Tax News

Don't Forget There May be Tax to Pay on Your Dividends in January

The rules for taxing dividends changed radically from 6 April 2016 with the removal of the 10% notional tax credit and the introduction of new rates of tax on dividends. For many taxpayers that meant more tax to pay on those dividends on 31 January 2018. The same will also apply on 31 January 2019.

IT Consultant Wins IR35 Personal Service Company Case

The government have been consulting on extending the personal service company rules that currently apply to public sector workers to those in the private sector, but in the meantime tax tribunal decisions are still being decided against HMRC.

Tax Efficient Childcare Schemes

Earlier this year the government announced that no new childcare voucher schemes could be set up after 5 October 2018. This was a six month extension from the previous 5 April 2018 end date. If those employers offering such schemes at 5 October are prepared to keep administering their scheme then they will continue to be available but will eventually be phased out.

Class 2 NICs to Continue for Self-Employed

In 2016 the government consulted on a proposed abolition of Class 2 National Insurance contributions (NICs) for the self-employed. This flat rate contribution, currently £2.95 a week is payable by the self-employed in addition to Class 4 contributions based on the level of profits. The flat rate contributions were due to cease on 5 April 2019 but will now continue “for the life of this parliament”.

2015/16 Pension Annual Allowance Lapses on 5 April 2019

To utilize the 2015/16 unused relief any additional pension savings would need to be paid to the pension fund by 5 April 2019, otherwise the relief from 2015/16 will lapse.

Paying Tax if Your Pension Savings are Too High

If your pension savings are more than your annual allowance for the tax year, and you do not have unused annual allowances from the 3 previous tax years to cover the difference, you’ll have to pay tax on the excess.

You’ll get a statement from your pension provider telling you if you go above the annual allowance. If you’re in more than one pension scheme, ask each pension provider for statements. This will help you work out how much you’ve gone above the allowance.

Check Your Pension Savings Annual Allowance

HMRC have updated their guidance on the rules for carrying forward the unused pension savings annual allowance, together with a calculator on their website. 

For most taxpayers, the maximum amount of pension savings that qualify for tax relief each tax year is £40,000. It is possible to increase this amount by utilising unused relief brought forward from the previous 3 tax years, provided the individual was a member of a pension scheme that year. 

Tapered Pension Tax Relief for Those With High Income

For most taxpayers, the maximum pension input annual allowance is currently £40,000. 

However, from 2016/17 those taxpayers with ‘adjusted income’ over £150,000 and ‘threshold income’ over £110,000 receive a tapered annual allowance. For those persons affected the allowance tapers by £1 for every £2 that their adjusted income exceeds £150,000 down to a minimum annual allowance of £10,000.

Time to Declare Offshore Income Gains and Assets Warns HMRC

HMRC is urging UK taxpayers to come forward and declare any foreign income or profits on offshore assets before 30 September to avoid higher tax penalties.

New legislation called ‘Requirement to Correct’ requires UK taxpayers to notify HMRC about any offshore tax liabilities relating to UK income tax, capital gains tax, or inheritance tax.

Welsh Income Tax Starts 6 April 2019

From 6 April 2019, the Welsh Government (like the Scottish Government) will be able to set and vary the rate of Income Tax paid by Taxpayers who live in Wales.

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