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OTS recommends simplifications for small companies

The Office of Tax Simplification (OTS) has unveiled a package of recommendations aimed at making the tax system simpler and easier to use for small companies. The report, entitled Small company taxation review contains a mix of long range structural change ideas and simpler short term administrative improvements.

The recommended administrative changes include:

– aligning filing and payment dates, e.g. VAT and PAYE, and annual returns and corporation tax;
– HMRC providing extra support at weekends and evenings when more small company owners deal with their tax affairs;
– stopping companies…

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Marriage Tax Allowance

Could you be missing out on up to a £212 per year tax break

 

If you married or in a civil partnership, you may be entitled to a £212 tax break called the Marriage Tax Allowance. To be eligible you and your spouse need to meet the following criteria:

  • You must be married or in a civil partnership.
  • Both of you must have been born after the 6th April 1935
  • You or your spouse needs to have total income below £10,600…
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The Budget 2016 – Download our free guide (PDF)

In this analysis we have mainly concentrated on the tax measures that will directly affect individuals, employers and small businesses.

We are committed to ensuring all our clients don’t pay a penny more in tax than is necessary.

If you have any questions or would like one-to-one advice tailored to your needs, please call us on 01792 466 428 or email [email protected].

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March Questions and Answers

Q. What are the implications of selling my Scottish home? I own and live in a property in Scotland. What are the implications of me selling the house to a relative, who will buy it using a buy-to-let mortgage, and allow me to stay in it and pay rent to her as a tenant?

A. If the house has always been your main residence, there should be no capital gains tax implications for you. Depending on the purchase price, your relative may have to pay the Scottish land and…

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Practical implications of the dividend tax allowance

The new rules governing the taxation of dividends are set to take effect in relation to dividends received after 5 April 2016. The changes include:

a £5,000 dividend nil rate (also known as the ‘dividend tax allowance’ (DTA)), which will effectively tax at the nil rate, the first £5,000 of taxable dividend income (i.e. after deducting the personal allowance, but treating dividends as the top slice of income, so the personal allowance is used last against dividends). Any dividends above the first £5,000 will be taxed as if…

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March Key Tax Dates

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/3/2016

31 – Last minute tax planning for the 2015/16 tax year. Ensure you use up all exemptions to which you are entitled

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Employee bonus schemes in the spotlight

HMRC have recently published the latest addition to their tax avoidance guidance series, entitled Employee Bonus Schemes: Growth Securities Ownership Plan and other avoidance schemes based on contracts for difference (Spotlight 28). The Spotlight guidance confirms that, in HMRC’s opinion, growth securities ownership plan schemes do not work and any payment made by an employer to an employee on the maturity of the contract for difference should be taxed as employment income and subject to PAYE income tax and National Insurance contributions (NICs).

Broadly, under this type of arrangement,…

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Landlords’ replacement wear and tear allowance

Capital allowances are not available for expenditure on furniture and furnishings for use in dwelling houses. However, until 5 April 2016 (1 April 2016 for corporation tax) a deduction for wear and tear may be claimed (known as a ‘wear and tear allowance election’), equal to 10% of the ‘net rents’ from furnished lettings (ie after deducting payments that would normally be borne by the tenant, such as water rates). In addition, a deduction may be claimed for replacing fixtures that are an integral part of a building…

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Personal savings allowance update

From 6 April 2016, the personal savings allowance (PSA) will allow basic rate taxpayers to receive up to £1,000 of savings income tax-free. For higher rate taxpayers, this limit will be £500. HMRC have published guidance setting out details of what counts as savings income and how the allowance will be calculated, including some useful examples.

Savings income includes account interest from:

– bank and building society accounts;
– accounts with providers like credit unions or National Savings and Investments.

It also includes:

– interest distributions (but not dividend distributions) from authorised unit…

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Februrary Question and Answer Section

Q. Did my extended leave constitute a cessation of trade? I have been the sole director of a trading limited company for many years. Last year, I decided to take a long holiday and travelled around the world with my wife – indeed, we got on so well that we stayed away for around 12 months! Whilst I was away the company continued to collect outstanding payments, but it received no other income. I have now taken on another director/shareholder (50%) and company trading has resumed. Should I…

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