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Coming soon: tax-free childcare

Plans for the introduction of a new scheme called ‘tax-free childcare’ were initially announced way back in the 2013 Budget. The original proposals have since been amended and the scheme is now set to be implemented during 2017. Broadly, the new scheme, which aims to help working parents with the cost of childcare, will replace the current system of employer-supported childcare (ESC) which is offered by less than 5% of employers and used by around 450,000 families.

Parents will be able to open an online voucher account with a…

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Employers beware of plans to change Scottish income tax threshold

Shortly before Christmas, the Scottish draft budget contained an announcement that Scottish taxpayers will start paying the 40p higher rate of income tax at a lower point than taxpayers elsewhere in the UK. This announcement means that businesses across the UK, not just in Scotland, will need to review their payroll systems to ensure that the proposed change can be accommodated.

Scotland’s Finance Secretary Derek Mackay confirmed that the Scottish Government intends to restrict increases in the rate at which people start paying the higher rate of income tax…

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HMRC’s Tougher Approach to Offshore Tax Evasion

HMRC have implemented various measures over recent years designed to encourage those not paying the right amount of tax across their offshore tax affairs to make full disclosures. Whilst there has been a positive approach to the facilities provided, HMRC have recently reminded taxpayers that things are about to get even tougher for those who try to hide investments offshore.

To date, over 100 countries have committed to exchange information on a multilateral basis under the Organisation for Economic Co-operation and Development Common Reporting Standard (CRS) ,which means that…

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Treasury Committee Urges Caution On Making Tax Digital Implementation

Back in January 2016 we talked about the Government’s Making Tax Digital initiative – the £1.3 billion overhaul of HMRC to transform it into one of the most digitally advanced tax administrations in the world by 2020.

It was intended that by April 2016 each individual and small business would have access to their own secure digital tax account allowing them to interact with HMRC digitally and begin digital reporting for income tax and National Insurance.

So far, so 21st century.

However, as Shakespeare almost said, the course of simpler…

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January Questions and Answers

Q. My husband and I jointly own and run a restaurant. We have both, in the past, faced heavy financial losses due to divorce and we don’t wish to be in this situation in the future. What should we do to safeguard both of our interests in the event of a marital split?

A. Some may think this is an unromantic approach, but knowing your interests are safeguarded can give you both real peace of mind and allow you to get on with your lives without nagging worries about the future.

If…

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January key tax dates

1 – Due date for payment of Corporation Tax for the year ended 31 March 2016

14 – Return and payment of CT61 tax due for quarter to 31 December 2016

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/1/2017 or quarter 3 of 2016/17 for small employers

31 – Deadline for filing 2016 Self Assessment personal, partnership and trust Tax Returns – £100 first penalty for late filing even if no tax is due or tax due is paid on time

– Balancing self assessment payment due…

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January questions and answers

Q. I am thinking of renting out a small outbuilding that I own to a friend so that he can store his work equipment in it when he’s not using it. The rent is likely to be less than £1,000 a year. Will I have to declare this income to HMRC on a self-assessment return? My tax affairs are quite straight-forward – I am employed and currently I don’t need to send in a tax return.

A. Two new annual tax allowances of £1,000 each are being introduced from…

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Disguised remuneration and the self-employed

Following the announcement in the Autumn Statement, HMRC have published the details of a measure designed to tackle the future use of avoidance schemes currently being used by some self-employed people to avoid paying income tax and NICs on their income.

The measure will also tackle the existing use of schemes involving loans with a new charge (a ‘loan charge’) on outstanding loans taken out as part of avoidance arrangements. This charge will apply if tax is not paid on the loan and the loan is not repaid by…

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Company cars: ultra-low emissions vehicles

At Budget 2016, the government said it would consult over the summer on changes to the ultra-low emission vehicles (ULEV) bands for taxing company cars to ‘focus incentives on the very cleanest cars‘. As a result of the consultation, HMRC have now published details of eleven new bands, which will be introduced for ULEVs with emissions below 75gCO2/km from 2020/21, including a separate zero emission band.

Some of the lowest CO2 bands are based on the ‘electric range’ of the vehicle, as well as the CO2 emissions. This is…

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Abolition of Class 2 NICs

Originally announced at Budget 2016, the 2016 Autumn Statement confirmed that Class 2 National Insurance Contributions (NICs) will be abolished from April 2018, hopefully achieving the desired effect of simplifying National Insurance for the self-employed and making the system fairer for employed and self-employed individuals.

At the same time as the abolition of Class 2 NICs, the system for Class 4 NICs will also be reformed to include a new threshold – to be called the ‘small profits limit’ (SPL). The amount of the SPL for 2018/19 is yet…

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