Autumn Statement by the Chancellor of the Exchequer

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George OsborneOn 5 December 2013 George Osborne, Chancellor of the Exchequer, gave his Autumn Statement in Parliament. Key announcements included:

  • A rise for the Personal Allowance, as was long-anticipated, to £10,000 in 2014/15;
  • the higher 40% tax rate threshold also increasing to £41,865;
  • A new, transferable, tax allowance of £1,000 for married couples and those in civil partnerships from April 2015;
  • For employees aged under 21 employers will not have to pay Class 1 National Insurance (‘NI’) Contributions on earnings up to the Upper Earnings Limit;
  • Capital Gains Tax (‘CGT’) for future gains will now also apply to NON-resident individuals from April 2015 (previously this had been applied only to UK resident landlords);
  • For 2014/15 the annual ISA subscription limit will increase to £11,880 (of which £5,940 can be in cash);
  • There were also announcements relating to the continuing clamp-down on tax avoidance, improvements and plans for UK infrastructure, and the proposed inheritance tax (‘IHT’) simplification for trusts.

The full speech transcript can be read here or alternatively view the following video recording: Read more

HMRC now has landlords in their sights

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Residential property lettingsHMRC (Her Majesty’s Revenue & Customs) has announced some new initiatives over the course of the last month and one of these is The Let Property campaign which is a campaign designed to recover undeclared tax from those receiving income from residential property lets. The idea is to encourage those landlords with under-declared income or gains (potentially including income tax, Capital Gains Tax and VAT) to contact them in order to make a full disclosure. By doing so they may well avoid the higher penalties which may be applied to them should HMRC discover the undeclared income/gains via other means. Don’t forget that they now have access to information shared across systems, including in relation to properties both at home and abroad, as well as being gained through their digital intelligence system ‘Connect’ which identifies links between individuals, entities and properties. So the message to landlords is loud and clear!

The campaign applies to landlords whether they have just a single property or a large portfolio of properties and encompasses lets to students, business workforces and the holiday market. Read more

New brochure available for download

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Taxfile's BrochureHave you ever wondered what other services the Taxfile group can help you with? Well, find all the answers in the new downloadable brochure, which outlines services undertaken at the various different offices in both South London and Exeter, Devon. From accountancy and bookkeeping for SMBs to simple tax returns for individuals and right through to the most complex of complicated tax issues – we’re here to help and the new brochure gives you all the contact details for each office including address, email, telephone, Skype ID, how to book appointments on-line and, finally, what discounts are available – both to new and existing customers – it’s all there … or rather I should say … it’s all here! (A4 PDF format, less than 1MB).

Commercial letting of furnished holiday accommodation and tax

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Commercial letting is defined as ‘let on a commercial basis and with a view to the realisation of profits’.
Accommodation is furnished if the tenant is entitled to use of sufficient furniture.

It will generally be necessary to calculate the furnished holiday lettings profit or loss separately from the rest of the rental business.

If a letting is to qualify as furnished holiday letting(FHL)a few conditions should be met:
• the property to be in the UK ;
• property has to be furnished;
• property should be available for holiday letting to the public for at least 140 days a year;
• it should be let commercially for 70 days or more, and
• cannot not be occupied for more than 31 days by the same person in any period of 7 months.
The difference between residential lets and holiday lets is that with residential ones you can claim a certain relief called wear and tear as compared to the holiday ones where you can claim capital allowances.

Capital allowances can include the cost of furnishings and furniture, and equipment such as refrigerators and washing machines.

Another important difference between residential and holiday lettings is that with holiday ones you can offset any loss you make in the year against other type of income.
You may also be able to take advantage of Capital Gains Tax (CGT) reliefs, such as ‘business asset roll-over relief’.
For example, if you reinvest within three years in another UK holiday letting property or certain other assets costing the same as or more than you got for the property you have sold, you may be able to defer payment of CGT until you dispose of those new assets.
To work out your taxable profit you deduct your allowable expenses from your gross rental income. These include:
•Letting agent fees (where applicable)
•Legal and accountant fees
•Buildings and contents insurance
•Interest on mortgage payments
•Maintenance and repair costs (but not improvements)
•Utility bills
•Council Tax
•Cleaning or gardening
•Other costs related to letting the property, such as phone calls, advertising and stationery.
Landlords with income from furnished holiday accommodation in the UK are
currently treated as if they are trading for certain tax purposes, as long as they
satisfy the above criteria.
Landlords with income from furnished holiday accommodation elsewhere in the
European Economic Area (EEA) cannot currently qualify for this treatment. They
were treated instead in the same way as landlords of other types of overseas
property, under the property income rules.
The Government has decided it should repeal the Furnished Holiday Lettings rules from 2010-11.

Next week we are going to talk about these changes in more detail.

If you are still confused about lettings in relation to tax, Taxfile‘s tax agents in South London and accountants in Exeter are here to assist you.

Taxfile will help you with tax & accounting

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We thought it was about time to say a little about ourselves – TaxFile.

TaxFile can help with your accountancy and tax issues whether you are an individual needing help filling in your self-assessment tax return, are someone needing assistance with a tax rebate, or are a large organisation needing full accounts work and payroll services. So if you need professional tax help, just drop into the shop or contact TaxFile.

Penalties Reform – The Next Stage

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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 and they will do it on your behalf.

Tax at Christmas time!

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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.

Confused about your tax code?

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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

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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

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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.