HMRC have reported that:

• a record breaking 24,546 people submitted their tax return online on New Year’s Eve
• more than 11,467 people sent off their self assessment tax return on New Year’s Day
• and in excess of 2,000 taxpayers submitted their tax returns on Christmas Day.

Ruth Owen, Director General of Personal Tax, HMRC, said:

‘As we all enjoy the festive season it’s easy to see how completing your tax return can be forgotten, but the 31 January deadline will be here quicker than we think.’

The deadline for sending 2014/15 tax returns to HMRC, and paying any tax owed, is 31 January 2016. Please contact us if you need help with your self assessment return.

Internet link: GOV.UK news

HMRC have set up a helpline (number is 0800 904 7900) and will enable anyone affected to get practical help and advice on a wide range of tax problems they may be facing. HMRC will also:

• agree instalment arrangements where taxpayers are unable to pay as a result of the floods
• agree a practical approach when individuals and businesses have lost vital records in the floods
• suspend debt collection proceedings for those affected by the floods
• cancel penalties when the taxpayer has missed statutory deadlines.

Internet link: GOV.UK news

The Information Commissioner’s Office (ICO) is warning companies making nuisance calls to expect more fines in 2016.

The ICO has reported that they imposed more than £1,000,000 worth of penalties for nuisance calls and text messages in 2015, and anticipates they will issue a similar amount in early 2016.

The fines issued in 2015 included:

• £295,000 of fines for companies offering call blocking or nuisance call prevention services
• an £80,000 fine to a PPI claims firm that sent 1.3 million text messages
• a £200,000 fine to a solar panels company that made six million nuisance calls
• a £130,000 fine to a pharmacy company that was selling customer details to postal marketing companies

In addition the ICO report that the fines related to nuisance marketing in 2015 amounted to £1,135,000. These included £400,000 fines for nuisance texts, £575,000 fines for nuisance calls and a £130,000 fine for selling customer records for marketing. Details of the businesses penalised and fined can be found by using the hyperlink.

Andy Curry, ICO Enforcement Group Manager, said:

‘Nuisance marketing calls frustrate people. The law is clear around what is allowed, and we’ve been clear that we will fine companies who don’t follow the law. That will continue in 2016. We’ve got 90 on going investigations, and a million pounds worth of fines in the pipeline.’

According to the ICO, PPI claims prompted the most complaints, followed by accident claims. Areas identified as emerging sectors for nuisance calls and texts included call blocking services, oven cleaning services and industrial hearing injury claims.

Internet link: ICO news

Confirms the Scottish Rate of Income Tax and announces changes to the Land and Buildings Transaction Tax

The Scottish Government set out tax and financial plans for the future in their draft Budget on 16 December 2015. The Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy, John Swinney, announced that the Scottish Rate of Income Tax (SRIT) would be set at 10p in the pound for 2016/17.

The Scotland Act 2012 granted the Scottish Parliament landmark new powers to set a separate annual rate of income tax for Scottish taxpayers. The Scottish rate of income tax (SRIT) comes into effect in April 2016 and represents a fundamental change to the UK tax system.

Two types of income tax

Under the new regime, with effect from 6 April 2016 taxpayers who are deemed to be resident in Scotland will pay two types of income tax. The UK rates of income tax will be reduced by 10p for Scottish taxpayers, and the Scottish Parliament will levy the SRIT in its place. It has now been confirmed that the Scottish Rate of Income Tax (SRIT) will be 10 pence in the pound ensuring that overall tax rates will remain the same as in the rest of the UK.

The Scottish Parliament has the choice of whether to reduce or increase the SRIT beyond 10p, and there are no lower or upper limits. However, on this occasion the income tax rate has been frozen at 10p in the pound. Commenting on the decision, Mr Swinney remarked: ‘The simple fact is this tax power does not enable me to target help to those on the lowest incomes’.

What does SRIT apply to?

The SRIT will apply to most mainstream sources of income such as PAYE income, pensions, rental profit and profits from self-employment.

The SRIT does not apply to income from savings such as building society interest or dividends. These rates will stay the same for all taxpayers across the UK.

Who does the SRIT apply to?

Broadly, a Scottish taxpayer is someone who is UK resident for tax purposes and has one place of residence which is in Scotland.

Individuals who have more than one place of residence in the UK need to determine which of these has been their main place of residence for the longest period in a tax year. Individuals who cannot identify a main place of residence will need to count the days they spend in Scotland and elsewhere in the UK. If they spend more days in Scotland, they will be a Scottish taxpayer.     

It is intended that HMRC will contact potential Scottish taxpayers before April 2016. If the address which HMRC holds is in Scotland then the individual will be classed as a Scottish taxpayer.

Employers

Any employer in the UK will see a change to PAYE procedures if an employee is classed as a Scottish taxpayer. A special PAYE code, prefix S, will apply to Scottish taxpayers and will be notified to employers and pension providers by HMRC where appropriate.

However, there will be no substantive changes for employers as a result of SRIT. An employer will not have to make any assessments on taxpayer status. Employers should not change a tax code unless advised to do so by HMRC. PAYE software will need to be updated to cope with the new ‘S’ codes.

HMRC has recently advised that there is no requirement for employers to include the Scottish rate separately on the P60 (end of year certificate). However, the P60 should show a Scottish tax code where appropriate.

Land and Buildings Transaction Tax

As well as paving the way for the changes to income tax outlined above, the Scotland Act 2012 also resulted in the introduction of Land and Buildings Transaction Tax (LBTT) in Scotland, replacing the Stamp Duty Land Tax applying in the rest of the UK, as well as changes to the landfill tax regime in Scotland.

The draft Budget also introduces a LBTT supplement on purchases of additional residential properties, such as buy-to-let properties and second homes. This supplement will be 3 percentage points of the total price of the property for all relevant transactions above £40,000 and will be levied in addition to the current LBTT rates.

The Scotland Bill 2015 proposes the further devolution of additional tax and spending powers to the Scottish Parliament. The Scotland Bill 2015 is still subject to consideration and amendment by the UK Parliament.

Please contact us if you would like help with SRIT, including determining whether or not you are a Scottish taxpayer.

Internet links: Gov.UK SRIT Scotland.gov.uk/News

Reversal of most of the tax credit proposals

A number of changes to tax credits and Universal Credit were announced in the July Budget but the Chancellor has scrapped some of the changes following a defeat of the proposals by the House of Lords. The government has confirmed that:

• The rate at which a tax credit claimant’s award is reduced as each pound of their income exceeds the income threshold (known as the taper rate) will remain at 41% of gross income from April 2016.
• The level of income at which a claimant’s tax credit award begins to be tapered away (known as the income threshold), will remain at £6,420 per year from April 2016. Claimants earning below this amount will retain their maximum award.
• The income rise disregard in tax credits will reduce from £5,000 to £2,500. This is the amount by which a claimant’s income can increase in-year compared to their previous year’s income before their award is adjusted.

Changes to the prospective Tax-Free Childcare scheme

Under the scheme, which is expected to launch in 2017, the relief will be 20% of the costs of childcare up to a total of childcare costs of £10,000 per child per year. The scheme will therefore be worth a maximum of £2,000 per child (£4,000 for a disabled child).

The government has announced changes to the conditions to qualify for Tax-Free Childcare. All parents in the household must:

• meet a minimum income level based on the equivalent of working 16 hours a week at the National Living Wage (increased from eight hours at the National Minimum Wage)
• each earn less than £100,000 a year (reduced from £150,000), and
• not already be receiving support through tax credits or Universal Credit.

The Chancellor of the Exchequer, George Osborne, has announced that the government will publish its next Budget on Wednesday 16 March 2016.

Internet links: GOV.UK main tax announcements GOV.UK news