Blog


| | General Articles, Blogging | 0 comments
16 October
Oct 16
16th October 2018

Attack On Pension Savings It is expected that the chancellor will announce in the Budget on the 16th March 2016 a flat rate tax relief on pension contributions. This has come under a lot of scrutiny from many financial professionals but is seen as the lesser of two evils when considered alongside a ‘Pension ISA’. The chancellor is considering a flat rate of between 20% and 33% which if set at 25% could have a major impact on those already in pension schemes/those planning their retirement investments. For those who have workplace pensions with defined fixed pension contributions this could reduce their monthly take home pay. As an example an individual on £60,000 salary, paying 5% into a defined fixed pension contribution would be paying in £3,000 to their pension. Under current legislation a higher rate tax payer would pay in £1,800 and the government would top up the contributions with £1,200 (tax refund into scheme). However, if a flat rate of 25% was introduced using the same scenario above, the individual would be required to pay in £2,250 with the government only topping up the contributions with £750. This would leave the employee having to pay in the additional £450, which would be taken from their salary. The below table shows how an individual paying 5% of gross salary into a defined fixed pension would be set to either lose or benefit :- Salary 5% Gross Contributions Current Tax Relief Current Net Contributions Proposed Flate Rate Relief @ 25% Gain/(Loss) £20,000 £1,000 20% £800 £750 £50 £40,000 £2,000 20% £1,600 £1,500 £100 £80,000 £4,000 40% £2,400 £3,000 £(600) £120,000 £6,000 40% £3,600 £4,500 £(900) £180,000 £9,000 45% £4,950 £6,750 £(1,800) £250,000 £12,500 45% £6,875 £9,375 £(2,500)   The treasury has not decided on how or if the changes are to come into effect but we are sure that the budget will shed some more light on how these changes may affect us all. ...

| | General Articles, Blogging | 0 comments
16 October
Oct 16
16th October 2018

Filing Personal Tax/Accounts with HMRC Every 3 Months! Are you Prepared? Many people have reported still feeling in the dark about HMRCs new propositions when it comes to filing business and personal tax returns online from 2018, although one thing is for sure; we are certainly stepping into the Digital era. This time of year the word ‘deadline’ looms over all of our heads as the paper tax return must be filed by October 31st, albeit it only this way for two more years. Statistics show however, that the majority are already making the switch with only 11 percent of us filing by paper in 2015. Despite online filing becoming increasingly more common for businesses, research highlights that many still feel in the dark about the foundations of ‘Making Tax Digital’ which was first announced in the 2015 budget. HMRC have stipulated that one of the four ‘foundations’ of Making Tax Digital will be for businesses, proposing that they should not have to wait until the end of the tax year or even longer before knowing how much tax they should pay. This will be achieved by filing quarterly Tax Returns online. The Telegraph have commented that this will put an ‘unnecessary burden’ on companies that do still feel that they are in the dark. Experts have told the Treasury Select Committee that this controversial switch is being hastily imposed without any detail of what companies must do. Mike Cherry, head of Federation of Small Businesses has also told The Telegraph that he predicts ‘these changes would cost small businesses an extra £2,770 a year to file its returns, with many ill-equipped to handle online record-keeping’HMRC’s intentions, on the other hand, are clear for the move forward. With the abolishment of the paper Tax Return and the October 31st deadline, businesses will be able to concentrate on putting people and profit first, rather than paperwork. Similarly, it seems that there will be greater clarity when it comes to paying tax bills. Edward Troup, executive chair of HMRC, acknowledged the significant changes of this digital revolution by bringing the tax system into the 21st century and to help make HMRC one of the most digitally-advances tax administrations in the world.   Klarity Vision will be speaking at The Business Show at Olmpia, London on Thursday 17th November about this major change for businesses, you can obtain a FREE ticket to the event here. We will be releasing a recording of the seminar after the show and you can register to receive a link by Clicking Here....

| | General Articles, Blogging | 0 comments
16 October
Oct 16
16th October 2018

You The Taxpayers to face the highest Tax Burden for 30 years The Institute for Fiscal Studies have recently claimed that UK taxpayers are facing the highest Tax Burden for 30 years. Over 37% of Britain’s National Income will be drawn from your tax receipts for the first time since 1986. These tax increases derive from a number of new legislations such as higher tax on dividend income, increase in tax on insurance premiums, higher vehicle excise duty and a new restriction on pension contributions for those on very high incomes. Hundreds of thousands of people, are suddenly paying a higher rate of tax as the threshold has failed to keep up with rising inflation, however the government have pledged to increase the threshold at which the higher rate of income tax is paid to £50,000 by 2020. The report has likewise said that £17bn of tax rises could be needed to contribute to bridging the gap between government income and outgoings. Income tax rates have risen steadily over recent years, meaning higher earners are paying an ever increasing proportion of the state’s total tax receipts. For example, the comparable rates for Income Tax Allowances and Income Tax Rates across the 2016 / 2017 and 2017 / 2018 are as follows: The personal allowance will increase from £11,000 in 2016 / 2017 to £11,500 in 2017 / 2018. The basic rate limit will be increased to £33,500 in the new tax year from the £32,000 as it currently stands and as a result of this, the higher rates threshold will increase to £45,000 from April 2017. We can see this as a positive step towards the government’s commitment to raising the personal allowance to £12,500 by the end of this parliament. This will rise in line with the consumer prices index measure of inflation, rather than the National Minimum Wage. Chancellor Philip Hammond has said that this will bring the way the allowance is increased into line with the higher-rate threshold....

| | General Articles, Blogging | 0 comments
16 October
Oct 16
16th October 2018

The 2017 car tax changes explained From next month, the way that vehicle tax is calculated will change, affecting all of us with vehicles registered with the DVLA from 1 April 2017. Vehicle tax for the first year will be based on CO2 emissions and after that the amount of tax that needs to be paid will depend on the type of vehicle. Unlike the current system, in which low-emission vehicles and petrol cars are exempt, the new Vehicle Excise Duty (VED) will only be free for vehicles with no tailpipe emissions (electric and hydrogen cars only). These new regulations will mean that all new cars will face a significant increase in their tax demands during the first year of registration and from their second year onwards a flat rate will apply. The rates for this are as follows: £140 a year for petrol and diesel vehicles. £130 a year for alternative fuel vehicles (hybrids, bioethanol and LPG). £0 a year for vehicles with zero CO2 emissions. For new vehicles with a list price of more than £40,000 – including zero emission cars – an additional supplement of £310 will be payable per year for the next five years. At the end of this period, the standard rate will apply. Although you may be able to negotiate the price down to a figure below £40,000 the government will use the published list price so you won’t be exempt from the £310 fee. If you register your new car by 31st March 2017 the updated road tax rate won’t apply as the reform will only affect vehicles registered from 1 April 2017. Those driving more polluting cars will pay a much higher tax in the first year, but lower tax in subsequent years – so eventually will break even. If you are in the market for a new car, it is worth completing the calculations to work out whether you are better off bringing the purchase forward to before April 1 so you can benefit from current system, or wait until next month to take advantage of the new one. If you are looking to buy a low-emission car or an expensive vehicle it may make sense to bring the purchase forward because in most cases, the current tax system will work out to be more cost-effective. If you cannot buy your low-emissions car before April, then when you eventually do buy, it’s worth considering a nearly-new car, which will continue to be taxed under the old system....

| | General Articles, Blogging | 0 comments
16 October
Oct 16
16th October 2018

HMRC recover debts of up to £17,000 though PAYE codes From April 2015, HMRC bought in a new legislation which gave them the power to collect debts of up to £17,000 through an individual’s tax code, even without the individual’s consent. From the 2015 / 2016 tax year, this new method of debt collection referred to as ‘coding-out’ saw an increase from the previous collection limit of £3000 for earnings less than £30,000. The upper limit for how much debt can be coded out is linked to the tax payer’s income. There is a graduated scale so that the maximum £17,000 can be coded out for a person with earnings over £90,000. There is no change for those with earnings less than £30,000 a year, for whom the maximum remains at £3000. Earnings in this context means earnings from the main source of income paid through PAYE. The graduated limits are: Annual PAYE Earnings       Coding out limits Up to £29,999.99 £3,000 £30,000 - £39,999.99 £5,000 £40,000 - £49,999.99 £7,000 £50,000 - £59,999.99 £9,000 £60,000 - £69,999.99 £11,000 £70,000 - £79,999.99 £13,000 £80,000 - £89,999.99 £15,000 £90,000 and above £17,000 This scale is applicable to unpaid self-assessment debts, Class 2 NIC debts and Tax Credit overpayments, while a £3,000 coding out limit will still apply for self-assessment balancing payments and PAYE underpayments. To ensure a consistent approach and to safe-guard employees from excessive deductions from their pay, HMRC extended the ‘legislative 50% overriding limit’ to include all tax codes and not just ‘K codes’. This limits any deductions to a maximum of 50% of an individual’s relevant pay. HMRC use this power to code out debts only where they have not been voluntarily paid. They first write to you to explain that your Tax Code will change and give you an opportunity to settle your debt in another way. If your debt does appear in your Tax Code, it will be under the heading ‘Outstanding Debt Restriction’. If you do not want debt to be included in your tax code, you will need to either pay the full amount you owe or contact HMRC to arrange a payment plan. If you receive a new tax code and would like us to review it, please get in touch....

[1] 2 ...of 2 | Next | Last Page