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Paying inheritance tax

Tuesday, September 1, 2015

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

Tuesday, September 1, 2015

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

Tuesday, September 1, 2015

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

Tuesday, September 1, 2015

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

Monday, August 3, 2015

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

Monday, August 3, 2015

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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Help to Buy ISAs

Monday, August 3, 2015

The new help-to-buy ISA, which is expected to be available from Autumn 2015, will enable first-time buyers to save up to £200 a month towards their first home. Investors will receive £50 from the government for every £200 saved, up to a maximum of £3,000. This means that the maximum that can be saved in a help-to-buy ISA is £12,000. The government bonus is added to this amount, so total savings towards the property purchase can be up to £15,000.

Accounts will be limited to one per person rather…

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Rent a Room

Monday, August 3, 2015

In the Summer Budget 2015, the government announced that the level of rent-a-room relief will be increased from the current level of £4,250 to £7,500 from April 2016. This means that from 6 April 2016, an individual will be able to receive up to £7,500 tax-free income from renting out a room or rooms in their only or main residential property. The relief also covers bed and breakfast receipts as long as the rooms are in the landlord’s main residence.

To qualify under the rent-a-room scheme, the accommodation has…

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Tax-free Childcare

Monday, August 3, 2015

Tax-free childcare is part of the government’s long-term plan to support working families and will provide up to 1.8m families across the UK with up to £2,000 of childcare support per year, per child, via a new online system. It was originally planned that the scheme would launch in Autumn 2015, but, as a result of a direct legal challenge from a small group of childcare voucher providers, development of the scheme was suspended. However, the Supreme Court has recently ruled that government proposals for delivering tax-free childcare…

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