6 September 2018

Welcome to the Exceed monthly newsletter.

  • 32.5% Corporation Tax on overdrawn directors’ loans
  • Time to declare offshore assets?
  • How to earn more at the basic rate of tax
  • Help to Buy: ISA scheme
  • Allowable costs for property businesses
  • Selling your UK home if you live abroad
  • Are you eligible for CGT Entrepreneurs’ Relief?
  • Capital Gains after divorce or separation
  • Gifting share in home
  • Correcting errors on your VAT return
  • VAT on transfer of business as a going concern
  • Tax free health benefits
  • What is Mileage Allowance relief?
  • Limited liability for sole traders?
  • Boosting recycling with tax system
  • Tax Diary August/September 2018
    32.5% Corporation Tax on overdrawn directors’ loans Corporation Tax

    HMRC defines a director's loan as money taken from your company (by you or other close family members) that isn’t:

    • a salary, dividend or expense repayment and
    • money you’ve previously paid into or loaned the company

    An overdrawn director's loan account is created when a director effectively 'borrows' company money. A record of these loans must be kept in a director's loan account (DLA). Small business owners need to be mindful that withdrawing funds from their company can have unwanted tax consequences for both the company and the director. The tax rules are further complicated if the value of...

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    Time to declare offshore assets? Income Tax

    HMRC has published a press release to remind taxpayers that the 30 September 2018 deadline to come forward and declare any foreign income or profits on offshore assets is fast approaching. This is the date set out in the Requirement to Correct (RTC) legislation that was introduced by the Finance (No.2) Act 2017.

    Taxpayers making a disclosure will then have a further 90 days to make the full disclosure and pay any tax owed. The RTC legislation applies to any person with undeclared UK Income Tax, Capital Gains Tax and/or Inheritance Tax liability concerning offshore matters or transfers. The RTC...

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    How to earn more at the basic rate of tax Income Tax

    Donations made to charity over the course of a tax year can add up and taxpayers should ensure that they keep a proper record of all donations and note them on their tax return. The Gift Aid scheme is available to all UK taxpayers. The recipient charity can claim an extra 25p worth of tax relief on every pound donated provided all the qualifying conditions of the scheme are met.

    If you pay Income Tax at the basic rate, then no additional relief is due on your gifts. However, higher rate and additional rate taxpayers are eligible to claim relief on the difference between the basic rate and their...

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    Help to Buy: ISA scheme Income Tax

    The Help to Buy: ISA scheme launched in December 2015 and allows savers to claim a government bonus of 25% on monthly savings of up to £200 towards their first home. The bonus translates to: an extra £50 added to every £200 saved up to a maximum governmental contribution of £3,000 on £12,000 worth of savings.

    New figures have revealed that since the scheme was launched (until the end of March 2018), first-time buyers have received bonuses of £157m which were used to finance properties worth £25.3bn in total. The mean value of a property purchased through the scheme, is £172,448 compared to an...

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    Allowable costs for property businesses Income Tax

    Costs that can be deducted by individuals that have a property rental business, depend on the type of property that is being rented out. There are three main categories of property business that need to be considered.

    Residential properties

    This is by far the most common type of investment property held by individuals. Tax relief can be claimed on allowable expenses incurred in the day-to-day letting of the property. These can include expenses such as:

    • letting agent's fees,
    • certain legal fees,
    • accountant's fees,
    • building and content insurance and
    • certain services paid for by the landlord such as...
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    Selling your UK home if you live abroad Capital Gains Tax

    There are special reporting requirements and the possibility of a tax bill when you sell your home in the UK and you live abroad. A Capital Gains Tax (CGT) charge on the sale of UK residential property by non-UK residents was introduced in April 2015. Only the amount of the overall gain relating to the period after 5 April 2015 is chargeable to tax.

    In certain circumstances private residence relief may apply when a property is the owner’s only or main residence. For example, you don’t usually pay any tax for any tax years in which you, your spouse or civil partner spent at least 90 days in...

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    Are you eligible for CGT Entrepreneurs’ Relief? Capital Gains Tax

    Entrepreneurs' Relief applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. Where this relief is available, CGT of 10% is payable in place of the standard rate. There are a number of qualifying conditions that must be met in order to qualify for the relief.

    When the relief was first introduced, there was a lifetime limit of £1 million for gains. This was increased to £2 million from 6 April 2010, to £5 million from 23 June 2010 and to a generous £10 million from 6 April 2011. This is a lifetime limit that means that individuals can...

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    Capital Gains after divorce or separation Capital Gains Tax

    When spouses or civil partners are living together they are both treated as separate individuals for Capital Gains Tax (CGT) purposes. However, assets can be transferred between them free of CGT. This means that when a couple are together there is no CGT payable on assets gifted or sold to their spouse or civil partner.

    There are different CGT rules that apply to a married couple that are divorced or to civil partners whose civil partnership is dissolved. These rules can also apply to couples after separation. In short, where a couple are no longer living together, then the transfer of an...

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    Gifting share in home Inheritance Tax

    Most gifts made during a person's life are not subject to tax at the time of the gift. These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'. The gifts or transfers achieve their potential of becoming exempt from Inheritance Tax if the taxpayer survives for more than seven years after making the gift. There is a tapered relief available if the donor dies between three and seven years after the gift is made.

    The rules are different if the person making the gift retains some 'enjoyment' of the gift made. This is usually the case where the donor does not want to give up...

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    Correcting errors on your VAT return Value Added Tax

    Where an error on a past VAT return is uncovered taxpayers have a duty to correct the error as soon as possible. HMRC can also charge penalties and interest if an error is due to careless or dishonest behaviour.

    As a general rule, you can use a current VAT return to make any necessary adjustment. However, in order to do so, there are three important conditions that must be met:

    1. The error must be below the reporting threshold.
    2. The error must not be deliberate.
    3. The error can only relate to an accounting period that ended less than 4 years ago.

    Under the reporting threshold rule, taxpayers can make an...

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    VAT on transfer of business as a going concern Value Added Tax

    The transfer of a business as a going concern (TOGC) rules consider 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.

    HMRC lists the following conditions necessary for a...

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    Tax free health benefits Employee Benefits

    There is no requirement for employers to pay tax and National Insurance on certain health benefits covered by tax concessions or exemptions. For example, there is no requirement to report employees’ medical or dental treatment or insurance if they are a part of a salary sacrifice arrangement.

    In addition, the following health benefits can be provided tax free:

    • A maximum of one health-screening assessment and one medical check-up in any year.
    • Eye tests required by health and safety legislation for employees who use a computer monitor or other type of screen.
    • Glasses or contact lenses required by...
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    What is Mileage Allowance relief? Employee Benefits

    Employees who use their own car at work can under certain circumstances be paid a tax-free allowance by their employers when using their own car, van, motorcycle or bike for work purposes. This is known either as Mileage Allowance Relief or a Mileage Allowance Payment. It is important to note that this tax-free allowance, does not include journeys to and from work but is relevant to employees who use their own vehicles to do other business-related mileage.

    Employers usually make payments based on a set rate per mile depending on the mode of transport used. There are approved mileage rates...

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    Limited liability for sole traders? General

    The Office of Tax Simplification (OTS) has updated its papers on the possibility of launching a Sole Enterprise Protected Assets (SEPA) business model for sole traders.

    SEPA status would allow sole traders to retain the simplicity of sole trader status but at the same time offer liability protection for a sole trader's primary residence and possibly the individual’s pension fund. SEPA would not have a separate legal identity and the sole trader would continue to be taxed as is currently the case as a self-employed person.

    The introduction of the SEPA status would simplify the tax and...

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    Boosting recycling with tax system General

    Over 162,000 responses were received to a call for evidence launched by HM Treasury on how changes to the tax system could help curb plastic waste. This was the largest ever response to a call for evidence in the Treasury’s history, and included responses not just from members of the public but also from representatives of 222 diverse organisations.

    Accordingly, the Chancellor, Philip Hammond, has vowed to take action through the tax system to reduce the amount of single-use plastic waste, and we can expect to see announcements as part of the upcoming Budget this autumn.

    Measures which received...

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    Tax Diary August/September 2018 Tax Diary

    1 September 2018 - Due date for Corporation Tax due for the year ended 30 November 2017.

    19 September 2018 - PAYE and NIC deductions due for month ended 5 September 2018. (If you pay your tax electronically the due date is 22 September 2018)

    19 September 2018 - Filing deadline for the CIS300 monthly return for the month ended 5 September 2018.

    19 September 2018 - CIS tax deducted for the month ended 5 September 2018 is payable by today.

    1 October 2018 - Due date for Corporation Tax due for the year ended 31 December 2017.

    19 October 2018 - PAYE and NIC deductions due for month ended 5 October...

     Read more  

    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  |   |

    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.