e0a698c6 e9a4 4844 be93 4cf3d3eb507d 800x380 - Carry-back charitable donations

Carry-back charitable donations

The Gift Aid scheme is available to all UK taxpayers. The charity or Community Amateur Sports Clubs (CASC) concerned can take your donation and, providing all the qualifying conditions are met, reclaim the basic rate tax. This increases the value of your donation by 25p for every pound donated.

If you are a higher rate or additional rate taxpayer, you are eligible to claim additional tax relief on the difference between the basic rate and your highest rate of tax.

For example:

If you donated £5,000 to charity, the total value of the donation to the charity is £6,250. You can claim back additional tax of:

  • £1,250 if you pay tax at the higher rate of 40% (£6,250 × 20%),
  • £1,562.50 if you pay tax at the additional rate of 45% (£6,250 × 25%).

If you are a higher rate or additional rate taxpayer you also have the option to carry back your charitable donations made in the current tax year, to the previous tax year.

A request to carry back the donation must be made before or at the same time as your previous year’s Self-Assessment return is completed.

This means that if you made a gift to charity in the current 2021-22 tax year that ends on 5 April 2022, you can accelerate repayment of any tax associated with your charitable giving. This can be a useful strategy to maximise tax relief if you will not pay higher rate tax in the current tax year but did in the previous tax year. This should be done as part of the Self-Assessment tax return for 2020-21 which must be submitted by 31 January 2022.

You can only claim if your donations qualify for gift aid. This means that your donations for both tax years together must not be more than 4 times what you paid in tax in the previous year. If you do not complete a tax return you need to use a P810 form to make a claim.

Source: HM Revenue & Customs Sun, 28 Nov 2021 00:00:00 +0100
18d2cf9a 31f9 4118 af6c a88878c9d3a0 800x380 - Income excluded from a property business

Income excluded from a property business

HMRC publishes a list of income streams that are excluded from a UK property business. The list includes fishing concerns, hotels and guest houses, tied premises, caravan sites, lodgers and tenants in your own home, extra services to tenants and letting surplus trade accommodation. In most cases the income from these activities will be taxed as income of a trade and not as property income.

In addition, there are certain receipts that can arise out of the use of land, and which are specifically excluded by statute from a rental business. These include yearly interest, income from the occupation of woodlands managed on a commercial basis, income from mines and quarries and income from farming and market gardening.

There is also a £1,000 property income allowance that applies to income from property (including foreign property). If a taxpayer’s annual gross property income is £1,000 or less the amount is exempt from tax and does not need to be reported on a tax return.

Source: HM Revenue & Customs Sun, 28 Nov 2021 00:00:00 +0100
5f7f5a6e d9b3 466d 894c 667d42d292d3 800x380 - VAT – driving schools who supplies services?

VAT – driving schools who supplies services?

The VAT liability of the supply of driving lessons is an interesting issue that can be of relevance to other supply scenarios such as hairdressers and other workers in the beauty industry. 

In HMRC’s internal manuals the guidance identifies three possible scenarios that can apply to someone providing driving lessons to the public:

  • The driving school employs its own instructors under contracts of service. HMRC comments that this method is probably only used in a minority of cases. When this is the case, the driving school is supplying the tuition to its pupils and must account for output tax on the full value of fees received. The driving school is making the supply of tuition to its customers and there is no supply by the individual instructors, who are simply receiving remuneration (wages) for their services as employees. 
  • The instructors supply their services to the school under a contract of services. They need only account for output tax on these supplies if the value exceeds the registration limits. The school must account for output tax on the full value of the fees received from pupils.
  • Each individual instructor supplies tuition services directly to their pupils using the driving school as an agent. Output tax is only due on the value of those supplies if an instructor exceeds the registration limits. However, payment made by each instructor to the school is consideration for a supply of agency services by the school, and the school must declare output tax accordingly. 
Source: HM Revenue & Customs Sun, 28 Nov 2021 00:00:00 +0100
97e3f7cf d55a 4fb0 8ed3 2cc09a25a7cc 800x380 - Can you claim the Marriage Allowance?

Can you claim the Marriage Allowance?

The marriage allowance came into force in 2015 and applies to married couples and those in a civil partnership where a spouse or civil partner doesn’t pay tax or doesn’t pay tax above the basic rate threshold for Income Tax (i.e., one of the couples must currently earn less than the £12,570 personal allowance for 2020-21).

The allowance works by permitting the lower earning partner to transfer up to £1,260 of their personal tax-free allowance to their spouse or civil partner. The marriage allowance can only be used when the recipient of the transfer (the higher earning partner) doesn’t pay more than the basic 20% rate of Income Tax. This would usually mean that their income is between £12,570 to £50,270 in 2020-21. The limits are somewhat different for those living in Scotland.

The allowance permits the lower earning partner to transfer up to £1,260 of their unused personal tax-free allowance to a spouse or civil partner. This could result in a saving of up to £252 for the recipient (20% of £1,260), or £21 a month for the current tax year.

If you meet the eligibility requirements and have not yet claimed the allowance, then you can backdate your claim as far back as 6 April 2017. This could result in a total tax break of up to £1,220 if you can claim for 2017-18, 2018-19, 2019-20, 2020-21 as well as the current 2021-22 tax year. If you claim now, you can backdate your claim for four years (if eligible) as well as for the current tax year. In fact, even if you are no longer eligible or would have been in all or any of the preceding years then you can claim your entitlement.

Source: HM Revenue & Customs Sun, 28 Nov 2021 00:00:00 +0100
c45c791f c985 4be6 aefa 996eb913c783 800x380 - Who needs to register for Self-Assessment

Who needs to register for Self-Assessment

There are a number of reasons why you might need to complete a Self-Assessment return. This includes if you are self-employed, a company director, have an annual income over £100,000 and / or have income from savings, investment or property.

Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a Self-Assessment return needs to be filed. If you have missed this deadline for the 2020-21 tax year you should still notify HMRC and register as soon as possible. You should also ensure that you file your 2020-21 tax return and pay any tax due by 31 January 2022.

In certain circumstances, HMRC may also ask taxpayers to complete tax returns. HMRC has an online tool www.gov.uk/check-if-you-need-tax-return/ that can help you check if you are required to submit a Self-Assessment return.

The list of taxpayers that are usually required to submit a Self-Assessment return includes:

  • The self-employed;
  • Taxpayers who had £2,500 or more in untaxed income;
  • Those with savings or investment income of £10,000 or more before tax;
  • Taxpayers who made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax;
  • Company directors – unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, like a company car;
  • Taxpayers whose income (or that of their partner’s) was over £50,000 and one of you claimed Child Benefit;
  • Taxpayers who had income from abroad that was taxable in the UK;
  • Taxpayers who lived abroad and had a UK income;
  • Income over £100,000.
Source: HM Revenue & Customs Sun, 28 Nov 2021 00:00:00 +0100
28775ac0 49f8 40a1 9a63 416b198fffd5 800x380 - SMP, SAP, SPP, ShPP, SPBP and SSP to rise from April 2022

SMP, SAP, SPP, ShPP, SPBP and SSP to rise from April 2022

According to proposals set out in a government policy paper, the revised rates for statutory maternity pay (SMP), statutory adoption pay (SAP), statutory paternity pay (SPP), statutory shared parental pay (ShPP), statutory parental bereavement pay (SPBP) and statutory sick pay (SSP) for tax year 2022/23 are to be as follows:

  • the standard weekly rates of SMP, SAP, SPP, ShPP and SPBP will increase from £151.97 to £156.66 (or 90% of the employee’s weekly earnings if that amount is lower than the statutory rate) – it is assumed this will be for payment weeks commencing on or after Sunday, 3 April 2022
  • the prescribed weekly rate of maternity allowance (MA) will increase from £151.97 to £156.66 (or 90% of the individual’s weekly earnings if that amount is lower than the statutory rate)
  • the weekly rate of SSP will increase from £96.35 to £99.35 from 6 April 2022.

In addition, the amount of the earnings threshold, below which employees do not qualify for SMP, SAP, SPP, ShPP, SPBP and SSP, is to rise from £120 to £123 per week.

Source: Department for Work & Pensions Fri, 26 Nov 2021 00:00:00 +0100
86ade169 529b 4e79 af0f e986c4be86b7 800x380 - TOGC overview

TOGC overview

The transfer of a business as a going concern (TOGC) rules cover the VAT liability on the sale of a business. Normally the sale of the assets of a VAT registered or VAT registerable business will be subject to VAT at the appropriate rate.

Where the sale of a business includes assets and meets certain conditions, the sale will be categorised as a TOGC. A TOGC is defined as 'neither a supply of goods nor a supply of services' and is therefore outside the scope of VAT. Under the TOGC rules no VAT would be chargeable on a qualifying sale.

All the following conditions are necessary for the TOGC rules to apply:

  • The assets must be sold as part of a 'business' as a 'going concern'. In essence, the business must be operating as such and not just an 'inert aggregation of assets'.
  • The purchaser intends to use the assets to carry on the same kind of business as the seller.
  • Where the seller is a taxable person, the purchaser must be a taxable person already or become one as the result of the transfer.
  • Where only part of a business is sold it must be capable of separate operation.
  • There must not be a series of immediately consecutive transfers.
  • There are further conditions in relation to transactions involving land.

The TOGC rules can be complex, and both the vendor and purchaser of a business must ensure that the rules are properly followed. The TOGC rules are also mandatory which means that it is imperative to establish from the outset whether a sale is or is not a TOGC. For example, if VAT is charged in error, the buyer has no legal right to recover it from HMRC and would have to seek to recover this 'VAT' from the seller.

Source: HM Revenue & Customs Sun, 28 Nov 2021 00:00:00 +0100
1cf00efc 37f2 4147 9b96 a1598c35ed51 800x380 - IHT and domicile

IHT and domicile

Domicile is a general legal concept which in basic terms is taken to mean the country where you permanently belong but actually determining domicile status can be complex. HMRC guidance states that domicile cannot be defined precisely, but the concept rests on various basic principles.

Although domicile can change, there is generally a presumption in favour of the continuation of an existing domicile. To change a domicile, lots of factors are considered, for example, the location family, property and business interests.

There is also a concept in the UK of deemed domicile, whereby under rules introduced from 6 April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years are deemed to be domiciled in the UK for tax purposes. This makes them liable to Inheritance Tax (IHT) on their worldwide assets.

IHT is generally chargeable to people domiciled (or deemed domiciled) in the UK or with assets sited in the UK. For example, HMRC’s manuals states that if someone creates a settlement with assets outside the UK, when they are not domiciled in the UK, the settlement could be excluded from the charge to IHT. There are also many double tax agreements that can, depending on the circumstances, change a person’s liability to IHT.

Source: HM Revenue & Customs Tue, 23 Nov 2021 00:00:00 +0100
1aac00d9 308f 4f30 bc4c b8a31fa908e2 800x380 - Teesside Freeport open for business

Teesside Freeport open for business

The first of the English Freeports, Teesside, opened operations on 19 November 2021, and is expected to be followed shortly by Thames and Humber. The Teesside Freeport will be at the forefront of local low carbon sector creating thousands of jobs in green energy.

Businesses in Freeport tax sites are able to benefit from tax reliefs including:

  • an enhanced 10% rate of structures and buildings allowance
  • an enhanced capital allowance of 100%
  • full relief from Stamp Duty Land Tax
  • business rates relief on certain business premises within freeport tax sites
  • employer National Insurance contributions relief, subject to Parliamentary process and approval

In addition, local councils will be able to retain 100% of business rates growth generated by the freeport tax sites for the next 25 years, providing them with financial security to invest in regeneration in their local area.

The Teesside Freeport also has a custom's site designation. This is a special kind of port where normal tax and customs rules do not apply. Rather there are simplified customs procedures including tariff suspension, exemption, and deferral available.

In total, the government has committed to the creation of eight Freeport locations across England and at least one Freeport in each of Scotland, Wales and Northern Ireland. 

Source: HM Government Tue, 23 Nov 2021 00:00:00 +0100
b78ff857 eb9b 4f34 bedf 2a5293d79c58 800x380 - New warnings from HMRC re tax fraudsters

New warnings from HMRC re tax fraudsters

Fraudsters are continuing to target taxpayers with scam emails in advance of the 31 January 2022 deadline for submission of Self-Assessment returns. In fact, over the last year, HMRC received nearly 360,000 reports about bogus tax rebate referrals. 

A number of these scams purport to tell taxpayers they are due a rebate / refund of tax from HMRC and ask for bank or credit card details in order to send the fake tax refund. The fraudsters use various means to try and scam people including making contact by phone calls, texts or emails. Fraudsters have also been known to threaten victims with arrest or imprisonment if a bogus tax bill is not paid immediately.

HMRC operates a dedicated Customer Protection team to identify and close down scams but continues to advise taxpayers to identify fraud and avoid becoming victims themselves. For example, HMRC will only contact taxpayers due a refund by post and never use emails, text messages or external companies for this activity. Genuine organisations like HMRC and banks will not contact customers asking for their PIN, password or bank details.

If you think you have received a suspicious call or email claiming to be from HMRC you are asked to forward the details to phishing@hmrc.gov.uk and text to 60599. If you have suffered financial loss, you should contact Action Fraud on 0300 123 2040 or use their online fraud reporting tool.

Source: HM Revenue & Customs Tue, 23 Nov 2021 00:00:00 +0100