Her Majesty Queen Elizabeth II’s State Funeral

Posted on 15th September 2022 by Solutions Accountancy

It has been confirmed that the date of Her Majesty Queen Elizabeth II’s State Funeral will be Monday, 19 September 2022 following 10-days of national mourning. King Charles III approved an order that the day of the Queen’s funeral will be a national bank holiday across the UK.

A press release from the Department for Business, Energy & Industrial Strategy (BEIS) stated that this will allow individuals, businesses and other organisations to pay their respects to Her Majesty and commemorate Her reign, while marking the final day of the period of national mourning.

The government has confirmed that the bank holiday will work in the same way as other bank holidays, and that there would be no statutory entitlement to time off. Employers may include bank holidays as part of a worker’s leave entitlement.

It is expected that many places of businesses will be closed on the day. The press release also said the BEIS “expects employers to respond sensitively to requests from workers who wish to take the day of the funeral off work”. Schools will also be closed.

The government also stated that no decision has yet been made on whether King Charles' Coronation Day will be a bank holiday. A date for the Coronation is unlikely to be announced until after the mourning period for the Queen has ended.

Sponsoring a charity

Posted on 15th September 2022 by Solutions Accountancy

There are special rules in place when a limited company gives to charity. This can include Corporation Tax relief for qualifying donations made to registered charities or community amateur sports clubs (CASC) as including capital allowances for giving away equipment that has been used by a donor company.

However, the rules are different if the company is given something in return for donating, such as tickets for an event.

Donation amount	Maximum value of benefit
Up to £100	25% of the donation
£101 – £1,000	£25
£1,001 and over	5% of the donation (up to a maximum of £2,500)

These rules apply to benefits given to any person or company connected with a company, including close relatives.

Charity sponsorship payments are different from donations because the company gets something related to the business in return. A company can deduct sponsorship payments from its business profits before it pays tax by treating them as business expenses.

Payments qualify as business expenses if the charity:

publicly supports the company's goods or services;
allows the company to use their logo in company’s printed material;
permits the company to sell their goods or services at the charity's events or premises; or
has links from their website to the company's website.

Goods sent from abroad

Posted on 15th September 2022 by Solutions Accountancy

There are special rules to help ensure that goods sent from abroad are taxed appropriately and do not disadvantage UK businesses supplying goods in the UK. For example, by having to compete with VAT free imports. This includes goods that are new or used and bought online, bought abroad and shipped to the UK and goods received as gifts.

This means that in order to receive goods you may have to pay VAT, Customs Duty or Excise Duty if they were sent to:

Great Britain (England, Wales and Scotland) from outside the UK.
Northern Ireland from countries outside the UK and the European Union (EU).

VAT is charged on all goods (except for gifts worth £39 or less) sent from:

outside the UK to Great Britain; and
outside the UK and the EU to Northern Ireland.

Online marketplaces that engage in facilitating the sale of goods are usually responsible for collecting and accounting for the VAT. If the VAT has not been collected, VAT will have to be paid to the delivery company either before the goods are delivered or when goods are collected. If you have to pay VAT to the delivery company, it’s charged on the total package value which includes the value of the goods, postage, packing, insurance and any duty owed.

Generally, there are no Customs Duties payable on non-excise goods worth £135 or less. There are various rates payable above this level and on excise goods of any value.

The pension savings annual allowance

Posted on 15th September 2022 by Solutions Accountancy

The pension savings annual allowance for tax relief on pensions has been fixed at £40,000 since 6 April 2014. The annual allowance is further reduced for high earners. Since 6 April 2020, the tapered annual allowance increased from £150,000 to £240,000.

This means that anyone with income below £240,000 is not affected by the tapered annual allowance rules. Those earning over £240,000 will begin to see their £40,000 annual allowance tapered. For every complete £2 income exceeds £240,000 the annual allowance is reduced by £1. The annual allowance cannot be reduced to be less than £4,000. The annual allowance can also be affected if the taxpayer flexibly accessed their pension pot.

There is a three-year carry forward rule that allows taxpayers to carry forward unused annual allowance from the last three tax years if they have made pension savings in those years. The calculation of the exact amount of unused annual allowance that can be carried forward can be complicated especially if subject to the tapered annual allowance.

There is also a pensions lifetime allowance that needs to be considered. The limit is currently £1,073,100.

HMRC’s shared workspace

Posted on 15th September 2022 by Solutions Accountancy

HMRC’s Shared Workspace is a service that allows businesses and tax agents to share sensitive data, for example, accounts or employee information, with HMRC.

According to HMRC, the service allows members to ‘share’ information in a ‘space’ where they can work together in real time. More than one person can view or edit material at the same time, with all amended versions being automatically saved and organised.

In order to use the Shared Workspace users must be invited by HMRC or request HMRC online service. Shared Workspace is available to qualifying businesses and agents, not individuals.

Shared Workspace is very versatile and can be designed to meet the needs of customers who may deal with the different parts of HMRC. This also includes more complex and specialist work involving HMRC.

Before requesting to use this service, HMRC recommends contacting your local HMRC office and they will see whether the service is suitable for your needs.

Taxable and tax-free State Benefits

Posted on 15th September 2022 by Solutions Accountancy

Whilst there are a large number of state benefits available, it is not clear which of these benefits are taxable and which are tax-free.

HMRC’s guidance provides the following list of the most common state benefits that are taxable i.e., Income Tax is potentially payable, subject to the usual allowances and reliefs:

Bereavement Allowance (previously Widow’s pension)
Carer’s Allowance
contribution-based Employment and Support Allowance (ESA)
Incapacity Benefit (from the 29th week you get it)
Jobseeker’s Allowance (JSA)
pensions paid by the Industrial Death Benefit scheme
the State Pension
Widowed Parent’s Allowance

The most common state benefits you do not have to pay Income Tax on are:

Attendance Allowance
Bereavement support payment
Child Benefit (income-based – use the Child Benefit tax calculator to see if you’ll have to pay tax)
Child Tax Credit
Disability Living Allowance (DLA)
free TV licence for over-75s
Guardian’s Allowance
Housing Benefit
Income Support – though you may have to pay tax on Income Support if you’re involved in a strike
income-related Employment and Support Allowance (ESA)
Industrial Injuries Benefit
lump-sum bereavement payments
Maternity Allowance
Pension Credit
Personal Independence Payment (PIP)
Severe Disablement Allowance
Universal Credit
War Widow’s Pension
Winter Fuel Payments and Christmas Bonus
Working Tax Credit

PAYE Settlement Agreements

Posted on 8th September 2022 by Solutions Accountancy

A PAYE Settlement Agreement (PSA) allows employers to make one annual payment to cover all the tax and National Insurance due on small or irregular taxable expenses or benefits for employees.

The expenses or benefits included in a PSA must be defined as one of the following;

minor – e.g., a small birthday present;
irregular – e.g., one-off relocation expenses over £8,000 (these are tax-free below £8,000); and
impracticable (difficult to work out the value of or divide up between individual employees) – e.g., shared cars or taxi journeys.

Employers that are required to notify HMRC of the value of items included in a PAYE settlement agreement (PSA) must do so using form PSA1.

The deadline for applying for a PSA for 2021-22 expired on 5 July 2022. Any tax or National Insurance due for 2021-22 under a PSA must be paid electronically to clear into HMRC’s bank account by 22 October 2022. Employers that pay by cheque must ensure that the payment reaches HMRC’s Accounts Office by 19 October 2022. There may be interest and / or a late payment penalty due where the payment is made late.

Back to school – help with childcare costs

Posted on 8th September 2022 by Solutions Accountancy

As children have returned to school, HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for breakfast and after school clubs.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme supports working families with their childcare costs. There are many registered childcare providers including childminders, breakfast and after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and save up their TFC allowance to use during school holidays.

The TFC scheme provides for a government top-up on parental contributions. For every £8 contributed by parents an additional £2 top up payment will be funded by Government up to a maximum total of £10,000 per child per year. This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs.

The TFC scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.

HMRC’s Director General for Customer Services, said:

‘Tax-Free Childcare can make a big difference to families, helping with the bills for things like wraparound care for school children, nurseries, childminders and holiday clubs. It’s easy to register – search ‘Tax-Free Childcare’ on GOV.UK.

Interest rates on student loans from September 2022

Posted on 8th September 2022 by Solutions Accountancy

Student loans are part of the government’s financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying. It is HMRC’s responsibility to collect repayments where the borrower is working in the UK. The Student Loans Company (SLC) is responsible for collecting the loans of borrowers outside the UK tax system.

The interest rates that will apply for the 2022-23 academic year were announced last month. Earlier in the summer, the government had announced that student loan borrowers faced a 12% interest rate from September 2022. The government announced in June that there would be a cap of 7.3% on student loan interest rates for current graduate borrowers to protect them from a rise in inflation. This interest rate was calculating using predicted market rates. The actual market rate reduced to 6.3%, so the cap has been lowered to this figure.

The 6.3% rate will apply to student loan borrowers on Plan 2 (undergraduate) and Plan 3 (Postgraduate) loans. This change will impact the total value of the loan, but there is no difference in the monthly repayments paid.

A spokesperson for the Student Loans Company said:

'The change in interest rates is automatically applied so customers don’t need to take any action. We encourage customers to use SLC’s online repayment service to regularly check their loan balance and repayment information, as well as ensure their contact information is up-to-date.'

There are also new measures that will apply from 2023-24 to ensure that new graduates will not, in real terms, repay more than they borrow.

UK residence and tax

Posted on 8th September 2022 by Solutions Accountancy

UK Income Tax is generally payable on taxable income received by individuals including earnings from employment, earnings from self-employment, pensions income, interest on most savings, dividend income, rental income and trust income. The tax rules for foreign income can be overly complex.

However, as a general rule if you are resident in the UK you will need to pay UK Income Tax on your foreign income, such as:

wages if you work abroad;
foreign investments and savings interest;
rental income on overseas property; and
income from pensions held overseas.

Foreign income is defined as any income from outside England, Scotland, Wales and Northern Ireland. The Channel Islands and the Isle of Man are classed as foreign.

If you are not UK resident, you do not generally have to pay UK tax on your foreign income. There are special rules if you work both in the UK and abroad.

The rules are even more complicated when addressing the liability to UK Income Tax for non-domiciles spending a substantial amount of time in the UK. There is a concept in the UK of deemed domicile, whereby any person who has been resident in the UK for more than 15 of the previous 20 years will be deemed to be domiciled in the UK for tax purposes.

Other non-doms living in the UK that wish to retain access to the remittance basis of taxation must pay an additional sum in addition to the tax on any income or gains remitted. This sum is known as the Remittance Basis Charge.