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Simplified import procedures

HMRC has automatically registered many businesses to use simplified import procedures should the UK leave the EU without a deal on 31 October 2019.

The scheme, called the Transitional Simplified Procedures (TSP) will make importing from the EU bloc much easier, especially for businesses completing customs processes for the first time. The TSP will allow most businesses to transport goods from the EU into the UK without having to make a full customs declaration at the border and to postpone paying any import duties. In most cases, businesses will have up to 6 months to delay paying import duties and submit customs declarations. The use of the TSP will be optional.

Over 30,000 businesses had registered to use the scheme since it was launched. HMRC has now automatically enrolled 95,000 VAT-registered businesses that imported goods from the EU in 2018 into the TSP scheme. This should help speed-up the process of preparing for a no-deal Brexit and minimising some of the expected issues at UK borders. Businesses that are not registered for VAT and would benefit from the scheme need to register directly with HMRC.

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Definition of a Scottish taxpayer

The Scottish rate of Income Tax (SRIT) commenced on 6 April 2016 and is administered by HMRC on behalf of the Scottish Government. The SRIT is payable on the non-savings and non-dividend income of those defined as Scottish taxpayers. This means that Scottish taxpayers who also have savings and dividend income, need to consider the UK rates as well as the Scottish rates when calculating their Income Tax bill.

Scottish taxpayer status applies for a whole tax year. It is not possible to be a Scottish taxpayer for part of a tax year. The definition of a Scottish taxpayer is generally focused on the question of whether the taxpayer has a 'close connection' with Scotland or elsewhere in the UK.  The idea of being treated as a Scottish taxpayer is not based on nationalist identity, location of work or the source of a person’s income e.g. receiving a salary from a Scottish business.

For the vast majority of individuals, the question of whether or not they are defined as a Scottish taxpayer is a simple one – they either live in Scotland and are a Scottish taxpayer or live elsewhere in the UK and are not a Scottish taxpayer.

More specifically, an individual will be defined a Scottish taxpayer if they satisfy any of the following tests:

  1. They are a Scottish Parliamentarian
  2. They have a 'close connection' to Scotland, through either:
    i) having only a single 'place of residence', which is in Scotland; or
    ii) where they have more than one 'place of residence', having their 'main place of residence' in Scotland for at least as much of the tax year as it has been in any one other part of the UK.
  3. Where no 'close connection' to Scotland (or any other part of the UK) exists (either through it not being possible to identify any place of residence or a main residence) – then place of residence will be decided by day counting.

There will always be cases where a taxpayer's status is not so clear cut. HMRC’s technical guidance looks at relevant case law and includes examples where a taxpayer has more than one residence either side of the border.

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Definition of a Welsh taxpayer

The start of the 2019-20 tax year marked a fundamental change to the way Income Tax is calculated for people who live in Wales. The new Welsh rates of Income Tax (WRIT) is payable on the non-savings and non-dividend income of those defined as Welsh taxpayers.

The definition of a Welsh taxpayer is generally decided on the question of where the taxpayer lives. It should be noted that in order to be a Welsh taxpayer, an individual must be a UK resident for tax purposes – an individual who is not UK tax resident cannot be a Welsh taxpayer.

An individual will be a Welsh taxpayer, for a given tax year, if they satisfy any of the following three tests:

  1. They are a Welsh parliamentarian
  2. They have a 'close connection' to Wales through either:
    (i) Having only a single 'place of residence', which is in Wales; or
    (ii) Where they have more than one 'place of residence', having their 'main place of residence' in Wales for at least as much of the tax year as it has been in each other part of the UK
  3. Where no 'close connection' to Wales or any other part of the UK exists (either, because it is not possible to identify any place of residence or a main residence) – through day counting.

For the current tax year, the rates of Income Tax paid by Welsh taxpayers will continue to be the same as those paid by English and Northern Irish taxpayers. This is because the Welsh Government has set the Welsh rates at the same level as in England and Northern Ireland for 2019-20.

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Gifts in anticipation of marriage

There is a special exemption from Inheritance Tax for cash gifts made on or shortly before the date that the relevant wedding or civil partnership ceremony takes place.

The amount of tax relief varies depending on the relationship between the donor and the recipient.

  • Each parent (including step-parents) can gift up to £5,000 tax free
  • Grandparents and Great grandparents can each gift up to £2,500
  • Any other person can each gift up to £1,000

If the value transferred by the gift is more than the amount of the available exemption, it is an exempt transfer up to the amount of the available exemption, and the excess is chargeable.

There is also a separate, general annual exemption of £3,000 for gifts. This exemption can be carried forward if not used to make a maximum gift of £6,000. These gifts are ignored in the event of the donor’s demise within 7 years of making the gift.

There are also exemptions for normal gifts out of income such as making birthday gifts. A donor can also give as many gifts of up to £250 per person as they want during the tax year but only if they haven’t used another exemption on the same person.

Newly married couples should be advised that there is no IHT to pay on lifetime gifts between spouses or civil partners as long as they live together in the UK.

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Provisional date announced for Autumn Budget 2019

The Chancellor of the Exchequer, Sajid Javid, has announced that he is planning to hold his first Autumn Budget 2019 on Wednesday, 6 November 2019. However, this date is based on the UK leaving the EU with a deal on 31 October 2019. At the time of going to press, this was certainly not a foregone conclusion.

The Chancellor did confirm that if the UK leaves the EU without a deal then the Government would act quickly to announce emergency measures to support the economy, businesses and households. This would then be followed by a Budget in the weeks thereafter. No announcement was made as to what will happen if there is a further extension to Brexit.

The Chancellor said:

'This will be the first Budget after leaving the EU. I will be setting out our plan to shape the economy for the future and triggering the start of our infrastructure revolution. This is the right and responsible thing to do – we must get on with governing.'

HM Treasury has also confirmed that the opportunity to submit representations for the Budget 2019 is now available. A Budget representation is a written representation from an interest group, individual or representative body to HM Treasury with the aim of commenting on Government policy and / or suggesting new policy ideas for inclusion in the Budget. Any submissions should be sent to HM Treasury by 30 October 2019.

Details of all the Budget announcements will be made on a special section of the GOV.UK website which will be updated following completion of the Chancellor’s speech.

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Tax if you return to the UK

There used to be a form that had to be completed advising HMRC if you were returning to live in the UK from another country. Whilst this form was abolished some time ago, there are still various actions that you may need to take if you are returning to live and work in the UK.

In most cases, if you return to live in the UK you will be classed as resident in the UK and you will be required to pay UK tax on your UK income and gains and any foreign income and gains. Your exact liability to Income Tax will depend on whether you are a resident and / or ordinarily resident and / or domiciled in the UK. For example, you may not be liable to UK tax on foreign income and gains if your domicile remains outside of the UK. The domicile rules are complex, and you must ensure you consider your position if this might apply to you.

When you return to the UK, you will need to register for Self-Assessment if required to do so. For example, if you are self-employed or have income / gains from abroad to report to HMRC. You would not usually be required to register for Self-Assessment if you are returning to the UK to take up a job as an employee and don’t have any other income to report.

If you had moved abroad and returned to the UK after a period of less than 5 years (temporary non-residence), you may have to pay tax on certain income or gains made while you were non-resident. This doesn’t include wages or other employment income. If you were away from the UK for less than a full tax year then you will usually be liable to pay UK tax on any foreign income for the entire time you were away.

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Who is eligible for 10% tax on business sale?

Entrepreneurs' Relief (ER) can be valuable relief when selling your business, your shares in a trading company or your interest in a trading partnership. Where ER is available, Capital Gains Tax (CGT) of 10% is payable. This rate applies to qualifying lifetime gains of up to £10 million.

However, it is important to remember that there are qualifying conditions that must be met to ensure you are eligible to benefit from the lower 10% rate.

If you are selling all or part of your business, then both of the following must apply in order to qualify for relief:

  1. You must be a sole trader or business partner,
  2. You must have owned the business for at least 2 years before the date you sell it.

If you are selling shares in the business you must be an office holder or employee of the company, own at least 5% of the company and have at least 5% of the voting rights for at least 2 years before you sell your shares. You must also be entitled to at least 5% of either the profits that are available for distribution and assets on winding up the company or the disposal proceeds if the company is sold.

The company must also be a trading company or the holding company of a trading group. If the number of shares you hold falls below 5%, because the company has issued more shares, you may still be able to claim ER. The rules are different if your shares came from certain Enterprise Management Incentive (EMI) schemes.

There is also a sister relief called Investor’s Relief which has a separate £10 million lifetime cap. This is useful for investors who do not meet the officer or employee requirement for ER.

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National Living/Minimum Wage entitlement

A reminder that the current National Minimum Wage (NMW) and National Living Wage (NLW) rates came into effect on 1 April 2019. The NLW is the minimum hourly rate that must be paid to those aged 25 or over. The current rate for the NLW is £8.21.

The hourly rate of the NMW (for 21-24 year olds) is £7.70. The rates for 18-20 year olds are £6.15 and the rate for workers above the school leaving age but under 18 is £4.35. Finally. the NMW rate for apprentices is £3.90. The rates are updated every April.

It is important that you ensure that you have used these rates since April 2019 as there are significant penalties for employers who are found to have paid workers less than they are entitled to by law. If you have underpaid an employee, you must pay any arrears immediately. There are penalties for non-payment of up to 200% of the amount owed, unless the arrears are paid within 14 days. The maximum fine for non-payment can be up to £20,000 per employee.

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The Governor of the Bank of England, Mark Carney, has unveiled the design of the new £20 note featuring the artist JMW Turner. The new note will be launched on 20 February 2020 and will join the current £5 and £10 notes in being printed on polymer, a thin flexible plastic. The new plastic £20 note will include a number of new security features including two windows and a two-colour foil, making it very difficult to counterfeit.

The Governor said:

'Our banknotes celebrate the UK’s heritage, salute its culture, and testify to the achievements of its most notable individuals.  And so, it is with the new £20 banknote, featuring JMW Turner, launched today at Turner Contemporary in Margate. Turner’s contribution to art extends well beyond his favourite stretch of shoreline.  Turner’s painting was transformative, his influence spanned lifetimes, and his legacy endures today. The new £20 note celebrates Turner, his art and his legacy in all their radiant, colourful, evocative glory.'

Once the new plastic £20 note is launched, the process of withdrawing the current paper £20 notes from circulation will begin. The paper £20 notes will remain as legal tender until they are withdrawn. The exact date that the paper notes are to be withdrawn has not yet been announced but at least 6 months in advance notice will be given. It has already been confirmed that a new £50 note will be issued in 2021, featuring Alan Turing, completing the updating of all current Bank of England banknotes.

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Objecting to a limited company being struck off

There are a limited range of circumstances when a company can request to be removed from the register (known as being struck off). For example, a voluntary strike off can be requested by a dormant or non-trading company.

You can object to a limited company’s application to be struck off the companies register if you’re a shareholder or other interested party, such as a creditor, and have a reason to stop the application, for example:

  • you have not been told about the company’s decision
  • you think the declarations on the company’s application are false
  • the directors have broken the law, for example tax fraud
  • you want to take legal action against the company

When a company has applied to be struck off, it is required to post a notice in the Gazette. You can only raise an objection (to Companies House) after this notice has been published.

You will need to provide evidence to support your objection, for example invoices showing the company is still trading or owes a debt.

Companies House must receive your objection at least 2 weeks before the notice expiry date (2 months after the date of publication). Companies House will let you know if your objection is successful and will usually set a time limit during which the company cannot be struck off.