 |
Welcome...
To January's Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.
Please contact us for advice in your own specific circumstances. We're here to help!
|
|
|
|
|
| Tax changes to progress to law in the new year |
top |
|
The 2024-25 Finance Bill is on course to complete in the new year. This will enact the many tax measures announced in the Autumn Budget into law.
The Government has published an official document entitled 'Overview of tax legislation and rates', detailing the main changes set to take effect following the Chancellor's announcements on 30 October. Within the core parts of the paper is the setting of rates and thresholds for Income Tax, Corporation Tax, Inheritance Tax and Capital Gains Tax - the latter two of which were among the biggest reforms in the Budget. Reforms to tax rules for alternative finance and carried interest, also feature.
The bill has reached the committee stage in Parliament and is on track to become legislation in the coming weeks.
One of the areas of tax that received very little attention at the Budget but is contained within the draft legislation is the reduction of tax-free overseas transfers of tax-relieved UK pensions.
According to Government papers, this will 'remove the exclusion from the Overseas Transfer Charge of transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) established in the European Economic Area and Gibraltar, where the member is resident in the UK or an EEA state'.
The consequence of this change is that pension transfers from 'tax relieved UK pensions to QROPS in the EEA and Gibraltar will now be subject to a 25% charge, unless another exclusion applies'.
The measure will apply, backdated in effect, from 30 October 2024.
One of the key exceptions to the bill in terms of how it affects people across the whole of the UK relates to taxpayers in Scotland and Wales. For Scottish taxpayers things are a bit different, with income tax rates and limits set by the Scottish Parliament, rather than by the UK Government at Westminster. And it's also worth noting that UK rates are reduced by 10 pence in every £1 for Welsh taxpayers. Income Tax for non-savings and non-dividend income for people in Wales is set by the Welsh Parliament.
|
| |
| Self-Assessment scammers warning as January deadline nears |
top |
|
It's sadly become all too common a trend in recent times, that the Self-Assessment Tax Returns deadline has become a time for criminals to exploit and target.
Attempts to scam the self-employed and others filling out their forms before the 31 January are ramping up, officials have warned.
In particular, taxpayers have been cautioned to look out for so called 'refund scams'. Watch out for emails that take this approach.
HMRC received nearly 150,000 referrals about possible scams in the last year. Around half of all scam reports (71,832) in the last year were fake tax rebate claims.
And it seems to be rising more and more as we approach the key deadline, with a reported 16.7% increase in all scams flagged to the tax man. Some 144,298 came between November 2023 and October 2024, up from 123,596 in the previous 12-month period.
The target for fraudsters is huge: there are millions of people due to complete their tax return and pay their taxes before 31 January.
In a statement, HMRC warned: 'Fraudsters are targeting people with offers of tax refunds or demanding payment of tax to get hold of personal information and banking details.
'HMRC will never leave voicemails threatening legal action or arrest, or ask for personal or financial information over text message - only fraudsters and criminals will do that.'
Kelly Paterson, Chief Security Officer at HMRC, said: 'Being vigilant helps you spot potential scams. And reporting anything suspicious helps us stop criminal activity and to protect you and others who could have received similar bogus communication. Our advice remains unchanged. Don't rush into anything, take your time and check 'HMRC scams advice' on GOV.UK.'
Further advice from HMRC:
- If you are contacted by someone claiming to be from HMRC and they ask you for their personal information a tax rebate, check the advice on GOV.UKto help identify if it is a scam
- report suspicious 'phishing emails' to phishing@hmrc.gov.uk
- report tax scam phone calls to HMRC on GOV.UK
- forward suspicious texts claiming to be from HMRC to 60599
- HMRC will not contact you by email, text, or phone to announce a refund or ask you to request one
- Anyone due a refund can claim it via the online HMRC account or app
|
| |
| Treasury coffers swell from IHT bills - even before imminent reforms set in |
top |
|
Reforms to Inheritance Tax were arguably among the most contentious measures that Rachel Reeves announced during her Autumn Budget.
We've seen farmers staging significant protests in London regarding changes to how agricultural properties are taxed when it comes to IHT.
But it seems that IHT receipts are rising swiftly even before any of the proposed changes can take effect.
Compared to the same half-yearly period last year, the Treasury took in £0.6bn extra in April to November 2024. That's according to new figures released by HMRC.
With these latest numbers, it appears that IHT continues to be on course for a record year of receipts. Analysts have noted that in total this year, before December's figures are announced, IHT receipts are already more than half a billion pounds higher than 2023. Commentators are predicting that with the changes to come as well, that the amount of IHT reaching Treasury coffers will keep on increasing in the next few years.
Another noteworthy figure that has been recorded in the media regarding the latest stats is that gross tax and National Insurance receipts for April to November 2024 rose by £15bn compared to a year ago. This figure included the IHT receipts.
|
| |
| Stamp Duty tax receipt trends revealed in new reports |
top |
|
Among the changes we saw at Budget 2024 related to Stamp Duty - the tax you pay when you buy a new property.
And a raft of new statistics has been released in the last couple of weeks, suggesting a significant trend downwards in terms of the amount of money the Treasury is receiving from this form of tax in the last couple of years. But on the flip side, other figures show signs of an increase in the later part of 2024.
The higher rates for people owning more than one home - and for companies, is set to rise from 3% to 5% above the standard residential rates, following the Chancellor's Budget in October. The single rate of Stamp Duty Land Tax (SDLT) payable by companies and 'non-natural persons' buying homes for more than £500,000, will also go up from 15% to 17%.
In its latest annual report, the Government revealed that total stamp tax receipts fell between financial year 2022-23 and 2023-24. There was a 23% drop - falling from £19.13 billion to £14.81billion. And SDLT receipts fell from £15.36billion to £11.61billion from tax year 2022-23 to 2023-24 - a reduction of 24%.
The latest quarterly figures for 2024 were also released, showing a rise in the latter part of the year for total SDLT transactions. They were 15% higher than in Q3 2024 (July to September) than the previous quarter, and 8% higher than in Q3 2023. This report also showed residential property transactions in Q3 2024 were 17% higher than in the previous quarter, and 9% higher than in Q3 2023.
In terms of total SDLT receipts, in Q3 2024 these were 14% higher than in the previous quarter, and 6% higher than Q3 2023. Residential property receipts in Q3 2024 rose by 20% compared to the previous quarter, and were 5% higher than Q3 2023, according to the Government data.
And, finally, additional figures showed that about £1.31bn was paid in SDLT in November, slightly lower than the £1.35bn intake in October.
|
| |
| January Questions and Answers |
top |
|
Q: I use various online marketplaces to sell my unwanted items - from clothes to old phones and various other things. I'm a bit concerned though by stories I've read in the media that rules are changing and I may have to start filing a tax return. That's not something I've ever had to worry about before. Can you help me understand if my fears are justified?
A: There has been a lot written in the papers over the last year or so about this issue and, with the angle that we see often taken in these reports, it's understandable that people like yourself could feel worried about the implications. Millions of people do what you do. It's become an everyday activity to sell second hand things online.
However, HMRC has become so concerned itself about what it feels are misleading stories in the press, that it's recently issued a long statement to try to reassure and clarify the matter.
The HMRC website stated: 'People selling unwanted items online can continue to do so with confidence and without any new tax obligations.'
The reason these concerns have arisen is due to the fact that a new process is taking effect in January. It means online platforms have to share certain sales data with HMRC.
These new measures 'generated inaccurate claims that a new tax was being introduced,' officials said, adding that 'absolutely nothing has changed for online sellers'.
However, you and others do need to be aware that if you're buying goods for re-sale or make things with the intention of selling for profit and you garner a total income from this activity of over £1,000 in one tax year (before deducting expenses), you may need to register for Self-Assessment and fill out a tax form.
HMRC stated: 'Those who sold at least 30 items or earned roughly £1,700 (equivalent to €2,000), or provided a paid-for service, on a website or app in 2024 will be contacted by the digital platform in January to say their sales data and some personal information will be sent to HMRC due to new legal obligations.'
Angela MacDonald, HMRC's Second Permanent Secretary and Deputy Chief Executive Officer, had this to say: 'We cannot be clearer - if you are not trading and just occasionally sell unwanted items online - there is no tax due. As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for Self-Assessment.'
So, whilst it's worth looking again at the criteria above that may mean you're in need of registering, it sounds as though, as for many people around the country, you don't need to be concerned or change your habits in this regard.
Q: I have recently started a business which offers consultancy for building and engineering. I'm running the business side for my new partner, who is the building consultant. So, I'm not the expert in the field and I'm trying to get a fuller understanding of our potential obligations with regard to the Construction Industry Scheme (CIS) and the need for registration. Can you provide any guidance?
A: For most people in the building and construction industry, the CIS is a key piece of regulation that is very important to understand and comply with. It is mandatory for constructors to register for the CIS. However, there are a number of exceptions, depending on certain roles and types of function.
The work of certain professionals may be excluded, meaning they do not have to be registered for the scheme. However, this is the case 'only if they are acting purely as consultants', according to the HMRC guidelines, which adds: 'Typically, this would include the production of designs, plans, technical assessments and reports relating to construction projects including site testing.'
Furthermore, under 'operations excluded', HMRC lists 'professional work of architects, surveyors or consultants in building, engineering, decoration (interior or exterior) or landscaping.'
Looking at these guidelines, it would appear your new venture would fall outside of the requirements of the CIS and you and your partner would not need to register. However, it is wise to be cautious because the guidelines also state the following: 'Any work that goes beyond a consultative or advisory role and becomes the supervision of labour or the co-ordination of construction work using that labour is not excluded from the scheme.'
So, if your partner feels their work is broader, at any time or to any extent, than simply consultancy, it's certainly worth seeking more detailed advice.
Please give our team a call if you'd like to explore the regulations and compliance more deeply.
And for anyone else in a similar position, it's worth noting that there are a few other examples of exceptions in the CIS where you do not have to register if you only do certain jobs. These include:
- architecture and surveying
- scaffolding hire (with no labour)
- making materials used in construction including plant and machinery
- delivering materials
- carpet fitting
- work on construction sites that's clearly not construction - for example, running a canteen
Q: I'm in the process of starting a new business and want to ensure I'm fully prepared for upcoming compliance changes. I'm aware requirements for reporting benefits in kind (BiKs) are changing, but how will it affect small businesses like mine? Specifically, do I need to report loans or accommodation benefits immediately?
A: There was some news around this topic at the beginning of 2024, with the Government releasing proposals to make it compulsory to do this type of reporting by using software.
The announcement at that time stated employers will be required to report and pay Income Tax and Class 1A NICs on most BiKs in real-time on the 'Full Payment Submission'.
However, don't fret; it's not immediate. The intention was to begin in April 2026, giving everyone some breathing space. But an update from the new Government means that it now looks like there should be a further cushion before compliance becomes strictly enforced. The mandatory use of payroll software will now be phased in from April 2026.
And, pertinent to your question on loans, you won't have to payroll loans and accommodation at that stage.
For those who want to on a voluntary basis, you'll be able to report employment-related loans and accommodation through payroll software from April 2026.
As to when payrolling loans becomes mandatory, HMRC had this to say in a December bulletin: 'no decision has been made as to when we will mandate the reporting of loans and accommodation through payroll software - careful consideration will be given to make sure sufficient notice of any change will be provided.'
In the meantime, if employers do not wish to payroll these, there will be a modified P11D and P11D(b) available.
There is likely to be further news in the new year, with officials promising information on plans to publish draft legislation and technical specifications.
|
| |
|
|
19th
- For employers operating PAYE, this is the deadline to send an Employer Payment Summary (EPS) to claim any reduction on what you'll owe HMRC
22nd
- Deadline for employers operating PAYE to pay HMRC. This is also the quarterly deadline for businesses that pay per quarter.
31st
- Deadline for filing Self-Assessment Tax Returns online
- Deadline paying any tax owed to HMRC for those doing online returns
|
| |
|
|
|
|
Please contact us if we can help you with these or any other tax or accounts matters.
In addition, if there's anyone else who you think would benefit from the newsletter, please forward the email to them or ask them to contact us to be added to the newsletter list.
|
If you are not already a client and are interested in becoming one, we would love to come to meet with you to discuss how we can help and provide you with a competitive quote for our services.
All new client consultations are provided free of charge and without obligation.
|
| |
If the images do not show.
If the images contained within this email do not show correctly please add this email to your safe senders list.
|
| |
|
|
