Child Benefit Scares

The clawing back of child benefit in situations where one partner has an income of over £50,000 (in the current tax year) starts on 7 January 2013. Until then, there are plenty of scare stories doing the rounds; what is clear is that the system is likely to be an administrative nightmare if you find yourself caught in this trap.

HMRC admit that no fewer than 1.2 million families are likely to be affected, with no less than 500,000 expected to start having to file an income tax return. Remember, all of this is to merely claw back child benefit through the tax system. If either partner has an income of at least £60,000, there is no child benefit to enjoy. In cases where an income is between £50,000 and £60,000, a muted benefit applies.

Some commentators estimate that over 350,000 mothers who do not work could be hit further. Full time mothers receive national insurance credits towards their state pension as recognition of their responsibilities to care for children under 12. The worry is that, in cases where their partner earns an income of £60,000, these mothers will not claim their child benefit entitlement as it would be clawed back via the income tax bill. This would mean that they would not receive their national insurance credits. The Treasury has denied this, but it would be good to have this confirmed officially!

If you would like advice on this or any other aspect of your personal taxation please contact sarahc@clayshawthomas.com

HMRC has recently published new guidance on inheritance tax (IHT)

The toolkit which applies to deaths from 6th April 2012 provides guidance on how to prepare inheritance tax account form IHT400.

The IHT checklist, includes:

  • Checking that any pension scheme lump sum death benefits have been included;
  • Applying the reduced rate of inheritance tax where the deceased leaves at least 10% of their net estate to charity (introduced in Finance Act 2012 and applying to deaths after 6th April 2012); and
  • Full details of all lump sum death benefits paid from the deceased’s pension schemes should be reported on form IHT409 whether or not they are chargeable to Inheritance Tax. This is frequently overlooked.

The toolkit can be found at http://www.hmrc.gov.uk/agents/toolkits/iht.pdf

Should you require any assistance with the completion of forms IHT400 or any other aspect of inheritance tax please do not hesitate to contact us at tellmemore@clayshawthomas.com or call 01656 867167

Property Letting

If you are thinking about increasing your income by entering the world of property letting then whether it is as a one off venture or a series of lettings then it is important that you check how your income will be taxed. Many people think that the income and associated costs will be treated as a trade and therefore that the wider tax reliefs available will apply.

The truth is that whilst you may be carrying on a business for tax purposes it may not be a “trading activity” for taxation purposes.  This distinction between business and trading has important implications for Income Tax, National Insurance and Capital Gains Tax.

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HMRC launches awareness campaign for PAYE Real Time Information

With six months to go until PAYE Real Time Information (RTI) becomes a reality, HM Revenue & Customs (HMRC) is launching an awareness campaign this month and will be writing to over 1.4 million employers.

The letters will tell employers what they need to do prepare for the new way of reporting PAYE information in real time information which will start in April 2013.

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National Minimum Wage Increase

Don’t forget when running your payroll this month that the National Minimum Wage has increased from the 1st October 2012

  • the main adult rate (for workers 21 and over) will increase by 11p to £6.19 an hour
  • the rate for 18-20 year olds will remain at £4.98 an hour
  • the rate for 16-17 year olds will remain at £3.68 an hour
  • the rate for apprentices will increase by 5p to £2.65 an hour

Source: http://www.hmrc.gov.uk/paye/payroll/day-to-day/nmw.htm

If you need any assistance with the implementation of the National Minimum Wage or any aspect of payroll please contact sarahc@clayshawthomas.com or telephone 01656867167

Autumn Statement 2012

The Autumn Statement is to be made by the Chancellor of the Exchequer, George Osborne, on Wednesday 5 December at 12.30pm. The Statement provides an update on the Goverment’s plans for the economy based on recent forecasts from the Office for Budget Responsibility. These forecasts are published aloinside the Autumn Statement on 5 December 2012.

If you require any advice about how the statement could affect you, please contact Sarah Curzon sarahc@clayshawthomas.com after the statements’s release for further assistance.

 

Tax and Cash Incentives for Business

Can you answer yes to any of the following questions?

  • Do you manufacture in the UK;
  • Undertake any product development or redevelopment work;
  • Offer bespoke customer solutions;
  • Improved internal processes such as automation of machinery, energy optimisation or efficiency improvements;
  • Purchased new machines, integrated technologies or capabilities new to you;
  • Ever contracted out any work on testing or prototyping;
  • Integrating your solutions into other environments;
  • Experiencing difficulties with compliance industry standards or security.

If so you could have missed out on readily available cash incentives from the Government in the form of Research and Development Tax Relief.

Come and listen to out tax and patent experts talk about tax relief and also the new Patent Box.

Register you interest here

Changes to Advisory Fuel Rates

The fuel rates were changed for journeys on or after 1 September 2012. Now that that the fuel rates have been in force for over a month the new fuel rates should be used instead of the ones previously published. The new rates are detailed below:

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Petrol hybrid cars are treated as petrol cars for this purpose.

If you would like more details regarding the implementation of the new rates, please contact our specialist, Sarah Curzon sarahc@clayshawthomas.com for further information.

Detail Source : http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

Should I have a share scheme?

In the current economic climate cash bonuses may not be an affordable means for any small businesses to reward or retain staff. Accordingly many are considering other options such as Employee Share Schemes or Employee Benefits. In assessing whether a share scheme is the right option for you there are key considerations. Before designing the ‘right’ share scheme, your objectives and whether or not the need is there should be assessed.

From a shareholder/directors point of view, a share scheme may be appropriate if you are looking to recruit, retain or motivate staff and cash bonuses/salary increases are either not an option or will not meet your objectives. For instance, will a short term cash bonus ensure someone stays with you for the next 5 years building company value and help you exit the company? Unlikely.

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