Tag: UK

Where should you pay tax? (Statutory Residence Test)

Flugzeug fliegend

Historically some of the key cases related to Pilots.

Shepherd v Revenue and Customs Commissioners [2007] BTC 426, [2006] EWHC 1512 (Ch)

A BA pilot had a home in Cyprus and spent 80 days in the UK (well below the 183 day test) in 1999/2000. However, he had ties to his former matrimonial home in Berkshire and the UK was his base for international flights, HMRC won the case on the basis that he had not ‘left the UK’.

Grace v Revenue & Customs [2008] Spc 663

Mr Grace was also a BA pilot, he claimed to have relocated to South Africa. Mr Grace won his case because he was set out the facts in a way that convincingly showed his links to his new country of residence. Although subsequently the outcome was reversed.

Gaines-Cooper Case

Robert Gaines-Cooper was a Multi Millionaire, based in the Seychelles but subject to the UK tax because of family ties

These cases demonstrate the problems of deciding residency, so on the 6th April 2013 a new Statutory Residence Test was introduced.

This test is relevent not only to Aircrew but also to:

  • Ships Crew
  • Lorry Drivers
  • Coach Drivers
  • Sales People
  • Travel Industry

UK ties are likely to be a key issue:

  1. Family Tie – Relevent relationships include Spouse, Child under 18, Common Law partner resident in the UK. However, Children in Full Time education are ok provided they don’t spend more than 21 days in the UK outside of term time.
  2. Accomodation Tie – A property in the UK where they can live for 91 days a year or 16 days if its owned by a close relative.
  3. Work Tie – Work in the UK for at least 3 hours a day for 40 days a year
  4. 90 Day Tie – Spend more that 90 days in the UK in this tax year or the previous tax year or the year before that
  5. Country Tie – the midnight test for the greatest number of days

On the positive side at least HMRC have been very specific in their guidance, these are are very specific tests!

steve@bicknells.net

 

Are you ready for massive construction growth?

at a construction site

According to the Construction Products Association summer forecasts, output will rise by more than 22% over the next five years. Private housing starts are expected to grow by 18% in 2014 and 10% in 2015. Commercial offices output is also projected to grow 10% this year and 8% in 2015.

The CITB Construction Skills Network predicts that 182,000 new jobs will be created in the UK construction industry between 2014 and 2019 as employment rises for the first time since the start of the recession in 2008.

A Close Brothers survey in May showed that 65% of construction firms admit that access to cash is a major challenge for their business.

So can we keep pace? where will the construction workers come from? and will we be able to fund the projects?

steve@bicknells.net

New reporting regime for Micro Companies – is it a crazy idea?

A donut store, bakery, fish and chips store and a pet shop

On the 21st February 2012, the European Union defined a new category of company, the ‘micro-entity’. Micro-entities are very small limited liability companies and qualifying partnerships.

Micro companies are those not exceeding two out of three of:
  1. Balance sheet total: £289,415 (€350,000)
  2. Net turnover: £578,830 (€700,000)
  3. Average number of employees during the financial year: 10 (or fewer)
Subject to certain conditions, the Micros Directive permits Member States to relieve micro-entities, from the obligations to:
  •  present “prepayments and accrued income” and “accruals and deferred income”
  •  recognise certain types of “prepayments and accrued income” and “accruals and deferred income”
  •  draw up notes to the accounts
  •  prepare an annual report
  •  publish annual accounts provided the financial data information contained in balance sheet items is filed with a designated competent authority.
The UK Government (Department for Business Innovation and Skills) issued a consultation document ‘Simpler financial reporting for micro-entities: the UK’s proposal to implement the ‘Micros Directive” the consultation period closed on 22nd March 2013.
The Government is seeking to make changes to the Companies Act 2006, and to the accounting regulations made under that Act and under EU law to implement the EU Directive 2012/6/EU of the European Parliament and of the Council (“the Micros Directive”). It would also make comparable changes to the accounting framework for Limited Liability Partnerships.

The ICAEW believes the lack of transparency and dearth of financial data would lead to more rejections of credit to these smaller organisations.

“We have a number of concerns about the suggested changes, as they may result in less transparency and less useful financial information. This, in turn, can over time have a negative impact on market confidence and on micro businesses’ ability to access finance, at least at the margins,” says Dr Nigel Sleigh-Johnson, head of the ICAEW’s Financial Reporting Faculty.

What do you think?
steve@bicknells.net

The UK 2013 Budget – Some things you might need to know….

Big Ben with city bus and flag of England, London

First the Good News……

Income tax

The personal allowance for under-65s will rise by £560 to £10,000 in 2014/15.

Housing

From 1 April, the Help-to-Buy scheme will give people who have a 5% deposit a 20% interest-free loan on homes worth up to £600,000. The qualifying period for people looking to purchase their home under the Right-to-Buy scheme has gone down to three years.

Childcare

Working families will benefit from a 20% tax relief on childcare costs, offering an annual saving of £1,200 per child under 12. The scheme will be phased in from autumn 2015.

An additional £200 million will be provided to increase childcare support in Universal Credit, with the commitment being introduced from April 2016.

Corporation Tax

Corporation tax will be reduced by a 1% to 20% in April 2015.

Employers National Insurance

Employers’ national insurance payments will be cut by £2,000 from April 2014

To take advance of the allowance, firms will simply have to inform HM Revenue & Customs, and the Treasury says it will be “delivered through standard payroll software”.

Mr Osborne added: “For the person who’s set up their own business, and is thinking about taking on their first employee – a huge barrier will be removed.”

“They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax.”

450,000 small firms will pay no employer National Insurance.

So who are the overall winners and losers – overall we are losers!

Budget 2013

Based on Treasury analysis, the middle income families have done better than the bottom quartile and top quartile, but overall we are all worse off (based on all households).

The Economy and Borrowing are in worse shape than previously predicted

Growth forecast for 2013 halved to 0.6% from 1.2% in December

Office for Budget Responsibility (OBR) watchdog predicts UK will escape recession this year

Growth predicted to be 1.8% in 2014; 2.3% in 2015; 2.7% in 2016 and 2.8% in 2017.

The OBR predicts borrowing of £121bn this year, the same as last year, and £120bn for 2014-5

George Osborne says borrowing as a share of GDP will fall from 7.4% in 2013-14 to 5% in 2015-16

Debt as a share of GDP to increase from 75.9% in 2012-13 to 85.6% in 2016-17

http://www.bbc.co.uk/news/uk-politics-21851965

You can read the full Budget Report by clicking on this link http://cdn.hm-treasury.gov.uk/budget2013_complete.pdf

steve@bicknells.net

What did you think of the UK Autumn Statement?

Big Ben with city bus and flag of England, London

The key points were:

Individuals

Tax

• Income tax personal allowance to go up to £9,440 next year, £235 more than previously announced. The rise will be extended to higher rate tax payers.

• Threshold for 40% rate of income tax to rise by 1% in 2014 and 2015 from £41,450 to £41,865 and then £42,285.

• Inheritance tax threshold to rise from £325,000 now to £329,000 in 2015/16

• Planned 3p per litre rise in fuel duty scrapped

• Capital gains tax annual exempt amount to increase by 1% over the same period, reaching £11,100

• No new tax on property

Pensions

• From 2014/15 will further reduce lifetime pension relief allowance from £1.5 to £1.25m. Annual tax-free allowance reduction from £50,000 to £40,000

• Basic state pension to rise by 2.5pc next year to £110.15 a week

• Increase in capped drawdown limit for pensioners from 100pc to 120pc

Savings

• Overall ISA limit increased to £11,520 from next April

Business

• SME equity markets to be held directly in stocks and shares ISAs

• The main rate of corporation tax to be cut by 1% to 21% from April 2014

• Bank levy rate to be increased to 0.13pc next year

• Temporary doubling of the small business rate relief scheme to be extended by a further year to 2014

• £1bn extra capital for Business Bank

http://www.telegraph.co.uk/finance/budget/9723417/Autumn-Statement-2012-key-points.html

Department for BIS key points:

  • An additional £600 million for science, research and innovation, which takes the total investment since the 2010 spending review to an additional £1.5 billion.
  • An extra £270 million to be spent on laboratories, classrooms and other facilities in our Further Education colleges.
  • £1 billion confirmed for the business bank, which will address the long-term structural gap in lending to small businesses.
  • An extra £120 million invested in supply chains, to encourage companies to invest here in the UK.
  • The Regional Growth Fund will also receive an additional £350 million, bringing the total available in 2012-13 to £2.75 billion.
  • Extra money for the Employer Ownership Pilot, taking it to £340 million overall and giving businesses funding so they can design and develop their own training programmes.
  • Increased funding of £140 million for UK Trade & Investment (UKTI) to help small and medium sized business export abroad.
  • £1.5 billion to help our smallest companies to access growing markets overseas. For the first time UK Export Finance, the Government’s export credit agency, will be able to issue loans to overseas customers and buyers wanting to purchase goods from UK businesses.
  • A package of measures to cut back red tape that business has told government stops them from growing.

http://www.bis.gov.uk/news/topstories/2012/Dec/autumn-statement-2012

Britain’s small businesses were given a boost in the Autumn Statement when the Chancellor instigated a tenfold increase in allowances on capital spending such as tools, office equipment and commercial vans to £250,000.

http://www.standard.co.uk/business/business-news/autumn-statement-uturn-on-allowances-will-help-small-firms-8386468.html

steve@bicknells.net