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Duty free limits if you are travelling abroad

04/08/2022

Here is a reminder of any duty payable and tax-free allowances if travelling abroad this summer. If you are travelling from outside the UK and arriving home in Great Britain (England, Wales and Scotland), you are allowed to bring the following back to for your own use without any UK tax or duty liabilities. 200 cigarettes or 100

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Tax-free trivial benefits

04/08/2022

There is a benefit in kind (BiK) trivial exemption that applies to small non-cash benefits like a bottle of wine, or a bouquet of flowers given occasionally to employees or any other BiK classed as 'trivial' that falls within the exemption. By taking advantage of the exemption employers can simplify the treatment of BiKs whilst at the

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Using Advisory Fuel rates

04/08/2022

The easiest way to ensure that no car-fuel benefit charge (for private journeys in a company car) is payable, is to use the advisory fuel rates published by HMRC to repay any private fuel costs to your employer. The advisory fuel rates are intended to reflect actual average fuel costs and are updated quarterly. However, the car-fuel

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Scope of Trade

04/08/2022

There is no statutory definition of ‘trade’. The only statutory reference to the term is that ‘trade’ includes a ‘venture in the nature of trade’. This absence of a formal definition decides if an activity is a trade more difficult. However, over time the courts have set some established guidance. It is clear from the significant amount

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Using the Annual Investment Allowance

04/08/2022

The Annual Investment Allowance (AIA) is a generous tax relief that was first introduced in 2008. The AIA allows for the total amount of qualifying expenditure on plant and machinery to be deducted from profits before tax. The AIA can be claimed by an individual, partnership or company carrying on a trade, profession or vocation, a UK

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Miscellaneous income

04/08/2022

There are special rules known as the miscellaneous income sweep-up provisions that seek to charge tax on certain income. This unusual provision, which is broad in scope, catches income that would not otherwise be charged under specific provisions to Income Tax or Corporation Tax. Amongst the types of income covered are: payment for a

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Gifts with reservation

28/07/2022

The majority of 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'. These 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.

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Tax relief on replacement of domestic items

28/07/2022

The replacement of domestic items relief has been in place since April 2016. The relief allows landlords the ability to claim tax relief when they replace movable furniture, furnishings, household appliances and kitchenware in a rental property. The allowance is available for the cost of domestic items such as free- standing wardrobes,

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Business records if self-employed

28/07/2022

If you are self-employed as a sole trader or as a partner in a business partnership, then you must keep suitable business records as well as separate personal records of your income. For tax purposes, the business records must be held for at least 5 years from the 31 January submission deadline for the relevant tax year. For example,

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Construction services taxed at VAT zero or 5% rate

28/07/2022

Whilst most businesses in the UK charge VAT at the standard rate of 20%, there are a number of different VAT rates and exemptions that businesses should be aware of. In the UK, there are three separate VAT rates, the standard rate @ 20%, reduced rate @ 5% and the zero rate @ 0%. HMRC has published an updated version of their guidance

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Settlement legislation – non-trust settlements

28/07/2022

The settlement legislation seeks to ensure that where a settlor has retained an interest in property that the income arising is treated as the settlor’s income for all tax purposes. A settlor can be said to have retained an interest if the property or income may be applied for the benefit of the settlor, a spouse or civil partner. In

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Emergency tax codes

28/07/2022

The letters in an employee’s tax code signify their entitlement (or not) to the annual tax-free personal allowance. The tax codes are updated annually and help employer’s work out how much tax to deduct from an employee’s pay packet. The basic personal allowance for the tax year starting 6 April 2022 is £12,570 and the tax code for an

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NIC threshold increased

21/07/2022

In the Spring Statement earlier this year, the then Chancellor, Rishi Sunak, announced an NIC tax-cut to take effect from 6 July 2022. This change sees the National Insurance threshold increased from £9,880 to £12,570. This increase means that the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs are

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Applying for Marriage Allowance

21/07/2022

The marriage allowance can be claimed by married couples and those in a civil partnership where a spouse or civil partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one of the couples must currently earn less than the £12,570 personal allowance for 2022-23). The allowance works by permitting

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Tax when you get your pension

21/07/2022

There are special rules which allow individuals who have set up private pension scheme(s) to benefit from significant tax reliefs when saving for their retirement. There is no overall limit to the amount of employer or employee contributions and no upper limit to the total amount of pension saving that can be accumulated. However, there

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Qualifying for residence nil rate band

21/07/2022

The Inheritance Tax residence nil rate band (RNRB) is a transferable allowance for married couples and civil partners (per person) when their main residence is passed down to a direct descendent such as children or grandchildren after their death. The allowance increased to the present maximum level of £175,000 from 6 April 2020. The

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Non-resident company taxation

21/07/2022

Non-resident companies with a trading business in the UK are liable to pay UK Corporation Tax on their profits made through a permanent establishment/branch or agency. If the non-resident company is deemed liable to pay Corporation Tax, then its chargeable profits are: any trading income arising directly or indirectly through or from

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Entitlement to National Minimum Wage

21/07/2022

Employers must ensure they are paying staff the new National Minimum Wage (NMW) and National Living Wage (NLW) rates for the period from 1 April 2022 - 31 March 2023. The NLW is the minimum hourly rate that must be paid to those aged 23 or over. The rate for the NLW is £9.50. The hourly rate of the NMW (for 21-22-year-olds) is £9.18. The

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Changes at HM Treasury

14/07/2022

Last week saw the resignation of the previous Chancellor Rishi Sunak from the Government. The previous Chancellor said he could no longer continue in his role in good conscience. The Prime Minister almost immediately sought to fill this role and appointed Nadhim Zahawi as Chancellor of the Exchequer. However, the Prime Ministers move to

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Tax gap remains at 5.1%

14/07/2022

The tax gap for the 2020-21 tax year has been published and remains at 5.1%. This is the second lowest recorded percentage and remains unchanged from the previous 2019-20 tax year. The tax gap is basically the difference between the amount of tax that should have been paid to HMRC and the amount of tax collected by the Exchequer. The gap

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Old style £20 and £50 notes

14/07/2022

The Bank of England will be withdrawing legal tender status of paper £20 and £50 banknotes after 30 September 2022. This means that if you have any old £20 or £50 notes you should use them or deposit them at your bank or Post Office by the end of September. A recent Bank of England press release states that ‘while the majority of paper

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Filing and paying company tax returns

14/07/2022

If you have recently setup a new limited company or are thinking of doing so then one of the areas that you need to be aware of is the accounts and tax filing regime for companies. After the end of its financial year, a private limited company must prepare full annual accounts and a company tax return. In most cases a company’s tax

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Furnished Holiday Lets and VAT

14/07/2022

The furnished holiday let (FHL) rules allow holiday lettings of properties that meet certain conditions to be treated as a trade for some specific tax purposes. As an FHL is treated as a business, it is important to remember that VAT must be accounted for on furnished holiday lettings once the VAT registration threshold is surpassed.

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Joining the MTD ITSA pilot

14/07/2022

Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). Under the pilot, qualifying landlords and sole traders (or their agents) can use software to keep digital records and send Income Tax

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Tax Diary August/September 2022

12/07/2022

1 August 2022 - Due date for corporation tax due for the year ended 31 October 2021. 19 August 2022 - PAYE and NIC deductions due for month ended 5 August 2022. (If you pay your tax electronically the due date is 22 August 2022) 19 August 2022 - Filing deadline for the CIS300 monthly return for the month ended 5 August 2022. 19 August

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Tax credits renewal deadline reminder

07/07/2022

31 July 2022 is the final day for families and individuals that receive tax credits to tell HMRC about any changes to their circumstances or income and to renew their tax credit. As in previous years, there is likely to be a huge last-minute rush and it may be difficult to contact HMRC by phone. Renewing a claim online (either on the HMRC

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Childcare top-up to cover summer activities

07/07/2022

As the school holidays fast approach, many parents face having to organise extra school holiday childcare over the summer months. Working families can use the Tax-Free Childcare (TFC) scheme to help if they have children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with

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Pensions triple lock to be reinstated

07/07/2022

The triple lock guarantee on pensions that was suspended for the current 2022-23 tax year is to be restored from April 2023. In September 2021, the government announced that its triple lock guarantee on pensions was to be abandoned for one year due to unprecedented fluctuations to earnings caused by the COVID-19 pandemic. The triple lock

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Tax if living abroad and selling UK home

07/07/2022

One of the most often used and valuable of the Capital Gains Tax (CGT) exemptions arises on the sale of the family home. In general, there is no CGT to pay on a property that has been used as the main family residence. An investment property which has never been used will not qualify. This relief from CGT is commonly known as private

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Standards for tax agents

07/07/2022

HMRC last published guidance on the standard for agents in January 2018 (updating the first set of standards published in February 2016). The standard applies to all tax agents who transact with HMRC and to any professional who advises or acts on behalf of others in relation to their tax affairs. HMRC’s guidance sets out what agents can

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