A more generous inheritance tax exemption applies where the donor can prove that he or she is not transferring capital but is making gifts out of their income. There are detailed conditions for this exemption to apply requiring records to be kept of income and expenditure in order to prove that there is sufficient surplus income each year to make regular gifts to the beneficiaries.
Certain traders can be made liable for the unpaid VAT of another VAT-registered business when you buy or sell specified goods. HMRC have recently updated VAT notice 726 which advises traders to carry out due diligence into their supply chain.
The specified goods are any equipment made or adapted for use as a telephone and any other equipment made or adapted for use in connection with telephones or telecommunication, such as SIM cards.
Also included is equipment made or adapted for use as a computer and any other equipment for use in connection with computers or computer systems and also other electronic equipment for use by individuals for the purposes of leisure, amusement or entertainment, such as Satnavs and games consoles.
Where possible higher rate taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity and for the individual to obtain additional tax relief on the payment.
For example where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40% higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing their net cost to £15.
Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will be taxed on the shortfall.
Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell your donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.
Under certain circumstances it is possible to arrange the collection of unpaid tax through your PAYE coding rather than making a balancing payment on 31 January. This will depend upon the amount outstanding and the amount of income taxable under PAYE. There is a further condition that the return is submitted to HMRC online before 30 December 2018 in order that the 2017/18 tax be collected by amending the 2019/20 PAYE coding.
To utilize the 2015/16 unused relief any additional pension savings would need to be paid to the pension fund by 5 April 2019, otherwise the relief from 2015/16 will lapse.
Note however that for some taxpayers the method of calculating unused relief for 2015/16 is extremely complicated as the Government changed the pension rules part way through the year on 8 July 2015. The amount of pension allowance will depend on the pension input period of your scheme.
For most taxpayers the maximum pension input annual allowance is currently £40,000.
However, from 2016/17 those taxpayers with ‘adjusted income’ over £150,000 and ‘threshold income’ over £110,000 receive a tapered annual allowance. For those persons affected the allowance tapers by £1 for every £2 that their adjusted income exceeds £150,000 down to a minimum annual allowance of £10,000.
The calculations of ‘adjusted income’ and ‘threshold income’ can be complicated.
HMRC have updated their guidance on the rules for carrying forward the unused pension savings annual allowance, together with a calculator on their website.
For most taxpayers the maximum amount of pension savings that qualifies for tax relief each tax year is £40,000. It is possible to increase this amount by utilising unused relief brought forward from the previous 3 tax years, provided the individual was a member of a pension scheme that year.
The brought forward relief from the earliest year is utilised before later years. Thus for the current tax year 2018/19 the unused relief from 2015/16 may be utilised in addition to the current year relief, followed by 2016/17 and then 2017/18.
HMRC has launched new and innovative technology to help more than 3 million customers renew their tax credits. HMRC has developed a customer-focused service through Amazon Alexa specifically for those seeking help with their tax credits renewals.
Customers with Amazon Alexa-enabled devices can ask Alexa to ‘open HMRC’ and ask for help and information with a change of circumstances, payment information, or a renewal. No personal information is stored on Alexa and customers cannot renew their tax credits using Alexa.
It’s just one part of HMRC’s growing online services. Tech-savvy customers can also use the HMRC App on their smartphone to:
- renew their tax credits
- check their tax credits payments schedule
- find out how much they have earned for the year.
Draft legislation in the next Finance Bill will introduce significant changes to the reporting of residential property disposals and the payment of CGT from 6 April 2020.
Currently non-UK resident taxpayers disposing of UK residential property are required to report the disposal to HMRC within 30 days. The new legislation extends this reporting obligation to UK resident taxpayers and at the same time will introduce a new payment on account regime.
This is yet another attack on buy to let landlords who currently pay CGT on property disposals on 31 January following the end of the tax year in which the disposal took place so this change will be a significant acceleration of the payment date.
From 6 April 2019, the Welsh Government (like the Scottish Government) will be able to set and vary the rate of Income Tax paid by Taxpayers who live in Wales.
As in Scotland the system will be administered by HMRC. Taxpayers resident in Wales who are employed or in receipt of a taxable pension will have the letter “C” as a pre-fix to their tax code to ensure the correct amount of tax is deducted under PAYE.