Taxman sinks his teeth into your pension

This was the headline in the Daily Mail article of 4 July 2007, complete with a picture of a vampire! The story outlines how pensioners on low incomes are being taxed up to 40% in what the Mail describes as “an extraordinary cash grab by HM Revenue & Customs”.

Under “trivial commutation” rules, pensioners with pension funds of £16k or under can actually cash them in instead of using them to buy annuities which would, of course, pay ridiculously small monthly amounts. As you might expect, the first 25% of the pension fund taken as cash comes tax-free. It is the other three-quarters which fall foul of HMRC’s cash grab. While most of the pensioners involved are basic-rate tax payers, many have this portion of the fund taxed at the higher 40% rate by the Revenue.

The reason for this ludicrous state of affairs is that, even more absurdly, if HMRC does not have a pensioner’s tax details, they assume the pensioner receives this amount of income every month and apply an emergency 40% rate charge to the top three-quarters of the fund. Pensioners who realise the mistake are then left to try to reclaim the overpayment, however many of them will not know how to even start such a claim as some will not have dealt directly with the tax system before. It is thought that up to 50,000 pensioners will be hit with this overcharge each year.

Walk-in accounting services provided by companies such as TaxFile in Tulse Hill are perfectly placed to offer low cost solutions to this type of tax error. When it comes to tax advice, they are a low cost alternative to a full accountancy firm and even the playing field between ordinary folk and Her Majesty’s Revenue & Customs.

Let Taxfile introduce you to VAT

Value Added Tax is a tax on consumer expenditure. It is collected on business transactions, imports and acquisitions.
There are three rates of VAT:
•standard rate, 17.5%
•reduced rate, 5%
•zero rate.
Businesses charge VAT on their sales and this is known as output VAT and the sales are referred to as outputs. Similarly, VAT is charged on most goods and services purchased by the business and this is called input VAT.
The output VAT is collected from the customer by the business and must be regularly paid to HMRC.
The input VAT on goods and services purchased can be deducted from the amount deducted from the amount of output tax owed. It is worth mentioning that certain types input tax can never be reclaimed such as business entertainment expenses and for most of business cars.
You are required to register for VAT if your turnover is over 64000.
You can apply for voluntary registration that would allow you to reclaim your input VAT which could result in a repayment of VAT if your business was principally making zero rated supplies.
It is very important that a VAT registered business maintains complete and up-to-date records including details of all supplies, purchases and expenses for 6 years.
Taxfile can assist you with registering for VAT and with completing your VAT return.
We will discuss VAT in more detail next week!

Welcome to Taxfile Property & Lettings Taxation Blog

With increased interest in Buy to let and property investments, the private rented sector has attracted many changes in legislation.

Every week we shall and attempt to familiarise ourselves with issues affecting existing and potential landlords and the Taxable allowances thereon incurred.

Overall, the housing act 2004 introduced many changes affecting the private rented sector replacing FITNESS standards under the old environmental health rules.
Landlords and letting agents have a duty to make sure that a property they rent out is “FIT” at the time of letting. Failure to do this could lead to prosecution. It is important that Landlords suffer the expenditure required to comply and keep good records and receipts so Taxfile can maximise your relief against both capital gains and income tax.

To begin with HMO – Houses in Multiple Occupation include bedsits, shared houses, hostels, bed & breakfast.

Not all HMOs are licensable although the larger HMOs do need a licence. Some local authorities have adopted selective licensing and, where this applies, all privately rented properties require a licence.

HHSRS – Housing Health and Safety Rating System, applies to all residential accommodation (not just the privately rented sector) and is enforced by the Environmental Health Officer who will arrive at a “Fitness score” for the hazard rating of your property. It enables local authorities to deal with 29 different risks hazards, include cold and heating, ventilation, trips and falls, security, lighting, and the complex area of danger from fire.

Fire; both local councils and the fire and rescue services have a role in enforcing Fire standards and I shall discuss this further next week.

Hi, let me introduce myself! I’m Taxfile and this is what I do:

I deal with the Inland Revenue on your behalf taking the strain off you at a taxing time!

• I have over 10 years experience in helping individuals as well as businesses prepare their tax returns and accounts for the tax office.

• I can help you register as self-employed, guide you with your property lettings, set up a limited company or sort out your National Insurance.

• Also, I can assess your eligibility for tax credits ( Pension, Child,Working)or help you register as an employer. You might also need help with your payroll and your book-keeping.• If you need to register for VAT or you have a tax enquiry, I am here for your assistance.

So whether you’re a cab driver or a bricklayer, a painter or a landlord, I can help you with your tax return. I pride myself on providing a personal service at very reasonable rates. Visit and judge for yourself!

Tax problem? You name it, I solve it!