This month's Tax Talk newsletter includes articles on lifetime giving ...
This month’s Tax Talk newsletter includes articles on lifetime giving and IHT traps, how gains can be deferred through Rollover Relief, a note of how long you need to keep tax records and also the tax position on staff Christmas parties and gifts. Our next Tax Talk newsletter will be published on Thursday 8 December 2016. Commentary and analysis - Autumn Statement 2016 Philip Hammond’s first Autumn Statement announcement will be held on 23 November 2016, and as usual we will be producing commentary and analysis during and after the announcement. On the day and post Autumn Statement our experts will provide: • •
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Immediate comment and updates during the announcement through the firm’s Twitter profile. Articles for our website to be published late 23 / early 24 November on relevant sectors/ services affected by the announcement. If you would like to receive an email which includes all of the updates produced on the day please subscribe to ‘Budget news’ here. On 24 November by 10am we will produce a comprehensive summary of the announcement which will be found here. An electronic version of this summary will be available for all to download.
Please keep an eye out on our website for updates and feel free to use our contact form, or Tweet to us, any questions arising from the Autumn Statement.
Watch out - being generous may cost you more than you expect... You would think making a gift to pass on wealth to the next generation to try and save Inheritance Tax (IHT) on death is easy wouldn’t you? Unfortunately, that’s not always the case. If you gift an asset but retain some benefit from it, then for IHT that is not an outright gift until the benefit ceases – until then, it is a ‘gift with reservation of benefit’. For example, if you give your house away and continue to live in it rent free, then the house stays in your estate. Ignoring the questions of retention of benefit, be aware that a transfer of land or property is only legally valid if it is in writing, and may be evidenced by a ‘deed of trust’ or changing the entry at the land registry. Parents often make loans to their children to help them buy their first house and then later let the children off repaying them. Unfortunately, this ‘waiver’ or gift of the loans has to be done in a special way using a ‘deed’ which has certain legal requirements to be effective – a simple verbal agreement or letter doesn’t work so the loans remain in your estate. When making a cash-type payment, it may not be clear at the time if this is intended to be a loan or a gift – so it is worthwhile including a letter spelling this out. Also, bear in mind that it is only for IHT that a gift with reservation of benefit is not effective – it may still be valid legally and for Capital Gains Tax (CGT) purposes. A gift of an asset liable to CGT incurs a potential CGT charge based on the difference between its cost and the market value at date of gift, even if no cash changes hands.
If the gift is of the family home which at that stage is exempt from CGT because of private residence relief, then no CGT will arise at that point. However, when the recipient sells the property, there is CGT due on his or her gain – assuming that he or she does not live in it as their home. If you have continued to live in it, then there is the worst of both worlds – there is a CGT charge which could have been avoided, and no IHT saving. Pre-Owned Assets Tax (POAT) is another nasty tax charge that can hit the unwary. One situation where this can arise is where you sell your home and give the proceeds to your children so that they can then buy you a house to live in or perhaps build a ‘granny annex’. In this case, whilst you may have made a gift which is valid for IHT and other purposes, you will be liable to income tax on a notional market rent applicable to the property you use unless you pay a market rent which is then taxed on the children. Apart from IHT saving, another common reason for gifting the family home in particular (though this might be any asset) is to try to lessen future care home fees by reducing wealth. However, this may well not be effective – local authorities can look at gifts and bring them into account if it was reasonable to assume they were made with this intention. If you would like to know more about the tax pitfalls of giving, please speak with your usual Kreston Reeves adviser here or contact Nigel Moon here or on +44 (0)330 124 1399. Buy-to-let incorporation, is it for you? So, if you own one or more buy-to-let properties you might currently be taxing your brain as to whether to incorporate your property holdings within a limited company wrapper to mitigate some of the tax damage arising from various recent HMRC initiatives? Tempting though it might sound to swop a personal income tax rate of up to 45% on rental profits for a (soon to be) corporate rate of only 17%, the reality (as always) is that the devil is in the details and that for the vast majority of property owners the maths just doesn’t work. In simple terms, the problem arises from the ‘admission price’ of converting properties owned personally to those owned by a limited company...namely Capital Gains Tax on any value uplift since the properties were first purchased (at rates up to 28%) and Stamp Duty Land Tax (at rates up to 12%). Of course it’s always worth a conversation as in a few cases (especially for those who are highly leveraged on their portfolio) the numbers will indicate that worthwhile savings could accrue from incorporation. To discuss this further please speak with your usual Kreston Reeves adviser here or contact Stephen Metcalf here or on +44 (0)330 124 1399 to ascertain how the land lies for your particular circumstances.
Deferring taxable gains until future sales It may be possible to delay paying Capital Gains Tax (CGT) if you sell a business asset that is subject to a charge to CGT, but you use all or part of the proceeds to buy new business assets. The relief you can claim is called Rollover Relief. This relief means you won’t usually pay any CGT until you sell the new, replacement asset. Depending on the circumstances of the replacement asset sale, you may then need to pay CGT on the gain from the original asset. You can also claim provisional Rollover Relief if you are planning to buy new assets with your proceeds of sale, but haven’t done so as yet, or if you use the proceeds to improve assets you already own. To qualify for Rollover Relief, the following circumstances must apply: • • •
You must normally buy the new assets within three years of selling or disposing of the old ones (or up to one year before) Your business must be trading when you sell the old assets and buy the new ones You must use the old and new assets in your business
You can claim relief on assets including land and buildings, fixed plant or machinery – and space stations! The old and new assets don’t have to be the same kind. Different rules apply if you only reinvest part of the proceeds from selling the old assets, if the old were only partly used in your business, or if you use the proceeds to buy ‘depreciating assets’ (fixed plant or machinery, or assets expected to last for less than 60 years when acquired). The devil as always is in the detail. If you are considering the sale of an asset that would normally be subject to a CGT charge, and you are aiming to replace the asset, we would suggest that you call to discuss the transactions to make sure you make the most of this relief. For further information please contact your usual Kreston Reeves adviser here or Matthew Creevy here or on +44 (0)330 124 1399. Staff Christmas parties and gifts It’s the time of year when staff Christmas parties are being planned and staff gifts ordered, so here is a quick update on the tax implications of your generosity. There is a specific exemption to allow annual staff parties to be provided without giving a taxable benefit for the employee. The event must meet the following conditions: • •
The employer must have a similar event every year e.g. a Christmas party or summer BBQ The event must be open to all employees (or all employees at a particular location) to attend
•
Only those events which total less than £150 per employee per tax year are exempt
You will need to calculate the cost per head (include all attendees not just staff). All the costs must be included e.g. venue hire, caterers, entertainment, decorations, transport/taxis home etc. This gives the cost per head for that event. Don’t forget this needs to be the gross cost including any VAT.
How long do I need to keep tax records? The length of time you need to keep tax records depends on the types of income you earn and the types of tax you are paying. A list of time limits is set out below: Income Tax and Capital Gains Tax •
If the cost per head comes to more than £150 then the whole of the benefit is taxable on the employees. In this situation a PAYE Settlement Arrangement may be appropriate where the employer effectively covers the tax and National Insurance (NI) costs so that the employee’s take home pay position is unaffected. Where an employer holds more than one event in a year then it is important to assess whether both events can be treated as taxfree benefits. For example, a Christmas party which costs £110 per head and a summer BBQ which cost £60 per head. Only the Christmas party will qualify (the event that most effectively uses of the limit should be chosen), as the summer BBQ would push the cost over £150.
•
•
• •
If you are thinking about giving gifts to your staff this Christmas, these can be treated as tax-free trivial benefits provided they meet the new trivial benefit rules i.e. essentially not cash or exchangeable for cash, less than £50 and not a contractual entitlement. For further information please speak with your usual Kreston Reeves adviser here or contact Emma Beynon here or on +44 (0)330 124 1399.
If you are not in business One year from the 31 January following the end of the tax year. For 2016-17, you would need to keep your records until 31 January 2019 If you are in business – which includes rental income Five years from the 31 January following the end of the tax year. For 2016-17, you would need to keep your business and other tax records until 31 January 2023 A company subject to Corporation Tax Six years from the end of an accounting period. For the year ending 31 December 2016 you would need to keep records until 31 December 2022 VAT You should keep records for at least six years PAYE You should keep payroll records for three years after the end of a tax year. For 2016-17 this would be until 5 April 2020
These deadlines can be extended. For example, if: • • • •
You file your return late A return is subject to an enquiry or compliance check Records relate to a transaction spanning more than one year An asset is bought which is expected to have a life beyond the time limit
Pension Lifetime Allowance - individual protection There has been significant discussion concerning the revised Pension Lifetime Allowance of £1m from 6th April 2016 and the potential tapering of the Annual Allowance from the same date for high earners to as little as £10,000 p.a.
If you require any further information or are unsure if it is safe to destroy your records please contact your usual Kreston Reeves adviser here or Margaret Schofield on +44 (0)330 124 1399. Limits on certain claims for tax relief
What may have escaped attention is that applications for HMRC Individual Protection 2014 can still be made but must be made before 5th April 2017. This valuable protection is relevant to those with pension values in excess of £1.25m as at 5th April 2014, but time is running out! If you might be affected by the Lifetime or Annual Allowance restrictions please contact Kreston Reeves Financial Planning. We can analyse your pension situation, make recommendations for a suitable strategy including appropriate HMRC protection and assist you with the application process.
From 6 April 2013, the total amount of certain income tax reliefs that can be used to reduce your total taxable income is limited to £50,000, or 25% of your adjusted total income, if higher. The main reliefs subject to this limit are: •
• Please speak with your usual Kreston Reeves adviser here, making reference to this article, or contact Paul Howson of Kreston Reeves Financial Planning here or on +44 (0)330 124 1399.
Trade loss relief against general income and early trade losses relief - claimed on the self-employment, Lloyd’s underwriters or partnership pages Property loss relief (relating to capital allowances or agricultural expenses) - claimed on the UK property or foreign pages
•
•
•
Post-cessation trade relief, post-cessation property relief, employment loss relief, former employee’s deduction for liabilities, losses on deeply discounted securities and strips of government securities - claimed on the additional information pages Share loss relief, unless claimed on Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) shares - claimed on the capital gains summary pages Qualifying loan interest - claimed on the additional information pages
These restrictions do not apply to Gift Aid relief; nor pension contributions which have their own limits. It is worth considering these restrictions as they may limit your ability to recover a proportion of cash lost by claiming a reduction in tax payable on future or past income and/or gains. If you require clarification please contact your usual Kreston Reeves adviser here or Kay Aylott here or on +44 (0)330 124 1399. Tax planning solutions for property investors/landlords Jo White, Kreston Reeves Property Tax Expert, will tomorrow offer solutions and advice on how to successfully invest in UK property. The event organised by Graham Turrell, Director of HighGround Property Investment, and Louise Reynolds, Director of Property Venture® European property investment will cover topical issues for efficient tax planning. Jo will cover the following issues: • • •
The implications of the new UK property tax regime. How best to survive in the new tax landscape - is to sell some, or all, of your buy-to-let portfolio? Considering the most tax efficient ways to grow a property portfolio.
With the seminar as a whole focussed on: • • • •
Changes to tax law and how it might damage property wealth. Ways to minimise the impact of the new UK property taxes on your portfolio. How to grow your portfolio in the most tax-efficient manner. Inspiration or new ideas.
If you would like to learn more about tax planning solutions for property investors/landlords please contact Jo White here or on +44 (0)330 124 1399. HMRC undertake even more investigations into taxpayers in 2015 Can you afford the costs of an investigation into your business? While HMRC continues to go after high profile tax evaders and those using expensive offshore tax havens (The Panama Papers
come to mind), HMRC is increasing the number of enquiries on ordinary taxpayers and businesses, because it is viewed by them as an ‘easy return’ for little effort. HMRC’s Local Compliance unit in 2015 is reporting that for every £1 spent on enquiry work, they are recovering £20 which is a rate of return that many businesses would like to enjoy. HMRC are using far more information which is going into their ‘Connect’ computer system to identify taxpayers and businesses which may not be fully reporting their income or profits. What HMRC does not worry about, is the cost and reputational damage that may be done to a business by a tax enquiry, even when there is no additional tax found to be due. Nick Alder, our Tax Investigation Partner, has noticed a worrying trend with more recent enquiries, where HMRC are just following information provided, however erroneous it may be. In addition, very few of the Inspectors have had any experience of actually working in a business environment and do not really understand how the ‘business world’ operates. Many enquiries start from a VAT or employer (PAYE/NIC) compliance check, which in their own right can be very costly and expensive in both time and money for the taxpayer. Furthermore, a substantial amount of that information may well find itself being forwarded to an ‘Inspector of Taxes’ who will use this information to then look at the company’s accounts and corporation tax returns, before issuing the opening letter and enquiry. For many years Kreston Reeves have operated a Fee Insurance scheme for its clients to protect them from the costs of an enquiry. It has not been uncommon on occasions for simple company enquiries to cost in excess of £5,000, irrespective of whether any tax, penalties and interest are also required to be paid. Dealing with the Taxman is strenuous and worrying enough anyway, without having to worry about the costs of meeting the accountant’s fees, who will no doubt have to undertake a time consuming exercise in establishing the correct facts, rather than what HMRC purports. Being reassured that the accountant can provide a first class service without any worry of the level of fees that will be incurred offers huge peace of mind to our clients who take up this service. Please click here for details of our Tax Investigations service. To discuss this article further and for more information on our Fee Insurance offering for clients please contact Nick Alder here or on +44 (0)330 124 1399.
Tax diary November/December 2016
Kreston Reeves – winners of ‘Accountancy Firm of the Year’ award at the M&A awards 2013. Shortlisted in the ‘Business and Financial Services’ category at the London Loves Excellence
1 November 2016 - Due date for Corporation Tax payable for the year ended 31 January 2016.
Awards 2013. Kreston Reeves achieved the “One to Watch” standard 2013 from Best Companies, the name behind The Sunday Times ‘Best Companies to Work For’ list. Shortlisted as ‘Mid Tier firm of the Year’ at British Accountancy Awards 2012. Winner of the ‘Developing People for Business
14 November 2016 - Due date for Corporation Tax for companies required to pay their tax by instalments with a year end of 31 January, 30 April, 31 July, or 31 October
Success’ award at the Gatwick Diamond Business Awards 2012. Kreston Reeves have made every effort to ensure accuracy at the time of publication. Information may be subject to legislative changes. Recipients should note that information may not reflect individual circumstances and should, therefore, not act on any information without seeking professional advice.
19 November 2016 - PAYE and NIC deductions due for month ended 5 November 2016. (If you pay your tax electronically the due date is 22 November 2016.)
We cannot accept any liability for actions taken or not taken as a result of the information given in this factsheet. Kreston Reeves LLP (the Firm) is a Limited Liability Partnership registered in England and Wales with registered number OC328775. Registered office: 37 St Margaret’s Street, Canterbury CT1 2TU.
19 November 2016 - Filing deadline for the CIS300 monthly return for the month ended 5 November 2016.
Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk for the UK and www.cro.ie/auditors for Ireland, under reference number C001541365.
19 November 2016 - CIS tax deducted for the month ended 5 November 2016 is payable by today.
A member of Kreston International | A global network of independent accounting firms. Kreston Reeves Financial Planning Limited, is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales with registered number 03852054. Registered office: 37
1 December 2016 - Due date for Corporation Tax payable for the year ended 29 February 2016.
St Margaret’s Street, Canterbury CT1 2TU. Kreston Reeves Corporate Finance LLP is a Limited Liability Partnership registered in England and Wales with registered number OC306454. Registered office: 37 St Margaret’s Street, Canterbury CT1
14 December 2016 - Due date for Corporation Tax for companies required to pay their tax by instalments with a year end of 28 February, 31 May, 31 August or 30 November. 19 December 2016 - PAYE and NIC deductions due for month ended 5 December 2016. (If you pay your tax electronically the due date is 22 December 2016) 19 December 2016 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2016. 19 December 2016 - CIS tax deducted for the month ended 5 December 2016 is payable by today. 30 December 2016 - Deadline for filing 2015-16 Self Assessment tax returns online to include a claim for under payments to be collected via tax code in 2017-18.
2TU. Kreston Reeves Corporate Finance LLP is authorised and regulated by the Financial Conduct Authority.
Website: www.krestonreeves.com Email: [email protected] Kreston Reeves Tax Talk newsletter November 2016 © Kreston Reeves
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Immediate comment and updates during the announcement through the firm’s Twitter profile. Articles for our website to be published late 23 / early 24 November on relevant sectors/ services affected by the announcement. If you would like to receive an email which includes all of the updates produced on the day please subscribe to ‘Budget news’ here. On 24 November by 10am we will produce a comprehensive summary of the announcement which will be found here. An electronic version of this summary will be available for all to download.
Please keep an eye out on our website for updates and feel free to use our contact form, or Tweet to us, any questions arising from the Autumn Statement.
Watch out - being generous may cost you more than you expect... You would think making a gift to pass on wealth to the next generation to try and save Inheritance Tax (IHT) on death is easy wouldn’t you? Unfortunately, that’s not always the case. If you gift an asset but retain some benefit from it, then for IHT that is not an outright gift until the benefit ceases – until then, it is a ‘gift with reservation of benefit’. For example, if you give your house away and continue to live in it rent free, then the house stays in your estate. Ignoring the questions of retention of benefit, be aware that a transfer of land or property is only legally valid if it is in writing, and may be evidenced by a ‘deed of trust’ or changing the entry at the land registry. Parents often make loans to their children to help them buy their first house and then later let the children off repaying them. Unfortunately, this ‘waiver’ or gift of the loans has to be done in a special way using a ‘deed’ which has certain legal requirements to be effective – a simple verbal agreement or letter doesn’t work so the loans remain in your estate. When making a cash-type payment, it may not be clear at the time if this is intended to be a loan or a gift – so it is worthwhile including a letter spelling this out. Also, bear in mind that it is only for IHT that a gift with reservation of benefit is not effective – it may still be valid legally and for Capital Gains Tax (CGT) purposes. A gift of an asset liable to CGT incurs a potential CGT charge based on the difference between its cost and the market value at date of gift, even if no cash changes hands.
If the gift is of the family home which at that stage is exempt from CGT because of private residence relief, then no CGT will arise at that point. However, when the recipient sells the property, there is CGT due on his or her gain – assuming that he or she does not live in it as their home. If you have continued to live in it, then there is the worst of both worlds – there is a CGT charge which could have been avoided, and no IHT saving. Pre-Owned Assets Tax (POAT) is another nasty tax charge that can hit the unwary. One situation where this can arise is where you sell your home and give the proceeds to your children so that they can then buy you a house to live in or perhaps build a ‘granny annex’. In this case, whilst you may have made a gift which is valid for IHT and other purposes, you will be liable to income tax on a notional market rent applicable to the property you use unless you pay a market rent which is then taxed on the children. Apart from IHT saving, another common reason for gifting the family home in particular (though this might be any asset) is to try to lessen future care home fees by reducing wealth. However, this may well not be effective – local authorities can look at gifts and bring them into account if it was reasonable to assume they were made with this intention. If you would like to know more about the tax pitfalls of giving, please speak with your usual Kreston Reeves adviser here or contact Nigel Moon here or on +44 (0)330 124 1399. Buy-to-let incorporation, is it for you? So, if you own one or more buy-to-let properties you might currently be taxing your brain as to whether to incorporate your property holdings within a limited company wrapper to mitigate some of the tax damage arising from various recent HMRC initiatives? Tempting though it might sound to swop a personal income tax rate of up to 45% on rental profits for a (soon to be) corporate rate of only 17%, the reality (as always) is that the devil is in the details and that for the vast majority of property owners the maths just doesn’t work. In simple terms, the problem arises from the ‘admission price’ of converting properties owned personally to those owned by a limited company...namely Capital Gains Tax on any value uplift since the properties were first purchased (at rates up to 28%) and Stamp Duty Land Tax (at rates up to 12%). Of course it’s always worth a conversation as in a few cases (especially for those who are highly leveraged on their portfolio) the numbers will indicate that worthwhile savings could accrue from incorporation. To discuss this further please speak with your usual Kreston Reeves adviser here or contact Stephen Metcalf here or on +44 (0)330 124 1399 to ascertain how the land lies for your particular circumstances.
Deferring taxable gains until future sales It may be possible to delay paying Capital Gains Tax (CGT) if you sell a business asset that is subject to a charge to CGT, but you use all or part of the proceeds to buy new business assets. The relief you can claim is called Rollover Relief. This relief means you won’t usually pay any CGT until you sell the new, replacement asset. Depending on the circumstances of the replacement asset sale, you may then need to pay CGT on the gain from the original asset. You can also claim provisional Rollover Relief if you are planning to buy new assets with your proceeds of sale, but haven’t done so as yet, or if you use the proceeds to improve assets you already own. To qualify for Rollover Relief, the following circumstances must apply: • • •
You must normally buy the new assets within three years of selling or disposing of the old ones (or up to one year before) Your business must be trading when you sell the old assets and buy the new ones You must use the old and new assets in your business
You can claim relief on assets including land and buildings, fixed plant or machinery – and space stations! The old and new assets don’t have to be the same kind. Different rules apply if you only reinvest part of the proceeds from selling the old assets, if the old were only partly used in your business, or if you use the proceeds to buy ‘depreciating assets’ (fixed plant or machinery, or assets expected to last for less than 60 years when acquired). The devil as always is in the detail. If you are considering the sale of an asset that would normally be subject to a CGT charge, and you are aiming to replace the asset, we would suggest that you call to discuss the transactions to make sure you make the most of this relief. For further information please contact your usual Kreston Reeves adviser here or Matthew Creevy here or on +44 (0)330 124 1399. Staff Christmas parties and gifts It’s the time of year when staff Christmas parties are being planned and staff gifts ordered, so here is a quick update on the tax implications of your generosity. There is a specific exemption to allow annual staff parties to be provided without giving a taxable benefit for the employee. The event must meet the following conditions: • •
The employer must have a similar event every year e.g. a Christmas party or summer BBQ The event must be open to all employees (or all employees at a particular location) to attend
•
Only those events which total less than £150 per employee per tax year are exempt
You will need to calculate the cost per head (include all attendees not just staff). All the costs must be included e.g. venue hire, caterers, entertainment, decorations, transport/taxis home etc. This gives the cost per head for that event. Don’t forget this needs to be the gross cost including any VAT.
How long do I need to keep tax records? The length of time you need to keep tax records depends on the types of income you earn and the types of tax you are paying. A list of time limits is set out below: Income Tax and Capital Gains Tax •
If the cost per head comes to more than £150 then the whole of the benefit is taxable on the employees. In this situation a PAYE Settlement Arrangement may be appropriate where the employer effectively covers the tax and National Insurance (NI) costs so that the employee’s take home pay position is unaffected. Where an employer holds more than one event in a year then it is important to assess whether both events can be treated as taxfree benefits. For example, a Christmas party which costs £110 per head and a summer BBQ which cost £60 per head. Only the Christmas party will qualify (the event that most effectively uses of the limit should be chosen), as the summer BBQ would push the cost over £150.
•
•
• •
If you are thinking about giving gifts to your staff this Christmas, these can be treated as tax-free trivial benefits provided they meet the new trivial benefit rules i.e. essentially not cash or exchangeable for cash, less than £50 and not a contractual entitlement. For further information please speak with your usual Kreston Reeves adviser here or contact Emma Beynon here or on +44 (0)330 124 1399.
If you are not in business One year from the 31 January following the end of the tax year. For 2016-17, you would need to keep your records until 31 January 2019 If you are in business – which includes rental income Five years from the 31 January following the end of the tax year. For 2016-17, you would need to keep your business and other tax records until 31 January 2023 A company subject to Corporation Tax Six years from the end of an accounting period. For the year ending 31 December 2016 you would need to keep records until 31 December 2022 VAT You should keep records for at least six years PAYE You should keep payroll records for three years after the end of a tax year. For 2016-17 this would be until 5 April 2020
These deadlines can be extended. For example, if: • • • •
You file your return late A return is subject to an enquiry or compliance check Records relate to a transaction spanning more than one year An asset is bought which is expected to have a life beyond the time limit
Pension Lifetime Allowance - individual protection There has been significant discussion concerning the revised Pension Lifetime Allowance of £1m from 6th April 2016 and the potential tapering of the Annual Allowance from the same date for high earners to as little as £10,000 p.a.
If you require any further information or are unsure if it is safe to destroy your records please contact your usual Kreston Reeves adviser here or Margaret Schofield on +44 (0)330 124 1399. Limits on certain claims for tax relief
What may have escaped attention is that applications for HMRC Individual Protection 2014 can still be made but must be made before 5th April 2017. This valuable protection is relevant to those with pension values in excess of £1.25m as at 5th April 2014, but time is running out! If you might be affected by the Lifetime or Annual Allowance restrictions please contact Kreston Reeves Financial Planning. We can analyse your pension situation, make recommendations for a suitable strategy including appropriate HMRC protection and assist you with the application process.
From 6 April 2013, the total amount of certain income tax reliefs that can be used to reduce your total taxable income is limited to £50,000, or 25% of your adjusted total income, if higher. The main reliefs subject to this limit are: •
• Please speak with your usual Kreston Reeves adviser here, making reference to this article, or contact Paul Howson of Kreston Reeves Financial Planning here or on +44 (0)330 124 1399.
Trade loss relief against general income and early trade losses relief - claimed on the self-employment, Lloyd’s underwriters or partnership pages Property loss relief (relating to capital allowances or agricultural expenses) - claimed on the UK property or foreign pages
•
•
•
Post-cessation trade relief, post-cessation property relief, employment loss relief, former employee’s deduction for liabilities, losses on deeply discounted securities and strips of government securities - claimed on the additional information pages Share loss relief, unless claimed on Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) shares - claimed on the capital gains summary pages Qualifying loan interest - claimed on the additional information pages
These restrictions do not apply to Gift Aid relief; nor pension contributions which have their own limits. It is worth considering these restrictions as they may limit your ability to recover a proportion of cash lost by claiming a reduction in tax payable on future or past income and/or gains. If you require clarification please contact your usual Kreston Reeves adviser here or Kay Aylott here or on +44 (0)330 124 1399. Tax planning solutions for property investors/landlords Jo White, Kreston Reeves Property Tax Expert, will tomorrow offer solutions and advice on how to successfully invest in UK property. The event organised by Graham Turrell, Director of HighGround Property Investment, and Louise Reynolds, Director of Property Venture® European property investment will cover topical issues for efficient tax planning. Jo will cover the following issues: • • •
The implications of the new UK property tax regime. How best to survive in the new tax landscape - is to sell some, or all, of your buy-to-let portfolio? Considering the most tax efficient ways to grow a property portfolio.
With the seminar as a whole focussed on: • • • •
Changes to tax law and how it might damage property wealth. Ways to minimise the impact of the new UK property taxes on your portfolio. How to grow your portfolio in the most tax-efficient manner. Inspiration or new ideas.
If you would like to learn more about tax planning solutions for property investors/landlords please contact Jo White here or on +44 (0)330 124 1399. HMRC undertake even more investigations into taxpayers in 2015 Can you afford the costs of an investigation into your business? While HMRC continues to go after high profile tax evaders and those using expensive offshore tax havens (The Panama Papers
come to mind), HMRC is increasing the number of enquiries on ordinary taxpayers and businesses, because it is viewed by them as an ‘easy return’ for little effort. HMRC’s Local Compliance unit in 2015 is reporting that for every £1 spent on enquiry work, they are recovering £20 which is a rate of return that many businesses would like to enjoy. HMRC are using far more information which is going into their ‘Connect’ computer system to identify taxpayers and businesses which may not be fully reporting their income or profits. What HMRC does not worry about, is the cost and reputational damage that may be done to a business by a tax enquiry, even when there is no additional tax found to be due. Nick Alder, our Tax Investigation Partner, has noticed a worrying trend with more recent enquiries, where HMRC are just following information provided, however erroneous it may be. In addition, very few of the Inspectors have had any experience of actually working in a business environment and do not really understand how the ‘business world’ operates. Many enquiries start from a VAT or employer (PAYE/NIC) compliance check, which in their own right can be very costly and expensive in both time and money for the taxpayer. Furthermore, a substantial amount of that information may well find itself being forwarded to an ‘Inspector of Taxes’ who will use this information to then look at the company’s accounts and corporation tax returns, before issuing the opening letter and enquiry. For many years Kreston Reeves have operated a Fee Insurance scheme for its clients to protect them from the costs of an enquiry. It has not been uncommon on occasions for simple company enquiries to cost in excess of £5,000, irrespective of whether any tax, penalties and interest are also required to be paid. Dealing with the Taxman is strenuous and worrying enough anyway, without having to worry about the costs of meeting the accountant’s fees, who will no doubt have to undertake a time consuming exercise in establishing the correct facts, rather than what HMRC purports. Being reassured that the accountant can provide a first class service without any worry of the level of fees that will be incurred offers huge peace of mind to our clients who take up this service. Please click here for details of our Tax Investigations service. To discuss this article further and for more information on our Fee Insurance offering for clients please contact Nick Alder here or on +44 (0)330 124 1399.
Tax diary November/December 2016
Kreston Reeves – winners of ‘Accountancy Firm of the Year’ award at the M&A awards 2013. Shortlisted in the ‘Business and Financial Services’ category at the London Loves Excellence
1 November 2016 - Due date for Corporation Tax payable for the year ended 31 January 2016.
Awards 2013. Kreston Reeves achieved the “One to Watch” standard 2013 from Best Companies, the name behind The Sunday Times ‘Best Companies to Work For’ list. Shortlisted as ‘Mid Tier firm of the Year’ at British Accountancy Awards 2012. Winner of the ‘Developing People for Business
14 November 2016 - Due date for Corporation Tax for companies required to pay their tax by instalments with a year end of 31 January, 30 April, 31 July, or 31 October
Success’ award at the Gatwick Diamond Business Awards 2012. Kreston Reeves have made every effort to ensure accuracy at the time of publication. Information may be subject to legislative changes. Recipients should note that information may not reflect individual circumstances and should, therefore, not act on any information without seeking professional advice.
19 November 2016 - PAYE and NIC deductions due for month ended 5 November 2016. (If you pay your tax electronically the due date is 22 November 2016.)
We cannot accept any liability for actions taken or not taken as a result of the information given in this factsheet. Kreston Reeves LLP (the Firm) is a Limited Liability Partnership registered in England and Wales with registered number OC328775. Registered office: 37 St Margaret’s Street, Canterbury CT1 2TU.
19 November 2016 - Filing deadline for the CIS300 monthly return for the month ended 5 November 2016.
Registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk for the UK and www.cro.ie/auditors for Ireland, under reference number C001541365.
19 November 2016 - CIS tax deducted for the month ended 5 November 2016 is payable by today.
A member of Kreston International | A global network of independent accounting firms. Kreston Reeves Financial Planning Limited, is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales with registered number 03852054. Registered office: 37
1 December 2016 - Due date for Corporation Tax payable for the year ended 29 February 2016.
St Margaret’s Street, Canterbury CT1 2TU. Kreston Reeves Corporate Finance LLP is a Limited Liability Partnership registered in England and Wales with registered number OC306454. Registered office: 37 St Margaret’s Street, Canterbury CT1
14 December 2016 - Due date for Corporation Tax for companies required to pay their tax by instalments with a year end of 28 February, 31 May, 31 August or 30 November. 19 December 2016 - PAYE and NIC deductions due for month ended 5 December 2016. (If you pay your tax electronically the due date is 22 December 2016) 19 December 2016 - Filing deadline for the CIS300 monthly return for the month ended 5 December 2016. 19 December 2016 - CIS tax deducted for the month ended 5 December 2016 is payable by today. 30 December 2016 - Deadline for filing 2015-16 Self Assessment tax returns online to include a claim for under payments to be collected via tax code in 2017-18.
2TU. Kreston Reeves Corporate Finance LLP is authorised and regulated by the Financial Conduct Authority.
Website: www.krestonreeves.com Email: [email protected] Kreston Reeves Tax Talk newsletter November 2016 © Kreston Reeves
