Archive for May, 2016

International tax transparency makes progress

Tuesday, May 10th, 2016

Chancellor of the Exchequer, George Osborne hailed the international expansion of a UK-led deal to automatically share information on the ultimate owners of companies as over 20 jurisdictions, including British crown dependencies, overseas territories and EU member states sign up.

Gibraltar, Isle of Man and Montserrat are amongst those joining the initiative led by the UK and launched with Germany, France, Italy and Spain at the G20 last week. As such their tax and law enforcement agencies will now exchange data on company beneficial ownership registers and new registers of trusts enabling more effective investigation of financial wrongdoing and tax-dodging.

The Chancellor of the Exchequer, George Osborne said:

Only a week after Britain launched this initiative with some of our closest European partners, it’s gaining the international support that will be vital to make it truly effective.

I welcome the early commitment made by Gibraltar, Isle of Man, Montserrat and Anguilla to participate and call on all of the remaining overseas territories and crown dependencies to do likewise.

It should be clear to all countries and tax jurisdictions that the world is moving firmly in the direction of greater tax transparency and the UK will continue to push for an internationally agreed blacklist for those that refuse to do the right thing.

The initiative will begin to explore the best way for countries to share this information, with a view to developing a truly global common standard in a two-step process leading to the interlinking of national registries

To date, since the launch 19 additional European countries have joined the pilot, the Netherlands, Romania, Sweden, Finland, Slovakia, Latvia, Croatia, Belgium, Ireland, Slovenia, Denmark, Malta, Lithuania, Cyprus, Bulgaria, Portugal, Estonia, Greece and Czech Republic.

On 14 April 2016, finance ministers from the 5 European countries launching the pilot wrote to their G20 counterparts urging progress towards a fully global exchange of beneficial ownership information. The letter recommended that the OECD, alongside the Financial Action Task Force should take a lead role in developing new single global standard for such exchange and for the interlinking of registers.

At the G20 meetings Chancellor of the Exchequer, George Osborne also called on the OECD to develop proposals for the listing of non-cooperative tax jurisdictions which do not meet international tax transparency standards, as well as options for coordinated counter-measures.

These latest actions build on strong action the government has taken since 2010 to revolutionise tax transparency and tackle tax avoidance and evasion. In this parliament alone the government will legislate for over 25 measures to make sure people do not get out of taxes due, together raising £16 billion by 2021.

Home owners may be caught by stamp duty increase

Friday, May 6th, 2016

From 1 April 2016, buyers of residential property that is not to be their main residence in England, Wales and Northern Ireland, will be liable for the higher rates of Stamp Duty Land Tax (SDLT). Basically any property subject to the higher rates, that costs more than £40,000, will be charged at the following rates:

 

Where applicable, the higher rates will be 3% above the standard rates of SDLT that apply to purchases of residential property. Each rate will apply to the portion of the consideration that falls within each rate band: Purchase price of property

Rate paid on portion of price within each band

Up to £125,000

3%

Over £125,000 and up to £250,000

5%

Over £250,000 and up to £925,000

8%

Over £925,000 and up to £1,500,000

13%

Over £1,500,000

15%

These higher rates will be charged even if a home owner buys a replacement for their main residence before their present home is sold. This could create cash flow problems for the buyer.

For example, a residential property purchased as a main residence for £250,000 after 1 May 2016 would be liable for a SDLT charge of £2,500. If their present home is not sold before they purchase a replacement, then the purchase will be subject to the higher rates of SDLT that would amount to £10,000.

It will be possible to reclaim the £7,500 additional SDLT but only if a previous main residence is sold within 3 years of paying the higher rates on a new main residence. A refund can be claimed by making an amendment to the original SDLT return. Repayments need to be claimed within 3 months of the sale of the previous main residence, or within 1 year of the filing date of the return, whichever comes later.

For house purchases in Scotland a similar situation arises. The purchase of a replacement home before the existing main residence is sold would be subject to an additional charge to Land & Buildings Transaction Tax. In Scotland, the 3-year period is reduced to 18 months.

Non competition clauses under the microscope

Thursday, May 5th, 2016

Business Secretary, Sajid Javid, has announced plans to look into employment rules that could be stifling British entrepreneurship by preventing employees from starting up their own business after leaving a job.

In a move designed to back even more small businesses and entrepreneurs across the country, the government is launching a call for evidence asking for views on what are known as ‘non-compete clauses’ – which can be written into employment contracts and can prevent individuals from competing against their former employer or working for a competitor for a set period of time, sometimes up to 9 months after leaving a firm.

The clauses are only enforceable in a court of law if it protects a legitimate interest and is reasonable. However, there have been suggestions that they can hinder start-ups from hiring the best and brightest talent, so the government is asking for views from individuals and employers on whether this type of practice is acting as a barrier to innovation and employment.

The move is the latest by the government to deliver on its pledge to make Britain the best place in Europe to innovate and start up a new business, with an Innovation Plan, setting out how the government can help make the UK a better place to turn ideas into new products and technologies, due to be published later this year.

The plan will look at a range of key areas, including how better regulation can drive innovation and opportunities to use the millions of pounds spent on public procurement every year to support new and exciting businesses. And today, UK businesses are being asked to give their ideas to feed into the new government Innovation Plan launched online today.

The government is asking businesses and entrepreneurs to give their views on whether clauses that prevent an individual from competing against their former employer are stifling opportunities to innovate and grow.

Known as non-compete clauses, these are provisions in a contract that prevent an individual from competing against their former employer and can include restrictions on individuals approaching former clients or working for a competitor for a set period of time, sometimes up to 9 months, after leaving a company.

Due to be launched shortly, the call for evidence will look for views from individuals and employers on whether this type of restrictive practice is acting as a barrier to innovation and employment and preventing British start-ups from prospering.

Tax Diary May/June 2016

Wednesday, May 4th, 2016

19 May 2016 – PAYE and NIC deductions due for month ended 5 May 2016. (If you pay your tax electronically the due date is 22 May 2016)

 19 May 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 May 2016.

 19 May 2016 – CIS tax deducted for the month ended 5 May 2016 is payable by today.

 31 May 2016 – Ensure all employees have been given their P60s for the 2015-16 tax year.

 1 June 2016 – Due date for Corporation Tax due for the year ended 31 August 2015.

 19 June 2016 – PAYE and NIC deductions due for month ended 5 June 2016. (If you pay your tax electronically the due date is 22 June 2016)

 19 June 2016 – Filing deadline for the CIS300 monthly return for the month ended 5 June 2016.

 19 June 2016 – CIS tax deducted for the month ended 5 June 2016 is payable by today.

 

Good news for farmers

Wednesday, May 4th, 2016

Under new rules, initially announced in the 2015 Budget, farmers will be able to average their profits for Income Tax purposes from two years to five years.

This change will help farmers with fluctuating profits better manage risk and level out the impact of tax on their farming profits. For example, they may avoid paying tax at higher income rates in one year, when in the next few years they may have significantly lower profits.

In recent times market conditions, driven by the impact of global volatility, make it difficult to budget for tax costs.

Chancellor George Osborne is reported as saying:

“A resilient and thriving food and farming industry is fundamental to the success of the UK economy. This government recognises the challenges our farmers face from volatile markets and we are absolutely committed to supporting them.

Today’s reforms will provide farmers with additional security to plan and invest for the future, allowing them to spread profits over a longer period of time. Over 29,000 farmers can benefit from the changes, saving an average of £950 a year.

The fairer tax system for famers is among a number of reforms to taxes, National Insurance allowances and others measures coming into effect today to back hard work, support savers and economic security at every stage of life.”

As well as having the new option to average tax over five years, farmers will also retain the choice to average profits over two years. The dual option, announced in December, follows industry feedback in consultation over how to deliver the extension to five years. It became evident that the two-year option was well understood and had provided significant relief to farmers dealing with financial pressures and should be retained.

Take the next step, Call us Today
0114 266 4518