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Insolvency threshold The Crown Set off threshold has reverted back to £500 its pre April 2002 level. The threshold was raised to £5000 as a temporary measure. Inheritance tax works of art The exemption from an inheritance tax charge covering works of art which are in the UK on a person’s death, because they are being publicly exhibited, cleaned or restored has been extended.. The charge to IHT will now also be waived if a work of art, which would otherwise have left the UK to be kept overseas, is retained in the UK solely for these purposes. Stamp Duty refunds Stamp duty was abolished,in some areas, in November 2001 on property sales of up to £150,000. A recent article pointed out that although the changes were announced over a year ago the new rules have not yet been properly introduced - meaning thousands of housebuyers have continued to pay the charge. It was alleged that the information on the Inland Revenue internet site was out of date. If you think you may have been charged stamp duty in error please contact us. Salary sacrifice The Inland Revenue have issued guidance on salary sacrifices and its tax and state benefit implications. If you would like to discuss the issues or want a copy of the guidance please contact us. Small Earnings Exception - Certificate Renewal The National Insurance Contributions Office (NICO) has begun to renew certificates for self- employed earners whose exception certificates are about to expire. All self-employed people who expect to earn below £4095 for the 2003/04 tax year can apply for a Small Earnings Exception (SEE) certificate to exempt them from paying Class 2 National Insurance Contributions. Unless people hold a certificate, they remain liable to pay. A SEE certificate issued on registration of self-employment expires at the end of that particular tax year, but subsequent certificates are valid for three years. Pension scheme guides The inland reveue have issued a new guide for members of tax approved schemes who want to know the tax rules that apply to tax-approved occupational pension schemes and their benefits. A guide to personal and stakeholder schemes has also been issued. If you would like a copy like a copy or would like to discuss your pension arrangements please give us a call. P60s The inland revenue have announced that it no longer has anobjection to employers giving duplicate P60s to their employees. Any duplicates should be clearly marked with the word "Duplicate". Employers can still give details of an employee's pay and tax on letter-headed paper if they prefer. Double taxation conventions Discussions are to be held about double tax arrangements with Croatia, Serbia and Montenegro. The Budget and tax codes Employers and pension providers have to put into effect any changes to codes and tax tables on the first pay day after 14 June backdated to the start of the tax year. This year, the implementation date is being extended to the first pay day after 14 June 2003 to ensure that there is the usual amount of implementation time. Revised notices of coding will be issued in June. You should make any P6 PAYE code changes on the first pay day after 14 June 2003 The new tax tables for 2003-04 should use be used after 14 June 2003 From 14 June onwards you should apply any tax codes changed by the Budget Implementation of changes that have already been announced to come into effect from 6 April 2003 (including changes to National Insurance Contributions) is not affected by this extension. Details were included in the Employers' Annual Pack which was sent to employers in February. Tax credits To receive their entitlement to tax credits, people need to claim them using a paper form TC600 or online at www.inlandrevenue.gov.uk/taxcredits. Claims can be backdated for up to 3 months. If you require any assistance in making a claim please contact us. Self Assessment- Short Tax Return Pilot scheme The Revenue are to pilot a new simplified 4-page Tax Return, for people with straightforward tax affairs, in April 2003. The new form will be sent, instead of the usual Return, to people selected on the basis of their last completed Tax Return. The types of taxpayers likely to qualify for a short Tax Return will include pensioners, low turnover self-employed people and employees, provided they have simple tax affairs VAT Group and divisional registration A new Notices has been issued covering the vat treatment of groups of companies and those organised in divisions. A number of changes have been incorporated into the revised notice: - additional guidance on who signs the group application forms; - additional information on Trader Unique Reference Numbers; - the special rules in place for partly exempt VAT groups acquiring a business as a transfer of a business as a going concern; - VAT avoidance; - the treatment of applications to leave a VAT group Construction industry scheme non resident employers. Non-resident companies that do not have a permanent establishment in the UK can register for CIS with the Centre for Non Residents (CNR) in Nottingham. The Inland Revenue has published a guide for non UK-resident contractors and subcontractors operating in the Construction Industry Scheme. Construction industry scheme new regulations These new Regulations allow an employer which is a company to take into account amounts deductible by others that it has worked for as a subcontractor in establishing whether it can make quarterly payments to the Collector in respect of sums deducted by it from payments to its own sub-contractors. There is also new protection for a sub-contractor which has had a sum deducted, but which the contractor has not paid over to the collector of taxes. A new Regulation provides for the inspection of the records of a sub-contractor where sums, deducted by others from payments due to it, fall to be applied against its liabilities for tax, national insurance, student loan recoveries, overpaid social security benefits, tax credits and sums which it has itself deducted under section 559 of the Taxes Act. The new rules are effective from 6 April 2003 Stamp Duty There is an online postcode search tool, which can be used to check if a property falls within a disadvantaged area qualifying for exemption from stamp duty. This exemption must be claimed. Stamp Duty paid in error can be reclaimed subject to a two year time limit. Taxation of UK Branches of Foreign Companies New legislation on the taxation of UK branches of foreign companies is now in its final draft form. This final draft includes a new Schedule which incorporates into UK law OECD principles in relation to capital requirements of branches and transfer pricing. The new legislation, to be introduced in the 2003 Finance Bill, will apply to foreign companies' accounting periods starting on or after 1 January 2003. It attributes capital to a UK branch for tax purposes based on the capital the branch would need if it were an independent company operating in the UK. In addition to publishing a final draft of the legislation, updated guidance has also been published. The revised version of the guidance provides some further examples, and detail, on certain issues. This is a very complex area of tax legislation and professional advice should be sought if you are operating under these provisions. Tax credits and changes in circumstances When tax credits are claimed, there are some changes in circumstances that need to be reported. A list of the main areas is are set out below: - someone claims tax credits as a single person, and then they marry or start to live with someone as if they were married - people claim tax credits as a couple, but they stop living together or separate - someone is receiving the child care element of Working Tax Credit, and their average weekly child care costs go down by more than £10 a week, or fall to zero, for at least 4 weeks in a row. Any increase in tax credits can only be updated for up to 3 months, but reductions in tax credits are generally backdated to the date when the circumstances changed Electronic VAT Return Use of the facility to make an electronic Vat return entitles most businesses to 7 days beyond the normal due date to send in their return and make payment. If you use this facility you must also pay any VAT due electronically. This concession is not available for Payment On Account and Annual Accounting traders. You can pay electronically by BACS, CHAPS or Bank Giro Credit Transfer. Gross interest to non resident beneficiaries Interest can be paid to discretionary or accumulation trusts without deduction of tax if each beneficiary of the trust is not ordinarily resident in the UK and each of the trustees is not resident in the UK. A form has to be completed, if you would like a copy or require any assistance please give us a call. Tax credits The Revenue has confirmed that they will accept claims from any taxpayer who wishes to preserve possible entitlement to tax credits, even where without a change in circumstance this will amount to a nil claim. A taxpayer in this position will have to fully complete a claim form in the usual way. The Revenue have confirmed that they will not seek penalties from a taxpayer who makes a claim resulting in a nil award and then fails to make any mandatory notification of a change in circumstances. This approach will not, of course, apply where a claim resulting in a nil award has subsequently been amended so that tax credits are payable and there is then a failure to make a mandatory notification of a change in circumstances. Corporation Tax on Chargeable Gains: Indexation Allowance The value of the retail price index for February 2003 is 179.3. Double Tax Digest The Centre for Non-Residents publishes a guide setting out the broad principles in the Double tax Treaties that the UK has with other countries. Anti avoidance legislation and First year allowances on IT Legislation will be included in the Finance Bill 2003, which will apply to expenditure incurred on or after 26 March 2003 to counter avoidance by individuals attempting to misuse the 100% rate of capital allowances available for expenditure on information and communications technology. The legislation will prevent first year allowances being available to anyone who exploits software or software rights by the granting of rights to use or otherwise deal with that computer software. The change will not affect small businesses claiming 100% allowances where they have invested in information and communications technology for bona fide use in their own business. Tax credits direct to caring spouse Prior to 6 April 2003, the child tax credit was given, usually to the main earner, as either a PAYE code addition, or as a reduction from the self assessed tax payable for the self employed. As this is no longer the case, the person in the relationship who used to receive this benefit, will notice that they are paying more PAYE after this April. The self employed must be prepared to make a correspondingly larger balancing tax payment on 31 January 2005. UK/Mauritius Double Taxation Convention 2003 When the Protocol enters into force, the amendments will have effect from 1 July 2003 in Mauritius. In the United Kingdom they will have effect from 1 April 2003 for corporation tax purposes, and from 6 April 2003 for income tax and capital gains tax purposes. Foster Carers Beginning on 6 April 2003, there will be an income tax exemption for foster carers with gross receipts below a threshold. Carers with receipts above the exemption threshold will be able to choose between computing their profits in the normal way for self-employed persons or treating the amount by which their gross receipts exceed the threshold as their taxable profit. The threshold will consist of two elements. Firstly, a fixed amount which for 2003/04 will be £10,000 a year. Secondly, an additional amount per child, which for 2003/04 will be equivalent to £200 per week for a child aged under eleven and £250 per week for a child aged eleven or over. The avoidance being countered exploits the way the rules in the Finance Act 1996 provide for loss relief on relevant discounted securities. They will also ensure that relevant discounted securities are broadly taxed in the same way as interest bearing securities. |
