Late Filing Penalties

From this year penalties for filing returns after the due date will not be rebated for people who have no tax liability, or the liability is less than £100 as has been done previously.The penalty remains £100 for up to 3 months, after which the penalty is £10 per day up to £900, then after 6 months the greater of an additional £300 or 5% of the tax liabilityand after 12 months the greater of a further £300 or 5% of the tax due and in serious cases 100% of the tax due . The due date for paper returns is 31st October 2011 & for online returns 31st January 2012.

23/3/2011

Budget 2011

The budget not providing any real surprises, the chancellor has stuck firmly to the road map set out in his first budget. This year many of the tax increases set out in last year budget come into force and you should refer to that budget for details.

The main points of this budget are as follows:

Business

• It had already been announced that the full rate of corporation tax (applies to companies earning profits in excess of £1.5 million) would be reduced to 27% from 28% on April 1st and a further reduction of 1% to 26% from that date was announced. Small company profits (up to £300,000) will as previously announced fall to 20% from 21%.

• Business rate relief for small companies has been extended until October 2012.

• Action was announced to prevent the avoidance of tax through Employee Benefit Trusts & Employer Financed Retirement Benefit Schemes. These measures are to be effective from 6th April 2011.

• 21 Enterprise Zones will be re-introduced giving a 100% rebate from business rates with other benefits including simplified planning, superfast broadband and enhanced capital allowances with the emphasis on manufacturing. Full details are to be released later.

• The non-taxable business milage rate was increased to 45p per mile from 6th April for the first 10,000 business miles, previously 40p. The 25p rate after 10,000 miles has
• not changed. You should also note that an extra 5p per mile can be claimed for each business passenger.

Individuals

• An intention to merge income tax & National Insurance was announced to streamline administration. Consultation will take place as to how this can be achieved fairly.

• The personal tax allowance will be raised from £7475 in 2011/2012 to £8105 from 6th April 2012, from 2012 thresholds and allowances will be linked to the CPI instead of RPI.

• A new retirement pension is to be launched to replace the existing arrangements which will be worth about £140 per week. This will not affect existing pensioners and and no date has been given for its introduction. It will be financed by increases in the pensionable age.

• Entrepreneurs relief for sales of businesses from 6th April 2011 to £10 million. The rate of Capital Gains Tax charged on qualifying businesses will be 10% instead of the standard and higher rates (18% & 28%).

• The scheduled fuel duty rise expected to be 5p a litre scheduled to be introduced from April 2011 has been postponed and a further cut of 1p a litre has taken place.

Mandatory Online Filing for Limited Companies

From 1st April 2011 all Corporation Tax returns and associated documents (accounts, computations & other schedules) will have to be submitted on line in iXBRL format. Our systems are fully compliant enabling a seamless transition for our clients. All documents have to be authorised for submission by the client as in the past.

New HMRC Tax Compliance Initiatives

1. They are stepping up their 'attacks' on the self employed generally but specifically targeting plumbers & gas fitters under their 'Plumbers Tax Safe Plan' whereby they have obtained information from Corgi & Gas Safe & are comparing this to advertising directories & Health & Safety prosecutions to build up a database of people they believe are under declaring their income. An amnesty has been offered for disclosure made before 31st May 2011 limiting penalties to 20% of understated tax. Full details then have to be provided by 31st August 2011 or penalties could be even 100% if the HMRC then launch their own investigation.

   
   

2. They intend to monitor 'tax cheats' people who have been found to be deliberately trying to pay less tax than they should for up to five years. This could involve regular inspection of business records and visits to the traders premises as well as general monitoring.

22/06/10

Chancellor Osborne's 2010 Budget

There are very few reversals of announcements in Chancellor Darlings last budget, these are included below or overwritten on our report on that budget

BUSINESS

• The main rate of Corporation tax will be decreased progressively by 1% pa from 1st April 2011, reducing from 28% to 24% by 2014. (profits over £1.5million)
• The increase in the small companies rate of Corporation tax from 21% to 22% scheduled is cancelled. The rate will be cut to 20% from 1st April 2011. (profits up to £300,000)
• Writing Down Allowance on fixed assets will be reduced from 20% to 18% as from April 2012 and the Annual Investment Allowance (100% on purchase) will be reduced from £100,000 to £25,000
• The increase in national insurance contributions announced by Chancellor Darling (1% on employers and employees) will go ahead from 1st April 2011 but will be mitigated by an increase in the threshold by £21 per week above indexation. Also new businesses outside London and the South-East will be offered relief from the first £5,000 on their first 10 employees

 

PERSONAL

• From 6th April 2011 personal allowance will be increased by £1,000 to £7,475 for taxpayers under 65 but the higher rate threshold will be lowered so only basic rate tax payers benefit.
• Individuals earning below £20,000 pa will be protected from the rise in national insurance contributions by the increase in the threshold. Higher rate taxpayers will receive some relief due to the decrease in the higher rate tax rate threshold with which the upper limit on standard contributions is aligned.
• The rate of Capital Gains Tax will increase on 23rd June 2010 from 18% to 28% for higher rate taxpayers, this is where earnings plus capital gains exceed the higher rate threshold. The life time limit for entrepreneur's relief (gains taxed at 10%) will be increased from £2million to £5million.
• Households with income of over £40,000 will no longer eligible for tax credits .
• Pensions and benefits will be uprated in line with the CPI rather than the RPI.
• Insurance premium tax will increase by between 1% and 2.5% depending on the type of insurance (travel will attract the bigger increase).

 

26/03/10

Chancellor Darling's 2010 Budget

You should also remember a general election is due in the next few weeks and that any incoming government is likely to have its own budget!

A fairly non-budget, most of the tax increases were announced in the pre-budget report in December and were not referred to in the budget.

These were:-

• Increase in national insurance contributions (both employer & employee) of 1% from April 2011
• Freezing of personal allowances at 2009 level (£6475) for 2010
  
• New rate of tax of 50% for those earning in excess of £150,000pa
  
• Reduced tax relief on pension contributions for those earning in excess of £130,000 pa
  
• Phasing out of personal allowances for those earning in excess of £100,000 pa
  
• Deferral of increase in Inheritance tax threshold from £325,000 for four years
  

Announcements included:-

• The 3p increase in fuel duty scheduled for April will be phased in, 1p in April, 1p in October and 1p in January 2011
  
• Duty on cider to increase 10% above inflation from Sunday while beer wine and spirits by 2%. Tobacco duty to increase by 1% from midnight Wednesday – CIDER INCREASE CANCELLED BY CHANCELLOR OSBORNE
  
• Stamp duty threshold for first time buyers to be increased to £250,000 for two years. Stamp duty on homes priced over £1 million to be increased to 5%
  
• Limits on ISA investment to increase with inflation
  
• Child tax credits to increase in 2012 for one & two year-olds by £4 per week
  
  

 

02/03/10

Compulsory Online VAT Return Submission

As from the April 1st 2010 all VAT registered businesses with sales exceeding £100,000/pa and all new registrations will have to submit their returns online and make payment electronically. For businesses that have previously submitted paper returns with cheques the first period for which this is compulsory is the first period beginning on or after the 1st April.

The procedure to register for online returns is set out at http://www.hmrc.gov.uk/vat/vat-online/moving.htm.

Anyone requiring assistance either to register or with paying electronically should contact Robert or Jane at this office immediately.

Budget Highlights (or lowlights) 2009

Chancellors Pre-Budget Statement  9/12/09

 

The main points affecting most people are as follows:

• The ½% increase in national insurance contributions scheduled for April 2011 has been increased to 1% (both employers and employees). The starting threshold is to be increased so anybody earning less than £20,000 will not be worse off.
• The standard rate of VAT will revert back to 17.5% as from 1st January 2010.
• Personal Allowances and tax bands will not be increased in 2010 from current levels.
• The planned increase in the small companies rate of Corporation Tax from 21% to 22% will be deferred for another year (until 2011).
• Planned increase in inheritance Tax threshold from £325,000 deferred.

 

 

PERSONAL

The main news here is the introduction of a 50% income tax rate on earnings over £150,000 pa from April 2010, a restriction of relief on pension contributes to basic rate for those earning over £150,000 from 2011 and a phased withdrawal of the personal tax allowance for those earning £100,000 from April 2010.

Other items include the car scrapage scheme, your ten year old car is now worth £2,000 on trade in, increases in fuel duty from September, increases in alcohol and tobacco duties from budget day and an extension of the stamp duty holiday until 31st December for properties under £175,000.