A new savings allowance is available to basic and higher rate taxpayers for 2016/17. The amount available depends on the individual’s circumstances:
- If any of the individual’s income for the year is additional rate income then the individual’s savings allowance for the year will be nil.
- If any of the individual’s income for the year is higher-rate income and none of the individual’s income for the year is additional rate income, the individual’s savings allowance for the year is £500.
- If none of the individual’s income for the year is higher rate income, the individual’s savings allowance for the year is £1,000.
No tax will be payable on savings income until the new savings allowance has been used up.
In a further change, banks and building societies will no longer deduct tax at source from interest at 20%. This means that non-taxpayers will no longer need to fill out an R85 to receive bank and building society interest gross. However, companies will still need to account for 20% at source on payments of interest.
The 0% savings starting rate also remains available on the first £5,000 of taxable savings income for those with the correct split of income. This would apply where non savings income, broadly pay, trade profits and property income are no more than the personal allowance. This means that for some, the effect of the personal allowance (£11,000 for 2016/17), the £5,000 starting rate band and the new savings allowance (£1,000 for basic rate taxpayers for 2016/17) means that it may be possible to receive up to £17,000 savings income tax-free in 2016/17.
In light of the above changes please contact us if you would like to review your tax position on savings income.
Internet link: Gov.uk Publication
HMRC are urging people to renew their tax credits claim well before the 31 July deadline.
HMRC have made improvements to the online renewal service and recommend claimants renew their claim online once they receive their renewal pack which is issued between April and June. The online service can now accommodate all changes in circumstances (working hours, childcare costs or income) which affect the amount of someone’s entitlement.
Nick Lodge, HMRC’s Director General, Benefits and Credits, said:
‘Our online service means that you can renew at any time of the day or night, and on any device, without having to call us. Online help can also answer most queries you may have and a web chat facility will be available to support people renewing online. We urge everyone who can to go online.
Our customers should check their details and renew early to ensure they get the right money. The sooner people renew their claim, the sooner we can check payments are correct, meaning we avoid paying too little money, or too much, which claimants then have to pay back.‘
This year, claimants renewing online will be able to access further information, including viewing their next payment, through their own online Personal Tax Account.
Internet link: Press release
HMRC have issued updated guidance on the operation of the VAT Flat Rate Scheme which allows taxpayers to calculate the VAT payable by applying a flat rate percentage to their VAT inclusive turnover, rather than netting off output and input VAT due on sales and purchases.
The revision in the guidance follows a number of unsuccessful visits to the First Tier Tribunal (FTT). HMRC has issued a revised version of VAT notice 733 Flat Rate Scheme to update their guidance in accordance with the FTT decisions.
The previous version of the notice listed a number of trades and professions (at paragraph 4.4 of the guidance) and indicated the relevant sectors and percentages that these types of business should choose. These had a higher percentage than the 12% rate which applies to ‘business services not listed elsewhere’.
The FTT was critical of HMRC in their rigid interpretation of their own guidance. Although this section of the guidance has not been removed, taxpayers are now advised to ‘use ordinary English’ and choose the sector which ‘most closely describes what your business will be doing in the coming year’. The new guidance confirms that HMRC will not change a business’s choice of sector retrospectively as long as the choice was reasonable.
Please contact us if you would like any advice on VAT matters.
Internet link: VAT Notice 733
From April 2016, rules are introduced which require companies to keep a register of people with significant control (PSC register). In addition, the details of people with significant control (PSCs) will have to be filed with Companies House from 30 June 2016.
A PSC is defined as an individual that:
- holds, directly or indirectly, more than 25% of the shares or voting rights in the company; or
- holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of the company; or
- has the right to exercise, or actually exercises, significant influence or control over the company; or
- where a trust or firm would satisfy any of the above conditions, any individual that has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm.
The details of the individuals which need to be entered on the PSC register include:
- name and address
- usual residential address, country of residence and nationality
- date of birth
- date when they became a PSC
- the nature of their control over the company.
Failure to comply with the requirements of the PSC regime could lead to the company or directors, or identified PSCs committing a criminal offence. The company and its directors could face a fine or imprisonment or both.
Further guidance can be found on the Companies House website or please contact us for more guidance in this area.
Internet link: Companies House
The April Employer Bulletin includes articles on:
- reporting expenses and benefits in kind for 2015/16 using form P11D
- Scottish Rate of Income Tax coding notice issues
- Class 1 National Insurance contributions for apprentices under the age of 25
- changes to Student Loans Deductions including the introduction of type 1 and type 2 loans and the reminders which HMRC will issue to employers who fail to make deductions.
The Bulletin also includes links to HMRC’s guidance on the restriction to Employment Allowance for Single Director Companies.
If you would like any help with payroll or P11D completion issues please contact us.
Internet link: Employer Bulletin