31st October Deadline

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If you would like to send your tax return for the year ended on 5th April 2009 by paper, you would have to do it by the end of this month.

Very important to remember is that the tax return has to reach HM Revenue & Customs by Saturday 31st October.

If you send your return on paper the HMRC will calculate the tax liability to be paid or owed.

If the paper return arrives after this deadline you will be charged a £100 penalty.

According to HMRC, if you miss the deadline because of the postal strike you would not be liable for paying the £100 penalty as long as you post the return before the 31st October.

If you hand deliver your return on the 2nd of November, no penalty would be due either.

In case you miss the deadline you can always send your return online.

At Taxfile in Tulse Hill we submit all the returns online as it is safer and more secure, tax returns are processed faster, and there are later deadlines to meet.

Changes to Minimum Wage from 1st October

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As explained in a previous blog post, Minimum Wage is defined as the lowest wage payable to most employees as fixed by law or union agreement.

As from 01/10/09 new rates came in place:

•£5.80 – as the main rate for workers aged 22 and over;
•£4.83 – the 18-21 rate;
•£3.57 – the 16-17 rate for workers above school leaving age but under 18.

A very important change from 01/10/09 is that fact that employers running bars and restaurants can no longer be allowed to use tips to top up pay up to the minimum wage.

Workers will now be paid at least the National Minimum Wage and be paid their tips on top of this.

If your employer is paying you less than the Minimum Wage entitlement you must report this by filing an online complaint form.

If you have any queries regarding Minimum Wage or any other tax related question, please feel free to ring us on 020 8761 8000 or come to see us in our office in Tulse Hill on the South Circular.

Taxfile: Barristers and Tax

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As a barrister you are treated as self employed by HM Revenue and Customs.

Historically barristers computed their professional profits for tax purposes on a “cash basis.”

Fees were brought into account only when received, and expenses only when paid.

From fiscal year 1999/00, it is required that all professionals including most barristers to compute their profits on a “true and fair view.”

Barristers in their first seven years of practice are still allowed to use the cash basis.

In computing their profits for tax purposes, barristers can deduct certain expenses like:

• Travelling costs from Chambers to court;

• Off street parking;

• Library and periodical subscriptions;

• Postage, printing, photocopying and stationary;

• Professional and accountancy fees;

• Devilling fees

• Chambers’ rent;

• Legal literature;

• Professional Indemnity Insurance premiums;

• Subscriptions (Circuit, Bar Council, Bar Associations)

• Bank charges;

• Use of home as an office;

• Robing room fees;

• Law report subscriptions;

• Staff costs;

• Silk application fees;

• Clothing and cleaning.

According to HMRC, “You should allow a deduction in computing profits for the cost of replacing gowns and wigs and frock coats worn by Queen’s Counsel. You should not, however, allow a deduction for expenditure on `normal clothes’, for example, black coats and pin- stripe trousers worn by male barristers or black dresses and suits worn by female barristers (this follows the decision in Mallalieu v Drummond”

Taxfile‘s tax agents will ensure you keep the necessary records of your income and expenditure and you make the right adjustments with regards the to private use of your expenditure.

Also, our tax accountants in South London and Exeter will make sure you obtain the maximum available tax deduction when calculating your taxable profits.

Happy New Tax Year!

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With the new tax year just around the corner, Taxfile offers you the opportunity to save some money on your accountancy bill just by presenting this voucher when you come to see us in our office in Tulse Hill or Dulwich.
So not only would you save money by getting this discount but also you get to join Taxfile and meet its multilingual team.To give you a better idea of what to expect, you can see bellow our colourful card:

So whether you are a builder and you qualify for a tax rebate , a landlord or a cab driver and you want to know your tax position in order to start saving towards your tax bill, Taxfile is here to take the strain.

Also, as many of you may have noticed a significant drop in your earnings due to the current financial crisis, by coming in early to see one of our experts you might be able to avoid paying your second payment on account for the following tax year, which is due in July.

We are looking forward to seeing you soon.

May the New Tax Year bring you less hassle and more money in your pockets!

Maintenance Payments Relief

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Our blog today is dedicated to some of our clients who wanted to know more about tax relief on alimony or child support payments.This relief is officially known as Maintenance Payments Relief.
Maintenance Payments Relief can reduce your tax bill if you make maintenance payments to your ex-spouse or former civil partner or child.
If you make or get maintenance payments and/or child maintenance payments after 6th April 2000 it will not normally have any effect at all on the tax you pay.
Only people born before 6 April 1935 who make these payments need to think about their tax position.
You do not pay tax on any maintenance payments that you receive.
In order to qualify for this relief that would cut your tax bill there are certain conditions to be met:
•only applies if you pay tax;
•you or your ex-spouse or former civil partner were born before 6 April 1935
•you’re separated or divorced or the civil partnership has dissolved and you’re making the payments under a Court Order, in other words the payments are legally enforceable and your ex spouse or former civil partner can take court action if you don’t make the payments;
•the payments are for the maintenance of your ex-spouse or former civil partner (provided they aren’t now remarried or in a new civil partnership) or for your children who are under 21.
For the tax year ending on 5th April 2009, this relief can reduce your tax bill by the lower of the following two amounts:either 10% of £2,540 (£254) – this will apply where you make maintenance payments of £2,540 or more a year or 10% of the amount you have actually paid – where the amount is less than £2,540.
For the following tax year(2009-10) the Maintenance Payments Relief limit will be £2,670.
Very important to remember is that you cannot claim a tax reduction/relief for any voluntary payments that you make for a child, ex-spouse or former civil partner.
We hope you found this useful and if there are still questions to be answered, please feel free to pop in to see us in our office in Tulse Hill or drop an email. One of our tax agents will be more than happy to assist.

Childminders and tax

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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.

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.

What is the Construction Industry Scheme?

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The Construction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be handled by contractors.

A contractor is a business or other concern that pays subcontractors for construction work. A subcontractor on the other hand is a business that carries out construction work for a contractor.
Under the Scheme, all payments made from contractors to subcontractors must take account of the subcontractor’s tax status as determined by HM Revenue & Customs (HMRC). This may require the contractors to make a deduction, which they then pay to HMRC.

As of 6 April 2007 the new Construction Industry Scheme replaced the previous scheme. The main changes in the scheme are the following:

• There are no more CIS cards, certificates or vouchers.

• Contractors have the responsibility to ‘verify’ new subcontractors by contacting HMRC.
•Subcontractors are still paid either net or gross, depending on their own circumstances, but it is HMRC who tell the contractor during verification which treatment to use.
•There is a higher rate tax deduction of 30% if a subcontractor has not registered with HMRC.

• The standard rate of deduction for those registered with the Inland Revenue is 20% .
• There are no more CIS annual returns. Now contractors must make a return every month to HMRC, showing payments made to all subcontractors. Returns must be made using official forms. Photocopies are not acceptable.
• Contractors must declare on their return that none of the workers listed on the return are employees. This is called a Status declaration.
•Nil returns must be made when there are no payments in any month. These can be made over the telephone as well as over the Internet or on paper. If made by paper, this must be on an official form. Photocopies will not be accepted. There will be financial penalties for failure to submit a return (including nil returns).

For most of subcontractors, the new CIS is still a puzzle. For this reason, the tax accountants at Taxfile in South London can unveil the mystery behind it. You can pop in to see one of our tax advisers in our office in South London, just two minutes away from Tulse Hill station or you can visit us on www.taxfile.co.uk.