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Thursday 29th November 2018

Winter 2018 Newsletter

This edition looks at VAT in the food sector and features an article on Inheritance Tax.

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Monday 6th August 2018

Summer 2018 Newsletter

Making Tax Digital is on the horizon and this edition gives an overview of the changes.

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Tuesday 6th March 2018

Spring 2018 Newsletter

This edition includes articles on paying dividends, the new Scottish income tax bands and inheritance tax.

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Thursday 16th November 2017

Winter 2017 Newsletter

This edition includes articles on changes to pension auto-enrolment and an update on the National Minimum Wage.

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Wednesday 30th August 2017

Autumn 2017 Newsletter

In this edition there are articles on the delayed Making Tax Digital plans and the new data protection rules.

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Wednesday 14th June 2017

Summer 2017 Newsletter

The Summer edition of the newsletter highlights the changes to the dividend allowance and the current position with Making Tax Digital

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Thursday 16th March 2017

Spring 2017 Newsletter

The Spring edition of the newsletter leads on changes to the VAT flat rate scheme

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Wednesday 5th December 2018

The government has published a collection of documents in preparation for the scenario of the UK leaving the EU without a Withdrawal Agreement a so called 'no deal' Brexit.

The government has published a collection of documents in preparation for the scenario of the UK leaving the EU without a Withdrawal Agreement a so called 'no deal' Brexit.

The guidance states:

'The government does not want or expect a no deal scenario. However, it is the duty of a responsible government to prepare for a range of potential outcomes, including the unlikely event of no deal. In the event of leaving the EU without a deal, legislation will be necessary to ensure the UK's Customs, VAT and Excise regimes function as intended after the UK leaves the EU and so, on a contingency basis, HM Treasury and HM Revenue and Customs will lay a number of Statutory Instruments (SIs) under the Taxation (Cross-border Trade) Act 2018 (TCTA) and the EU Withdrawal Act 2018 (EUWA).'

We will keep you informed of developments.

Internet link: GOV.UK no deal brexit collection

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Wednesday 5th December 2018

According to statistics published by HMRC more than 180,500 first-time buyers have benefitted from First Time Buyers Relief.

According to statistics published by HMRC more than 180,500 first-time buyers have benefitted from First Time Buyers Relief (FTBR). The relief introduced in November 2017 has saved eligible first-time buyers an estimated total amount of more than £426 million.

Mel Stride MP, Financial Secretary to the Treasury, said:

'These statistics show that the government was right to offer a helping hand to first time buyers. Without this investment more than 180,500 new homeowners may have struggled in getting onto the property ladder. Maintaining the status quo was not an option.'

FTBR is a Stamp Duty Land Tax relief for eligible first-time buyers. The tax relief can be used when buying a residential property where the purchase price is no more than £500,000 in England and Northern Ireland. Land and Buildings Transaction Tax and Land Transaction Tax apply to property in Scotland and Wales.

The press release goes on to state:

'The amount of relief reported should not be used to infer average house prices for first time buyers; first-time buyer purchases below £125k and above £500k are not included in the statistics as they are below the lower SDLT threshold (£125k) or ineligible for the relief (above £500k).For purchases up to £300,000 no SDLT is payable. Where the purchase price is between £300,000 and £500,000 SDLT at 5% is due on the amount above £300,000. For example, a property purchased for £450,000 would pay £7,500 SDLT (5% of £150,000). This gives a saving of up to £5,000 for each first-time buyer.'

Extension of FTBR

It was announced in the Autumn Budget 2018 that the relief for first-time buyers will be extended to purchasers of qualifying shared ownership properties who do not elect to pay SDLT on the market value of the whole property when they purchase their first share. Relief will be applied to the first share purchased, where the market value of the shared ownership property is £500,000 or less. This relief will apply retrospectively from 22 November 2017, meaning that a refund of tax will be payable for those who have paid SDLT after 22 November 2017 in circumstances which now qualify for FTBR.

Internet link: HMRC press release

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Wednesday 5th December 2018

Some employers may wish to give a small gift to their employees.

Some employers may wish to give a small gift to their employees. As long as the employer meets the relevant conditions, no tax charge will arise on the employee.

A tax exemption is available which should help employers ensure that the benefits provided are exempt and do not result in a reportable employee benefit in kind. In order for the benefit to be exempt it must satisfy the following conditions:

  • the cost of providing the benefit does not exceed £50 per employee (or on average when gifts made to multiple employees)
  • the benefit is not cash or a cash voucher
  • the employee is not entitled to the benefit  as part of a contractual arrangement (including salary sacrifice)
  • the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
  • where the employer is a 'close' company and the benefit is provided to an individual who is a director, an office holder or a member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any other exemptions or allowable deductions.

No more than £50

One of the main conditions is that the cost of the benefit does not exceed £50. If the cost is above £50 the full amount is taxable, not just the excess over £50.The cost of providing the benefit to each employee and not the overall cost to the employer determines whether the benefit can be treated as a trivial benefit. So, a benefit costing up to £50 per employee whether provided to one or more employees can be treated as trivial. Where the individual cost for each employee cannot be established, an average could be used. Some HMRC examples consider gifts of turkeys, a bottle of wine or alternatively a gift voucher.

Further details on how the exemption will work, including family member situations, are contained in the HMRC manual.

However if you are unsure please do get in touch before assuming the gift you are about to provide is covered by the exemption.

Internet link: HMRC manual

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Wednesday 5th December 2018

New company car advisory fuel rates have been published which took effect from 1 December 2018.

New company car advisory fuel rates have been published which took effect from 1 December 2018. The guidance states: 'You can use the previous rates for up to one month from the date the new rates apply'. The rates only apply to employees using a company car.

The advisory fuel rates for journeys undertaken on or after 1 December 2018 are:

Engine size Petrol
1400cc or less 12p
1401cc - 2000cc 15p
Over 2000cc 22p
Engine size LPG
1400cc or less 8p
1401cc - 2000cc 10p
Over 2000cc 15p
Engine size Diesel
1600cc or less 10p
1601cc - 2000cc 12p
Over 2000cc 14p

HMRC guidance states that the rates only apply when you either:

  • reimburse employees for business travel in their company cars
  • require employees to repay the cost of fuel used for private travel

You must not use these rates in any other circumstances.

If you would like to discuss your car policy, please contact us.

Internet link: GOV.UK AFR

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Wednesday 5th December 2018

HMRC has warned that university students are being bombarded with fake tax refund emails.

HMRC has warned that university students are being bombarded with fake tax refund emails. The scammers have targeted university students in an attempt to steal their banking and personal details using .ac.uk email addresses that look genuine, in order to avoid detection.

Mel Stride, Financial Secretary to the Treasury said:

'Although HMRC is cracking down hard on internet scams, criminals will stop at nothing to steal personal information.

'I'd encourage all students to become phishing-aware - it could save you a lot of money.'

In common with other tax scams, fraudsters send a message, including HMRC, GOV.UK or credit card branding, supposedly advising the recipient about a tax refund. Those taken in by the fake email are asked to click on a link and enter their banking and personal details. Fraudsters can use this information to steal money from bank accounts or to sell on to other criminals.

Internet link: GOV.UK press release

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Wednesday 5th December 2018

The Office of Tax Simplification has published the first of two reports on inheritance tax.

The Office of Tax Simplification (OTS) has published the first of two reports on inheritance tax.

The first report sets out an explanation of the issues and complexities of IHT, gives an overview of concerns raised by the public and professional advisors during the review and then makes recommendations. This first report examines the administrative issues that people complain about and which were raised in the responses. The second report covering other wider areas of concern to people will follow in Spring 2019.

The first report highlights the benefits of:

  • reducing or removing the requirement to submit forms for smaller or simpler estates, especially where there is no tax to pay
  • simplifying the administration and guidance
  • the advantages of banks and other financial institutions having standardised requirements
  • automating the whole system by bringing it online

Angela Knight CBE, OTS Chairman, said:

'Inheritance tax is both unpopular and complicated. The basic design of the tax itself is for government, but at the OTS we can address that most frequent of all comments “at least make it easier for the families to fill in the forms”. The OTS has worked on ways to address these practical complexities, which have come through loud and clear.'

'The recommendations in this report will make it easier for the majority, and would mean that in future, many may not have to do the forms at all. Improving the administration of this tax in these ways is important as having to deal with the current process can seem overwhelming to people at a time when they are both preoccupied and distressed.'

Internet link: GOV.UK OTS IHT report

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Tuesday 6th November 2018

The Chancellor Philip Hammond presented his second Autumn Budget on Monday 29 October 2018.

The Chancellor Philip Hammond presented his second Autumn Budget on Monday 29 October 2018. In his speech he stated that 'austerity is coming to an end - but discipline will remain'. He also promised a 'double deal dividend' if the Brexit negotiations are successful but stated that there may be a full-scale Spring Budget in 2019 if not.

We will keep you informed of developments.

Internet link: GOV.UK Budget 2018

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Tuesday 6th November 2018

At the Budget, the Chancellor announced that increases to the personal allowance and basic rate band for 2019/20.

At the Budget, the Chancellor announced that increases to the personal allowance and basic rate band for 2019/20.

The personal allowance is currently £11,850. The personal allowance for 2019/20 will be £12,500. Also for 2019/20, the basic rate band will be increased to £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance. The additional rate of tax of 45% will remain payable on taxable income above £150,000.

The government had pledged to raise the thresholds to these levels by 2020/21.

Internet link: GOV.UK income tax

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Tuesday 6th November 2018

A number of changes to capital allowances were announced at the Budget.

A number of changes to capital allowances were announced at the Budget, including an increase in the Annual Investment Allowance (AIA), for two years to £1 million, in relation to qualifying expenditure incurred from 1 January 2019. The AIA is currently £200,000 per annum. Complex calculations may apply to accounting periods which straddle 1 January 2019.

Other changes to the rules include:

  • a reduction in the rate of writing down allowance on the special rate pool of plant and machinery, including long-life assets, thermal insulation, integral features and expenditure on cars with CO2 emissions of more than 110g/km, from 8% to 6% from April 2019. Complex calculations may apply to accounting periods which straddle this date
  • clarification as to precisely which costs of altering land for the purposes of installing qualifying plant or machinery qualify for capital allowances, for claims on or after 29 October 2018
  • the end of the 100% first year allowance and first year tax credits for products on the Energy Technology List and Water Technology List from April 2020
  • an extension of the current 100% first year allowance for expenditure incurred on electric charge-point equipment until 2023.

In addition, a new capital allowances regime will be introduced for structures and buildings. It will be known as the Structures and Buildings Allowance and will apply to new non-residential structures and buildings. Relief will be provided on eligible construction costs incurred on or after 29 October 2018, at an annual rate of 2% on a straight-line basis.

Internet link: GOV.UK Budget 2018

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Tuesday 6th November 2018

The government announced, as part of the Budget, that some changes are being made to the rules for Entrepreneurs' Relief .

The government announced, as part of the Budget, that some changes are being made to the rules for Entrepreneurs' Relief (ER) with immediate effect for disposals on or after 29 October 2018. Two new tests are to be added to the definition of a 'personal company', requiring the claimant to have a 5% interest in both the distributable profits and the net assets of the company. The new tests must be met, in addition to the existing tests, throughout the specified period in order for relief to be due. The existing tests already require a 5% interest in the ordinary share capital and 5% of voting rights.

Minimum qualifying period

The government will legislate in Finance Bill 2018-19 to increase the minimum period throughout which certain conditions must be met to qualify for ER, from one year to two years. The measure will have effect for disposals on or after 6 April 2019 except where a business ceased before 29 October 2018.

Where the claimant's business ceased, or their personal company ceased to be a trading company (or the holding company of a trading group) before 29 October 2018, the existing one year qualifying period will continue to apply.

Dilution of holdings below 5%

Draft legislation has already been issued to provide a potential entitlement to ER where an individual's holding in a company is reduced below the normal 5% qualifying level (meaning 5% of both ordinary share capital and voting power). The relief will only apply where the reduction below 5% occurs as a result of the company raising funds for commercial purposes by means of an issue of new shares, wholly for cash consideration.

Where a disposal of the shareholding prior to the issue would have resulted in a gain which would have qualified for ER, shareholders will be able to make an election treating them as if they had disposed of their shares and immediately reacquired them at market value just before dilution. To avoid an immediate CGT bill on this deemed disposal, a further election can be made to defer the gain until the shares are sold. ER can then be claimed on the deferred gain in the year the shares are sold under the rules in force at that time.

The new rules will apply for share issues which occur on or after 6 April 2019.

Please contact us if you would like further information on how this may affect you.

Internet link: GOV.UK ER

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