Archive: 12th December 2024

Income Tax

Are you eligible to claim the Marriage Allowance?

Dec 12, 2024 by Terry Harris 0 Comments

Could you save up to £1,260 in tax this year? If one of you earns less than £12,570, the Marriage Allowance lets couples transfer unused personal allowances. Don't miss out on this easy tax break!

The Marriage Allowance applies to married couples and civil partners where one partner does not pay tax or does not pay tax above the basic rate threshold for Income Tax (i.e., one partner must earn less than the £12,570 personal allowance for 2024-25).

The allowance allows the lower-earning partner to transfer up to £1,260 of their unused personal tax-free allowance to their spouse or civil partner. The transfer can only be made if the recipient (the higher-earning partner) is taxed at the basic 20% rate, which typically means they have an income between £12,571 and £50,270 for the 2023-24 tax year. For those living in Scotland, this would usually apply to an income between £12,571 and £43,662.

By using the allowance, the lower-earning partner can transfer up to £1,260 of their unused personal allowance, which could result in an annual tax saving of up to £252 for the recipient (20% of £1,260).

If you meet the eligibility criteria and have not yet claimed the allowance, you can backdate your claim to qualifying tax years for up to four years starting from 6 April 2020. This could provide a total tax saving of up to £1,260 for the tax years 2020-21, 2021-22, 2022-23, 2023-24, and the current 2024-25 tax year. If you apply now, you can backdate your claim, as well as for the current year. Applications for the allowance can be submitted online at GOV.UK.

Source:HM Revenue & Customs | 09-12-2024
Inheritance Tax

IHT nil rate band reduction for large estates

Dec 12, 2024 by Terry Harris 0 Comments

Married couples and civil partners may be able to pass on up to £1 million of their estate tax-free with the Residence Nil Rate Band. Claiming this transferable allowance could secure your family home for future generations. Make sure your estate planning takes this into account.

The Residence Nil Rate Band (RNRB) for Inheritance Tax is a transferable allowance available to married couples and civil partners when their main residence is inherited by direct descendants, such as children or grandchildren, after their death.

Currently, the maximum RNRB allowance is £175,000 per person, and it can be transferred to a surviving spouse or partner if unused. This is in addition to the existing £325,000 Inheritance Tax (IHT) nil-rate band. Together with the IHT limit, this allows married couples and civil partners to pass on property valued up to £1 million free of IHT to their direct descendants.

The RNRB is subject to tapering for estates valued over £2 million, even if the family home is left to direct descendants. For every £2 the estate exceeds the £2 million threshold, the additional allowance is reduced by £1. This means that, for large estates, the full amount of the RNRB could be entirely tapered away. This means that for estates valued over £2,350,000 for individuals or £2,700,000 for married couples, the RNRB would be reduced to nil.

The transfer of any unused RNRB does not occur automatically; it must be claimed from HMRC when the surviving spouse or civil partner passes away. Typically, the estate's executor will file the claim to transfer the unused RNRB from the estate of the first deceased spouse or civil partner. This transfer can also be made if the first spouse or civil partner died before the RNRB was introduced on 6 April 2017.

Source:HM Revenue & Customs | 09-12-2024
General

Self-assessment scam warning

Dec 12, 2024 by Terry Harris 0 Comments

Scammers are on the rise as the Self-Assessment deadline nears! HMRC warns that HMRC never emails or texts about tax refunds. Stay alert, report suspicious contacts, and protect your money from fraudsters.

Fraudsters are increasingly targeting taxpayers with scam emails as the deadline for submitting self-assessment returns for the 2023-24 tax year approaches. Between November 2023 and October 2024, HMRC received over 144,000 reports of suspicious contact, nearly 72,000 of which involved fake tax rebate claims. There has been a significant rise in scam emails compared to the previous year.

These scams often claim that taxpayers are entitled to a rebate or refund from HMRC and request bank or credit card details to process the non-existent refund. Fraudsters use various methods, including phone calls, text messages, and emails, and may even threaten victims with arrest or imprisonment if a fabricated tax bill is not paid immediately.

HMRC works to identify and shut down scams but continues to urge taxpayers to be vigilant and avoid falling victim. Remember, HMRC only contacts individuals due a refund by post—never via email, phone, text, or third-party companies. Legitimate organizations like HMRC and banks will never ask for your PIN, password, or bank details.

If you receive a suspicious email claiming to be from HMRC, forward it to phishing@hmrc.gov.uk. For suspicious texts, text 60599, and for fraudulent calls, report them via GOV.UK. If you have lost money, contact Action Fraud at 0300 123 2040 or report online. In Scotland, contact the Police on 101.

HMRC’s Chief Security Officer at HMRC, said:

'With millions of people filing their Self-Assessment return before January’s deadline, we’re warning everyone to be wary of emails promising tax refunds.

Being vigilant helps you spot potential scams. And reporting anything suspicious helps us stop criminal activity and to protect you and others who could have received similar bogus communication.

Our advice remains unchanged. Don’t rush into anything, take your time and check ‘HMRC scams advice’ on GOV.UK.'

Source:HM Revenue & Customs | 09-12-2024
Income Tax

No tax changes for online sellers

Dec 12, 2024 by Terry Harris 0 Comments

Selling online? From 2024, digital platforms must report your information to HMRC if sales exceed £1,700 or 30 goods a year. Casual sellers are exempt, but regular traders may need to register for Self-Assessment.

New rules, which became effective from 1 January 2024, require digital platform operators in the UK to collect and verify information about sellers on their platforms. The first reports due under these new rules must be submitted by 31 January 2025. HMRC has released a press release to make it clear that the tax rules for sellers have not changed despite rumours to the contrary.

These new rules mean that if you are using online platforms to sell goods or services, any pertinent information collected about you between 1 January 2024 to 31 December 2024 will be reported to HMRC by 31 January 2025. The information will only be shared with HMRC if you sell 30 or more goods or earn approximately £1,700 (equivalent to €2,000) or more in a calendar year. The online sellers are also required to give you a copy of the reported information. This can help if you have to make tax returns.

HMRC’s Second Permanent Secretary and Deputy Chief Executive Officer, said:

We cannot be clearer – if you are not trading and just occasionally sell unwanted items online – there is no tax due. As has always been the case, some people who are trading through websites or selling services online may need to be paying tax and registering for self-assessment.

You may need to register for self-assessment and pay tax if you:

  • buy goods for resale or make goods with the intention of selling them for a profit;
  • offer a service through a digital platform – such as being a delivery driver or letting out a holiday home through a website;
  • AND generate a total income from trading or providing services online of more than £1,000 before deducting expenses in any tax year.
Source:HM Revenue & Customs | 09-12-2024
Income Tax

Scottish Budget Statement 2025-26

Dec 12, 2024 by Terry Harris 0 Comments

Scotland’s 2024 Budget delivers on public priorities with investments in services, poverty reduction, and economic growth. Tax rates stay frozen, but bands shift to protect low incomes. A hopeful step forward for Scotland’s future!

Scotland’s Deputy First Minister and Finance Secretary, Shona Robison delivered her second Budget statement to the Scottish parliament on 4 December 2024.

The Finance Secretary said the following:

‘I am proud to present a budget that delivers on the priorities of the people of Scotland. Parliament can show that we understand the pressures people are facing. We can choose to come together to bring hope to people, to renew our public services, and deliver a wealth of new opportunities in our economy.

This Budget invests in public services, lifts children out of poverty, acts in the face of the climate emergency, and supports jobs and economic growth.

It is a budget filled with hope for Scotland’s future, and I look forward to working with all parties in Parliament to secure agreement around its provisions.’

The measures announced for next year are expected to raise an additional £1.7 billion in Income Tax revenue compared to if the Scottish Government had followed UK Government policy.

There were no changes announced to the Scottish Income Tax rates, which will be frozen until at least the end of the current Parliament. The Starter rate band is set to increase by 22.6% and the Basic rate band by 6.6% in 2025-26. This means that a larger portion of people's income will be taxed at the starter and basic rates helping to protect lower income households.

The proposed Scottish rates and bands for 2025-26 are as follows:

Starter rate – 19%

£12,571 – £15,397

Basic rate – 20%

£15,398 – £27,491

Intermediate rate – 21%

£27,492 – £43,662

Higher rate – 42%

£43,663 – £75,000

Advanced rate – 45%

£75,001 – £125,140

Top rate – 48%

Above £125,140

The standard personal allowance remains frozen at £12,570.

The Additional Dwelling Supplement (ADS) for the land and buildings transaction tax (LBTT) increased from 6% to 8% with effect from 5 December 2024. The ADS is an extra charge added to any LBTT that may be due when purchasing an additional residential property in Scotland. No other changes to LBTT were announced.

The standard rate of Scottish landfill tax will rise to £126.15 per tonne and the lower rate to £4.05 per tonne from April 2025 maintaining alignment with the corresponding taxes in the rest of the UK.

The Budget measures are subject to final approval by the Scottish parliament.

Source:The Scottish Government | 09-12-2024
Business Support

Launch Your Dream Business: 10 Must-Know Steps

Dec 9, 2024 by Terry Harris 0 Comments

Starting your own business is exciting but can be overwhelming if you’re not prepared. To help you navigate the journey, we’ve compiled a list of 10 key considerations that will set you up for success. Whether you’re launching a small business or a full-fledged enterprise, these steps will guide you toward building a solid foundation for your business dreams.

1. Define Your Business Idea

Before diving in, ensure your idea is viable. Ask yourself: What problem does my business solve? Who are my customers? Conduct market research to refine your offering and identify your unique selling point (USP).

2. Create a Business Plan

A solid business plan outlines your goals, target audience, financial projections, and operational strategies. This document not only serves as a roadmap but is also essential if you need to secure funding or investors.

3. Choose the Right Business Structure

Your legal structure—sole trader, partnership, or limited company—affects your tax obligations, personal liability, and regulatory requirements. Research which option aligns best with your vision.

4. Register Your Business

Ensure your business name is unique and not already registered. In the UK, you’ll need to register with HMRC or Companies House, depending on your chosen structure.

5. Understand Your Tax Obligations

Get familiar with taxes like Income Tax, Corporation Tax, and VAT. Keep accurate records and consider using accounting software or hiring an accountant to stay on top of deadlines and compliance.

6. Set a Realistic Budget

Financial planning is critical. Calculate your start-up costs, ongoing expenses, and expected revenue. Create a budget to ensure you’re financially prepared for the first 12 months of operation.

7. Open a Business Bank Account

Separate your personal and business finances. A dedicated business account simplifies accounting, helps with tax filing, and presents a more professional image to clients.

8. Build an Online Presence

In today’s digital age, having a strong online presence is non-negotiable. Create a professional website and set up social media profiles to showcase your products or services and engage with your audience.

9. Protect Your Business

Consider business insurance to protect against unexpected losses. Types include public liability, professional indemnity, and employer’s liability insurance if you plan to hire staff.

10. Comply with Legal and Regulatory Requirements

Depending on your industry, you may need specific licenses or permits. Also, ensure you adhere to health and safety regulations, data protection laws, and employment laws.

Conclusion: Set Yourself Up for Success

Starting a business can feel like a monumental task but breaking it down into these 10 key steps makes the process manageable. With careful planning and attention to detail, you can turn your entrepreneurial vision into a thriving reality.

Ready to take the first step? Give us a call, we can share the knowledge we have gained in supporting numerous businesses through the set-up process.

Source:Other | 08-12-2024
Business Support

Government Unlocks Success for Small Businesses

Dec 9, 2024 by Terry Harris 0 Comments

Small businesses across the UK can now access streamlined support and advice through the newly launched Business Growth Service, designed to simplify and enhance the way SMEs engage with government resources.

Simplifying Support for SMEs

Navigating government support has often been a challenge for small and medium-sized enterprises (SMEs). In 2023, only 26% of UK SME employers sought external advice, reflecting the complexity of available resources. The Business Growth Service aims to address this by consolidating support into a single, user-friendly platform.

Launching in 2025, the service will offer:

  • Revamped Web Interface: A modern, intuitive website for easy navigation.
  • Collaborative Development: Built in partnership with businesses and local governments.
  • Localised Delivery: Tailored support to meet regional business needs.

Inspired by successful international business models, this service is part of the government’s broader strategy to boost SMEs' growth, productivity, and economic impact.

Reducing Administrative Burdens

Small business owners spend over 33 hours each month on admin tasks. The new service seeks to cut through bureaucracy, freeing up time for entrepreneurs to focus on growth and innovation.

Government Commitment to SMEs

The Business and Trade Secretary reaffirmed the government's dedication to SMEs stating that:

"This government’s Plan for Change will deliver economic growth, and for that to succeed we need SMEs right across the country to be exporting, hiring, and expanding."

Additional Measures Supporting Small Businesses

The Business Growth Service complements other initiatives, including:

  • Financial Support: Programmes like Start Up Loans and Enterprise Finance Guarantee continue to offer capital access.
  • Late Payment Crackdown: Strengthened measures ensure prompt payments to small businesses, improving cash flow.
  • Regulatory Simplification: Reducing red tape to create a more business-friendly environment.

Looking Ahead

The Business Growth Service is a step-change in SME support, promising a centralized, accessible resource hub to help businesses navigate challenges and seize opportunities.

As the launch approaches, SMEs are encouraged to engage with the service’s development to ensure it meets their needs and supports their ambitions.

Source:Other | 08-12-2024
Overseas tax issues

Transfers of assets abroad

Dec 5, 2024 by Terry Harris 0 Comments

A new rule aimed at preventing individuals from using companies to avoid taxes through the Transfer of Assets Abroad (ToAA) provisions applies to income arising to persons abroad on and after 6 April 2024.

This change affects UK residents who own or have a financial interest in UK resident close companies or non-resident companies that would be close if they were resident in the UK. Affected individuals will have used companies to transfer assets to a separate non-resident person, or to a non-domiciled individual.

The new rule introduces a provision that deems individuals who are participators in a close company, or a non-resident company that would be close if they were UK resident, as transferors to address situations where such companies make transfers. This change ensures that a transfer made via a company, in which the individual is an owner or has a financial interest, will be considered a ‘relevant transfer’ by that individual for the purposes of the ToAA legislation.

This change should not affect genuine commercial transactions or transfers that are not aimed at avoiding tax, as outlined in sections 736 to 742 of the Income Tax Act 2007.

Source:HM Government | 02-12-2024
Value Added Tax

VAT Flat Rate Scheme overview

Dec 5, 2024 by Terry Harris 0 Comments

The VAT Flat Rate Scheme allows businesses to pay VAT as a fixed percentage of their total turnover, which includes VAT. The applicable percentage varies based on the business type. This scheme is designed to simplify VAT accounting, thereby reducing the administrative burden associated with VAT compliance.

The scheme is open to businesses that expect their annual taxable turnover in the next 12 months to be no more than £150,000 (excluding VAT). This annual taxable turnover includes all sales—standard, reduced, zero rate, and other supplies—but excludes the actual VAT charged, VAT-exempt sales, and sales of capital assets.

Since April 2017, a 'limited cost trader' test has been in place. Businesses that meet the conditions as limited cost traders must use a fixed rate of 16.5% under this scheme. For these types of businesses, it is usually beneficial to opt out of the VAT Flat Rate Scheme and use traditional VAT accounting.

Once enrolled, businesses can remain in the scheme as long as their total income does not exceed £230,000 in any 12-month period, with special provisions for temporary increases in turnover. Additionally, there is a 1% discount available for businesses in their first year of VAT registration.

Source:HM Revenue & Customs | 02-12-2024
National Insurance

Apply for or locate a National Insurance number

Dec 5, 2024 by Terry Harris 0 Comments

If you have lost or forgotten your National Insurance number, there are several ways to retrieve it.

You can find your National Insurance number:

  • On a document you already possess, such as a P60, payslip, or letters regarding benefits.
  • In your personal tax account.
  • In the HMRC app.
  • In your Apple or Google Wallet (if you have previously saved it there).

You can also download a letter showing your National Insurance number through your personal tax account or the HMRC app.

If you are still unable to find your National Insurance number, you can request it online, submit a written request to HMRC using form CA5403 or contact HMRC by phone. Teenagers will usually receive a letter with their National Insurance number just before turning 16.

If you have never been issued a National Insurance number, you can apply for one, provided you meet the eligibility criteria.

Source:HM Revenue & Customs | 02-12-2024