Blog

Gifts out of disposable income

There is an annual Inheritance Tax exemption of £3,000 for gifts. This exemption can also be carried forward to the following tax year if not used to make a maximum gift of £6,000. You can also give unlimited individual gifts of up to £250 per person during the tax year, but only if you haven’t used another exemption on the same person. There are additional, special allowances for gifts made at a wedding or civil ceremony. Use the following relief to exempt regular financial support to your family It is also possible for wealthier taxpayers...

Read More

What work is covered by the CIS scheme?

The Construction Industry Scheme (CIS) is a set of special rules for tax and National Insurance for those working in the construction industry. Businesses in the construction industry are known as 'contractors' and 'subcontractors'. Under the scheme, contractors deduct money from subcontractors' payments and pass it to HMRC. Contractors are defined as those who pay subcontractors for construction work or spent an average of more than £1m a year on construction over a three-year period. Subcontractors do not have to register for the CIS, but...

Read More

When do you pay Capital Gains Tax?

Capital Gains Tax (CGT) is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. However, if you only pay basic rate tax and make a small capital gain, you may only be subject to a reduced rate of 10%. Once the total of your taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT. A higher rate of CGT applies (18% and 28%) to gains on the disposal of residential property (apart from a qualifying principal private residence). There is an annual CGT...

Read More

Class 4 NICs who is liable?

There are two types of National Insurance Contributions (NICs) payable by most self-employed people. These are known as Class 2 NICs and Class 4 NICs. Class 2 NICs are paid by all self-employed taxpayers unless they qualify for the small earnings exception or other exemptions which remove the necessity to pay NICs. Class 2 NICs are payable at a flat weekly rate. In addition, most self-employed people are also required to pay Class 4 NICs. Class 4 NICs are payable (as well as Class 2 NICs) if profits are £8,424 or more a year. Class 4 NIC...

Read More

Reduction in special Writing Down Allowance

Businesses can claim Capital Allowances tax relief for certain types of capital expenditure. For expenditure on plant and machinery that exceeds the Annual Investment Allowance (AIA) and does not qualify for a first year allowance, a standard 18% Writing Down Allowance (WDA) is available. This is based on the cost of the items in the year they are acquired. There is a lower rate known as the Special Writing Down Allowance available for certain long life assets, integral features and certain motor vehicles. The special rate of Writing Down...

Read More

EIS Income Tax relief restriction for connected parties

The Enterprise Investment Scheme (EIS) is designed to help smaller higher-risk trading companies raise finance by offering a range of tax reliefs to investors who purchase new shares in those companies. In order for investors to be able to claim EIS tax reliefs, the company which issues the shares has to meet a number of rules regarding the kind of company it is, the amount of money it can raise, how and when that money must be employed for the purposes of the trade, and the trading activities carried on. The amount of Income Tax relief for...

Read More

Tax codes for employees

The P9X form is used to notify employers of the tax code to use for employees. The form shows the tax codes to use from 6 April 2019. The basic Personal Allowance for the tax year starting 6 April 2019 will be £12,500 and the tax code for emergency will be 1250L. The basic rate limit is £37,500 except for those defined as Scottish taxpayers who have a lower basic rate limit as well as an intermediate rate. As a result of the increase in the basic Personal Allowance, there will be a general uplift of tax codes with suffix 'L' which have...

Read More

Alcohol duty freeze confirmed

The Chancellor, Philip Hammond recently paid a visit to an independent brewery in Liverpool and confirmed that the duty rates on beers, spirits and most ciders will be frozen at the current rates for another year from 1 February 2019. These measures mean that the average price for a bottle of whisky will be £1.50 less and a pint of beer 14p less than if the rates had increased as expected based on the duty escalator. The Chancellor hailed the duty freeze as offering much needed support to the pubs and drink industry as well as for beer lovers...

Read More

Will you pay tax on your inheritance?

If you inherit property, money or shares you are usually not liable to pay tax on the inheritance. This is because any Inheritance Tax (IHT) due should be paid out of the deceased’s estate before any cash or assets are distributed to the heirs. There is normally no tax to be paid by the deceased’s estate if the value of the estate is below the IHT nil rate threshold of £325,000. There is also an IHT main residence nil-rate band (RNRB) that was introduced in April 2017. The RNRB will ultimately allow for a £175,000 per person transferable...

Read More

Struggling to pay your January tax bill?

Have you missed the 31 January 2019 deadline for paying your tax bill? The 31 January was not just the final date for submission of your Self Assessment tax return but also an important date for payment of other tax due. This included the payment of any Capital Gains Tax due in relation to the 2017-18 tax year, and also the due date for your first payment on account for 2018-19. If you were unable to pay some or all of the monies due to HMRC, you need to be pro-active and contact HMRC as soon as possible. Avoiding the issue and hoping the...

Read More