Budget 2018 Capital Taxes

Capital gains tax (CGT) rates The current rates of CGT are 10%, to the extent that any income tax basic rate band is available, and 20% thereafter. Higher rates of 18% and 28% apply for certain gains; mainly chargeable gains on residential properties with the exception of any element that qualifies for private residence relief. There are two specific types of disposal which potentially qualify for a 10% rate, both of which have a lifetime limit of £10 million for each individual: Entrepreneurs’ Relief (ER). This is targeted at working directors and employees of companies who own at least 5% of
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Budget 2018 Other matters

Penalties for late submission of tax returns Taxpayers are required to submit tax returns by specified dates. When taxpayers submit their returns late they generally incur a penalty. Draft legislation has been issued which sets out a new points-based penalty regime for regular submission obligations. Returns have to be submitted more frequently in some circumstances. Depending on the frequency of the return submission obligation, a defined number of penalty points will accrue to a threshold. Once this threshold has been reached, a fixed penalty will be charged to the taxpayer. After this each late submission will attract a fixed penalty, until
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Self-employed Class 2 National Insurance will not be scrapped

The government has decided not to proceed with plans to abolish Self-employed Class 2 National Insurance Contributions (NICs) from April 2019. Class 2 NICs are currently paid at a rate of £2.95 per week by self-employed individuals with profits of £6,205 or more per year. The government had planned to scrap the Class 2 contribution and had been investigating ways in which self-employed individuals with low profits, could maintain their State Pension entitlement if this inexpensive contribution had been abolished.
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HMRC warning: time to declare offshore assets

HMRC is warning that taxpayers could face penalties if they fail to declare their income on foreign assets before new ‘Requirement to Correct’ legislation comes into force. HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties. New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax. The most common reasons for declaring offshore tax are in relation to foreign property, investment income and moving money
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Making Tax Digital for VAT

HMRC has published further information on Making Tax Digital for VAT (MTDfV). The VAT notice sets out some further details of the MTDfV regime, which will ultimately require taxpayers to move to a fully digital tax system. Under the rules, businesses with a taxable turnover above the VAT threshold (currently £85,000) will be required to keep digital records for VAT purposes using ‘functional compatible software’ and provide their VAT return information to HMRC via an application programming interface. This notice explains: The digital records businesses must keep and the ways to record transactions digitally in certain special circumstances. What counts as ‘functional
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One million couples still eligible for £900 tax boost

Are you missing out on this tax boost? HMRC has highlighted that three million UK couples have already taken advantage of Marriage Allowance but a million more are still eligible for the tax break. The Marriage Allowance allows certain couples, where neither pay tax at more than the basic rate, to transfer 10% of their unused personal allowance to their spouse or civil partner, reducing their tax bill by up to £238 a year in 2018/19.  The allowance was introduced in 2015 and it is possible to backdate the claim to earlier tax years. Please contact us if you would
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HMRC cracks down on second home sales

HMRC clearly have property owners in their sights as they go for more low hanging fruit; this time they are looking at second home sales. They are writing to 1,500 people who have sold a second home or buy-to-let property in the 2015-16 tax year but not declared a profit on which capital gains tax would potentially be liable. The wording of these letters is still being finalised but they will certailny ask recipients to explain why they have not paid the tax that HMRC’s computer models indicate they owe. Chas Roy-Chowdhury of the ACCA said the HMRC initiative should serve as a
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VAT reverse charge for construction services consultation

HMRC proposes to introduce new VAT rules for construction services which are subject to consultation. HMRC has published a draft statutory instrument for technical consultation together with a draft explanatory memorandum and a draft tax information and impact note. Under the draft legislation supplies of standard or reduced-rated construction services between construction or building businesses will be subject to a domestic reverse charge. This means that the customer will be liable to account for VAT due, instead of the supplier. The legislation will not apply to specified supplies made to customers who are consumers, or to those that use specified supplies to
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HMRC saves public £2.4M by stopping fraudsters

HMRC has announced that it has saved the public over £2.4m by tackling fraudsters that trick them into using premium rate phone numbers for services that HMRC provide for free. HMRC has reported that scammers create websites that look similar to HMRC’s official site and then direct the public to call numbers with extortionate costs in comparison to the low cost and no cost services that HMRC provides. These websites promote premium rate phone numbers as a means of phoning HMRC but these are call forwarding services which connect the unsuspecting to HMRC at a premium rate. HMRC’s has confirmed
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HMRC extends RTI late filing easement until April 2019

HMRC has extended the payroll Real Time Information (RTI) late filing easement until April 2019. Under RTI payroll obligations employers must submit details of payments made to employees on or before the day that wages are paid via a Full Payment Submission. The updated guidance extends the easement, introduced in April 2015 to April 2019. The easement applies where an employer’s FPS is late but all reported payments on the FPS are within three days of the employees’ payday. This easement applies from 6 March 2015 to 5 April 2019. However, HMRC go on to clarify that employers who persistently
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