0 comments on “Requirement to Correct (RTC) deadline 30 September 2018”

Requirement to Correct (RTC) deadline 30 September 2018

Many taxpayers may find themselves with penalties of 200% of the tax due if they have not brought their tax affairs up to date by 30 September 2018.

The government have given taxpayers until 30 September 2018 to come forward about any undisclosed income and capital gains from offshore sources to 5 April 2017. The deadline coincides with the government and HMRC receiving a huge amount of financial data from over 100 different countries signed up to an exchange of information called the Common Reporting Standards (CRS).

These rules will not only affect people deliberately evading UK tax but also those unaware that a tax liability exists or might exist from ordinary foreign bank accounts or properties, for example.

The main penalty for non-compliance by 30 September 2018 is 200% of the additional tax due. However, if the individual was aware of the requirement to correct, there could be additional penalties based on 10% of the value of the underlying asset. In some circumstances, HMRC also have the power to ‘name and shame’.

If you think this may apply to you or would like a tax health check just in case, please get in touch on 02073842647.

0 comments on “End of year tax planning”

End of year tax planning

DIVIDENDS

From 6 April 2018, the dividend allowance, on which dividends are tax free is being reduced to £2,000.  For dividends above this, basic rate taxpayers will have a 7.5% tax liability, higher rate 32.5% and additional higher rate taxpayers 38.1%. Taxpayers with income above £100,000, will lose £1 of their personal allowance for every £2 of income above £100,000 so the effective rate on dividends shoots up between £100,000 and £123,000 for 2017/18.

In many cases, it will be more tax efficient to take dividends before 5 April 2018. Please call us before 5 April 2018 to discuss your situation.

PENSION CONTRIBUTIONS

Reviewing your pension contributions should form part of your end of year planning, whether it’s to make use of your annual allowances and those unused from earlier years (2014-15 onwards) or to preserve your personal allowance when your income is over £100,000. The maximum that can be held as a Lifetime Allowance (LA) is currently £1,000,000.  This will be increasing to £1,030,000 for the year ended 2018/19.  The annual allowance (AA) remains at £40,000 for those with income below £150,000.

CAPITAL GAINS TAX

All UK tax residents are entitled to an annual CGT exempt amount which for 2017/18 is £11,300.  This is especially useful for those with readily realisable assets such as shares. Please note that if you buy back the shares within 30 days, anti-avoidance rules will kick in. However, these will not apply if another person such as a spouse acquires the shares. Inter-spouse transfers or gifts of assets remain free of CGT.  Married couples therefore can look to maximise their combined allowances of £22,600.

INHERITANCE TAX

The annual gift exemption of up to £3,000 can be used in each tax year. If unused, the allowance can be carried forward one year, so if you did not make gifts last year, you may consider making gifts of £6,000 before the end of the tax year. ‘Gifts out of income’ is still a valuable exemption and records should be kept if you wish to make use of these exemptions. Please contact us so that we can advise what records should be kept and the format they should be in to ensure that they comply.

The nil rate band currently remains frozen at £325,000. Wills should be regularly reviewed to take advantage of the new residence nil rate band which was introduced from 6 April 2017.

ISAs

The maximum contribution for 2017/18 is £20,000.  The limit for a Lifetime ISA is currently £4,000 and there is an additional allowance of £4,128 that can be placed by parents into a junior ISA for children.

ENTERPRISE INVESTMENTS SCHEME (EIS), SEED ENTERPRISE INVESTMENT SCHEME (SEIS) and VENTURE CAPITAL TRUSTS (VCTs)

The EIS, SEIS and VCT reliefs were introduced to provide incentives to investors to invest in small unquoted companies, which are generally perceived to be higher-risk investments. The main incentive is income tax relief but there are also other valuable tax reliefs including CGT deferral relief, loss relief on disposal, CGT exemption and IHT relief where conditions are met.

ANNUAL PROPERTY OR TRADING ALLOWANCE

From 6 April 2017, you can get up to £1,000 a year in tax-free allowances for gross property or trading income, so if you have not already done so, now would be a time to make use of it before 5 April 2018. If you have both types of income, you’ll get a £1,000 allowance for each. Gross income means the total amount you get before any allowances or expenses. Please note that you can’t deduct any other expenses or allowances if you claim this allowance.

If any of the above are of interest to you, please call us on 0207 384 2647

0 comments on “BUDGET NOVEMBER 2017 – key points”

BUDGET NOVEMBER 2017 – key points

With immediate effect: new announcements

  • From 22 November 2017, Stamp Duty Land Tax (SDLT) abolished for first time buyers on homes costing up to £300,000; no SDLT on first £300,000 of first time buyer’s purchase of homes up to £500,000.
  • From 29 November 2017, Marriage Allowance can be claimed to transfer the benefit of 10% of the personal allowance after the transferring spouse has died.
  • For tax year 2017/18, unincorporated property business landlords will have the option to use simpler fixed rate deductions for miles travelled by car, motorcycle or goods vehicle for business journeys.
  • From 6 April 2017, anti-avoidance measures will tackle ‘disguised remuneration’ schemes used by closely controlled companies to remunerate employees who have a material interest.

From 1 January 2018: new announcements

  • Indexation allowance, which gives companies relief for the effect of inflation on capital gains, will be frozen at January 2018.
  • The rate of the Research and Development Expenditure Credit increases from 11% to 12% with effect from 1 January 2018.

From April 2018: new announcements

  • Tax-free personal allowance rises from £11,500 to £11,850; threshold for 40% tax rises from £45,000 to £46,350. Rates and bands for Scottish taxpayers are still to be confirmed by the Scottish Parliament.
  • Employees will not be charged income tax on benefit of charging an electric car at work.
  • Supplement of 3% in calculating taxable employee benefit of a diesel company car will increase to 4%.
  • Employees with SAYE-related share option schemes will be able to take a 12-month break from saving, up from 6 months at the moment, while on maternity or paternity leave.
  • Abolition of Class 2 National Insurance and reform of Class 4 NIC for self-employed deferred by a year to April 2019 in order to assess impact on contributory benefits.
  • Freezing of VAT registration threshold at £85,000 for two years instead of normal £2,000 increase, but speculation about possible reduction in threshold was unfounded.
  • ISA investment limit for 2018/19 unchanged at £20,000; Junior ISA limit rises in line with inflation to £4,260.
  • Lifetime Allowance for tax-advantaged pension funds rises from £1m to £1,030,000.
  • Increase in Enterprise Investment Scheme investment limit from £1m to £2m, provided any amount over £1m is invested in one or more knowledge-intensive companies.
  • Capital Gains Tax annual exempt amount rises from £11,300 to £11,700.
  • Annual Tax on Enveloped Dwellings to rise by 3% in line with inflation.

From April 2018: confirmation of previous announcements

  • ‘Making Tax Digital’ reforms for income tax reporting will not now be introduced until 2020 at the earliest; VAT-registered traders to operate ‘Making Tax Digital for VAT’ from April 2019.
  • Class 4 National Insurance Contributions increases proposed in March 2017 will not take effect.
  • Dividend Allowance, introduced at £5,000 for tax year 2016/17, reduced to £2,000 for 2018/19.

Other significant announcements

  • CGT charge for non-resident taxpayers extended to cover non-residential as well as residential property in the UK with effect from 1 April 2019 (companies) and 6 April 2019 (individuals).
  • Allocation of £155m in extra resources to HMRC to fund action on the hidden economy, marketed tax avoidance schemes, enablers of tax fraud, non-compliance and collection of debts 9 months overdue.