2014 July | Exchange Accountancy Services

Archive for July, 2014

Inheritance Tax

Thursday, July 31st, 2014

Inheritance Tax (IHT) is due when a person’s estate (their property and possessions) is worth more than £325,000 when they die. This is called the ‘IHT threshold’.

The current rate of IHT is 40% on anything above the threshold. The rate may be reduced to 36% if more than 10% of the estate is left to charity.

Who pays Inheritance Tax

Usually the executor or personal representative for the person who has died pays IHT using the funds from the estate.

Trustees are responsible for paying IHT on trusts, which are a way of looking after assets (money, investments, land or buildings) for people. A trustee is a person who looks after the trust.

If you’ve got an inheritance or a gift from someone who has died you only owe IHT if their estate is more than £325,000 and either:

  • it says in the will that you should pay Inheritance Tax
  • the deceased’s estate can’t pay it

There are certain reliefs from IHT. These include estates that include certain business assets or agricultural property.

 

It is also possible to reduce any IHT due on death by reorganising your estate while you are alive. This can be done with the use of trusts or by gifting assets. As you can imagine there are complicated rules that set out how these strategies can be used. Additionally, any assets left to your spouse or civil partner (providing they are UK domiciled) are exempt from IHT.

Trade marks

Tuesday, July 29th, 2014

Ever wondered how you can register a trade mark that makes your brand recognisable, for example a logo or a sound?

Registering a trade mark lets you stop other people from using it without your permission. A trade mark registration lasts 10 years and is only valid in the country of registration. You can renew it every 10 years. Company names and domain names aren’t automatically trade marks. Company names are registered with Companies House (so no-one else can register a company with the same name at the same registry). Domain names for internet use are registered with a domain registrar and are similarly protected.

If you want to protect your brand name or image you will have to go through a different registration process.

Register a trade mark in the UK

  1. Firstly, you will need to check that your brand qualifies as a trade mark – you can’t change it after you’ve submitted an application.
  2. Find out if an identical or similar trade mark already exists – it’s your responsibility to do a thorough search.
  3. If a similar mark does not exist you can proceed to register your trade mark.
  4. The Intellectual Property Office (IPO) checks your application.
  5. The IPO makes your application public to give other people the chance to oppose it.
  6. The IPO accepts or refuses your trade mark application – they’ll send you a certificate if they accept it.

If you are establishing a recognisable brand image the last thing you want is a competitor to capitalise on your hard work by plagiarising your trade mark. The best way to protect your investment is to register your trade mark. The IPO website explains how this can be done or you can employ a registration firm to do the form filling for you. http://www.ipo.gov.uk/types/tm/t-applying/t-apply.htm

National Minimum Wage (NMW) rates and penalties

Thursday, July 24th, 2014

Last week we published details of who is, and who is not, entitled to payment at National Minimum Wage rates. This week we have listed the current rates of NMW that apply.

There are currently three aged based national minimum wage rates and an apprentice rate, which are usually updated in October each year. The rates that apply from 1 October 2013 are as follows:

  • for workers aged 21 years or more: £6.31 per hour
  • for workers aged 18 to 20 inclusive: £5.03 per hour
  • for workers aged under 18 (but above compulsory school age): £3.72 per hour
  • for apprentices aged under 19: £2.68 per hour
  • for apprentices aged 19 and over, but in the first year of their apprenticeship: £2.68 per hour

Apprentices aged 19 or over who have completed one year of their apprenticeship are entitled to receive the national minimum wage rate applicable to their age.

Note for employers:

 

Don’t forget that it’s a criminal offence not to pay someone the National Minimum Wage or to falsify payment records. Employers who discover they’ve paid a worker below the minimum wage must pay any arrears immediately.

 

HMRC officers have the right to carry out checks at any time and ask to see payment records. They can also investigate employers, following a worker’s complaint to them. If HMRC finds that an employer hasn’t been paying the correct rates, any arrears have to be paid back immediately. There will also be a penalty and offenders might be named by the government.

It’s the employer’s responsibility to keep records proving that they are paying the minimum wage – most employers use their payroll records as proof. All records have to be kept for 3 years.

Exporters data to be released by Government

Tuesday, July 22nd, 2014

 UK businesses should be aware that the Government are consulting on the possible release of data held by public departments, particularly, HMRC. We have reproduced extracts from a recent press release that sets out the scope of the present consultation.

 

“The data held by the public sector is among the most useful and valuable anywhere. This is why the UK Government is at the forefront in making a step change in the availability of data held by the public sector, with the potential to deliver significant public benefits.

 

… some of the customs data that HMRC holds has the potential to be used in ways which could generate real public benefits if made more widely available, without compromising the core principle of taxpayer confidentiality. In particular, the ability for HMRC to share and publish certain export data would enable HMRC to more effectively support and contribute to public and private sector initiatives to help UK exporters compete and prosper in the global market place.

 

This consultation proposes the release by HMRC of a limited set of exporter data alongside similar data that HMRC already makes available in respect of importers. Release of some exporter data would provide a number of potential benefits such as:

  • greater visibility of UK exporters to new customers in the global market place;
  • assisting developers to create exporter registers and online shop fronts to advertise and showcase UK exporters and their products;
  • enabling those who provide export services to more easily identify their customers;
  • helping importers to locate alternative UK suppliers.

 

There are likely to be further positive uses which emerge only once the data is available.”

A new look to benefits in kind regime?

Tuesday, July 15th, 2014

HMRC are currently consulting with interested parties (the accounting profession and associated professional organisations) to re-vamp the UK’s system for taxing employee benefit in kind and expenses. Changes are planned to simplify this process in accordance with recommendations made by the Office of Tax Simplification.

Consultations commenced 18 June 2014 and due to be completed 9 September 2014.

The four areas of consultation are:

  • The abolition of the £8,500 threshold. The government believes that this threshold adds unnecessary complexity to the tax system and is consulting on who would be affected and how to mitigate the effects of abolition on vulnerable groups of employees.
  • Introducing a statutory exemption for trivial benefits in kind. The government believes that a clear and simple statutory exemption will make administering such benefits substantially easier for employers. The government will therefore consult on the design of such an exemption.
  • Replacing the current system of dispensations for reporting non-taxable expenses with an exemption for expenses paid or reimbursed by employers. The government believes that an exemption would be simpler, more transparent, consistent and easier to use for employers than the current system. This consultation will cover the design features of such an exemption and its administration.
  • Introducing a system of voluntary payrolling for benefits in kind. The government believes that payrolling benefits in kind instead of submitting forms P11D can offer substantial administrative savings for some employers and wishes to create a system that will enable employers to do so if they wish. The government will consult on the design and scope of a payrolling model and is also interested to hear from employers who are already payrolling benefits on an informal basis.

Exchequer Secretary to the Treasury, David Gauke, said:

“Following the valuable work the Office of Tax Simplification has carried out in reviewing employee benefits and expenses, the government is now consulting on changes that will deliver real improvements for businesses and individual and their experience of the tax system.

“We want to make sure we get the structure and detail absolutely right and each consultation will allow us to engage with and learn from those who will be directly affected.”

Tax free capital gains – private residence relief

Thursday, July 10th, 2014

If you dispose of a dwelling house (which can include a house, flat, houseboat or fixed caravan) which is your home, or part of a dwelling house which is your home, or• part of the garden attached to your home , you would normally have to pay Capital Gains Tax (CGT) on any gain you make.

However, you will be entitled to full relief from any capital gains tax liability where all the following conditions are met:

  • the dwelling house has been your only or main residence throughout your period of ownership, and
  • you have not been absent, other than for an allowed period of absence or because you have been living in job-related accommodation, during your period of ownership
  • the garden or grounds including the buildings on them are not greater than a specified area, and
  • no part of your home has been used exclusively for business purposes during your period of ownership.

If you meet all of these conditions, you will not have to pay CGT on the disposal.

Consideration of the tax position if you own more than one property which you have occupied in a tax year, or if the above conditions are only partly met, will need to be considered in some detail.

Relief for the disposal of a private residence can also be complicated when owners marry, divorce or permanently separate.

A new range of apprenticeships under the Trailblazer scheme.

Wednesday, July 9th, 2014

Skills and Enterprise Minister Matthew Hancock announced a new range of apprenticeships that will be developed by employers under the Trailblazer scheme on 27 June 2014. He also called for expressions of interest from groups of employers to become part of the third phase of Trailblazers.

The Apprenticeship Trailblazers, launched in October 2013, have gone from strength to strength. The first phase of Trailblazer sectors includes energy & utilities, digital industries, financial services, life sciences and industrial sciences. Businesses from each sector worked together and produced new concise employer-led standards for key apprenticeship roles in their industry. These were launched in March 2014 and the first apprenticeships under the new standards will be delivered in 2014/15.

Building on their success, the businesses involved will now work on standards for more occupations that they see as crucial to developing their workforce and that will provide new opportunities for young people. The new range of occupations includes:

  • workplace pensions
  • aerospace machinist
  • IT practitioner
  • laboratory and healthcare science
  • investment operations

Skills and Enterprise Minister Matthew Hancock said:

The apprenticeship Trailblazers have already made great strides in developing a simpler and more rigorous system which works for employers and apprentices. Their commitment to develop more apprenticeship standards demonstrates the support our reforms have from employers.

Equipping all young people with the skills they need to begin prosperous and productive careers is a vital part of our long-term economic plan. Apprenticeships give young people the chance to fulfil their potential while helping to drive business growth.

We want to give more employers in more sectors the chance to lead the development of apprenticeship standards for their industries. That is why we will launch a third phase of Trailblazers later this year and I would encourage groups of employers to step forward and take this opportunity.

Please call if you would like to discuss the possibility of developing an apprenticeship scheme for your business.

Is my State Pension taxable or not?

Friday, July 4th, 2014

The State Pension is part of a pensioner’s taxable income. The problem is, it is paid gross, without deduction of tax.

If your sole source of income is the State Pension then this should cause no problem as the State Pension is usually below the annual tax-free personal allowance. What can, and does, cause a problem is if you have other sources of income that combined with your State Pension exceed your personal tax-free allowance.

The assumption most pensioners make is that they can spend their State Pension. Unfortunately, this can lead to cash flow problems if a tax bill drops through your door. This should only happen if you have other income sources and any tax stopped on those additional income streams is insufficient to cover your total tax liabilities: based on all your income including State Pension receipts.

If you have additional income and receive a State Pension, it is necessary to crunch the numbers and see if you should be saving to meet a future tax bill. Readers concerned about their position should talk to the tax office or their professional tax advisor.

TV productions vie for share of UK\’s new TV tax credits

Wednesday, July 2nd, 2014

The UK’s new TV tax credit for approved productions in the UK are going down a storm with production companies on both sides of the Atlantic.

One of the key draws to working on productions in the UK, aside from the financial incentives, is the large pool of experienced crew and actors based in the UK.

TV production incentives were first introduced in Northern Ireland and attracted the popular “Game of Thrones” series. This provided the inspiration for the wider offer to the UK as a whole.

The “High-end Television Tax Relief” (HTR) is available if the following conditions are met:

  • the programme passes the cultural test – a similar test to that for FTR but within the European Economic Area
  • the programme is intended for broadcast
  • the programme is a drama, comedy or documentary
  • at least 25% of the total production costs relate to activities in the UK
  • the average qualifying production costs per hour of production length is not less than £1million per hour
  • the slot length in relation to the programme must be greater than 30 minutes

Programmes commissioned together are treated as 1 programme.

However, your company can't claim HTR if the programme:

  • is an advertisement or promotional programme
  • is a news, current affairs or discussion programme
  • is a quiz or game show, panel show, variety show, or similar programme
  • consists of or includes an element of competition or contest
  • broadcasts live events, including theatrical and artistic performance
  • is produced for training purposes

The availability of this relief has reversed the previous outflow of investment from the UK in this type of TV production.

Tax Diary July/August 2014

Tuesday, July 1st, 2014
  • 1 July 2014 – Due date for Corporation Tax due for the year ended 30 September 2013.
  • 6 July 2014 – Complete and submit forms P11D return of benefits and expenses and P11D(b) return of Class 1A NICs.
  • 19 July 2014 – Pay Class 1A NICs (by the 22 July 2014 if paid electronically).
  • 19 July 2014 – PAYE and NIC deductions due for month ended 5 July 2014. (If you pay your tax electronically the due date is 22 July 2014.)
  • 19 July 2014 – Filing deadline for the CIS300 monthly return for the month ended 5 July 2014.
  • 19 July 2014 – CIS tax deducted for the month ended 5 July 2014 is payable by today.
  • 1 August 2014 – Due date for Corporation Tax due for the year ended 31 October 2013.
  • 19 August 2014 – PAYE and NIC deductions due for month ended 5 August 2014. (If you pay your tax electronically the due date is 22 August 2014.)
  • 19 August 2014 – Filing deadline for the CIS300 monthly return for the month ended 5 August 2014.
  • 19 August 2014 – CIS tax deducted for the month ended 5 August 2014 is payable by today.