Tax if you live abroad and sell UK home

Posted on 14th April 2022 by Solutions Accountancy

One of the most often used and valuable of the Capital Gains Tax (CGT) exemptions covers the sale of the family home. In general, there is no CGT to pay on a property which has been used as the main family residence. An investment property which has never been used will not qualify. This relief from CGT is commonly known as private residence relief or PRR.

The rules are different if you live abroad. A CGT charge on the sale of UK residential property by non-UK residents was introduced in April 2015. Only the amount of the overall gain relating to the period after 5 April 2015 is chargeable to tax. In certain circumstances PRR may apply where the property is the owner’s only or main residence.

A UK non-resident that sells UK residential property needs to deliver a non-resident CGT (NRCGT) return and pay any CGT within 60 days of selling a relevant property. The return must be made whether or not there is any NRCGT to be paid, if there is a loss on the disposal, and when the taxpayer is due to report the disposal on their Self-Assessment tax return.

There are penalties for failing to file the NRCGT return within the deadline as well as for failing to pay any tax due on time.

Check your Income Tax for current year

Posted on 14th April 2022 by Solutions Accountancy

HMRC offers taxpayers the ability to check their Income Tax for the current tax year. The online portal has been updated for the new 2022-23 tax year from 6 April 2022 to 5 April 2023. The service is not available to taxpayers who only pay Income Tax using Self-Assessment.

The service can be used to:

  • check your tax code and Personal Allowance
  • see if your tax code has changed
  • tell HMRC about changes that affect your tax code
  • update your employer or pension provider details
  • see an estimate of how much tax you will pay over the whole tax year
  • check and change the estimates of how much income you will get from your jobs, pensions or bank and building society savings interest

In order to use this service, taxpayers must prove their identity using a Government Gateway user ID. If you have not used this service before, you can register online.

The portal used to be available for those using the GOV.UK Verify service. However, this alternative sign-in method for a limited number of HMRC online services was removed from 1 April 2022.

HMRC names avoidance scheme promoters

Posted on 14th April 2022 by Solutions Accountancy

HMRC has used new powers introduced in the Finance Act 2022 to name tax avoidance schemes and their promoters for the first time. Under this legislation HMRC can name avoidance scheme promoters, publish details of the way they promote tax avoidance schemes and name the schemes they promote.

This allows HMRC to warn users and potential users of these schemes at the earliest possible stage of the risks and to help those already involved to leave these avoidance arrangements.

The two named schemes are:

  • Absolute Outsourcing, of Foerster Chambers, Todd Street, Bury, Greater Manchester
  • Equity Participation Scheme (EPS), promoted by Purple Pay Limited (PPL), of Gracechurch Street, London.

Both schemes involve individuals agreeing an employment contract and working as a contractor. The schemes pay contractors the National Minimum Wage with the remainder of their wage paid through a loan to try to avoid National Insurance and Income Tax.

HMRC will also regularly update the list by publishing the details of other tax avoidance schemes and their promoters. It is important to note that there are other schemes and the fact that a scheme is not included in HMRC’s list does not mean that the scheme works or is in any way approved by HMRC.

NIC relief if employing veterans

Posted on 14th April 2022 by Solutions Accountancy

A new National Insurance Contributions (NICs) holiday for employers who hire former members of Her Majesty (HM) armed forces came into force on 6 April 2021. This allows employers to apply a zero-rate of secondary Class 1 Employer NICs on the earnings of veterans during the first year of their civilian employment post-service. The zero-rate applies up to the Veterans Upper Secondary threshold (currently £50,270 per annum).

From 6 April 2022, employers can now claim this relief in real time by submitting Real Time Information (RTI) returns. Employers who used this relief in 2021-22 can claim back the relief retrospectively for any qualifying employees who joined their company in the last 12 months.

Employers can claim this relief for the 12-month period starting on the first day of the veteran’s first civilian employment after leaving the regular armed forces.

An employee qualifies as a veteran if they have either:

  • served at least one day in the regular armed forces
  • completed at least one day of basic training

The relief is available to a veteran who has started their first civilian job regardless of when they left the regular armed forces.

The Minister for Defence People and Veterans said:

‘Our veterans have made important contributions to keeping our country safe. The skills they gain during service are invaluable, and businesses can greatly benefit from their dedication. I encourage all businesses to consider hiring veterans and supporting their journey to civilian life after service.’

When does a partnership exist?

Posted on 14th April 2022 by Solutions Accountancy

A partnership is a relatively simple way for two or more legal persons to set up and run a business together with a view to profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership.

There are two main types of partnership, a conventional one with two or more partners in the business. There is also a limited liability partnership or LLP, this more complex structure provides partners with the protection of limited liability, just as with a company.

HMRC’s manual is clear that a partnership may exist without a written agreement, on the basis that a later written agreement gives formal expression to an oral agreement already existing. The date of the formation of the partnership remains the date on which the terms of the oral agreement are implemented.

However, when a written agreement creates a partnership where none exists, it is effective from the date of execution and implementation of the written agreement. It has no retrospective effect.

HMRC’s own internal advice when determining if a partnership exists states that… it is important that you establish all of the facts to determine the true relationship between the parties. This will include finding out what the intentions of the parties were. No single factor is likely to be conclusive on its own. You will need to form an overall view, based on all the facts and evidence.

Get help with childcare costs for Easter

Posted on 7th April 2022 by Solutions Accountancy

As the Easter holiday approaches, HMRC is reminding parents that they may be eligible for Tax-Free Childcare (TFC) to help pay for regulated childcare, including holiday clubs and other out-of-school activities.

The TFC scheme can help parents of children aged up to 11 years old (17 for those with certain disabilities). The TFC scheme helps support working families with their childcare costs. There are many registered childcare providers including childminders, after school clubs and approved play schemes signed up across the UK. Parents can pay into their account regularly and use their TFC allowance towards the cost of holiday clubs, before and after-school clubs, childminders and nurseries, and other approved childcare schemes. 

The TFC scheme provides a government top-up based 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 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. It will also benefit parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. 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.

HM Treasury’s Exchequer Secretary to the Treasury, said:

‘There are lots of brilliant holiday clubs and childcare providers to help working parents during the Easter holidays, and Tax-Free Childcare is a great offer that can help cut the childcare bills.’

Do you need to submit a Self-Assessment return for 2021-22?

Posted on 7th April 2022 by Solutions Accountancy

There are a number of reasons why you might need to complete a Self-Assessment return. This includes if you are self-employed, a company director, have an annual income over £100,000 and / or have income from savings, investment or property.

Taxpayers that need to complete a Self-Assessment return for the first time should inform HMRC as soon as possible. The latest date that HMRC should be notified is by 5 October following the end of the tax year for which a Self-Assessment return needs to be filed. If you required to submit a Self-Assessment return for 2021-22, you should ensure that you file your tax return electronically and pay any tax due by 31 January 2023.

HMRC has an online tool www.gov.uk/check-if-you-need-tax-return/ that can help you check if you are required to submit a Self-Assessment return.

The list of taxpayers that are usually required to submit a Self-Assessment return includes:

  • The self-employed (earning more than £1,000);
  • Taxpayers who had £2,500 or more in untaxed income;
  • Those with savings or investment income of £10,000 or more before tax;
  • Taxpayers who made profits from selling things like shares, a second home or other chargeable assets and need to pay Capital Gains Tax;
  • Company directors – unless it was for a non-profit organisation (such as a charity) and you did not get any pay or benefits, like a company car;
  • Taxpayers whose income (or that of their partner’s) was over £50,000 and one of you claimed Child Benefit;
  • Taxpayers who had income from abroad that they needed to pay tax on;
  • Taxpayers who lived abroad and had a UK income;
  • Income over £100,000.

Will you need to repay child benefits?

Posted on 7th April 2022 by Solutions Accountancy

The High Income Child Benefit charge applies to taxpayers whose income exceeds £50,000 in a tax year and who are in receipt of child benefit. The charge claws back the financial benefit of receiving child benefit either by reducing or removing the benefit entirely.

If you or your partner have exceeded the £50,000 threshold for the first time during the last tax year (2021-22) then you must act. Where both partners have an income that exceeds £50,000, the charge applies to the partner with the highest income.

Taxpayers who continue to receive child benefit (and earn over the relevant limits) must pay any tax owed for 2021-22 on or before 31 January 2023. The child benefit charge is charged at the rate of 1% of the full child benefit award for each £100 of income between £50,000 and £60,000. For taxpayers with income above £60,000, the amount of the charge will equal the amount of child benefit received.

If the High Income Child Benefit charge applies to you or your partner it is usually worthwhile to claim Child Benefit for your child, as it can help to protect your State Pension and will make sure your child receives a National Insurance number. However, you still have the choice of whether to keep receiving child benefit and pay the tax charge or you can elect to stop receiving child benefit and not pay the charge.

NIC Rates and Allowances for 2022-23

Posted on 7th April 2022 by Solutions Accountancy

HMRC has published an updated version of the rates and thresholds for employers following the spring statement. The main changes relate to the increases in the National Insurance (NIC) thresholds. This will see the NIC threshold increase from £9,880 to £12,570 from 6 July 2022 and result in the alignment of the Primary Threshold (PT) for Class 1 NICs and Lower Profits Limit (LPL) for Class 4 NICs, with the personal allowance of £12,570.

The PT and LPL will be £9,880 (as previously announced) from 6 April 2022 – 5 July 2022 and £12,570 from 6 July 2022 – 5 April 2023. This means the LPL will be £11,908 for the 2022-23 tax year which is equivalent to 13 weeks of the threshold at £9,880 and 39 weeks at £12,570. HMRC’s document also includes weekly and monthly figures to help calculate weekly / monthly pay.

The increases in NICs of 1.25% – first announced last year – also took effect from April 2022. These increases will be ring-fenced to provide funding for the NHS, health and social care.

The increases will also apply to Class 1 contributions (paid by employees) above the primary and secondary thresholds. Employers should ensure that they have prepared for the increase as these changes will increase wage costs from April 2022.

All existing NICs reliefs to support employers will continue to apply. In addition to the employment allowance, this includes the following:

  • employees under the age of 21
  • apprentices under the age of 25
  • qualifying Freeport employees
  • armed forces veteran

There are also corresponding increases in Secondary Class 1 NICs (paid by employers) and Class 4 NICs (paid by the self-employed).

Rural pubs community funding

Posted on 7th April 2022 by Solutions Accountancy

The Department for Levelling Up, Housing and Communities has published the list of successful bidders from the reopening of the first round of the Community Ownership Funding. This brings the total level of funding in the first round to almost £8m. Thus, helping communities across the UK take ownership of assets and amenities at risk of closure. In total, the government has committed to funding of £150m until 2024-25.

The funding round has helped rural pubs in areas such as West Cornwall and Melton Mowbray placing them into community ownership with the support of local people.

The government also announced funding for a sports academy in Northern Ireland, a community centre in Scotland, an historic chapel in County Durham and a village shop and post office in Dorset.

The Secretary of State for Levelling Up said:

‘Pubs, historic buildings and sports clubs form a vital part of our heritage and for too many places they are a disappearing part of the local community. That is why we are helping local people take control of these beloved community assets, which would otherwise be lost.’