Tag Archives: Tax

Have You Completed Your Personal Tax Return?

shutterstock_276568649Christmas is now a distant memory and time is running out for completing your tax return before the 31 January deadline.

If we do your tax return and you have not yet sent us your information, please do so as soon as possible in order to ensure you don’t incur a £100 late filing penalty.

If you prepare your own tax return and are already registered with HMRC’s online service, we recommend you log on and prepare your return sooner rather than later.  The HMRC portal is likely to get very busy as we get closer to 31 January.  Also, you may find when you sit down to prepare your return that you are missing some information or need some advice, both of which may take time to resolve.

The bad news for those who have not already registered for self-assessment is that it’s currently taking HMRC 6 weeks to issue UTR (unique taxpayer references). However, if you apply now and make a reasonable effort to register well before the deadline HMRC may exercise some leniency. They may not be so keen to set aside late filing penalties if you do not apply until 30 January.

If you need help with your tax return or this is your first time completing a tax return online and are worried about meeting the deadline, please get in touch with Julie Walsh (Tax Manager) at julie.walsh@pmm.co.uk or call 01254 679131.

HMRC Plan To Scrap Business Record Checks

shutterstock_141007105HMRC have announced their intentions to scrap the Business Records Checks that have been consistently criticised by the Chartered Institute of Taxation for being ineffective.

The checks were originally introduced to allow HMRC to visit and confirm that a business is keeping sufficient information on its income and expenses in order to produce an accurate tax return. For businesses with inaccurate records, there is currently a potential £3,000 fine on top of any unpaid tax, interests and penalties.

Julie Walsh, Tax Manager at PM+M, said; “The reduction in unnecessary HMRC interventions is great news for businesses, but business owners should not forget that it remains crucial for businesses of all sizes to keep records up to date and in good order to protect themselves against any HMRC enquiries and tax demands.”

HMRC investigations can be very costly even if companies have up to date records. One way that we support our clients with this is in providing fee protection insurance to cover any professional fees that may be incurred in the event of an unexpected investigation or HMRC intervention.  This means we can spend time helping clients through the process and defending against HMRC challenges without the client facing a bill for our time.

For more information or advice on protecting your business, or for a fee protection quote, please get in touch with our tax team by emailing tax@pmm.co.uk or calling 01254 679131.

Tax Return Season Is Fast Approaching

shutterstock_164415176As the days become shorter and the nights darker, it’s time to ask yourself that age-old question – ‘Have I sent my tax return information to my accountant?’

Well, maybe it’s not ‘age old’, but if the answer is “Yes!” you can rest assured that everything will be in hand.

If the answer is “No!” it is now time to dust off your 2014-15 paperwork and send it to us. Tax waits for no one, and with Christmas fast approaching, you will no doubt want your tax affairs dealt with in time to put your mind at ease for another year.  You have until 31 January 2016 to submit and pay any tax due to HM Revenue and Customs, but why wait until then?

We strongly recommend that you avoid leaving your paperwork until January. Whilst we will do our best to turn around any tax return information arriving in January, by leaving it to the last minute you risk your tax return being rushed which means we have no time to think about any planning opportunities or provide advance notice of your tax liability.

If you’re struggling to remember what documents you need, please contact your usual PM+M tax adviser now or send an email to tax@pmm.co.uk, and we will be delighted to help you out!

 

Impact Of Tax Changes For Buy To Let Landlords

shutterstock_286835846We are all aware of the major curve balls that were announced in George Osborne’s Post-Election budget this summer. One of the biggest losers from the announcements are buy-to-let property investors who could potentially see their tax bill more than double.

The major issue that has emerged from the announcements is that the landlords’ ability to deduct the cost of their mortgage interest from their rental income when calculating their tax has been removed. The wealthiest investors, who do not have any mortgages, are unaffected.

The change is due to be introduced in 2017 and fully implemented by 2020. The new rules will wipe out any profits for landlords with mortgage interest being 75% or more of their rental income, net of other expenses. Those paying additional-rate taxes will see their returns on investment disappear once mortgage costs reach 68% of rental income.

Looking into the future, it will become very difficult for middle-income borrowers to get into the buy to let market and those that have just entered the buy to let scheme face some issues in the next couple of years.

One solution for buy to let landlords might be to operate their business via a limited company. However, this option won’t be beneficial for all investors, individuals will need to take advice to determine which structure will be most appropriate for them.

If you are worried about the tax changes and if you would like any advice on what to do next, please contact Jonathan Cunningham at jonathan.cunningham@pmm.co.uk or call 01254 679131.

Is It The End For Tax Free Termination Payments?

HMRC - Tax Free Payments - Wage Slip

A consultation is to take place to review the treatment of termination payments with a view to simplifying the treatment of tax and national insurance.

This does however mean that the current rule allowing the first £30,000 of some termination payments to be made tax free could be abolished, as contractual and non-contractual payments are aligned in their treatment for income tax and national insurance purposes.

This could be replaced with a new exemption from tax and national insurance, which will increase in proportion with the length of service.  In addition, no allowance would be available until completion of two years’ service with the company.

There is also a move to link the exemption to any statutory redundancy payment.

HMRC are consulting until 16 October 2015 on the current proposals and our tax team with provide more information as soon as it becomes available.

 

PM+M Scores New Contract with Blackburn Rovers

PM+MBRFCPM+M has been appointed by Blackburn Rovers FC as its new audit and tax compliance advisers.

The deal will also see PM+M supply Venky’s London Limited – the club’s parent company – with ad hoc advisory services as and when required.

The PM+M team will be headed up by David Gorton, partner and head of corporate services. He will be supported by Neil Jones, manager; Ceri Dixon, audit senior; and Claire Astley, tax manager.

PM+M has a long association with Blackburn Rovers FC as it acted for the club over several decades before parting company in 2011 when KPMG, the group auditors for Venky’s London Limited, was appointed.

David Gorton commented: “We are delighted to be working with Blackburn Rovers FC once again – especially as it’s a local institution and many of our team members are lifelong Rovers fans. Our focus is now firmly on providing a first class service to the club and being part of its future.”

Mike Cheston, finance director at Blackburn Rovers, added: “Blackburn Rovers is committed to engaging with the community and that includes building commercial ties with businesses in the town. The club and PM+M go back a long way so this appointment was a natural fit for us.”

How Well Does The Taxman Know You?

How well does the taxman know you

 

Do you ever wonder what the taxman actually knows about you? The answer is quite a lot. HMRC have spent years developing software that scours banks of data for personal and commercial information. The software (known as Connect) seeks links between individual taxpayers and businesses, income, assets and transactions. Connect will then match its findings against the information the taxpayer has provided through their tax return. Discrepancies are flagged and could prompt a tax investigation.

This all happens in a matter of seconds and searches are undertaken repeatedly to capture new information. Here’s what the taxman knows about you:

Your income and pensions – The main feature of Connect is to hunt for income discrepancies. It will have information on your bank balances and income and it will match this with other information detailed in your tax return and PAYE data submitted by your employer.

Your property – HMRC has access to Land Registry databases. This means they know the price you paid for a property and who your mortgage lender is, if you have one. By having access to these records, HMRC can cross-reference stamp duty records and identify where capital gains have arisen and not been reported.

Your business – HMRC have the ability to look through a four year credit card history of small businesses.  This means that the taxman can check that your disclosed expenses match up with your electronic record.

Your bank accounts, savings and investments – banks and financial institutions report the interest paid to individuals across millions of accounts to HMRC. This data will then be analysed by HMRC’s Connect to detect undeclared, taxable savings income.

The taxman will also have eyes on your pension contributions. If you are claiming tax relief and you are disclosing this on your tax return, Connect will want to see a parallel increase in the balance held by your pension provider.

Connect’s powers don’t just end in the UK. From September 2016, HMRC will have access to files held by banks and financial institutions based in British overseas territories, such as the Channel Islands. This will expand to global accessibility by 2017.

Will it be successful? – It has been so far, as the number of tax investigations triggered by Connect is increasing, however, can this continue to be efficient on a global scale? Many do have their doubts as there is a possibility that some of the data could be inaccurate, potentially causing an increase in the numbers of pointless and costly tax investigations.

Ever heard of Fee Protection? – Fee protection insurance protects you from fees you may have to pay if HMRC launch an investigation into you or your business. It’s that simple. With some enquiries running into tens of thousands of pounds, it’s better to be safe than sorry.

For more information or advice on Fee Protection insurance, please get in touch with our tax team by emailing tax@pmm.co.uk or call Julie Walsh on 01254 679131.

VIDEO: Post-Election Budget Reactions and Full Commentary

Following our Post-Election Budget seminar yesterday, we have now had time to digest George Osborne’s announcements. What has become apparent is the Chancellor wanted to make some significant changes and he did just that in the first all Conservative Budget in almost 20 years.

During our Post-Election Budget seminar on Thursday 9 July, the PM+M team highlighted some key points from the Chancellor’s budget speech and these are outlined in the video below. Full commentary on the Budget is now available by clicking the button below.

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If you have any questions regarding the Post-Election Budget, please get in touch by email at info@pmm.co.uk or call 01254 679131. Our team will be happy to help with any questions or concerns you may have.

Pension Freedoms – What You Need To Know

shutterstock_147678989When George Osborne delivered his 2014 autumn statement, he announced that in the future you would be able to access your pension pots in much the same way as you do your bank account, and also be able to pass on your pension pot onto your loved ones. This created huge ripples across the pensions industry. The share prices of leading annuity providers fell sharply as a core part of their business was no longer the default product for retirement. Why would you lock yourself into a fixed withdrawal for the rest of your life and potentially lose a large nest egg for your heirs should you die early?

So it was with much excitement that on 6 April many of the new ways of accessing your pension became available. Except it is a bit more complicated than that.

First there is the tax. For those wishing to extract their pension in one go there is a substantial tax bill. After receiving 25% tax free as a Pension Commencement Lump Sum (PCLS), the remaining fund extracted is added to your income and taxed accordingly in that year. If you have income from other sources there’s a good chance that much of this lump sum will attract 40%, or maybe even 45% income tax.

In addition, if you don’t have a P45 in the current tax year, pension providers may apply a “month-one” tax code, treating the income as if you were to receive the same payment each subsequent month – thus meaning you pay a lot more tax than is due. Employed people may be able to claim back any overpayments during the year, but the self-employed will have to have wait until submission of their tax return the following year.

Apart from the tax, you will also need to consider whether your existing pension can allow you to access these new freedoms. The Telegraph outlines how Friends Life (part of the Aviva Group) are unable to offer Flexible Drawdown within their existing pension plans. Similarly, not all providers are offering the option of being able to draw your cash out in one go. For advisers this situation comes as no surprise – to expect legacy providers with creaking IT systems to be able to meet these new requirements and to completely change their business model in a matter of months was always going to be a challenge. Many people will need to change their pension provider to access benefits in the way they would like.

If you’re looking to take retirement benefits, you should take financial advice to find out and discuss what options are available to you, and to be aware of the tax consequences of any decision you make.

For more information or advice on how to efficiently access your pension pot, please contact Richard Hesketh on 01254 679131 or email richard.hesketh@pmm.co.uk.

HMRC Waive Fines For Reasonable Excuses

shutterstock_276958952The news over the last week of the leaked memo suggesting that HMRC have decided to waive the £100 fine for people who missed the deadline for filing their tax returns earlier this year is an interesting and welcome development. The decision is said to be part of a plan to reallocate resources to target major tax avoiders rather than penalising “ordinary people”.

However, this is not just a blanket waiver and is not carte blanche for missing the tax return filing deadline in the future. Anyone who has missed the deadline will need to have a good reason for sending it in late and will also need to make sure that they have now paid their tax and submitted the return.

The concession only applies to late 2013/14 income tax returns.

In this one instance, in order to reduce their backlogs, HMRC have said that they will take at face value and not check people’s applications for penalty waiver because they have a reasonable excuse. The rules around late returns are normally quite strict and are firmly applied by HMRC.  Acceptable reasonable excuses tend be to things that are unexpected or beyond your control.

If you filed your tax return late and would like advice on cancelling a penalty, or if you would like to make sure that you get your 2014/15 tax return in on time, please get in touch with our tax team for advice on tax@pmm.co.uk or call 01254 679131.