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June 2017 Newsletter

July tax payments

Many of you will shortly receive statements from HMRC showing the amount of tax due for payment before 31 July. For most people the amount due by 31 July will be in line with the figure that we advised you when we submitted your 2016 self-assessment return. But the figure assumes that your income for the tax year is the same as or greater than your income in the previous year. If you believe that your income has fallen let us know, together with details of your income and we will review the position and advise you if you can reduce your payment.

Tax-free Childcare

The new scheme was launched on 28 April and is being rolled out starting with individuals who have children aged under two. In very simple terms the parent opens a special online account into which they, or anyone else can save money to which the government will add £2 for every £8 saved, up to a maximum of £2,000 per year, per child aged 11 or under. The money can only be used to pay for child care costs with registered nurseries, nannies or afterschool clubs. The money can be withdrawn at any time, but you lose the government's contribution. There are limits on the parents' income and you must register before you can open an account.

Mistakes by M Revenue & Customs (HMRC)

We have started filing 2016/17 tax returns. This is the first year where the new rules for taxing dividends have applied. The results do not make happy reading. Clients who have previously had no personal tax bill to pay in January or July are now being faced with bills of £3,000 in January 2018 and a further £1,000 in July 2018. The January bill is high because clients are having to pay the whole of the liability due for 2016/17 and then a further 50% as a payment on account for 2017/18. All things being equal their future bills will be in the order of £1,000 in each of January and July each year. I am sorry to be the bearer of bad news but I want you to be aware of this situation as early as possible.

Phishing scams

I am sure that most of you will be aware that there is a regular series of email scams being sent which advise you that you are due a tax refund. Do not open the email as HMRC will not email you to advise about a refund, the other giveaway is that most refer to the sum as "GBP" and don't use the "£" symbol. Even if you are due a refund you should still ignore the email and contact us. We will monitor your refund position, chase it up with HMRC and advise you how much you are due and when to expect it.

A variation that I have become aware of is where individuals are getting texts or phone calls, including voicemails, stating that they owe HMRC money and a warrant will be issued for their arrest unless they pay immediately. Payments have even been requested in iTunes vouchers! As usual, the warning is never give out any personal information, get in touch with us and we will confirm whether or not there is a liability outstanding and how to make the payment.

Should all directors file self-assessment tax returns?

This is a question that we are frequently asked. HMRC guidance says "yes", but there is no statutory requirement. I have always worked on the basis that if all income is taxed at source and there is no additional liability there is no requirement to file a return. This position has been accepted in a recent tax case. In the past many directors were taking low salary and topping up with dividends. They were basic rate taxpayers no tax was due so no return was necessary. The change in the rules for taxing dividends so that now only the first £5,000 of dividends is not taxed will mean that for 2016/17 (the tax year just finished) self-assessment returns will have to be filed.

Summer budget

As previously reported the calling of the election meant that many announcements in the Chancellor's last budget did not in fact happen. There was always going to be another budget after the election, but the result of the election means that predicting what will be included is more difficult. Whatever is included we will keep you informed.

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