CALL US ON 01924 384984
Wakefield's Leading Accountant
Registered office: 2 Chancery Lane, Wakefield, WF1 2SS

News

August 2017 Newsletter

We are now in the middle of August and a quiet month for tax news. HMRC are getting hotter at chasing taxpayers who pay late, so don't forget to make any payments due by the end of the month on time.

Simple assessments

A new form to help HMRC collect income tax has been introduced. For 2016/17 onwards we understand that this new procedure will be used where the taxpayer's main source of income is taxed under PAYE, but he or she also has up to £10,000 of other taxable income or gains.

A simple assessment is a tax assessment made by HMRC. They have up to four years from the end of the tax year to issue a simple assessment. If the taxpayer does not agree with the assessment then they have 60 days to appeal against it.

The aim of the simple assessment procedure is to take the taxpayer out of the self-assessment system, where they have only a small amount of income or gains which is not taxed under PAYE.

The normal tax payment date applies, so for 2016/17 the tax due is payable by 31 January 2018.

Trading allowance and rent allowance

In the budget earlier this year the Chancellor announced new allowances for individuals who had income of less than £1,000 from property and from selling items on ebay or similar sites. When the General Election was called these allowances were not brought in, but HMRC have now confirmed that the allowances will be introduced in the next budget and they will be available from 6 April 2017.

Pension flexibility

It is now permitted for individuals to make early drawdowns from their pension funds and have this treated as income in the year that the drawdown is made. If you do take advantage of this flexibility it reduces the annual allowance that you can contribute to a pension scheme to £4,000 (2017/18). There is a danger that an individual will "tidy up" their pension arrangements and drawdown to close a small fund that might have been started a number of years ago and has been dormant. This will trigger the restriction in the annual allowance for contributions going forward.

What to do if you receive a small amount of dividends

Ignoring other income, if you receive dividends of less than £5,000 in a tax year you have no tax to pay and do not have to file a tax return. If your dividend income is greater than £10,000 you have to file a tax return, but we have been waiting for clarification of what to do if your dividend income is between the two figures. We have now been advised by HMRC that if you have dividend income of more than £5,000 but less than £10,000 you should advise HMRC by phoning the contact centre on 0300 200 3300 (I hate to say it, but good luck). HMRC will then try to collect the tax through your tax code or, if you do not have a source of income subject to PAYE they will issue you with a tax return. If you already file a tax return then you need do nothing other than record the dividends on the return.

Brexit causes unexpected capital gains tax liability

If you buy an asset in a foreign currency and sell it later in a foreign currency there can be an unwanted tax consequence of exchange rate fluctuations. This is because the calculation uses the rate of exchange at the date of purchase to calculate the cost in sterling and then the rate at the date of sale. The capital gain is calculated by deducting the sterling value of the cost from the sterling value of the proceeds. This means that if you bought an asset when the pound was stronger against the euro (dollar) and sell it now you may get a tax bill purely due to the currency fluctuation. Conversely if you buy now while the pound is weak and sell when the pound has recovered you may escape capital gains tax on the profit.

Do you have unwanted IT equipment at work or home?

As a part of another business initiative, we have been approached by The Prince of Wales Hospice to see if we have unwanted IT equipment such as computers, laptops, cables, telephone systems, mobile phones, monitors and more.

Donating your old equipment raises funds to support their patients. The items will be collected from your premises for free and 20% of the sale price will go to the hospice funds and they will let you know what funds have been raised. Do email tmearns@pwh.org.uk or ring 01977 781474 with your list of items and they will coordinate the collection for you. Just mention Vogan Accountancy when you call. We managed to find 9 items in our storage area.

Is it a sport?

We have spent many hours around the family table discussing whether activities such as darts, snooker, chess and synchronised swimming are sports or games. One activity we have not considered is duplicate contract bridge and now we do not need to because an advocate general at the Court of Justice of the European Union has said that it is a sport. That is good news for the English Bridge Union (EBU) which will now pursue a VAT refund and invest more into the game.

Enjoy the rest of the summer whatever activity you choose to pursue.

Send us your details for
a free consultation