December

7 December 2017

Welcome to the Exceed monthly newsletter.

 
 
Change to tax relief on re-mortgaged buy-to-let property? Income Tax

HMRC’s guidance on paying income tax when you rent out a property has been updated to reflect the new restriction on tax relief for finance charges incurred since April 2017. The tax relief on finance costs (such as mortgage interest) used to buy investment properties, is being gradually restricted to the basic rate of tax. The finance costs restriction is being phased in over four years and will be fully in place from 6 April 2020.

An interesting anomaly appears to have arisen in HMRC’s guidance where a taxpayer increases his/her mortgage loan. Previously, the guidance stated that '...If you...

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Are your earnings approaching £100,000? Income Tax

For high earning taxpayers the personal income tax allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. Adjusted net income is total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions.

Adjusted net income between £100,000 and £123,000 creates an effective marginal rate of tax of around 60% for tax payers as the £11,500 tax-free personal allowance is gradually withdrawn. Taxpayers whose income sits within this band should consider any...

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Autumn Budget 2017 – Income Tax Rates & Allowances Income Tax

The Chancellor has confirmed that from 2018-19 the personal allowance will increase to £11,850 (an increase from the current £11,500) and the basic rate limit to £34,500. As a result, the higher rate threshold will increase to £46,350 from April 2018. These increases are part of the government’s commitment to increase the basic personal allowance to £12,500 and the higher rate threshold to £50,000 by the end of the current Parliament. The Scottish Parliament sets the basic rate limit for Scotland meaning that Scottish higher rate taxpayers may pay more tax in 2018-19.

For high earning...

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Claiming an “unclaimed” estate Inheritance Tax

There are special rules that govern how assets are divided if a person dies without making a will. If this happens your assets are passed on to family members in accordance with a set legal formula. This can result in a distribution of assets that would not be in keeping with your final wishes, and can be especially problematic for cohabitees (a couple who live together but are not married and have not entered into a civil partnership).

However, if someone dies without a will and there are no known family members, their property passes to the Crown as ownerless property. This is known as ‘bona...

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Autumn Budget 2017 – SDLT for first-time buyers Stamp Duty Land Tax

As the Chancellor, Philip Hammond alluded to in his Budget speech there had been much speculation in the press that he would do something to alleviate the Stamp Duty Land Tax (SDLT) burden for first time buyers.

However, he went a step further by introducing a temporary freeze in SDLT. SDLT for all first-time buyers making a purchase of up to £300,000 will pay no stamp duty under the new proposals. He also added a little extra cheer by extending the relief to the first £300,000 of the purchase price on properties valued at up to £500,000. This is an effective reduction of £5,000 in SDLT for a...

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Autumn Budget 2017 - Minimum wage increases Payroll

The Chancellor used his Budget speech to confirm that increased National Minimum Wage (NMW) and National Living Wage (NLW) rates are due to come into effect on 1 April 2018, subject to Parliamentary approval.

The NLW first came into effect on 1 April 2016 and is the minimum hourly rate that must be paid to those aged 25 or over. From 1 April 2018, the NLW will increase by 33p to £7.83. This represents an increase of 4.4%.

The hourly rate of the NMW will increase to £7.38 (a rise of 33p) for 21-24 year olds. The rates for 18-20 year olds will increase to £5.90 (a rise of 30p) and the rate for...

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Delay in withdrawal of self-employed NIC contributions National Insurance

In a surprising move, the Government has announced that the planned abolition of Class 2 National Insurance Contributions (NICs) is to be delayed for a year. The withdrawal of Class 2 NICs was due to take place from April 2018 but will now take place one year later from April 2019.

The enabling legislation for this change, NICs Bill will now be introduced in 2018 and will take effect in April 2019. The measures in the Bill include, the abolition of Class 2 NICs as well as reforms to the NICs treatment of termination payments and changes to the NICs treatment of sporting testimonials.

We are...

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OTS publishes new report on the VAT system Value Added Tax

The Office of Tax Simplification (OTS) provides advice to the Chancellor on simplifying the UK tax system, with the objective of reducing compliance burdens on both businesses and individual taxpayers and will draw together expertise from across the tax and legal professions, the business community and other interested parties.

It was announced as part of the Autumn Statement 2016, that the OTS had been asked to carry out a review of certain aspects of the VAT system. A terms of reference paper was published in December 2016 followed by an interim report earlier this year. A final report has...

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Autumn Budget 2017 - VAT registration and deregistration thresholds Value Added Tax

The taxable turnover threshold, that determines whether businesses should be registered for VAT, will be frozen at £85,000 for 2 years from 1 April 2018. The taxable turnover threshold that determines whether businesses can apply for deregistration will also be frozen at the current rate of £83,000 for the same time period.

Businesses are required to register for VAT if they meet either of the following two conditions:

  1. At the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded £85,000; or
  2. At any time there are reasonable grounds for believing that...

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HMRC win Littlewoods’ tax case General

HMRC has won a landmark case after the Supreme Court overturned an earlier decision of the Court of Appeal. The issue at hand concerned historic overpayments of VAT by Littlewoods (a catalogue sales business) between 1973 and 2004. In 2004, HMRC accepted that the VAT had been overpaid and repaid £205m plus a further £268m interest calculated using the simple interest basis.

Littlewoods argued that the interest should have been calculated on a compound basis and that a further £1.25bn was due. Littlewoods claimed that only the payment of compound interest could properly recompense the company...

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How to appeal against a tax decision General

It is not unusual for taxpayers to find themselves in a position where they disagree with a tax decision made by HMRC. There are a number of different options open to taxpayers seeking to use the review and appeals process.

Note, there is a separate procedure to be followed by taxpayers to make a complaint about HMRC for issues such as unreasonable delays, mistakes and poor treatment by HMRC’s staff.

As a first step, it is possible to make an appeal against a tax decision. There is normally a 30-day deadline for making a claim, so time is of the essence. HMRC will then carry out a review,...

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Tax Diary December 2017/January 2018 Tax Diary


1 December 2017 - Due date for corporation tax due for the year ended 28 February 2017.

19 December 2017 - PAYE and NIC deductions due for month ended 5 December 2017. (If you pay your tax electronically the due date is 22 December 2017)

19 December 2017 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2017.

19 December 2017 - CIS tax deducted for the month ended 5 December 2017 is payable by today.

30 December 2017 - Deadline for filing 2016-17 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2018-19.

1 January...

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Best wishes,

The Exceed Team
Exceed CA Limited     Bank House, 81 St Judes Road, Englefield Green, Surrey, TW20 0DF, United Kingdom
Tel (UK): +44 (0) 1784 439 955  |  Tel (World): 0370 060 0996  |   |  www.exceedca.com

In preparing and maintaining this newsletter every effort has been made to ensure the content is up to date and accurate. However, laws and regulations change continually and unintentional errors can occur and the information may be neither up to date or accurate. Exceed CA Limited makes no representation or warranty (including liability towards third parties), express or implied, as to the accuracy, reliability or completeness of the information published in this newsletter. The articles shared with you in this email are intended to inform rather than advise. If you do or do not take action as a result of reading this newsletter, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.