New tax evasion plans revealed

HMRC has released further details about how it plans to crackdown on offshore tax evasion.

Treasury officials announced plans to create a new strict liability offence for offshore tax evasion following Budget 2015 in March. Strict liability refers to a criminal offence where proof of intent is not required to convict the suspected individual.

Under current laws, taxpayers can only be found guilty of tax evasion if HMRC is able to prove that the failure to pay was deliberate. Under the new rules, failure to declare income and gains will alone be sufficient to convict taxpayers.

Under the draft legislation:

  • the offence will only apply to income and capital gains tax
  • it will apply to all offshore income and gains
  • it will only be used if the amount of undeclared tax exceeds £5,000
  • the threshold will not roll over into multiple tax years
  • convicted people will face a maximum 6 month prison sentence.

HMRC is currently consulting stakeholders about the viability of the draft legislation.

The Chartered Institute of Taxation (CIOT) has warned that the use of strict liability will result in criminal convictions of people who did not intend to evade tax and merely made mistakes on their tax returns.

Patrick Stevens, tax policy at the CIOT, said:

“It is easy to see why this is attractive to the tax authorities. But UK and international taxation is a minefield of complexity and, while some taxpayers do actively seek to hide their income by intentionally failing to declare it, there are others who simply make mistakes in their financial affairs without intending to act wrongly.

“It is not reasonable for someone to be convicted, let alone imprisoned, for offshore tax evasion without an intention to evade tax being proved beyond reasonable doubt.”

We can file your personal tax return for you. Contact us for more information.

Reporting standards for small firms simplified

The Financial Reporting Council (FRC) has introduced new accounting standards designed to simplify reporting for small and micro businesses.

Micro businesses will now have to report to a different standard than small businesses under the new FRS 105, while small businesses will also have to adjust to a new set of standards.

The FRC’s changes are largely a response to the EU Accounting Directive which significantly increased the size thresholds for small companies.

Small and micro companies will have to report in line with the new standards for accounting periods on or after 1 January 2016.

FRS 105

Micro firms now have a separate reporting standard which allows them to submit accounts with reduced disclosure. Key changes include:

  • financial statements will be presumed true if they are prepared according to legislation
  • simplified balance sheets and profit and loss accounts
  • deferred tax does not need to be accounted for.

FRS 102

The standard previously used by small businesses (Financial Reporting Standard for Smaller Entities) has been withdrawn and a new section aimed at small businesses has been added to the FRS 102 standard. Reporting under FRS 102 is more comprehensive than FRS 105 but still contains reduced disclosures for small businesses.

Mandatory reporting under FRS 102 has already been introduced for medium and large companies with accounting periods on or after 1 January 2015.

Melanie McLaren, executive director of codes and standards at the FRC, said:

“These new accounting standards support the implementation of the micro-entities regime, further simplifying accounting requirements for up to 1.5 million of the UK’s smallest entities.

“They also respond to the new legal framework for disclosure in small company reporting, providing guidance for applying it and improving transparency relating to financial instruments, and they further improve the cost-effective reduced disclosure framework for listed groups by permitting IFRS-based presentation requirements in subsidiaries’ financial statements.”

We can manage your accounts for you. Contact us today for more information.

Government announces red tape reviews

The Department for Business, Innovation and Skills will launch reviews into cutting red tape in 5 key sectors, Business Secretary Sajid Javid has announced.

The reviews will be the first step in Conservative plans to reduce regulation by £10 billion over the next 5 years. The government is calling on businesses to voice their opinions about how deregulation could improve the productivity of British businesses and make the economy more efficient.

The 5 sectors identified by the government are:

  • Energy
    A review will look at government Ofgem’s role in the sector. Energy companies will be asked to provide their views on regulations including licensing arrangements.
  • Agriculture
    The government wants to reduce the amount of time it takes farmers to report on the health of their animals.
  • Care homes
    Businesses working the care home sector can be subject to different inspection regimes, with small homes of 30 residents dealing with 7 different state agencies. A review will look into how the system can be more efficient.
  • Waste
    A review will look into how regulations impact the sector. It will attempt to identify and remove obstacles to sector growth while maintaining human and environmental standards.
  • Mineral extraction
    Sector businesses have complained that some of the strict planning and environmental regulations should be simplified and better-coordinated with regulators.

The results of these reviews will be used to build upon measures related to regulation included in May’s Enterprise Bill such as making the primary authority scheme simpler and making regulators contribute more.

Small businesses can submit their thoughts on the reviews by posting comments to the Cutting Red Tape website, using social media, email or via the postal address listed on the site.

Business Secretary Javid said:

“I am determined to take the brakes off British businesses and set them free from heavy-handed regulators. The government’s pledge to cut £10 billion in red tape over the course of this parliament will help create more jobs for working people, boost productivity and keep our economy growing.

“For the first time, these reviews will look not only at the rules themselves but the way they are enforced. We want firms to tell us where red tape is holding them back and help us make Britain the best place in Europe to start and grow a business.”

Contact us to discuss planning for the future of your business.

Brits unaware of overseas tax rebates

Failing to claim tax rebates on overseas purchases is costing British holidaymakers millions each year, according to research by Direct Line.

Of the 2,002 people surveyed, just 8% said they had reclaimed VAT on their purchases abroad in the past 2 years.

Tax-free shopping is widely available in some of Britain’s most popular holiday destinations such as EU member states, Thailand and Japan.

A lack of awareness was shown to be the biggest reason why the majority of British holidaymakers fail to claim rebates:

  • 42% said they weren’t aware they could claim a VAT rebate
  • 14% couldn’t receive a rebate because they hadn’t kept the receipts
  • 12% thought the rebate wouldn’t be worthwhile
  • 12% said it was inconvenient.

Tom Bishop, head of travel insurance at Direct Line, said:

“Getting some of the money you’ve spent back when returning from holiday should be an opportunity too good to miss, but millions of people aren’t taking advantage of it. We’re big spenders when it comes to shopping abroad, so the tax on these items really does add up and once you have arrived home it will be too late to claim.

“Check before you travel if your holiday destination offers a VAT or GST rebate, keep all your receipts and ensure you have sufficient time at the airport or port to make a claim before you leave.”

Going on holiday? Contact us to discuss the impact on your personal finances before you go.

Government outlines productivity plans

A comprehensive plan to improve the productivity of UK businesses has been published by the Treasury.

The policy document identifies 2 areas that the government regards as key to stimulating productivity in the UK: long term investment and a dynamic economy.

Long term investment

The government has the aim of cutting £10 billion of red tape by 2020. Long term investment will be generated through tax reform, innovation and upgrading infrastructure:

  • Business investment
    Lower corporation tax rates, lower personal taxes and more generous capital allowances will support long term business investment.
  • Skills
    Increasing emphasis on apprenticeships and building a globally-recognised university system will combat the skills shortage.
  • Infrastructure
    Upgrading transportation, energy and digital infrastructure is essential to bringing the UK economy into the 21st century.
  • Innovation
    The government will continue to invest in scientific and technological innovation.

A dynamic economy

Labour market reforms, increased support for exports and deregulation have been identified by the government as essential to promote a dynamic economy:

  • Market reform
    Planning permission reforms, lower state welfare and more employee benefits such as free childcare have been outlined by the government.
  • Finance
    A New Bank Unit within the Financial Conduct Authority and Prudential Regulation Authority will ensure finance is provided for productive investments.
  • Competition
    The government has committed itself to cutting £10 billion of red tape and exporting £1 trillion worth of goods and services by 2020.

Business Secretary Sajid Javid said:

“This is a bold and ambitious plan, to achieve our vision of a more dynamic economy, with a business environment that fosters long-term investment, raising our living standards and become the best of all the major economies by 2030.”

Daniel Godfrey, chief executive of The Investment Association, said:

“It is crucial that Britain solves its productivity problem so that the economy can deliver rising standards of living and healthier public finances.”

Talk to us today about improving your business processes.

Dividend tax credits replaced by new allowance

Dividend tax credits will be replaced with a new £5,000 tax-free allowance from April 2016, the Chancellor George Osborne announced during his Summer Budget statement.

Under current rules dividend income is reduced with tax credits. Basic rate taxpayers currently pay no tax on dividend income while higher rate taxpayers are charged 25% and additional rate taxpayers 30.55%.

From April 2016, investors will pay no tax on dividend income below £5,000 but income exceeding the allowance will be taxed at the following rates:

  • Basic rate taxpayers: 7.5%
  • Higher rate taxpayers: 32.5%
  • Additional rate taxpayers: 38.1%.

The dividend allowance will be in addition to the £1,000 personal savings allowance for income such as bank interest.

Sean McCann, chartered financial planner at NFU Mutual, urged investors to review their stocks and shares portfolio:

“A new £5,000 tax-free allowance on dividends sounds great but there will be winners and losers. Basic rate taxpayers won’t be any better off. In fact, basic rate taxpayers with more than £5,000 in dividend payments will start paying tax on their dividend income.

“What is clear from today’s announcement is that anyone with stocks and shares should review their investments to make sure they aren’t paying any more tax than they have to.”

However, Anthony Thomas, chairman of the Chartered Institute of Taxation’s Low Incomes Tax Reform Group, welcomed the move:

“For some the new dividend allowance will offer a useful simplification, although it is possible that some people on modest incomes will now have to start paying tax on their dividend income and be brought into self-assessment in order to collect what is due from them.

“That apart, the dividend allowance together with the £1,000 personal savings allowance will encourage more individuals to save outside of the constraints of an ISA.”

Contact us to discuss what the Summer Budget 2015 means for you and your business’ finances.

 

 

Summer Budget Summary 2015

Free from the constraints of coalition government George Osborne has just delivered his second budget of the year, and the first Conservative budget in almost two decades.

In this Summer Budget, Mr. Osborne has set-out to implement some of the Tory party’s election pledges, whilst revealing the full scale of cuts ahead for both public services and welfare payments.

Recognising that not everything within this budget is necessarily of relevance or importance, Wellden Turnbull Director ‘Robin John’ took a moment to summarise what the measures could mean for you and your business, including the following:

  1. Dividend Tax
  2. Effective Tax Rate
  3. Non-Domiciled Individuals
  4. Foreign Owned Residential Property
  5. Tax Depreciation for Goodwill
  6. Buy-To-Let Landlords

Click on the video above to hear what Robin John has to say about the Summer Budget.

Summer Budget 2015: First Reactions

The Chancellor George Osborne has delivered the first all-Conservative Budget statement in almost 20 years. Here is a collection of snap reactions from the UK’s leading business groups:

Federation of Small Businesses

John Allan, national chairman of the FSB, said that the Chancellor has unveiled a “mixed bag of proposals”:

“There was further support to reduce corporation tax, fix the annual investment allowance and boost regional growth, where investment in roads will be particularly well received.

He agreed with the emphasis placed on boosting productivity but voiced concern about the introduction of a national living wage:

“However, even though offset by a welcome increase in the employment allowance, some will find the new national living wage challenging. Changes to the treatment of dividends will also affect many of our members.”

Confederation of British Industry

CBI director general John Cridland agreed that it was a “double-edged” Budget for businesses:

“Firms will welcome measures to balance the books and boost investment, but they will be concerned by legislating for wage increases they may not be able to deliver.”

British Chambers of Commerce

John Longworth, director general of the BCC, was more positive about the Chancellor’s statement and praised his “genius balance of politics and economics”:

“The Chancellor has confirmed that Britain is open for business. Firms across the UK will cheer not just the new permanent Annual Investment Allowance, further Corporation Tax reductions, and lower National Insurance for small businesses, but also commitments to childcare and higher education that help them employ Britain’s best.”

He added that businesses will want assurance that the move to create a national living wage would follow an “evidence-based approach that will minimise the impact on small businesses for whom the adjustment will be harder.”

Institute of Directors

Simon Walker, director general of the IoD, said that the Chancellor’s announcement of a new living wage was “dramatic” but argued that businesses have been sufficiently compensated in other areas:

“In return [for a national living wage], companies have been provided with a cut to corporation tax and an increase in the employment allowance. We should not understate the boldness of this move, and many businesses will have been taken by surprise, but the IoD accepts that after several years of slow wage rises, now is the time for companies to increase pay.”

To read the announced changes in full, please click here to download a free copy of our Summer Budget Summary

Standard annuity rate hits 2015 high

The standard annuity rate has increased 5.6% since the 12 May 2015, research by My Pension Expert has found. This is the highest standard annuity rate in 2015 so far.

The research shows that a 64 year-old with a £100,000 pension would earn £303 a year more than they would have 7 weeks ago.

The best available income on 12 May was £5,370, compared to a possible £5,673 on 30 June. This adds up to an extra £6,060 over the course of the average 20-year retirement.

My Pension Expert attributes the rising rate to an increase in gilt yields. The yields on gilts, which are linked to annuities, rose in June after policymakers hinted at a future rise in interest rates.

The figures will come as good news for standard annuity holders which have seen rates plummet since the government’s pension reforms were announced. Rates fell 10% between August 2014 and January 2015 before hitting an all-time low in April 2015.

Scott Mullen, director at My Pension Expert, said:

“The 5.5% rise in the standard annuity rate is great news for those considering purchasing an annuity, as it could lead to a significant increase in their retirement income. It demonstrates just how volatile the market is and why it requires constant monitoring if you’re to make the most of your pension funds.”

Contact us to discuss your options in retirement.