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Over the past few years the way in which landlords have been able to obtain relief for interest and other finance costs has been changing. The system of relief is moving from one of relief [...]
MTD goes live Making Tax Digital (MTD) for VAT went live from 1 April 2019. It applies to businesses with VATable turnover over the VAT registration threshold of £85,000 from the start of their first [...]
The Doctor will not be seeing you now. The ‘pension tax trap’ that’s affecting senior NHS doctors has been getting plenty of media attention over the past few months. But if you’re one of the [...]
Changes to the rates and allowances impact on directors of personal and family companies looking to extract profits in a tax-efficient manner. As always, the optimal strategy will depend on circumstance, and professional advice should [...]
RATES AND ALLOWANCES Personal allowances for 2019/20 For the 2019/20 tax year, the personal allowance is set at £12,500. As in previous years, the allowance is reduced by £1 for every £2 by which income [...]
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Over the past few years the way in which landlords have been able to obtain relief for interest and other finance costs has been changing. The system of relief is moving from one of relief by deduction – which applies for 2016/17 and earlier tax years – to one under which relief is given as a basic rate tax reduction. From 2020/21, relief will be given in full as a basic rate tax reduction. Transitional rules apply for 2017/18 to 2019/20 inclusive as the changes are phased in, with some interest costs relieved by deduction and the balance as a basic rate tax reduction. For 2019/20, 25% of the interest costs can be deducted in computing profits, with relief for the remaining 75% being given as a tax reduction at the basic rate. Check with Shipleys Tax that you are obtaining relief for interest costs in the correct manner.
Call on 0114 275 6292 or email firstname.lastname@example.org.
MTD goes live
Making Tax Digital (MTD) for VAT went live from 1 April 2019. It applies to businesses with VATable turnover over the VAT registration threshold of £85,000 from the start of their first VAT accounting period on or after 1 April 2019, unless they fall within one of the categories of businesses with more complex affairs (such as those in a VAT group) in respect of which the start date is deferred until the start of the first VAT accounting period beginning on or after 1 October 2019.
Under MTD for VAT businesses must keep digital records and file their VAT returns digitally using MTD-compatible software.
Speak to Shipleys Tax to check what you need to do to comply with the requirements of MTD for VAT.
Call us on 0114 275 6292 or email email@example.com.
The Doctor will not be seeing you now.
The ‘pension tax trap’ that’s affecting senior NHS doctors has been getting plenty of media attention over the past few months. But if you’re one of the senior doctors and consultants that’s directly affected by this issue, you’ll already know about the detrimental effect on your earnings.
Some doctors have been advised to use the “NHS Scheme Pays” option as a solution, but this, as we will see below, has a secondary trap waiting for the usnsuspecting pension patient. What a mess!
It works as follows. If you are subject to an Annual Allowance (AA) charge, you can either pay this directly to HMRC via the self-assessment system, or in some circumstances, you can ask your pension scheme to pay the charge on your behalf (Scheme Pays). NHS Pensions have confirmed to what extent Scheme Pays applies to members whose AA is tapered due to their level of earnings (refers to “earnings” generally above £150k).
The legislation will only allow Scheme Pays if the AA tax is over £2k and the growth in the scheme is above the £40k limit (not the reduced limit if an individual is subject to tapering). However, there is also a paragraph in the revenue’s personal tax manual (PTM056410):
“There is a maximum amount that a member can ask their scheme administrator to pay under these circumstances based on the pension input amount in the scheme which exceeds the annual allowance.”
This means that the NHS Pension scheme will only pay the tax charge on the excess over £40k. So if a member has a £60k growth in their pension and a tapered AA limited of £10K, NHS Pensions will only pay the AA tax on £20K, (being £60k – £40k). The member will have to pay the tax on £30k (i.e. £40k – £10k) via their Self Assessment return.
Any clients affected we can write to ask for a voluntary scheme pays to be considered but it is unlikely any will be. The Department of Health (DoH) are currently monitoring the position as use of Scheme Pays is quite low. If members are opting out as a result of not being able to Scheme Pay the whole amount, NHS pensions may well refer them to the DoH.
If you need advice on NHS pensions and how you can avoid the tax trap please call 0114 275 6292 or email firstname.lastname@example.org.