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Reading Time | < 1 min 11 Apr 2016

Quarterly business tax returns questioned by independent watchdog

Reading Time • < 1 minThe Administrative Burdens Advisory Board (ABAB), an independent oversight body for HMRC, has "significant concerns" about the government's plans to introduce quarterly digital tax returns for businesses. The government wants to make most businesses, s...
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Reading Time | < 1 min 08 Apr 2016

Savers lack understanding of savings options

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Savers are potentially missing out due to not understanding the range of savings options available to them, particularly the personal savings allowance (PSA) and ISA accounts, according to the Skipton Building Society (SBS).

On a survey of 2,000 people, 47% said they were confused by the rules regarding to ISA accounts, while 36% didn’t know what the new PSA was.

SBS also found:

  • 10% said they don’t understand the different types of saving products
  • 22% didn’t know how ISAs differ from saving accounts
  • 10% unaware of what ISA and PSA acronyms stand for.

Changes to PSA were introduced from 6 April 2016, allowing basic rate taxpayers to earn up to £1,000 in savings income tax-free. 

For higher rate taxpayers the tax-free PSA is £500.

Tax-free interest from ISAs doesn’t apply towards your new PSA.

Kris Brewster, head of products at SBS, said:

“The savings landscape is becoming too complicated, especially with multiple types of ISA products.

“We’d encourage the government to think about really helping savers by ending tax on all savings interest, and in doing so, abolishing the need for ISAs, putting an end to this confusion and creating a nation of lifetime savers.”

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Reading Time | < 1 min 07 Apr 2016

Tax credit overpayment change introduced

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A number of changes relating to the way that tax credit changes have come into force from 6 April 2016. Claimants earning over £20,000 may see a cut in payment as HMRC seek to recover overpayments at a higher rate, according to Low Incomes Tax Reform Group (LITRG).

The highest rate at which on-going payments are reduced in order to repay debts will rise from 25% to 50%. This will result in individuals paying back overpayments at a faster rate while simultaneously seeing their tax credit payments fall.

Further tax credits changes coming into effect are:

  • tax credit income disregard – the limit by which an household’s income can rise before it affects tax credit entitlement has reduced from £5,000 to £2,500
  • tax credit taper – rising from 41% to 48%
  • tax credit threshold – tax credit income threshold has been reduced from £6,420 to £3,850. Universal credit will be reduced to £4,764 (those without housing costs), £2,304 (those with housing costs) and removed from non-disabled claimants without children.

LITRG has urged HRMC to offer protection from the 50% rate rise for those with childcare costs and disability tax credits.

Anthony Thomas, chairman of LITRG, said:

“We fully support the need for HMRC to recover overpayment debt but this should not be at such a rate that it has the potential to plunge people into serious financial hardship. 

“This change is likely to catch people out as they may not be aware that their payments are about to reduce by an additional 25%. The cliff-edge income threshold means it is going to affect families with household income of more than £20,000 whatever their circumstances.”

Talk to us today to discuss your income.

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Reading Time | < 1 min 06 Apr 2016

New tax year brings changes for savers

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The start of the new tax year signals the arrival of a range of changes to taxation for businesses and individuals. 

Here’s a summary of the changes relating to personal savings coming into effect in April 2016.

Personal savings allowance

A new allowance of £1,000 will be introduced for income earned on people's savings. 

Basic rate taxpayers with a total income of £43,000 a year are eligible for the savings allowance, meaning they will pay no tax on the first £1,000 of their savings income.

Higher rate taxpayers earning between £43,001 and £150,000 will be eligible for a personal savings allowance of £500.

Money withdrawals from ISA accounts

People with ISA accounts can now withdraw money during the tax year without it counting towards the annual ISA limit.

This comes alongside a new Lifetime ISA announced in Budget 2016. From April 2017 adults under 40 will be able to save up for £4,000 each year while receiving a 25% bonus (£1000) from the government.

The ISA limit will also increase from £15,240 to £20,000 from April 2017.

Commenting on the personal savings allowance in February 2016, Low Incomes Tax Reform Group chairman, Anthony Thomas, said:

“The highly complex operation of the savings allowance must be addressed to improve its clarity and avoid people feeling that they face arbitrary and unjust tax bills.

“People should keep an eye on their level of savings income to ensure they do not stray into a different taxable band.

Talk to us today to discuss your financial planning.

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Reading Time | < 1 min 05 Apr 2016

New state pension comes into effect

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A new single-tier state pension will be introduced for those who reach their state pension age on or after 6 April 2016. 

The full state pension will be set at £155.65 a week.  Men born after 6 April 1951 and women after 6 April 1953 are eligible for the new system.

Workers will be required to have 10 years’ worth of national insurance contributions (NICs). 35 qualifying years is also required for the full new state pension which has been extended from 30 years.

Workers who have already retired before 6 April 2016 will continue on the old two-tier system where they’ll receive the basic state pension of £115.95 a week plus additional savings (Serps).

In March 2016, Daniela Silcock, head of policy research at The Pensions Policy Institute, said:

“Once the new state pension has been fully phased in there will no longer be significant differences in state pension income between women, ethnic minorities, disabled people, carers, the self-employed and the average for all pensioners.

“However, lower private pension saving and income among the under-pensioned are projected to continue.”

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Reading Time | < 1 min 04 Apr 2016

Range of tax changes for businesses

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Several tax changes have come into effect from 1 April 2016 that will affect businesses.

The following tax changes have come into effect from 1 April 2016.

  • Small Business Relief Scheme - the scheme has been extended for another year, saving businesses an average of £890
  • Fuel duty - duty has been frozen for the sixth year running. 

Further tax changes will be introduced 6 April 2016. These include:

  • national insurance contributions (NICs) – businesses will be exempt from paying employer NICs for apprentices under 25
  • employment allowance – increasing the NIC allowance for all businesses and charities from £2000 to £3000
  • capital gains tax (CGT) – reduced CGT, excluding carried interest and gains on residential property.

Financial secretary to the Treasury, David Gauke, said:

“Businesses are the lifeblood of the economy and we’re committed to backing them because we know that it is their enterprise and innovation that will deliver growth and opportunity for the next generation.

“The much welcomed tax breaks we’re delivering will support millions of businesses to take on more apprentices, create more jobs and expand their operations.”

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Reading Time | < 1 min 01 Apr 2016

Stamp duty changes come into effect

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New stamp duty rates for people investing in buy-to-let property and second homes came into force on 1 April 2016.

Individuals who purchase a second home or buy-to-let investments will have to pay a 3% surcharge on additional property over £40,000. 

The new charge will likely have an effect on additional property purchase costs with new rates payable on a house costing £275,000 rising from £3,750 to £12,000.

Stamp duty rates

The following rates will apply when purchasing an additional property over £40,000:

Property price

New rates (1 April 2016)

*£0 - £40,000

0%

**£0 - £125,000

3%

£125,001- £250,000

5%

£250,001- £925,000

8%

£925,001 - £1.5m

13%

£1.5m +

15%

 *Property price £40,000 or less.

**Property price over £40,000.

Land and Buildings Transaction Tax (LBTT)

Rate changes also come into force for those seeking to purchase buy-to-let properties in Scotland. The following LBTT rates will be charged on buying a property as your primary residence for over £145,000.

Property price

New rates (1 April 2016)

*£0-£40,000

0%

**£0 - £145,000

3%

£450,001 - £250,000

5%

£250,001 - £325,000

8%

£325,001 - £750,000

13%

£750,001+

15%

 *Property price total is £40,000 or under.

**Property price total is over £145,000.

These rates also apply to second homes and holiday homes.

Talk to us today to found out more on stamp duty.

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Reading Time | < 1 min 31 Mar 2016

Businesses cautious before national living wage introduction

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The national living wage (NLW) comes into effect on Friday 1 April 2016.

Research by Federation of Small Businesses (FSB) found that over 38% of employers expect the NLW to have a negative impact on their business, whereas only 6% thought the policy would have a positive impact.

With NLW projections expecting to it to rise to around £9.15 by 2020, 54% of employers said the new changes would still have a negative impact on their business.

When asked about adapting to the NLW, 54% said they would restrain from hiring new staff while 50% said they would increase their prices.  

Other measures some employers stated they would take:

  • cut staff hours (41%)
  • reduce staff (31%)
  • cancel or postpone planned investments (26%)
  • freeze or reduce wages of higher paid staff (29%).

Mike Cherry, FSB national chairman, said:

“Our research suggests that over half of small firms already pay their staff more than the voluntary Living Wage, but those that don’t are often operating in highly competitive sectors with very tight margins. 

“While it is easy to say everyone deserves a pay rise, the only way to deliver and sustain higher wages in the long run is to improve productivity, boost skills and drive business growth. Without the right type of productivity growth, there is a real risk that in many sectors higher enforced statutory wages will lead to fewer jobs being created, fewer hours for existing staff and, unfortunately in some cases, job losses.”

Contact us today to discuss the NLW.

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Reading Time | < 1 min 30 Mar 2016

Starter home plan announced

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Housing sites of 10 homes or more will need to make 1 house in 5 a starter home under new plans published by the government.

The changes will aim to support 200,000 new homes for first-time buyers under 40 as part of plans to build 1 million new homes - offering affordable sale, rental and private purchases.

Starter homes will be offered at 20% below market value, helping buyers to purchase affordable housing on moderate incomes.

Other measures include: 

  • starter homes can only be resold to other first time buyers, at a discount for 5 to 8 years after purchase
  • starter homes will be prevented from becoming buy-to-let opportunities
  • joint purchasers will be eligible for a starter home when one partner is above 40 and the other is below.

The new plan is the latest government measure aimed at people under 40 who are looking to purchase their first home. Budget 2016 saw a new lifetime ISA announced for adults to help them save towards their first home. 

From April 2017 adults under 40 will be able to save up to £4,000 each year while receiving a 25% government bonus up to £1000.The ISA limit will also increase from £15,240 to £20,000 a year.

Housing and planning Minister Brandon Lewis, said:

“We want to ensure young people who aspire to own their own home can settle down and enjoy the security home ownership brings.

“This is why we have committed to building 200,000 high quality homes exclusively for first time buyers backed by £2.3 billion government funding to get building underway including on brownfield sites.”

Talk to us today to discuss about your personal finances.

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