From April 2016, where trivial benefits are provided to employees they may be exempt from tax if certain conditions are met. The conditions are:

• the cost of providing the benefit does not exceed £50
• the benefit is not cash or a cash voucher
• the employee is not entitled to the voucher as part of a contractual arrangement (including salary sacrifice)
• the benefit is not provided in recognition of particular services performed by the employee as part of their employment duties
• where the employer is a ‘close’ company and the benefit is provided to an individual who is a director, member of their household or their family, then the exemption is capped at a total cost of £300 in a tax year.

If any of these conditions are not met then the benefit will be taxed in the normal way subject to any exemptions or allowable deductions.

One of the main conditions is that the cost of the benefit is less than £50, if the cost is above £50 the full amount is taxable, not just the excess over £50. The cost is the cost of providing the benefit to each employee not the overall cost to the employer. Where the individual cost for each employee cannot be established, an average could be used.

Further details on how the exemption will work, including family member situations, are contained in the Government guidance. However if you are unsure please do get in touch before assuming the trivial benefit you are about to provide is covered by the exemption.

Internet link: GOV.UK

With one month to the end of the tax year there is still time to save tax for 2015/16. We have set out some points you may want to consider.

• Review dividend payment timing – with new dividend tax rates and a £5,000 dividend allowance from 6 April 2016, the timing of dividends could make a difference to the tax charge.
• Consider company car options – going forward for each tax year the taxable percentage increases 2% for each CO2 emission band and the diesel 3% supplement which was expected to be abolished from April 2016 is now to be retained.
• Review personal pension contributions to ensure annual allowances are being used effectively as from 6 April 2016 the annual allowance may be tapered for those with incomes over £150,000.
• Defer capital gains by reinvesting in Enterprise Investment Scheme shares.

Please contact us to discuss your personal situation.

There are significant changes to the income tax rules from 6 April 2016 which affect the taxation of savings income.

From 6 April 2016, if you are a basic taxpayer you may be able to receive up to £1,000 in savings income tax free. Higher rate taxpayers will be able to receive up to £500.

Savings income includes the following:

• interest from bank and building societies accounts
• interest from credit union or National Savings and Investment accounts
• income from government or company bonds
• interest distributions from authorised unit trusts
• most types of purchased life annuity payments.

As a result of this from 6 April 2016 interest will be paid gross rather than net which is the current position for most interest paid to individuals. Net payments are received after deduction of the basic rate of tax of 20%. Interest from ISAs is not included in your Savings Allowance (SA) because it is already tax free.

No action is required to claim the allowance. If the amount of savings income you receive is higher than the allowance, banks and building societies will provide details to HMRC and they will amend your tax code to collect any tax due. If you complete a Self Assessment tax return you should carry on doing this as normal.

If you have any queries on the changes to income tax please do get in touch.

Internet link: GOV.UK

With two Budgets in 2015 it does not feel like that long ago since we last had a Budget but the next one is not that far away and will take place on  Wednesday 16 March 2016. Ahead of the Budget the CBI have written to the Chancellor outlining what they would like to see in the Budget proposals.

The CBI emphasise that businesses have suffered sizeable policy costs which impact on their ability to remain competitive. These include the Apprenticeship Levy, the National Living Wage and also pension auto enrolment. They therefore want the government to provide additional tax incentives to promote productivity and the delivery of jobs. Examples would include:

• new capital allowances for investments in structures and buildings
• allowing smaller companies claiming research and development tax credits to be able to claim repayments in part payments throughout the year rather than yearly
• introducing a payroll incentive to help small firms with the costs of hiring high-skilled staff along the lines of the Employment Allowance.

We will keep you informed of pertinent Budget announcements.

Internet link: CBI

HMRC have revealed that 10.39 million Self Assessment tax returns were completed ahead of the 31 January deadline which is more than 92% of the total returns expected, and 150,000 more than last year.

More than 89% of taxpayers (9.24 million) filed their return electronically.

An automatic £100 penalty applies to those failing to file their return by 31 January 2016 midnight deadline. Use the following link for more information about HMRC Self Assessment deadlines.

HMRC have also revealed the top 10 worst tax return excuses for 2014. They include:

‘I had an argument with my wife and went to Italy for 5 years’

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

‘Untidy family members and hungry pets are very unlikely to be accepted as a legitimate excuse for completing your tax return late.
We understand that life can be unpredictable and for those customers who have a genuine excuse for missing the 31 January deadline, such as the flooding, help is on hand. My advice would be to contact us through our helplines or online, as soon as possible. But for those who are trying to play the system, while the rest of us do the right thing, the message is clear: submit your tax return online by 31 January or face a fine. We’re here to help people in genuine distress, but not to act as a free lender to people who can’t meet their responsibilities to pay their tax.’

The deadline for sending 2014/15 tax returns to HMRC, and paying any tax owed, was 31 January 2016.

If you need help getting your tax affairs up to date please contact us.

Internet link: GOV.UK Top 10 Worst Tax Return Excuses for 2014