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Tax Credit Changes Approved

The government has recently confirmed that the draft Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015, which were laid before Parliament on 7 September 2015, are compatible with the European convention on human rights. Following a lengthy parliamentary debate, the draft regulations have been approved and are expected to apply from 6 April 2016. The implication of these regulations means that most tax credit claimants will have their working tax credit (WTC) and child tax credit (CTC) reduced from April 2016, but the impact of…

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October Key Tax Dates

1 – Due date for payment of Corporation Tax for the year ended 31 December 2014

5 – If a Tax Return has not been received, individuals and trustees must notify HMRC of new sources of income and chargeability in 2014/15

14 – Return and payment of CT61 tax due for quarter to 30 September 2015

19 – Tax and Class 1B national insurance due on PAYE settlements for 2014/15

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/10/2015 or quarter 2 of 2015/16 for small employers

31 -…

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New Job Vacancy

Semi Senior Accountant PERMANENT – FULL TIME Swansea Area, Salary TBC

 

We are broadening our horizons. Do you want to do the same? Morgan Hemp, one of the most respected Chartered Certified Accountancy Firms in South West Wales, is looking for a semi-senior accountant to join its expanding team.

We are looking for a diligent practitioner with over three years experience for this role, which will be focused on preparing financial statements, management accounts, corporate and personal tax returns,…

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September Question and Answer Section

Q. I have recently registered for VAT. What is the difference between ‘normal’ and ‘cash’ accounting?

A. Under the normal method of accounting for VAT, you account for the output tax on your sales as they take place or as soon as you issue a VAT invoice, even if your customer hasn’t paid you. Then you can reclaim input tax on purchases you make as soon as you receive a VAT invoice, even if you haven’t paid your supplier. This method can cause cash flow problems if you have…

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Paying inheritance tax

Various rules exist for determining the time for payment of inheritance tax (IHT). In certain circumstances it will be possible to pay in instalments, and it is even possible to settle a liability by transferring ownership of assets to the Crown (for example, a valuable painting may be donated to a national museum in lieu of an inheritance tax bill).

Unless it can be paid in instalments, IHT is generally due for payment as follows:

– Chargeable lifetime transfers: Tax is due six months after the end of the month…

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When tips are taxable

Confusion often arises regarding tips and gratuities as the tax and NIC treatment depends on how they are paid to the recipient.

Cash tips handed to an employee, or left on the table at a restaurant and retained by that employee, are not subject to tax and NICs under PAYE, but the employee will need to declare the income to HMRC – HMRC often make an adjustment to the employee’s PAYE tax code number to reflect the amount likely to be received during a tax year so any liability…

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The future for intermediaries

The Summer Budget 2015 contained an announcement that the government is to consult on proposals toimprove the effectiveness of the existing intermediaries legislation, commonly known as IR35. The reason for this review was given as the perceived unfairness that two people could be doing the same job and pay very different levels of tax depending on how they are engaged. A consultation document has now been published (Intermediaries Legislation (IR35): discussion document), which sets out the rationale for change, the options to be discussed and the…

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Tax-free Childcare

There are a number of ways to save or invest for children – some accounts are tax-efficient but rigid, others are often flexible but liable to tax. Interest earned from CTFs and Junior ISAs is paid tax-free, but the money is effectively locked in until the child is 18, at which time it belongs to the child. Standard savings accounts usually offer lower interest rates and the interest is likely to be taxable, but there will be flexibility on withdrawals and transfers, enabling the parent to keep a…

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August Question and Answers

Q. I have realised that I made a mistake on my most recent VAT return. What should I do?

A. You can adjust your current VAT account to correct errors on past returns if the error:

– was below the reporting threshold (broadly, less than £10,000, or up to 1% of your box 6 figure (up to a maximum of £50,000);
– was not deliberate; and
– relates to an accounting period that ended less than 4 years ago.

When you submit your next return, add the net value to box 1 for…

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Employment Allowance

The Summer Budget 2015 contained two announcements affecting the employment allowance (EA).

Broadly, the EA potentially cuts every company’s NIC payments by allowing businesses and charities to offset up to £2,000 (2015-16) against their employer (secondary) PAYE NIC liabilities.

From April 2016, eligible employers will be able to reduce their employer Class 1 NICs liability by up to £3,000 per tax year, instead of the current £2,000.

Secondary Class 1 NICs are ‘excluded liabilities’, and therefore do not qualify for EA, if they are incurred:

– employing someone for personal, family or…

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