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Tax Return Deadline, Confession Time, Welsh Taxes, VAT on cars and Digital Tax

Sep 25, 2016   //   by Ralph   //   Latest News  //  Comments Off on Tax Return Deadline, Confession Time, Welsh Taxes, VAT on cars and Digital Tax

Welcome to October’s edition of Accountant’s Corner. The mornings now certainly seem to have an autumnal feel to them despite the warmth of the sun during the day. Now the summer is over the days get busier for accountants as the first self-assessment deadline is at the end of this month. Below are a few items that have caught my attention over the last month.

Paper return deadline

As I alluded to above the deadline for submission of 2016 self-assessment tax returns on paper rather than electronically is at the end of October. If you are late then don’t send in the paper one and in order to avoid a £100 fine an electronic return will have to be submitted by the 31st January 2017.

Time for confession

If you have undisclosed income from offshore sources HMRC have launched the Worldwide Disclosure Facility (WDF). This will close on 30th September 2018. There are no concessions to using it – the due tax, interest and penalties, according to the type of tax and date of liability will have to be paid and potential criminal prosecution has not been ruled out.

taxWales has introduced its first tax in almost 800 years.

The Land Transaction Tax and Anti-avoidance of Devolved Taxes bill replaces Stamp Duty Land tax in April 2018. As this is some time away I will give details of the changes nearer the time. If you are considering a property transaction it may be worth finding out if the changes will affect you.

Victory for taxpayer re VAT on car

A taxpayer reclaimed the VAT on Land Rover Freelander as a commercial vehicle for her building business. HMRC denied the claim but lost at the tribunal as the vehicle was insured for business use only. Therefore the car was not available for private use. The taxpayer also had another car that she used privately. For small businesses it is difficult to pass the pool car test. It is insufficient for the car not to be used privately – it has to be unavailable for private use, which the insurance restriction confirmed.

Making Tax Digital

One of the biggest changes in the world of taxation is on the horizon and HMRC are consulting on the new Making Tax Digital system. The UK will become the most digitally advanced tax system in the world, and is all part of trying to increase the tax take by plugging the tax gap and ensuring people pay the correct amount of tax. This will mean that all but the smallest of businesses will have to submit information quarterly to HMRC electronically. This will not just be totals of different types of income and expenditure but each transaction. There will be a requirement to record these on a system that HMRC will have access to so that they can look at the data. There are six consultation documents that cover the various areas of the changes. It will affect most taxpayers who submit a tax return. Landlords with gross income over £10,000 per annum will also be required to provide HMRC with details quarterly. Quite what they will do with all of the data. My main concerns are whether their systems will cope with it, and the security of the data before it gets to HMRC.

Llangollen resident Ralph Robson FCCA can be contacted at the Wrexham office of TA Gittins & Company on 01978 264846 or on ralph.robson@tagittins.co.uk to discuss any of the above items or with any accounting or tax queries.

Lower Corporation Tax hopes, Business Changes, Farming Losses and Spurs 1 – HMRC 0

Jul 25, 2016   //   by Ralph   //   Latest News  //  Comments Off on Lower Corporation Tax hopes, Business Changes, Farming Losses and Spurs 1 – HMRC 0

no10Welcome to August’s edition of Accountant’s Corner. Following on from last month we now know that we will be leaving the EU although on what terms still has to be negotiated. Meanwhile from a tax point of view it all seems to be carry on as normal – for now.

Hope for lower corporation tax rate

The previous Chancellor George Osborne announced at the beginning of July that he intended to reduce corporation tax rates to below 15%. Now we have a new Chancellor of course this may not happen. Corporation tax levels although headline grabbing account for less than 10% of the total tax collected, so a reduction can actually be made without it costing too much.

Failure to notify HMRC of business changes can be costly

Recently, a case before the tax tribunal highlighted the need to notify HMRC of business changes. The case in point related to a sole trader who took his son into partnership. He failed to notify HMRC of the change and, although there was no loss of VAT to the exchequer, an 18% penalty was charged by HMRC for late notification. Although reduced later by the tax tribunal, there was considerable expense to the taxpayer for what was described by the tribunal as “the merest technicality…causing no loss to the revenue and no administrative inconvenience to HMRC”

Restriction of farming losses

As I have previously written about, there is a restriction in place that prevents farming losses being offset against other income or capital gains once there have been five successive tax years in which losses have been made. This, however, does not apply to the case of a farmer who engages in specialised activities which are potentially profit making but cannot be expected to show a profit before the end of the year of claim. For this to apply it needs to be demonstrated that there is an expectation of profit, and that business plans were prepared at the time etc.

Spurs win 1-0 over HMRC

Tottenham Hotspur football club won a victory over HMRC recently. The case concerned whether payments made under a compromise agreement upon termination of the employment of two players should be treated as salary or compensation payments. The tax tribunal decided in the club’s favour and the payments made were able to qualify for the £30,000 income tax exemption and not be subject to national insurance either.

Llangollen resident Ralph Robson FCCA can be contacted at the Wrexham office of TA Gittins & Company on 01978 264846 or on ralph.robson@tagittins.co.uk to discuss any of the above items or with any accounting or tax queries.

Private Tuition, Travel Expenses, Official Errors, Golf Clubs and New Farmers Averaging Rules

Jun 15, 2016   //   by Ralph   //   Latest News  //  Comments Off on Private Tuition, Travel Expenses, Official Errors, Golf Clubs and New Farmers Averaging Rules

There have been some interesting developments what with the much publicised release of the “Panama papers” and the implications for some politicians. These of course are the items that hit the headlines but rarely affect the ordinary taxpayer. I intend to talk about the issues that the small business or individual has to deal with.

What is private tuition to qualify for the VAT exemption

A recent tax tribunal case further defines what can be treated as exempt for VAT when teaching a variety of subjects. The deciding factor is whether it is a subject that is ordinarily taught is schools. In this case although the tuition was related to GCSE course, and the lessons took place within the confines of a school. The problem was the lesson was motocross racing. A subject although taught in some educational institutions, not many, and therefore it failed on the ordinary test. This may seem an extreme example but is a salutary warning and those involved in giving private tuition need to ensure that the subject passes all of the tests before treating as VAT exempt.

Allowable travel expenses

HMRC have reminded employers that travel paid to employees to interviews, grievance procedures etc. are not undertaken in the performance of the employees duties and  therefore should be reported on the from P11D. In order to avoid the necessity to complete the form it may be simpler not to reimburse the employee unless their contract means you have to.

Interest payable because of an official error

HMRC tried to argue that their role was not to advise a business on the legislation but the tribunal disagreed. The taxpayer who sold herbal tea was twice advised by HMRC that the tea should be standard rated when in fact it should not.  When the VAT paid in error was refunded HMRC refused to pay interest on the basis that the VAT was overpaid was not due to an official error. Evidence showed that this wasn’t correct and the tribunal agreed with the taxpayer.

golfRefund of golf clubs’ VAT

HMRC have agreed to refund the VAT incorrectly charged on green fees of non-profit making clubs. They will repay 90% of the VAT incorrectly paid on the basis of unjust enrichment if the whole of the VAT was repaid. Does the principle of unjust enrichment only work one way?

New farmers averaging rules begin

As farming is such a cyclical industry it has been possible to average profits over a two year period. This has now been extended to allow profits to be averaged over five years.  The ability to average is not extended to limited companies. This extended period will be welcomed by those who have a longer cycle and will mean overall there may be less tax payable. It may be worth ensuring that capital expenditure takes place in the final year of the five to perhaps remove previous profits from higher rate.

Llangollen resident Ralph Robson FCCA can be contacted at the Wrexham office of TA Gittins & Company on 01978 264846 or on ralph.robson@tagittins.co.uk to discuss any of the above items or with any accounting or tax queries

Budget Update 2016

Mar 25, 2016   //   by Ralph   //   Latest News  //  Comments Off on Budget Update 2016

SDLT surcharge for buy-to-let landlords.  As I mentioned in my January article from the 1st April 2016 there is to be a 3% SDLT surcharge on all residential property where the purchaser is not going to live in the property. This means that on a buy to let investment property of £150,000 there will be £5,000 SDLT payable rather than £500. This does not apply to commercial property. There will be no exemption for investors with significant property portfolios. The SDLT rates will apply to all purchasers including companies and funds.PF-to-let-signs_1115479c

SDLT on non-residential properties. The SDLT due on non-residential properties is to be brought in line with that for residential where it will be exempt up to £150,000 and 2% from £150,001 to £250,000 and 5% above that.

Business Premises Renovation Allowance.  This is to cease on the 5th April 2017 so anyone considering claiming this needs to have the work completed by then in order to receive the 100% capital allowance.

An extra £1000 allowance. From 6th April 2017 micro-entrepreneurs, and those receiving rental income of less than £1000 per year will be exempt from tax upon it. This is to simplify those doing a bit of “wheeling and dealing” on the internet and letting a car parking space etc. If your income is over £1,000 then you can deduct £1,000 from the gross and be taxed on the remainder or claim the actual expenses incurred.

Increase in cost of loans from own company. The rate of tax payable by a company for loans made to directors has been increased from 25% to 32.5% to reflect the new dividend tax of 7.5% and to stop company owners using loans as a more tax efficient way of withdrawing funds.

Reduction in Capital Gains Tax rates.  The Chancellor announced that the main rates of capital gains tax will fall from 18% and 28% to 10% and 20% respectively for all gains excluding those on residential property and carried interest. The new rates apply from 6th April 2016.

tax-169849-mVAT limits increased.  The new registration limit for VAT is £83,000 and for deregistration £81,000.

Increase in Insurance Premium Tax. The rate of IPT will increase to 10% on the 1st October 2016.

Tax free savings. From 6th April 2016 the first £1,000 (£500 for higher rate taxpayers) of interest is tax free. This could therefore be of an advantage where company directors have lent the company money. A reasonable interest rate could be charged, which would increase the tax free income available by up to £1,000.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

Dividend Tax, Personal Savings Allowance, Renewals, Stamp Duty and Employment Allowance

Feb 21, 2016   //   by Ralph   //   Latest News  //  Comments Off on Dividend Tax, Personal Savings Allowance, Renewals, Stamp Duty and Employment Allowance

Those of you who are used to Ralph’s articles will have to wait until next month as, at the time of writing this article, he is in Australia for a month.  He’s asked me, Lauren Baddeley, to update you on the latest news from the tax world in his absence.

It’s that time of year again when we all let out a big sigh of relief as the rush of January is over as the deadline for filing self assessment returns has passed.  Our attention now turns to the 6th April and the upcoming changes.

Dividend tax

One of the biggest changes from 6th April 2016 is the way that dividends will be taxed.  Any of you that receive dividends will know that up until this date you could receive dividends up to your basic rate allowance and not have to pay any tax as there was a tax credit on such, well that is now changing.  HMRC have abolished the tax credit for dividends instead opting to give £5,000 dividends tax free and then begin taxing them at 7.5% for basic rate tax payers.  Anything above the basic rate band will be taxed at 32.5% until the additional rate kicks in at 38.1%.  Dividends received from pensions and ISAs will remain unaffected.

This will mean that even basic rate tax payers will have to complete self assessment returns from 6th April 2016 if they receive dividends over £5,001.  It will also affect company directors who currently take a low salary and high dividend.

moneyPersonal savings allowance

Another change from 6th April 2016 is that banks and building societies will no longer be taxing interest paid to customers.  This is because for basic rate tax payers the first £1,000 of saving income will be tax free, for higher rate tax payers this reduces to £500 and there is no allowance for upper rate taxpayers.  This will however mean that for the lucky few who earn more than their tax free amount there will be a requirement to complete self assessment returns to pay the appropriate tax due.

Renewals basis

Some good news for landlords, HMRC have agreed to reintroduce the tax relief on replacement of furnishings in rental properties from 6th April 2016.  This will mean that any freestanding kitchen appliances, carpets and so on will once again qualify for tax relief.  In opposition to this HMRC will withdraw the 10% wear and tear allowance that landlords of furnished rentals were able to benefit from on the same date.

Stamp duty

Another change for existing and potential landlords to consider is that stamp duty will be increasing by 3% on additional residential property purchased with a consideration above £40,000 on 1st April 2016.  If you are considering venturing into the world of buy to let properties, or even considering adding to your portfolio then aim to have all purchases completed before then.  This will also apply to those who purchase a second home.

 

Employment allowance

The good news is that the employment allowance is going up from £2,000 to £3,000 as of 6th April 2016 which employers will be able to deduct from the employer’s national insurance contributions that they have to make.  The bad news is that HMRC will withdraw this allowance for any single director companies.

The author Lauren Baddeley ACCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on lauren.baddeley@tagittins.co.uk.  Ralph Robson FCCA may be contacted at the same number or via email on ralph.robson@tagittins.co.uk.

SDLT Surcharge, Capital Gains, Quarterly Recording and other items

Jan 21, 2016   //   by Ralph   //   Latest News  //  Comments Off on SDLT Surcharge, Capital Gains, Quarterly Recording and other items

A happy new year to you all.  I hope you all had a good Christmas and are looking forward to 2016. I stated last month that I would give any highlights of the Chancellor’s Autumn Statement in this month’s edition of Accountant’s Corner due to dates of going to press. Well there is nothing much to report, we have predicted low interest rates to thank for that, although there may well be greater changes in the budget on the 16th March 2016.

SDLT surcharge for buy-to-let landlords.  There is to be a 3% SDLT surcharge on all residential property where the purchaser is not going to live in the property. This means that on a buy to let investment property of £150,000 there will be £5,000 SDLT payable rather than £500. This does not apply to commercial property and the government are consulting as to whether it will apply to landlords with more than 15 properties. For those landlords who have exchanged prior to the 25th November 2015 but completing after 1st April 2016 the new rules will not apply. Once the rules have been finalised I will let you know.

Capital gains tax earlier payment dates. Although this doesn’t come in until April 2019 from that date all capital gains tax on the sale of let property will be due by 30 days after the date of completion rather than by 31st January in the year following the tax year in which the property was sold as the system is now.

Reporting quarterly to HMRC.  Buried in the Autumn Statement is a proposal to force business and landlords to report income and expenditure quarterly to HMRC. Apparently this is to reduce compliance costs for the businesses. I have to admit to being at a loss as to see how this can be, surely multiplying the reporting requirement by four will not ease the burden on small business.

Other items.

Reasonable expectation of profit. Losses in a trade can be offset against (amongst other things) other income received in the same tax year. A recent tribunal case has shown that for these losses to be offset they must be suffered by genuine business with a reasonable expectation of profit. HMRC successfully argued that the expectation of profit was too far away for the business model to be viable therefore the losses were not allowable. The business was as a sheep farmer. To counteract any such challenge by HMRC a good business plan is advisable.

Self-employed travelling expenses. There has been another case which has resulted in a victory for HMRC in their efforts to restrict the amount of travelling expenses that the self-employed claim. The latest case concerned a consultant anaesthetist Dr. Jones, who worked at several hospitals in South Wales. He administered his business from home and the tax tribunal accepted this. The fact that he attended one hospital about 100 times and another about 50 was sufficient for the tribunal to deny tax relief for these expenses. This is concerning because often the self-employed will work at one place for several weeks at a time, or visit one customer regularly. Beware of HMRC trying to deny relief. Detailed records should be kept to show all different locations visited.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

Outstanding Tax, Pension Tax Relief, Donations, Business Record Checks, VAT on Green Fees and Building Work

Dec 21, 2015   //   by Ralph   //   Latest News  //  Comments Off on Outstanding Tax, Pension Tax Relief, Donations, Business Record Checks, VAT on Green Fees and Building Work

Welcome to the festive edition of Accountants Corner. This has been written prior to the Chancellor’s Autumn Statement on the 25th November and I will highlight any important changes and what can be done about them in next month’s article. I doubt it will be as the mild as the weather we have been experiencing recently.

Paying outstanding tax through your tax code.  If you want to pay any outstanding self-assessment liability for 2014/15 through your 2016/17 tax code you need to submit your return by the 30th December, (yes that’s right the 30th not the 31st), otherwise HMRC may not be able to include it.

Delayed decision on pension tax relief. The Chancellor has confirmed that the response to the pension tax consultation will take place fully in the 2016 budget. There may be some tax planning opportunities prior to the 2016 budget where it may be that the tax relief for higher earners will be reduced more than it has been already.

Donors to pay for gift aid errors. From April 2016 charities and community amateur sports clubs (cascs) will need to use a new type of declaration for one-off donations to be gift-aided. If the taxpayer does not pay sufficient tax for the amount gift-aided to be claimed then they will need to pay the difference. This could mean that donors that don’t pay much tax could end up donating more than they intended. If you do make donations and gift aid them you need to be careful otherwise you could end up paying more than you thought.

Business record checks scrapped. Thankfully the taxman has decided not to continue with the trial of the Business record checks due to the fact that most of the business visited had sufficiently good records. Although technically these were only checks no doubt to the taxpayers they felt more like an enquiry.

VAT on green fees to be refunded. HMRC will repay either 50% or 33% of the VAT charged on the clubs green fees. This is due to a case in the EU Court of Justice relating to the Bridport and West Dorset Golf Club that decided that green fees aren’t subject to VAT. The taxman does not intend to repay all of the VAT as it says that the clubs would be “unjustly enriched”.  It may be that if you have paid green fees and can prove it you should ask the club for the VAT back. Although it may be some time before the clubs get the refund to pass on to you.

Charging the correct VAT rate on building work. VAT on building work can be charged at the standard rate 20% or at the lower rate, 5%. There is much confusion as to when the lower rate can be charged. The 5% rate is available for the conversion of a non-residential building to residential, a house conversion where additional dwellings are created, converting multiple dwellings back to one dwelling, or if the residential property has been unoccupied in excess of two years. To go into the full detail would require more room than I have here as there are several exceptions etc., so it pays to ask your accountant with regard to your individual circumstances.

It merely remains to wish you all a merry Christmas and a happy, prosperous, and tax efficient new year.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

Auto Enrolment, Pensions, Capital Allowances, Subsistence and Partners Parting Company

Nov 21, 2015   //   by Ralph   //   Latest News  //  Comments Off on Auto Enrolment, Pensions, Capital Allowances, Subsistence and Partners Parting Company

Here we are in November and as most people start to get ready for the Festive Season I doubt there will be much good cheer from the Chancellor in his Autumn Statement this month. As I get older the subject of pensions seems to pre-occupy me more so the first couple of items reflect this.

Auto-enrolment – has it been a success? Now that Auto-enrolment (AE) has been in the workplace for the largest of employers for three years a survey has been carried out to see if it a success. Whilst over 90% of employees think it is a good idea over half do not know where the funds are being invested or what the options are at retirement.

State pension top-up scheme now open. There has been much talk in the press of late about the ability of those who reach state pension age before 6th April 2016 to increase their state pension by making a lump-sum contribution. The amount required is based upon the person’s age and how much extra pension they require. At 65 for £10 per week (£520 per annum) £8,900 is required and this drops to £6,740 at age 75. The scheme will remain open until 5th April 2017. The reason for the scheme is to recognise that those retiring before 6th April 2016 will be ineligible for the new state pension launched on that date.

Capital allowances and property.  Since April 2014 solicitors acting on property transactions are obliged to raise the issue of capital allowances with their clients otherwise both the seller and the purchasers may lose their ability to claim. An indication of the scale of the issue is that a recent report estimates that £1.6 billion went unclaimed in the 9 months to December 2014. If you are involved in a property transaction you need to ensure that both your solicitor and your accountant are aware of the rules and the requirements. The position regarding capital allowances can also be used as a marketing tool if your advisors are aware of the possibilities.

Taxman reviewing subsistence rules. HMRC are reviewing the rules for subsistence as they date back to the days when companies had subsidised staff canteens. The taxman views that all subsistence is private expenditure as we “eat to live”. Nothing has been finalised yet but I doubt that there will be a change of heart.

What to do when shareholders part company. Many small limited companies have few shareholders and all goes well until one of them wants to leave. Apart from the usual negotiations there is the issue of how to buy the shares from the leaving party. The most tax efficient way of doing this is for the company to buy back its own shares. This provides considerable savings as the funds do not need to be withdrawn from the company by the shareholders to purchase the shares personally, potentially saving higher rate tax and from the 6th April 2016 the new additional dividend tax of 7.5%. There are some conditions and it does of course depend upon the size of the transaction whether it is worthwhile.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

Employment Allowance, Living Wage, Inheritance Tax, PSA and HMRC Campaigns

Sep 21, 2015   //   by Ralph   //   Latest News  //  Comments Off on Employment Allowance, Living Wage, Inheritance Tax, PSA and HMRC Campaigns

As I write this there is a distinctly Autumnal feel in the air. Last month I gave some highlights of the budget and how it affected businesses, whereas this month I intend to focus on those measures that relate to the individual. I will however start with one piece of good news for business.

Employment allowance increased. As from the 6th April 2016 the employment allowance increases from £2,000 to £3,000 per annum. In effect this is extra to help towards the increase to the living wage for those employees who are over 25. How much it will contribute depends of course on the age profile, number, and current pay rates of your workforce.

Minimum wage/Living wage rates. As from the 1st October 2015 the minimum wage rate for those aged 21 and over is £6.70. From 1st April 2016 those over 25 are entitled to £7.20 per hour.

Inheritance tax changes. For those lucky enough to have assets over £325,000 as an individual, there will be an inheritance tax charge of 40% of any value over this amount, subject to certain exemptions and reliefs for business assets and gifts to charity.  As from April 2017 there will be an additional £100,000 available in respect of the main residence of the deceased being left to a direct descendant. This will increase at £25,000 per year to £175,000 in 2020/21 and then increase in line with inflation. This could give a couple as much as £1million as long as their home is worth £350,000.

Personal savings allowance. This is being introduced and all basic rate taxpayers will be able to receive up to £1000 in interest from non-ISA bank and building society accounts tax free. Tax will not be deducted by banks and building societies from the 5th April 2016. This also applies to peer to peer lending. If you are a higher rate taxpayer the allowance is £500 and top rate tax payers (45%) don’t get any allowance. This could also be used to pay interest tax free to you from your company if you have a credit balance on your director’s loan.

Latest HMRC campaign. The taxman has launched a campaign targeted at the beauty industry to ensure compliance with the minimum wage legislation. According to statistics 42% of apprentices in the industry are underpaid. Employers in this sector should check their records and ensure compliance as there can be penalties of up to 100% of the amount of the underpayment. By rectifying the position before HMRC discover it by making up back pay etc. the penalty can be avoided, as well as being added to the list of employers not paying the minimum wage.

IR35 being reviewed – again. In the budget the Chancellor stated that the IR35 legislation for intermediaries was ineffective. HMRC does not want to abolish it but make it easier to comply with the legislation without “disproportionate burdens on business or individuals”. There is no intention to widen the scope of IR35.

The author Ralph Robson FCCA is based at TA Gittins & Company’s Wrexham office and can be contacted on 01978 264846 or via email on ralph.robson@tagittins.co.uk

Budget Update August 2015

Jul 20, 2015   //   by Ralph   //   Latest News  //  Comments Off on Budget Update August 2015

As this is the first edition after the summer budget, I’m highlighting some of the changes and the effects that they will have. This is because some of them are far reaching and will require the restructuring of some business prior to April 2016 in order to ensure that the increase in tax is kept to a minimum. I cannot cover all of the budget in one article so will pick up on the new inheritance tax rules and those affecting employers and employees next month.

New dividend tax. As from the 6th April 2016 there will be tax payable on dividends over £5,000 even if you are a basic rate taxpayer. If you trade through a limited company and as many people who do, have a salary of the personal allowance and dividends to utilise your basic rate allowance, then you will effectively be approximately £1875 per year worse off. There is the £5,000 tax free allowance on dividend income which if you transfer shares to your spouse means you can save £375 of this tax. If you also have investments of course then this will eat into the £5,000 dividend income allowance. What can be done? Very little unless you have parents or possibly children over the age of majority who don’t have any share income, so you can transfer shares to them. These must be true gifts though and you will lose the right to the dividend paid. There are other things that can be done too, which I will expand upon in future articles.

Corporation tax rate reduction. As from the 1st April 2017 the corporation tax rate will fall to 19% and from 1st April 2018 to 18%.

The annual investment allowance. This is to be fixed at £200,000 per annum from 1st January 2016. Currently £500,000 per annum. This won’t affect most businesses but there are transitional rules which can mean that tax relief will not be fully available when the accounting year doesn’t coincide with the tax year. It was due to go down to £25,000 so it’s pleasing to see this measure brought in.

Rent a room scheme. This is increasing to £7500 from the £4250 that it has been stuck at for more than a decade. Also includes B&B income so if you have modest income from this source it can be tax free.

Restriction of tax relief on finance costs of buy to let properties. Higher rate tax payers will see the tax relief on finance costs restricted to 20% over the four years from April 2017. The calculations are not straightforward, but this rule does not apply to furnished holiday lettings, so if you have property in a tourist area it may be worth considering changing it, at least until the mortgage is paid off.

Abolition of the wear and tear allowance on let furnished property. This is to be replaced by actual costs for deduction. If you do have any properties that fall into this category delay the replacement of any items until after the 6th April 2016 if you can, so you get the wear and tear allowance this year and the actual cost next year.

Insurance premium tax. This is increasing to 9.5% (up from 6%) on the 1st November 2015. This will of course affect everyone and was a notable exclusion from the “Triple Lock” announced by George Osborne.

Ralph Robson can be contacted at his office at TA Gittins & Company Chartered Accountants on 01978 264846 or via email below. If you would like a particular issue covered in this article please contact Ralph on ralph.robson@tagittins.co.uk

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