Childminders and tax

Registered childminders are people that work in their own homes to provide care and learning opportunities for other people's children.
Childminders need to declare their income from their self-employment by filling in a self-assessment tax return every year.
Many childminders are members of the National Childminding Association (NCMA).The NCMA had an agreement with with HMRC in terms of allowable expenses that a childminder can have. They agreed that receipts for items of expenditure will not be required for items costing less than £10.
Also they agreed with the HMRC that full-time childminders (40 or more hours a week)can deduct as expenses a third of their heating and lighting costs and 10% of water rates and Council tax. Food and drink provided for children are acceptable and receipts are not required provided that the figures are reasonable.
Probably not everyone is aware of 10% Wear and Tear relief available to childminders. 10% Wear and Tear of total childminding income may be deducted as an expense to cover the wear and tear of furniture and household items. Once a childminder claims this relief, he/she cannot claim for replacing such household items.
Other expenses allowable in calculating the taxable profit are the cost of toys, books, safety equipment, travel fares, NCMA subscription, Public Liability Insurance, stationary, the cost of phone calls for childminding purposes, cleaning, accountancy fee, children gifts,training costs, resources (like paint, arts/craft)and Ofsted Registration fee(Office for Standards in Education).

For more details regarding childminders and their relationship with tax, you can seek guidance from Taxfile's tax agents in South London (Tulse Hill) and Exeter.

Taxfile tells you about Pension Credits

Pension Credit is a tax-free payment for people aged 60 or over living in Great Britain, giving them extra money each week.
In order to get Pension Credit you do not need to have paid National Insurance Contributions(NIC's).
Pension Credit is made up two elements:

• Guarantee Credit element which might be paid to people over 60 and adds up to their weekly income guaranteeing a certain minimum level.

• Savings Credit element, which is an extra amount for people aged 65 or over who have some savings for their retirement. The savings Credit will add up to their Guarantee Credit.

If you live your husband,wife or civil partner than you will need to add up your income in order to have Pension Credit calculated.
You are likely to be entitled to Pension Credit if your weekly income is less than £124.05 if you are single and £189.35 if you have a partner.

You may still be able to get Pension Credit if your weekly income is more than these amounts if, for example, you or your partner:
• have a severe disability
• look after a person who is severely disabled
• have certain housing costs – for example, mortgage interest payments

Also, if you or your partner are 65 or over you may be rewarded for saving for your retirement, up to:
• £19.71 if you are single
• £26.13 a week if you have a partner

You can get Pension Credit even if you live with your grown-up family, you own your own home or you get financial support from friends, family or charity.
You can apply for Pension Credit by freephone by calling the Pension Credit application line 0800 99 1234 or follow the link for the application form .
You can only apply if you are 60 or over or if you are turning 60 in four months time.

If you need further help, Taxfile's tax accountants in South London and Exeter would be more than happy to guide you through your application.

Revenue Determinations

Under Self Assessment, taxpayers are required to file their tax return by a certain filing date. If they fail to do so they face the risk of having the HMRC determine their tax liability by raising a so called Revenue Determination.
The Revenue Determination is meant to encourage the taxpayer to send in his/her return to the HMRC by estimating the taxpayer's tax liability.
Once a Revenue Determination charge has been added to the taxpayer's Self-Assessment record a notice known as 'Determination of tax due' will be issued to the taxpayer and his/her agent.

A Revenue Determination will automatically involve any payments on account for the following tax year. Also, where Revenue Determination and any overdue payment on account remains unpaid, interest and surcharge will be added to the taxpayer's record.

There is no right of appeal against a Revenue Determination but the submission of the completed tax return will take the place of the Determination and the determined amount of tax will be automatically amended to the return amount. Any related interest, surcharge and payments on account will also be automatically amended.

A Revenue Determination must always be raised for an amount equal to or greater than the previous or last year's liability, and include where necessary an appropriate percentage addition to the previous year figure.
Very important to know is that Determinations can only be raised within 5 years from the filing date.
Taxpayers can displace the determination with their own self assessment at any time up to the fifth anniversary of the filing date for the year of assessment in question (or one year after the determination was issued, if later). After five years things become a little bit more difficult as a certain concept may need to be applied, that of equitable liability.
In order to avoid having to deal with a Revenue Determinations, self-assessment taxpayers need to make sure that they are familiar with the filing deadlines and seek help from tax companies like Taxfile when sending their tax return , especially now with a new 31st October paper return deadline in place.

Non-taxable payments and benefits

Under general tax law, expenses payments and benefits made to certain directors and employees are taxable earnings (better known as remuneration).
As it is the case with most rules, there are exceptions where benefits or payments to an employee are not normally taxed:
• Annual parties or similar functions provided that the cost incurred by the employer for every employee is less than £150.
• Living accommodation related to the work.
• Equipment provided for disabled employees like a wheelchair or hearing aid and their private use
• The provision of goodwill entertainment for an employee.
• Late night taxis where an employee is provided with a taxi paid for by his employer for a journey from work to home.
• Work-related training expenses
• Long service and suggestion scheme awards provided that the cost to the employer does not exceed £50 per year of service for the employee.
• Meals and food vouchers where the vouchers are non-transferable, they are used
for meals only and the value of vouchers issued to employees does not exceed 15p for each working day.
• Mobile phones unless the calls paid by the employer can be converted into money by the employee.
• Parking spaces
• Removals expenses and benefits which exempts from tax the first £8,000 of removal expenses.
• Re-training expenses and courses for an employee who is about to leave or has left within the
previous year.
• Pensions on retirement or death
• Sports facilities generally available to the employer’s employees and members of their families
and households but not to the public.
• Medical treatment abroad
For more information on each of the non-taxable payments and benefits mentioned above just follow the HMRC link.
Alternatively, you can contact Taxfile's tax accountants in South London and Exeter for any query that you might have.

Data Protection Act and HMRC

As a tax agent you might have found it quite difficult trying to deal with subcontractors' tax returns (those working in the Construction Industry Scheme) for the year ending on the 5th April 2008. The main reason behind this situation is the struggle of gathering all the relevant data in order to submit an accurate, complete and compliant tax return to HM Revenue & Customs.
In the past years we used to be able to ask the tax office for a so called ''captured voucher list'' for our subcontractor clients quite easily. We cannot say this is happening this year, now when the construction scheme has changed and we need their help even more. According to the HMRC, excessive demands were placed before on their resources when requests were made for payment details for scores of subcontractors at a time.
Their refusal of giving away information is normally stated in a letter and we can quote:
''Under Section 12(B) 1 Taxes Management Act 1970 your client must keep all records they need to enable to make a correct and complete tax return.They may receive a penalty of up to £3000 for each failure to keep or to preserve adequate records they need for future reference.[...] If they have lost any of their deduction statements given to them by the contractor(s) or they think they were not given a deduction statement(s), your client must in the first instance go back to the contractor concerned and ask for either a duplicate, or the missing deduction statement.''
That said, unless we can provide evidence that contact has been made to the contractor(s) concerned the HMRC will not be able to release any information. The evidence in question can be either a letter from the contractor(s) confirming why that they are unable to provide the documentation or a letter with the name of the contractor(s) and the dates the client worked for him/them.
As we needed to know more about this subject, we asked one of our legal associates to do some research on this matter. Under Data Protection Law 1998 s.63(1) it is required by all Government departments to reveal information held by them on our clients. However s.29 of the Act states that the right to disclosure of personal data and to have copies of it does not apply to to data collected for the assessment or collection of any taxes:
''Personal data processed for any of the following purposes[...](c) the assessment or collection of any tax or duty or of any imposition of a similar nature are exempt from the first data protection principle.'' It looks as if there is a clear statutory right for hmrc to refuse to reveal the information requested.
However, there is nothing in the Taxes Management Act 1970 requiring the client to go back to the contractor for a duplicate copy of the missing document(s) in the first place. As there is no policy stating that that the client or agent should first contact the contractor, it appears as if the policy has no status in law.
Taxfile's tax accountants in South London and Exeter would like to know your opinion on this matter. Have you found it difficult this year to deal with your subcontractors' tax return? Have you gathered all your data from the contractors or you managed to get some help from HMRC? Write your comments, your opinion matters to us.

Capital Gains Tax (CGT)-2008 Budget

The 2007 Pre-Budget report issued in October 2007 announced major changes to the way in which Capital Gains Tax will be calculated for disposals after 5th April 2008.
Among the most important changes related to CGT we can mention:

•removal of the link to income tax rates and bands, meaning that various rules providing for the interaction of income tax and CGT rules are no longer required.

•introduction of a single rate of CGT of 18%, replacing the current rules that charge CGT at income tax rates as though the gains were additional income. The flat 18% rate applies irrespective of the type of asset disposed of and the period for which it has been held by the taxpayer.There is one important exception for certain types of business gains that may attract the new Entrepreneurs' relief. This relief is based on taxing the first £1 million of the gains at 10 %, but even this is achieved by reducing the amount of the relivable gain (by 4/9ths), so that the resultant chargeable gain can still be taxed at 18%!
•abolition of taper relief which normally has the effect of reducing the effective rate at which CGT is paid. It operates by reducing the amount of a gain which is charged to CGT, the amount of the reduction being determined by whether the disposed asset on whose disposal the gain was a "business" or a "non-business" asset, and the length of time that the asset had been owned before the disposal. and

•abolition of indexation allowance for non-corporate tax payers (currently frozen at April 1998) that normally compensates for the effect of inflation by reference to increases in the retail prices index;

•The abolition of the kink test for CGT purposes which means that in future the ''gains accruing on all disposals of assets owned at 31 March 1982 will be based on their market value at that date, so effectively "rebasing" all allowable expenditure to 31 March 1982''(HMRC).

• great simplification of the computation of chargeable gains due to the abolition of indexation allowance and taper relief.
As a large number of entrepreneurs and business owners aim to dispose of their businesses/companies for substantially more than £1 million, they are the biggest losers of the CGT reforms since their CGT rates will generally be much higher than 10%. (Before the 6th April 2008 CGT rate was often below 10% due to the benefit of indexation relief.)
Taxfile's tax accountants in Exeter and South London can help you make the most of every opportunity to minimize your tax liability, making sure you are paying the right amount of tax and all this for at very reasonable rates.

Lump sums,redundancy and compensation payments

When dealing with lump sums, redundancy and compensation payments great care needs to be exercised. The reason behind this is that this type of income will not necessarily be taxed as normal employment income.
Up to the first £30,000 of any compensation payment can be paid to you without deduction of tax if it is made in connection with the termination of your employment. This also applies to statutory redundancy payments. This tax exemption applies whether the payment is made as a result of an unfair dismissal claim or for breach of contract.
In order to qualify for compensation for loss of office relief, strict criteria must be met.
For instance, if your contract of employment gave you a right to compensation on ceasing to be employed or payment in lieu of notice (i.e. the employer pays in lieu of notice instead of the employee working the notice period), then the lump sum you receive will be taxable under PAYE scheme, regardless of the amount.
Also, even if the contract says nothing about pay in lieu of notice but there is an expectation of payment because it has been routinely paid to others, that constitutes an implied contractual term and the payment will still be liable to tax and NICs.
HMRC often challenges this aspect, trying to prove that the payments were contractual in nature therefore they need to be fully taxed.
Very important to remember is that the limit of £30,000 relief relates to each employment but employments with employers under common control only count once. If a payment was received in the previous fiscal year for the same employment but the relief was not used, than the balance can be claimed against any relevant payments in a subsequent year.
Some employees with redundancy payments that exceed £30,000 choose to pay some or all of the excess into their approved occupational pension scheme. As long as the payment is within the scheme's rules, it has no liability for tax or NICs.
As different rules apply to different lump sum payments connected with an employment it is very important to seek advice from professionals like Taxfile's tax accountants in South London and Exeter. They will make sure that your circumstances have been carefully considered before submitting your tax return to HMRC.

Darling's Increase in Personal Allowance

The Chancellor Alistair Darling has announced an increase in the personal tax allowance of £600 and an adjustment to the higher rate threshold (the total of the personal allowance and basic rate limit).

According to the tax office we do not need to make any adjustments to our tax code numbers at the moment.The emergency code for new employees without a code number remains 543L.
This change is supposed to give 22 million people on low and middle incomes a gain of £120.
Alistair Darling explains this in saying that ''[the need of the increase in the personal allowance] represented the fairest and most effective way to help those who had lost out due to the abolition of the 10p starting rate announced by Gordon Brown last year in his final Budget as Chancellor''

From September, all basic rate taxpayers would get a one-off increase of £60, followed by a monthly increase of £10 for the rest of the year.

By giving £600 extra to the personal tax allowance, the government also reduces the threshold at which an individual starts to pay tax at the higher rate by £600. People used to pay basic rate tax on earnings up to £36,000 above their personal allowance but higher rate tax will now apply at £34,800 and as a result 150,000 people will become higher rate tax payers.
Still confused about all these changes in the tax system? Taxfile's tax accountants in South London and Exeter are here to help for any tax issues you might have. Visit their website or call them on 020 8761 8000 and find all the answers to your questions.

April's tax reforms

One of the most significant changes in the tax year 08/09 is the adjustment to income tax bands. The 10% band is being scrapped and the 22% band is being replaced by a 20% band. The income above £41,435 is taxed at 40 %.
There will also be changes to the amount of national insurance contributions we pay.
The upper earnings limit, up to which you pay the standard rate of 11%, is being increased from £670 a week to £770 . Any earnings above the limit are then taxed at 1%. This change will affect those with weekly earnings between £670 and £770, that previously used to pay 1% on these earnings and now they have to pay 11 %.

In terms of Capital Gains Tax(CGT), the top rate of 40% is being replaced by a flat rate of 18%. But this good news is balanced by the abolition of two tax reliefs: indexation relief and taper relief which would normally reduce the investor's gain and so minimize his or her tax.

Changes also affect non-domiciled residents. At the moment, non-UK residents who are working in this country pay tax here on their earnings in this country but not on any of their non-UK income. From today, non-domiciled residents who have lived in the UK for more than seven years will be taxed on their worldwide earnings, rather than just those in this country, or have to pay an annual charge of £30,000.

Ed Green, financial planning manager for Chartwell Private Client, warns: "On the face of it, this looks like good news as the basic rate of income tax is going down. But the reality is that the changes to your pocket will hardly make a difference. However, one area that should be of concern is for people with a personal pension. At present, tax-relief means that, for a basic-rate taxpayer, a contribution of 78p into a pension fund is made up to £1 – this will soon be only 97-and-a-half pence. The changes will also affect higher-rate taxpayers. Now is therefore a good time to put in a lump sum.[...]Another group that will be hit by the income tax changes are those on low incomes, currently paying only 10 per cent on pay above their £5,225 basic allowance. This benefits those on an income of up to £7,455.[...] Pensioners could also be particularly hard hit by the change as they will be forced to pay the higher 20 per cent rate of tax on pension income above the initial tax-free allowance, currently £7,550 for individuals aged 65 to 74 or £7,690 for those aged 75 or more. Previously they paid a tax rate of just 10 per cent for the following £2,230 of income above this allowance, but this will now only apply to savings income.(...) "(The Independent, Saturday, 8 March 2008 )

Tell us at Taxfile in what way you are being affected by these changes and whether it has a positive or a negative impact on you as a the taxpayer.

What are the tax credits?

Tax credits are payments the Government makes to you if you live in the UK and are in a paid work, responsible for children or both.
There are two types of tax credits: Working Tax Credit (WTC) and Child Tax Credits (CTC).
The CTC has the following parts:
• a family part
• a baby part
• a child part
• a disability part.
The WTC has in turn the following parts:
• basic part
• a couple part
• a lone parent's part
• a 30 hours a week part
• a disability part
• over 50 years old part.

If you are a student and do not have paid work you may still be able to claim if you look after a child.
If you are 16 or over and have a dependant child or are working and disabled you can still claim tax credits.
If you are 25 years old or over and you work at least 30 hours a week you can claim even if you have no children.
People who have children can claim WTC as well as CTC as long as they work at least 16 hours a week.
Rates and Thresholds for 2008-09 tax credits:

Working Tax Credit ( per year)
•Basic part:£1800
•Couple and lone parent part :£1770
•30 hour part: £735
•Disabled worker part:£2405
•Severe disability element: £1020
•50+ Return to work payment (16-29 hours) : £1235
•50+ Return to work payment (30+ hours) : £1840
There is a childcare element with the WTC.The maximum eligible cost for one child in 2008-09 tax year is £175 per week and for two to more children is £300 per week.

Child Tax Credit ( per year)
•Child Tax Credit Family part: £545
•Family element, baby addition: £545
•Child element : £2085
•Disabled child element : £2540
•Severely disabled child element :£1020

If you need to know more about tax credits, Taxfile's tax accountants can help you decide whether you are eligible or not to claim tax credits.

Dealing with someone's tax after they die

When somebody dies it is important to sort out their tax and National Insurance contributions as soon as possible. The 'personal representative' or the executor has to sort out the deceased person's tax affairs, as well as the rest of the estate.There may be either tax to pay or a rebate from the Tax Office.
If the deceased paid tax through Pay As You Earn (PAYE), their Tax Office will send the executor a form called R27 'Potential repayment to the estate' to complete.
If the deceased person was self-employed paying tax through self-assessment, the administrator can choose to fill in form R27 in full - or only in part and then complete a Self Assessment tax return immediately or at the end of the tax year.
The deceased person will get their full tax-free personal allowance for the year of their death. They will also get a full year's entitlement to any blind person's or married couple's allowance that was due to them for the full year.
If they did not receive enough income to use the whole of the blind person's or married couple's allowances, the personal representative can arrange for the unused allowances to be transferred to a surviving spouse or civil partner.
The personal representative may have to pay Capital Gains Tax(CGT) if profit is made from selling the property or possessions of the deceased. The executor is treated as acquiring the house at its market value at the time of death so CGT can only be payable if a profit is made after disposal and if it exceeds the 'annual exempt amount' (AEA).
You might find it very useful to ask a tax accountant for advice. Taxfile in South London and Exeter can give you the best solutions when having to sort out a deceased person tax affairs.

Taxman's new power

Is taxman going too far? This is the question we have to ask ourselves today. The taxman has been given the authority to bug people's phones and read their emails and letters.

In order to reassure taxpayers, the Inland Revenue declared that these new powers will not be used in routine tax investigations. As noticed by Sunday Times ''one area where the new regulations could have an impact is against those who failed to come forward during HMRC’s partial amnesty for offshore account holders. [...]HMRC offered a limited window of opportunity for taxpayers to disclose savings held in offshore accounts on which they had not paid tax.
About 45,000 people with bank accounts in tax havens such as the Cayman Islands and Isle of Man coughed up £400m by the November 26 deadline, but this may be only a fraction of the total held offshore. ''(Ali Hussain, Sunday Times, February 17, 2008)
Although the tax office has assured people that the powers will only be used in the most serious of cases, some experts have expressed concerns.

Mike Warburton of tax partners Grant Thornton said: “Once the new powers are available it will be very difficult to stop the taxman using them.''(Ali Hussain, Sunday Times, February 17,2008)

To surprise you even more, senior tax officials are being rewarded for failure as they are given record bonuses totalling more than £23 million this year despite the department continuing to lose £1 billion to fraud and error. This also came just three months after the department admitted it had lost computer discs containing the tax credit details of 25 million people.

In its defence, HMRC said that these payments were based on last year performances and those for the current financial year had not been set.

Taxile's tax accountants in South London and Exeter would like to know your opinion in these matters, so write your personal comments on our blog. Are you for or against the way the tax office handles their tax investigations? Do you think of it as an intrusion in people's life or is it in our best interest on the long run? Share today your thoughts with us,your opinion matters!

Capital Allowances

As a business you can claim tax allowances, called capital allowances, on certain purchases or investments. This means you can deduct a proportion of these costs from your taxable profits and reduce your tax bill.
Capital allowances are available on plant and machinery, buildings - including converting space above commercial premises to flats for renting - and research and development.

Capital allowance on plant and machinery
You can claim capital allowances on:
• the cost of vans and cars
• machines
• scaffolding, ladders, tools, equipment
• computers and similar items you use in your business
• expenditure on plant and machinery
If you're buying equipment, 25 % is the standard allowance for businesses each year. This will reduce to 20% from April 2008.
You can claim additional allowances in the first tax year after the expenditure was made. This is called first -year allowance. First-year allowances are a tax allowance you can claim on certain purchases or investments in the year you buy them.
Small businesses can claim first-year allowances of 50% for qualifying investments. Medium-sized businesses can claim 40%, and in certain circumstances both small and medium-sized businesses can claim allowances of 100 % (referred to by HMRC as Enhanced Capital Allowances for Energy-Saving Investments), in the year they make the purchase. However, for most plant and machinery, 25 % is the usual capital allowance. There are also allowances for investment in research and development.

Capital allowance on buildings
You can claim capital allowances on the cost of:
• constructing industrial or agricultural buildings, commercial buildings in enterprise zones, and certain types of hotel
• buying or constructing a building to use for a qualifying trade such as manufacturing or processing
• renovating or converting space above shops and other commercial premises to provide flats for rent - for example, money spent on building dividing walls or fitting a new kitchen
• converting or renovating unused business premises in a disadvantaged area on or after 11 April 2007
You cannot claim capital allowances on the cost of:
• houses, showrooms, offices and shops
• the land itself, such as buying the freehold of a property or acquiring a lease
• extensions, unless it provides access to qualifying flats
• developing adjacent land
• furnishing qualifying flats
The allowance for buying industrial and agricultural buildings is 4 %, in both the first and subsequent years. You can usually claim 100% of the cost of converting underused or vacant space above commercial property into flats or converting or renovating unused business premises in a disadvantaged area.
If you need to know more about capital allowances you can contact Taxfile's tax accountants in South London and Exeter and they will make sure you make the best of your capital allowances in order to minimize your tax liability.

Overpayment of tax through PAYE

PAYE (Pay As You Earn) is the system used by employers and pension providers to deduct tax from your wages or pension. If you think you've paid too much Tax through PAYE you can contact Taxfile's tax accountants in South London and they will clarify that for you.

HM Revenue & Customs (HMRC) gives you a tax code that shows your employer or pension provider how much tax to deduct from your wages or pension before you get paid. You'll find your tax code on your P45 or your wages/pension payslip.

It is possible you might have overpaid tax in the following circumstances:
• you started a new job and had an emergency tax code for a while
• you were only employed for part of the year
• your employer was using a wrong tax code
• you're a student who only worked at holiday times
• you had more than one job at the same time
• you stopped working and didn't get any taxable earnings or benefits for the rest of the year
• your circumstances changed - for example you retired, were made redundant or became self-employed
• you have taken a pension in the form of a lump sum rather than a small monthly amount (this is known as 'trivial commutation'), the rate of tax you pay on the lump sum could be higher than the basic rate of tax you pay over the year and could cause an overpayment.

Any overpaid tax from previous years will we calculated by the tax office and they will send you a refund in the post or through bank transfer.

What you need to bear in mind is that you can only reclaim overpaid taxes for up to a maximum of six years previous to the current tax year.

Penalties Reform - The Next Stage

Hello self-employed taxpayers,

I hope you enjoyed your holidays. I'm sure it might be quite difficult for those of you who haven't submitted your tax return yet with the the deadline coming soon.
Now, you might wonder what this Next Stage is all about!
Well, as part of ''The Review of Powers, Deterrents and Safeguards HMRC has been developing ideas and consulting on how to modernise and align civil financial penalties.[...]The first substantial measure,[...] was a single new penalty regime for incorrect returns for income tax, corporation tax, Pay As You Earn(PAYE), national insurance contributions(NICs) and value added tax(VAT)(the main taxes)''(HMRC and the Taxpayer, Modernising Powers, Deterrents and Safeguards, Penalties Reform:The Next Stage.Consultation Document 10 January 2008).
In other words, the Tax Office wants to make sure that people do pay the right amount of tax and at the right time. The payment of taxes together with the repayments and reliefs cannot be voluntary or arbitrary. They must be governed at all times by a framework of rules
and obligations. According to HMRC, these penalties should influence behaviour, should be effective and fair.
Penalties have been considered in the following categories:
•incorrect returns
•failure to notify a new taxable activity
•late filing and late payment
•record keeping and information powers failure
•other regulatory failures.

There will be no penalty where taxpayers make a mistake or misinterpret the law despite taking reasonable care in completing their returns.
To make sure your tax return is submitted correctly and in time visit Taxfile's tax accountants in South London or Exeter and they will do it on your behalf.

Tax at Christmas time!

A very Merry Christmas to one and all from Taxfile' s Tax Accountants.

Our gift to you all this year is a brand new, free of charge insurance cover.
This cover will provide you with protection against any possible Tax enquiry: In the unlikely event of a random investigation by the revenue, Taxfile have insured its customers against the associated costs incurred in defending such cases thus saving its clients hundreds of pounds. So avoid the stress and have piece of mind this Christmas and call into Taxfile this December.
By way of an extra incentive to think Tax returns before the end of December! Taxfile have also put together some great Christmas prizes.
Bring your details into us before the 31 December and you'll have a free entry into our Christmas draw.

Prizes available are:

• 1st Prize: A weekend for two at one of the Meridian Hotels
• 2nd Prize: Half a case of champagne
• 3rd Prize: A Marks and Spencer voucher worth £25.00

So let Taxfile take the pressure off, come in and see us before the 31st of December and ensure you have your return filed before the January 31st deadline.

Furthermore Taxfile have now established links with companies offering financial, legal and mortgage advice, further details on these services are outlined in our newsletter which will be arriving on your door step very shortly.

We look forward to seeing you soon.

PAYE forms: P45,P46, P60, P11D

PAYE (PAY As You Earn) is the HM Revenue and Customs system for collecting income tax from the pay of employees.

As an employer, you need to deduct income tax and National Insurance contributions (NICs) from your employees' pay and send it to the HMRC.

As an employee, you should receive a P45 or a P60 from your employer that show you the tax you pay on your wages. If you receive benefits or expenses your employer has to send a form P11D to the tax office.

P45 form

You receive a P45 from your employer when you stop working for them. It shows:
•your tax code, tax reference number and Tax Office
•your NI number
•when you were last paid
•your earnings in the tax year from all your jobs
•how much tax was deducted from your earnings

You are entitled by law to get a P45 when you stop working for your employer.

P60 form

P60 is a summary of your pay and the tax and the tax deducted during the year.

Your employer should give you a P60 at the end of every tax year (tax year runs from 6 April to 5 April the next year)

It is very important to keep your P60 safe as you might need it to prove your income if you apply for a loan or to claim back any overpaid tax.

P11D form

Your employer doesn't have to give you a copy of P11D but he must tell you the details included on the form. This form shows the expenses payments, benefits and facilities provided by the employer.

For more information, you can visit Taxfile's tax accountants in South London and Exeter . Their multilingual staff ( English, Polish, Romanian, French, Hungarian, Dutch and Chinese) are ready to help you with any type of tax affair.

Introduction to Stamp Duty & Stamp Duty Land Tax

Stamp Duty is a type of tax you pay when you buy land or shares. You pay a Stamp Duty Land Tax when you buy property and Stamp Duty Reserve Tax when you buy shares.
You pay Stamp Duty Land Tax on such properties like houses, flats , other buildings and land.There is a threshold of 125,000 which is tax free. If the land or property is up to 250,000 than you pay a rate of 1% Stamp Duty Land Tax. From 250,001 to 500,000 there is a 2% tax rate and a rate of 4% for am amount exceeding 500,001.
If you want to buy a property which is designated by the government as a disadvantaged property than you do not have to pay any Duty Land Tax for an amount of 150,000 or less.
You pay Stamp Reserve tax when you buy shares. There is a tax rate of 0.5% of the value of the shares.
Stamp duty is payable when the shares are transferred to you using a stock transfer form and Stamp Duty Reserve Tax (SDRT)when the shares re transferred to you electronically,also known as paperless transactions, without using a stock transfer form.
When you buy shares from a stockbroker the transaction is usually completed electronically through the electronic settlement and registration system known as CREST. CREST automatically deducts the Stamp Duty Reserve Tax and sends it to the HMRC.If you do not pay for shares using CREST than you have to pay the stamp duty tax to Inland Revenue yourself.
You do not have to pay UK Duty Stamp or SDRT if you buy foreign shares. There will probably be foreign taxes involved that you need to carefully consider.
When buying either properties or shares, carefully tax planning must be considered.Taxfile's tax accountants in South London and Exeter always make sure you never pay more than your minimum tax liability.

Casual labour / subcontracting

It is not widely known that you must establish someone's status when you pay them any money for helping you with their labour.The trick or tip is to get them to supply their unique tax reference number. They should invoice you for their services . If they don't offer an invoice, it's best to issue a self billing invoice for them to sign at the time you hand over the money.
Lots of people will offer their services to you if you have work which needs doing. In some industries it's well regulated such as within the Construction Industry Scheme (CIS).
Most labour suppliers will be registered as self employed or a partnership and frequently these days as a limited company.
Each of them will have its own unique tax reference number(UTR).
They are not obliged to put this on their invoice to you.
You must request it if you fall into the classification termed by the government as a contractor or subcontractor.
There is a useful helpline for Construction Industry Scheme if you are not sure about your position and always try to get professional tax advice from companies like Taxfile in South London and Exeter where their tax accountants make sure to sort out all your