The Low Incomes Tax Reform Group published updated guidance on how to apply for the new transferable personal allowance, known as the marriage allowance, for married couples and civil partners which came into effect on 6 April 2015.
The transfer of part of the personal allowance between spouses (or civil partners) allows eligible couples to save up to £212 tax in a year.
The marriage allowance enables an individual whose income does not allow them to make use of their full personal allowance, currently £10,600, to transfer 10% (£1,060) of this allowance to their partner. Their spouse or civil partner is then able to set their own personal allowance, plus the transferred part of their partner’s allowance, against their own income. This increase in usable allowances should result in a tax saving of up to £212 in a year for a couple (20% of £1,060).
The transfer can only be made if the spouse or civil partner who receives the transferred allowance is not a higher-rate taxpayer (meaning that in 2015/16 they have an income of more than £42,385).
Currently an individual can only claim to transfer the marriage allowance to their partner by registering online via GOV.UK. The individual will then be prompted to use GOV.UK’s Verify procedure to confirm their identity which requires the individual to have a UK passport or driving licence. A phone option is also available if the individual is unable to confirm their identity using Verify they will be advised to call HMRC’s PAYE helpline on 0300 200 3300.
Internet link: News
HMRC have started to check that people have paid the right amount of tax in 2014/15, a process they refer to as the annual End of Year Reconciliation process.
They will be sending out forms P800 first which show details of the calculation showing the under or over payment. However, where an overpayment of PAYE has been made they should issue the cheque approximately two weeks later. For those who have underpaid tax for the year the P800 will detail how this tax will be collected, generally by adjustment of the PAYE tax code for 2016/17.
HMRC’s press release states:
‘This automated process ensures those who have had a change in circumstances during the last tax year (2014/15) that was not captured in their tax code have paid no more or less than they should. Any discrepancy could be because the taxpayer changed jobs, had more than one job for a time, a change of company car or received investment income that was not reported during the year.’
Where HMRC’s calculations show that the correct amount of tax has been paid for the year, HMRC will not contact the individuals concerned. HMRC expect that the vast majority of PAYE taxpayers will have paid the right amount of tax for the year.
If you would like help reconciling your tax position please do get in touch.
Internet links: GOV news Understanding and checking your P800 Tax Calculation
The Office for National Statistics (ONS) has released figures showing that UK employment rates were up between February and April compared to the three months to January 2015. As detailed in the press release the figures show:
- ‘There were 31.05 million people in work, 114,000 more than for the 3 months to January 2015 and 424,000 more than for a year earlier.
- There were 22.74 million people working full-time, 362,000 more than for a year earlier. There were 8.31 million people working part-time, 63,000 more than for a year earlier.
- The proportion of people aged from 16 to 64 in work (the employment rate) was 73.4%, up slightly from the 3 months to January 2015 (73.3%) and higher than for a year earlier (72.7%).
- There were 1.81 million unemployed people. This was 43,000 fewer than for the 3 months to January 2015 and 349,000 fewer than for a year earlier.
- Comparing February to April 2015 with a year earlier, pay for employees in Great Britain increased by 2.7% both including and excluding bonuses.’
Employment Minister Priti Patel said: ‘Today’s figures confirm that our long-term economic plan is already starting to deliver a better, more prosperous future for the whole of the country, with wages rising, more people finding jobs and more women in work than ever before’.
Neil Carberry, CBI Director for Employment and Skills, said:
‘These figures provide more evidence that the wage squeeze has eased, with private sector pay increasing almost as fast as it was before the crisis. At the same time, firms are creating more jobs.’
‘If we are to deliver sustainable higher wage growth, we need to see a rise in productivity. That means businesses investing in skills, and the Government helping firms innovate by supporting investment in next month’s Budget.’
‘These figures are testament to the strength of our flexible labour market, which has helped British firms create a strong number of permanent full-time jobs.’
Internet links: ONS bulletin Press release
HMRC have issued a list of makes and models of car derived vans and combi vans which VAT registered businesses can use to determine if the VAT paid on the purchase can be reclaimed as input tax.
The issue is that VAT will normally be claimable in full on the purchase of a commercial vehicle. However if the vehicle purchased is a passenger car VAT is not recoverable unless it is used ‘exclusively for the purposes of a business’. Generally cars are therefore VAT ‘blocked’ and no input VAT is recoverable.
The VAT guidance states:
‘Motor car means any motor vehicle of a kind normally used on public roads which has three or more wheels and either:
a) is constructed or adapted solely or mainly for the carriage of passengers; or
b) has to the rear of the driver’s seat roofed accommodation which is fitted with side windows or which is constructed or adapted for the fitting of side windows’
Whether or not a vehicle is commercial is not specifically defined but instead the definition of a car excludes:
- vehicles capable of accommodating only one person or suitable for carrying twelve or more people including the driver
- vehicles of more than three tonnes unladen weight
- caravans, ambulances and prison vans
- special purpose vehicles such as ice cream vans, mobile shops, hearses, bullion vans and breakdown and recovery vehicles
- vehicles constructed to carry a payload of one tonne or more.
Many car derived vans are not cars for VAT purposes as they have no rear seats, have metal side panels to the rear of the front seats and a load area which is highly unsuitable for carrying passengers etc.
HMRC have issued the clarification due to developments in the car derived van market, as some vehicles with a payload of less than one tonne have ‘blurred’ the distinction between cars and vans.
If you would like help with this or any other VAT issue please contact us.
Internet link: GOV.uk-car-derived-vans-and-combi-vans
HM Treasury has announced that the National Savings and Investments 65+ Guaranteed Growth Bonds have been bought by more than a million older savers, who made total investments of over £13 billion. These investment figures make the product the best-selling retail financial product in Britain’s modern history.
The ’65+ Guaranteed Growth Bonds’ from National Savings and Investments went on sale in January 2015 and offered savers aged 65 and over an opportunity to boost the return on their savings by investing up to £10,000 per bond at fixed annual interest rates of 2.8% for one year bonds and 4% for three year bonds.
The Bonds are no longer available to purchase with the investment window closing on 15 May 2015.
Internet link: GOV.UK news