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Month: July 2024

Tax Diary September/October 2024

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1 September 2024 – Due date for corporation tax due for the year ended 30 November 2022.

19 September 2024 – PAYE and NIC deductions due for month ended 5 September 2024. (If you pay your tax electronically the due date is 22 September 2024)

19 September 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2024.

19 September 2024 – CIS tax deducted for the month ended 5 September 2024 is payable by today.

1 October 2024 – Due date for Corporation Tax due for the year ended 31 December 2023.

19 October 2024 – PAYE and NIC deductions due for month ended 5 October 2024. (If you pay your tax electronically the due date is 22 October 2024.)

19 October 2024 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2024.

19 October 2024 – CIS tax deducted for the month ended 5 October 2024 is payable by today.

31 October 2024 – Latest date you can file a paper version of your 2023-24 self-assessment tax return.

Source: HM Revenue & Customs Mon, 29 Jul 2024 00:00:00 +0100

AI expert to lead action plan

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New UK Science Secretary, Peter Kyle, has put Artificial Intelligence or AI at the heart of the government’s agenda to deliver change, sustained economic growth and improved public services.

The Secretary of State has appointed Tech entrepreneur and Chair of Advanced Research And Invention Agency (ARIA), Matt Clifford, to kick-start this work. He will deliver a new AI Opportunities Action Plan to identify ways to accelerate the use of AI to improve people’s lives by making services better and developing new products.

As well as exploring how to build a UK AI sector that can scale and compete on the global stage, the plan will also set out how to boost take-up of the technology across all parts of the economy, and consider the necessary infrastructure, talent, and data access required to drive adoption by the public and private sectors.
 
The Action Plan will play a vital role in driving up productivity and kick-starting economic growth. Estimates from the International Monetary Fund (IMF) show that while the exact economic impact hinges on the wider development and adoption of AI, and realisation could be gradual, the UK could ultimately see productivity gains of up to 1.5% annually.

Matt Clifford will deliver a set of recommendations to the Science Secretary in September. Alongside this, Department for Science, Innovation and Technology (DSIT) – acting as the digital centre of government – will also establish an AI Opportunities Unit to bring together the knowledge and expertise to take full advantage of AI and implement recommendations from the Action Plan.

Source: Other Mon, 29 Jul 2024 00:00:00 +0100

Labour market stats not encouraging

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The number of people classed as economically inactive has spiraled to 9.4 million.

Data published by the Office for National Statistics (ONS) shows the percentage of people employed has fallen to 74.4%, while a near record 2.8 million people are now out of work due to long-term sickness.

The figures come a week after the Secretary of State set out how the Government’s plan to get Britain working will tackle economic inactivity and drive growth in every corner of the country.

 Alongside action to make work pay, overhaul skills and address the root causes of worklessness, including poor physical and mental health, the plan will deliver:

  • A new national jobs and career service to help get more people into work, and on in their work.
  • New work, health and skills plans for the economically inactive, led by Mayors and local areas.
  • A youth guarantee for all young people aged 18 to 21.

Work and Pensions Secretary, Liz Kendall MP said:

“Spiralling economic inactivity, rising unemployment and the UK standing alone as the only G7 country where the employment rate is still not back to pre-pandemic levels. This is a truly dire inheritance which the Government is determined to tackle.

Behind these statistics are real people, who have for too long been ignored and denied the support they need to get into work and get on at work.

It’s time for change – in every corner of the country. That is why we are taking immediate actions to deliver on our growth mission, and spread jobs, prosperity, and opportunity to everyone, wherever they live.

Our Plan to Get Britain Working again will overhaul jobcentres, deliver a youth guarantee, and give local areas the power they need to tackle economic inactivity and break down barriers to a brighter future.”

Source: Other Mon, 29 Jul 2024 00:00:00 +0100

Let Property Campaign

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The Let Property Campaign provides landlords who have undeclared income from residential property lettings in the UK or abroad with an opportunity to regularise their affairs by disclosing any outstanding liabilities whether due to misunderstanding the tax rules or because of deliberate tax evasion. Participation in the campaign is open to all residential property landlords with undisclosed taxes. The campaign is not suitable for those letting out non-residential properties.

Landlords who do not avail of the opportunity and are targeted by HMRC can face penalties of up to 100% of the tax due together with possible criminal prosecution. Taxpayers that come forward will benefit from better terms and lower penalties for making a disclosure. Landlords that make an accurate voluntary disclosure are likely to face a maximum penalty of 0%, 10% or 20% depending on the circumstance on top of the tax and interest due. There are higher penalties for offshore liabilities.

There are three main stages to taking part in the campaign, notifying HMRC that you wish to take part, preparing an actual disclosure and making a formal offer together with payment. The campaign is open to all individual landlords renting out residential property. This includes, amongst others, landlords with multiple properties and specialist landlords with student or workforce rentals. Once HMRC have been notified of the wish to take part in the campaign, landlords usually have 90 days to calculate and pay any tax owed.

Source: HM Revenue & Customs Mon, 22 Jul 2024 00:00:00 +0100

Considering a significant gift?

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There are special rules concerning the liability to IHT of a transfer made during one’s lifetime. For example, most gifts made during a person's life are not subject to tax at the time of the gift. These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'.

These gifts or transfers achieve their potential of becoming exempt from IHT if the taxpayer survives for more than seven years after making the gift. If the taxpayer dies within three years of making the gift, then the IHT position is as if the gift was made on death. A tapered relief is available if death occurs between three and seven years after the gift is made.

The effective rates of tax on the excess over the nil rate band for PETs is:

  • 0 to 3 years before death 40%
  • 3 to 4 years before death 32%
  • 4 to 5 years before death 24%
  • 5 to 6 years before death 16%
  • 6 to 7 years before death 8%

IHT may be chargeable if the person making the gift retains some 'enjoyment' of the gift made. For example, where an elderly person gifts their home to their children (who usually live elsewhere) and continues to live in the house rent-free. In this case the taxman will not accept that a true gift has been made and the 'gift' would remain subject to inheritance tax even if the taxpayer dies more than 7 years after the transfer.

If you are currently considering making a significant gift to your loved ones, it may be prudent to contemplate doing so sooner rather than later as there is always the possibility of changes to the tax regime especially with a new government in place.

Source: HM Revenue & Customs Mon, 22 Jul 2024 00:00:00 +0100

Current CGT rates

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Capital Gains Tax (CGT) is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT.

A higher rate of CGT applies to gains on the disposal of residential property (apart from a principal private residence). The rates are 18% for basic rate taxpayers (2023-24: 18%) and 24% (2023-24: 28%) for higher rate or additional rate taxpayers. Again, if the gain pushes a taxpayer into the higher rate, then CGT will be payable at both rates.

The 18% basic rate and 28% higher or additional rate of CGT that applies to gains in respect of carried interest (the share of profits or gains that is paid to asset managers) remain unchanged in the current tax year.

The usual due date for paying any CGT owed to HMRC is the 31 January following the end of the tax year in which the capital gain was made. However, since 27 October 2021 any CGT due on the sale of a residential property needs to be paid within 60 days. In practice, this change only applies to the sale of any residential property that does not qualify for Private Residence Relief (PRR).

There is also an annual CGT exemption for individuals that is currently £3,000 (2023-24: £6,000). A husband and wife each have a separate exemption. Same-sex couples who acquire a legal status as civil partners are treated in the same way as married couples for CGT purposes.

Source: HM Treasury Mon, 22 Jul 2024 00:00:00 +0100

The marginal rate of Corporation Tax

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The Corporation Tax Main Rate applies to companies with profits in excess of £250,000. The applicable rate is currently 25%. A Small Profit Rate (SPR) of 19% applies to companies with profits of up to £50,000.

Where a company has profits between £50,000 and £250,000 a marginal rate of Corporation Tax applies that bridges the gap between the lower and upper limits. The lower and upper limits are proportionately reduced for short accounting periods of less than 12 months and where there are associated companies.

The effect of marginal relief is that the effective rate of Corporation Tax gradually increases from 19% where profits exceed £50,000 to 25% where profits are more than £250,000.

The amount of Corporation Tax to pay will be found by multiplying your profits by the main rate of 25% and deducting marginal relief. For the current 2024 fiscal year, the marginal relief fraction is 3/200. HMRC also has an online calculator that can be used to calculate marginal relief on Corporation Tax profits. The calculator can be found at www.tax.service.gov.uk/marginal-relief-calculator

Source: HM Treasury Mon, 22 Jul 2024 00:00:00 +0100

Thinking of selling your business?

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Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. When the relief if available, Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. This can mean a substantial CGT saving for someone looking to exit from their business.

There are a number of qualifying conditions that must be met in order to qualify for the relief. BADR used to be known as Entrepreneurs’ Relief before 6 April 2020. The name change did not affect the operation of the relief.

You can currently claim a total of £1 million in BADR over your lifetime. The £1m lifetime limit means you can qualify for the relief more than once. The lifetime limit may be higher if you sold assets before 11 March 2020.

Claims for BADR are made either through your self-assessment tax return or by filling in Section A of the Business Asset Disposal Relief helpsheet.

The deadline for claiming relief is as follows:

Tax year when you sold or closed your business  Deadline to claim BADR
2022-23 31 January 2025
2023-24 31 January 2026
2024-25 31 January 2027

Although there have been no specific announcements affecting this relief there are likely to be significant tax changes when the new Chancellor, Rachel Reeves delivers her first Budget later this year. If you are thinking about selling your business we can help you consider your options.

Source: HM Revenue & Customs Mon, 22 Jul 2024 00:00:00 +0100

Register for VAT One Stop Shop Scheme

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The VAT Import One Stop Shop (IOSS) Scheme applies to goods imported in consignments with a value of £135 or less (known as low value goods) from countries outside the EU and Northern Ireland, to consumers in the EU, Northern Ireland, or both.

The IOSS Scheme can be used to report and pay VAT due on imports of low value goods to consumers (B2C sales) in the EU, Northern Ireland, or both.

To use the scheme your goods must:

  • be located in a country outside the EU and Northern Ireland at the point of sale;
  • have a consignment value of £135 or less; and
  • be sold to a consumer in the EU or Northern Ireland.

If you only sell through an online marketplace, they should have already registered in their name for the IOSS. This means that the online marketplace is responsible for reporting and paying any VAT due.

The IOSS scheme is available to:

  • businesses in Northern Ireland; and
  • businesses in countries that the EU has concluded and recognises an agreement with, on the mutual assistance for the recovery of VAT — currently only Norway.

You must follow the normal VAT rules if you sell goods imported in consignments with a value of more than £135.

Source: HM Revenue & Customs Mon, 22 Jul 2024 00:00:00 +0100

The ‘fiscal’ goal posts will be moving

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In the coming months we will start to see how our new government intends to change the UK tax rules to further its economic growth agenda.

Whatever they decide to do, readers who presently benefit from tax and/or business planning strategies, should be prepared to revise their plans as fiscal changes are announced.

For example, if you are considering the disposal of assets at a profit, then any gain may be subject to Capital Gains Tax (CGT). If the Chancellor changes the CGT rates, perhaps by treating capital gains as income for tax purposes – or by removing or reducing present CGT reliefs – your after tax profits may not be at a level to satisfy your plans.

The first opportunity to alter tax or other business related matters will likely be the Autumn Budget. This year will be Rachel Reeves first announcements at the despatch box, and she may introduce far reaching changes.

This does mean that there is a short period before the Autumn Budget when we will be subject to present legislation. If you are considering radical changes to your business or financial circumstances in the next year would it be sensible to consider moving transactions forwards as a hedge against negative changes come September/October 2024?

We recommend keeping a weather eye on your planning options. If you are about to buy or sell business or personal assets, please call so we can consider your options. Double guessing what the Treasury may or may not do is not an exact science, but we can be fairly confident that changes are on the way, the fiscal goal posts will be moving.

Source: Other Tue, 23 Jul 2024 00:00:00 +0100

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