Taxing Times – February 2016

Welcome to the second issue of Taxing Times for 2016, a bit later than usual as we are just catching up from the rush of January self assessment tax returns!  So now that the 31st January filing deadline has been successfully negotiated for another year we’ll have a look at the following in this edition: Tax Opps

  • Reasonable excuses for late filing of tax returns
  • Busting the myths around digital tax
  • Tax savings tips for 2016
  • Free Companies House service
  • Payroll update and end of year reminder
  • Can Dodd Wealthcare help you?
  • As usual we’ll also have a quick round up of what’s new in the world of tax

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Auto Enrolment is coming, what are you waiting for? 

AE Seminar MPU fb & twitter
We would like to invite those employers with a 2016/17 staging date to our seminar on Tuesday March 8th at 9.30am at the Rheged Centre, Penrith.

If you’re worried about this process you should come along and our experts will talk you through it. You’ll leave our seminar feeling much clearer about what auto enrolment entails, what you have to do and how to go about doing it, in real practical terms.

To book your free place please contact Tessa Robinson on 01228 530913 or email . You don’t have to be a Dodd & Co client to attend this seminar, everyone is welcome, and we’ll even throw in a brew and a breakfast butty!

Taxing Times will take a break in March (back in April) but will be replaced with detailed coverage of the March 16th Budget instead so please look out for that!

Dotted Line2Late to file your tax return?  Don’t  forget your right to appeal

22387798_mlMost of us will have breathed a sigh of relief when 31st January ended and we (or our trusty accountants and tax advisers!) got our personal tax returns safely filed with HMRC.  But for those taxpayers who did not manage to get their returns filed, the Low Income Tax Reform Group is reminding them that they should appeal against penalties for late filing if they think they had a reasonable excuse.

Anthony Thomas, LITRG chairman, said: ‘We are concerned that people may feel panicked by penalty notices from HMRC and just pay financial sanctions for filing self assessment forms late without considering that there may be excellent reasons for the delay in filing that may make them eligible for special treatment’. Reasonable excuses include the issues caused by recent flooding or severe weather problems, and also life events such as serious illness or bereavement, and other causes beyond the taxpayer’s control.

HMRC has also specifically said “No taxpayer affected by flooding will have to pay a fine if their return is late. We will accept a customer has a reasonable excuse if the delay is caused by flooding at their premises or their agent’s premises and the return is subsequently submitted without unreasonable delay.” Those who have been affected by the floods will be offered instalment arrangements to pay their taxes, and HMRC will cancel penalties and suspend debt collection for those who have missed deadlines or cannot pay as a result of flooding.

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Busting the myths around digital tax

HMRC have published a “myth-buster” for their digital tax accounts strategy (presumably in response to outcry from various bodies at the time of the announcement).

Myth No 1: Businesses will need to do 4 tax returns a year

HMRC say “No.  Businesses will not need to file 4 tax returns a year.  The new digital accounts will integrate all the different information businesses already provide to HMRC into a simple, streamlined system.  Instead of one big onerous tax return each year, once a quarter businesses can check that the information they are collecting digitally is correct and simply click “send” to update HMRC”.

Myth No 2: This does not consider those who are digitally excluded

HMRC say:

  • There is no question of forcing those who cannot go digital to do so. Help will be available for businesses who struggle to use digital tools.
  • People who genuinely can’t use digital tools will be offered alternatives, like nominating someone else to update their information for them, or giving information by phone.

Myth No 3: Businesses don’t want to do tax digitally

HMRC say:

  • Millions of firms already manage their tax online. 99% of VAT returns are done online, 98% of Corporation Tax and 86% of Self-Assessment returns are done online.
  • Many taxpayers want more certainty over their tax bill and access to an in-year picture of their tax position, which their new digital accounts will provide.

Myth No 4: Businesses will need to keep extra records and the digitisation will cost a fortune

HMRC say:

  • No additional records are needed for increased digitisation. These changes will contribute to our target to reduce business burdens by £400m.
  • For those who aren’t already keeping records digitally, there will be free software and clear, simple advice on how it can be used.

Myth No 5: The new plans will increase errors and hinder compliance

HMRC say:

  • Not true. The scope for error will be greatly reduced -meaning fewer businesses face the shock of a bigger tax bill than they expected at the end of the year.
  • Annually £6.5bn is lost through error. These reforms will improve the quality of record keeping and reduce mistakes.

We’ll watch this space with interest!

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Tax Tips to help you save in 2016

The Treasury has published a summary setting out ten helpful points for saving money in 2016. With regards to tax matters, the summary highlights the tax advantages of utilising ISAs and help-to-buy ISAs, the personal and marriage allowances, and the new personal savings allowances, which takes effect from April 2016. The summary is on and is set out below.

18456177_s1. If you’re saving for a deposit for your first home, you can earn a bonus with the Help to Buy: ISA

If you’re saving to buy your first home, you can put away up to £200 a month in the Help to Buy: ISA and the government will top it up by 25%, up to a maximum of £3,000.

This year, if you put away £3400 in your Help to Buy: ISA, your bonus will be £850 in December (save £1,200 in January and £200 every month after that).

2. Switching your bank account could save you on average £70 a year

It’s a quick and easy way to switch your current account in 7 days – your direct debits and standing orders are transferred automatically, and there’s a switch guarantee, so you’re protected against financial loss if anything goes wrong when you switch.

Over 2.25 million switches have taken place since 2013. And it’s also available to 99% of small businesses.

3. There are more options for how to manage your pension

Since 6 April 2015, if you’re aged 55 and above, you can access your savings from your defined contributions pension scheme to invest or spend as you want under new pension reforms.

For example, you can take money direct from your pension pot without having to buy an annuity or put the money into drawdown, and 25% of this sum will be tax free – or you can use some or all of your funds to buy an annuity that will be payable for at least the rest of your life.

*Speak to Dodd Wealthcare IFA Nathan Glaister if you need any more information on this matter.*

4. If you’re looking to buy a new build home you could benefit from the Help to Buy scheme

House to letYou’re able to put down at least a 5% deposit, the government will lend you up to 20% of the rest of the value of the property, alongside your mortgage of up to 75%.

And to reflect the current property market in London, those buying in Greater London will soon be able to benefit from up to a 40% loan.

Alternatively, from April 2016, if you have a household income of less than £80,000 outside London, and £90,000 inside London, Help to Buy Shared Ownership will allow you to buy a share of between 25% and 75% of a home.

The rent on the rest of the property won’t be more than 3% of the amount left and the scheme will apply across England.

5. Married couples could save up to £212 this year by applying for the marriage allowance

The marriage Allowance lets you transfer £1,060 of your Personal Allowance to your husband, wife or civil partner.

This means that they could pay up to £212 less tax this tax year (from April 2015 to April 2016).

6. You can use an online tool to find out if you’re getting the best deal from your current account

Using the Midata tool on GoCompare, you can compare current accounts to find out the best one for you, based on how you actually use your bank account.

The service was set-up in April 2015 to help you get easy access to your data so you can make choices about how you bank.

At the moment, you can use the service if you bank with any of these providers – HSBC, Lloyds, RBS, Barclays, Nationwide, Santander and Tesco Bank. You can download your midata file through internet banking.

7. You will have complete freedom to take money out of an ISA and put it back in later in the year Money bags 2

ISAs are being reformed so that instead of being able to put up to £15,240 in the 2015-16 tax year into an ISA in total, you can take out your money and put it back in within the same year, without losing your ISA tax benefits – as long as the repayment is made in the same tax year as the withdrawal.

8. Taking out a mortgage is becoming simpler

Lenders have committed to use the same names for fees, so that you only have to get your head round the different types of fees, rather than the different names.

All fees will also have the same fee descriptions, listed in the same order. So when it comes to deciding which mortgage is right for you, it’ll be easier to compare.

9. From April 2016, a new personal savings allowance will take 95% of taxpayers out of savings tax altogether

From April 2016, a tax-free allowance of £1,000 (or £500 for higher rate taxpayers) will be introduced for the interest that you earn on your savings.

If you are a basic rate taxpayer (you have a total income of up to £43,000 in 2016-17), you will be eligible for a £1,000 tax-free savings allowance.

If you are a higher rate taxpayer (you have a total income in 2016-17 between £43,001 and £150,000), you will be eligible for a £500 tax-free savings allowance.

10. The tax-free Personal Allowance will be increased from £10,600 in 2015-16 to £11,000 in April 2016

The tax-free Personal Allowance – the amount people earn before they have to start paying Income Tax – will increase to £11,000 in 2016-17.  This means that a typical taxpayer will be £80 better off in 2016-17 than they were in 2015-16.

Free Companies House service

We often get calls from our clients asking us to check out a company they are forming a business relationship with. Thanks to Companies House you can now do this yourself, completely free of charge, through the Companies House Beta service. Go to their website and search the register with the company name. You can see an overview of the company details and also their filing history, which gives you information on directorships, abbreviated accounts which will all help in your decision about whether to trade with a company.

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Payroll update and end of year reminder

National Living Wage

Britain’s bosses are being urged by the Department for Business, Innovation and Skills (DBIS) to take 4 simple steps to be better prepared for the introduction of this year’s new National Living Wage (NLW).
Businesses are being advised to prepare early for the changes on 1 April 2016, when the new wage will become law, and make sure they follow these 4 simple steps:

  • know the correct rate of pay – £7.20 per hour for staff aged 25 and over
  • find out which staff are eligible for the new rate
  • update the company payroll in time for 1 April 2016
  • communicate the changes to staff as soon as possible

CIS Online

From April 2016, mandatory online filing of CIS returns will be introduced with the offer of alternative filing arrangements for those unable to access an online channel by reason of age, disability, remote location or religious objection.  The stated aim of the changes is to reduce the administrative and related cost burden on construction businesses.  From 6 April 2017 mandatory online verification of subcontractors will be introduced.

Are you ready for your payroll year end? Plan ahead!

At the payroll year end on 5 April, there are a number of key tasks you must complete and prepare for. So thinking about what you need to do early, will make the process go more smoothly.

For instance: Payroll Web Image

  • Is your software update available to download and install?
  • Have you planned when you need to do your final payroll processing and FPS submission before completing your year end tasks?
  • Do you know the deadline for issuing your employees P60’s?

Another question you should ask yourself is:

  • Will my software be able to deal with the auto enrolment planning and assessment in the new tax year?

Make sure you are ready for your year end in good time and that you are prepared for the year ahead including your staging for auto enrolment. Speak to one of the Payroll and Auto Enrolment Specialists at Carlisle on 01228 530913 or Penrith on 01768 864466.

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Can Dodd Wealthcare help you?

DoddWealthcare smallDodd & Co Chartered Accountants invite you to take a look at our exciting new financial services venture Dodd Wealthcare Limited. To discuss your individual circumstances please contact Nathan Glaister at Dodd Wealthcare for a no obligation chat on 01228 530913 or drop him an email on

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What’s new in the world of tax?

Cherie Blair challenges buy-to-let tax

Omnia Strategy, headed by Cherie Blair, has launched the first stage of a legal challenge to changes to tax rules for buy-to-let investors, on the basis that the planned changes to restrict tax relief on finance costs breach their human rights.  Omnia is arguing that the policy discriminates against individual buy-to-let investors by denying them the same rights as other business owners such as corporate landlords, who will not face such a restriction. The government has a very short window in which to respond to the claims, before the matter moves to a judicial review.

HMRC lists ‘rip off’ personal expenses claims

HMRC has published a list of what it describes as the top five most spurious personal expenses claims included in the 2013-14 tax returns.

15431411_lAccording to HMRC, a taxpayer filling in the forms for the 2013-14 self assessment process attempted to claim for the costs for storing Mars bars overnight in a fridge.  Personal health was also a popular choice for claims, with one taxpayer asking to offset the cost of a pair of flip flops so he or she did not have to walk barefoot between changing and shower rooms at work, while another wanted to claim the costs for intimate waxing!!

Ruth Owen, HMRC director general of personal tax, said: ‘There are a number of items and expenses that people can claim against, such as genuine business costs and items needed to do a job. But these….. are not items that every taxpayer in the country should be contributing towards and HMRC will never allow for these to be processed as genuine claims’.

Top tax return excuses

Some of the more bizarre excuses people offered for filing late last year include: “I had an argument with my wife and went to Italy for five years”; “My tax papers were left in the shed and the rat ate them”; and “My husband ran over my laptop”!

Numbered access

HMRC has provided a phone number for people without access to the internet to apply for the Married Couple’s Allowance. The number is: 0300 200 3300.

Big brother is watching – Beneficial ownership rules for companies confirmed

The Department for Business, Innovation and Skills (BIS) has published the government’s response to a consultation on new rules for companies required to set up a ‘person with significant control’ (PSC) register to record company beneficial ownership information.

From April 2016 companies will be required to hold a PSC register and will need to send the information to Companies House with their confirmation statement (which replaces the annual return) or on incorporation from 30h June 2016 onwards. The registrar will maintain the PSC information in a central public register, which will be publicly available for free.

Hoax letter warning

22175861_sThis is a reminder to be careful about refund letters pertaining to be from HMRC, which ask you to confirm your bank details.  These are hoax letters.  We have seen a number of these recently and they look very convincing.  Especially at this time of year when tax returns have been submitted and some of you may well be expecting tax refunds, it can be easy to drop your guard. If you are in any doubt as to the genuineness of letters which say they are from HMRC, please ask your accountant!

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