CIS Contractor Monthly Return

CIS contractors must complete and file a tax return to the HM Revenue and Customs every month showing the payments made to all subcontractors as well as the tax deducted. The contractor needs also to show the verifications references against all those subcontractors from whom the contractor had to deduct a higher tax rate.
Even if no payments were made to subcontractors, contractors still need to submit a monthly return , in this case a nil return.
Starting from 19th October, HMRC will start charging building contractors penalties for late returns. The contractor monthly returns should be submitted to the Inland Revenue by the 19th of every month. After this date, any return not received from contractors by the due date will be liable to a fixed penalty of £100 and a further penalty for every additional month that the return remains outstanding.
There are three ways to submit the return:
•on paper through the post
•online through the HMRC website
•electronically through Electronic Data Interchange or through approved third-party software.

Yesterday, the 26th October, HMRC showed some sympathy towards contractors’ late returns due to the postal strikes. Those who file electronically have no problem submitting their returns. ”Nil returns can continue to be made by telephone and HMRC are also prepared exceptionally, during continuing disruption, to accept paper returns at their Enquiry Centres.
There are likely, however, to be some contractors whose returns, will not be received by the 19th October, even though posted in what would normally be good time to meet the deadline. HMRC are prepared to consider these cases sympathetically.
Contractors can make nil returns and get further assistance by telephoning the CIS Helpline on 0845 366 7899.”(HMRC)

Taxfile in South London can help you filing your monthly return making sure it is done in due time. Their tax accountants will also be able to verify your subcontractors with HMRC in order for you, the contractor to deduct the right amount of tax.

Confused about your tax code?

A tax code is usually made up of one letter and several numbers, for instance 161L or K567 . A tax code is used by your employer or pension provider to calculate the amount of tax to deduct from your pay or pension. If you have the wrong tax code you could end up paying too much or too little tax.
The letters in your tax code have different meanings:
• L- for those tax payers that are eligible for the basic personal allowance or those that are on the emergency code.
• T-if there are any other items HM Revenue and Customs (HMRC) needs to review in your tax code.
• P- for persons aged 65 to 74 and eligible for the full personal allowance.
• V-for persons aged 65 to 74, eligible for the full personal allowance and the full married couple’s allowance (for those born before 6 April 1935 and aged under 75) and estimated to be liable at the basic rate of tax.
• Y-for persons aged 75 or over and eligible for the full personal allowance.

If your tax code has two letters but no number, it normally indicates that you have two or more sources of income and that all of your allowances have been applied to the tax code and income from your main job:
•BR-Is used when all your income is taxed at the basic rate – currently 22 per cent (most commonly used for a second job)
•D0-Is used when all your income is taxed at the higher rate of tax – currently 40 per cent (most commonly used for a second job)
•NT-Is used when no tax is to be taken from your income or pension.

Your employer will use an emergency tax code when you start a new job and your pay is above the PAYE threshold or when you declare on your P46 that this is your only job. Also your employer will use the emergency tax code if you don’t give him/her a P45 when starting a new job.
Taxfile in South London can help you sort out your tax code and make sure you pay the right amount of tax.
If you have paid too much tax under the PAYE code , Taxfile‘s tax accountants in Tulse Hill you will get in touch with the Inland Revenue and request a refund on your behalf.

IHT: Transfer of unused nil-rate band

The Pre-Budget 2007 Report published on Tuesday 9th October announced various changes, one of them referring to the inheritance tax (IHT).
Previously, married couples could transfer an unlimited sum to each other when one died without paying inheritance tax. But when the survivor died, their estate was then taxed at 40% on anything exceeding £300,000.
Couples can now transfer their allowances to each other. When the first person dies, they can transfer their allowance to the second person. When the survivor dies, their beneficiaries can add the two allowances together.
In other words, the change in IHT is concerned with ”the transfer of any unused nil rate band allowance on a person’s death to the estate of their surviving spouse or civil partner.”
It is important to remember that there is a ”permitted period”which is the time limit within which a claim must be made by the personal representative. This is two years from the death of the survivor spouse. If the claim is not be made within the time limit, than a claim may be made by any other person who could be liable to the inheritance tax.
By 2010, the combined tax-free allowance for couples will rise to £700,000.Experts emphasise the need to keep good records, especially where the spouse who dies first does not use the whole of their IHT allowance.
Although this is a great news for married couples or those in civil-partnerships these changes will not help unmarried or non-civil partnership couples, or siblings who share homes.
If you would like to know more details about the way IHT works, you can visit Taxfile’s accountants in South London.

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 always make sure you never pay more than your minimum tax liability.