CALENDAR & NEWS
Digital Tax Accounts
Digital Accounts were announced in the March 2015 Budget. This potentially represents the largest change to the UK tax system since the introduction of Self Assessment in 1997. The task for HMRC to implement this change is large and the timescales envisaged (within 5 years) are challenging.
The basic idea is that each individual will be able to access their tax account 24/7 via all digital means (phone, tablet, smart tv, pc etc). All employers/pension providers/banks/investment houses and so on will provide direct information to this HMRC system to pre populate sections of the individual accounts. There are issues that have yet to be addressed/confirmed concerning various sources of income where the information will still need to come from the taxpayer. In addition, there are questions as to who takes responsibility and when for information accuracy and so on.
Various consultations have been held. There is a lot still to be decided and law changes are yet to be implemented in full for the changes to be made. Whilst this has moved on considerably since the initial announcement it remains that there are a lot of unknowns, with HMRC yet to confirm all the details. If you wish to discuss how this will impact your own individual position please get in touch.
Resident v Non Resident Issues
Following the introduction of legislation in 2013/14 defining residence and non residence for UK tax purposes, various scenarios now exist that did not before whereby without planning even where it seems obvious that a taxpayer is not resident he or she can easily be deemed resident under the new rules.
Averaging of visits to the UK over 4 years to determine long term status no longer apply, and someone can, in certain circumstances be resident in the UK for the entire year by simply being in the UK for as few as 16 days. Generally, if an individual works full time abroad for a complete tax year he or she will not be UK resident in that year if they keep within visit limitations and split year treatment may apply before and after. However, if not working full time then they may continue to be resident in the UK depending on ties to the UK such as a home being available or dependent children remaining in the UK.
This is an area where advice should be sought in the first instance and on a continuing basis as there are now a large number of factors to consider annually to ensure that residence status is in accordance with the facts under the new legislation.
Top Rate of Tax, Tax on Savings and Personal Allowances
The top rate of tax was altered with effect from 2013/14, reducing the top rate charged to 45%, which remains for 2016/17.
A restriction in Personal Allowances now applies for those individuals earning in excess of £100000, with the Personal Allowance reducing by £1 for every £2 above the limit. Income in excess of this, taking in to account the allowance restriction can be seen to give a liability at up to 60% on personal allowances lost.
For 2016/17 onwards each basic rate taxpayer can receive up to £1000 of bank interest tax free, banks will now pay interest gross. This allowance is reduced to £500 for higher rate taxpayers. Anyone in receipt of more than £1000 interest and/or higher rate payers will need to review their position at least annually to ensure they do not build up an unforeseen tax liability.
Rates of tax on dividends have also changed, with the first £5000 exempt, and then several rates applying thereafter. Previously, basic rate payers had no additional liability on top of the 10% tax credit, higher rate payers paid an additional 22.5%. The changes in tax rates on dividends will require careful calculations for any taxpayer in receipt of more than £5000 from this source.
A "married couples allowance" now exists. This is not an additional allowance, but simply a transfer of 10% of one spouse's personal allowance to the other, where one spouse is a basic rate payer and the other does not pay tax at all. This situation needs to be kept under review/considered annually, the maximum saving is 10% of the personal allowance at 20%.
Whilst we cannot do anything to change tax rates or allowances it may be possible to look at an individual situation and take advantage of opportunities to reduce an individuals overall liability, dependant on attitude to general investment risk etc. We do not, however, participate in or sell any aggressive tax avoidance schemes.
CALENDER Important Dates
1 April 2017
Corporation tax rate for companies is 19% for 2017/18, small companies rate the same
6 April 2017
HMRC issue Self Assessment returns and Notices to Complete a return for the year to 5 April 2017.
31 July 2017
Second payment on account due for 2016/17 (based on 50% of 2015/16 liability unless 2016/17 return already submitted and the liability is lower for later year in which case it will be the lower balance due)
Further 5% surcharge added to any tax still unpaid for 2015/16 tax year.
30 September 2017
File accounts at Companies House for private limited companies with a 31 December 2016 year end.
1 October 2017
Corporation tax due for small companies with accounting periods ended 31 December 2016.
5 October 2017
Last date to inform HMRC of new sources of personal income for 2016/17 year.
31 October 2017
Final date for submission of a return on paper, for HMRC to calculate the tax position and to apply for tax to be coded against income in following year (where less than £3000)
1 November 2017
Paper returns submitted after this date will attract a £100 penalty
30 December 2017
Final date for submission of an online return where any tax under £3000 can be collected via a notice of coding against income in the following year.
1 January 2018
Corporation tax due for small and medium-‐sized companies with accounting periods ended 31 March 2017.
31 January 2018
Final date for submission of an online return
Final date for paper returns for taxpayers who are unable to submit online where HMRC are unable to accept online returns
Due date for payment of Final payment for 2016/17 liability
Due date for payment of 1st payment on account for 2017/18 (where more than £3000 payable or greater than 20% of total tax liability for 2016/17)
1 February 2018
Interest starts to run on unpaid tax as at 31 January 2018
£100 Fine imposed where HMRC requested return for 2016/17 but not submitted. Additional fine of £10 per day for 3 months (total up to £900) starts running at midnight.
28 February 2018
5% Surcharge added on tax unpaid for 2016/17 at this date, interest will still be running.
31 March 2018
Final dale to submit CTSA return for year ended 31 March 2017.