This month’s newsletter includes articles that highlight the following tax and business issues: more on strategy to minimise the new dividend tax next year; heads up regarding a new Sunday trading review; information about the changes to vehicle excise duties from April 2017; and an article for owners of property in the EU.
Our next newsletter will be published Thursday, 1 October 2015.
Whitefieldtax.co.uk
Accounts and Tax Deadlines
More on the dividend tax
Vehicle Excise Duty changes from April 2017
Sunday trading review
Do you own property in the EU?
Tax Diary September/October 2015
Whitefieldtax.co.uk PRACTICE NEWS
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Recent articles include:
• Helping vulnerable people in crisis with their tax – Bridge The Gap
• FRC introduces changes in response to EU Accounting Directive
• Employers Liability Insurance and the family business
• Summer Budget: wear and tear allowance
• So Many Changes! Looking at recent personal tax changes
• August Newsletter
• Changes to VAT treatment for prompt payment discounts
• Is fundamental reform of IR35 on the horizon? HMRC consultation
• ACCA head of taxation, responds to George Osborne’s summer Budget
• Summer Budget: tax treatment of interest paid on property income
You can see all of last months articles here: https://www.whitefieldtax.co.uk/2015/08/
Accounts and Tax Deadlines PRACTICE NEWS
A reminder to clients that your deadline for getting accounts and tax return information for 2014/15 to us is 30 September.
After that date you will incur a late presentation surcharge from us of £100+vat.
This applies to business year ends of 31 march 2015, 5 April 2015 or earlier, and to 14/15 Self Assessment information.
You can send Self Assessment information to us electronically: https://www.whitefieldtax.co.uk/forms-administration-clients/self-assessment-data-request/
You can send accounts information to us electronically: https://www.whitefieldtax.co.uk/forms-administration-clients/guidance-on-year-end-procedures/
Once we have completed them, you can also approve your accounts electronically: https://www.whitefieldtax.co.uk/help/forms-administration-clients/approve/
More on the dividend tax INCOME TAX
As we mentioned in last month’s newsletter, from April 2016, the present dividend tax credit of 10% is being abolished and is being replaced with an annual dividend allowance of £5,000.
To recap, dividends received in excess of the £5,000 allowance will be taxed at increasing rates according to your highest rate of Income Tax:
• 7.5% if you are a basic rate taxpayer
• 32.5% if you are a higher rate tax payer, and
• 38.1% if you are an additional rate tax payer.
These changes will make a difference to all limited company shareholder/directors who presently receive a small salary and large dividends. Many will be paying more tax as a result.
We recommend that all affected readers undertake a review of their tax position from April 2016 so that they are aware of the financial impact on their personal disposable income.
But what about tax payers who receive significant dividend income from diverse investments and do not, necessarily, run their own company?
If your dividend income is likely to exceed the £5,000 limit you could consider the following actions to minimise any additional dividend tax:
1. Make sure you use the ISA limit to transfer high dividend yield shares into this tax free environment.
2. Each person will be entitled to the £5,000 relief so spouses could consider equalising their share holdings in an attempt to make the most of their individual £5,000 allowance.
3. As the additional tax, on dividends received in excess of the £5,000 limit, is at higher rates for higher rate and additional rate Income Tax payers, consider transferring shares to a lower taxed spouse to restrict tax to the lower 7.5% rate.
4. If you are a higher or additional rate tax payer and you have significant dividend income, you could look for ways to reduce your overall taxable income and therefore reduce an additional dividend tax charge. For example, by deferring withdrawals from a drawdown pension.
If it is likely that you will be crossing the £5,000 Rubicon next year, now is the time to plan an effective tax mitigation strategy. Please call if you would like our assistance.
Vehicle Excise Duty changes from April 2017 DUTIES
If you are concerned about the annual cost of a VED license you may want to consider your car replacement options before the new VED regime starts April 2017. It will apply to all cars first registered after 1 April 2017.
From this date, VED will still be based on CO2 emissions, but the present generous rates for low CO2 vehicles will largely disappear. The only exception is zero emission vehicles which will continue to have a £0 charge.
VED will be split into two bands: a starter band, which will apply for the first year, and a standard rate, which will apply to subsequent years of ownership.
The rates gradually increase for the initial starter band. For emissions between 1 to 50g/km the starter rate is just £10. At the other extreme, cars with a CO2 rating in excess of 255g/km, the starter rate is a significant £2,000.
Owners of all vehicles with a CO2 emission rate in excess of 0g/km will then pay an annual, standard rate of £140 for the second and subsequent years of ownership.
Finally, cars with a list price above £40,000 will pay a supplement of £310 a year for the first 5 years at which the standard rate is applied. i.e. the annual standard rate for these vehicles will be £450 not £140.
Sunday trading review GENERAL
The Government is undertaking a review of the Sunday Trading legislation. The review aims to deal with the concerns of larger high street retailers, who are concerned that they cannot compete effectively with online retailers unless they are open seven days a week at normal opening hours.
The Government is consulting on plans to give local areas the power to allow large shops to open for longer on Sundays.
The reforms would give metro mayors and local authorities the power to determine Sunday trading rules that reflect the needs of local people and allow shops and high streets to stay open longer and compete with online retailers.
Local authorities would have the discretion to zone which part of their local authority area would benefit from the longer hours, allowing them to boost town centres and high streets.
The existing Sunday trading laws were introduced more than 20 years ago before high-street shops faced competition from online retailers. The law currently prevents large stores from opening for more than 6 hours. Small shops covering less than 3,000 sq ft can open all day.
The Government is committed to giving the UK’s major cities the power to compete for international tourism while increasing consumer choice. Paris has recently extended Sunday trading opening hours in areas of international tourism, and Dubai and New York shops open into the evening 7 days a week.
Do you own property in the EU? GENERAL
If you own property in the EU you may be advised to revisit your Wills and make sure that you are not affected by the automatic succession rules that apply in many countries. For example, in France it is the usual practice to ensure that property is left to children rather than the surviving spouse.
Recent changes in EU law and practice mean that you can now nominate the jurisdiction that you wish your EU property to be ruled by. This may mean a change to your current Will in the UK, or by creating a second Will to cover your EU property.
In effect, citizens are able to choose whether the law applicable to their succession should be that of their last habitual residence or that of their nationality.
Tax Diary September/October 2015 GENERAL
1 September 2015 – Due date for Corporation Tax due for the year ended 30 November 2014.
19 September 2015 – PAYE and NIC deductions due for month ended 5 September 2015. (If you pay your tax electronically the due date is 22 September 2015.)
19 September 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 September 2015.
19 September 2015 – CIS tax deducted for the month ended 5 September 2015 is payable by today.
1 October 2015 – Due date for Corporation Tax due for the year ended 31 December 2014.
19 October 2015 – PAYE and NIC deductions due for month ended 5 October 2015. (If you pay your tax electronically the due date is 22 October 2015.)
19 October 2015 – Filing deadline for the CIS300 monthly return for the month ended 5 October 2015.
19 October 2015 – CIS tax deducted for the month ended 5 October 2015 is payable by today.
31 October 2015 – Latest date you can file a paper version of your 2015 Self Assessment tax return.