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Withdrawal of renewals basis for residential let property
The renewals basis which allowed for tax relief on white goods, furniture and soft furnishings for residential let property has been withdrawn from 6 April 2013 for income tax and 1 April 2013 for corporation tax.
This relief was one of the extra statutory concessions that have been available for some time but HMRC are now withdrawing these concessions.
The withdrawal of the renewals basis concession is causing some concern to tax advisers and tax payers but we have detailed below what we believe will be the affect of the withdrawal of this concession.
This will not affect furnished residential let property where the wear and tear allowance (10% statutory allowance) is available as detailed in our online article tax-relief-on-wear-and-tear-of-furniture-let-property for fully furnished lettings.
However the withdrawal of the renewal basis will affect unfurnished residential lettings. Capital allowances are not allowable against income from unfurnished residential lettings. Therefore the costs of replacing any free standing equipment (such as a fridge freezer) in an unfurnished residential property will not be deductible as an expense.
Where white goods are fitted such as integrated hobs and ovens then these will be recognised as part of the entirety of the property and so would be deductible as a repair when replaced.
Small items such crockery, rugs i.e. low cost furnishings would be tax deductible from income from unfurnished residential lettings.
For full details on HMRC updated guidance on repairs concerning furnished, part furnished and unfurnished lettings see HMRC - Property businesses deductions - repairs and renewals.
Please contact us for further advice tax implications of income from let properties.
Dates and deadlines June 2014
Upcoming deadlines for businesses and individuals:
1 June: Corporation tax payment for a company not within the instalment regulations: year ending 31 August 2013.
5 June: End of month 2 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession where still available.
7 June: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 30 April 2014.
11 June: Direct debit VAT payment will be taken: quarter ended 30 April 2014.
19 June: CIS monthly return deadline: month ended 5 June 2014.
19 June: Cheque payments for PAYE/NI, student loan, CIS to be cleared into HMRC bank: month ended 5 June 2014.
22 June: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 June 2014.
30 June : Company tax return CT600 due to HMRC: years ending 30 June 2013.
30 June: Company accounts (Private Limited Co) due to be filed: years ending 30 September 2013.
30 June: Company accounts (Public Companies) due to be filed: years ending 31 December 2013.
1 July : Corporation tax payment for company not within the instalment regulations: years ending 30 September 2013.
6 July : P11ds and P11d(b) due for submission to HMRC by this date: Tax year 2013/14.
HMRC campaign – offshore income
HMRC are currently running a campaign aimed at taxpayers who have undeclared income and gains offshore.
New international agreements will let HMRC see more about overseas accounts. If you have not declared overseas income and HMRC catch you, you will have to pay the undeclared tax, a penalty of up to double the tax you owe, and you could even go to prison if they pursue a criminal prosecution.
HMRC will soon be obtaining much greater information about overseas accounts, insurance products and other investments, including those held through overseas structures. This includes details of who is holding the account or asset, or owns the entity holding the asset including their name, address, date of birth, the balance of the account and payments made into it. They will be using this information to go after those who have evaded their taxes. It is important for individuals to use this campaign to come forward and declare all their offshore income and gains in order to obtain best terms for penalties.
Further information can be obtained here on HMRC website or please contact us for further advice.
Tax tables 2014-15
The latest version of our tax tables document has been published on the publications and useful links page.
Dates and deadlines May 2014
Upcoming deadlines for businesses and individuals:
1 May: Corporation tax payment for a company not within the instalment regulations: year ending 31 July 2013.
2 May: Submission of form P46(car) for changes in quarter ended 5 April 2014
5 May: End of month 1 for PAYE (RTI). All FPS (Full Payment Submissions) due if taking advantage of concession where still available.
7 May: Online VAT return due to be filed and electronic payment of VAT due to be cleared into HMRC bank: quarter ended 31 March 2014.
12 May: Direct debit VAT payment will be taken: quarter ended 31 March 2014.
19 May: CIS monthly return deadline: month ended 5 May 2014.
19 May: Cheque payments for PAYE/NI, student loan, CIS to be cleared into HMRC bank: month ended 5 May 2014.
22 May: Electronic PAYE/NI etc payments to be cleared into HMRC bank: month ended 5 May 2014.
31 May: Provide all employees who were working for you at 5 April form P60 for 2013/14 by this date.
31 May : Company tax return CT600 due to HMRC: years ending 31 May 2013.
31 May: Company accounts (Private Limited Co) due to be filed: years ending 31 August 2013.
31 May: Company accounts (Public Companies) due to be filed: years ending 30 November 2013.
1 June : Corporation tax payment for company not within the instalment regulations: years ending 31 August 2013.
Auto Enrolment – Develop an initial plan
Once an employer knows their staging date, it is a good idea to develop an initial plan in order to understand the preparation tasks which must be carried out, when the tasks should be completed and who will implement them.
To save time and the ensure the registration deadline is not missed, employers can also log in to automatic enrolment registration online and start providing some of the information required as and when it is received. Such as the name and address of the employer, the PAYE reference number, pension scheme reference and the address.
In order to be fully prepared for auto enrolment, employers must complete a number of tasks, including:
- Assessing the workforce
- Reviewing internal processes and testing software to ensure it will support automatic enrolment
- Reviewing existing pension arrangements and setting up a scheme if necessary
- Communicating with staff on how they will be affected by auto enrolment.
The time required to complete each task will vary depending on the size of the workforce and the existing arrangements that are in place. Scheduling a target date for the completion of each task will ensure that employers allow sufficient time to be fully prepared for auto enrolment before their staging date.
Employers will need to involve key people in the planning process, such as the person who runs payroll, your HR administrator and your accountant as they will be carrying out some of the day-to-day activities once automatic enrolment is up and running.
The Pensions Regulator have produced a quick guide to preparing for automatic enrolment (PDF, 12 pages) leaflet summarising the preparations needed and to help develop initial plans.
This is the third installment in a series of articles regarding auto enrolment as detailed on our Employer Action Plan. Previous installments detailed below:
2 -
For more information on pensions or for help making an initial plan please contact us.
HMRC – Second incomes campaign
HMRC have introduced another campaign that targets individuals who supplement there main source of income (usually employment) with an additional income from working for themselves that has not previously been declared and taxed .
This would be classed as a second income for the purposes of this campaign and would include income from activities such as:
- Consultancy fees –training, property plans etc.
- Organising parties and events
- Providing services like taxi driving, hairdressing or fitness training
- Making and selling craft items
- Buying and selling goods eg market stalls, car boot sales, eBay trading etc
The purpose of the campaign is to provide an incentive for individuals to make a voluntary disclosure of a second income in order to obtain best possible terms from HMRC.
If HMRC discover by their own means an undisclosed second income then penalties incurred by the individual may be higher and the individual could face criminal prosecution.
An individual will have 4 months (from the date of HMRC receiving notification) to calculate and pay the tax owed but if more time is needed to pay then a call to the HMRC help line (0300 123 0945) should be made.
HMRC can be notified by completing D01 - Second incomes campaign notification form and follow instructions on submission of form (either online or post).
Once acknowledgement has been received by HMRC then complete D02 Second incomes campaign disclosure form and follow instructions on submission of form (either online or post).
Full details of campaign including a helpful video on what is deemed a second income can be found at HMRC second incomes campaign.
Please contact us if you require any assistance or advice concerning the second incomes campaign.
2014 Budget
The key announcements in the 2014 Budget are as follows:
PERSONAL TAXATION
Income Tax
From 6 April 2015, the personal allowance for those born after 5 April 1948 will be increased by £500 from £10,000 to £10,500.
The basic rate limit threshold will be reduced to £31,785 for 2015/16 from £31,865. The personal allowance and basic rate limit will be £42,285, a 1% increase on 2014/15 £41,865 as previously announced in the Autumn statement 2013.
For people born on or before 5 April 1948 there is no increase in the personal allowance, currently £10,500 with a higher allowance of £10,660 for those born before 6 April 1938.
Legislation will be introduced in the Finance Bill 2014 so that a spouse/civil partner can transfer part of their personal allowance to the other spouse/civil partner. For 2015/16 £1,050 of the personal allowance will be transferable from an individual whose income is below the personal allowance or who is liable at the basic rate, dividend ordinary rate or starting rate for savings. The receiving spouse/civil partner is eligible to receive the allowance if they are liable to tax at the basic rate, dividend ordinary rate or starting rate for savings. For 2016/17 the amount transferable will be 10% of the personal allowance.
For 2015-16 the main rates of income tax will remain at the 2014/15 rates - 20% basic rate, 40% higher rate and 45% additional rate.
From 6 April 2015 the starting rate of tax for savings will reduce from 10% to nil. The maximum amount of taxable savings income that can be eligible for the starting rate will also increase from £2,880 to £5,000. When combined with the increase in the personal allowance, this means that savers will not be liable for tax on any interest if their total taxable income is less than £15,500. The eligibility requirements to enable an individual to have their interest paid gross will change to accommodate the new provisions.
ISA
From 1 July 2014 all ISAs will reform in to a simpler New ISA (NISA) with the overall annual subscription limit increasing to £15,000, £4,000 for Junior ISAs. There will be changes so that the full amount subscribed can be in cash and a wider range of securities will be eligible to be included.
Company Car Tax rates 2017/18 and onwards
For 2017/18 and 2018/19 there will be an increase in the appropriate percentage for company cars emitting more than 75g of carbon dioxide per kilometre of two percentage points to a maximum of 37 per cent.
Van Fuel Benefit Charge 2015/16
The van fuel benefit charge will increase by inflation in 2015-16 based on the increase in the September 2014 Retail Price Index (RPI).
Company Car and Van Fuel Benefit Charge 2015/16
The rate of fuel benefit charge for company cars and fuel benefit charge for company vans will also increase in line with inflation (based on RPI) for 2015-16. The increase will be based on the September 2014 RPI figure.
Pensions
Changes to the limits from 27 March 2014 to drawdown, trivial commutation and small pots will affect the benefits to be taken as pension income drawdown and taxed lump sums.
The government has also announced a consultation document to consider proposed changes from April 2015 to allow greater flexibility for withdrawing from pension contribution schemes.
These changes will have a major effect on retirement options and strategies and we will produce a separate article on this in the next month or two. Please speak to us in the meantime.
CAPITAL TAXATION
Seed Enterprise Investment Scheme – Capital Gains Reinvestment Relief
Legislation will be introduced in Finance Bill 2014 to make permanent the capital gains tax (CGT) relief for reinvesting gains in SEIS shares without time limit. The relief will apply to half the qualifying re-invested amount.
BUSINESS TAXATION
Research and development tax relief for small and medium sized companies
From 1 April 2014 the rate of research and development payable tax credit will be increased from 11% to 14.5% for loss making small and medium sized enterprises.
Class 2 National Insurance process simplification for the self-employed
Legislation will be introduced to simplify the administrative process for the self-employed by using Self Assessment to collect Class 2 NICs alongside income tax and Class 4 NICs. The intention is for this to apply from April 2016.
Annual Investment Allowance
The maximum annual amount increases on 1 April 2014 for corporation tax and 6 April 2014 for income tax from £250,000 to £500,000 for the period to 31 December 2015. From 1 January 2016 it will revert back to the original annual maximum of £25,000.
VAT
Registration and deregistration limits
From 1 April 2014, the taxable turnover threshold which determines whether a person/entity must be registered for VAT will increase to £81,000 (currently £79,000).
The deregistration threshold will increase to £79,000 (currently £77,000).
The registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased to £81,000 (currently £79,000).
Changes to the rules on prompt payment discounts
To bring the UK in line with European law from 1 April 2015 businesses will need to account for VAT on the amount received for a supply. Currently HMRC accept VAT calculated on the prompt payment discount figure even if the discount is not taken. A consultation process will take place to implement the new rules. However, this will apply to telecommunications and broadcasting services where there is no obligation to provide a VAT invoice from 1 May 2014.
EXCISE DUTY
From 6 pm on Thursday 19 March 2014 the following changes will take effect:
Tobacco duty – 2% above the rate of inflation
The following increases are effective from 24 March 2014:
Alcohol duty – inflationary increase on duty for wine and made-wine, and sparkling cider of a strength exceeding 5.5%. The duty rates on beer will decrease by 6% for low strength beer, 2% for the standard rate of beer duty and 0.75% overall for high strength beer. The duty rates on spirits, ordinary cider and perry have been frozen.
The exemption cut-off will change for vehicle excise duty on 1 April 2014 for vehicles registered before 1 January 1974. This will change annually so that vehicles over 40 years old will be exempt from vehicle excise duty.
OTHER DUTIES
There are proposed reductions to bingo duty and a higher machine game duty.
A document containing the tax rates applying for 2014-15 will be available for download from our website downloads page in due course.
Printed tax tables are also being produced and if you would like to receive a copy then please contact us.
Please contact us at Edwin Smith if you would like to discuss any of the measures announced in the 2014 Budget in more detail or to apply any changes to your specific circumstances.This article is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this web page.
