Latest Tax Rates for 2012-13 available here:
Employers NI Threshold: £7,488 (£624 pcm)
Personal Tax Allowance: £8,105
Basic Band £34,370 (net dividends if personal allowance used up - £30,933)
Latest news article on tax efficiency as a freelancer, written by our MD Steve Crouch, check it out here!
http://www.moneyobserver.com/news/11-12-01/how-work-tax-efficiently-freelancer
What you need to know:
Clients
Are you aware that there are certain rules surrounding what can and cannot be claimed back on Tax and VAT in relation to gifts and entertaining during Christmas periods?
H M Revenue and Customs have capped the price for gifts to clients at £50 per tax year. All gifts over the set price will be completely disallowed. The gift itself must be strictly professional and must clearly carry an advertisement for your business or it will be classified as entertainment expenses and will be disallowed.
Staff
Staff gifts are classified as taxable benefits, gifts considered to be trivial are exempt from tax.
Trivial gifts could be anything from a bottle of wine to a boquet of flowers. Please be aware that, although a bottle of wine is deemed trivial, a case of wine would not.
All non-trivial gifts must be included on form P11D. Any monetary gifts must be taxed in the usual manner.
Staff Parties
As an incentive for hard work and morale purposes, HMRC allows up to £150 per employee. Exceed this limit, and the entire amount is disallowed.
Expenditure generated by non-employees attending the party is allowable for tax, providing total costs don't exceed the capped amount per employee attending.
Where VAT is concerned, expenditure generated by non-employees is considered to be entertainment so therefore cannot be claimed back. Also note that in order for VAT incurred to be classed as input tax, entertainment provided must not be limited to partners or directors in order for it to be recoverable.
As from 1st September 2011, a new scheme has been launched, which mortgage lenders will use where they suspect mortgage fraud.
The National Fraud Authority estimated the cost of mortgage fraud at £1 billion last year.
H M Revenue and Customs, the Council of Mortgage Lenders and the BSA have worked together on the development of the Mortgage Verification Scheme and see it as a necessary means in aid of beating fraud.
Mortgage lenders will notify HMRC and send relevant details where they suspect fraud. HMRC will then cross check and advise the lenders in relation to income details declared against the information provided in income tax and employment returns.
A penalty may be charged where a careless or deliberate inaccuracy leads to any of the following:
A penalty may also be charged where an assessment has been raised by HMRC and there is a failure to notify that it is underestimated.
The rate of penalty charged is dependent on whether the inaccuracy is careless or deliberate. Where it is deliberate the amount is higher still if it is concealed. The maximum rates are 30%, 70% and 100% respectively but rise to 200% where the tax rates to income and gains relating to an offshore matter. These maximum percentages can be reduced depending on disclosure and whether it is promptyed or unprompted.
Where a company is liable to a penalty and this is attributed to an officer of the company (director or company secretary) the penalty may be collected from that officer. This is likely where the company is insolvent.
Telephone + 44 (0) 1273 326 556, email info@srctaxation.co.uk or fill out the form below.