rate tax bracket, you can claim back the difference between the higher rate (40%) and the basic rate (20%) on the gross donation. For a £25 gross donation, this equates to £5:

  • Initial donation: £20
  • Gross donation with Gift Aid: £20 + (£20 * 25%) = £25
  • Higher-rate taxpayer relief: £25 * (40% – 20%) = £25 * 20% = £5

You can claim this as a tax refund via your annual self-assessment tax return or as an adjustment to your tax code.

However, here’s the important part: you must make a declaration that you are a UK taxpayer, and you must have paid enough tax to cover the Gift Aid claimed by charities on your donations. If you’ve not paid enough, you will be taxed on the shortfall.

Finally, remember that Gift Aid does not just apply to cash donations. Many charity shops will now sell donated items on your behalf and can treat the sale proceeds as Gift-Aided donations.

Can charities claim Gift Aid on donations from companies?

If you’re a business owner and you’re wondering whether a charitable donation from your company is eligible for gift aid, the short answer is no. The Gift Aid scheme only applies to donations made by individuals.

Don’t let this put you off, though. Charitable donations made by companies qualify for corporation tax relief, effectively reducing your tax bill.

Just bear in mind that, while the charity receives the donation amount in full, there’s no additional top-up from HMRC. So if you’re trying to decide whether to make a charitable gift from your personal account or your company, you may want to compare the impact of each option on your personal and corporate tax liabilities, plus the gross amount your chosen charity will receive.

Need more information?

Do you need further help with Gift Aid or other forms of tax relief as a higher-rate taxpayer?

Our team can help. We’re a firm of trusted, chartered accountants, based in Manchester. We’ll support individuals and businesses with everything from end-of-year accounting to effective tax planning. For more information, please don’t hesitate to contact us via our website or by calling 0161 962 1855.

By Katie Business Advice 0 Comments

Christmas Gifts For Employees: Are They Tax-Free?

Are you thinking about rewarding your employees with a Christmas gift this year?

As it turns out, certain gifts to staff at Christmas are tax-free if structured correctly. Since April 2016, employers have been allowed to provide their directors and employees with certain “trivial” benefits-in-kind. The rules were brought in as a simplification measure, so that these benefits do not need to be reported to HMRC and are tax-free for the employee.

There are, of course, a number of conditions that need to be satisfied to qualify for the exemption, which we explain below.

Which employee gifts are tax-free?

For the tax-free exemption to apply, the following conditions must be met:

  • The cost of providing the benefit does not exceed £50.
  • The benefit is not cash or a cash voucher.
  • The employee is not entitled to the benefit as part of any contractual obligation, such as a salary sacrifice scheme.
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).

So, what does that all mean in practical terms?

It means that you can give your employees small, thoughtful gifts, such as a bottle of wine, a box of chocolates, or a store voucher, to mark key occasions. And here’s the thing, this doesn’t just apply at Christmas – you could also provide a gift on an employee’s birthday, to celebrate their wedding, or even religious festivals like Eid or Diwali.

As long as each gift costs £50 or less, isn’t cash or a cash-equivalent voucher, isn’t part of their employment contract, and isn’t a reward for doing their job, then it qualifies as a trivial benefit and does not create a tax liability for either you or them.

Is there a limit?

Yes and no!

For regular employees, there is no limit to the number of trivial benefits an employee can receive in a tax year, as long as each one individually meets the criteria.

However, for directors of ‘close’ companies (typically those controlled by five or fewer shareholders), there is an annual cap of £300 on trivial benefits.

What if the value of the gift exceeds the tax-free threshold?

If your gift exceeds £50, even by a single penny, the gift no longer qualifies as a trivial benefit. As a result, the entire amount becomes a taxable benefit.

This means it may need to be reported to HMRC via a P11D form, and both the employee and employer could face additional tax and National Insurance charges.

What about Christmas bonuses?

We get this question a lot. Towards the end of the year, if a company has done well, it may reward staff with a cash bonus.

A bonus payment typically does not fall under the trivial benefits scheme, as it contravenes the following conditions:

  • The benefit is not cash or a cash voucher.
  • The benefit is not provided in recognition of particular services performed by the employee as part of their employment duties (or in anticipation of such services).

A bonus, whether it’s paid at Christmas or any other time, is considered a reward for services performed. That makes it part of an employee’s earnings, and as such:

  • It must be added to their salary for PAYE purposes.
  • You must deduct Income Tax and National Insurance through payroll as usual.

That said, bonuses are generally considered allowable business expenses. That means they can be deducted from your company’s taxable profits as a means of managing or reducing tax liabilities. If you want more advice on that, speak to our corporation tax specialists.

Need more information?

Gifts are a simple and tax-efficient way to show appreciation for your team. You just have to make sure you stay within the rules. But the tax-free benefits don’t stop there, you can also provide parties and social events throughout the year, to the tune of £150 per head. You can find out more about that here: Tax Relief For Staff Parties And Annual Functions

If you need more guidance on Christmas gifts for employees, please don’t hesitate to get in touch with us. We support businesses with a wide range of services, including end-of-year accounting, tax advice, and R&D claims.

By Katie Business Advice 0 Comments

Reference Pay

An employee’s reference pay will depend upon whether or not they were on the payroll and subject to an RTI submission for 2019/20 on or before 19 March 2020. Where that is the case their reference pay will be that used under previous furlough claims. Where the employee has joined since that date or not subject to an RTI submission prior to 19 March the reference pay will generally be that for the last pay period ending before 30 October.

There are exceptions to these rules and complications for those working variable hours and with variable rates of pay.

Reference pay: calculating 80% of wages

If an employee was not previously eligible for CJRS, 80% of wages must be calculated for employees:

  • on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
  • whose pay varies – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins

80% of wages is capped at the maximum wage amount which will be calculated in the in the way it was for CJRS before the extension .

We can of course assist you with your claims, or alternatively prepare them on your behalf.

 

Need more information?

Do you need further support with your payroll?

Our team offers a complete range of payroll services for companies across all sectors, from charities to construction firms.

If you want to learn more about how the team can help, or simply want some start-up advice from a trusted accountant, don’t hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

By Katie Business Advice 0 Comments

Green Homes Grant: make energy improvements to your home

Green Homes Grant: make energy improvements to your home

Homeowners

What is the Green Homes Grant?

The government will provide a voucher up to £5,000 that covers up to two-thirds of the cost of energy efficiency and low carbon heat improvements to your home. See which improvements are included in the scheme below.

You may be able to receive a bigger grant if you are a homeowner and you or a member of your household receives one of the qualifying benefits. The government will cover 100% of the cost of the improvements up to £10,000.

How do I apply?

  1. Check if you’re eligible for a voucher
  2. Check what improvements may be suitable for your home
  3. Choose which improvements you would like and see an estimate of how much they may cost
  4. Find registered installers to get quotes to carry out the work
  5. Apply for your voucher

The Green Homes Grant scheme will never include official representatives coming to your property uninvited or cold calling on the phone to encourage you to join the scheme.

Tradespeople

Tradespeople and businesses that are appropriately certified to install energy efficiency and/or low carbon heating improvements in homes need to register with TrustMark to carry out work under the scheme. This confirms to homeowners that you will install measures to high standards.

You will be added to a directory of TrustMark registered  installers and homeowners can then contact you to obtain a quote.

Tradespeople and businesses that install low carbon heating improvements in homes will also need to be MCS certified.

Once you are registered with TrustMark, you need to apply to become a Green Homes Grant installer so you can deliver work in the 600,000 homes that will receive vouchers.

Working during national restrictions

Tradespeople, including Green Homes Grant installers, can continue to work in people’s homes under the national restrictions from 5 November.

You must follow the COVID-19 Secure guidelines.

Installers do not need to physically attend a customer’s home to provide a quote and can do this remotely using a video call or detailed photos.

Need more information?

If you need more information on the green homes grant, do not hesitate to contact us – we offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Changes to Capital Gains Tax

Changes to capital gains tax:

If you sold your property after 6 April 2020 you must report and pay Capital Gains Tax within 30 days of selling property in the UK. You may have to pay interest and a penalty if you do not report gains on property within the time limit.

You can report Capital Gains Tax you need to pay:

  • using the Capital Gains Tax on UK property service within 30 days of selling UK property
  • straight away using the ‘real time’ Capital Gains Tax service
  • annually in a Self Assessment tax return

If you have to send a Self Assessment return for another reason, you must include capital gains on your return, even if you’ve already reported and paid them.

Before you report

You’ll need:

  • calculations for each capital gain or loss you report
  • information from your records about the costs and what you received (the ‘proceeds’) for each asset
  • any other relevant details, such as any reliefs you’re entitled to

Report gains and pay straight away

If you’re a UK resident you can use the ‘real time’ Capital Gains Tax service to report any gains that are not from selling UK residential property.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

When you use the service you’ll need to upload PDF or JPG files showing how your capital gains and Capital Gains Tax were calculated.

When to report

You can use the ‘real-time’ service as soon as you’ve calculated your gains and the tax you owe. You do not need to wait until the end of the tax year.

You must report by 31 December after the tax year when you had the gains.

The tax year runs from 6 April to 5 April the following year.

After you’ve reported your gains, HMRC will send you a letter or email giving you a payment reference number and telling you ways to pay.

Do not pay your Capital Gains Tax bill until you’ve received your payment reference number.

You’ll need a Government Gateway user ID and password. If you do not have a user ID, you can create one when you report and pay.

If you sold the property before 6 April 2020, report the gain using the ‘real time’ Capital Gains Tax service or in your next Self Assessment tax return.

If you’re not resident in the UK

If you’re a non-resident and you’ve sold property or land in the UK, tell HM Revenue and Customs (HMRC) within 30 days, even if you have no tax to pay.

Need more information?

Do you need more guidance on the changes to capital gains tax? We offer a wide range of services and are here to help you. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Bring your tax affairs up to date

Bring your tax affairs up to date:

2018/19 tax returns can be amended by the taxpayer up until 31 January 2021. Where the omitted property income or gain relates to earlier tax years the taxpayer should consider disclosing using HMRC’s let property campaign. If this affects you we can assist you in putting together the details that HMRC require.

Need more information?

Do you need guidance with your tax affairs? We offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

CGT business asset disposal relief lifetime limit just £1 million

In the March 2021 Budget, it was announced that CGT Entrepreneurs’ relief (ER) was replaced by CGT Business Asset Disposal relief (BADR) for disposals on or after 11 March 2020.

It was also announced that the 10% CGT rate would only apply to the first £1 million of qualifying gains in the taxpayer’s lifetime and many business owners have misinterpreted how this limit applies.  Unfortunately claims under the predecessor ER need to be taken into consideration so if £750,000 ER has already been claimed only the first £250,000 of qualifying gains after 11 March 2020 would qualify for BADR.

Any gains in excess of that amount would be taxed at normal CGT rates, currently 20% for higher rate taxpayers.

 

Need more information?

Do you need guidance on the replaced Business Asset Disposal relief (BADR)? Feel free to contact our team today for further CGT advice. We are here to help you and your business succeed.

We offer a wide range of accounting services that can be tailored to your business.

Our team has a wealth of experience in a broad range of sectors, from construction and property to the charity sector. We work hard to deliver smart and effective tax-efficient solutions. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant don’t hesitate to contact us.

For more information please call, email or use the form below.

By Katie Business Advice 0 Comments

Considering an electric company car?

Considering an electric company car? There is currently a zero P11d benefit for the drivers of electric cars in 2020/21. The legislation for this change is included in Finance Act 2020 which also states that the benefit will be 1% of list price in 2021/22 and then 2% in 2022/23.

The zero taxable benefit also applies to hybrid cars emitting no more than 50 grams of CO2 per kilometre with a range using its electric motor of at least 130 miles, but only for cars first registered on or after 6 April 2020. Unfortunately, the range of most plug in hybrids is considerably less than 130 miles. For example, the Mercedes A 250e costing £32,980 emits 26g CO2 but has a PEV range of only 45 miles.

An additional benefit for the business is that motor cars that emit no more than 50g CO2 per kilometre currently also qualify for a 100% first year allowance which means that the full cost can potentially be set off against business profits.

The Mercedes A 250e would currently qualify for a 100% first year allowance but the P11d benefit would be 6% for the employee in 2020/21.

Note however that the 50g CO2 threshold reduces to zero from April 2021 which means that hybrids will cease being eligible for the 100% write off. If the business can afford to do so it’s a good time to buy a plug in hybrid.

Need more information?

Do you need help purchasing an electric company car? We offer a wide range of services which are unique to your business! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Business News 0 Comments

Virtual meetings: running effective meetings

We have adapted our accountancy practice to work with existing and new clients through virtual meetings. Over the course of the past few months, we have all had to adapt to working remotely.

Despite lockdown restrictions, many businesses have found ways to move their operations online, with all staff working remotely. This has given rise to an increased volume of virtual meetings on services such as Skype, Zoom, Teams, WebEx or other popular online meeting services. This has resulted in a new challenge – how to have an effective virtual meeting.

Agenda

Just like any meeting, take the time to set an agenda and circulate it in advance of the call along with any supporting documents.

Setting an agenda and sticking to it helps to keep the virtual meeting on track. If there are lots of documents, make sure that you circulate them in time to allow people to read them well in advance.

Choose the right technology

There is nothing more frustrating than dialling into a video or conference call and not being able to connect due to a technical glitch. Before you set up your virtual meeting, check with the attendees that they are comfortable (and able) to use your platform of choice. If possible, use a system that allows users to join via a web browser – most platforms such as Skype, Teams, Zoom, WebEx, etc. allow this.

Etiquette

A virtual meeting is still a meeting, so make sure you give it your full attention. Ask all attendees to use video – this makes it harder for them to do something else during the virtual meeting as they will be on everyone’s screen. In addition, seeing people on screen can help those who have been working from home during COVID-19 to feel more connected.

Jump into the content

Don’t waste time (yours or other people’s) during a virtual meeting. Keep it short and get straight into the agenda. Aim to follow up within 24 hours of the meeting with any relevant action points as it keeps people’s attention. By sending the notes around 2 weeks after a meeting, momentum on any actions may be lost.

Need more information?

We have adapted our business to provide clients with virtual meetings. We offer a wide range of services which are unique to your business and work with clients virtually all over the world. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Certain property business owners are liable to class 2 National Insurance Contributions

Class 2 National Insurance Contributions (NICs) are currently paid at the rate of £3.05 per week by self-employed earners. A person who is liable to Income Tax on the profits arising from the receipt of property rental income will only be a self-employed earner for NICs purposes if the level of activities carried out amounts to running a business.

HMRC have recently issued clarification which states that in order for a property owner to be a self-employed earner, their property management activities must extend beyond those generally associated with being a landlord which include, but are not limited to, the following:-

  • undertaking or arranging for external and internal repairs
  • preparing the property between lets
  • advertising for tenants and arranging tenancy agreements
  • generally maintaining common areas in multi-occupancy properties; or
  • collecting rents.

The HMRC guidance suggests that the ownership of multiple properties, actively looking to acquire further properties to let, and the letting of property being the property owner’s main occupation could be pointers towards there being a business for NICs purposes.

A landlord will also be a self-employed earner if any of their activities amount to a trade for Income Tax purposes. This could include, for example, receiving income from other services provided to tenants.

Need more information?

Do you need more guidance on National Insurance Contributions? We offer a wide range of services which are unique to your business. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Making Tax Digital 0 Comments

MTD for VAT to be extended to all VAT registered businesses in 2022

Since 2019, the vast majority of VAT-registered businesses with a taxable turnover above the VAT threshold (£85,000) have been mandated to keep digital VAT records and send returns using Making Tax Digital (MTD)-compatible software.

From April 2022 these requirements will apply to all VAT-registered businesses.

It has also been announced that MTD for Income Tax Self-Assessment (ITSA), which was originally intended to start in 2018, will finally be introduced from April 2023 for unincorporated businesses and landlords with total business or property income above £10,000 per year.

Most businesses will have 2 years to prepare and test the service voluntarily prior to its introduction.

Need more information?

We offer a wide range of services for VAT-registered businesses. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want VAT advice from a trusted accountant don’t hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively, you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice 0 Comments

VAT definition of “motor car”

For VAT purposes the definition of a motor car has been amended several times over the years.

The current definition states:   “Motor car” means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:

  1. a) is constructed or adapted
    solely or mainly for the
    carriage of passengers; or
  2. b) has to the rear of the
    driver’s seat roofed
    accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows;

There are a number of exceptions to this rule: notably vehicles constructed to carry a payload of one tonne or more, i.e. double cab pick-ups such as a Toyota Hilux.

COMPANY VANS WERE MOTOR CARS

The Court of Appeal have now ruled on the tax status of certain vehicles provided to employees of Coca Cola. The court has upheld the HMRC view that vans with windows and a second row of seats behind the driver are not goods vehicles but motor cars for benefit in kind purposes.

Consequently, the income tax and national insurance payable by employee and employer is significantly higher than if the vehicles had been classified as goods vehicles.

The income tax legislation defines a “goods vehicle” as “a vehicle of a construction primarily suited for the conveyance of goods or burden of any description…”

At the Tax Tribunal it was decided that modified VW Kombi vans failed this test whereas modified Vauxhall Vivaro vans did fall within the definition of goods vehicles.

It has now been determined that the Vauxhalls should also be taxed as motor cars for P11d benefit in kind purposes. This means that where the vehicle is available for private use the taxable benefit will be based on the original list price multiplied by a percentage based on the vehicle’s CO2 emissions.

The decision means that employers may need to reconsider providing such vehicles. They may also need to rectify the P11d reporting in respect of earlier years and we await further guidance from HMRC.

What is also particularly confusing, and thus difficult for businesses to deal with, is that the benefit in kind rules are not the same as the rules for recovery of input VAT and it would be useful if there was a common definition for tax purposes

Need more information?

Do you need more guidance on the VAT definition of “motor car”?

Our specialist VAT accoutants can help. Please contact us by filling in a contact form or calling 0161 962 1855.

By Katie Business News 0 Comments

Rumours of capital gains tax increase

There has been a lot of speculation in the Press that the Chancellor may introduce radical changes to capital gains tax to start to repay the substantial Government borrowings to support businesses and employees affected by the coronavirus pandemic.

It has been suggested that the current £12,300 CGT annual exemption will be reduced and the rates aligned with the rates of income tax. It has also been suggested that the capital gains uplift on death may be abolished following recommendations by the Office of Tax Simplification and the House of Commons Treasury Select Committee.

The Treasury Committee has recently launched a new inquiry called ‘Tax after coronavirus’. That inquiry will consider different ways of raising taxes, in particular a thorough review of UK tax reliefs which has also been recommended by the Public Accounts Committee.

The Chancellor has also hinted that there may be radical changes to the way that the self-employed and directors of family companies may be taxed in future.

Need more information?

Do you need help with capital gains tax? We offer a wide range of services and have a dedicated team of tax specialists. We work with businesses from a large range of sectors and are here to help you whenever you need us. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Reporting property gains within 30 days

Reporting property gains within 30 days

Since 6 April 2020 where UK residential property is disposed of, the resulting capital gain needs to be reported and the capital gains tax paid within 30 days of completion of the disposal. There have been a number of teething problems with the new online reporting system and HMRC stated that there would be no penalties imposed for late returns, provided the returns were submitted by 31 July 2020. Taxpayers need to obtain a Government Gateway account and apply for a CGT or property reference number to report disposals, although they can authorise their accountant to report the disposals on their behalf.

Currently only the first disposal may be reported using the online reporting system with any subsequent disposals being reported using a paper return. We have been told that the new system will be fully functional shortly.

Need more information?

Do you need help with property gains? We offer a wide range of services and our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Insights 0 Comments

Stamp duty cuts

Second home buyers and buy-to-let landlords welcome stamp duty land tax cut. 

Although the temporary increase in the Stamp Duty Land Tax (SDLT) threshold to £500,000 was aimed at those buying their main residence, it also benefits those buying a second or subsequent property where there is a 3% supplementary charge. Thus, the rate of SDLT on a second home costing up to £500,000 is now 3%. Previously, the rate was 3% up to £125,000, then 5% up to £250,000 and then 8% up to £825,000. So the SDLT on a second home costing £400,000 is now £12,000 compared to £22,000 if the purchase had completed before 8 July 2020.

Note that there are different thresholds and rates of Land and Buildings Transaction Tax for properties located in Scotland and Wales.

Need more information?

Do you need further guidance on the stamp duty cuts? We offer a wide range of services which are unique to you. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Interaction with VAT flat rate scheme

Small businesses with turnover below £150,000 may join the VAT flat rate scheme which makes their VAT accounting much simpler as they merely pay HMRC a percentage of their VAT inclusive turnover.

The temporary reduction in the rate of VAT from 20% to 5% reduces the flat rate percentages for affected businesses as set out below:

 

Type of Business 15 July 20  to 12 Jan 2021 From 13 January 2021
Catering services including restaurants and takeaways 4.5 12.5
Hotel or accommodation 0 10.5
Pubs 1 6.5

 

Note that to use the flat rate percentage for pubs the turnover must be predominantly “wet sales”.

Need more information?

Do you need help with the VAT flat rate scheme? We offer a wide range of services to help! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

VAT treatment of deposits

It is fairly common, particularly in the summer holidays, to pay  deposits when booking a hotel or self-catering accommodation but how should the deposit be accounted for?

HMRC have confirmed that the hotel has the option of charging VAT according to the ‘basic tax point’ (dates of the stay) rather than the ‘actual tax point’ (invoice/payment dates).

For example where the customer paid a non-refundable £300 deposit in February 2020 for a £1000 holiday in Cornwall in August, using the actual tax point, the hotel would account for 20% VAT on the deposit received in February 2020 and 5% on the balance payable after 15 July 2020.  The hotel could choose to use the basic tax point rule which would mean that the 5% rate would apply to the entire cost of the stay and make an adjustment for the VAT already accounted for.

Please contact us if you need advice on dealing with the invoicing or accounting for such transactions.

Need more information?

We specialise in VAT and we are here to help you with deposits.

Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector.

If you want to learn more about how the team can help or simply want some tax advice from a trusted accountant, please contact us by filling in a contact form or calling 0161 962 1855.

By Katie Business News 0 Comments

High income child benefit charges not valued

A recent tax tribunal has ruled against HMRC who were seeking to raise tax assessments for the High Income Child Benefit Charge (HICBC) for earlier years that had not been reported to HMRC.

HICBC is a special tax charge that applies where one member of a couple in receipt of child benefit receives income in excess of £50,000 a year. The charge is 1% of the child benefit received for every £100 of income in excess of £50,000 such that where income exceeds £60,000 the child benefit is fully taxed.

The problem is that many taxpayers whose income is taxed under PAYE do not receive a self-assessment tax return and may not be aware of the tax charge.

The taxpayer in this particular case fell into that category but reported and paid the tax when prompted by HMRC. He was then assessed to tax on the child benefit for the three previous years but the court found that HMRC did not have the power to issue those assessments.

Need more information?

We offer a wide range of services which are unique to your business and deal with HMRC on a regular basis! Our team of chartered accountants have a wealth of experience in a broad range of sectors and we work hard to ensure we create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

What does the 5% temporary VAT rate apply to?

The temporary 5% rate applies to the following supplies, but is not an exhaustive list:

  • Catering, including hot takeaway food
  • Accommodation in hotels, guest houses and similar places
  • Tourist attractions such as theme parks, zoos, theatres and cinemas

Note that as far as catering is concerned, the 5% rate only applies to food and non-alcoholic drinks. The 20% rate continues to apply to alcoholic drinks.

Please contact us if you are unsure as to whether the 5% rate applies to any of your supplies.

Need more information?

Do you need further guidance on the 5% temporary VAT rate? We offer a wide range of services for the hospitality industry and work with many hotel and restaurant clients.  Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice • Business News 0 Comments

More details on hospitality VAT reduction

When the Chancellor announced a temporary cut in the rate of VAT for the hospitality sector and attractions in his Summer Statement on 8 July there were a number of areas that needed clarification. The reduction applies to supplies made between 15 July 2020 and 12 January 2021.

The reduction is one of a number of additional measures announced to support the economy as the COVID-19 pandemic continues to affect individuals and businesses.

VAT on food and non-alcoholic drinks

From 15 July 2020 to 12 January 2021, to support businesses and jobs in the hospitality sector:

  • A 5% rate of VAT applies to supplies of:
    • food and non-alcoholic beverages sold for on-premises consumption, for example, in restaurants, cafes and pubs
    • hot takeaway food and hot takeaway non-alcoholic beverages.
  • Alcoholic drinks will remain subject to the standard 20% rate.
  • Food and drink supplied as part of a supply of catering services for consumption off-premises continue to be standard rated.

HMRC have now set out more details of which supplies will attract the 5% temporary rate as well as the impact on invoicing, deposits and the flat rate scheme.

Need more information?

We offer a wide range of services for the hospitality industry. Our team of chartered accountants have a wealth of experience to suit your hospitality needs. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

HMRC may allow tax refunds for anticipated company losses

HMRC have recently announced that they may allow limited companies to make claims for loss relief and tax refunds even though the current accounting period has not yet ended and the corporation tax return has not been submitted. This will be available to companies of all sizes but they will be required to provide evidence to support the claims.

REFUNDS OF QUARTERLY INSTALMENT PAYMENTS

Companies with profits in excess of £1.5 million are required to make quarterly instalment payments (QIPs) of their corporation tax liability much earlier than the normal payment date which is 9 months after the end of the accounting period.

For year ended 30 June 2020 a company with profits between £1.5 million and £20 million would be required to pay 25% of the estimated liability on 14 January 2020, 50% on 14 April with further payments due on 14 July and 14 October 2020. Where profits exceed £20 million the payments are due 3 months earlier.

If the same company now anticipates that it will make a loss for year ended 30 June 2020 they may be able to have the tax paid in January and April repaid and the further QIPs reduced to nil. Furthermore, HMRC may allow the losses to be carried back and set against the previous accounting period ended 30 June 2019 resulting in a further tax repayment even though the 30 June 2020 corporation tax return has not yet been submitted.

Note that the £1.5 million and £20 million limits referred to above are divided by the number of companies under common control so for example the limit would be £500,000 per company if there are 3 companies in a group.

CARRY BACK TO PREVIOUS ACCOUNTING PERIOD

Where company profits are below the £1.5 million limit then QIPs will not be due but they may still be able to make a claim to set a loss against profits of the previous accounting period and obtain a tax repayment where losses are anticipated. We can of course help you make a claim and negotiate a tax repayment with HMRC.

Need more information?

Do you need further guidance?

Our team of corporation tax advisors have a wealth of experience in a broad range of sectors. We work hard to create smart and effective tax-efficient solutions for start-ups, SMEs and beyond.

If you want to learn more about how the team can help, please fill in a contact form or call 0161 962 1855.

By Katie Business News 0 Comments

New system for reporting CGT on property disposal

A new CGT reporting and payment on account system was introduced for a residential property disposal by UK resident taxpayers from 6 April 2020. The new system as originally announced required the disposal to be reported and any CGT due to be paid on account within 30 days of completion. HMRC have now announced that for disposals between 6 April and 30 June there will be no penalty provided that the return is made by 31 July 2020 although HMRC will still charge interest!

We can of course assist you with this new reporting obligation, but you will need to be registered with the Government Gateway and authorize us to act on your behalf.

Need more information?

We offer a wide range of services for companies with a residential property disposal. We are here to help you through the Coronavirus and will do everything we can to get you through. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business Advice 0 Comments

CGT private residence relief changes go ahead

The latest Finance Bill includes important changes to private residence relief that took effect from 6 April 2020.

The first change is to limit to just 9 months the period prior to disposal that counts as a period of deemed occupation and thus exempt from CGT even though the owners are not living in the property during that period

The second is to limit “letting relief” to periods where the taxpayer is in shared occupation with the tenant.

Final period exemption now reduced to 9 months

The final period exemption was for many years the last 36 months which was felt to be too generous. The period was then reduced to the last 18 months and has now been further reduced to the last 9 months.

The final period exemption will remain at 36 months for those with a disability, and those in or moving into care.

CGT Lettings Relief Changes

Lettings relief provided a further exemption for capital gains of up to £40,000 per property owner.

The additional relief was introduced in 1980 to encourage people to let out spare rooms within their property on a casual basis without losing the benefit of PRR, for example where there are a number of lodgers sharing the property with the owner. It no longer applies where property owners rent out their former main residence.

Those who are renting their property temporarily whilst working elsewhere are unlikely to be affected by this change as there are alternative reliefs available under those circumstances.

 

Need more information?

We offer a wide range of services for private residence businesses. Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. We are here to help and understand this difficult time with Coronavirus. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.

By Katie Business News 0 Comments

Impact on the high-income child benefit charge

Child benefit charge: With many employees and the self-employed being furloughed, being made redundant, or making lower profits, their income for 2020/21 may well fall below the £50,000 limit at which child benefit starts being taxed.

The charge is 1% for every £100 that adjusted net income exceeds £50,000 multiplied by the child benefit claimed in respect of the children. Note that the rate of Child benefit increased from 6 April to £21.05 a week for the eldest child and £13.95 for each additional child.

Many couples with income over £60,000, when the benefit is fully taxed stopped, claiming Child Benefit rather than have to repay it back in tax. They should therefore reinstate their claims if the income of the higher paid taxpayer could drop back below £60,000.

Need more information?

We understand the impact Coronavirus is having on your business and we want to help ensure your business comes out on the other side. If you need help with the child benefit charge please get in touch. We wide range of services which are unique to your businesses who are just getting going! Our team of chartered accountants have a wealth of experience in a broad range of sectors, from construction and property to the charity sector. Our team work hard to ensure they create smart and effective tax-efficient solutions for start-ups to optimise growth and help them succeed. If you want to learn more about how the team can help or simply want some start-up advice from a trusted accountant do hesitate to contact us. For more information please do hesitate to contact us on 0161 962 1855. Alternatively you can email us using the form below and we will contact you as soon as possible.

Our fantastic team at A&C Chartered Accountants are here to help.