Latest News

INDIVIDUALS

Capital gains tax
The Chancellor has introduced legislation to “simplify” the capital gains tax system. This has some positive and some negative consequences, namely: -
There will be a single 18% rate of CGT (good news for those disposing of non-business assets, or assets held for less than 2 years);
Taper relief will be withdrawn (bad news for those disposing of business assets, especially higher rate tax payers who formerly had an effective 10% rate of CGT). However the Budget has introduced an entrepreneur’s relief of up to £1million, for lifetime gains on business assets, effectively reducing the rate to 10% on the first £1 million of gains.
Indexation allowance will be withdrawn (bad news for those disposing of assets held prior to 1998);
Simplification of the share identification rules (good news for those of us who have to make these calculations);
Halving relief & the “kink test” will be abolished (relevant if disposing of assets that were held prior to March 1982).
Some current reliefs will continue to apply, namely: -
Business asset rollover & business asset gift holdover relief -; EIS & VCT (Investment) relief; Principal private residence relief;

Electronic Filing of Tax Returns
Please be aware that the Revenue no longer automatically issue self-assessment tax calculations, where your return has been filed electronically. If you need proof of your earnings (especially as a self-employed person), you/we will need to request a copy printout of your total income tax calculation from the Revenue. It is the Revenue’s intention that eventually all returns will be filed electronically.

The Revenue has introduced a new supposedly simplified form for 2008. There are a few issues with the layout of this form, and this may cause some electronic filing challenges. Please bear with us (and our software providers) if this proves to be the case.

Enquiries into Tax Returns
Changes are proposed to the timescales under which the Revenue can enquire into your tax return, currently anytime up to 12 months after the 31st January, following the tax year-end. It is proposed that in future this be limited to 12 months after the date you have filed your tax return, so the earlier you file the quicker the door would shut on the Revenue.

Tax Returns
If you haven’t already completed your tax return please note we cannot guarantee to process your information by 31st January, unless you ensure everything is with us before 21st December. If you file late you will incur a £100 penalty.

BUSINESSES

Fuel Rates
If you make fuel only payments to your staff, or use the Approved Revenue Rates to claim back VAT input tax on the fuel element of mileage payments then make sure you check the IR website http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm to ensure you’re using the new fuel rates, effective from 1st January 2008.

National Minimum Wage Rates (NMW)
The NMW changed again on 1 October last year. The current rate for workers aged 22 & over is £5.52, 18-21 year olds £4.60 and 16-17 year olds £3.40. Make sure your software system has built in checks for hourly rate workers.

Employer’s Year-End Returns
Remember this year (2008/09) is the last year you will be able to file P35’s etc. in paper form; from 2009/10 you will have to file electronically. If you are not geared up for this, we suggest you start thinking about it now and benefit from the last year of the electronic filing incentive for smaller businesses.

Corporation Tax Rates
From April 2008 the small companies rate of tax will rise to 21%, while the larger company rate will decrease to 28%.

Capital Allowances
There are major changes to allowances for capital expenditure this year. From April 2008 the current system of first year allowances for small businesses will no longer apply, instead a 100% annual investment (AIA) allowance on expenditure up to £50,000 will be given. The annual allowance will reduce from 25% to 20%; fixtures & fittings will be separately classified and only attract a 10% rate; the agricultural & industrial buildings allowance will decrease to 3%, eventually being phased out; the rate for long-life asset s will increase to 10%.

VAT
From 1 April 2008 there is an increase in the VAT registration threshold from £64,000 to £67,000 - and the VAT deregistration threshold from £62,000 to £65,000.