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Reclaiming pre-trading VAT

20/06/2024

There are special rules that determine the recoverability of VAT incurred before a business registered for VAT. This type of VAT is known as pre-registration input VAT. There are different rules for the supply of goods and services, but VAT can only be reclaimed if the pre-registration expenses relate to the supply of taxable goods or

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Post cessation transactions

20/06/2024

Tax relief may be available for post-cessation expenses of a trade. To be an allowable post-cessation expense the trade must have ceased and the expense must have been deductible in calculating the trading profits. This means that the expense still has to meet the wholly and exclusively test and be revenue, not capital, expenditure. The

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Tax relief for training costs

20/06/2024

If you are self-employed it is important to know if an expense is tax allowable. Any allowable costs can be used to reduce your taxable profit. As a general rule you can claim for items that you would normally use for less than 2 years as allowable expenses such as stationery and other office sundries as well as rent, rates, power and

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Tax and employee share schemes

20/06/2024

There are a number of government approved share schemes which offer various incentives to employees. The rules of the schemes vary but they are all designed to help incentivise employees by giving them the opportunity to invest in their employer's business. This in turn helps businesses retain and recruit key staff by offering tax

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Connected persons for tax purposes

20/06/2024

The definition of a connected person for tax purposes varies. A statutory definition of “connected persons” for Capital Gains Tax purposes is set out in Section 286 of the Taxation of Chargeable Gains Act (TCGA) 1992. The legislation states: " A person is connected with an individual if that person is the individual’s

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Is your income over £100,000?

20/06/2024

If you earn over £100,000 in any tax year your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances that would reduce the allowance to zero if your

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Child Benefit for 16 – 19 year olds

17/06/2024

More than a million parents will receive reminders to extend Child Benefit for their teenagers if they are continuing their education or training after their GCSEs. HM Revenue and Customs (HMRC) is sending more than 1.4 million Child Benefit reconfirmation letters to parents between 24 May and 17 July. The letters will include a QR code

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Are we unpaid tax collectors?

17/06/2024

Business owners often refer to VAT as if it were a cost to their business regardless of their VAT position; whether they are registered for VAT or not. If you are not registered for VAT, you do not have to add VAT to your sales and you cannot recover any VAT you pay on purchases. In which case, under these circumstances, VAT is a

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Types of HMRC enquiries

13/06/2024

HMRC can enquire into any statutory return (or amendment of that return) or statutory claim to check if the return / claim has been prepared correctly or if further information is required. HMRC’s internal manuals state that there is no statutory definition of an enquiry, so it carries its normal dictionary meaning of `seeking

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Correcting errors in VAT returns

13/06/2024

Where an error on a past VAT return is uncovered businesses have a duty to correct the error as soon as possible. As a general rule, any necessary adjustment can be made on a current VAT return. To do this, the errors must be below the reporting threshold. Under the reporting threshold rule, businesses can make an adjustment on their

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Interest on children’s savings

13/06/2024

All children in the UK have their own personal allowance, currently £12,570. There are special rules if a parent gifts significant amounts of money to their children which results in them receiving bank interest of more than £100 (before tax) annually. If this is the case, the parent is liable to pay tax on all the interest if it is above

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Non-resident UK property sales

13/06/2024

There are specials rules that apply to UK property sales by non-residents. Since 6 April 2020 non-residents have needed to report and pay any non-resident Capital Gains Tax (CGT) due if they have sold or disposed of: residential UK property or land (land for these purposes also includes any buildings on the land); non-residential UK

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Self-assessment payments on account

13/06/2024

Self-assessment taxpayers are usually required to pay their income tax liabilities in three instalments each year. The first two payments on account are due on 31 January during the tax year and 31 July following the tax year end date. These payments on account are based on 50% each of the previous year’s net income tax liability. In

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Multiple Dwellings Relief for SDLT

13/06/2024

It was announced as part of the Spring Budget 2023 that Multiple Dwellings Relief (MDR) was being abolished. This change has now come into effect for transactions which complete, or substantially perform on or after 1 June 2024. The MDR relief applied to property purchasers who bought more than one dwelling where a transaction or a

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New Brooms

11/06/2024

As time passes during the present election campaign, its seems more likely that we may have a change of government from the 5 July. Labour have disclosed a number of tax changes they would introduce. To summarise they are: Private school fees will attract VAT at 20% which private schools will no doubt pass on to parents. The Labour

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Falling inflation – what does it mean for you?

11/06/2024

The following notes are reproduced from a Treasury statement issued 21 May 2024. Lower inflation supports people by maintaining the purchasing power of their money. If prices only rise slowly, people can plan their budgets more effectively - encouraging spending and investment, which fuels the economy. Lower inflation also helps

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Tax Diary July/August 2024

07/06/2024

1 July 2024 - Due date for corporation tax due for the year ended 30 September 2023. 6 July 2024 - Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs. 19 July 2024 - Pay Class 1A NICs (by the 22 July 2024 if paid electronically). 19 July 2024 - PAYE and NIC deductions due for month ended

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Filing your tax return early

06/06/2024

The 2023-24 tax year ended on 5 April 2024 and the new 2024-25 tax year started on 6 April 2024. Most taxpayers will be happy to leave dealing with their 2023-24 tax returns until later this year or even until January 2025. The 31 January 2025 is not just the final date for submission of the 2023-24 self-assessment tax return but also an

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Setting up as a sole trader

06/06/2024

Setting up in business as a sole trader is arguably the simplest way of starting and running a business. The advantages of being a sole trader include independence, ease of set up and running your business, and the fact that all the profits go to you. The disadvantages include a lack of support, unlimited liability, the prospect of

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Need to register for self-assessment?

06/06/2024

There is an online tool, developed by HMRC, that allows taxpayers to check if they need to notify HMRC about additional income. The online tool can be found at www.gov.uk/check-additional-income-tax. You are required to submit a self-assessment return if any of the following apply: you were self-employed as a ‘sole trader’ and earned

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Statutory Pay assistance

06/06/2024

An employer can usually reclaim 92% of employees’ Statutory Maternity, Statutory Paternity, Statutory Adoption, Statutory Parental Bereavement and Statutory Shared Parental Pay. If the business qualifies for Small Employers’ relief, this figure can increase to 103%. Small Employers’ relief is available if the business paid £45,000 or

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Directors and National Insurance

06/06/2024

Directors are classed as employees and pay National Insurance on annual income from salary and bonuses that exceed the Primary Threshold. The annual threshold is £12,570 in the current 2024-25 tax year. Many director shareholders take a minimum salary and any balance of remuneration as dividends. This tends to reduce National Insurance

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Transferring unused IHT residence nil rate band

06/06/2024

The Inheritance Tax residence nil rate band (RNRB) is a transferable allowance for married couples and civil partners (per person) when their main residence is passed down to a direct descendent such as children or grandchildren after their death. The allowance increased to the present maximum level of £175,000 from 6 April 2020. The

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Change

04/06/2024

There is a French saying “Plus ca change, plus c’est la meme chose” meaning, the more things change, the more they stay the same. Its interesting to apply this to a change that is about to come about, if, as expected, the Labour Party form the next government from the 5th of July. The present Shadow Chancellor, Rachael

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New protection for consumers

04/06/2024

The Digital Markets, Competition and Consumers Act has become law after receiving Royal Assent. The Act paves the way to give consumers rights across the UK, with greater control and clarity over online purchases. It does this by requiring businesses to provide clearer information to consumers before they enter a subscription contract,

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General election date announced

30/05/2024

The Prime Minister, Rishi Sunak, declared from the steps of Downing Street (on 22 May 2024) that the next general election will take place on 4 July 2024. The Prime Minister confirmed that he had spoken with His Majesty the King to request the dissolution of parliament. The King granted this request, thereby confirming that the general

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Do not respond if you receive this letter

30/05/2024

Companies House published guidance titled ‘Reporting scams pretending to be from Companies House’ has been updated. The list is intended to help people check if contacts purporting to be from Companies House are actually a scam. The guidance contains a list of emails, letters and phone calls that are fraudulent. The guidance can be

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Changes to the High Income Child Benefit Charge

30/05/2024

The changes to the High Income Child Benefit Charge (HICBC) announced as part of the Spring Budget came into effect on 6 April 2024. The income threshold at which HICBC starts to be charged has been increased from £50,000 to £60,000. The HICBC is charged at the rate of 1% of the full Child Benefit award for each £200 (2023-24: £100) of

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Payback company car private fuel

30/05/2024

Where an employee with a company car is provided with fuel for their own private use by their employers, the default position is that the employee is required to pay the car fuel benefit charge. The charge is determined by reference to the CO2 rating of the car, applied to the car fuel benefit multiplier, currently £27,800. The car fuel

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CGT Rollover Relief

30/05/2024

Business Asset Rollover Relief also known as CGT Rollover Relief allows for deferral of Capital Gains Tax (CGT) on gains made when taxpayers sell or dispose of certain assets and use all or part of the proceeds to buy new business assets. The relief means that the tax on the gain of the old asset is postponed. The amount of the gain is

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Carry back charitable donations

30/05/2024

If you are a higher rate or additional rate taxpayer you have the option to carry back your charitable donations to the previous tax year. A request to carry back the donation must be made before or at the same time as your previous year’s self-assessment return is filed. This means that if you made a gift to charity in the current

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Employee suggestion schemes

30/05/2024

There are many advantages to creating an employee suggestion scheme where employees are rewarded for making suggestions that benefit your business. Apart from the value that these suggestions can have in saving money or driving new business ideas there are also tax-free benefits associated with running these schemes. HMRC list two kinds

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