fpdteam, Author at Bennetts Accountancy

State Pension if you retire abroad

3rd August 2023 by fpdteam

If you are retiring abroad, you are still entitled to claim your UK State Pension as long as you have built up a suitable amount of qualifying years of NIC contributions. However, your entitlement to yearly increases in the State Pension only apply in certain countries.

The increases only apply if you live in:

The European Economic Area (EEA) or Switzerland.
A country that has a social security agreement with the UK that allows for cost of living increases to the State Pension. Note, the UK has social security agreements with Canada and New Zealand, but you cannot get a yearly increase in your UK State Pension if you live in either of those countries.

If you do not qualify for the annual increase in the State Pension but move back to the UK then your pension will revert to the current rate.

If you are living abroad, you must be within four months of your State Pension age to claim.

To claim your pension, you can either:

contact the International Pension Centre; or
send the international claim form to the International Pension Centre (the address is on the form).

You can elect to have your pension paid into a UK or foreign bank account. There are also tax implications that need to be considered. If your country of residence does not have a double taxation agreement with the UK, you may pay tax in both places.

Source:HM Government| 31-07-2023

HMRC recommends early filing of tax returns

3rd August 2023 by fpdteam

The 2022-23 tax year ended on 5 April 2023 and the new 2023-24 tax year started on 6 April 2023. Many taxpayers will be happy to leave dealing with their 2022-23 tax returns until later this year or even until January 2024.

The 31 January 2024 is not just the final date for submission of the 2022-23 Self-Assessment tax return but also an important date for payment of tax due. This is the final payment deadline for any remaining tax due for the 2022-23 tax year. In addition, the 31 January 2024 is also the due date for the first payment on account for 2023-24.

HMRC’s recent press release recommends early filing of tax returns. In most circumstances, we would agree with this recommendation. By preparing your tax return early in the tax year you have not accelerated the payment date, but you will know what your tax bill will be well before the payment deadline of 31 January 2024. You can also spread the cost of your tax bill using HMRC’s Budget Payment Plan and avoid the eleventh-hour rush.

Remember that calculating how much tax you may owe is a separate process to filing the return, and so you will also need to remember to file your return and pay any tax due by 31 January 2024. This strategy should also give you time to set aside enough money to pay any tax payable. Of course, if you are owed a repayment of tax then it is a useful strategy to file your tax return as soon as possible and thus accelerate the repayment.

Source:HM Revenue & Customs| 31-07-2023

Corporation Tax Group Payment Arrangements

3rd August 2023 by fpdteam

A Corporation Tax Group Payment Arrangement (GPA) is a special arrangement that allows groups of companies to make joint payments of Corporation Tax. This type of arrangement can reduce the administration and costs associated with making a large number of individual payments. A GPA can also let members of the group mitigate any potential differential interest charge by allowing the group to allocate payments in a way that is most beneficial.

Only certain groups can qualify for GPA and a legal agreement needs to be made. Companies that can enter a GPA are a parent company and its 51% subsidiaries. The 51% subsidiaries of those subsidiaries, and so on, can also be included in the group. This definition is not necessarily the same as other definitions used for groups by HMRC and other government departments and agencies.

A GPA does not alter the fact that each company is liable for its own Corporation Tax, although a GPA also makes the nominated company liable to discharge the Corporation Tax liabilities of all the companies participating in that GPA.

An application for using a GPA should only be made once all the necessary conditions have been or will be met. The application should be sent to HMRC at least one month before the first payment is due for the accounting period to be covered by the GPA. That is 6 months and 13 days after the start of the Corporation Tax accounting period.

Source:HM Revenue & Customs| 31-07-2023

Amazon offers to change Marketplace rules

2nd August 2023 by fpdteam

Amazon has offered to change the way it treats third-party sellers using its Marketplace platform in the UK, by submitting proposed commitments to the Competition and Markets Authority (CMA) in response to competition concerns it raised with the technology giant.

The CMA considers that these commitments – if accepted – will ensure third-party sellers’ product offers have a fair chance of being prominently displayed to customers in the ‘Buy Box’ on a product page when they are competing against Amazon’s own product offers. The commitments also aim to prevent Amazon from using data that it obtains from third-party sellers to give itself an unfair competitive advantage.

The CMA launched an investigation in July 2022 into concerns that Amazon was abusing its position as the UK’s leading online retail platform by giving an unfair advantage to its own retail business over competing sellers that use Amazon Marketplace, or to sellers that use Amazon’s own warehousing and delivery services, rather than rival organisation businesses.

The CMA’s preliminary view is that the offer from Amazon addresses its competition concerns, and the CMA is now consulting on the commitments put forward before deciding whether to accept them.

The commitments offered propose to:

Ensure Amazon does not use rival sellers’ Marketplace data to gain an unfair advantage over other sellers. This follows concerns that Amazon’s access to commercially sensitive data relating to third-party sellers helped its retail business to decide which products to sell, manage stock levels for those products, set prices and make other important commercial decisions.
Guarantee all product offers are treated equally when Amazon decides which will be featured in the ‘Buy Box’. This relates to concerns that products being offered by third-party sellers were less likely to appear in the Buy Box than similar offers from either Amazon’s own retail business or third-party sellers that use Amazon’s delivery services.
Allow third-party businesses using Marketplace to negotiate their own rates directly with independent providers of Prime delivery services so that customers can benefit from lower delivery costs where better rates are negotiated.
Require Amazon to appoint an independent trustee who will monitor the company’s compliance with these commitments. The CMA will have a direct say in this appointment, ensuring they have the necessary skills and expertise for the job.

Source:Other| 01-08-2023

Gambling white paper reforms

2nd August 2023 by fpdteam

A public consultation process has been launched to look at how to conduct financial risk checks for problem gambling and at what level stake limits should be set for people playing online slot games.

The move is the next step of the Government’s gambling white paper to update gambling rules for the smartphone era and protect those at risk of gambling harm including young adults.

The gambling industry, clinicians, academics, those with firsthand experience of harm, and the general public are invited to share their views.

Online slot games are deemed a higher-risk gambling product, associated with large losses, long sessions and binge play.

According to NHS England surveys, 8.5% of online slots, casino and bingo players report experiencing problem gambling, which is nearly 20 times higher than the adult population average. But unlike gaming machines in pubs, arcades and bookmakers, online slot games have no stake limits, which can make it too easy to incur potentially life-changing losses in minutes.

The Government is consulting on a maximum stake of between £2 and £15 per spin.

Public Health England research has also shown younger adults can be particularly vulnerable to gambling harms, due to a combination of common factors such as ongoing cognitive development and managing money for the first time.

The Government is also consulting on options to introduce greater protections when playing slots for 18 to 24-year-olds, such as lower stake limits of £2, £4, or requirements on operators to consider age as a risk factor for gambling-related harm.

Source:Other| 01-08-2023

Emergency tax codes

27th July 2023 by fpdteam

The letters in an employee’s tax code signify their entitlement (or not) to the annual tax free personal allowance. The tax codes are updated annually and help employer’s work out how much tax to deduct from an employee’s pay packet.

The basic personal allowance for the tax year starting 6 April 2023 is £12,570 and the tax code for an employee entitled to the standard tax-free Personal Allowance 1257L. This is the most common tax code and is used for most people with one job and no untaxed income, unpaid tax or taxable benefits (for example a company car).

Emergency tax codes can be used if HMRC does not receive a taxpayer’s income details in time after a change in circumstances such as:

a new job
working for an employer after being self-employed
getting company benefits or the State Pension

Employees on an emergency tax code will see one of the following codes on their payslip:

1257L W1
1257L M1
1257L X

These codes mean that an employee’s tax calculation is based only on what they are paid in the current pay period. The emergency tax codes are temporary and will usually be updated once the necessary details about previous income or pension payments are sent to HMRC.

Source:HM Revenue & Customs| 24-07-2023

Check your State Pension forecast

27th July 2023 by fpdteam

The State Pension forecast provides an estimate of how much State Pension an individual can expect to receive when they reach State Pension age. The estimate is based on the applicant's National Insurance current and future contribution record.

A forecast application can be made online using the government gateway by sending the BR19 application form by post or by calling the Future Pension Centre. The forecast includes basic information explaining what effect further qualifying years may have on the amounts shown in the forecast.

The forecast also shows what date the taxpayer will reach their State Pension age based on the current law. The State Pension age is regularly reviewed and may change in the future. The estimate does not take account of future payments to fill possible gaps in the taxpayer's contribution record.

If you do not have 10 qualifying years, the forecast will only tell you how many qualifying years you currently have. This is because taxpayers usually require a minimum of 10 qualifying years to qualify for any State Pension.

It is worthwhile to regularly check your State Pension position to help optimise your entitlement. You should also consider what other savings or pensions might be required for a long and comfortable retirement.

Source:Department for Work & Pensions| 24-07-2023

Draft legislation published for Finance Bill 2023-24

27th July 2023 by fpdteam

Legislation Day (L-Day), 18 July 2023, was the date when the government published the draft legislation for Finance Bill 2023-24. This Finance Bill will be colloquially referred to as Finance Bill 2024. Alongside the publication of the draft legislation the government published accompanying explanatory notes, tax information and impact notes on each measure.

There is a consultation on draft clauses that is intended to ensure that the legislation works as intended. The consultation will close on 12 September 2023.

The publication of the draft Finance Bill is in line with the current approach to tax whereby the government committed to publishing most tax legislation in draft for technical consultation before the legislation is laid before Parliament.

This Finance Bill will see the introduction of a number of measures including:

Enterprise management incentives: extension of the time limit to submit a notification of a grant of options.
Abolishing the pensions lifetime allowance.
Pensions tax relief — amendments to the relief at source legislation.
Corporation Tax draft legislation.
Additional tax reliefs for research and development (R&D) intensive small and medium-sized enterprises and potential merged R&D scheme.
Creative industry tax reliefs: administrative changes.
Clarifications of the rules for cultural tax reliefs.
Reform of audio-visual creative tax reliefs to expenditure credits.
Increasing the capital allowance limits for leasing into tonnage tax.
Changes to the geographical scope of agricultural property relief and woodlands relief for Inheritance Tax.
Increasing the maximum prison term for tax fraud.

Source:HM Treasury| 24-07-2023

The Construction Industry Scheme

27th July 2023 by fpdteam

The Construction Industry Scheme (CIS) is a set of special tax and National Insurance rules for those working in the construction industry. Businesses in the construction industry are known as 'contractors' and 'subcontractors' and should be aware of the tax implications of the scheme.

Under the scheme, contractors are required to deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards the subcontractor’s tax and National Insurance liabilities.

Contractors are defined as those who pay subcontractors for construction work or who spent more than £3m on construction a year in the 12 months since they made their first payment. Subcontractors do not have to register for the CIS, but contractors must deduct 30% from their payments to unregistered subcontractors. The alternative is to register as a CIS subcontractor where a 20% deduction is taken or to apply for gross payment status.

Monthly returns must be submitted online. The monthly return relates to each tax month (i.e., running from the 6th of one month to the 5th of the next). The deadline for submission is 14 days after the end of the tax month. Contractors who have not paid subcontractors in a particular month are required to submit a 'CIS nil return' or notify HMRC that no return is due.

Additionally, new VAT rules for building contractors and sub-contractors came into effect on 1 March 2021. This means that for certain specified supplies, sub-contractors no longer add VAT to their supplies to most building customers, instead, the contractors are obliged to pay the deemed output VAT on behalf of their registered sub-contractor suppliers. This is known as the Domestic Reverse Charge. The contactors can then claim back the output tax paid as input VAT, subject to the usual rules.

Source:HM Revenue & Customs| 24-07-2023

When you don’t have to pay Capital Gains Tax

27th July 2023 by fpdteam

In most cases, there is no Capital Gains Tax (CGT) to be paid on the transfer of assets to a spouse or civil partner. There is, however, still a disposal that has taken place for CGT purposes, effectively, at no gain or loss on the date of the transfer. When the asset ultimately comes to be sold the gain or loss will be calculated from when the asset was first owned by the original spouse or civil partner.

There are a few exceptions that couples should be aware of when the relief does not apply. This mainly relates to the use of goods which are sold on by the transferee’s business and for couples that are separated or divorced. The CGT rules that apply during separation and divorce changed for disposals that occurred on or after 6 April 2023.

These changes extended the period for separating spouses and civil partners to make no gain/no loss transfers extended to up to three years after they cease to live together. The new rules also provide for an unlimited time if the assets are the subject of a formal divorce agreement. Previously, the no gain/no loss treatment was only available in relation to any disposals in the remainder of the tax year in which the separation occurred. If a transfer does not ultimately qualify for relief, then the asset must be retrospectively valued at the date of the transfer and the transferor is liable for any gain or loss.

There are similar rules for assets that are gifted to charities. However, CGT may be due where an asset is sold to a charity for more than was paid for it and less than the market value. The gain in this case would be calculated based on what the charity paid rather than the market value of the asset.

Source:HM Revenue & Customs| 24-07-2023