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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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Changes to the VAT flat rate scheme

In a surprise announcement in the 2016 Autumn Statement, the Chancellor announced that changes are to be made to the existing flat rate scheme for VAT (FRS) in order to tackle perceived ‘aggressive abuse’. The changes, which will take effect from 1 April 2017, are designed to ‘reduce the incentive for firms and agencies to move employees to self-employment to exploit VAT simplification aimed at small businesses’. The subsequent HMRC policy paper published on 5 December sets out the details of the changes, which will affect any users,…

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December Questions and Answers

Q. I live near the Millennium Coastal Path and I’m considering renting out my spare room via Air BnB to walkers and cyclists. Would this be considered a business and should tell the tax man?

A. Firstly, it is important that you make sure you have a freehold arrangement on your property. A recent tribunal ruled that a flat owner was breaking the terms of her leasehold contract by renting out a room this way, since her contract stipulated that hers was a private residence only.

If you have a…

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December key tax dates

19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/12/2016

30 – Deadline for 2015/16 self assessment online returns to be filed if you are an employee and want tax underpaid to be collected by adjustment to your 2017/18 PAYE code (for underpayments of up to £3,000 only)

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