Welcome to our monthly blog designed to bring you tax tips and news to keep you one step ahead of the taxman.
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- Finance Bill 2016 receives Royal Assent
- Termination payments consultation
- HMRC launches online disclosure service for agents
- Lifetime ISA guidance updated
- October Question and Answer
- October Key Tax Dates
Finance Bill 2016 receives Royal Assent
The Finance Bill 2016 finally received Royal Assent on 15 September, enacting proposals announced in the 2016 Budget, Autumn Statement 2015 and Summer Budget 2015. Amongst other things, Finance Act 2016 includes provisions relating to income tax rates and allowances; restrictions on tax reliefs for expenses (in effect since April 2016), the reduction of the lifetime allowance on pension contributions from £1.25m to £1m (again, effective from 6 April 2016); and the reduction in the main rate of corporation tax to 17% for financial year 2020.
Termination payments consultation
Following a recent consultation, the Office for Tax Simplification (OTS) is currently consulting on proposed changes to the tax and National Insurance Contributions (NICs) treatment of termination payments.
The current rules governing termination payments are complex and are sometimes open to manipulation by employers to take advantage of the employer NIC exemption in particular. Employers sometimes attempt to change the nature of payments so that they effectively become exempt termination payments, where strictly, they should be charged to tax and NICs.
HMRC launch online disclosure service for agents
Where a client has failed to report all their income and gains, tax advisers and agents are now able to make a disclosure to HMRC using a new online service.
Lifetime ISA guidance updated
HM Treasury has updated its factsheet on the new Lifetime Individual Savings Account (ISA), which are expected to launch in April 2017. Key features of the new ISA include:
- Accounts may be opened by investors aged between 18 and 40.
- Savings invested in the account before age 50 will attract a government bonus of 25%.
- A maximum of £4,000 may be saved each year on which the 25% bonus will be paid. This equates to a maximum bonus of £1,000 a year.
- Some or all of the money can be used to buy a first home, or it can be saved until the investor is 60.
October Question and Answers
Q:I have recently started a new job and, for the first time in my career, I have been provided with a company car. I have to pay for fuel for private use but my employer says I can claim mileage for business journeys. Will I have to pay tax on fuel payments?
Q: I am a director of a limited company, which is registered for VAT. I have recently formed a limited partnership, with my limited company being the only general partner and another business being a limited partner. HMRC have written to me advising that I am unable to register the limited partnership for VAT as my limited company is already VAT-registered. Is this correct?
Q: Having been an employee of a company for many years, I was appointed to the board of directors from 1 March 2016. I understand that Class 1 National Insurance Contributions (NICs) are calculated differently for directors. Can you please explain how it works and let me know what will happen for the rest of the current tax year?
October Key Tax Dates
1 – Due date for payment of Corporation Tax for the year ended 31 December 2015
5 – If a Tax Return has not been received, individuals and trustees must notify HMRC of new sources of income and charge ability in 2015/16
14 – Return and payment of CT61 tax due for quarter to 30 September 2016
19 – Tax and Class 1B national insurance due on PAYE settlements for 2015/16
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/10/2016 or quarter 2 of 2016/17 for small employers
31 – Deadline for 2015/16 self-assessment paper returns to be filed for HMRC to do the tax calculation. If a paper return is being filed also the deadline for tax underpaid to be collected by adjustment to your 2017/18 PAYE code (for underpayments of up to £3000 only)
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