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The rules for MTD for Income Tax

28/05/2021

Making Tax Digital (MTD) will fundamentally change the way businesses, the self-employed and landlords interact with HMRC. The regime will require businesses and individuals to register, file, pay and update their information using an online tax account. The regime started in April 2019 for VAT purposes but only for VAT registered

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UK Infrastructure Bank set-up

19/05/2022

The UK Infrastructure Bank Bill, announced as part of the measures in the Queen’s speech, represents the final step in setting up the UK Infrastructure Bank as an operationally independent institution. The new Bank officially opened for business in June 2021 but the Bill will remove legal obstacles so the Bank can lend directly to local

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Free company information

19/05/2022

There is a significant amount of information about companies that can be obtained from Companies House. Companies House is responsible for incorporating and dissolving limited companies, examining and storing company information and making company information available to the public. Much of this information is available at no cost. This

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VAT – discounts and free gifts

19/05/2022

When you issue an invoice to your customer, you must ensure that you charge the correct rate of VAT. Whilst most businesses in the UK charge VAT at the standard rate of 20% there are a number of different VAT rates and exemptions that you should be aware of. In the UK, there are three separate VAT rates, the standard rate @ 20%, the

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Intrastat – trading goods with EU

19/05/2022

Intrastat declarations were historically used to collect information on the movement of goods from the UK to other EU countries and vice versa. Any business that exceeded the exemption threshold for either arrivals or dispatches of goods were obliged to submit monthly returns. This changed following Brexit and there were further changes

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Corporation Tax – reminder HMRC contact details

19/05/2022

HMRC can be called by phone on 0300 200 3410 for help with general Corporation Tax enquiries. You will need your 10-digit Unique Tax Reference (UTR) when calling HMRC and this reference number cannot be provided over the phone. The UTR is the primary identifier for a company and should be used whenever HMRC is contacted. The number can

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Access to cash protection increased

18/05/2022

The new Financial Services and Markets Bill, announced as part of the Queen's speech, will provide increased protections for those still dealing with cash. Access to cash remains vital for many people across the UK, including the more vulnerable in society. The government has committed to preserving the use of cash as an option even as

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Reminder to look out for tax credit renewal packs

12/05/2022

HMRC is currently sending the annual tax credit renewal packs to some 2.1 million tax credit claimants and is encouraging recipients to renew their tax credits claim online. HMRC started writing to taxpayers at the end of April and expects all packs to be with recipients by 27 May 2022. A renewal is required if the pack has a red line

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Holiday lets occupancy check

12/05/2022

The furnished holiday let (FHL) rules allow holiday lettings of properties that meet certain conditions to be treated as a trade for tax purposes. In order to qualify as a furnished holiday letting, the following criteria need to be met: The property must be let on a commercial basis with a view to the realisation of profits. Second

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When you are required to register for PAYE

12/05/2022

There are a multitude of rules that new businesses must follow when they start employing staff for the first time. These include ensuring registering for PAYE as an employer with HMRC. This must be done before the first payday and this process must even be completed by directors of a limited company who are employed by the company. There

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ISAs 2022-23

12/05/2022

The maximum amount that can be invested in an ISA in the current (2022-23) tax year is £20,000. ISA’s are a valuable and flexible relief and should be considered as an option for most investors. An ISA is a tax-exempt savings account available to UK residents. Whilst the amount invested in an ISA does not benefit from tax relief the

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Structures and Buildings Allowances

12/05/2022

The Structures and Buildings Allowances (SBA) allows for tax relief on qualifying capital expenditure on new non-residential structures and buildings. The relief applies to the qualifying costs of building and renovating commercial structures. The relief was introduced in October 2018 at an annual capital allowance rate of 2% on a

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Income excluded from a property business

12/05/2022

HMRC publishes a list of income streams that are excluded from a UK property business. The list includes fishing concerns, hotels and guest houses, tied premises, caravan sites, lodgers and tenants in your own home, extra services to tenants and letting surplus trade accommodation. In most cases the income from these activities will be

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Mortgage interest on rented property

05/05/2022

Under new rules that came into effect from April 2017 the tax relief on mortgage costs for residential landlords was restricted to the basic rate of tax. The finance costs restriction was phased in over a number of years and is now fully in place since 6 April 2020. This means that all finance costs, such as mortgage interest on rented

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Builders – when you may not have to charge VAT

05/05/2022

VAT for most work on houses and flats by builders and similar trades, like plumbers, plasterers and carpenters, is charged at the standard rate of 20%. However, there are a number of exceptions where special VAT rules apply and a reduced or zero rate of VAT may apply. A builder may not have to charge VAT (zero rate) on some types of

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Tax benefits of switching to electric cars

05/05/2022

There are many benefits to encourage the use of electric cars including lower running costs, the environmental advantages and reduced noise pollution. There are also tax benefits to encourage the purchase of electric cars. We have listed some of these benefits below. The benefit-in-kind (BIK) due on company cars can be significantly

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Writing off a director’s loan

05/05/2022

An overdrawn director's loan account is created when a director (or other close family member) 'borrows' money from their company. Many companies, particularly 'close' private companies, pay for personal expenses of directors using company funds. Where these payments do not form part of a director’s remuneration, they are usually posted

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Exchange of joint interests

05/05/2022

HMRC’s internal manuals consider the reliefs available where there is an exchange of joint interests in land. The manuals state that: The exchange of interests in land which are jointly owned by two or more persons constitutes a disposal by each owner for Capital Gains Tax purposes. In some cases, the exchange is made simply to

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IHT business asset relief

05/05/2022

There are a number of reliefs available that can reduce liability to IHT if you inherit the estate of someone who had died. One of these reliefs is known as Business Relief and is a valuable tax relief for taxpayers with business interests, offering either 50% or 100% relief from IHT on the value of the business assets if certain

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Reclaiming VAT

28/04/2022

For most fully taxable businesses, VAT can be reclaimed on goods and services used in the course and furtherance of their business activities. This means that businesses must consider where there is personal or private use of goods or services bought for the business and can usually only reclaim the business proportion of any VAT

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Tell HMRC if your company is dormant

28/04/2022

If a company has stopped trading and has no other income, then the company is usually classed as dormant for Corporation Tax purposes. A company is usually dormant for Corporation Tax if it: has stopped trading and has no other income, for example investments is a new limited company that hasn’t started trading is an unincorporated

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PAYE settlement agreements

28/04/2022

A PAYE Settlement Agreement (PSA) allows employers to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for their employees. The expenses or benefits included in a PSA must belong to one of the following categories; minor - e.g., a small birthday

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Accountancy expenses arising out of an enquiry

28/04/2022

HMRC’s internal manual offer some revealing insights as to the treatment of accountancy expenses arising out of an enquiry. As a matter of course, HMRC allows companies to claim a tax deduction for normal accountancy expenses incurred in preparing accounts or accounts information and in assisting with preparing Self-Assessment tax

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Check which EORI number is required

28/04/2022

The Economic Operators' Registration and Identification System (EORI) was setup as a European Union (EU) wide initiative that helps businesses communicate with customs officials when they are importing and exporting goods. The EORI allows businesses to provide pre-arrival/pre-departure information for goods. Following the end of the

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Tax Diary May/June 2022

26/04/2022

1 May 2022 - Due date for corporation tax due for the year ended 30 July 2021. 19 May 2022 - PAYE and NIC deductions due for month ended 5 May 2022. (If you pay your tax electronically the due date is 22 May 2022). 19 May 2022 - Filing deadline for the CIS300 monthly return for the month ended 5 May 2022. 19 May 2022 - CIS tax

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Paying staff on jury service

26/04/2022

If you have staff that have been called up to serve on a jury, then you must allow them the necessary time off. You can ask them to request to delay their jury service if their absence would seriously harm your business. Your employee would need to agree to this request and would need to provide written evidence explaining why a delay has

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Asset disposals not subject to Capital Gains Tax

21/04/2022

Capital Gains Tax (CGT) is a tax on the profit made from selling certain assets such as property, shares or other investments. CGT is usually charged at a flat rate of 20% and 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 CGT at a

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Dividend tax increase from 6 April 2022

21/04/2022

A reminder that the 1.25% increase in NIC contributions that came into effect on 6 April 2022 are reflected in a similar increase in the tax charge on dividends. This means that the dividend tax rates for 2022-23 are as follows (all rates having increased by 1.25% over the 2021-22 rates): Basic rate taxpayers will pay tax on

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Tax-free mileage expenses

21/04/2022

If you use your own vehicle for business journeys, then you may be able to claim a tax-free allowance from your employer known as a Mileage Allowance Payment or MAP. The allowance is paid when employees use their own car, van, motorcycle or bike for work purposes. It is important to note that this tax-free allowance is not available for

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Basic principles of domicile

21/04/2022

Domicile is a general legal concept which in basic terms is taken to mean the country where you permanently belong. However, actually determining domicile status can be complex. In fact, HMRC’s guidance states that domicile cannot be defined precisely, but the concept rests on various basic principles. Every individual must have a

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Planning for Basis Period reform

21/04/2022

The basis period reforms will change the way trading income is allocated to tax years. The reforms will change the basis period from a ‘current year basis’ to a ‘tax year basis’. Under the current rules there can be overlapping basis periods, which charge tax on profits twice and generate corresponding ‘overlap relief’ which is usually

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Demergers

21/04/2022

There are special statutory demerger provisions that are designed to make it easier to divide and place into separate corporate ownership the trading activities of a company or group of companies. Using these provisions, an exempt demerger will be deemed to take place and the distribution will normally be exempt for Income Tax purposes

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Business tax cuts from April 2022

14/04/2022

A number of business tax cuts came into effect from April 2022. This includes an increase in the Employment Allowance from £4,000 to £5,000. The allowance enables eligible employers to reduce their National Insurance liability. An employer can claim less than the maximum if this covers their total Class 1 NIC bill. This increase

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Tax if you live abroad and sell UK home

14/04/2022

One of the most often used and valuable of the Capital Gains Tax (CGT) exemptions covers the sale of the family home. In general, there is no CGT to pay on a property which has been used as the main family residence. An investment property which has never been used will not qualify. This relief from CGT is commonly known as private

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Check your Income Tax for current year

14/04/2022

HMRC offers taxpayers the ability to check their Income Tax for the current tax year. The online portal has been updated for the new 2022-23 tax year from 6 April 2022 to 5 April 2023. The service is not available to taxpayers who only pay Income Tax using Self-Assessment. The service can be used to: check your tax code and Personal

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HMRC names avoidance scheme promoters

14/04/2022

HMRC has used new powers introduced in the Finance Act 2022 to name tax avoidance schemes and their promoters for the first time. Under this legislation HMRC can name avoidance scheme promoters, publish details of the way they promote tax avoidance schemes and name the schemes they promote. This allows HMRC to warn users and potential

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NIC relief if employing veterans

14/04/2022

A new National Insurance Contributions (NICs) holiday for employers who hire former members of Her Majesty (HM) armed forces came into force on 6 April 2021. This allows employers to apply a zero-rate of secondary Class 1 Employer NICs on the earnings of veterans during the first year of their civilian employment post-service. The

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When does a partnership exist?

14/04/2022

A partnership is a relatively simple way for two or more legal persons to set up and run a business together with a view to profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership. There are two main types of partnership, a conventional one with two or more partners in the

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Get help with childcare costs for Easter

07/04/2022

As the Easter holiday approaches, HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for regulated childcare, including holiday clubs and other out-of-school activities. The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme

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Do you need to submit a Self-Assessment return for 2021-22?

07/04/2022

There are a number of reasons why you might need to complete a Self-Assessment return. This includes if you are self-employed, a company director, have an annual income over £100,000 and / or have income from savings, investment or property. Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as

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Will you need to repay child benefits?

07/04/2022

The High Income Child Benefit charge applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of child benefit. The charge claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely. If you or your partner have exceeded the £50,000 threshold for the first

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NIC Rates and Allowances for 2022-23

07/04/2022

HMRC has published an updated version of the rates and thresholds for employers following the spring statement. The main changes relate to the increases in the National Insurance (NIC) thresholds. This will see the NIC threshold increase from £9,880 to £12,570 from 6 July 2022 and result in the alignment of the Primary Threshold (PT) for

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Rural pubs community funding

07/04/2022

The Department for Levelling Up, Housing and Communities has published the list of successful bidders from the reopening of the first round of the Community Ownership Funding. This brings the total level of funding in the first round to almost £8m. Thus, helping communities across the UK take ownership of assets and amenities at risk of

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Commuting to work

07/04/2022

As a general rule, there is no tax relief for ordinary commuting. The term 'ordinary commuting' is defined to mean travel between a permanent workplace and home, or any other place that is not a workplace. Case law has also confirmed that travel between home and a permanent workplace is ordinary commuting even where home is also a

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Scammers target Self-Assessment taxpayers

31/03/2022

Fraudsters are continuing to target taxpayers with scam emails, texts and calls following the deadline for submission of Self-Assessment returns for 2020-21. In fact, over the last year, HMRC received more than 570,000 reports about suspicious HMRC contacts. A number of these scams purport to tell taxpayers they are due a fake tax

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On your bike – cycle to work exemption

31/03/2022

The Cycle to Work scheme was introduced over 20 years ago to help promote the use of healthy ways to commute to work using an environmentally friendly mode of transport. The scheme allows employers to provide bicycles and cyclists’ safety equipment to employees as a tax-free benefit. The scheme must be offered to all employees and the

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Resolving commercial rent debts

31/03/2022

A new law that seeks to resolve certain remaining commercial rent debts accrued during the pandemic received Royal Assent on 24 March 2022. The new law introduces a legally binding arbitration process to resolve certain outstanding commercial rent debts related to the pandemic. It is hoped that this new law will help resolve disputes

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Self-employed NIC changes

31/03/2022

In the recent Spring Statement, a significant increase in the National Insurance Threshold from £9,880 to £12,570 was announced. This increase will see the alignment of the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs with the personal allowance of £12,570. This change is effective from 6 July

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What is a wasting asset?

31/03/2022

A wasting asset is an asset which has a predictable life of 50 years or less. HMRC’s guidance is clear that when you dispose of an asset, you are required to estimate its predictable life based on the nature of the asset and your intended use of the asset when you originally acquired it. Certain chattels are always treated as wasting

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When does a partnership exist?

31/03/2022

A partnership is a relatively simple way for two or more persons to set up and run a business together with a view to making a profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership. There are two main types of partnership, a conventional one with two or more partners in the

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