A new tax break as launched this week from 6 April 2015, which will be eligible to more than 4 million married couples and 15,000 civil partnerships.
The Allowance means a spouse or civil partner who doesn’t pay tax – therefore is not earning at all or is earning below the basic rate threshold (£10,600) – can transfer up to £1,060 of their personal tax-free allowance to a spouse or civil partner – as long as the recipient of the transfer doesn’t pay more than the basic rate of income tax.
Applying online is straightforward. Couples can register their interest to receive the Allowance now at gov.uk/marriageallowance.
The maximum saving is 20% x £1,060 = £212
However, the partner giving up the allowance must not be earning and the partner getting the allowance must not be a higher rate tax payer.
The cost of a web site is analogous to that of a shop window. The cost of constructing the window is capital; the cost of changing the display from time to time is revenue. (BIM35870)
UITF Abstract 29
Set out 4 key areas of cost:
Planning – P&L
Application and infrastructure development – Tangible Fixed Asset
Design costs – P&L
Content costs – P&L
HMRC also have some useful information on software in CA23410
CAA01/S71
Computer software qualifies for PMAs if it is not already plant.
Computer software is not defined in the capital allowance legislation. You should treat computer programs of any type and data of any kind as computer software. Computer programs range from operating systems like Windows to games like Solitaire. There may be no physical asset because software is sometimes transferred by electronic means, for example it may be downloaded over the Internet. Software acquired that way is also plant.
A person may acquire a right to use or otherwise deal with computer software. If so, the right and the software to which it relates are plant. Treat the person as owning the plant while the person is entitled to the right.
Capital Allowances and the Annual Investment Allowance can be claimed against Plant including software.
An intermediary is any person who makes arrangements for an individual to work for a third party or be paid for work done for a third party. An employment intermediary is also commonly referred to as an agency.
From 6 April 2015, intermediaries must return details of all workers they place with clients where they don’t operate Pay As You Earn (PAYE) on the workers’ payments. The return will be a report (or reports) that must be sent to HM Revenue and Customs (HMRC) once every 3 months.
Agencies will be required to let HMRC know the following details:
Contractor’s name, address, date of birth, etc.
PAYE reference.
National Insurance number.
How the contractor was engaged during the period (i.e. was he working via a limited company).
The duration of each assignment.
Details of the contractor’s limited company (e.g. company registered number).
How much was paid to the contractor.
The regulations will give HMRC information that will enable it to decrease false self-employment and abuse of offshore working. This will help HMRC to:
support intermediaries that comply
penalise intermediaries that don’t comply
make sure the right tax and National Insurance is paid by people working through intermediaries
reduce unfair commercial advantage
Here is link to the full reporting requirements – Legislation Link
CIS covers most construction work to buildings, including site preparation, decorating and refurbishment.
Exceptions
You don’t have to register if you only do certain jobs, including:
architecture and surveying
scaffolding hire (with no labour)
carpet fitting
delivering materials
work on construction sites that is clearly not construction, eg running a canteen or site facilities
So what is being changed?
The changes are outlined in this document – CIS Link
Key Changes
Reducing the Gross Status minimum turnover threshold to £100,000 a year for businesses with multiple directors (from April 2016)
Initial and annual compliance tests will focus on fewer obligations
Penalties triggered by failure to file a nil CIS return can be set aside on appeal from April 2015
It will be easier for Joint Ventures to obtain Gross Status if one party already holds Gross Status
Online verification will be mandatory from April 2017
Earlier repayments can be made to liquidators in insolvency proceedings. Currently where a subcontractor is a company, no repayment of any amount deducted and paid over to HMRC by a contractor can be made to the subcontractor until after the end of the tax year in which the deduction was made. These rules will be amended so that in certain cases where the amount deducted by the contractor is excessive, a repayment can be made during the tax year.
Mandatory online filing of CIS returns will be introduced with the offer of alternative filing arrangements for those unable to access an online channel by reason of age, disability, remote location or religious objection.
The directors’ self assessment filing requirements will be removed from the initial and annual compliance tests.
Based on HMRC Statistics approximately 1 million employees have a company car, its the 2nd most popular benefit in kind. The most popular benefit in kind is Private Medical Insurance (2.2m employees).
Often employees will change cars or start/stop having fuel for cars during a tax year and the tax on company cars can be significant, you can use this HMRC calculator to assess the the tax.
Often when you start a business you will need to borrow money personally to lend to your new company or buy shares.
You might borrow by increasing your mortgage.
You may be entitled to claim tax relief for interest paid on a loan or alternative finance arrangement used to buy:
shares in, or to fund, a ‘close’ company (contact your HM Revenue & Customs (HMRC) office if you are not sure if the company is ‘close’)
an interest in, or to fund, a partnership
plant or machinery for your work (but make sure you do not claim this interest twice, you will do if you have already deducted it as a business expense)
If you receive a low-interest or interest free loan from your employer for one of the above purposes you may be able to claim relief for any benefit taxable on you.
This is called ‘Qualifying loan interest relief’, HMRC have a helpsheet which gives further details HS340
In the 2014 Budget Qualifying loan interest relief was changed to include EEA state companies
Childminders work in their own homes and are paid by parents for looking after their children, often while the parents are at work. Profits from childminding are usually chargeable to Income Tax as trade profits, although some occasional childminders’ profits may be chargeable as miscellaneous income.
Many childminders are members of the Professional Association for Childcare and Early Years (PACEY), formerly known as the National Childminding Association (NCMA). HMRC entered into an agreement with the NCMA on the expenses that will be allowed as deductions from childminding income.
Household expenditure
The agreement is based on the hours that childminders work and not on the number of children they care for. A childminder looking after a child on a full time basis for 40 or more hours each week is entitled to claim the full time proportion of expenses.
How this works is illustrated in the following table:
Hours worked
% of Heating and lighting costs
% of Water rates, Council Tax and Rent
10
8%
2%
15
12%
4%
20
17%
5%
25
21%
6%
30
25%
7%
35
29%
9%
40 (full time)
33%
10%
The full time figures shown in the table should be scaled down from depending on hours worked.
Wear and tear of household furnishings
A deduction of 10% of total childminding income may be made to cover the wear and tear of furniture and household items. This is intended to include household items which are not used wholly and exclusively in childminding. A childminder claiming this deduction may not, however, claim relief for the cost of replacing such household items. Reasonable costs of cleaning household items where the need for cleaning is as a result of childminding activities may be allowed as a separate item.
The agreement also covers the following expenditure:
Food and drink
Reasonable estimates for the costs of food and drink provided for the children being cared for are acceptable and receipts are not required.
Car expenses
Where appropriate, childminders can use the simplified expenses mileage rates. However, if the childminder wishes, the actual cost of car expenses for childminding purposes can be claimed instead.
Other costs
Also allowable – the cost of toys, outings, books, safety equipment, stationary, travel fares, membership fees or subscriptions to your childminding organisation, public liability insurance premiums and the actual cost of telephone use for childminding purposes.
Use a number of tax avoidance schemes each year that were intended to offset their tax liability several times over in the hope that at least one will work.
Repeatedly use tax avoidance schemes to shelter the same type of income year after year.
Repeatedly use avoidance schemes to cover the majority of income or gains as they arise.
Often use tax avoidance schemes to cover major life or commercial events.
The new sanctions are expected to include:
Surcharges on repeated or concurrent use of tax avoidance schemes
Being compelled to provide more documents and records
Its a common mis-understanding that many Buy to Let investors think that they can rollover the gains under business asset rollover reliefs.
Residential Property Investment is not a trading activity, whenever you sell a property that isn’t your main residence you will be liable to capital gains tax.
If you want to release cash from your property portfolio its better to consider other options such as re-financing to take advantage of capital growth.
Also joint ownership (particularly between spouses) will increase the available Capital Gains Allowance you have, individuals currently have £11,000 per year. This allowance might cover your gain?
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