Monthly Archives: November 2019

Countdown to the 31 January Self-Assessment Tax Return deadline begins

Fewer than 100 days now remain until the 31 January 2020 deadline for the online submission of Self-Assessment Tax Returns.

Self-Assessment Tax Returns must be completed in respect of most income that has not been subject to PAYE. This includes the following groups:

  • Self-employed individuals
  • Sole traders
  • Partners
  • Individuals in receipt of rental income
  • Individuals in receipt of tips and commission
  • Those with income from savings, investments and dividends
  • Individuals in receipt of overseas income

Additionally, this year, people who are liable for the High Income Child Benefit Charge (HICBC) may need to file a Self-Assessment Tax Return. This generally applies to people with an income of £50,000 or more.

Anyone who misses the 31 January deadline for online filing and payment will be subject to penalties from HM Revenue & Customs (HMRC) beginning at £100.

Angela MacDonald, HMRC Director General for Customer Services, said: “The deadline for completing Self-Assessment Tax Returns is only 100 days away, yet so many of us wait until January to start the process. Avoid the last-minute rush by completing your tax returns on time and then enjoy the upcoming festive period.

“We want to help people get their tax returns right – starting the process early and giving yourself time to gather all the information you need will help avoid that stressful, late rush to file.”

Link: 100 days to self-assessment tax return deadline

Grant scheme opportunities for electric vehicle charging infrastructure at work

With the projected growth of electric car ownership in coming years, the Government is offering grants to support businesses who introduce charging infrastructure at their place of work.

Provided by the Office of Low Emission Vehicles (OLEV), the Workplace Charging Scheme (WCS) is a voucher-based grant that offers support to companies with the up-front costs of the purchase and installation of electric vehicle charge-points.

The grant is available to eligible businesses, charities and public sector organisations and is limited to the 75 per cent of purchase and installation costs, up to £500 for each socket, for a maximum of 20 sockets across all sites for each applicant.

In order to apply for vouchers, businesses have to complete a form, which can be found here.

If a business completes and passes eligibility checks they will be issued with a unique identification voucher code via email within five days, which can then be given to any OLEV-authorised WCS installer.

Unfortunately, any infrastructure installed before a voucher has been issued will not be eligible and claims via the scheme must take place within four months of the date of issue. Any grant claim linked to expired vouchers will not be approved.

Businesses can apply for subsequent vouchers for additional charge-points and sites after an initial installation, as long as their cumulative total does not exceed 20 sockets.

Under the rules of the scheme, applicants will have to maintain the charge-point for a minimum of three years and ensure measures are in place to provide usage data to OLEV.

Under the requirements of the scheme, all charge-points will have a minimum three-year warranty on parts and installation from the charge-point manufacturer.

The Government is currently in the process of legislating a tax exemption in relation to employees who charge their own electric and plug-in hybrid vehicles at work, which will have the effect that the value of the electricity used will not be taxed as a benefit-in-kind.

Link: Grant schemes for electric vehicle charging infrastructure

Spanish holiday home owners cautioned over post-Brexit tax impact

With the UK currently set to leave the EU by the end of January 2020, anyone who owns a Spanish holiday home needs to be prepared for the impact of Brexit on taxation.

Spanish tax law makes specific provision for EU/EEA residents that benefits people living in member states over others from outside the EU bloc. In some cases, this is expected to lead to a considerably increased Spanish tax bill.

The changes Spanish holiday home owners are likely to face include:

  • Higher tax on rental income with no deductions allowed in respect of costs
  • Higher tax on deemed rental income
  • Compulsory use of the state system for inheritance
  • Loss of capital gains tax benefits
  • Loss of deferral on exit tax
  • New 10 per cent tax on dividend paid to a UK company that owns less than a 10 per cent share of a Spanish company

If you have a Spanish holiday home, it is vital that you start planning for the effects of Brexit now.

Link: How Brexit will affect the taxation of Spanish holiday homes

Businesses and contractors offered clarity on IR35

With less than six months left until the introduction of the IR35 regulations in the private sector, HM Revenue & Customs (HMRC) has finally released additional guidance to help clarify this complex area of taxation.

From 6 April 2020, the off-payroll rules (IR35) are going to be extended across the private sector bringing large and medium-sized companies under the regulatory framework that is currently in place in the public sector.

Under the changes it will be the responsibility of engagers to decide the employment status of a contractor who supplies their services via a personal services company (PSC).

One key development from HMRC’s latest off-payroll rules update, which sets out the approach to the operation and enforcement of the new regulations, is that the new rules can only be applied retrospectively in cases of suspected fraud or criminal behaviour.

The Association of Taxation Technicians (ATT) has welcomed the move saying that it removes any ambiguity in regards to whether HMRC could use a change of status as a reason to enquire into a contractor’s tax affairs from previous years.

In its recent publication, HMRC also announced that it would launch an enhanced version of the check employment status for tax (CEST) tool before the end of the year, following criticism of its existing system.

Introduced in 2017 to assist with the determination of employment status, and therefore a person’s tax treatment, the CEST requires users to complete a set of step-by-step questions.

However, subsequent legal cases regarding status have led to questions about CEST’s effectiveness after it was shown to conflict with the Courts’ rulings. In fact, CEST has proved to only be accurate in 85 per cent of cases and HMRC has conceded that a minority of employment cases can be less straightforward and require one-to-one support from specialist advisers.

HMRC has estimated that only one in 10 people, outside of the public sector, who should be paying tax under the current off-payroll working rules are doing so correctly and it believes that the IR35 reforms will raise an additional £3 billion in tax over the next four years.

Link: Working through an intermediary (IR35)

Pension holders to be refunded £54 million of overpaid tax

New figures released by HM Revenue & Customs (HMRC) have revealed that it handed back more than £54 million to people who had overpaid tax on pension withdrawals in the last three months alone.

The latest quarterly data for 1 July 2019 to 30 September 2019 is the highest figure since pension freedoms were introduced in 2015.

HMRC processed 10,379 P55 forms for flexibly accessed pension overpayments, along with 5,253 P53Z forms for small pension lump sums and 1,753 P50Z applications in this time.

As a result of this, HMRC was required to pay out a total of £54.97 million and it means that the total amount of ‘emergency tax’ on withdrawals, which has since been repaid to savers is now £535 million.

Former Pensions Minister, Steve Webb, said: “Even by their own low standards, HMRC has outdone itself the last three months, taking more than £54 million of savers’ money in income tax to which they were not entitled.

“It cannot be right that tens of thousands of people each year have too much tax taken out of their pension and then have the hassle of filling in a form to get back money that is rightfully theirs.”

Overpayments tend to arise due to how the current rules are laid out. Currently, when someone makes a pension withdrawal, HMRC assumes that they will go on to make more withdrawals in the same tax year.

This may mean that some people are pushed into a higher tax bracket under emergency coding. In order to recoup this money, pensioners are required to complete either a P55, P53Z or P50Z form.

Link: Claim a tax refund when you’ve taken a small pension lump sum / Claim a tax refund if you’ve stopped work and flexibly accessed your pension / Claim back a flexibly accessed pension overpayment

Newly cohabiting parents warned over new tax charge

Newly cohabiting couples, where at least one of the partners is a parent, have been warned by a leading insurer to be aware of a new tax charge, if either earns more than £50,000 a year.

NFU Mutual has said that cohabiting couples need to be aware of the High Income Child Benefit Tax Charge, which sees Child Benefit payments made to either the high earner or his or her partner recouped progressively on income between £50,000 and £60,000.

Notably, the charge applies regardless of whether the higher earner is the parent of their partner’s child and regardless of whether the couple is married, civil partnered or cohabiting.

Another feature of the charge is that it applies to one partner’s income, meaning that a couple with a combined income of nearly £100,000 would not be subject to the charge, while a couple with an income of £50,000 from only one partner would be subject to the charge.

While parents can opt-out of receiving Child Benefit, stay-at-home parents of children aged up to 12 can qualify for National Insurance credits that contribute towards their entitlement for the state pension.

Link: The hidden tax bill a new partner could bring