However, our accountant can help you bring down your IHT bill by taking benefits of available exemptions and reliefs. For example, if 10% or more of the total estate is donated to any registered charity, the IHT rate will lower down to 36%. For all residential properties that are valued below £2 million and where the deceased has lived at time of death, there is additional nil rate band of £175,000 for individuals and £350,000 for married couples.

WHICH ASSETS ARE VALUED FOR INHERITANCE TAX?

Essentially, all assets in form of money, property and personal possessions must be included in probate valuation. These will include;

• All bank accounts held in UK or abroad,
• Pensions,
• Properties; whether residential or commercial,
• Shares and investments,
• Vehicles,
• Any jointly held assets,
• Jewellery and all other valuable personal effects.
• Pay-outs from insurance policies

Properties and other such unique assets like jewellery will need to undergo professional probate valuation. For assets like vehicles, you can always use publicly available data like second hand vehicle price guides. It is essential that you submit source of valuation as evidence to HMRC. If you have no IHT payable, you will submit Form IHT205. You will submit Form IHT400 if you have any IHT payable.

Please note that you have to declare any foreign assets and any gifts made by the deceased in last 7 years for the valuation of Estate. In case, you discover any assets after the forms have already been submitted, it is your legal duty to notify HMRC within six months of the date when forms were submitted.

WHEN DO YOU PAY INHERITANCE TAX?

Inheritance tax must be paid within six moths after the end of month in which the deceased passed away. For example, if the deceased died on 20^th March, 2020, you must pay the IHT within six months of 31^st March 2020, that is 30^th September 2020.

If you delay the payment, you will be bound to pay statutory interest which is currently calculated at 2.60%. In order to avoid accruing this statutory interest, you six months to sort out probate valuation and other gifts issues.

If you want to avoid paying interest, you can use prepayment before probate option. You will submit Form IHT422. HMRC may reduce interest on early payments and will refund with interest any overpayments. Where the money is tied up in properties, you can opt to pay in instalments with interest over 10 years period.

HOW TO CALCULATE INHERITANCE TAX PAYABLE ON GIFTS?

Every individual has an annual allowance of £3000 per tax year. Unused allowance can be carried forward for one year only. This means you can have a maximum of £6,000 exemptions on gifts received. Beyond which they will be charged at a rate depending on time between when the deceased gifted you and when they passed away.

Please note that the gifts use nil band allowance before any balance is applied to the individual’s estate.

There are also certain exemptions to taxable gifts which include;

• Any wedding or civil ceremony gift up to value of £1,000 per person. The exemption bar is raised to £2,500 for grand-children or great-grand children and £5,000 for children.
• Birthday/Christmas presents that were made out of normal income
• Gifts to any registered charity or registered political party
• Any payments made to elderly relative or a minor for assistance with normal living costs

HOW CAN YOU PAY THE INHERITANCE TAX?

You can pay the IHT from the deceased’s account, joint account held with deceased or your personal account.

When you are using personal account or joint account with the deceased, you can use online of telephone banking, CHAPS or BACS.

When you pay the IHT from the deceased account, this is called Direct Payment Scheme. You have to submit Form IHT423 . Please fill in these details very carefully;

• Inheritance Tax Reference Number
• Deceased’s account details
• Amount to be transferred

This form will also need signatures of Personal Representative appointed by nomination in deceased’s will or by legal nomination where there is no will. The signed form will be forwarded to the building society, bank or National Savings & Investments; who will make the payment to HMRC from the deceased’s account themselves.

if you have quire then visit our Tax Consultant page!

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Following are Changes to Business Taxes and Reliefs that have been announced in Spring Budget 2020-

Changes to Corporation Taxes:

It was expected that corporation rate for financial year beginning 1 April, 2020 will be reduced to 17% from 19%. However, Chancellor Rishi Sunak has announced that the corporation tax rate will remain 19% for the period 1^st April, 2020 to 31^st March, 2021.

Changes to Capital Allowances:

• For Corporation Tax, the annual rate of capital allowance for qualifying investments to construct new structures and buildings, or upgrade existing ones will increase to 3% from 2%. This change is effective from 1^st April 2020.
• For income tax, capital allowances for qualifying investments to construct new or upgrade old non-residential structures will also increase to 3% from 2%. This change will however, be effective from 6^th April 2020.
• Spring Budget 2020 has announced 100% first year allowance for investments in new plant and machinery in marked Enterprise Zones. This will be available till 31^st March, 2021; after which it will be subject to Spring Budget 2021 announcement.
• There is an extension to 100% first year allowance for zero-emission business cars and zero-emission business goods, vehicles and equipment by four years beginning April 2021. Beginning April 2021, CO2 emission thresholds will be reduced from 50g/km to 0g/km for low emission cars first year allowance and from 110g/km to 50g/km for purpose of writing down allowance for business cars. This means that cars with CO2 emissions of only 0g/km will be eligible for writing down allowance at 18%. Cars with emissions exceeding 50g’km will only be eligible for 6% writing down allowance.

Increase in Research and Development Expenditure Credit (RDEC):

In order to rebuild UK economy after the COVID-19 Outbreak, the UK government announces a huge increase from 1% to 13% for tax credit for all companies that are eligible for RDEC schemes. This increased tax credit rate is effective from 1^st April, 2020.

In another happy move for RDEC scheme eligible companies, the Chancellor has announced that the 2018 Budget Restrictions for qualifying loss making companies’ tax credits will be delayed till 1^st April, 2021; as of now. Previously, 2018 Budget announced that effective from 1^st April, 2020, the amount of R&D tax credit for all qualifying loss making companies will be restricted to maximum of three times of net Total PAYE and NIC Liability of a given year.

Corporation Tax Loss Relief Proposed Changes in Spring Budget 2020:

Draft legislations have been issued to restrict deduction allowance to £5 million inclusive of all capital losses brought forward, from 1^st April 2020. This will impact where companies have been carrying forward capital losses to reduce their chargeable gains.

Corporate Tax Relief for Intangible Assets from 1st July 2020:

On the other hand, the government has announced extension to corporation tax relief so that all Pre-finance Act 2002 intangible assets acquired on or after 1^st July 2020 will also be covered. This means companies can now claim relief for older intellectual property rights also. All intangible assets will now be taxed under a single regime.

Business Rates Tax Holiday and Cash Grants for Small Businesses:

The government has announced a 100% Business rates Tax Holiday for all small businesses with Rateable value of less than £51,000.  This applies to all businesses in retail, leisure and hospitality sectors. These may include shops and restaurants, museums, art galleries, theatres, cinemas, caravan parks, gyms and sports clubs, small hotels, Bed & Breakfasts, guest houses, music venues and night clubs. All business rates will be discounted for £5,000 for the year up against the £1,000 for the year for Pubs.

All small businesses eligible for Business Rates Relief have been promised £3,000 cash grant. The Chancellor announced that currently there are about 700,000 such businesses in UK.

Changes to National Insurance Threshold in Spring Budget 2020:

From 1^st April, 2020, the National Insurance Threshold is up to £9,500 from £8,632.

VAT amendment in Spring 2020 Budget:

Only two changes to VAT have been mentioned in the recent budget.

1) Tampon tax stands abolished from 1^st January 2021 when Britain’s Transition period for exiting EU ends. This includes scrapping of VAT on all women sanitary products; no longer classifying them as luxury or non-essential products.
2)VAT will also be abolished from 1^st December, 2020 for all digital publications, e-books,

Academic journals and newspapers.

New Digital Services Tax:

Spring Budget 2020 announces implementation of new Digital Services Tax of 2% on all revenues generated from search engines, social media platforms and online market places that are derived from UK users only. This new tax applies only when two conditions are present:

1)The group’s worldwide revenue from digital activities exceed £500 million.

2)At least £25 million are derived from UK users.

Diesel Tax Relief Amendment:

Previously some companies enjoyed Diesel Tax Relief where they paid just over 11p/litre as compared to the regular 58p/litre consumption. The Government has now announced complete abolishing of Diesel Tax for such companies; majority of which belong to agriculture sector. This means they won’t even be required to pay the 11p/litre tax now.

New ‘Green’ Tax Introduced:

The UK Government has been trying to achieve ambitious green targets. In a new bid, the government has announced that all manufacturers or importers of products that have less than 30% recyclable material composition will henceforth be charged at £200/tonne.

Amendment to the Entrepreneur Relief:

Contrary to the expected, The Entrepreneur Relief has not been abolished completely. However, the lifetime allowance has been reduced to £1 million from £10 million.

Proposal for Ten New UK Free Ports:

The Chancellor has announced that UK Government is considering establishing ten free ports across all four UK nations. The proposal revolves around following tariff benefits:

• No Tariffs/ import VAT/ Excise or Duty suspension for all goods being brought from across border into the Free ports. The taxes and duties will apply only when goods leave the free port for domestic market.
• Duty Inversions for all goods where the duty of final product is lower than duty on component parts. In such cases, the government will allow duty free import of component so that businesses pay duty at finished product rate when goods enter domestic market.
• Duty exemptions for re-exported goods. This will allow businesses to import components duty free in free ports, manufacture final product and then export it without any tariff.
• Simplification of customs processes and documentation requirements for all businesses accessing free ports.

Other Business Grants and Reliefs in Spring Budget 2020:

• The government will refund employers; with less than 250 employees, Statutory Sick Pay Costs for up to 2 weeks per employee that has either contracted COVID-19 or is self-isolating.
• For Self Employed, the minimum income barrier of Employment Support Allowance is temporarily removed. This means self-employed will have access to such benefits from day 1 of illness or isolation. This was previously only available after 1 week.
• Government has also announced Business Interruption Loans of up to £1.2 million to any SME has incurred additional costs as result of Covid-19 outbreak.
• The chancellor has also promised a review of High street business rates system in coming few days.
• The Government’s Time to Pay Scheme ensures that all businesses are given a pre agreed deferral period and time frame to eventually pay their HMRC liabilities.

Certax Fitzrovia Ltd prides itself on keeping all its Clients up to date with changes in Taxes and Reliefs, as announced by the government. Book your appointments now to see how the Spring Budget 2020 will impact your business and how can you take benefits from latest Reliefs and Grants announced by the government.

The post CHANGES TO BUSINESS TAXES AND RELIEFS IN SPRING BUDGET 2020 appeared first on Blogs or News Offical Certax London.

Raza Laghari, Director Certax Fitzrovia has put together the information in this article so that you can know all there is to know about Dividend Taxes in UK for Tax year 2019/2020. This article has updated information till its time of publication.

WHAT IS YOUR TAX FREE DIVIDEND ALLOWANCE?

There is a certain threshold, below which your dividends are not subject to tax. In effect, up to this threshold there is no difference between your gross dividends and take home dividend income. Dividend up till this threshold are call Dividend Allowance.

All tax payers are allotted this dividend allowance. It makes no difference which UK tax bracket they fall in. This means no matter at which rate they pay their dividend tax eventually, their initial threshold for tax free dividend allowance remains universal for all tax payers.

For all practical purposes, the dividend allowance is a 0% tax bracket. For tax year 2019/2020, dividend allowance is £2,000. This is same threshold as for the previous year. For Dividend earnings above £2,000, you will have to know which dividend tax bracket you fall in.

DIVIDEND TAX RATE BRACKETS:

There are three dividend tax rate brackets:

• Basic Rate- 7.5%
• Higher Rate- 32.5%
• Additional Rate- 38.1%

How you actually work tax on dividend is a bit complex. You need to know your Total Income Tax Band. Add your dividend income in your all other income to know your Tax band. You may pay tax at more than one rate. The Table Below and the following worked example can give you a better outlook

DIVIDEND TAX UK WORKED EXAMPLE:

Mr. A gets £30,000 in wages and £3,200 in Dividends for Year 2019-2020.

Mr. A’s Total Income: £30,000 + £3,200= £33,200

Income after personal Allowance: £33,200- £12,500=£20,700

This is Basic Rate Tax Band.

Therefore Mr. A will pay:

20% on £17,500=£3,500

No Tax on first £2,000 dividend

Basic Rate of 7.5% on remaining £1,200= 90

Total Tax Due is £3500+£90=£3590

HOW YOU PAY TAX ON DIVIDENDS?

Now that you know about UK tax Brackets and Dividend Tax Rates, it is important that you know how you pay dividend. All self employed individuals will use their Self Assessment Returns to declare their dividend earnings to the HMRC. In case you are earning less than £10,000 in dividends you need to contact HMRC and have your tax codes changed.

In all circumstances, Tax on Dividends is usually complicated and if you have more than one source of earnings, it is better you seek services of Professional accountant. If you need a professional accountant service in central London, you may contact Certax Fitzrovia Ltd. We are not only expert in UK dividend Tax Calculations but also excel in VAT management, Tax consultancy, bookkeeping, Self Assessment Returns and Payroll Accounting.

The post ALL THAT YOU NEED TO KNOW ABOUT UK DIVIDEND TAX appeared first on Blogs or News Offical Certax London.

Businesses can either claim cash back amount or as a reduction in tax liability. You can claim for cash back on loss, tax reductions on profits or a combination of both. Any company that is spending money on new product development or existing product improvements is eligible for research and development rebate. For purpose of this tax rebate, “product” includes product, service or any process. The research and development tax credit can be claimed up to two years old accounting period.

Research and Development HMRC tax credit records show that businesses have been able to claim back up to 33p for every £1 spent on Research and Development activities.  R&D Tax Credits Scheme was first introduced in 2000 for Small and Medium Enterprises only. In 2002 R&D Expenditure Credit Scheme was introduced to allow R&D tax rebate relief for large companies too.

What are eligibility criteria for R&D Tax Credits?

You can claim R&D tax rebate incentives only if:

• If you are limited company registered in UK and subject to UK tax laws
• You have carried out qualifying research and development activities
• You have already spent the money on these activities

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The scope of R&D rebates is huge considering that HMRC R&D manual  does not restrict it eligibility to any one sector or industry. It can take place in everything from butter processing to automotive engineering and from construction industry to advancement in digital marketing. HMRC guidance says that as long as you are taking a considerable risk by attempting to resolve scientific or technological uncertainties, you are taking a research and development activity. The scope of R&D tax rebate includes creating new product/process/service and/or changing or modifying existing product/process/service.

In order to be eligible for R&D Tax Credits, there is no compulsion that:

• You have a large company
• Your R&D activities are successful
• You do not have enough costs

What Costs can qualify for R&D Tax Credits Schemes?

Practically, you can claim for any costs that are born to further R&D activities. This will include not only on actual research and development but also the Salaries, NI contributions, Pension Contributions and any reimbursed expense or paid benefits to personnel involved. Payments made to subcontractors, free lancers and agency workers also qualify as R&D costs. All the materials you use plus heat, light, power, water or any utility costs during the process will be included in R&D tax Credits claim. If you are using any kind of software or are paying for clinical trials and live experiments, you can get tax rebate on these costs.

There are some costs that you cannot claim for under UK Government R&D tax rebate. These include:

• Capital expenditure
• Land costs
• Costs for patents and trademarks
• Rents/rates
• Production/distribution of goods and services

How to Claim R&D Tax Credits?

R&D Tax Credits can be claimed by using HMRC online services. However you can submit a R&D refund claim only if your company has already completed and files CT600- full Company Tax return Form. You will need to file separate claims, if considering R&D costs for a period of more than 12 months. You will require to provide a summary of what were the objectives of your research and development activities and what were the scientific and technological uncertainties involved. You will also include the outcome of the R&D activities in the summary.

Make sure your R&D rebate claim includes the accounting period for which you are claiming, total amount of R&D tax relief you are claiming with breakdown of qualifying costs and any unrelieved trading loss that you accrued during the said accounting period.

Certax Fitzrovia Limited has helped its clients recover thousands of pounds in R&D tax credits. If you wish to know if you qualify for Research and Development Tax Refunds, what costs can qualify or if your R&D counts as innovation according to HMRC definition, contact us today.

The post What is Research and Development (R&D) Tax Credits? appeared first on Blogs or News Offical Certax London.

If you have ever switched employment, you would know what is a P45. It is one of the most important documents that your last employer provides you with along with all final settlements. Many people are aware of what is a p45 but they do not realise why is it so important. P45 is the code of the form titled Details of employee leaving Work. Certax  Fitzrovia Accountants can give you a detailed explanation about all important tax documentations including P45.

P45 is issued to all employees who ceased their jobs during the tax year. It is duty of the employer to provide this important document to you and the HMRC. If you are leaving employment in order to receive pension, make sure your pension provider informs you of your tax code to work out payments.

What is a P45 made up of?

This form will help your new employer by giving details of total taxable salary and total deductions paid in current  on going tax year. It will also tell your tax code at the time of cessation of last employment. P45 has four parts:

1) part 1A; your previous employer sends it to HMRC.

2) part 1A; this is your copy. Keep it safe in your records

3) Part 2 and 3: these copies should be given to the new employer or Jobcentre Plus if you are looking for employment

Why do I need a P45 form?

To be honest, it is the new employer who needs the P45 more. The form will help your new employer determine how much tax you have already paid and thereby calculate your remaining free allowance claims and tax liabilities.

Contrary to what most people believe, you will still be able to start a new emplyment without P45. however, having a P45 makes things easier for new employers. If you have not been yet given P45 or you have lost it, your employer will instead ask you to fill out a starter checklist. You may still be asked to fill starter checklist even if you have a P45.

You will however need your P45 how to register for benefits with Jobcentre Plus if you do not have have any other  job to move on to.

What is a P45 source?

P45 will be given by the employer with whom you are ending the employment with. You cannot ask HMRC on your own behalf to provide you with P45.However, you can complain to HMRC that your ex employer is not fulfilling legal duty of providing you with P45. HMRC has not given any timeframe to employers for providing P45. However, it instructs them to do so ‘without reasonable delay’.

What is a P45 Validity?

A P45 is valid only for the tax year in which it was provided. However, your are required to retain it till  22 months after the end of tax year. HMRC has legal rights to carry investigations as long as 20 years down the lane. It may be wiser to retain it for long.

Do I get P45 if I get sacked?

Regardless of how how your employment germinated your employer is bound to provide you with P45. This includes whether you were laid off, you quit or were terminated.

What is Difference between P45 and P60?

If you know what is a P45 clearly, answering the above question is fairly easy. P60 is the year end summary of all gross payments and deductions. It will be given to you by your employer at tax year end, even if you are not leaving.

On the other hand, P45 may not necessarily be given at year end. It will be given at any point in tax year when you leave the employment. It is also summary of gross payments and deductions but from tax year start uptill the point where you left the employment.

For further information on P60, read our blog here.

What is a P45 correction procedure?

It is your duty to check all the details on your P45 once you receive it. If there is is a mistake with your personal information your previous employer’s HR must be contacted to make the necessary correction. Any problems with your tax code can however be corrected by contacting HMRC.

If you have any further queries about what is a P45 or any thing related to it, you can contact our staff at info@certaxlondon.co.uk  or call us at 020 8004 4608. If you want to see how P45 looks like, visit UK Government official website.

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The MTD aims to make UK tax more efficient, time saving and convenient for taxpayers. The Making Tax Digital Timeline for VAT is period starting from 1st April 2019. This means when these businesses submit their tax returns in March 2020 HMRC Making Tax Digital Timeline Date, they should be fully complaint to MTD. All VAT returns should be submitted using only MTD compatible software approved by HMRC. MTD is mandatory for all businesses with VAT registration threshold above £85,000 (as of 2019). Paper records are now not acceptable as per new tax legislation. Your business can only use HMRC’s Application Program Interfaces Platform.

We have covered a detail post on What is a VAT Return? learn from here or get in touch with one of our representative to help you out.

Please note that he online services that are currently available will also stand withdrawn for those businesses with VAT registration above the mentioned threshold. Those with taxable turnover below the threshold £85,000 can still voluntarily register for MTD.

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EXEMPTIONS FOR MAKING TAX DIGITAL TIMELINE DATE 1ST APRIL 2019:

The Making Tax Digital Timeline has been pushed off till 1st October 2019 for a very small proportion of businesses. These include those which have complex VAT calculations. The extension has been granted purely at HMRC jurisdiction. Examples include trusts, Not for Profit businesses (not set up as company), VAT groups, VAT divisions, public sector UK businesses, council authorities and overseas traders. The extended Making Tax Digital VAT timeline also include annual accounting scheme users.

Please note that the above types of organizations have not been exempted from the need to transition to digital records. There has been a Making Tax Digital delay allowed so that they sort out complications for their VAT records and integrate approved software for all their accounting records. All such organizations should have started their digital record keeping from Making Tax Digital Timeline date of 1st October 2019. Don’t forget to look at HMRC approved list of VAT software compatible with MTD.

Those who are completely excluded from use of digital records or the “digitally excluded” list include people who cannot use digital tools due to age, religion, disability, remoteness or any other reason.

Few days back we released news on TAX FACTS 2019- EVERYTHING YOU NEED TO KNOW ABOUT THIS YEAR’S TAX RATE AND ALLOWANCES

CONTENT OF MAKING TAX DIGITAL RECORDS:

You can use spreadsheets to calculate VAT on individual transactions and sum the VAT returns you need to file for. Make sure you use spreadsheets from a compatible application. HMRC requires you to use only Bridging software. This means that you cannot manually retype information but import the spreadsheet prepared in its original form. There is no requirement for additional records in MTD. All you are required to do is to keep records in digital format.

Tax records that need to be submitted as per Making Tax Digital Timeline must include information about business activities, its trading name, its principle address, VAT registration details and name of accounting scheme you use. For each supply transaction, you need to mention tax point i.e. time of supply, value of transaction excluding VAT and the rate of VAT charged.

We recently published WHAT IS CIS TAX REBATE AND HOW TO CLAIM IT? be sure to read it.

MAKING TAX DIGITAL TIMELINE FOR INDIVIDUALS, SELF EMPLOYED AND LAND LORDS:

As of now Making Tax Digital is compulsory only for VAT. A pilot program was run by HMRC for Making Tax Digital Income Tax in spring 2018. This program was voluntary and so far no Time line date has been announced making it compulsory. However, you may consider joining this. Make sure you use only HMRC approved list of Making Tax Digital Income Tax Software.

The mandate to make digital tax filing compulsory for individuals, landlords and self employed has been purposely delayed. As of now there is only a Making Tax Digital Timeline for VAT that is enforced by HMRC. It is expected that the complete transformation of manual tax system to digital one will take place in 2020 and 2021 tax submissions will all be digitized.

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Do you know that more than 33% of construction workers in UK end up paying too many taxes each year? If you are a worker in construction industry and you feel you have overpaid, you have a right to take back the extra amount paid. You will be happy to know that you can claim the refund or the CIS Tax Rebate for last four accounting years. Possible Average CIS tax rebate are about £80 million each year.

You can file for a CIS Tax Refund if you have worked for at least 2 construction sites with one company; or if you use your own transport/public transport to reach work. New filers of CIS Tax Rebate can get up to £2,500 for four years. This is good money and on top of all, this is your money. Look for the UK Government Guidance on registration and other obligations of subcontractors.

However, in order to be eligible for HMRC tax rebate for subcontractors, you need to be registered as self employed and under CIS scheme. These are two registrations and one does not replace another. If you are registering as a newly self employed you can call HMRC Helpline 0300 200 3504 and register for both.

But if you are already registered as self employed and need to register for CIS scheme, you can call HMRC Helpline 0300 200 3210. You need to apply for CIS Tax Rebate. You can claim either online or by post by filling a CIS Tax Rebate Form. CIS Tax rebate is not automatically credited to your HMRC tax account ever. The contractor for whom you work will use your UTR before first pay to determine your tax deduction rate.

Be sure to read What is a Tax Reference Number and where can I find it? if you have any confusion regarding UTR.

UNDERSTAND CIS SCHEME BEFORE YOU CONSIDER CIS TAX REBATE:

Under the Construction Industry Scheme, contractors deduct a portion of pay at source before disbursing payment to subcontractors. It is responsibility of the contractor to pay this money to HMRC which will count towards subcontractor’s NI and taxes. This means for all subcontractors, taxes are paid in advance.

All registered subcontractors under CIS scheme, will have payments deducted at 20%. Unregistered subcontractors need to pay 10% more; i.e 30%. One of the reasons for overpaid taxes is that when subcontractors register at the end of year, they will get a reduced rate and will therefore be eligible to file for CIS Tax Rebate.

However, the reason for overpayment by large so far is that the deductions do not account for personal allowance. Every UK tax payer is entitled to a tax free range of income. The personal allowance for the most recent tax year has been set up at £11,500. This was previously set at £11,000. If you want to see if you are eligible for CIS Tax Rebate, talk to us!

HOW LONG DOES A CIS TAX REBATE TAKE?

CIS tax Rebate is submitted along with your annual tax return. You will have to allow HMRC up till eight weeks for security checks and procedurals tasks before your refund is sent to you. It may take longer if it is a busy time of year or if there are unusual or complex circumstances attached to your individual case. This time scale takes assumption that all your records are complete.

The deadline for paper tax return submission is 31st October. You get additional three months up till 31st January if you are filing online tax returns. However, this is the deadline when HMRC must receive your tax returns along with payment and not when you send them. Missing deadlines can impact your Tax claims and refunds.

WHAT SHOULD YOU KNOW FOR FILING CIS TAX RETURNS?

In order for you to complete your CIS Tax Rebate Form completely, you need to know details of your income and expenses. You are advised to keep record for last six years minimum. Make sure all your records are complete in case HMRC asks you for additional evidence for any rebate claim. Incomplete record may render you ineligible for CIS tax rebate.

You will get all your income details from Pay slips or CIS statements from your contractor. Take into account your P45 or P60 also if you have a PAYE employment also. Bank statements are also very useful part of documentary records for CIS Tax Refund. You should also include details of any benefits that you receive. Any negligent reporting or misreporting will result in huge penalties.

Go in more depth with our previous publications WHAT IS A P60 FORM? WHAT DETAILS IT CONTAINS AND WHY SHOULD YOU SAVE IT

You will be required to provide evidence of your CIS subcontractor expenses. Allowable expenses will bring down your tax liability. Acceptable evidence may include receipts, bank statements, Mileage logs and MOT certificates. HMRC may render certain evidence as inacceptable but you have a right to appeal if you are willing to go in negotiation with the tax man.

And this is where you will need the help of an experienced accountant. How to calculate the CIS tax Rebate may seem easy in theory but in truth, it is very complicated. If you are looking for A CIS tax accountant, your search is at end now. Contact Certax Fitzrovia for accounting, book keeping, payroll and startup services. We also do tax consultancy, self assessments, CIS Tax Rebate and VAT returns.

Call us at +44 020 8004 4608 OR Email us at info@certaxlondon.co.uk

The post WHAT IS CIS TAX REBATE AND HOW TO CLAIM IT? appeared first on Blogs or News Offical Certax London.

For more information of Tax rates and tax allowances, take a look below:

INCOME TAX RATES

Few days back we published WHY CASH FLOW FORECASTING IS IMPORTANT FOR YOUR BUSINESS? be sure to read that.

A- is representing the Rate on non-dividend savings income up to “£5,000″ A is 0% where taxable nonsavings income does not exceed £5,000.

B- is the dividend allowance that successfully taxes the first £2,000 dividends received at 0%. Dividends beyond this limit are taxed at 7.5%, this is for the basic and standard tax rate taxpayers. For higher rate taxpayers 32.5% and for additional and trust rate taxpayers the tax is 38.1%.

C- Basic rate band that is raised by gross Gift Aid donations and personal pension aids.

D- the Scottish income tax and rate bands apply to earned, pensions and property income of Scottish taxpayers. UK income tax rates and bands apply to other income like savings and dividend income, of Scottish taxpayers. From 6 April 2019, the Welsh Government will set the Welsh rate of income tax that applies to earned, pension and property income of Welsh taxpayers in addition to the UK rates less 10%. Moreover, the Welsh rate on income tax at 10% for 2019/20, will be the same as those applying in England and Northern Ireland.

INCOME TAX ALLOWANCES

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A- Decrease by £1 for every £2 of income over £100,000.

B- Non-residents will not be allowed to personal allowances, in certain conditions.

C- Available to persons born before 6 April 1935. Relief limit is 10%. Reduced to minimum allowance by £1 for every £2 over the income limit. Minimum allowance reduced by £1 for every £2 income over £100,000 after applying personal allowance reduction.

D- £500 for a higher rate and £nil for additional rate taxpayers.

E- If gross income in excess of £1,000, a deduction of £1,000 instead of actual expenses is permitted.

Note High-income child benefit charge: 1% of the benefit per £100 of adjusted net income over £50,000: 100% of the benefit when adjusted net income is over £60,000.

PENSION CONTRIBUTIONS

Why don’t you try our online tax calculators to do the hard math work 🙂

A- Up to the lower of 100% of earnings or the maximum contribution. The maximum contribution is the annual allowance plus unused allowances from the three previous tax years. Up to £3,600 may be contributed regardless of earnings. Annual allowance reduced by £1 for every £2 income over £150,000 to a minimum of £10,000, and to £4,000 maximum if there are specific pension drawings.

CAPITAL GAINS TAX

See how our tax consultants help you out in the tax puzzles!

A- Gains on carried interest and chargeable residential property – 8% surcharge.

Note: Non-UK residents subject to capital gains tax (or corporation tax rate for companies) on the sale of UK residential property and, from 6 April 2019, non-residential property and certain disposals of interests in UK property rich entities.

Note: From 6 April 2019, certain disposals of UK land and buildings by non-residents must be reported and the tax rate for tax paid to HMRC within 30 days of sale. Similar rules will apply for certain disposals of residential property by UK residents from 6 April 2020.

INHERITANCE TAX

A- Additional residence zero rate band (RNRB) of £150,000 (2018/19 £125,000) for transfers of a main residence to direct children. NRB and RNRB for the estate of surviving wife/husband are increased by unutilised percentage of NRB and RNRB of the predeceased spouse. RNRB tapers away for estates over £2m.
B- Some lifetime gifts are taxed at 20%.
C- Tax rate decreased to 36% where up to 10% net chargeable estate is left for charity.

NON DOMICILED REMITTANCE BASIS USERS

Note: Certain returning former UK domiciled individuals, and non-domiciled individuals who have been resident in the UK in at least 15 of the previous 20 tax years, are treated as if UK domiciled for income tax, tax rate, tax allowances, capital gains tax and inheritance tax purposes.

NATIONAL INSURANCE CONTRIBUTIONS

If you are also working as a small business and wondering why outsource accounting services? See BENEFITS OF USING ACCOUNTING SERVICES

The first £3,000 of employer’s liability relieved by the employment tax allowances. From 6 April 2020, the employment allowance will only apply to companies with an NIC bill of less than £100,000. No employers NIC for employees aged under 21 (and apprentices up to age 25) on earnings up to £962 per week (the upper earnings limit).

Apprenticeship Tax rate at 0.5% payable on annual pay bills in surplus of £3m, net of £15,000 annual allowance.

INDIVIDUAL SAVINGS ACCOUNTS

Note: For Buying ISA – deposit limit £1,200, plus up to £200 per month.

TAX EFFICIENT SAVINGS AND INVESTMENTS

A- Income tax relief at 50%.
B- Income tax relief at 30%.
C- £1.5m for enterprises up to 7 years old.
D- Up to £2m for ‘knowledge – intensive’ companies.
E- Capital gains tax deferral on gains reinvested in EIS qualifying investments.
F- Capital gains tax exemption on 50% of gains reinvested in SEIS qualifying investments.

PROPERTY STAMP TAXES

3% supplement to above tax rates for second properties and all purchases above £40,000 by corporates, discretionary and certain other trustees.
Residential properties in England and Northern Ireland purchased by non-natural persons (enveloped properties) for more than £500,000 incur a flat 15% SDLT rate unless relief is available.
First-time buyer exemption from SDLT for purchases up to £300,000 and for the first £300,000 of purchases up to £500,000.
First-time buyer relief from LBTT for the first £175,000 of relevant property purchases.

Residential Leases

England and Northern Ireland – 1% on the present value of rents £150,001 to £5m, 2% above £5m.
Scotland – 1% on the present value of rents over £150,000.
Wales – 1% on the present value of rents £150,000 to £2m, 2% above £2m.
Note: The time limit for filing a stamp duty land tax return and paying the stamp duty land tax liability is reduced from 30 to 14 days for transactions with an effective date after 1 March 2019

ANNUAL TAX RATE ON ENVELOPED DWELLINGS

Note: Prior to 1 April 2019, gains on disposals of property within the Annual Tax Rate on Enveloped Dwellings regime subject to capital gains tax at up to 28%.

CORPORATION TAX AND DIVERTED PROFITS TAX

A- Withheld at the source.
B- Applies to profits of large entities diverted from the UK as a result of an avoided permanent establishment or transactions which lack economic substance.

We presented a list of 6 TAX DEDUCTIONS FOR SAVVY SMALL BUSINESS OWNERS to assure their business is tax-efficient.

PATENT BOX

A- Nexus based regime operates from 1 July 2016. Previous regime available until 2021 if opt-in the election made for patents registered by 30 June 2016.

RESEARCH AND DEVELOPMENT TAX ALLOWANCE RELIEF

A- Additional (enhanced) tax deduction available for qualifying R&D expenditure.
B- From 1 April 2020, the payable R&D tax credit in any tax year is restricted to three times the company’s total PAYE income tax and NIC liability for the year.
C- Taxable credit available on qualifying R&D expenditure. 

CAPITAL TAX ALLOWANCES

A- Maximum annual investment allowance £1m pa from 1 January 2019 to 31 December 2020 (£200,000 pa to 31 December 2018 and from 1 January 2021).
B- Reducing balance.
C- Available for: research and development (no time limit); enterprise zone (assisted areas) until designated dates between 31 March 2020 and 16 March 2024; energy saving and environmentally beneficial (water efficient) technologies until 31 March 2020/5 April 2020; brand new low emission cars and gas refuelling stations until 31 March 2021; zero-emission goods vehicles until 31 March 2021/5 April 2021; and electric vehicle charge points until 31 March 2023/5 April 2023.
D- Expenses on non-residential structures and buildings on construction contracts entered on 29 October 2018 and so on.

Few weeks back we discussed TAX DEBATE: COMPANY CAR OR CAR ALLOWANCE?

VALUE ADDED TAX

A- Taxable turnover calculated through the reference to the last 12 months or next 30 days.

DIGITAL SERVICES TAX

STAMP DUTY

Consideration on shares over £1,000 | 0.5%

AUTHORISED MILEAGE RATES

CAR AND FUEL SCALE BENEFITS

Notes:
Electric Vehicles Benefit 16%.
Diesel vehicles meeting the RDE2 standard will be discharged from diesel supplement and the above petrol rates apply for such vehicles.

The post TAX FACTS 2019- EVERYTHING YOU NEED TO KNOW ABOUT THIS YEAR’S TAX RATE AND ALLOWANCES appeared first on Blogs or News Offical Certax London.

The Chancellor kept saying that this budget would will be dedicated to the most hardworking individuals, families and the government’s goal was to raise wages, employment and growth.

Budget 2018 Summary  

IR35

IR35 is a tax legislation planned to fight against tax avoidance by those employees who are selling their services to the clients through a third party more like a limited company. But, in reality, they are fulfilling all the services in the same ways as an employee. In case, if you are categorized as an employee then you pay a bit more employment taxes.

In order to bring some fixes into this activity, HMRC brought changes to IR35 in the public sector in April 2017. The changes moved responsibilities in making IR35 status taxations from the limited company (i.e. the worker) to the agency and the final client.

However, after some issues, the government finally come up with an idea to proceed with caution.

The Private Sector IR35 Planned Changes:      

• Businesses will be accountable for evaluating an individual’s employment status.
• The reform won’t be allowed to apply to the minimum 1.5 million businesses, also won’t apply to large and medium business which takes too long to adjust with the changes being announced in April 2020.
• Medium and Large businesses will need to apply IR35 rules to the individuals working through their own company. This will be implemented from 6^th April 2020.
• Where it’s determined that the rules do apply, the business, agency or third party that pays the individual’s company will need to deduct income tax and employee NICs and pay employer NICs
• HMRC won’t perform targeted campaigns into preceding years when people start giving employment taxes supporting IR35 for the first time following the reform, and businesses’ decisions regarding whether their workers fall within the IR35 rules
• HMRC will continue working with stakeholders to recognize the enhancements for checking employment status for tax and other formalities to ensure that the reform is meeting the needs of the private sector. In Addition, improvements will be tested with stakeholder and other legal experts before execution.

Higher Tax Rate and Personal Allowance Threshold Increase

It is expected that the rate at which individuals will start paying income tax will increase from £11,850 to £12,500 in April 2019. Since, changes are anticipated therefore, announced a year earlier.

Likewise, the higher rate Income Tax threshold will face an upsurge from £46,350 to £50,000 in April 2019.

The Dividend Allowance

For the individuals looking for the news about tax-free dividend allowance, the update is that the tax-free dividend allowance will remain unchanged at £2,000.

National Insurance              

Up till now, there are no anticipated changes for National Insurance or the related rates. However, it’s been expected that this could be re-examined in the future budgets.

Pensions and savings 2019/20:

Lifetime allowance for pensions:

The lifetime allowance for pension savings increases in line with CPI for 2019/20, rising to £1,055,000 (2018/19: £1,030,000).

Savings Starting Rate

Remain unchanged, the band of savings income that is subject to the 0% starting rate will be kept at its current level of £5,000 for 2019/20

Individual Savings Account ISA

The subscription limit for the adult ISA will be unaffected at £20,000. The junior ISAs 2019/20 will sooner be update in line with CPI to £4,368 (2018/19: £4,260).

Child trust funds:

The government will issue a session in 2019 related to draft regulations for the purpose of maturing child trust fund accounts. Child trust funds for 2019/20, annual subscription will be updated with CPI to £4,368 (2018/19: £4,260).

The National Living Wage

A slight increase will be appear In the National Living Wage i.e by 4.9% t

Business Taxes and Relief

Corporation Tax

Financial year 2019 (start 1st April 2019) = 19% Financial year 2020 (start 1st April 2020) = 17%

Entrepreneurs’ Relief

Entrepreneurs Relief (ER) will be prolonged from 12 to 24 months from 6^th April 2019. (Qualifying conditions)

He also claimed that in addition to current rules on share capital and voting rights, shareholders will be entitled to a minimum 5% of the distributable profits and claimed net assets of the company

R&D Relief

No changes were announced for R&D relief.

Annual Investment Allowance (AIA)

He announced Greater capital investment incentives.

Companies can claim £1 million as AIA for spending occurred from January 1^st 2019 to 31^st Dec 2020.

Business rates

Those companies which are comprising business rates of value

Business rates for companies with a value of £51,000 or less will be reduced by a third over two years.

Other duties and allowances

Fuel Duty

Fuel duty remain unchanged for the ninth sequential years.

Stamp Duty Land Tax: relief for first-time buyers

A relief has been announced to an estimated value of £500,000 from 22 Nov 2017. Those who are eligible but have not claimed previously, will be able to adjust their return to claim a refund.

Capital gains tax: letting relief

The government will reform lettings From April 2020, it only applies in conditions where the owner of the property is in shared tenancy with the tenant.

Making Tax Digital (MTD)

No changes were proclaimed to the VAT threshold of £85,000, the introduction of MTD for VAT registered businesses remains a reality.

VAT and Brexit

Brexit is the only thing that’s been mentioned just for once in the whole year.

Previous HMRC guidance shown that a ‘no-deal’ Brexit’, UK VAT-registered businesses importing goods into the UK will be eligible to add import VAT on their VAT return.

In you are a freelancer, small business or startup, don’t hesitate to contact Certax London. We can help you with tax and accounting services with free consultation.  Contact Certax London today for more information.

The post 2018 BUDGET HIGHLIGHTS AND ITS EFFECTS ON SMALL BUSINESS appeared first on Blogs or News Offical Certax London.

So, if you are in a trouble deciding which option to choose between a company car or a car allowance then this guide will helping you know pros and cons of both options.

Why Car Allowance is Better?

A number of people are considering car cash allowance rather than a company car this means you can use your personal vehicle and in return receive a mileage based cash incentive from your employer. This is called Inland Revenue Authorised Mileage Rate (IRAMR).

Most of the employees enter into the PCP agreement while receiving a car allowance. The sum of taken out credit for the PCP particularly covers the depreciation of the vehicle over the duration of the agreement, rather than its full value.

This helps to reduce the monthly cost, also it bounds the employee in a fixed term agreement covering several years which can represent a threat to those whose employment is not considered safe.

Just when the agreement duration reaches to an end, the employee is free to either handover keys back or purchase the vehicle or enter into a new PCP agreement.

Meanwhile, employees have the right to claim back business mileage from employer or against their incurred income tax bill.

However, regardless of the tax flexibility and efficiency, The HMRC report 2017 released that the number of employees paying company tax has reached a five-year high.

In comparison with a PCP deal, the company car provides more security and the driver is not required to worry about issues like car maintenance, insurance, service cost and etc.

From a different tax viewpoint, instead of being taxed on the value of cash allowance, the employees are taxed on the basis of a theoretical value of the benefit, a combination of the list price and vehicle’s emission etc.

Calculating the Benefit Tax

Benefit in Kind – BIK – is one of the main obstacles to a company car. It’s a tax based on the fact that you will use the car for personal use. That is a benefit in kind, and the rate of tax depends on the car’s P11D price, itself depending on the car’s CO2 emissions.

Since the P11D price is the value of the car’s list price plus VAT, plus delivery and all options over £100, you can work out the P11D price. Multiply that by the percentage that applies to the CO2 emissions, then multiply that by your income tax band – 20% or 40%.

What if I own my own company?

The decision changes a lot if you own your own company and the tax consideration vary intensely based on your individual circumstance and the car you want to drive. Low emission vehicles attract enhanced allowances too so, selecting the right car is very important.

In addition, VAT registered businesses may be able to claim back some of the VAT consumed on the lease costs or purchase price too.

Moreover, the company car scheme affects whether drivers go for a company car or a personal lease deal.
In case, if this structure is not organized properly then people start looking for PCPs along with their cash allowance. Somehow it allows them more manufacturer choice and therefore greater flexibility

The post TAX DEBATE: COMPANY CAR OR CAR ALLOWANCE? appeared first on Blogs or News Offical Certax London.