fpdteam, Author at Bennetts Accountancy

Register for VAT One Stop Shop Scheme

25th July 2024 by fpdteam

The VAT Import One Stop Shop (IOSS) Scheme applies to goods imported in consignments with a value of £135 or less (known as low value goods) from countries outside the EU and Northern Ireland, to consumers in the EU, Northern Ireland, or both.

The IOSS Scheme can be used to report and pay VAT due on imports of low value goods to consumers (B2C sales) in the EU, Northern Ireland, or both.

To use the scheme your goods must:

be located in a country outside the EU and Northern Ireland at the point of sale;
have a consignment value of £135 or less; and
be sold to a consumer in the EU or Northern Ireland.

If you only sell through an online marketplace, they should have already registered in their name for the IOSS. This means that the online marketplace is responsible for reporting and paying any VAT due.

The IOSS scheme is available to:

businesses in Northern Ireland; and
businesses in countries that the EU has concluded and recognises an agreement with, on the mutual assistance for the recovery of VAT — currently only Norway.

You must follow the normal VAT rules if you sell goods imported in consignments with a value of more than £135.

Source:HM Revenue & Customs| 21-07-2024

Let Property Campaign

25th July 2024 by fpdteam

The Let Property Campaign provides landlords who have undeclared income from residential property lettings in the UK or abroad with an opportunity to regularise their affairs by disclosing any outstanding liabilities whether due to misunderstanding the tax rules or because of deliberate tax evasion. Participation in the campaign is open to all residential property landlords with undisclosed taxes. The campaign is not suitable for those letting out non-residential properties.

Landlords who do not avail of the opportunity and are targeted by HMRC can face penalties of up to 100% of the tax due together with possible criminal prosecution. Taxpayers that come forward will benefit from better terms and lower penalties for making a disclosure. Landlords that make an accurate voluntary disclosure are likely to face a maximum penalty of 0%, 10% or 20% depending on the circumstance on top of the tax and interest due. There are higher penalties for offshore liabilities.

There are three main stages to taking part in the campaign, notifying HMRC that you wish to take part, preparing an actual disclosure and making a formal offer together with payment. The campaign is open to all individual landlords renting out residential property. This includes, amongst others, landlords with multiple properties and specialist landlords with student or workforce rentals. Once HMRC have been notified of the wish to take part in the campaign, landlords usually have 90 days to calculate and pay any tax owed.

Source:HM Revenue & Customs| 21-07-2024

The marginal rate of Corporation Tax

25th July 2024 by fpdteam

The Corporation Tax Main Rate applies to companies with profits in excess of £250,000. The applicable rate is currently 25%. A Small Profit Rate (SPR) of 19% applies to companies with profits of up to £50,000.

Where a company has profits between £50,000 and £250,000 a marginal rate of Corporation Tax applies that bridges the gap between the lower and upper limits. The lower and upper limits are proportionately reduced for short accounting periods of less than 12 months and where there are associated companies.

The effect of marginal relief is that the effective rate of Corporation Tax gradually increases from 19% where profits exceed £50,000 to 25% where profits are more than £250,000.

The amount of Corporation Tax to pay will be found by multiplying your profits by the main rate of 25% and deducting marginal relief. For the current 2024 fiscal year, the marginal relief fraction is 3/200. HMRC also has an online calculator that can be used to calculate marginal relief on Corporation Tax profits. The calculator can be found at www.tax.service.gov.uk/marginal-relief-calculator

Source:HM Treasury| 21-07-2024

Current CGT rates

25th July 2024 by fpdteam

Capital Gains Tax (CGT) is normally charged at a simple flat rate of 20% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 10%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 20% CGT.

A higher rate of CGT applies to gains on the disposal of residential property (apart from a principal private residence). The rates are 18% for basic rate taxpayers (2023-24: 18%) and 24% (2023-24: 28%) for higher rate or additional rate taxpayers. Again, if the gain pushes a taxpayer into the higher rate, then CGT will be payable at both rates.

The 18% basic rate and 28% higher or additional rate of CGT that applies to gains in respect of carried interest (the share of profits or gains that is paid to asset managers) remain unchanged in the current tax year.

The usual due date for paying any CGT owed to HMRC is the 31 January following the end of the tax year in which the capital gain was made. However, since 27 October 2021 any CGT due on the sale of a residential property needs to be paid within 60 days. In practice, this change only applies to the sale of any residential property that does not qualify for Private Residence Relief (PRR).

There is also an annual CGT exemption for individuals that is currently £3,000 (2023-24: £6,000). A husband and wife each have a separate exemption. Same-sex couples who acquire a legal status as civil partners are treated in the same way as married couples for CGT purposes.

Source:HM Treasury| 21-07-2024

Considering a significant gift?

25th July 2024 by fpdteam

There are special rules concerning the liability to IHT of a transfer made during one’s lifetime. For example, most gifts made during a person's life are not subject to tax at the time of the gift. These lifetime transfers are known as 'potentially exempt transfers' or 'PETs'.

These gifts or transfers achieve their potential of becoming exempt from IHT if the taxpayer survives for more than seven years after making the gift. If the taxpayer dies within three years of making the gift, then the IHT position is as if the gift was made on death. A tapered relief is available if death occurs between three and seven years after the gift is made.

The effective rates of tax on the excess over the nil rate band for PETs is:

0 to 3 years before death 40%
3 to 4 years before death 32%
4 to 5 years before death 24%
5 to 6 years before death 16%
6 to 7 years before death 8%

IHT may be chargeable if the person making the gift retains some 'enjoyment' of the gift made. For example, where an elderly person gifts their home to their children (who usually live elsewhere) and continues to live in the house rent-free. In this case the taxman will not accept that a true gift has been made and the 'gift' would remain subject to inheritance tax even if the taxpayer dies more than 7 years after the transfer.

If you are currently considering making a significant gift to your loved ones, it may be prudent to contemplate doing so sooner rather than later as there is always the possibility of changes to the tax regime especially with a new government in place.

Source:HM Revenue & Customs| 21-07-2024

Thinking of selling your business?

25th July 2024 by fpdteam

Business Asset Disposal Relief (BADR) applies to the sale of a business, shares in a trading company or an individual’s interest in a trading partnership. When the relief if available, Capital Gains Tax (CGT) of 10% is payable in place of the standard rate. This can mean a substantial CGT saving for someone looking to exit from their business.

There are a number of qualifying conditions that must be met in order to qualify for the relief. BADR used to be known as Entrepreneurs’ Relief before 6 April 2020. The name change did not affect the operation of the relief.

You can currently claim a total of £1 million in BADR over your lifetime. The £1m lifetime limit means you can qualify for the relief more than once. The lifetime limit may be higher if you sold assets before 11 March 2020.

Claims for BADR are made either through your self-assessment tax return or by filling in Section A of the Business Asset Disposal Relief helpsheet.

The deadline for claiming relief is as follows:

Tax year when you sold or closed your business	Deadline to claim BADR
2022-23	31 January 2025
2023-24	31 January 2026
2024-25	31 January 2027

Although there have been no specific announcements affecting this relief there are likely to be significant tax changes when the new Chancellor, Rachel Reeves delivers her first Budget later this year. If you are thinking about selling your business we can help you consider your options.

Source:HM Revenue & Customs| 21-07-2024

Your stake in your business

23rd July 2024 by fpdteam

Ever wondered how your stake in your business is represented in your accounts?

The answer can be found at the bottom of your balance sheet. Simply put it is the value of your physical business assets less any liabilities; usually described as net assets.

But this is not the full story as there is a further intangible asset that is generally omitted from your accounts. It’s called goodwill. It is the extra value a buyer is willing to pay, over and above the net assets value of your business, for the rights to your customer lists and other non-physical assets that are generally left out of your accounts.

Ultimately, what you can sell a business for will be limited to what a buyer is willing to pay. But there is value in making a consistent estimate of what your business may be worth, especially if this exercise is undertaken annually, when your financial accounts are prepared.

In this way you will be able to see if the valuation is increasing or decreasing, and if increasing, is the increase at a sufficient rate to meet your planned future exit from your business?

Hopefully, many of you will already be monitoring your business value in this way, if not, please get in touch so we can figure out the best way to add this important indicator to your final accounts each year.

Source:Other| 22-07-2024

The ‘fiscal’ goal posts will be moving

23rd July 2024 by fpdteam

In the coming months we will start to see how our new government intends to change the UK tax rules to further its economic growth agenda.

Whatever they decide to do, readers who presently benefit from tax and/or business planning strategies, should be prepared to revise their plans as fiscal changes are announced.

For example, if you are considering the disposal of assets at a profit, then any gain may be subject to Capital Gains Tax (CGT). If the Chancellor changes the CGT rates, perhaps by treating capital gains as income for tax purposes – or by removing or reducing present CGT reliefs – your after tax profits may not be at a level to satisfy your plans.

The first opportunity to alter tax or other business related matters will likely be the Autumn Budget. This year will be Rachel Reeves first announcements at the despatch box, and she may introduce far reaching changes.

This does mean that there is a short period before the Autumn Budget when we will be subject to present legislation. If you are considering radical changes to your business or financial circumstances in the next year would it be sensible to consider moving transactions forwards as a hedge against negative changes come September/October 2024?

We recommend keeping a weather eye on your planning options. If you are about to buy or sell business or personal assets, please call so we can consider your options. Double guessing what the Treasury may or may not do is not an exact science, but we can be fairly confident that changes are on the way, the fiscal goal posts will be moving.

Source:Other| 22-07-2024

Ordering documents from Companies House

18th July 2024 by fpdteam

Companies House offers interested parties the ability to order certified copies of certificates and documents held on the Companies House register.

You can order:

a company certificate with certified facts; or
a certified copy of a document held on the register.

You can place an order by:

using the Find and update company information service available at https://find-and-update.company-information.service.gov.uk/ – search for the company, and order from the ‘More’ tab; or by
calling the Companies House contact centre on 0303 1234 500.

There are two dispatch options for this service: standard or express dispatch. The standard service costs £15. Orders for incorporation documents cost £30. Companies House aims to send these orders within 10 working days. There is also an express service available at a higher cost.

You can request to include additional certified facts on a certificate. These are:

directors’ names, and details such as date of birth or nationality;
secretaries’ names;
registered office address;
the company’s objects; and a
summary statement – previously known as the good standing statement.

You cannot order certificates with information on people with significant control (PSCs), shareholders, shareholdings or statement of capital.

Source:Companies House| 15-07-2024

Taxable and non-taxable State Benefits

18th July 2024 by fpdteam

Whilst there are a large number of state benefits available, it is not clear which of these benefits are taxable and which are tax-free.

HMRC’s guidance provides the following list of the most common state benefits that are taxable, i.e., Income Tax is payable, subject to the usual limits:

Bereavement Allowance (previously Widow’s pension)
Carer’s Allowance
contribution-based Employment and Support Allowance (ESA)
Incapacity Benefit (from the 29th week you get it)
Jobseeker’s Allowance (JSA)
pensions paid by the Industrial Death Benefit scheme
the State Pension
Widowed Parent’s Allowance

The most common state benefits you do not have to pay Income Tax on are:

Attendance Allowance
Bereavement support payment
Child Benefit (income-based – use the Child Benefit tax calculator to see if you’ll have to pay tax)
Child Tax Credit
Disability Living Allowance (DLA)
free TV licence for over-75s
Guardian’s Allowance
Housing Benefit
Income Support – though you may have to pay tax on Income Support if you’re involved in a strike
income-related Employment and Support Allowance (ESA)
Industrial Injuries Benefit
lump-sum bereavement payments
Maternity Allowance
Pension Credit
Personal Independence Payment (PIP)
Severe Disablement Allowance
Universal Credit
War Widow’s Pension
Winter Fuel Payments and Christmas Bonus
Working Tax Credit

Source:HM Revenue & Customs| 15-07-2024