taxfile Archives | Page 11 of 12

Landlords warned over tax on Income from lettings & property investments

Buy-to-let Changes Are Coming — Landlords Beware

October 27, 2015/in 2017, 2021, 2022, Budget, Buy to let, Chancellor of the Exchequer, Furnished Holiday Lettings, HMRC, Land and property, Landlords, Lettings, Lettings income, property investor, Tax advisers, Taxes, Taxfile/by Mark

A warning and reminder to landlords: the Chancellor’s Summer budget back in July will hit buy-to-let investors’ profits once the changes kick in, so now is the time to start planning ahead. Not all landlords will be affected though; if their rental property is mortgage free or if they sell within the next 2 years these changes won’t affect them. However those landlords that are Higher and Additional taxpayers will notice their tax relief reduce by 2020. Also, investors near the tax threshold could find themselves in the next tax bracket, which could have a knock-on effect and increase their tax exposure.

So what are the proposed tax changes?

There are basically two:

Firstly, the amount of tax relief landlords can claim on their mortgage interest will now be capped at basic rate and;
Secondly, landlords will no longer be able to subtract their mortgage interest from their rental income before they calculate their taxable profit.

One in five landlords are expected to have to pay more tax because of these changes, however the new rules will not be phased in until between 2017 and 2021 according to the latest information.

What steps can landlords take?

There are several steps that investors can take to conserve as much profit as possible and to limit the amount of any extra tax payable. For example: Read more

Received a ‘P800 tax calculation’ from HRMC in the post?

August 19, 2015/in P800, Tax, Tax calculation, Tax liability, Tax overpayment, Tax underpayment/by Mark

If you have paid either too much or too little tax during the financial year, HMRC will send you a ‘P800 Tax Calculation’ some time between now and October 2015.

If you’ve paid too much tax

If you’ve paid too much tax then you will receive a cheque for the overpayment within 2 weeks of the P800 being issued.

If you’ve paid too little tax

If you’ve paid too little then the P800 will explain how much you owe and how HMRC intend to collect it. Usually this will be by adjusting your tax code so that the tax is recouped via future tax on earnings, however exceptions to this would include, for example, a situation where the taxpayer is now unemployed, in which case HMRC would explain alternative options for paying the money due. Read more

Case Study: a high rate taxpayer in a complex tax situation

June 30, 2015/in Case Studies/by Mark

The Client

A new client, Mr ‘K’, is a higher rate taxpayer who previously used to file his own tax returns.

The Problem

Mr K got into a complicated financial situation in 2013/14 due to having received redundancy pay, severance pay waiver, investment income, PAYE income and pension income. He needed professional guidance and advice regarding his tax liability.

The Solution

Taxfile looked into all the records and correspondence regarding the redundancy and severance pay so as to make sure of the right tax treatment for each. We also calculated the various tax rates for each type of income and advised that the remaining tax liability should be collected through the tax code system.

The Result

The client was reassured that the tax calculation was done professionally and accurately and was able to pay the right amount of tax in the most appropriate way.

Client Feedback

The client was impressed with how quick and efficient Taxfile’s service was and, as a result, is continuing to use our service now and into the future. Read more

STILL haven’t filed your tax return? You owe £410 in fines & counting!

May 26, 2015/in HMRC, Late return, Tax advice, Tax advisers, Tax returns/by Mark

If you STILL haven’t filed your tax return despite the end of May being almost upon us, you’ll owe £410 in HMRC penalties by the end of this week. Continue to throw money down the drain at the rate of £10 extra per day thereafter if you still don’t submit your return.

As we explained in our last post, missing the original January 31 deadline meant an automatic HMRC penalty of £100 (on top of tax owed, of course) at that time.
But, with the additional penalty of £10 per extra day extra having been piling up since 1st May, it means you’ll need to add £310 to the original £100 penalty by the end of this week. Carry on like this for yet another month and by the end of June you’ll owe a whopping £710. It doesn’t end there — by the end of July it’ll be worse still as there is an additional £300 penalty levied by HMRC. Yes, that’s on top of the daily £10 fine and the original £100 penalty, meaning that the total penalty will then be £1300 as a bare minimum (it can be worse still if HMRC deem your case to be particularly serious). All this simply because your tax return is late.

All these penalties are in addition to the actual tax you owe!

Don’t forget … even if you owe no tax, you still need to submit your tax return so aren’t immune to the penalties. Take another look at the full post for more detail or, better still, contact us here at Taxfile urgently if you’d like our professional help in filing your tax return on your behalf — and minimising the penalties you’ll need to pay to HMRC. Call 0208 761 8000, click here to contact us or book an appointment with one of our tax advisors here and we’d be delighted to help. We are based in Tulse Hill, South London.

Still Haven’t Filed Your Tax Return? Expect a Nasty Bill from HMRC!

April 22, 2015/in 2014, Accountancy, Accountants, Advice, HM Revenue and Customs, HMRC, Income tax, Key dates, Late return, London, Nil return, Online returns, penalties, penalty, Self-assessment, South London, Tax, Tax advice, Tax advisers, Tax affairs, Tax bill, Tax return, Tulse Hill/by Mark

If you still haven’t filed your tax return for the financial year up to 5 April 2014 you can expect the penalties from HMRC to begin racking up daily — and potentially very significantly — starting from Friday 1 May.

If you missed the 31 January Tax Return deadline …

If you missed the 31 January 2015 deadline for tax returns, you already owe HMRC £100 in fines on top of any tax you owe. If you don’t owe any tax whatsoever, HMRC still require a tax return from you, plus that £100 in penalties.

If you still haven’t filed your return by 1 May …

From 1 May 2015 you can also expect a £10 daily penalty to kick in, on top of the £100 fine above, up to a maximum addition for the period of £900 (90 days) extra. But it gets even worse…

If you STILL haven’t filed your return by 30 July …

After the 90 day period beginning on May 1st, if you STILL haven’t filed your tax return you’ll receive a further £300 penalty (or 5% of the tax due; whichever is highest) plus a possible additional fine equivalent to 100% (or more) of the tax due, depending on how serious the case is.

Each of these individual penalties is in addition to the preceding ones.

So, to conclude, if by 30 July 2015 you STILL haven’t filed your latest tax return you will be in for a minimum penalty of an incredible £1300.00 and that’s in addition to the tax you owe. Also, Read more

Construction Industry Scheme (CIS): How to Claim a Tax Refund

March 24, 2015/in Accountancy, Advice, CIS, cis gross payments, CIS4, CIS5, CIS6, Construction Industry Scheme, Contractor, Contractor Monthly Return, Multilingual staff, National Insurance, New CIS, NI, NIC, Non-domiciled residents, Rebate, Refund, South London, Subcontractor, Tax, Tax refunds, Tulse Hill, UTR/by Mark

It’s now time to start the process of claiming your tax refund if you are a subcontractor working within the construction industry and have been paying tax, in advance, through the Construction Industry Scheme (‘CIS’). In this article we will tell you how you qualify and how to claim your tax refund. First, though, a little bit of background to the scheme:

The CIS Scheme

The Construction Industry Scheme, or CIS, is a scheme whereby a contractor in the construction industry usually deducts a proportion of the money due to their subcontractor, at source. The deducted amount is then passed direct to HMRC and counts towards the subcontractor’s tax and National Insurance, the tax element effectively being paid in advance. The exact proportion deducted depends on whether the subcontractor concerned has registered under the CIS system. If the subcontractor has not registered, the deduction will usually be made at a rate of 30%. If they have already registered, then the deduction will usually be made at a rate of 20%. Either way, by the financial year end, the amount of tax deducted at source will usually end up being more than they really needed to have paid, simply because it won’t have factored in the personal allowance which every UK taxpayer is entitled to (most UK citizens can earn up to £10,000 before paying tax at time of writing, this figure being set to rise to £10,600 in the tax year 2015-16, 10,800 a year later then increasing to £11,000 by 2017-18 following the recent budget proposals). Hence, many subcontractors in the construction industry will be due a tax refund because of the overpayment. The good news is that the time to apply for the refund is pretty much now, so get in touch if you’d like our help claiming.

What kind of work does CIS cover?

You qualify to be in the CIS system if you are a subcontractor who supplies construction work to buildings. This includes labouring, decorating, site preparation and refurbishment but excludes things like architecture, surveying services, the hire of scaffolding without labour, the fitting of carpets, the delivery of materials, and finally non-construction type services such as site facilities (canteens etc.).

What if your business is not in the UK?

Even if your business is abroad, the same rules apply if you work as a subcontractor within the UK. However there are some slightly different rules regarding the treatment of taxation for non-resident workers from countries which have ‘Double Taxation’ treaties with the UK (we can, of course, also help with that — just get in contact).

Registering for CIS

If you haven’t already registered for CIS as a sub-contractor, Taxfile can help to do this for you. You’ll need to be registered for Self Assessment (we can also help with this) and this will give you your UTR (unique taxpayer reference) number. We’ll also need your name, National Insurance number, your legal business/trading name and contact details. Once registered with CIS one of the immediate benefits will be that you’ll then have tax deductions made at the 20% rate rather than at 30%, which would otherwise be the case. If your business is a legal partnership you will also need to register it for CIS but this would need to be done in addition to being registered as an individual or sole trader. Of course, Taxfile can help with that too. Once you have been registered with CIS and have passed certain eligibility criteria, it is also possible to apply for ‘gross payment status’ meaning that you’ll then be paid by the contractor without the usual ‘at source’ deductions. Instead you’ll need to pay any outstanding tax and National Insurance at the financial year end; however HMRC will review your business each year to check that you still qualify for this status (paying tax late and/or submitting returns late would put your gross payment status at risk).

Offsetting Expenses against your tax

Taxfile can also help you to offset certain expenses against your subcontractor income. This means that any tax refund will be larger — or any tax outstanding will be lower. We can offset Read more

You have only HOURS left to submit your Tax Return!

January 30, 2015/in 2014, Accountancy, Accountants, Advice, Deadline, Dulwich, Filing deadlines, HM Revenue and Customs, HMRC, Income tax, Key dates, Late return, London, penalties, penalty, Self-assessment, South London, Tax, Tax accountant, Tax accountants, Tax advice, Tax advisers, Tax agents, tax experts, Tax return, tax return amendment, Tax returns, Tulse Hill/by Mark

You’re running out of time to submit your tax return and have just HOURS left! We are here to help you fill in and submit your self assessment tax returns to HMRC on Saturday 31st (by appointment only, 9-1pm) so come and see us quickly or you may miss the HMRC deadline. If you do miss it, you’ll get an automatic fine of £100 minimum – and it could get significantly worse (up to £1,600) if you continue to delay.

It doesn’t matter if you have zero tax to pay – you still need to submit your tax return on time. You also need to have paid HMRC any tax due for the 2013-14 financial year. So don’t miss your last chance to get our professional help with filing of your tax return!

ACT NOW and contact us on 020 8761 8000 or book an appointment online.

Get Sage One Cashbook (online accounts package) FREE!

December 23, 2014/in Accountancy, Accountants, Bookkeeping, Cash flow, expenditure, expenses, Income & Expenditure, Payroll, RTI, Sage, Software packages, Special Offers, Tax accountant, Tax accountants, Taxfile/by Mark

[UPDATE: Please note that this offer has now expired]. Get Sage One Cashbook FREE, only with Taxfile. If you are a Taxfile customer you can currently get this excellent online accounting and cashflow package totally free of charge. This is better than any special offer you’ll find online for the same product and an additional benefit is that it allows us, your accountants and tax advisors, to collaborate with you within the package (with your permission of course), making managing your income, expenditure, tax accounting and bookkeeping absolute child’s play. You can stop at any time; it’ll cost you nothing either way.

Features & Benefits of Sage One Cashbook online include:

It allows you to record income & expenditure for your business quickly and easily;
Access your records from anywhere with an internet connection, any time;
No accountancy experience is necessary – it’s simple;
Perfect for small businesses, sole traders, etc;
It allows you to Read more

Infographic: Stamp Duty Changes: Good News for Most!

December 5, 2014/in 2014, Accountancy, Buy to let, Chancellor of the Exchequer, Chancellor's Autumn Statement, George Osborne, Land and property, Landlords, Lettings, Lettings income, Stamp Duty, Stamp Duty Land Tax, Tax, Tax bands, thresholds/by Mark

In what, for most of us, is very welcome news, the Chancellor announced a significant tidy-up of Stamp Duty in his Autumn Statement yesterday. The changes will mean that 98% of those who pay Stamp Duty will save money — and potentially a significant amount. We believe that this is a fairer system, with the richest contributing the most and, in effect, counterbalancing the savings which will be made by those buying any property for less than £937,500.

So how will this affect you?

HM Treasury have released a rather useful infographic which, with the aid of examples, gives you a good idea of the savings you will make if the property you are buying costs less than £937,500 … or for richer people the extra you’ll pay if the property price is above that threshold.

So how does it work?

In the old Stamp Duty rules you had to pay a single Stamp Duty rate based on the entire value of the property being purchased. This meant sometimes hugely differing amounts of Stamp Duty being levied for sometimes similar property prices (depending on which side of the tax band threshold an individual house price fell). With the new tax bands, however, buyers will pay Stamp Duty at a rates applied to only the part of the property price falling within each tax band, rather like happens with income tax.

Here are the tax bands and the rates which apply:

You can also try the Read more

Taxfile passes HMRC inspection with flying colours!

November 17, 2014/in Accountancy, Accountants, Dulwich, expenses, HM Revenue and Customs, HMRC, Income tax, Inland Revenue, London, Records, Self-assessment, South London, Tax, Tax accountants, Tax agents, Tax determination, tax inspector, Tax returns, Tulse Hill/by Mark

HMRC have recently been targeting tax agents who file high volumes of tax returns and, as one of the UK’s top 100 tax return preparers by volume, Taxfile had the honour of having an inspection by HMRC inspectors during late October.

The two senior inspectors met all Taxfile staff who prepare tax returns and analysed the procedures undertaken by them to arrive at the figures entered on customer returns. They also reviewed, on a spot-check basis, a selection of files worked upon over this Summer. Analysis included checks on procedures, figure work and record keeping including the level of detail recorded in notes. The result was a resounding success – Taxfile passed with flying colours – of course!

HMRC were also satisfied with the way Taxfile had dealt with any occasional instances of missing client receipts. They reiterated that, where clients had lost receipts, some kind of proof of purchase was always needed in lieu of the official receipts. For example bank statements showing that the purchase was made via a debit card or cheque, or credit card statements showing the purchase was made originally with a Visa or MasterCard. Our own recommendation is to Read more

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