Financial Monitor (January / February 2010)
End of Year Tax Planning
It is important that consideration be given to maximising tax reliefs and allowances available on an annual basis before 5 April each year.
- An individual is entitled to earn approximately £44,000 per annum before paying tax at higher rates. Those who are shareholders in family owned businesses should where practical ensure dividends are declared to provide maximum earnings at the basic rate of tax. No additional tax is paid by a basic rate taxpayer on dividends received.
- The annual capital gains tax allowance (currently £10,100) should also be utilised whenever possible. Those with share portfolios who have not utilised this allowance should consider crystallising gains by selling shares. If it is wished to retain these shares in the portfolio, then they can be repurchased after 30 days or bought back immediately through a spouse or via an ISA investment. Those who have taxable gains relating to any asset disposal may also wish to crystallise share losses to offset any tax payable.
- Pension contributions can no longer be carried back into previous years so those wishing to make personal pension contributions or additional voluntary contributions into their employer’s pension scheme need to do so before 5 April 2010 if they want tax relief in the 2009/10 tax year. Please note that Thursday 1 April 2010 is the last working day before the Easter break.
In our November edition of Financial Monitor we referred to various tax planning issues that need to be considered now, given the changes from 5 April 2010. These include the increased tax rate of 50% for those with income over £150,000 and the loss of personal allowances for those with income over £100,000.
HM Revenue and Customs target the Medical Profession
HMRC have indicated that they suspect that not all medical professionals, doctors, dentists, consultants, cosmetic surgeons, etc. have correctly dealt with their tax affairs. They have therefore introduced the Tax Health Plan which gives these professionals an opportunity to make a full disclosure of any tax irregularities in return for a reduced penalty of 10% of any tax due. There will be no reduction in the tax and interest that would be chargeable but the reduced penalty is an incentive.
Medical professionals have until 31 March 2010 to advise HMRC that they intend to make a disclosure. They must then make the full disclosure and pay the tax, interest and penalty due by 30 June 2010.
If you wish to discuss any issues in connection with this HMRC initiative please contact Peter Newsam.
Increased Compensation Limits
The cap on compensation available for unfair dismissal claims has been reduced to £65,300 (previously £66,200) from 1 February 2010. The maximum weeks pay for calculating redundancy pay will remain at £380.
Increase in Statutory Payments
From 6 April 2010:
- Statutory sick pay will remain at £79.15 per week for those earning at least £97 per week (previously £95 per week).
- Statutory maternity pay, adoption pay and paternity pay will increase from £123.06 to £124.88 per week for those earning at least £97 per week. The rules allowing employers to recoup some or all of these payments remain unchanged.
Claiming VAT incurred on Business Trips in Europe
Businesses that incur VAT in other EU member states where it has no business establishment can recover VAT incurred in that EU country on hotels, conference expenses etc. Until 1 January 2010 the system was lengthy and burdensome so unless the amount to reclaim was significant, making a claim was often not cost effective.
A new electronic system has been established and claims are made through the UK VAT system. Businesses wishing to make claims need to register to do so via the Government Gateway. Claims must be made within nine months of the calendar year end although normally they will be prepared on a quarterly basis. However, claims must exceed 400 euros unless they are annual claims which must exceed 50 euros.
Grants for University
Student Cash Point is a free, comprehensive online guide to more than 3,000 grants, scholarships, awards and bursaries to those studying at university or college.
Penalties for Late Payment of PAYE
In our October 2009 edition of Financial Monitor we outlined the new penalties for late payment of PAYE which will range from 1% to 4% of the amount due depending on the number of late payments in a year. There are also further penalties of 5% if PAYE due is not paid after 6 months and again after 12 months. These penalties will apply for payments due for May 2010 onwards.
The PAYE payment deadlines are 22nd of the month for cleared electronic payments and 19th of the month if sent by post. If these dates fall on a weekend or a bank holiday the payment must be made by the last working day prior to these dates.
Please remember if the amounts you pay are likely to average less than £1,500 per month you can pay quarterly.
If you do not have anything to pay for a month or quarter it is important that you let HMRC know either by completing the payslip for the month and enter ‘Nil due’ or by going online to
www.hmrc.gov.uk/payinghmrc/paye-nil.htm
Whilst every care has been taken in the preparation of these notes we can accept no responsibility for errors or omissions contained in them or for any loss arising from their use unless we have been consulted professionally prior to any action being taken.
UHY Wingfield Slater
Wellington House, 39 Wellington Street, Sheffield S1 1XB
Tel: 0114 275 1544 Facsimile: 0114 275 1366 Email: info@uhy-wingfieldslater.com Web Site: www.uhy-wingfieldslater.com
Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales
A member of the UHY Hacker Young Group of independent UK partnerships. A member of UHY, an international association of independent accounting and consulting firms.
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