| UK
South Africa Double Tax Agreement
On 5 April 2003 the new UK South Africa Treaty came into force.
Two new forms have now been published for making claims for gross payments
from the UK to South Africa.
One form is for individuals residing in South Africa who wish to receive gross
payments of pensions, interest, purchased annuities or royalties. The other
is for companies who are resident in South Africa who wish to receive gross
interest or royalties from the UK.
In both cases this applies only to payments received on or after 6th April
2003.
For more information about making such claims please contact us.
Self Assessment – No Return!
A large number of tax payers have been confused recently due to the fact that
they have not received a self assessment tax return when they have in previous
years. These people have apparently been taken out of the self assessment system
without any prior notification or explanation.
According to the Inland Revenue a change in instructions has now gone out
to staff saying that they must write to the tax payer and their agent confirming
that they will not be issued with a self assessment return in the following
year giving explanations where appropriate.
This should hopefully reduce confusion in the future.
Child Trust Funds (CTF)
More details have now been issued by the Government regarding the Child Trust
Funds which are due to start in April 2005.
The main features proposed for the scheme are as follows:
1. Children born on or after 1 September 2002 will be eligible.
2. A voucher for £250 will be provided by the Government to eligible
children.
3. Children who are part of a lower income household receiving child tax
credit will receive an additional £250.
4. Up to £1,200 can be contributed annually to the CTF by family and
friends.
5. All funds must remain in the account until the child reaches the age of
18, after which they can be used without restriction.
6. When the child reaches the age of 7 the Government will make an additional
payment into the account. As yet the amount of this additional payment has
not been decided but it should be announced at some point in the future.
7. Account providers can offer various types of account but they must provide
a stakeholder account.
As part of the initiative an education programme is to be introduced to help
young people to have a better understanding of basic finance due to the fact
that they have a fund of money of their own.
PAYE
E-filing for End of Year Returns
Within the next couple of weeks the Inland Revenue will be writing to employers
advising them of their e-filing obligations.
Some of these letters will include a tear-off section for employers to send
off to appeal against the requirement to pay electronically or the decision
that they do not qualify for the early online filing bonuses. Any appeals must
be made in writing to the relevant PAYE office within 30 days of receiving
the letter.
We as agents are not being sent copies of these letters so if you have any
queries when you receive your letter please get in touch with us immediately.
National Minimum Wage
As mentioned in last month’s update the National Minimum Wage (NMW)
was increased to £4.50 per hour for workers aged 22 and over and £3.80
for those aged 18 to 21 with effect from 1st October 2003.
A lot of confusion seems to arise as to the application of NMW in situations
where there are directors of small companies or family members working within
companies.
In general terms, if a
person is a director and does not have an explicit employment contract then
they are unlikely to be subject to the NMW legislation
even if they carry out a wide range of activities. These activities are regarded
as being carried out in that person’s capacity as an office holder rather
than a worker. If however, the director does have an explicit employment contract,
they will be within the scope of the NMW as a worker/employer relationship
will be in existence. All persons regarded as workers are covered by the NMW
with a worker being someone working under a contract of employment.
The exemption from NMW for work done by certain family members of the proprietor
of a business does not apply where the business is carried on by a company.
One of the consequences of incorporation is to confer the full protection of
employment legislation including the NMW on such people.
Although an actual written contract of employment is not in existence this
does not mean that no contract exists. A contract of employment can be express
or implied and can be oral or in writing. However, if a person works for a
company without any remuneration at all they may well be considered not to
be an employee as the relationship could be explained by a simple desire to
assist the company voluntarily. As with any other contract an employment contract
requires the receipt of some benefit by both parties.
Enforcement of the National Minimum Wage
The DTI is responsible for NMW policy in the UK with the Inland Revenue being
responsible for the enforcement
There are two main ways in which the Revenue undertake enforcement:
1. Enforcement officers follow up complaints by workers or conduct investigations
as a result of information from third parties.
2. Enforcement officers undertake risk analysis of all employers to identify
those most likely not to comply.
Also, if a PAYE audit is carried out and the auditor has reason to believe
that there has been a failure to pay NMW then this information is likely to
be passed to a NMW enforcement officer who would no doubt follow this information
up with an investigation.
If it is established that an employer has failed to pay NMW over a period
of time then the employer will be required to make good any underpayments to
the employee.
Where an employer refuses to pay NMW the Revenue have sanctions which they
can use including:
- serving an enforcement notice requiring an employer to pay NMW
- issuing penalty notices in the event of failure to pay NMW
- bring a case on behalf of an employee to a tribunal
- prosecute an employer for committing criminal offences under the Act.
If you have any questions regarding the National Minimum Wage or any other
payroll issues please get in touch with us.
Capital Gains Tax – Gifts Relief
New rules are to be introduced to plug the gap that was left when retirement
relief was removed from the CGT statutes.
Due to an oversight legislation which had previously been introduced to prevent
capital gains tax gifts relief being used in certain tax avoidance schemes
was repealed. The legislation in question relates to the transfer of shares
or securities to a company.
New legislation is to be
introduced in next year’s Finace Bill to correct
this previous oversight.
If you feel that this amendment may affect you or you require more information
please contact us.
Inheritance Tax
Two new leaflets have been issued setting out when an excepted estate grant
is appropriate. One leaflet covers Scotland with the other covering England
and Wales.
Various conditions must
be satisfied for an estate to be excepted including the gross value of the
estate not exceeding £240,000.
For more information please contact us.
Stamp Duty Land Tax
On 20th October the Inland Revenue announced further changes to the Stamp
Duty Land Tax (SDLT) rules which are due to come into force on 1st December
2003.
Among the changes announced was the outcome on the further consultation on
lease duty. In the case of new leases where the rental element exceeds the
threshold, a reduction in the SDLT liability was announced from those provided
in the 2003 Finance Act.
In the case of surrenders and regrants, the surrender of any lease will not
be consideration for the grant of another, nor will the grant be consideration
for the surrender.
A partial relief will be
given for the lease back element of a sale and lease back of commercial property
together with an extension of the relief relating
to house building companies and a new relief for “chain breaking companies”.
The compliance burden for leases with uncertain rent (e.g. rent based on
monthly turnover) have been eased significantly by only having to submit
one land transaction return after the initial return at the five year point.
Among the anti avoidance rules is a change to the treatment regarding continuation
leases and leases for an indefinite term. Such leases are to be regarded as
twelve month leases as opposed to the previous treatment as having a twelve
year term. This change will lead to complicated compliance implications for
the purchaser tenant.
For more information on Stamp Duty Land Tax and the ways in which it could
affect you please contact us. |
