General & Tax Notes

REMEMBER: If you are sent a notice to complete a tax return then you must do so.
If you do not, there will be a penalty even if you owe no tax.


RECORD KEEPING CHECKS by HMRC
Since 2011 HMRC have decided that they are going to take a close look at the way individual business's records are kept. If they are not satisfied then penalties will result, even before they decide whether there are any penalties for undeclared income.
They are looking at primary records in particular. If you are concerned by this then please get in touch immediately.

HMRC Investigations - Be aware that the Revenue are in a position to cross check all the main taxes with ease since VAT came within HMR&C. Businesses in particular should be aware that if an investigation starts it could cross between Income or Corporation Tax, PAYE and/or CIS and VAT.

If HMRC advise they are making a visit - You must advise us immediately, because we probably will not be advised of the visit, so that we can, at the very least, advise you on what they can and cannot do, and how to deal with questions.


Personal Tax:- Tax Rates and Allowances
The tax rates and allowances for 2016/17 are:
Personal Allowance: £11,000;.
Blind Person's Allowance: £2,290
Married couples allowance if either partner born before 6-4-1935: £8355.
The married couples allowance is subject to a deduction if the income limit of £27,700 is exceeded.
And the rates of tax remain 20% and 40% (7.5% and 32.5% for dividend income) for incomes below £150,000 and 45% above that. The link for Rates and allowances - Income Tax only is www.gov.uk/income-tax-rates

For those on incomes above £150,000 then the additional rate of income tax will be 50% on income over £150,000, with a rate of 42.5% for dividends; and the value of the personal allowance will be restricted for those with incomes over £100,000, tapering down to zero.
For those who will be affected, their personal allowance will be reduced by £1 for every £2 that their income exceeds £100,000 until the personal allowance is reduced to Nil. The point at which the personal allowance is fully reduced is £122,000 for 2016/17.

Trusts
The rates of income tax on discretionary trusts is dependent on total income.
See: www.gov.uk/trusts-taxes

Corporation Tax
For 2016 the rate is 20%.
See: www.gov.uk/corporation-tax-rates


New Equipment and Repairs & Renewals
Do not forget if you are in business and are looking to replace or buy additional equipment, or to undertake repairs etc, then to do so before your accounting year finishes in order to get the tax reliefs as soon as possible. The Revenue are now attempting to classify what counts as repairs, and you may find that what you thought was a repair is not seen by them as being so. If you are going to spend a lot on repairs please discuss it with us before you spend any money.
The Capital Allowance rules in respect of new equipment etc are now quite different and if you are in business and thinking of buying a high value item you need to discuss in particular the timing of the purchase with us. There are also other factors that need to be taken into account particularly if you run more than one business.

Purchase of New Equipment and or Buildings and the new Capital Allowances Provisions
If you are proposing to purchase any expensive new fixed assets then it is important to discuss the timing of the purchase with us now. Timing in tax terms could be crucial in getting the most tax relief.


Charitable Giving
If you are a taxpayer you can assist charities by making a gift aid declaration when you make a gift to them. The charity benefits by claiming £25 back of tax on every £100 of gifting. If you are a Higher Rate tax payer you should endeavour to gift this way as you can claim additional tax relief depending on your top rate.


Let Property
If you spend money on energy-saving items there may be a special allowance available.

Guidance about your tax obligations and how to work out your rental income if you rent out properties in the United Knigdom can be found here: www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income.


Capital Gains Tax
We are now in a different set of rules when it comes to Capital Gains Tax and it would be advisable to discuss your plans with us if you intend selling any high value asset(s). The allowance for 2016/17 is £11,100 of gains per person. Tax is at 10% if a basic rate tax payer, but at 20% if in a higher rate of tax.
See: www.gov.uk/capital-gains-tax


National Insurance
The links below take you to the HMRC main web page and also the list of rates:
www.gov.uk/national-insurance-rates-letters
If you are a new business with employees, you may be entitled to claim relief on contributions. See this link: www.gov.uk/claim-employment-allowance
Workplace pensions are being introduced. Some helpful guidance can be found at the web address below. This is important, whether you have reached pension age or not, and we recommend you take a look at the proposed changes.
www.gov.uk/workplace-pensions


Pensions and State Pension
From April 2016 the new system comes in for those becoming entitled.
Have you had any communication at any time about your pension entitlement? If not it is vitally important to make sure your contributions to the State Pension are fully paid up, if at all possible. So if you get advised you are short of contributions please get in touch to discuss the matter. You can find out whether you have paid enough NICs by asking for a pension forecast from the Department for Work and Pensions on form BR19. You can ask for a forecast on line at www.gov.uk/state-pension-statement. The need to make provision for a private pension is now more important than ever now that the pension age is being slowly increased, particularly if you wish to retire early.
Any woman born after 5th April 1950 will need to check their retirement date for State Pension.
www.gov.uk/state-pension-age


State Pension Topup
Up until the end of March 2017, for those already drawing state pension, it will be possible to topup the weekly sum if you pay in a lump sum..
If you go online to: www.gov.uk/state-pension-topup


Tax Credits
Those on low incomes need to check carefully their eligibility. If you think you might be eligible ring the number shown below or get in touch with local Citizens Advice Bureau (CAB). If you are an internet user read the information available at the site shown below. You can either complete the form on the internet or send for a paper copy.
http://www.hmrc.gov.uk/taxcredits or by telephoning 0345 300 3900 and requesting the papers be sent to you. Anyone benefiting from tax credits must remember to advise the authorities if their financial circumstances change suddenly.


Inheritance Tax
No major changes recently, but remember that any unused part of a personal allowance ( currently £325,000 ) is transferable to a surviving spouse. Remember to use your annual allowance this year if you are in a position to do so, that being £3,000 or £250 gifts to separate individuals. If you did not use or only partly use the £3,000 exemption in 2015/16, you can make inheritance tax free gifts of up to £6,000 before 6 April 2017. If you intend to make a substantial life time gift, making use of the seven year rule, then it would be prudent to put it into effect promptly, but if you do so you should advise your Solicitor. Another rule that they have looked at removing is that of “Deed of Variation”, which allows the beneficiaries of an estate to change the distribution of the estate in order to take advantage of all reliefs available, and this must be done within two years of the date of death. See:-
Inheritance Tax
Since 6th April 2012 there will be an additional allowance if 10% of an estate is left to charity. The allowance will be in the form of a tax deduction.


COMPANIES HOUSE AND INLAND REVENUE PENALTIES
These have all been changing for the worse in the last year or so. It is therefore important to remember any deadline you are advised of.


Company Stationery
Could we bring to your attention, in case you are unaware of the rules, the information that must be shown on all Company stationery. This is a legal requirement and the details can be found at :-
www.gov.uk/running-a-limited-company/signs-stationery-and-promotional-material

Limited Companies - Managed Service Company Schemes
The rules relating to their taxation etc have changed and it is important that they are understood before setting up such a company.


Fees Insurance in the Event of an Investigation by the Inland Revenue
This type of insurance has been around for some years and the cover has improved. The cover provided is for professional fees arising during an investigation, which can be substantial, particularly if it turns out that the Returns submitted were incorrect. This insurance will cover such fees, but not the tax that may be due. If you are interested in getting this type of cover please get in touch.

You can obtain a wealth of information from the various Government Web Sites.
The following sites may be of a help.
UK Government online http://www.direct.gov.uk
HM Revenue & Customs http://www.hmrc.gov.uk/