HMRC to cap certain tax reliefs

In an attempt to ensure that higher rate tax payers make a reasonable contribution to UK tax revenues, new legislation is to be introduced from 6 April 2013 that limits access to certain tax reliefs. Taxpayers will be denied relief(s) if the claim exceeds 25% of their income or £50,000, whichever is the greater. This…

Salary v Dividends in 2012/13

It is common for owner managers to take income from their own company through a mixture of salary and dividends. For 2012/13 the maximum salary at which no tax or NI is payable is £7,485. Although no employee’s or employer’s NI is due on this level of salary, the employee does still receive a full…

Taxation of jointly owned property

Where property is owned jointly it is possible to divert income from a high rate taxpayer to a low rate taxpayer without necessarily giving up the beneficial interest in the underlying property. Between husband and wife and civil partners a simple transfer of legal title into joint names, with no change in the beneficial interest…

What is the highest rate of tax in 2011-12?

General considerations: You will be paying tax at the 40% income tax rate if your income less tax allowances exceeds £35,000 and at the additional rate, 50%, if your taxable income exceeds £150,000.   Additionally, your Personal Allowance reduces when your income is above £100,000 – by £1 for every £2 of income above the…

Self Assessment penalties

In the past as long as you paid your tax liabilities on time and cleared any self-assessment tax due by 31 January, no late filing penalties were due. Even if you failed to pay your tax on time, late filing penalties were capped at £100 or nil if you were due a tax refund. The…

PAYE filing

Pretty well all businesses need to file their yearend payroll returns for 2010-11 online. The Employer Annual Return comprises: . a form P14 for every employee . a form P35 that summarises the end of year payroll totals. These returns for 2010-11 must reach HMRC by 19 May 2011. Returns filed after this date may…

Tax refunds on holiday property

If you have a commercial furnished holiday let within the EU, then there is potential for a tax refund. Did you know up to 30% of the purchase price of a furnished holiday letting may be eligible for capital allowances? If these allowances are higher than your profits from rental income, any excesses may be…

Home based business

At first glance, Paul Mellor’s recent Tribunal victory was nothing to write home about. Mellor, a self employed electrician living in Ruislip, successfully argued his home was his business base and won his appeal against an increased amendment to his self assessment, in which HMRC had disallowed a proportion of his motor expenses. HMRC had…

50% tax rate payers beware

50% rate tax payers beware… HMRC have no present system for deducting tax at a flat rate of 50% from second or subsequent employments. The nearest tax code is DO that only collects tax at 40%. As a result tax payers in this position will be underpaying tax through the PAYE system and should be…

Should I complete a tax return?

The recent press coverage of taxpayers who may be receiving unexpected tax refunds or tax demands has created yet further anxieties about the integrity of our tax system. The refunds and demands are due to HMRC errors in tax codings and other issues for the two tax years ending 5 April 2009 and 5 April…