Welcome to May's Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you abreast of the latest developments in taxation.
May’s newsletter includes some timely advice for small limited companies with only one or more directors on the payroll, who wish to opt out of Pension Auto-enrolment.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.
Please contact us for advice. We're here to help!
Forms P11D and P9D
The forms P11D and P9D need to be submitted to HMRC by 6 July 2015 where expenses or benefits were provided to your employees in 2014/15, which are not covered by a dispensation, or are not otherwise exempt from tax. If the forms are not submitted on time, HMRC will issue penalties.
But how does HMRC know whether a P11D or P9D is due to be filed? In pre-RTI years when you completed the end of year form P35 you had to say whether a P11D was due. Those P35 questions were carried over to the "final" RTI report for each tax year, which is normally a full payment submission (FPS) report or employer payment summary (EPS). However, from 6 March 2015 there has been no legal requirement to complete those end of year questions, but most payroll software continued to include them in the final submission for the year.
If you didn't complete the "Is a P11D due?" question on the final FPS for 2014/15, HMRC may assume a P11D is needed anyway. To avoid any nastiness with automatic penalties you can tell the HMRC computer that no P11D/ P9D is needed and no Class 1A NIC is due by completing an online declaration.
The latest Employer Bulletin (no. 53) contains lots of tips for getting the P11Ds right first time, and it is well worth a read. You may find you don't have to submit a P9D for every low paid worker. Where an employee is provided with a medical benefit such as health insurance, and that employee earns less than £8,500 per year, you don't have to complete a P9D for the employee. We can help take the strain of your P11D task.
Cancelling VAT or VAT-MOSS Registration
If you registered for UK VAT in order to operate VAT-MOSS for your overseas sales of digital services to non-business customers, you may now find that the administration for such sales is just not worth the hassle. If so you may want to deregister for both UK-VAT and VAT-MOSS, and restrict your sales to UK-based consumers, or businesses located anywhere outside the EU.
The deregistration process for VAT-MOSS must be done online and it will take effect from the end of the calendar quarter in which notice to deregister is given. Thus to deregister from VAT-MOSS with effect from 1 July 2015 onwards, notice must be given by 15 June 2015. Note that once deregistered for VAT-MOSS your business can't use VAT-MOSS again for two calendar quarters.
The deregistration application for UK-VAT can be done online, and we can do this for you. The paper form VAT 7 can also be used to apply for deregistration from UK VAT. For a voluntarily deregistration the effective date is the date HMRC receives the application to deregister or a later date as agreed with HMRC.
The annual tax on enveloped dwellings (ATED) now applies to residential properties worth over £1m that are owned by a company, or a partnership with one or more corporate members, or in some cases a unit trust.
The ATED charge starts at £7,000 per year for properties worth over £1m but no more than £2m, and increases in steps to £218,200 per year for properties worth over £20m. This tax is normally payable to HMRC by 30 April within the year that charge applies to, which starts on 1 April.
So for most properties the 2015/16 ATED charge is payable by 30 April 2015 unless a relief or exemption is claimed. Although owners of properties which are in the lowest valuation band for 2015/16 (over £1m and not more than £2m) have until 31 October 2015 to pay this year's ATED charge.
Many companies and specific properties qualify for relief from ATED, but the relief must be claimed on an ATED return. Companies whose trade is: commercial letting, property development or property trading should qualify for relief from ATED and need to claim that relief on an ATED relief declaration return for their whole portfolio of properties.
If you would like us to submit an ATED return on your behalf, you need to complete a special ATED authorisation form: ATED1.
Have you received a letter from The Pension Regulator (TPR) telling you to "ACT NOW" to prepare for auto-enrolment? The letter gives you just a few weeks to nominate a contact to receive communications about auto-enrolment, with the threat of fines or prosecution if you don't take action.
The "staging date" for your business will be stated in the letter. This is the date by which you must have a pension scheme ready for your employees to join, if you do indeed need one.
A large number of small companies will be exempt from auto-enrolment, if they don't technically have any "workers" at their staging date. A company director is not a "worker" if he or she does not have a contract of employment with the company. A company with no staff other than directors has no obligations under auto-enrolment if any of the following apply:
- It has only one director; or
- It has a number of directors, but none of those have an employment contract; or
- It has a number of directors, only one of whom has an employment contract.
TPR doesn't know which directors in which small companies have employment contracts. If you receive a TPR letter asking for a contact to be established for auto-enrolment, you can get TPR off your back with one email to: email@example.com . This should open a structured email in which you need to insert your: PAYE reference, Companies House reference and the letter code from the TPR letter.
If your company does have staff other than its directors, we should talk about what preparations you need to make to get ready for auto-enrolment.
May Question and Answer Section
Q. I live in France and I am about to sell my former home in the UK, which has been let out since I emigrated in August 2001. Do I have to pay tax in the UK on the gain?
A. As you have lived abroad for nearly 14 years you will probably be treated as "non-resident" in the UK for tax purposes, but we need to check that with a few more questions. If you are a non-resident, the gain would generally be exempt from UK capital gains tax (CGT).
However, a new non-resident CGT applies to gains made on the disposal of residential property for 6 April 2015. This new tax only applies to the property of the gain falling after 5 April 2015. So if you sell the property fairly shortly after April 2015 there should be little gain to tax, and the first £11,100 of the gain will be exempt from tax.
Q. I am the sole director of my own company and will take a salary of £10,600 this tax year. How much dividend can I extract from the company this year without paying higher rate tax?
A. Assuming your company makes sufficient profits you can take out net dividends of £28,606 (90% of £31,785), without breaking into the 40% tax band.
Q. My Dad is nearly 90 years old and has an income of £26,000. My Mum who is 85, has an income of less than £10,000. Can my Mum transfer some of her unused personal allowance to my Dad in 2015/16?
A. Unfortunately, the transferable allowance of £1,060, doesn't apply to people who were born before 6 April 1935. Your father will already receive the married couple's allowance, which is worth up to £816.50 for 2015/16. The transferable allowance is only worth £212 (£1,060 x 20%), so he is better off with the married couple's allowance.
May Key Tax Dates
2 - Last day for car change notifications in the quarter to 5 April - Use P46 Car
19/22 - PAYE/NIC, student loan and CIS deductions due for month to 5/5/2015
31 - Deadline for copies of P60 to be issued to employees for 2014/15