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Non-resident Capital Gains Tax

If your involved with sales of UK residential property where the buyer or seller is tax-resident outside of the UK, you need to be aware of a new tax that came into effect on 6 April 2015: non-resident CGT (NR CGT).

The NR CGT charge is applied at different rates according to whether the seller is a non-resident closely-held company, fund, individual, personal representative or trustee. It applies to gains made in the period from 6 April 2015 to the disposal date of the property, so a small amount of tax likely to be payable on property sales made in 2015/16.

However, when such a sale is made a NR CGT return must be submitted to HMRC within 30 days of the conveyance of the property, and this must be done online. The return must be made whether there is any NR CGT to pay or not, where there is a loss on the disposal, and even where the taxpayer is due to report the disposal on their own personal or corporate self-assessment tax return.

Where the vendor is not registered for UK income tax, corporation tax or the annual tax on enveloped dwellings (ATED), the NRCGT charge must be paid within 30 days of the conveyance date. This payment can only be made once the NRCGT return has been submitted and HMRC have replied with a reference number to use when making the payment. There are penalties for failing to file the NR CGT return on time, and failing to pay the tax on time.

If the taxpayer is registered for UK tax they can opt to pay the NRCGT due at the same time as the tax due for their normal personal or corporate tax.

Conveyancing solicitors need to be aware of the very tight tax reporting and payment deadlines. Property developers need to warn non-resident customers that they will be liable to tax on any gain made when they sell the residential property and that gain includes any discount in the price achieved by buying “off-plan”.

Xero hits top of the forbes list

For the second year running , Forbes have ranked Xero number 1 as the most innovative growth company , well done Xero xero-logo-hires-RGB1

Bookkeepers Network

Cloud Bookkeeper is a member of the Bookkeepers Network which is one of the UKs number 1 portals for reputable bookkeepers. Screen Shot 2015-05-18 at 21.57.31

National Minimum Wages and Birthdays

Do you know when your younger workers will reach their key birthdays: 18 and 21? It is essential to know exactly when these dates fall, as reaching such a milestone will change the level of national minimum wage (NMW) which must be paid to that worker. The current and proposed NMW hourly rates are:

Age or status of employee: From 1 October 2014 From 1 October 2015
21 and over £6.50 £6.70
18 to 20 £5.13 £5.30
Under age 18 £3.79 £3.87
Apprentices under 19 or in 1st year £2.73 £3.30

An employee’s pay must be increased from the beginning of the pay period that starts on or after the date the NMW rate changes, either because all the NMW rates have changed (on 1 October each year), or because the employee has moved into a different rate band due to their age or status (apprentice). A pay period is the normal period for which the employee is paid – be that weekly or monthly.

Failure to pay the NMW is a criminal offence, as is falsifying payment records regarding the NMW. The maximum financial penalty for NMW underpayments is £20,000 per employer, but will soon change to £20,000 per employee. If HMRC find out that your business has not paid the right amount of NMW, it will be publically named, even if the amounts underpaid are very small for each worker.

You need to keep a close eye on when employees turn 21 for NIC purposes. From 6 April 2015 the wages of up to £815 per week paid to workers aged under 21 attract a zero rate of employers’ class 1 NIC. Once the employee reaches 21 the normal NIC rates apply.

Xero @ Accountex 2015

Xero is now one of the leading names in accounting software and they had one of the largest stands at this years Accountex exhibition. Xero Accountex 2015

Sage @ Accountex 2015

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Sage take to the major stage once again this year to showcase new cloud software at Accountex in the Excell london. I was welcomed and invited into there VIP area and given a demo into there new Cloud control panel which inter grates more of your day to day office overview into one program. features included email, twitter feed, support and more.

Eight tax and benefit changes coming

he 2015/16 tax year begins on 6th April and that means a raft of changes to both taxes and benefits.

Here’s a round-up of the major changes that will affect our finances.

 

Income tax

The tax-free personal allowance will increase from £10,000 to £10,600. This will also be the first year people born between 6th April 1938 and 5th April 1948 will have the same allowance as working age people, as their allowance has only risen by £100.

The higher rate (40%) tax threshold is increasing to £42,385.

And the starting rate of income tax on savings will be cut from 10% to 0% on savings income of up to £5,000.

The new couple’s allowance means people who are married or in a civil partnership can transfer up to £1,060 of their tax-free allowance to their partner, but only if both partners don’t pay more than the basic rate of income tax.

And the married couple’s allowance, which is only available if one partner was born before 6th April 1935, is increased to a maximum of £8,355 and a minimum of £3,220.

 

National Insurance

The Class 2 rate of contributions is increasing from £2.75 a week to £2.80. The Class 3 rate is increasing from £13.90 a week to £14.10.

 

Tax Credits and Child Benefit

Elements of the Working Tax Credit are increasing, but only by small amounts, in line with Government policy.

Element Annual amount (14/15) Annual amount (15/16)
Basic element £1,940 £1,960
Couple and lone parent element £1,990 £2,010
30 hour element £800 £810
Disabled worker element £2,935 £2,970
Severe disability element £1,255 £1,275

Meanwhile, the childcare element is frozen at £175 per week for one child and £300 per week for two or more children.

In terms of Child Tax Credits, the family element is frozen at £545 a year.

But there are small changes to other elements.

Element Annual amount (14/15) Annual amount (15/16)
Child element £2,750 £2,780
Disabled child element £3,100 £3,140
Severely disabled child element £1,255 £1,275

Child Benefit is increasing by just 20p a week to £20.70 for the first child and by 15p a week to £13.70 for second and subsequent children. Meanwhile, guardian’s allowance is increasing by 20p a week to £16.55.

 

ISA allowances

The tax-free annual ISA allowance will increase from £15,000 to £15,240. In addition, the Junior ISA annual allowance is increasing from £4,000 to £4,080.

The Child Trust Fund allowance is also increasing to £4,080, although you will be able to switch Child Trust Funds into Junior ISAs from 6th April.

 

State Pension

The Basic State Pension is increasing by 2.5%, or £2.85 a week, to a maximum of £115.95 a week. The maximum amount pensioners on low incomes can receive with the addition of the standard minimum guarantee of Pension Credit is £151.20 for a single couple or £230.85 for a couple.

 

Tax on pension lump sums

If you decided to withdraw your pension in one go under new pension freedoms coming into force, from 6th April it will be taxed at your marginal rate of Income Tax (eg 20%, 40% or 45%) rather than at 55% as was the case before.

 

Tax on inherited pensions

Tax on inherited pensions is being scrapped if the pension holder dies before they reach 75.

 

Maternity and paternity pay

The statutory rate of maternity and paternity pay is increasing from £138.18 to £139.58 a week.

Marriage allowance

f you are married or in a civil partnership, and born on or after 6 April 1935 you can now apply for the new marriage allowance. This is not an extra amount of tax free allowance, but a transfer of £1,060 of unused personal allowance from one spouse or civil partner to the other. It will save the couple tax of £212 for 2015/16.

The marriage allowance can only be claimed where one person has unused personal allowance and the other partner/spouse is taxed at no more than 20%. The transferred allowance is treated as belonging to the recipient for the whole of the tax year for which it is claimed.

The claim for the marriage allowance must be done online through the GOV.UK website, by the person who is surrendering part of their allowance. If the taxpayer can’t use the online service HMRC is supposed to provide additional support.

Once the marriage allowance is claimed, the couples’ PAYE codes will be altered to reflect the change in allowances with the following suffix letters used in the place of L:

M – for the person who receives the extra allowance
N – for the person who has surrendered £1,060 of their personal allowance
The existing married couple’s allowance (worth up to £835.50) continues to apply for couples who were born before 6 April 1935.

VAT on Food

If you have any clients that are VAT Registered and offer any form of seating or a place to eat in their premise, then they will need to ask each individual customer if they will be eating in or out of the establishment.

If they opt to eat in, then VAT will need to be applied regardless of whether the food served is hot or cold and also even if it is normally zero rated; for example a cold sandwich.

To read the full HMRC article please see the link below:

https://www.gov.uk/government/publications/vat-notice-7091-catering-and-take-away-food/vat-notice-7091-catering-and-take-away-food

Limited Companies with Patents pay lower rate of Corporation Tax

There is good news for limited companies with patents. HMRC introduced the ‘Patent Box’ which offers a 10% corporation tax rate on profits attributable to qualifying patents. This has applied for limited companies with profits arising after 1 April 2013.

The reduced tax rate not only applies to royalty income but also includes profits derived from patented products or patented processes. HMRC have confirmed that there only has to be one patented and UK managed invention embodied in a product for the entire product to be within the patent box. So the scope of the relief is very wide and many companies will be able to qualify for this lower rate of tax