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Guy Bridger outside the Tax Office

“Pay As You Go” Self-Assessment is on it’s way!

Pay-as-you-go Self AssessmentA few years ago Guy Bridger, from Taxfile, was helping to advise The Office of Tax Simplification and the then Director Michael Jack. Guy proposed that, while the bulk of the working population have their taxes calculated by their employer and thereforGuy Meets Rt. Hon Michael Jacke pay taxes in ‘real time’ with clarity, ease and convenience, the same was unfortunately not true for the UK’s small business owners and the self-employed. For those, it is too often the case that taxes are paid as much as 18 months in arrears because of limitations in the existing tax system. This time lag often means that the tax due to be paid has been spent already, simply because that old system had too large a reporting and payment window. So Guy suggested that ‘real time’ reporting and payments of tax would be significantly more convenient and beneficial to the small business owner and self-employed individual. It would enable them to keep on top of taxes and, as an added bonus, their accounts records too.

The Government has now recognised this good advice. In a new system nicknamed ‘Pay As You Go Self-Assessment’, the Chancellor has announced that small businesses, landlords and self-employed workers making more than £10k in profit each year will be able to account for tax in virtually “real time”. This will be made possible via Read more

Airbnb in HMRC crack-down on hidden income from renting out rooms

Hosts renting out rooms to be targeted by HMRC

Airbnb in HMRC crack-down on hidden income from renting out roomsHosts who rent out a spare room could soon see themselves being straddled with an unexpected tax bill if companies like ‘Airbnb’ are forced to share data with UK authorities.

Airbnb, the website that allows you to list, find or rent a room in a private residence, has announced that it now has to share details of its users’ rental profits with the tax authorities in Ireland. Airbnb was already required to share this information in America but, until now, has not been required to do so in the UK. However, HMRC are cracking down on unpaid tax from hidden income and this may result in companies like Airbnb soon having to share details of income earned by its UK customers.

Airbnb, which has headquarters in Ireland and America, say they are not currently governed by the same legalities in the UK and so will not be reporting income automatically in the UK but, as part of its crack-down on unpaid taxes, HMRC has said it will be approaching intermediaries like Airbnb for data on their clients. Read more

George Osborne

Highlights from the Chancellor’s Budget, 18 March 2015

Along with some encouraging news about the UK economy, some interesting new measures were announced in the Chancellor’s Budget yesterday and below we highlight those which we feel will directly impact the majority of UK taxpayers:

  • As widely forecast, the tax-free allowance will increase. The amount people can earn before paying tax will rise to £10,800 from 2016-17 and then to £11,000 from 2017-18. At the same points in time, higher earners will also receive a two stage increase to the threshold at which they start to pay a 40% rate of tax, with the threshold increasing to £43,300 by 2017-18.
  • The Chancellor also announced a brand new Personal Savings Allowance whereby the first £1,000 of interest (£500 for higher rate taxpayers) will be tax tree. This new allowance will kick in from April 2016 and will take 95% of taxpayers out of savings tax completely. (Fact Sheet available here).
  • Another new scheme announced was the introduction of a new ‘Help to Buy ISA’ aimed at prospective first time buyers. This fairly generous scheme means that the Government will chip in up to £50 extra per month (up to a ceiling of £3,000) when an eligible saver saves up to £200 per month towards their first home. (Fact Sheet available here).
  • In another ISA reform, savers will now be able to withdraw money from a new Flexible ISA and deposit it back later in the same financial year without losing any of their usual ISA tax benefits. £15,240 will be able to be put into this re-styled savings vehicle. Read more

HMRC’s fight against tax avoidance is bearing fruit

HMRC has reported that it raised an extra £20.7 billion in additional revenue during the financial year 2012-13, a result of its continued push on tax compliance and anti-avoidance measures. That’s an increase of £2.1 billion on the preceding year and is actually £2 billion above its original target.

This information comes hot on the heals of the Chancellor’s Autumn Statement, about which we reported in early December. Following that Statement, the Treasury issued documents including a ‘Scorecard’ which measures the impact of the Chancellor’s actions in regard to revenue collections. Of the 59 items listed in the scorecard, 20 fell directly into the categories of “Avoidance, tax planning and fairness” or “Fraud, error and debt”. The measures are estimated to yield a further £1,515 million in 2014-15 and £8,900 million in total by close of play 2018-19. Read more

Assets hidden offshore? Not for long!

Financial information sharing now reaches the Cayman Islands, Isle of Man, Jersey and Guernsey.

On November 5th, Her Majesty’s Revenue & Customs (‘HMRC’) announced that the Cayman Islands had joined the ever-growing list of offshore territories which will now automatically share financial information with them in respect to UK taxpayers who may have accounts there. This follows similar agreements which took place in October for Jersey, Guernsey and the Isle of Man. Clearly the idea is to further aid in HMRC’s clampdown on tax evasion and avoidance.

The Cayman Islands also agreed to become an integral part of the G5 multi-lateral information sharing initiative involving a total of 31 territories including the UK, France, Germany and Spain, based on an earlier agreement with the U.S. and now also including cooperation with South Africa. The transparency of who really owns and controls UK companies is also a key HMRC aim.

This is all an important step towards the creation of a global standard in tax transparency and information sharing, an initiative originally agreed Read more